TIDMPSN
RNS Number : 5499S
Persimmon PLC
07 November 2019
THIRD QUARTER TRADING STATEMENT
THURSDAY 7 NOVEMBER 2019
Persimmon plc today releases its third quarter Trading Statement
which covers the period from 1 July 2019 to 6 November 2019.
Highlights
"Persimmon's top priority is the delivery of higher levels of
quality and customer service through the implementation of its
detailed customer care improvement plan. Central to this plan is
putting customers before volume, with sales volumes in the first
half of the year being 6% lower than last year, together with
making significant additional investments in both our annual
customer care resources, by c. GBP15m each year, and in the level
of the Group's work in progress, which amounted to c. GBP140m at 30
June 2019.
"The Group has continued to make good progress with these plans
through the second half. On 1 July Persimmon became the first UK
house builder to introduce a customer retention scheme, placing us
at the forefront of strengthened consumer rights for homebuyers. I
am pleased that our progress to date has resulted in Persimmon
achieving the Four Star status level in the latest quarterly HBF
customer satisfaction survey results and we are currently trending
strongly ahead of the Four Star threshold. I am determined to
ensure that the Group makes further headway by implementing our
additional quality and customer care initiatives.
"I am confident that the continued successful implementation of
our detailed customer care improvement plans together with our
strengthened forward build position, healthy forward sales, robust
balance sheet and industry-leading land holdings provide a sound
platform for the successful future development of the Group.
Dave Jenkinson, Group Chief Executive
Trading
Trading over the summer weeks was in line with our expectations,
with the Group seeing the usual pick-up in customer activity as we
moved into the autumn season. Consumer confidence has remained
resilient despite the continued uncertainties around the timing and
nature of the UK's withdrawal from the EU and the broader
challenges surrounding the UK economy. The resilience of the
housing market continues to reflect the strong levels of employment
in the UK and some real wage growth, together with low interest
rates and a competitive but disciplined mortgage market.
The Group is well positioned in its regional markets, remaining
focused on delivering a good range and choice of new homes at lower
price points, the Group's average selling price being c.17% lower
than the national average for newly built homes sold to owner
occupiers[1]. Supporting sustainable communities and delivering
housing to lower income families in the communities we serve
remains a key component of the Group's development approach, with
over 2,100 new homes being delivered to our housing association
partners in the financial year to date.
The Group is encouraged by the ongoing progress being made
through the implementation of its detailed customer care
improvement plan, achieving the Four Star status level in the most
recent HBF quarterly customer satisfaction survey, and trending
strongly ahead of that threshold in recent months. Whilst we now
believe we have sufficient momentum to be confident of an overall
rating of Four Stars for the 2018/2019 survey year as a whole, our
recent actions together with additional initiatives that are
currently being introduced should enable the Group to continue to
deliver sustainable improvements in quality and customer service
into the future.
As previously reported, to support our customer care improvement
plans, we have continued to restrict the release of new homes for
sale in higher demand areas until construction reaches the
appropriate advanced stage, both on selected new sites and, in some
cases, on existing sites. As expected, this has reduced the number
of sales reservations that earlier release would have delivered and
resulted in the Group having c. 5% lower average active sales
outlets year on year, at c. 350 sites. Our substantial additional
investment in work in progress, which amounted to c. GBP140m at
June 2019, has been a fundamental driver of the improvements in
quality and service, and will continue with further investment
through to the year end.
Trading has continued to be resilient through the second half of
the year with the Group's average weekly private sales reservation
rate per site of c. 0.67 being in line with last year. We are now
fully sold up for the current year and have c. GBP950 million of
forward sales reserved beyond 2019 (2018: c. GBP987 million). Sales
prices remain firm across our regional markets, with customers
continuing to make carefully considered reservation commitments,
particularly in relation to higher value new homes. Cancellation
rates continue to run in line with last year, at historically lower
levels.
In the first half of the year the Group's approach of releasing
homes for sale only at a more advanced stage of construction
resulted in total legally completed sales volumes reducing by 6%
year-on-year to 7,584 homes. Whilst we currently expect our
consistent application of this approach to result in a similar
situation in the second half of the year, we anticipate that second
half volumes will be greater than for the first half, reflecting
the normal seasonality of the market.
In the second half of 2018, in response to customer feedback,
the Group launched a new business, FibreNest, to provide ultrafast,
full fibre to the home broadband services. The Group has continued
to invest in establishing its full fibre network and currently has
over 3,350 customers enjoying this fast and reliable service across
more than 100 developments, with plans for a continued rollout.
We are mindful of the uncertainties facing the UK economy but
remain keen to bring new developments through the planning system
as promptly as possible to enable construction activity to commence
and new homes to be delivered to the communities we serve. This
will help ensure that Persimmon's home building activities continue
to support c. 50,000[2] construction jobs on the Group's sites and
in its supply chain. The Group's investment in high quality land
holdings over many years provides a sustainable long-term platform
for each of our 31 regional house building businesses. The Group
has continued to be selective in its land replacement activity
having secured over 3,700 new plots of land, and spent over GBP170
million, including payment of deferred land creditors, during the
period to date. Of the replacement land secured so far this year c.
38% has been converted from the Group's strategic land
holdings.
We will give a further update on progress and trading, following
the year end, on Wednesday 15 January 2020.
Persimmon will host a conference call with analysts at 9.00 a.m.
today. To participate please dial +44 (0) 33 3300 0804. The access
pin is 77391028# and the password is "Persimmon".
Further information, please contact:
Persimmon plc Citigate Dewe Rogerson
Dave Jenkinson, Group Chief Executive Simon Rigby
Mike Killoran, Group Finance Director Kevin Smith
Tel: +44 (0)1904 642199 Tel: +44 (0)20 7638 9571
[1] 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 selling price for the first half of 2019 was
GBP242,912.
[2] Economic Toolkit estimate
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END
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