TIDMPSN
RNS Number : 4639L
Persimmon PLC
13 January 2021
TRADING STATEMENT - WEDNESDAY 13 JANUARY
Persimmon plc today announces the following update ahead of its
Final Results for the year ended 31 December 2020, which will be
released on 3 March 2021.
Highlights
Dean Finch, Group Chief Executive, commented:
"Against the backdrop of the unprecedented challenges of 2020,
Persimmon produced a robust performance for the year, as we
continued to deliver the new homes the country needs. The Group's
strong second half completions were supported by its advanced build
coming into the year, an agile and effective response to the
Covid-19 pandemic and resilient customer demand. I would like to
take this opportunity to thank my colleagues and our suppliers and
subcontractors for their continued hard work and commitment
throughout this challenging period.
"The health, safety and wellbeing of our customers, our
workforce and our communities has been paramount throughout and all
of the Group's businesses continue to operate in line with our
Covid-secure policies and procedures.
"We continue to improve our customer service and build quality
and I am pleased at the level of commitment I have seen from within
the business to achieving these aims, as recognised in our current
customer satisfaction scores which have been trending ahead of the
5 star HBF rating since January 2020. Looking ahead, we are focused
on delivering further improvement and consistency in the way we
serve our customers and build our homes, whilst reducing our impact
on the environment.
"Recent events have served to further demonstrate the continuing
near term uncertainties arising from the Covid-19 pandemic.
However, we believe that the longer term fundamentals of the UK
housing market remain resilient and I am confident Persimmon will
continue to deliver superior long term value for all of its
stakeholders."
Highlights
2020 2019
New home completions 13,575 15,855
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Average selling price c. GBP230,500 GBP215,709
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Total Group revenues GBP3.33bn GBP3.65bn
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New housing revenues GBP3.13bn GBP3.42bn
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Cash at 31 December GBP1,234m GBP844m
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Current forward sales position GBP1.689bn GBP1.356bn
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Dividend paid in the year 110p per share 235p per share
--------------- ---------------
Trading
Group trading has been robust despite the challenges arising
from the pandemic, including the ongoing increase in the time taken
to progress and complete sales contracts. The robust performance in
the second half of the year, delivering 8,675 new home legal
completions, has mitigated some of the impact of the delays caused
by the initial Covid-19 lockdown period in the first half.
Total Group revenues of GBP3.33bn, (2019: GBP3.65bn) were
generated in the year, with new housing revenues of GBP3.13bn
(2019: GBP3.42bn). New home legal completions of 13,575, (2019:
15,855), include 11,363 new homes sold to private owner occupiers
(2019: 12,463). The Group's average selling price increased by c.
7% to c. GBP230,500, resulting from the 6% higher proportion of new
homes delivered to owner occupiers in our total sales for the year.
The average selling price of new homes sold to owner occupiers
improved by 3.7% to c. GBP250,900 (2019: GBP241,985), largely
reflecting year on year changes in the mix of active sales outlets
and homes sold.
Demand for new homes has remained resilient throughout the
second half with the Group's average weekly sales rate per site
being 39% higher than the second half of last year in part
supported by the temporary adjustment to the Government's stamp
duty regime. The Group's sales in the second half were delivered
from c. 305 active outlets on average through the period (2019: c.
345 outlets). The Group's average weekly sales rate during the
final quarter of the year trended towards more normalised levels
from the elevated rate seen over the summer months, the latter
having been supported by the Group's prior investment in stock and
a degree of pent up demand. As a result, the Group's sales levels
over more recent weeks reflect lower active outlet numbers and some
constraints on stock availability, together with delays to
reservations while first time buyers awaited the opening of the new
Help to Buy scheme on 16 December 2020. The Group's forward sales
at 31 December 2020 were GBP1.689bn, 25% ahead of last year (2019:
GBP1.356bn).
Capital Discipline Maintained
The Group has maintained its disciplined approach to potential
land investment opportunities in line with its long established
strategy, which recognises the cyclical nature of the housing
market, and after exercising caution with regard to the increased
near term uncertainties caused by the Covid-19 pandemic, with the
Group's current active outlet levels and continued strong liquidity
reflecting this approach. The Group spent c. GBP330m in the year on
land investment, including payments of deferred land commitments of
c. GBP220m, and brought c. 6,700 plots of new land into the
business across 33 locations.
The Group's liquidity remains strong. Cash balances of
GBP1,234m, after returning GBP351m to shareholders during the year,
and deferred land commitments of c. GBP330m were held at 31
December 2020, providing further opportunity to invest in the
future growth of the business.
In addition, the Group has an undrawn GBP300m Revolving Credit
Facility which has a five year term out to 31 March 2025.
Covid-19
The wellbeing of our colleagues, customers, and local
communities remains the Group's top priority.
Throughout the first national lockdown period starting in March
2020, 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 in late
April 2020.
The Group has not accessed any of the UK Government's Covid-19
financial support schemes and has no plans to do so.
Our Covid-secure operating procedures, which maintain the
stringent two metre social distancing rules, are embedded across
all of our operations.
During the current phase of tighter restrictions, we remain
confident in our ability to continue to operate safely and
effectively, having further adjusted our existing high level of
Covid secure safe operating procedures throughout the business as
we continue to comply with all relevant regulations. While the
Group has achieved pre-Covid build rates since the end of June
2020, including during all subsequent lockdowns imposed in England,
Scotland and Wales, we recognise the elevated risk to the Group's
planned build programmes presented by the higher transmission rates
of the new variant of the Covid-19 virus. Our regional businesses
are currently managing resource efficiently, to support
productivity where unplanned absences occur, and we remain in close
liaison with our work force and supply chain to address these
increasing operational challenges.
Continuing to support our customers
The Group maintained its focus on improving build quality and
customer service through continued improved communication,
commencing the roll out of a Group wide consolidated approach to
new home construction, "the Persimmon Way", increased
digitalisation and enhanced quality assurance processes.
We continue to put customers before volume to ensure that our
quality assurance processes across all of our development sites
remain effective and that we deliver high quality homes
consistently to all of our customers. External audits of our
processes will be in place for implementation through 2021 and will
further enhance our quality assurance.
The Group's customer portal, which will provide support to our
customers from the point of reserving a new home, is currently
being rolled out. Once fully established, this will facilitate
improved support for all of our customers throughout their two year
warranty period, ensuring that we continue to provide the highest
level of care and support well after they have moved into their new
home.
In the period since 1 July 2020, c. 50% of our private new home
customers have utilised Persimmon's unique Homebuyer Retention
Scheme which continues to drive positive behavioural change within
the business. We actively encourage all of our customers, including
those who do not formally utilise the scheme, to complete a
seven-day inspection review following their moving in day.
We are delighted that our customers are seeing the benefit of
these improvements, with c. 89.8% (1) of customers that have moved
into their new home since 1 October 2019 for the 2019/2020 HBF
survey year saying they would recommend Persimmon to a friend. The
Group has continued to trend ahead of the 90% HBF survey five star
threshold since January 2020.
FibreNest, the Group's ultrafast, full fibre broadband service,
continues to grow, serving c. 11,700 new households across 198 of
our developments. The service, which is highly rated by our
customers, is becoming increasingly important as families rely on
it to support their efforts to work from home and to access
essential services online.
Our communities
The Group continues to deliver "homes for all" providing a range
of house types at affordable price points and access to the housing
market for customers wanting to move into their first home. Our
private average selling price of c. GBP250,900 for the year to 31
December 2020 (2019: GBP241,985) is c. 16% (2) below the UK
national average and approximately 50% of our private home
completions for the year have been to first time buyers.
The Group is Industry lead to the Social Mobility Pledge, which
encourages businesses to boost social mobility in the UK, and a
signatory to the Covid-19 Business Pledge supporting colleagues,
customers and communities through the pandemic crisis.
Persimmon recognises the importance of the wider role it has to
play in its communities. The Persimmon Foundation'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. Further information can be found at
https://www.persimmonhomes.com/building-futures . In addition, our
Community Champions campaign donated c. GBP740,000 in the year
including supporting charities that assist the over-70s, a group
that has been particularly affected by the pandemic.
Minimising our environmental impact
Persimmon is committed to playing its part in reducing
greenhouse gas emissions. Significant progress is being made to
establish the Group's science based carbon reduction targets,
assisted by an independent expert, covering emissions from our
operations, our homes and our supply chain. These targets will
follow the latest criteria and recommendations of the Science Based
Target initiative (3) and will be externally accredited. Setting
these targets will further support our actions in achieving
measurable improvements in activities across our operations
designed to reduce carbon emissions by all stakeholders in the
business. In addition, we are progressing our work to identify a
pathway to deliver net zero carbon homes for our customers, through
our 'low carbon homes' steering group and through engagement with
the wider industry.
The Group's five regional environmental champions continue to
develop Persimmon's Construction Environmental Management systems
together with the development of environmental performance measures
for on-site inspections.
Strong platform to deliver the homes the country needs
The Group has a strong record of managing the housing cycle
through a long established strategy of minimising financial risk
and disciplined capital investment at the right time in the cycle,
acquiring high quality land to deliver the new homes required to
fulfil the housing needs of local communities whilst generating
robust liquidity. This strategy ensures that the Group remains
resilient and maintains the appropriate levels of working capital
investment to generate and secure superior long term sustainable
returns for all of our stakeholders.
A total forward sales value of GBP1.689bn at 31 December 2020
(2019: GBP1.356bn) provides Persimmon with a strong platform as we
enter 2021. The Group currently has c. 300 active sales outlets
(2019: c. 350 outlets) reflecting the Group's capital discipline
and the strong sales rate seen through the second half of 2020.
Approximately 10 sites are under construction awaiting their first
sales release and we plan to open a further c. 50 new sites in the
first half of the year, providing further strength to the Group's
diverse outlet network.
The recovery of the Group's build rates to pre-Covid levels from
the end of June 2020 supported the delivery of new homes to our
customers in the second half of 2020. The Group's level of work in
progress of c. 5,600 equivalent units of new home construction at
31 December 2020 is 8% lower than last year (2019: c. 6,100
equivalent units) due to the combined effect of the Covid-19
associated disruption in the first half of 2020 together with the
reduction in the number of active sales outlets. As we move into
2021 the Group remains focused on achieving similarly strong levels
of build and managing the increased operational challenges caused
by the Covid-19 pandemic.
On entering the third phase of tighter Covid-19 restrictions,
whilst recognising the commencement of the nation-wide vaccine
rollout, the uncertainties surrounding the potential impact of the
pandemic remain, particularly with regard to unemployment levels
and consumer confidence. We are also mindful of the potential
impact of an end to the stamp duty holiday.
In addition, whilst the completion of the free trade agreement
between the UK and the EU has relieved some immediate concerns,
including regarding increased customs duties on supplies imported
from the EU, the broader impact of these new trade arrangements has
yet to be seen.
Despite the impact of the unprecedented events of 2020, the
levels of customer interest Persimmon has experienced, particularly
through the second half of the year, demonstrate the resilient
demand for new homes which has been supported by the Government
response to the pandemic and the Group's positioning in its
markets. The Group's strategy, which is designed to help mitigate
the impact of downside risks to the housing cycle, provides the
robust platform required to continue to generate superior long term
value for the benefit of all stakeholders in the business.
We will give an update on our assessment of the housing market
over the early weeks of 2021 when we announce our results for the
year ended 31 December 2020 on Wednesday 3 March 2021.
Persimmon will host a conference call with analysts at 9 am
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 Kevin Smith Tel: +44 (0) 7710
Executive 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. SBTi Criteria and Recommendations v4.1:
https://sciencebasedtargets.org/wp-content/uploads/2019/03/SBTi-criteria.pdf
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