Half Year results for the six months ended 30 June 2020


“The Group, governed by its clear purpose and values, reacted responsibly, swiftly and effectively to the challenges of the Covid-19 pandemic, with the safety and wellbeing of our workforce, customers and local communities our first priority. Taking an early decision not to take advantage of the furlough scheme for any colleagues, we maintained good momentum in the business, continuing to serve our customers, making detailed preparations for a safe return to work and, when it was appropriate, restarting our build programmes efficiently. Build rates were back at pre-Covid levels by the end of the period.

“Despite the significant disruption, the Group’s preparedness, agility and strength ensured a robust first half performance with 4,900 new home completions and further good progress made on our customer care improvement plan.

“The Group has had an excellent start to the second half with a c. 49% year on year increase in average weekly private sales rates per site since the start of July and a current forward order book of c. £2.5bn, a 21% increase on last year. Our strong opening work in progress position and excellent build rate through the summer give us confidence in a positive second half outturn. We expect that by the end of September, we will have delivered c. 45% of our anticipated second half new home legal completions.

“As a result of the continuing strong performance of the business through this challenging period, together with our cautious optimism on the Group’s prospects for the second half, we are pleased to announce that the Board is proposing a modest interim dividend of 40p per share. Further dividend payments this year will remain under close review.

“Our reaction to the Covid disruption showed very clearly the exceptional quality of our colleagues throughout the business and I’m very proud of their response to the recent challenges. Our team, together with our strong balance sheet, high quality land holdings, significant investment in work in progress, a transformed customer care programme and a 5-star HBF rating now within reach, gives Persimmon a strong platform from which to deliver the homes the country needs, support the UK’s economic recovery and drive long-term sustainable value for all our stakeholders.”

Dave Jenkinson, Group Chief Executive

    

Highlights

 

H1 2020

H1 2019

Home completions

4,900

7,584

New home average selling price

£225,066

£216,942

Total Group revenues

£1,190m

£1,754m

New housing gross margins1

31.3%

33.8%

Profit before tax

£292.4m

£509.3m

Cash at 30 June

£828.9m

£832.8m

Land holdings at 30 June – plots owned and under control

89,232

95,086

Current number of developments across the UK

c.340

c. 345

Current forward sales position

£2,483m

£2,048m

Current customer satisfaction score2

89.6%

83.1%

Dividend

40p per share

235p per share in the year

 

  • Entering the second half with a strong platform to deliver the homes the country needs
    • Strong market positioning across 31 businessesproviding the operationalcapacity to support future growth
    • A range and choice of homes in the right locations at affordable prices for our customers, with a private average selling price of £246,208 (2019: £242,912) which is c. 17% below the UK national average3
    • Strong total forward sales, including legal completions in the second half so far, 21% up on last year
    • Substantial work in progress investment with c. 14% more equivalent new home units over last year
    • Strong liquidity with current cash of £821m
    • High quality land holdings underpinning future production
    • Customer care improvement plan operational within the business
    • Highly experienced, agile and flexible management team

 

  • Continued careful management of housing cycle risk
    • Persimmon’s strong sense of purpose supports the Group’s sustainable business model that: delivers long-term sustainable benefits in the best interest of all stakeholders through the cycle, maintains high quality land holdings, judges capital deployment at the right time in the cycle and minimises financial risk
    • Land replacement over the last two years running at c. 55% of consumption level, with all acquisitions meeting the Group’s strict criteria

Operational Highlights

  • Continuing to support our customers
    • Customer care improvement plan initiatives continue to drive improvements in our quality and service
    • Throughout 2020, Persimmon’s HBF survey rating4 has been trending ahead of the five star threshold
    • 12 months since the successful launch of the Group’s industry leading Homebuyer Retention Scheme with over 40% of new customers taking advantage of the Scheme in the first half of the year
    • The ‘Persimmon Way’, the consolidation of the Group’s approach to new home construction, will be fully operational by the end of the year
    • FibreNest, the Group’s internet service provider, unique in the industry, is supporting over 8,000 customers with full fibre to the home broadband service

 

  • Building and supporting our communities
    • c. 50% of our private legal completions in the six months to 30 June 2020 were to first time buyers
    • Persimmon is a signatory to the Covid-19 Business Pledge supporting colleagues, customers and communities through the crisis
    • Persimmon is industry lead to the Social Mobility Pledge which encourages businesses to boost social mobility in the UK
    • Invested over £675m in local communities over the last eighteen months, including the delivery of 4,263 new homes for lower income families to our housing association partners
    • The Group supports c.50,0005 jobs across our communities and within our wider supply chain
    • Dedicated resources focusing on reducing our environmental impact with work underway to review setting a science-based carbon reduction target

 

  • Covid-19 Update
    • The wellbeing of the Group’s workforce, customers and local communities remains a key priority
    • Effective Covid-19 safe operating procedures, maintaining the stringent two metre social distancing rules, are fully embedded across all Group operations
    • All colleagues were retained on full pay, without recourse to Government funding, throughout the lockdown period continuing to drive the business forward, serving our customers, progressing site preparation works and completing remote training courses

 

  • Outlook
    • Short term outlook robust with strong start to the second half and healthy level of forward orders, well supported by a strong work in progress position
    • Potential medium term risks to demand associated with Covid-19, rising unemployment and Brexit remain but long-term housing market fundamentals continue to be strong
    • Persimmon is well placed to navigate potential future challenges and deliver superior long-term sustainable returns in the best interests of all its stakeholders

 

1. Stated on new housing revenues of £1,102.8m (2019: £1,645.3m) and gross profits of £345.2m (2019: £555.5m).
2. The Group participates in a National New Homes Survey, run by the Home Builders Federation. The Survey year covers the period from 1 October to 30 September. The rating system is based on the number of customers who would recommend their builder to a friend. The current customer satisfaction score is based on the results from 1 October 2019 to 17 August 2020.
3. National average selling price for newly built homes sourced from the UK House Price Index as calculated by the Office for National Statistics from data provided by HM Land registry.
4. Based on the results from the National New Homes Survey, run by the Home Builders Federation from January 2020.
5. Estimated using an economic toolkit