TIDMPSN
RNS Number : 7430E
Persimmon PLC
10 November 2020
THIRD QUARTER TRADING STATEMENT
TUESDAY 10 NOVEMBER
Persimmon plc today announces its third quarter Trading
Statement which covers the period from 1 July 2020 to 9 November
2020 ('the period').
Highlights
Dean Finch, Group Chief Executive, commented:
"Persimmon continues to perform robustly despite the significant
challenges presented by the Covid-19 pandemic and we are currently
on course to deliver a good result for 2020.
"The health and safety of our colleagues, customers and
communities remains our top priority and we have been carefully
following each of the devolved Government's measures to curb the
spread of the pandemic. In England's second lockdown, our
Covid-secure sales offices, sites and manufacturing facilities are
remaining operational, in line with Government guidance, as we
continue to support our customers and deliver their new homes.
"In my first weeks as CEO I have been getting around the Group
to understand the business better, including the significant
opportunities we have ahead of us. Throughout the organisation, the
team's focus on quality and serving our customers has been
impressive.
"Our commitment to helping to level up opportunities and to
supporting our communities, through initiatives such as the Social
Mobility Pledge, are more crucial than ever as we strive to deliver
much needed new homes across the country, and to support the UK
economy's recovery from the impacts of the pandemic.
"Persimmon is undoubtedly a strong market leader with an
excellent management team and workforce, and significant high
quality assets. The task in front of us is to continue to build a
sustainable business in every sense - one that can maintain a
strong financial performance whilst continually improving customer
service, and fulfilling our important role in the economy, in our
communities and for the environment."
-- The Group's Covid-secure sales offices, sites and manufacturing
facilities, spread across the UK, are all operational,
in line with devolved Government guidance.
-- Strong third quarter performance, supported by firm selling
prices and resilient demand for new build homes.
-- Average private weekly sales rates per site for the period
38% ahead of 2019.
-- Fully sold up for the current year and c. GBP1.36bn of
forward sales reserved beyond 2020, 43% up on last year
(GBP0.95bn).
-- Well established strategy of careful management of the
housing cycle through minimising financial risk and investing
capital at the right time - c.1,700 plots of land secured
in the year to date (2019: c. 7,300 plots).
-- Strong liquidity with a cash balance of c. GBP960m at
31 October 2020 (2019: GBP371m).
-- Current customer satisfaction score of 89.8% (1) for the
period from 1 October 2019, with the Group trending ahead
of the five star threshold since January 2020.
-- The Sustainability Committee continues to make good progress
against the Group's strategy of ensuring that the business
delivers long term sustainable benefits for all stakeholders.
It has recently engaged an independent expert to assist
in setting a science based carbon reduction target.
-- Reflecting the Group's continuing strong performance,
a further interim dividend of 70p per share will be paid
on 14 December 2020, which together with the interim dividend
of 40p per share paid in September, replaces the previously
postponed 110p per share final dividend declared for 2019.
Covid-19 update
The wellbeing of our colleagues, customers, and local
communities remains our top priority.
Throughout the initial national lockdown period, we retained all
of our staff on full pay, without recourse to Government
assistance, and provided necessary support to our suppliers and
subcontractors to ensure operational continuity and enable a safe
and structured re-start to site operations. This effective response
meant that the Group had established Covid-secure sites, offices
and manufacturing facilities, in line with Government guidelines,
by the end of April. The Group has not accessed any of the UK
Government's Covid-19 financial support schemes and has no plans to
do so.
From 1 July 2020 the Group, which operates on sites right across
the UK, has continued to operate in full compliance with devolved
Government guidelines. Our sales offices in Wales closed during the
local two week lockdown and re-opened on 9 November. These
measures, together with the recent tightening of Covid-19
restrictions across England and Scotland, had a relatively limited
impact on the Group's operations.
For the second national lockdown in England, which is scheduled
to last until 2 December, our Covid-secure sales offices, sites and
manufacturing facilities are remaining operational, in line with
Government guidelines, as we continue to support our customers and
deliver their new homes. Our safe operating procedures, which
maintain the stringent two metre social distancing rules, have been
embedded across all of our operations since site works re-commenced
in April, allowing the Group to continue to operate safely.
Pre-Covid build rates were achieved by the end of June and have
been maintained since. Our customer care teams have resumed
scheduled works and this will continue, applying our Covid-secure
operational procedures.
Our well-established remote working policies and practices meant
that our office based colleagues, who had started to return to
their workplaces where safe to do so, have reverted to working
remotely. Currently all of our regional offices are closed, with
only a skeleton staff to facilitate the wider workforce working
from home.
We are well prepared for this second lockdown and continue to
work with our subcontractors and supply chain to maintain the
Group's operations. We remain mindful, however, of the potential
for further disruption from additional Government mandated measures
to control the pandemic and the impact of ongoing uncertainty on
the UK economy.
We are immensely proud of how our colleagues, subcontractors and
supply chain partners have performed during this time and would
like to thank them all for their hard work and commitment in such
difficult circumstances.
Trading
Trading through the summer weeks was robust, with sales rates
remaining strong thanks to good availability of homes at an
advanced stage of construction. The Group's increased investment in
work in progress over the last eighteen months was designed to
position the business to be able to support more customers to
achieve their aspiration of owning a newly built home, putting the
business in a good position to satisfy this demand. Demand for new
homes has remained resilient despite the continued challenges
surrounding the Covid-19 pandemic, the UK economy and the
uncertainty relating to the nature of the UK's future global
trading arrangements. The Group's average private weekly sales rate
for the period was c. 38% higher than last year driven by the
strength of the Group's gross sales levels net of slightly higher
cancellation rates. As anticipated, as the wider housebuilding
industry has gradually returned to greater activity, the Group's
market share has started to trend towards more normal levels in
recent weeks, although sales rates remain ahead of the prior
year.
We remain confident that legal completions in the second half of
this year will be at least in line with the second half of 2019,
supported by robust build rates, subject to there being no
significant disruption to the construction industry due to
additional measures introduced to control the pandemic.
Continuing to support our customers
The Group remains committed to improving build quality and
customer service. Specific initiatives from our customer care
improvement plan continue to be embedded across the business and
are delivering the anticipated improvements in the quality of our
new homes and the service levels we provide.
The development of "the Persimmon Way", the consolidation of the
Group's 'end to end' approach to new home construction, aims to
ensure that we deliver good quality homes consistently to all of
our customers. The implementation of the Persimmon Way has
progressed well and it remains on track to be operational across
the Group by the end of the year.
We continue to put customers before volume and are focused on
ensuring that our build programmes allow for consistent and
effective quality assurance processes across all of our development
sites. Additional quality assurance of our construction approach
will be obtained through external audit processes which will be in
place for implementation through 2021.
Persimmon's unique Homebuyer Retention Scheme has been utilised
by 47% of our private new home customers since 1 July 2020 and is
helping to drive cultural change within the business. We are
pleased that the Consumer Code for Housebuilders has highlighted
this industry leading scheme as an area of good practice in
relation to customer service.
Responding to feedback, the Group continues to invest in
improving its communication with customers and our comprehensive
customer portal, which will provide support from the point of
reserving a new home, is currently being rolled out.
These initiatives are driving improvements in our build quality
and customer service. The Group's current HBF customer satisfaction
score for surveys performed from 1 October 2019 to 30 September
2020 is 89.8% (1) and has been trending ahead of the five star
threshold since January 2020.
In the current environment, FibreNest, the Group's ultrafast,
full fibre broadband service, is more important than ever for our
customers as they rely on the service to work from home or access
essential services online. FibreNest, which is highly rated by our
customers, now serves c. 9,800 new homes across 170 of our
developments.
Continuing to support our communities
Persimmon plays an important role in providing much needed
homes, job opportunities and wider support to our local
communities.
The Group's affordable price points provide 'homes for all' and
access to the housing market for customers wanting to move into
their first home. Our private average selling price of GBP246,208
at 30 June 2020 (2019: GBP242,912) is c. 19% (2) below the UK
national average and approximately 50% of our private home
completions for the ten months to 31 October 2020 have been to
first time buyers. In addition to providing new homes, our
activities support a directly employed workforce of c. 5,000 and a
further c. 50,000 (3) jobs across our communities and within our
wider supply chain.
The Group also plays a wider part in the communities it serves.
The Group's 'Building Futures' campaign which, in conjunction with
Team GB, supports community projects that benefit young people
across the UK in the areas of sport, education and arts and health,
has donated over GBP1m in 2020. As part of the campaign, a public
vote was held to select 96 finalists from more than 2,000 nominated
charities. The finalists received a total of c. GBP940,000 with the
top three winners in each category receiving GBP100,000, GBP50,000
and GBP20,000 donations respectively. Beneficiaries included
hospital charities, local sports groups, eco activity centres and
refugee support groups. Further information can be found at
https://www.persimmonhomes.com/building-futures . In addition, our
Community Champions campaign had donated c. GBP685,000 in the ten
months to 31 October 2020 including supporting charities that
assist the over-70s, a group that has been particularly affected by
the pandemic.
Persimmon's important contribution to the creation of job
opportunities and its Building Futures and Community Champions
campaigns were recognised recently by the Social Mobility Pledge,
which the Group is a signatory to.
Continuing to support our environment
Persimmon is determined to contribute positively to the
achievement of the Government's ambition to find an effective
solution to delivering low carbon homes that are affordable 'for
all'.
The Sustainability Committee continues to make good progress in
implementing the Group's strategy of ensuring that the business
delivers longer term sustainable benefits for all stakeholders. It
has recently engaged an independent expert to assist in setting a
science based carbon reduction target. This will provide a clear
pathway to identify further opportunities to reduce the Group's
greenhouse gas emissions and contribute to global climate change
efforts.
Regional environmental champions have been appointed to
implement and enhance the Group's environmental policies and
procedures across all developments, providing increased investment
and resource to this important area.
Careful management of the housing cycle
The Group's established strategy, implemented over many years,
of minimising financial risks and deploying capital at the right
time, recognises the cyclical nature of the UK housing market and
ensures the business is well positioned to face periods of
uncertainty.
During the year the Group has remained cautious in its
assessment of potential land opportunities, judging each purchase
against strict criteria, bringing c.1,700 new plots of land into
the business. The Group spent c. GBP260m in the ten months to 31
October 2020, including payment of deferred land commitments.
The Group held c. GBP960m of cash at 31 October 2020 and had
deferred land commitments of c. GBP325m. Of the Group's current
land creditors c. GBP70m is to be paid by 31 December 2020
resulting in an estimated GBP255m remaining at the end of the year,
supporting the Group's strong liquidity.
In addition, the Group has an undrawn GBP300m Revolving Credit
Facility which has a five year term out to 31 March 2025.
Capital return plan
Given the substantial and immediate uncertainties facing the UK
economy at the onset of the Covid-19 pandemic, in late March, the
Board cancelled the interim dividend for the 2019 financial year
which was to be paid in early April. Remaining mindful of the
challenges facing the UK economy the Board also decided to postpone
the payment of the 2019 final dividend of 110p per share, due to be
paid in early July, to enable the Board to assess the pandemic's
impact on the Group.
Given the progress the business has made in these difficult
circumstances, the Board made a part payment (of 40p per share) of
the postponed final dividend for 2019 in September. In light of the
continued strong performance and in line with the long term
strategic objectives of the Group, which includes recognising the
importance of dividend receipts to pension schemes in supporting
retired workers and their families, the Board is pleased to
announce a second interim dividend of 70p per share which will be
paid on 14 December 2020 to shareholders on the register on 27
November 2020 in satisfaction of the Board's previously indicated
final dividend for 2019. No further dividend payments will be made
in relation to the 2019 financial year.
An update on the Group's capital return plan will be provided in
the Group's 2020 full year results announcement on 3 March
2021.
Strong platform to deliver the homes the country needs
Trading has continued to be strong through the second half of
the year with selling prices remaining firm and the Group's average
weekly private sales rate per site being c. 38% ahead of last year.
Persimmon's c. 305 active outlets (c. 13% lower than last year
reflecting the strong sales rates being achieved) provide a strong
and diverse network of developments across the Group's 31 operating
businesses nationally.
The Group is fully sold up for the current year and has c.
GBP1.36bn of forward sales reserved beyond 2020, 43% ahead of the
prior year (2019: c. GBP0.95bn), with strong rates of build
supporting future delivery.
We believe the longer term fundamentals of the UK housing market
remain favourable. However uncertainties remain including those
posed by further Covid-19 disruption, rising unemployment and the
potential impact of the outcome of trade negotiations with the
European Union and the rest of the world.
Persimmon's strategy of providing good quality homes, delivering
wider community benefits, minimising financial risks and deploying
capital at the right time in the cycle provides a strong platform
to navigate these unprecedented circumstances and continue to
deliver sustainable returns for the benefit of all of the Group's
stakeholders.
We will give a further update on progress and trading, following
the Group's year end, on Wednesday 13 January 2021.
Persimmon will host a conference call with analysts at 9am
today. To participate please use the details below:
Dial in: +44 (0) 20 3003 2666
Passcode: Persimmon
For further information please contact:
Dean Finch, Group Chief Executive Kevin Smith Tel: +44 (0) 7710
815 924
Mike Killoran, Group Finance Jos Bieneman: Tel: +44 (0) 7834
Director 336 650
Persimmon Plc Ellen Wilton Tel: +44 (0) 7921
352 851
Footnotes
1. 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.
2. 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.
3. Estimated using an economic toolkit.
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END
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