Persimmon Plc today announces Final Results for the year ended 31 December 2021.
Dean Finch, Group Chief Executive, commented:
"Persimmon’s performance was strong in 2021 as we delivered more homes, built better and strengthened our platform for future growth. Maintaining build rates at pre-Covid levels, we delivered almost 1,000 additional new homes, and improved customer service such that we anticipate receiving a five-star rating in the annual HBF survey later in March 2022, a first in the company’s history, whilst also improving our underlying operating margin.
“An agile approach across the business ensured we navigated the supply chain challenges posed by the pandemic, with our Brickworks, Tileworks and Space4 manufacturing facilities providing security of supply for essential materials and helping us maintain our operating efficiency. We will significantly expand production capacity at our Brickworks and Tileworks facilities this year and invest in a new Space4 timber frame facility.
“We are taking advantage of exciting opportunities in the land market, bringing in over 20,750 plots into our business last year at industry-leading embedded margins, and we expect to open around 75 new outlets in the first half of 2022.
“A year ago, we adopted an industry-leading position regarding the remediation of all cladding and fire related defects on a small number of buildings developed by Persimmon over the last 30 years, which is consistent with the recent amendments to the Building Safety Bill. We await further details including any widening in scope of those developments brought within the Building Safety Levy.
“The new year’s trading has started well, with private sales rates ahead by c. 2% in the opening weeks and a robust forward sales position of £2.21bn. We expect to grow our outlet position in 2022 and are targeting volume growth of 4–7% on 2021 levels, whilst maintaining our industry-leading margins, although we are mindful of the growing risk of an economic impact as a result of the tragic conflict in Ukraine.”
|New home completions||14,551||13,575|
|New home average selling price||£237,078||£230,534|
|Total Group revenues||£3.61bn||£3.33bn|
|New housing revenues||£3.45bn||£3.13bn|
|Underlying new housing gross margins1||31.4%||31.0%|
|Underlying profit before tax2||£973.0m||£863.1m|
|Profit before tax||£966.8m||£783.8m|
|Cash at 31 Dec||£1,246.6m||£1,234.1m|
|Land holdings at 31 Dec - plots owned and under control||88,043||84,174|
|Current number of developments across the UK||c. 290||c. 300|
|Current forward sales position||£2.21bn||£2.27bn|
|Net assets per share||1,135.7p||1,102.7p|
|Return on average capital employed3||35.8%||29.4%|
|Customer satisfaction score4||92.0%||89.7%|
- Strong demand throughout the year with the Group’s average private weekly sales rate being c. 9% higher than 2020, a year significantly impacted by pent up demand brought about by the pandemic, and c. 22% ahead of 2019.
- Average selling prices increased by 2.8% since 2020 reflecting a combination of the mix of homes sold in the year and the increased proportion of homes sold to our housing association partners.
- Effective supply chain management, cost control and the Group’s vertical integration, together with strong selling prices, mitigated build cost inflation of c. 5.0% and delivered an industry-leading underlying operating margin5 of 28.0% (2020: 27.6%).
- Strong net cash generation of £1,209.8m (2020: £1,066.8m) before capital returns of £749.6m and net land spend of £447.7m.
Strengthening our development pipeline
- Added over 20,750 plots of land, both from on market purchases and our strategic land holdings, with industry-leading embedded margins.
- High quality land holdings, with 88,043 plots owned and under control at 31 December 2021 (2020: 84,174 plots).
- Continued investment with gross land spend of £460m in 2021.
Build quality – ‘build right, first time, every time’
- An unrelenting focus on ‘build right, first time, every time’, further enhancing the Group’s build quality and customer service.
- Achieved pre-Covid build rates throughout the year, whilst building better quality homes in line with the ‘Persimmon Way’, the Group’s construction excellence programme, which is fully operational across the business.
- Build rates have further improved in the early part of this year as we continue to see the benefit of the Persimmon Way in our build programmes and the Group’s vertical integration facilities.
- All warranty provider scores have significantly improved over the last year, with a 17% year on year improvement in the number of NHBC Reportable Incidents6.
- Achieved a 92.0%4 customer satisfaction score for the survey year ending 30 September 2021. We believe we will achieve a five-star rating when the HBF’s annual results are published later in March 2022 for the first time in the company’s history.
- FibreNest, the Group’s ultrafast, full fibre broadband service, currently supports over 21,000 of our customers across over 270 developments. (2020: over 12,500 customers across 198 developments).
Supporting sustainable communities
- Our private average selling price of £259,231 for the year to 31 December 2021 is over 20%7 lower than the UK national average.
- Investment of £490m in local communities in 2021, including the delivery of 2,533 new homes for lower income families to our housing association partners.
- Over £1.8m donated to local charities and community groups.
- Challenging science-based carbon reduction targets – net zero homes by 2030 and net zero operations by 2040 – now set and independently accredited by the Science Based Targets initiative.
- Pilot projects, utilising innovative carbon reduction technologies, are underway to determine the most effective methods of delivering net zero carbon homes in use at scale.
Legacy buildings provision
- In February 2021 the Group announced its commitment that no leaseholder living in buildings it developed, would pay for cladding related defects or fire related safety issues.
- Persimmon set aside £75m to pay for rectification works with 33 developments identified, including all those above 11m.
- Four of the identified developments have secured successful EWS1 forms, protecting leaseholders, and are working closely with the Management Companies and building owners of the rest.
- Persimmon will not claim from the Government’s Building Safety Fund.
- In line with Government’s request, we have extended the search back 30 years but do not expect the number of buildings identified to change materially.
Current trading and outlook
- Persimmon is in an excellent position with strong current forward sales of £2.21bn, a c. 2% year on year increase in the Group’s average private weekly sales rate for the first eight weeks of 2022 and strong weekly build rates.
- High quality land holdings with industry-leading embedded margins.
- Diverse network of c. 290 active outlets (2020: c. 300) across the UK with good visibility of c. 75 new outlets coming through in the first half of 2022 providing a strong platform for future disciplined growth.
- Investment in new Space4 factory and output increases at Brickworks (+25%) and Tileworks (+50%) planned for 2022, enhancing security of supply and driving further quality and efficiency gains.
- We expect to deliver volume growth of 4–7% for the full year 2022 from 2021 levels whilst maintaining the Group’s industry-leading margins.
- We anticipate a greater proportion of completions in the second half of the year relative to the first reflecting a return to more typical trading patterns and the growth profile of our outlet network.
- We currently anticipate increases in selling prices will mitigate build cost inflation.
- Dividends of 125p (£398.7m) and 110p (£350.9m) per share paid on 26 March 2021 and 13 August 2021 respectively.
- Payment of regular annual instalment of 125p per share to be made on 1 April 2022 (brought forward from July 2022) with payment of 110p of surplus capital in July 2022, subject to continuous review, in line with the Group’s strategy.
For further information please contact:
|Persimmon Plc||Tel: +44 (0) 1904 642199|
|Dean Finch, Group Chief Executive|
|Citigate Dewe Rogerson||
Tel: +44 (0) 20 7638 9571
A presentation to analysts and investors will be available from 07.00 am on 2 March 2022. To view the presentation, please use the webcast link below:
Webcast link: https://edge.media-server.com/mmc/p/bxvcypb6
There will also be a Q&A session with management, hosted by Group Chief Executive, Dean Finch, Chief Commercial Officer, Martyn Clark, Group Financial Controller, Mike Smith and Julia Nichols, Group Strategy and Regulatory Director, via conference call at 9.00am. Analysts may join the call by using the details below:
Telephone number: +44 (0) 33 0551 0200
An audiocast of the call will be available on www.persimmonhomes.com/corporate from this afternoon.
1. Stated before legacy buildings provision (2021: £nil, 2020: £75.0m) and based on new housing revenue (2021: £3,449.7m, 2020: £3,129.5m).
2. Stated before legacy buildings provision (2021: £nil, 2020: £75.0m) and goodwill impairment (2021: £6.2m, 2020: £4.3m). Profit before tax after legacy buildings provision and goodwill impairment is £966.8m (2020: £783.8m).
3. 12 month rolling average calculated on underlying operating profit and total capital employed (including land creditors). Underlying operating profit is stated before legacy buildings provision of £nil (2020: £75.0m) and goodwill impairment (2021: £6.2m, 2020: £4.3m).
4. The Group participates in a National New Homes Survey, run by the Home Builders Federation. The rating system is based on the number of customers who would recommend their builder to a friend.
5.Based on new housing revenue (2021: £3,449.7m, 2020: £3,129.5m) and underlying operating profit (2021: £966.7m, 2020: £862.8m) (stated before legacy buildings provision of £nil (2020: £75.0m) and goodwill impairment (2021: £6.2m, 2020: £4.3m)).
6. A Reportable Incident is an area of non-compliance with NHBC Standards. The item is rectified fully before completion of the home.
7. 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. Group average private selling price is £259,231.