Full Year results for the year ended 31 December 2018


Chairman’s Overview

“Since the launch of the Group’s strategy in 2012 we have focused on increasing the strength, resilience, and performance of Persimmon for the long term. Building a strong vibrant business where our employees are proud to work, constructing well designed traditional homes and creating sustainable communities throughout the UK remains our central focus.”       

Highlights

  • Legal completion volumes increased by 406 new homes to 16,449 (2017: 16,043) with an average selling price of £215,563, up 1% year on year (2017: £213,321) 
  • Total Group revenue for the year increased by 4% to £3.74bn (2017: £3.60bn) 
  • 2018 new housing operating margin* of 30.8% increased from 28.2% last year, with a second half new housing operating margin* of 31.8%  
  • 13% increase in total Group operating profits to £1.083bn (2017: £0.955bn) 
  • 13% increase in Group profit before tax to £1.091bn (2017: £0.966bn) 
  • 11% increase in basic earnings per share to 283.3p (2017: 255.0p) 
  • 52.8% return on average capital employed** (2017: 51.5%) 
  • 17,092 plots of land acquired in the year, with 3,772 plots successfully converted from the Group’s strategic land portfolio 
  • Net cash of £1.048bn at 31 December 2018 (2017: £1.303bn) 
  • Strong forward sales position at £2.02bn (2018: £2.03bn) 
  • Interim and Final dividends of 125p and 110p per share respectively declared for 2018 
  • Appointment of Dave Jenkinson as Group Chief Executive announced separately today 
  • Range of new customer service initiatives implemented in late 2018 showing encouraging initial results.  The Group is confident these measures will improve its customer satisfaction score once they have had time to take effect 
  • Significant investment in training to address the skills shortage in the house building industry  
  • Adoption of the Living Wage Foundation payment criteria for our employees from January 2019 
  • Persimmon is proud to be a sponsor of Team GB who will compete at the 2020 Tokyo Olympics 

Long term strategy

  • Track record of strong operational performance continues: 
    • Successfully delivering growth - seven new house building businesses opened over the last four years, supporting a more than 75% increase in new home legal completions since the launch of the Group’s new strategy in 2012 
    • Successfully investing in future growth - £3.81bn invested in land since the launch of the new strategy 
    • Successfully returning surplus capital - £2.22bn, or £7.20 per share, of excess capital returned since 2012 

Dave Jenkinson, Group Chief Executive said:

"Our results for 2018 reflect our successful focus on offering attractively priced new homes primarily to the first time buyer and first time mover markets, where housing need is greatest.  This strategy has enabled Persimmon to grow its construction volumes by more than 75% since 2012, making a significant contribution to UK housing supply.  My focus is to build on this strong platform, maintaining our operational momentum, but also implementing a number of necessary new initiatives in customer care.  A wide range of projects to improve customer satisfaction commenced in late 2018 and the initial results have been encouraging, giving us confidence in our ability to make progress in this important area. We continue to invest in our teams, systems, and our off-site manufacturing capabilities to support the Group’s further growth.”

“We are also taking action to address the shortage of skills in the industry, with almost 15% of our workforce in structured training programmes across the business. We continue to nurture and develop our best talent and I am delighted that over 570 colleagues were promoted during the last two years recognising their success in developing their careers with Persimmon. The Group is proud to support over 20,000*** construction jobs and over 30,000*** jobs in our supply chain.”

“Whilst the sales outlook remains subject to a degree of uncertainty at the start of any financial year, at this point the Group’s sales are in line with management’s expectations. Given our strong prior year comparatives, the current increased uncertainties with respect to the future performance of the UK economy and the planned later sales releases in the early part of the year, we are encouraged by the levels of customer interest across the UK. Including legal completions taken so far in 2019, the Group has a strong forward sales position at £2.02bn and we currently anticipate delivering a similar level of legal completions during 2019 as in the prior year.” 

Roger Devlin, Group Chairman, said:

“Persimmon is changing. In his short time as interim CEO Dave Jenkinson has introduced new approaches to customer satisfaction and colleague engagement, whilst also ensuring that the Group delivered another year of growth. These changes are illustrative of wider efforts across the Group to evolve our processes and practices to pursue excellence across all aspects of our business. Achieving further progress with these initiatives will be a key priority for Dave in his new post as CEO.”

“The Board remains confident in the Group’s long term prospects.”

 

*    Stated before goodwill impairment of £9.2m (2017: £11.0m)
**  12 month rolling average and stated before goodwill impairment
*** Estimated using an economic toolkit