REG - Persimmon Plc - Full Year Results
11/03/2025 07:15
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RNS Number : 0906A Persimmon PLC 11 March 2025
FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
Delivering growth
Persimmon Plc today announces Final Results for the year ended 31 December
2024.
Financial Highlights
2024 2023 Change
New home completions 10,664 9,922 +7%
New home average selling price £268,499 £255,752 +5%
New housing revenue £2.86bn £2.54bn +13%
Underlying operating profit(1) £405.2m £354.5m +14%
Underlying operating margin(2) 14.1% 14.0% +10bps
Underlying profit before tax(1) £395.1m £359.4m +10%
Underlying return on average capital employed(3) 11.1% 10.5% +60bps
Dividend per share 60p 60p -%
Cash at 31 December £258.6m £420.1m £(161.5)m
Statutory measures:
Total Group revenue £3.20bn £2.77bn +16%
Profit before tax £359.1m £351.8m +2%
Operational highlights:
Land holdings at 31 December - plots owned and under control 82,084 82,235 -%
Number of selling outlets at 31 December 270 258 +5%
Current private forward sales position(4) £1.15bn £0.90bn +27%
Customer satisfaction score(5) 96.0% 92.9% +310bps
· 7% increase in completions to 10,664
· 14% increase in underlying operating profit and underlying
operating margin of 14.1% (2023: 14.0%)
· Improved net private sales rate of 0.70 per outlet per week up from
0.58 in 2023. Excluding bulk sales, net private sales rate of 0.59, up 5%
on the prior year (2023: 0.56)
· Customer satisfaction score improved to 96.0% (2023: 92.9%);
continued five-star HBF rating
· 13,064 plots achieved detailed planning consent in the year, a 21%
improvement and significantly above industry trends
· £1.55bn disciplined land investment in last three years
supporting future outlet growth
· 12% increase in underlying EPS to 92.1p(1)
Current trading and outlook
We entered 2025 with an improved forward order book and have continued to add
to it since the start of the year. In the first nine weeks of 2025, our net
private sales rate per outlet per week was 0.67, up 14% compared to the same
period last year (2024: 0.59). Combined with a 3% increase in the private
average selling price to £288,542 (2024: £279,282), our current private
forward order book is £1.15bn, 27% higher year on year (2024: £0.90bn).
Given this progress in our forward order book and an anticipated increase in
the delivery of affordable homes, we are targeting 11,000-11,500 completions
in 2025. Alongside this we are targeting further growth in profit and returns,
in line with market expectations, and an improved underlying operating margin
in 2025. Although we are mindful of the potential impact from ongoing
macroeconomic and geopolitical uncertainties, the underlying market
fundamentals remain strong. Persimmon is well positioned to benefit from our
disciplined investment in land and operational improvements of recent years.
Our medium-term ambition is to deliver an underlying operating margin and ROCE
of 20%.
Dean Finch, Group Chief Executive, commented:
"Persimmon's disciplined investment and significant operational improvements
in recent years has created a stronger business. This is demonstrated by our
growth in 2024, with completions, outlets and profit all up. The underlying
market fundamentals remain strong and we are encouraged by the further
improvement in our sales rates in the early weeks of this year. The
Government's welcome planning reforms and pro-housebuilding agenda demands
more of the high-quality, affordable homes which are Persimmon's core
strength, providing a positive tailwind.
With our strong platform in place, we are targeting further growth this year
and are confident the business will grow margins, returns and shareholder
value over the medium term."
Footnotes
1 Stated before net exceptional charge (2024: £34.4m; 2023: £nil), and
goodwill impairment (2024: £1.6m; 2023: £7.6m).
2 Stated before net exceptional charge (2024: £34.4m; 2023: £nil),
and goodwill impairment (2024: £1.6m; 2023: £7.6m) and based on new housing
revenue.
3 12 month rolling average calculated on operating profit before net
exceptional charge (2024: £34.4m; 2023: £nil), and goodwill impairment
(2024: £1.6m; 2023: £7.6m).
4 2024 figure as at 2 March 2025; 2023 figure as at 3 March 2024.
5 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.
For further information please contact:
Victoria Prior, Group IR Director Elizabeth Snow, Teneo
Anthony Vigor, Group Director of Strategic Partnerships
and External Affairs
Persimmon Plc persimmon@teneo.com
Tel: +44 (0) 1904 642199 Tel: +44 (0) 7912 540 246
There will be an analyst and investor presentation at 09.00 today, hosted by
Dean Finch, Group Chief Executive and Andrew Duxbury, Chief Financial Officer.
Analysts unable to attend in person may listen live via webcast using the link
below. All participants must pre-register to join the webcast. Once
registered, an email will be sent with important details for this event, as
well as a unique Registrant ID. This ID is to be kept confidential and not
shared with other participants.
Live webcast: https://edge.media-server.com/mmc/p/sovwpads
(https://edge.media-server.com/mmc/p/sovwpads)
An archived webcast of today's analyst presentation will be available from
this afternoon on www.persimmonhomes.com/corporate
(http://www.persimmonhomes.com/corporate) .
CHAIRMAN'S STATEMENT
Introduction
I am delighted that the Group's results deliver on our ambition of a strong
return to growth in 2024, with a 7% increase in completions and a 10%
improvement in underlying profit before tax(1). But more importantly, I
believe they mark the start of an exciting new growth phase for Persimmon.
Over the past few years, we have been clear that we needed to be building
five-star homes that met or exceeded our customer expectations. We needed to
build them safely and we needed to leverage our in-house supply chain
effectively while continuing to buy land at the right price to increase the
number of outlets we have open. I believe 2024 marked the turning point with
good progress across the board, and we have achieved this whilst maintaining a
strong balance sheet.
At Persimmon, we have three fundamental principles. First, we will protect our
robust balance sheet and maintain a disciplined approach to investment in
land. This, coupled with the significant improvements in our operational
capabilities, has positioned the business for success over the next housing
cycle.
Second, our commitment to build quality and customer care has improved both
our brand and reputation in a highly competitive market. I am proud of our
team's dedication and progress as evidenced by further improvement in our
customer satisfaction score and the achievement of a five-star HBF rating for
the third year in a row.
Third, vertical integration remains a key advantage and differentiates us from
our peers. These key capabilities provide us with security of supply and
support our drive to deliver high-quality, affordable homes consistently and
cost efficiently, as demonstrated by our industry-leading margins.
These core elements to Persimmon's approach are reinforced by our recent
disciplined investment in land, complemented by the current Government's
pro-housebuilding agenda. The recent, and very welcome, planning reforms are
creating a positive tailwind on the supply side, providing additional momentum
towards our ambition of growing our outlets to at least 300.
With a greater focus on our three well positioned brands, we have the
opportunity to drive further growth as this enhanced diversification for the
Group caters to different customer segments.
Persimmon is well placed to drive further growth, delivering strong financial
performance and value for our shareholders. I would like to thank all our
employees and subcontractors for their dedication and hard work, which have
been instrumental in driving our success.
Industry leadership
I am proud to reaffirm our unwavering commitment to our building safety
remediation programme and we are delivering ahead of the Government's
Remediation Acceleration Plan timetable. The proactive measures taken in
addressing our building safety remediation have meant we have completed or
started works on over 70% of known developments or over 80% of our accepted
buildings and are on track to be on site at all developments by the end of
2025. We anticipate completing remediation works on the majority of the
outstanding developments over the next two years.
During the year, the Board were pleased to meet with Dame Judith Hackitt, the
former Chair of the Independent Review of Building Regulations and Fire
Safety, to discuss our approach to building safety.
Shareholder returns
Our Capital Allocation Policy balances cash returns to shareholders with
business investment for future growth. For 2024, the Board proposes a final
dividend of 40p per share, payable on 11 July 2025 to shareholders on the
register at 20 June 2025, following shareholder approval at the AGM. This
dividend, combined with the interim dividend of 20p per share paid in November
2024, totals 60p per share for the 2024 financial year.
Board changes
We were delighted to welcome Andrew Duxbury as CFO in June 2024. Andrew is
already making a significant contribution to the business and brings a wealth
of experience to the team.
Additionally, Paula Bell and Anand Aithal joined the Board as Non-Executive
Directors in September 2024 and January 2025 respectively. Paula has an
extensive background in finance and strategic planning, which will help
support the financial performance and strategic growth of the Company. Anand
is an entrepreneur who brings significant experience in digital transformation
and innovation, as well as Government relations, which will be invaluable as
Persimmon continues to modernise its operations. The Board and I look forward
to working with them both. We bid farewell to Shirine Khoury-Haq, who departed
from the Board in September 2024 to focus on her Executive role, having served
on the Persimmon Board for three years. We extend our thanks and best wishes
to Shirine in her future endeavours.
In conclusion
We believe we are well positioned for the future. This is as a result of the
land and planning investments we have made in recent years, our vertical
integration capabilities, and our excellent teams. This investment, coupled
with the Government's ambitious planning reforms, should drive more of the
high-quality, affordable homes which are Persimmon's core strength, thus
supporting our long-term growth ambitions.
1 Stated before net exceptional charge (2024: £34.4m; 2023: £nil),
and goodwill impairment (2024: £1.6m; 2023: £7.6m).
CHIEF EXECUTIVE'S REVIEW
Delivering growth
Persimmon benefits from a strong balance sheet and a secure and growing
pipeline of outlets, complemented by longer-term strategic land positions. Our
decisions to sustain disciplined investment in new land, enhance sales and
marketing, improve build quality and customer service and extend the
efficiency benefits of our vertical integration have enabled us to build a
better and more sustainable business. Our return to growth in 2024, with a 7%
increase in completions and 14% improvement in underlying operating profit(1),
demonstrates the success of our approach.
We are well placed to capture further opportunities. The Government's planning
reforms and ambitious pro-house building agenda, coupled with our strong land
bank and enhanced planning approach, support our aim of operating from at
least 300 outlets. Further investment in our digital marketing platforms and
the targeted expansion of our three brands - each well positioned at the
affordable end of their respective markets - will enable us to further
increase volumes, driving growth and financial returns. A new automated
production line in our Space4 timber frame factory will further enhance build
efficiency and mitigate anticipated industry skills shortages. A second timber
frame factory, together with innovations such as a brick facade product and
construction management digitisation, will provide further efficiency
benefits.
I am really proud of the Persimmon team for its dedication and hard work in
recent years in positioning our business for sustained growth and success. I
am pleased to welcome Iain McPherson as our new UK Manging Director and would
like to thank Paul Hurst for his 28 years of dedicated service.
Persimmon has built a platform for longer-term growth, well placed to drive
further margin improvement and enhanced returns.
Trading performance
Our stated ambition was to capitalise on our enhanced operational capabilities
and leverage our investment in land to return to growth as quickly as
possible. These results demonstrate the success of this strategy as we
delivered 10,664 new homes in the year (2023: 9,922). Enhanced sales and
marketing led to a net sales rate of 0.70 per outlet per week which included a
0.13 per outlet per week contribution from bulk sales (2023: 0.07) as we took
advantage of the growing institutional investor and Build to Rent ('BTR')
market. Since the 2024 spring selling season, customer enquiries and sales
rates have been consistently ahead of the prior year. Private average selling
prices on reservations increased as the year progressed with incentives
controlled at c.4.5% per gross reservation (2023: c.4.0%).
We are pleased to have achieved an underlying operating margin(2) of 14.1%
(2023: 14.0%). Our vertical integration and operational efficiencies enabled
us to mitigate the substantial impact of embedded build cost inflation coming
into the year. These unique capabilities have helped underpin the margin
performance and will help drive further growth.
Improving sales effectiveness
The benefit of our investment in our sales and marketing platforms and teams
is evident in a 34% increase in website visitors and a 26% growth in enquiries
in the year. This increased interest helped drive an improved net private
sales per outlet per week of 0.70 (2023: 0.58), 0.57 excluding bulk sales
(2023: 0.50).
We have three strong brands across the business in Persimmon Homes, Charles
Church and Westbury Partnerships, providing diversification and the ability to
realise our assets more efficiently. This strategy broadens our customer pool,
with each brand's ambition to be the leading provider of value in their
respective markets.
We have reinvigorated the Charles Church brand with an enhanced specification
which will drive increased value for the business. Charles Church saw a 31%
increase in private completions in the period demonstrating the initial
progress we've made in capturing the demand in this market. Our newly promoted
Deputy UK Managing Director will drive the brand's further growth.
We completed 1,456 bulk sales to investors in the period (2023: 780) and
continue to expect this segment of the market to contribute c.10-15% of our
future volume. Savills reported £5.1bn of investment in the BTR market in
2024, of which c.50% was for single family housing(3). With the institutional
investor and BTR markets presenting a large and growing opportunity, we will
continue to develop long-term relationships to secure sales that enhance
capital returns and accelerate delivery.
The Government has an ambitious affordable homes programme, and we expect this
to be a growing market in the coming years. Our new UK Managing Director has
significant experience in this market, complementing our improved
relationships in this segment of the market. We anticipate growing our
affordable homes delivery in 2025 with nearly all units secured for the year,
demonstrating the benefit of our proactive engagement with housing
associations and local authorities.
Continued focus on build quality and safety
Our improvements in customer service and build quality have ensured that
prospective purchasers continue to choose Persimmon in a highly competitive
market. Recent investment in digitisation of on-site build processes is
helping drive further improvement in build quality and efficiency, health and
safety management and engagement with our customers.
The results of these improvements are clear. We have further improved our HBF
eight-week customer satisfaction score(4) to 96.0% (2023: 92.9%), having
maintained our five-star HBF rating for the third consecutive year. Reportable
items improved by 7% to 0.26 in 2024 (2023: 0.28); this equates to a 60%
improvement from the position in 2019. These efforts were also acknowledged in
the industry's Pride in the Job Awards, where 19 sites received awards in
2024, more than double the number in 2023 and Persimmon's best results in at
least a decade.
I am pleased that we continue to make good progress on our building safety
remediation programme, ahead of the Government's Remediation Acceleration Plan
targets. We have completed works or are on site at 73% of known developments
or 82% of accepted buildings, with the remainder expected to be on site by the
end of the year. Further detail is provided in the Financial Review.
Land and planning success
We made a strategic decision to continue to invest in land in recent years at
the right point in the cycle. Savills Greenfield Development Land Index(5)
fell 9% from September 2022 to March 2024, with our disciplined investment in
this period helping secure the strong embedded margins within our land bank.
In the year, we successfully brought 13,404 plots into our owned and under
control land holdings, a replacement rate of 126%.
We have continued to focus on actions we can take to address challenges in the
planning system to improve our performance. In the period, we secured detailed
or reserved matters planning for 13,064 plots, reflecting a 21% increase from
the previous year (2023: 10,809) and representing 123% of 2024 completions,
demonstrating the success of this approach. The Government's revision of the
National Planning Policy Framework will provide further helpful momentum in
coming years.
Our approach is to proactively engage local authorities and find innovative
solutions to address challenges. For example, our Anglia business developed
its own nature-based nutrient mitigation solution at Guist, Norfolk, to treat
both phosphates and nitrates. This solution will allow us to bring forward
c.1,000 plots across three sites in a more timely and cost-effective manner
than available alternatives.
Our sustained, disciplined investment in land and planning approval success
positions the business for future growth. We ended the period with 270
outlets, a 5% increase from the previous year (2023: 258 outlets) against a
backdrop of industry decline. We have a strong pipeline of new outlets to open
in 2025 and remain on track to achieve our target of at least 300 outlets.
Vertical integration providing efficiency and resilience in supply
Our Brickworks, Tileworks and Space4 factories are a differentiator and
continue to provide a secure supply of cost-effective, high-quality materials
to the business. We estimate that where we use our own bricks, tiles and
timber frames we save up to £5,500 per plot, insulating us from supplier cost
increases and providing a positive contribution to margin. In 2024, we sourced
56% of our brick (2023: 54%) and 85% of our roof tiles (2023: 81%) from our
in-house factories.
Innovation will be key to the delivery of our growth and build efficiency
ambitions. Anticipated skills shortages present a challenge to the whole
industry particularly considering the Government's ambitious growth targets.
New techniques that significantly shorten build times provide an opportunity
for further efficiency gains and factory-assured high quality. Timber frame
has a crucial role to play as it reduces the demand for scarce labour and
typically shortens our build times by around eight weeks. This is why we have
continued to invest in our existing Space4 factory, beginning the installation
of a new automated line in early 2025 to further improve productivity,
efficiency and quality of our timber frame product. We anticipate commencing
work on our second Space4 factory in Loughborough this year, to further
increase our capacity and range of timber frame products. We have also piloted
further innovation, such as the combined use of our timber frame with the
Mauer brick facade product. The combination of timber frames produced in our
new factory and the Mauer facade provides the opportunity for a significant
step-up in housing output, while securing additional savings through lower
off-site manufacturing costs and even faster build times.
Current trading and outlook
We entered 2025 with an improved forward order book and have added to it
further since the start of the year. In the first nine weeks of the year our
net private sales rate per outlet per week was 0.67, up 14% compared to the
same period last year. The private average selling price in the current order
book is up 3% compared to last year. Together, these improved sales rates and
average selling prices means our current private forward sales position is
£1.15bn, 27% higher year on year (2024: £0.90bn).
With this progress in our forward order book, alongside an anticipated
increase in the delivery of affordable homes, we are targeting 11,000-11,500
completions for 2025. With the ongoing benefit of our improved operational
capabilities and disciplined investment in our land holdings, we are on track
to deliver further growth in profit and returns and an improved underlying
operating margin again this year.
We are mindful of the ongoing macroeconomic and geopolitical uncertainties and
their potential impact on delivery. The timing of any future interest rate
changes is likely to impact prevailing customer confidence. Government policy
and regulatory changes, such as the National Insurance increase and proposed
Building Safety Levy, are adding costs to the business. We will continue to
mitigate their impact through our relentless focus on cost control and
efficiency, and we expect to be able to restrict build cost inflation to low
single digits in the year.
The underlying market fundamentals remain strong and Persimmon's disciplined
investment and operational improvement in recent years, mean we are confident
the business will grow margins, returns and shareholder value over the
medium-term. Our enhanced approach to planning is already helping to convert
our sustained investment in land into new outlets and supports our target of
at least 300 outlets. Our disciplined land buying incorporates the new
regulations such as Future Homes Standard, Building Safety Levy, nutrient
neutrality and Biodiversity Net Gain to preserve embedded margins.
Our investment in new technology is enhancing our sales and marketing, both
driving greater customer interest and enhancing conversion rates. Our on-site
digitisation has already secured operational, commercial and quality
improvements and efficiencies, with more opportunities ahead. Enhanced
automation in both our existing and new timber frame factories, coupled with
innovations such as the combination with a brick facade product, means we have
significant further build efficiency opportunities ahead.
With three strong brands, each positioned as good value products in their
respective markets, we are well placed to increase volumes and returns. With
this volume growth delivered efficiently given our investment and operational
improvements, our overhead leverage will improve further strengthening our
margin. Taken together we believe we are well placed to deliver a medium-term
margin and ROCE ambition of 20%, driving increasingly stronger shareholder
returns.
Footnotes:
1. Stated before net exceptional charge (2024: £34.4m; 2023: £nil), and
goodwill impairment (2024: £1.6m; 2023: £7.6m).
2. Stated before net exceptional charge (2024: £34.4m; 2023: £nil), and
goodwill impairment (2024: £1.6m; 2023: £7.6m) and based on new housing
revenue.
3. Savills UK | UK Build to Rent Market Update - Q4 2024.
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. Savills Greenfield Index.
FINANCIAL REVIEW
The Group operates with a very strong balance sheet and delivered an improved
financial performance, and growth in volume of new homes, as a result of our
disciplined and strategic financial investment into the business.
Trading
The Group generated total revenue(1) of £3.20bn (2023: £2.77bn), with new
housing revenue 13% higher than 2023 at £2.86bn (2023: £2.54bn).
In total, the Group delivered 10,664 new homes in 2024, 7% higher than in the
prior year (2023: 9,922), at a blended average selling price up 5% at
£268,499 (2023: £255,752).
Of these, 9,075 homes were delivered to private customers, an increase of 18%
on last year (2023: 7,681) and representing 85% of total completions (2023:
77%). This greater weighting towards private sales reflects a more typical
completion mix, after accelerating delivery of affordable homes in 2023 when
private market conditions were weaker. The private average selling price of
£287,162 was marginally up on the prior year (2023: £285,774) reflecting
the strength of the market in some of our regions, offset by an increased use
of incentives and an increase in the number of plots sold to investors. During
the year, we completed the sale of 1,456 homes to investors, up from the 780
delivered last year, as we continue to strengthen our strategic relationships
in this increasingly important part of the market.
The Group delivered a further 1,589 new homes to housing associations (2023:
2,241) at an average selling price of £161,916, 6% higher than the prior year
(2023: £152,852). We are aware of the financial challenges facing many
registered providers, and the impact on their ability to bid for s106 housing
plots, and so are pleased that we have nearly all of our expected s106 housing
delivery for 2025 already secured.
The Group's performance continues to be supported by our high-quality land
portfolio, with land cost recoveries(2) of 11.9% of new housing revenue for
the year (2023: 11.7%). The small increase in the year reflects the mix of
completions and has resulted in a small decrease in the Group's underlying
gross margin(3) to 20.3% from 20.5% last year. As a percentage of new housing
revenue, build and other direct costs were flat year on year.
The Group's underlying gross profit(4) for the year increased by 12% to
£582.4m (2023: £520.1m). The Group's reported gross profit for the year is
£580.4m (2023: £520.1m) after exceptional items, as described below.
The Group has maintained its focus on cost control and has been able to
increase its operating margin in the year. Underlying operating profit(5) for
the Group increased 14% to £405.2m (2023: £354.5m), generating an underlying
operating margin(6) of 14.1% (2023: 14.0%). On a reported basis operating
profit increased 6% to £369.2m (2023: £346.9m) including the net exceptional
charge described below.
The Group has reported a net exceptional charge of £34.4m (2023: £nil).
This includes a net exceptional charge within gross profit of £2.0m (2023:
£nil) in relation to the anticipated costs of the Group's commitments to the
costs of removal of combustible claddings and other fire related remediation
works (see below). The Group also recognised an exceptional charge of £25.0m
in relation to the impairment of its investment and long-term loan notes in
TopHat Enterprises Limited, which writes down the value of the investment and
long-term notes to £nil, as well as a charge of £7.4m relating to costs
incurred on professional fees associated with one-off projects, including for
prospective M&A opportunities and the ongoing CMA investigation. These
have been classified as exceptional given they are non-recurring in nature.
Further detail is provided in note 4 to the financial information.
Net finance cost for the year was £10.1m (2023: £4.9m net finance income)
being a result of lower average cash balances, increased utilisation of our
£700m Revolving Credit Facility ('RCF'), £3.8m of imputed interest payable
on land creditors (2023: £6.0m) and £7.4m of imputed interest payable on the
legacy buildings provision (2023: £4.0m).
The Group generated an underlying profit before tax(5) of £395.1m (2023:
£359.4m), and a reported profit before tax of £359.1m (2023: £351.8m).
The Group has an overall tax charge of £92.0m for the year (2023: £96.4m)
and an effective tax rate of 25.6% (2023: 27.4%), lower than the standard rate
of 29.0% (including both corporation tax and the Residential Property
Developers Tax) (2023: 27.5%). The lower rate was driven by deductions arising
from the finalisation of prior year tax returns, including one-off items in
respect of the treatment of building safety remediation provisions, and we
anticipate the rate reverting towards the standard rate in the future.
Underlying basic earnings per share(5) for the year was 92.1p, 12% higher than
the prior year (2023: 82.4p). Reported basic earnings per share was 5% higher
than last year at 83.6p (2023: 80.0p).
Underlying return on average capital employed ('ROCE') including land
creditors was 11.1%(7), higher than the prior year (2023: 10.5%) reflecting
the increase in underlying operating profit(5) in the year. ROCE excluding
land creditors was 12.2%(7) compared with 11.8% at 31 December 2023. On a
statutory basis, ROCE including land creditors was 10.1%(7) (2023: 10.2%).
Building safety
The Group has committed to make progress on its building safety remediation
programme, as well as investing in future building quality. Our work has been
recognised by our membership of the Building Safer Future Charter.
Across our legacy building programme, we continue our proactive approach of
working with management companies, factors (in Scotland) and their agents to
carry out necessary remediation as soon as possible. The table below sets out
our detailed position at 31 December 2024, compared to 31 December 2023.
Of the total of 83 developments in our programme, 40 (48%) have already had
any necessary works completed. Of the remaining 43
developments, 21 currently have work on site and 22 are at varying stages
of pre-tender, live tender, progressing to contract or agreed contract and
works starting very soon. As we actively progress the programme the number of
developments at or before the tender stage has reduced by 37% to 10; and the
number of developments on site or completed has increased 9% to 61.
Identified developments As at 31 December 2024 As at 31 December 2023
Recently made aware and under investigation 1 2
Pre-tender preparation ongoing 9 8
Live tender process - 6
Sub-total: progressing through tender 10 16
Progressing to contract 8 7
Contracted but works yet to start 4 3
Sub-total: pre-works starting 22 26
Currently on site 21 17
Sub-total: to complete 43 43
Completed developments 40 39
Total identified developments 83 82
Cash expenditure in the year £58m £46m
31 December provision £235m £283m
During the year, the provision has been increased by £25.0m, following a
review of the projected costs to complete rectification work, partly offset by
the recoverability of £23.0m of VAT applicable to certain costs resulting in
a net £2.0m increase in the provision. Due to the non-recurring nature of
these changes, they have been disclosed as exceptional items to support the
understanding of financial performance and improve the comparability between
reporting periods.
We spent £58.1m on the programme in the year, with total aggregate
expenditure now over £120m, whilst a further £7.4m of imputed interest was
charged to the income statement through finance costs. The remaining provision
at 31 December 2024 was £235.3m and the next 24 months are projected to be
the peak period of cash expenditure on this programme. Given our own proactive
approach, and the sustained significant publicity around cladding and building
safety, we do not anticipate substantial new building additions into the
programme.
Competition and Markets Authority ('CMA')
On 26 February 2024, the CMA launched an investigation under Chapter I of the
Competition Act 1998 into suspected breaches of competition law by eight
housebuilders, including Persimmon, relating to concerns that it may have
exchanged competitively sensitive information. On 10 January 2025, the CMA
extended the timeline for the initial investigation by five months to May
2025. The Group continues to cooperate with the CMA in relation to its ongoing
market investigation into alleged anti-competitive conduct by housebuilders.
Balance sheet
Total equity increased by £0.09bn to £3.51bn at 31 December 2024 (2023:
£3.42bn). This is after returning £191.8m of capital to shareholders through
a final dividend of 40p per share in respect of the 2023 financial year and an
interim dividend of 20p per share for the 2024 financial year. Retained
earnings increased to £2.94bn (2023: £2.85bn). Reported net assets per share
of 1,096p represents a 2% increase from 1,070p at 31 December 2023.
Land holdings
A core strength of the business remains its disciplined approach to land
replacement. Over the last three years we have maintained our selective land
purchase strategy, positioning us well for the future as we look to grow our
outlet position. At 31 December 2024, we had 270 outlets, 5% higher than 31
December 2023, and remain on track to increase outlets in 2025 as we position
the business for further growth.
At 31 December 2024, the carrying value of the Group's land assets increased
by 8% to £2,266m (2023: £2,104m), reflecting continued investment in the
Group's future and our ongoing focus on converting owned land with outline
planning permissions to implementable consents. The Group's land cost
recoveries for the year of 11.9%(2) of new housing revenue is 20bps higher
than the prior year, reflecting the mix of completions in the year, and
remains an excellent position.
During the year, the Group brought 13,404 plots into its owned and under
control land holdings across 58 locations throughout the country, of which
7,591 (57%) were converted from our strategic land portfolio.
At the end of the year, the Group had owned and under control land holdings of
82,084 (2023: 82,235) representing 7.7 years of forward supply at 2024
volumes. Owned plots totalled 69,189 (2023: 66,742) of which 40,430 have a
detailed implementable planning consent, a 5% year on year increase, providing
excellent visibility. The Group's owned land holdings represent 6.5 years of
forward supply at 2024 volumes, with an overall pro-forma site gross margin(8)
of c.29% (2023: c.29%) and a land cost to revenue ratio of 11.9%(9) (2023:
11.5%) which provides good confidence for future margin progression.
In addition to its owned plots, the Group controls 12,895 plots (2023: 15,493)
through exchanged contracts. These contracts to acquire the site will be
completed once all outstanding unfulfilled planning conditions have been
satisfied. Cash invested in these under control plots is limited to deposits
paid on the exchange of contracts and fees associated with progressing the
sites through the planning system. During the year, the Group secured detailed
or reserved matters planning for 13,064 plots (2023:10,809).
The Group incurred net land spend of £437.0m during 2024 (2023: £397.8m),
including £210.6m of payments in satisfaction of deferred land commitments
(2023: £253.0m).
In 2024, the Group acquired interests in a further c.6,900 potential plots of
strategic land opportunities resulting in a total of c.70,000 plots at 31
December 2024 (2023: c.79,500 plots). This will provide a long-term supply of
forward plots for future development by the Group.
Work in progress
At 31 December 2024, the Group had work in progress of 3,684 equivalent units
of new homes under construction, 12% lower than the position we entered the
year in (2023: 4,170). This decrease reflects the strong volume of completions
in 2024, ahead of expectations, alongside good control of working capital. On
average, overall weekly build rates tracked 2% higher in the year, with an
average of 201 equivalent units of build per week, compared to 198 per week in
2023.
Our work in progress investment at 31 December 2024 of £1.43bn was in line
with the prior year (2023: £1.43bn).
As at 31 December 2024, we owned 739 part exchange properties (2023: 591
properties) at a value of £154.4m (2023: £114.6m). Part exchange continues
to be a key sales incentive for our customers, and we are progressing sales of
part exchange properties promptly at around expected values.
Cash generation and liquidity
During the year, we continued our targeted investment into the business to
enhance quality, efficiency and returns as we build a more sustainable
business. Our long-standing financial discipline will continue to maintain our
robust balance sheet.
At 31 December 2024, the Group had a cash balance of £258.6m (2023: £420.1m)
with land creditors of £423.2m (2023: £372.0m), of which c.£240m are
expected to be settled during 2025.
The Group generated £419.6m of cash from operating activities in the year
(2023: £360.1m), before investing £232.7m in working capital (being
principally £113.4m in net land and a £57.3m utilisation of the legacy
buildings provision) and returning £191.8m of capital to shareholders through
dividend payments (2023: £255.4m).
The Group's shared equity loans have generated £4.6m of cash in the year
(2023: £5.7m). The carrying value of these outstanding shared equity loans,
reported as 'shared equity loan receivables', is £29.0m at 31 December 2024
(2023: £32.1m).
During the year the Group's banking facility was extended by 12 months to July
2029, with the possibility of a further extension to 2030. The RCF is a
'sustainability linked' facility within the banks' finance frameworks, with
ESG targets across the facility's term. The targets are consistent with the
Group's science-based operational carbon reduction targets, our commitment to
deliver net zero homes in use by 2030 and our long-standing ambition to
deliver excellent development opportunities for our colleagues.
The Group's defined benefit pension asset has increased to £130.7m at 31
December 2024 (2023: £127.1m), the increase reflecting an increase in the
discount rate assumptions applied to the scheme obligations offset in part by
the underperformance of asset returns from that expected at the start of the
year.
Capital allocation
The Group's Capital Allocation Policy is to invest in future growth through
disciplined expansion of our land portfolio while maintaining a strong balance
sheet and delivering sustainable returns to shareholders.
For 2024, the Board proposes a final dividend of 40p per share to be paid on
11 July 2025 to shareholders on the register on 20 June 2025, following
shareholder approval at the AGM. This dividend is in addition to the interim
dividend of 20p per share paid on 8 November 2024 to shareholders on the
register on 18 October 2024 to give a total dividend of 60p per share in
respect of the financial year 2024 (2023: 60p).
As we deliver on our medium-term growth ambitions, coupled with further
progress on our fire safety remediation programme, we anticipate increasing
our returns to shareholders.
2025 outlook
Although we are mindful of the potential impact from ongoing macroeconomic and
geopolitical uncertainties, the underlying market fundamentals remain strong.
Our current private forward sales position stands at £1.15bn, a 27% increase
year on year (2024: £0.90bn). With this progress in our forward order book
and an expected rise in the delivery of affordable homes, we are targeting
11,000-11,500 completions for 2025. Benefiting from our improved operational
capabilities and disciplined investment in our land holdings, we aim to
achieve further growth in profit and returns, as well as an improved
underlying operating margin to between 14.2% and 14.5% for 2025.
The next two years are expected to see peak expenditure on our building safety
remediation programme, with approximately £100m anticipated to be spent in
2025. The net cash position at the end of 2025 is currently forecast to be
between £nil and £200m.
Footnotes:
1. The Group's total revenues include the fair value of consideration
received or receivable on the sale of part exchange properties and income from
the provision of broadband internet services. New housing revenues are the
revenues generated on the sale of newly built residential properties only.
2. Land cost value for the plot divided by the revenue of the new
home sold.
3. Stated before a net exceptional charge of £2.0m (2023: £nil), as
set out in note 4, and based on new housing revenue (2024: £2.86bn;
2023: £2.54bn).
4. Stated before a net exceptional charge of £2.0m (2023: £nil), as
set out in note 4.
5. Stated before a net exceptional charge of £34.4m (2023: £nil), as
set out in note 4, and goodwill impairment (2024: £1.6m; 2023: £7.6m).
6. Stated before a net exceptional charge of £34.4m (2023: £nil), as
set out in note 4, and goodwill impairment (2024: £1.6m; 2023: £7.6m) and
based on new housing revenue (2024: £2.86bn; 2023: £2.54bn).
7. 12-month rolling average calculated on underlying operating profit
and total capital employed. Underlying operating profit is stated before net
exceptional charge of £34.4m (2023: £nil), as set out in note 4, and
goodwill impairment (2024: £1.6m; 2023: £7.6m). Capital employed being the
Group's net assets less cash and cash equivalents plus land creditors. ROCE
excluding land creditors is calculated on capital employed being the Group's
net assets less cash and cash equivalents excluding land creditors. Statutory
ROCE including land creditors is calculated on reported operating profit and
capital employed with capital employed being the Group's net assets less cash
and cash equivalents plus land creditors.
8. Estimated weighted average site gross margin based on assumed revenues
and costs at 31 December 2024 and normalised output levels.
9. Land cost value for the plot divided by the anticipated future
revenue of the new home sold.
PERSIMMON PLC
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
2024 2023
Total Total
Note £m £m
Revenue 3 3,200.7 2,773.2
Cost of sales (2,620.3) (2,253.1)
Gross profit 580.4 520.1
Analysed as:
Underlying gross profit 582.4 520.1
Exceptional - Legacy buildings provision (through Cost of Sales) 4 (2.0) -
Other operating income 9.8 8.6
Operating expenses (196.0) (181.8)
Exceptional - Impairment of a financial asset 4 (25.0) -
Profit from operations 369.2 346.9
Analysed as:
Underlying operating profit 405.2 354.5
Exceptional - Legacy buildings provision (through Cost of Sales) (2.0) -
Exceptional - Impairment of a financial asset (25.0) -
Exceptional - Project fees 4 (7.4) -
Impairment of intangible assets (1.6) (7.6)
Finance income 11.1 19.7
Finance costs (21.2) (14.8)
Profit before tax 359.1 351.8
Analysed as:
Underlying profit before tax 395.1 359.4
Exceptional items (34.4) -
Impairment of intangible assets (1.6) (7.6)
Tax 5 (92.0) (96.4)
Profit after tax (all attributable to equity holders of the parent) 267.1 255.4
Other comprehensive expense
Items that will not be reclassified to profit:
Remeasurement loss on defined benefit pension schemes 13 (1.5) (35.1)
Tax 5 0.4 9.8
Other comprehensive expense for the year, net of tax (1.1) (25.3)
Total recognised income for the year 266.0 230.1
Earnings per share
Basic 6 83.6p 80.0p
Diluted 6 82.7p 79.5p
PERSIMMON PLC
Consolidated Balance Sheet
As at 31 December 2024
2024 2023
Note £m £m
Assets
Non-current assets
Intangible assets 164.6 165.4
Property, plant and equipment 154.6 140.5
Investments accounted for using the equity method 0.3 1.0
Shared equity loan receivables 9 25.7 27.2
Trade and other receivables - 6.9
Deferred tax assets 9.2 11.5
Retirement benefit assets 13 130.7 127.1
485.1 479.6
Current assets
Inventories 8 3,902.8 3,701.2
Shared equity loan receivables 9 3.3 4.9
Trade and other receivables 167.8 182.0
Current tax assets 15.8 -
Cash and cash equivalents 12 258.6 420.1
4,348.3 4,308.2
Total assets 4,833.4 4,787.8
Liabilities
Non-current liabilities
Trade and other payables (196.2) (178.7)
Deferred tax liabilities (73.1) (64.9)
Partnership liability (10.3) (15.1)
Legacy buildings provision 10 (123.9) (161.7)
(403.5) (420.4)
Current liabilities
Trade and other payables (806.3) (821.7)
Partnership liability (5.6) (5.6)
Current tax liabilities - (0.1)
Legacy buildings provision 10 (111.4) (121.5)
(923.3) (948.9)
Total liabilities (1,326.8) (1,369.3)
Net assets 3,506.6 3,418.5
Equity
Ordinary share capital issued 32.0 31.9
Share premium 25.6 25.6
Capital redemption reserve 236.5 236.5
Other non-distributable reserve 276.8 276.8
Retained earnings 2,935.7 2,847.7
Total equity 3,506.6 3,418.5
PERSIMMON PLC
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 December 2024
Share capital Share premium Capital redemption reserve Other non-distributable reserve Retained earnings Total
£m £m £m £m £m £m
Balance at 1 January 2023 31.9 25.6 236.5 276.8 2,868.5 3,439.3
Profit for the year - - - - 255.4 255.4
Other comprehensive expense - - - - (25.3) (25.3)
Transactions with owners:
Dividends on equity shares - - - - (255.4) (255.4)
Own shares purchased - - - - (1.2) (1.2)
Share-based payments - - - - 5.7 5.7
Balance at 31 December 2023 31.9 25.6 236.5 276.8 2,847.7 3,418.5
Profit for the year - - - - 267.1 267.1
Other comprehensive expense - - - - (1.1) (1.1)
Transactions with owners:
Dividends on equity shares - - - - (191.8) (191.8)
Issues of new shares 0.1 - - - - 0.1
Own shares purchased - - - - (0.2) (0.2)
Share-based payments - - - - 14.0 14.0
Balance at 31 December 2024 32.0 25.6 236.5 276.8 2,935.7 3,506.6
PERSIMMON PLC
Consolidated Cash Flow Statement
For the year ended 31 December 2024
2024 2023
Note £m £m
Cash flows from operating activities:
Profit for the year 267.1 255.4
Tax charge 5 92.0 96.4
Finance income (11.1) (19.7)
Finance costs 21.2 14.8
Depreciation charge 20.1 18.7
Impairment of intangible assets 1.6 7.6
Exceptional items (non-cash) 4 27.0 -
Profit on disposal of fixed assets (2.5) -
Share-based payment charge 14.7 4.5
Net imputed interest expense (10.0) (8.7)
Other non-cash items (0.5) (8.9)
Cash inflow from operating activities 419.6 360.1
Movements in working capital:
Increase in inventories (200.4) (235.3)
Decrease in trade and other receivables 12.7 37.5
Decrease in trade and other payables (49.6) (233.6)
Decrease in shared equity loan receivables 4.6 5.7
Cash generated/(absorbed) from operations 186.9 (65.6)
Interest paid (9.3) (4.3)
Interest received 5.1 11.7
Tax paid (97.8) (71.6)
Net cash inflow/(outflow) from operating activities 84.9 (129.8)
Cash flows from investing activities:
Investment in an associate - (0.7)
Acquisition of loan notes (17.5) (6.8)
Purchase of property, plant and equipment (32.3) (36.4)
Proceeds from sale of property, plant and equipment 4.8 1.0
Net cash outflow from investing activities (45.0) (42.9)
Cash flows from financing activities:
Lease capital payments (4.0) (3.0)
Payment of Partnership liability (4.6) (4.3)
Bank fees paid (0.9) (4.9)
Own shares purchased (0.2) (1.2)
Share options consideration 0.1 -
Dividends paid (191.8) (255.4)
Net cash outflow from financing activities (201.4) (268.8)
Decrease in net cash and cash equivalents 12 (161.5) (441.5)
Cash and cash equivalents at the beginning of the year 420.1 861.6
Cash and cash equivalents at the end of the year 12 258.6 420.1
Notes
1. Basis of preparation
The results for the year have been prepared on a basis consistent with the
accounting policies set out in the Persimmon Plc Annual Report for the year
ended 31 December 2024.
The preparation of the financial statements in conformity with the Group's
accounting policies requires the Directors to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the balance sheet date and the reported
amounts of revenue and expenses during the reported period. Whilst these
estimates and assumptions are based on the Directors' best knowledge of the
amount, events or actions, actual results may differ from those estimates.
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2024 or 2023 but is derived
from those accounts. Statutory accounts for 2023 have been delivered to the
Registrar of Companies, and those for 2024 will be delivered in due course.
The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their report and
(iii) did not contain statements under Section 498(2) or (3) of the Companies
Act 2006.
Whilst the financial information included in this announcement has been
computed using the recognition and measurement requirements of UK adopted
International Accounting Standards (IAS), this announcement does not itself
contain sufficient information to comply with IAS. The Company expects to send
its Annual Report 2024 to shareholders on 24 March 2025.
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report in the Annual Report and the financial statements and notes. The
Directors believe that the Group is well placed to manage its business risks
successfully. The principal risks that may impact the Group's performance and
their mitigation are outlined in note 15. After making enquiries, the
Directors have a reasonable expectation that the Group has adequate resources
to fund its operations for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the annual financial
statements.
Adoption of new and revised International Financial Reporting Standards
(IFRSs) and Interpretations (IFRICs)
The following relevant UK endorsed new amendments to standards are mandatory
for the first time for the financial year beginning 1 January 2024:
· Amendments to IAS 1 Presentation of Financial Statements
· Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements
· Amendments to IFRS 16 Lease Liability in a Sale and Leaseback
The effects of the implementation of these amendments have been limited to
disclosure amendments where applicable.
The Group has not applied the following new standards, amendments and
improvements to standards which are not yet effective:
· IFRS 18 Presentation and Disclosure in Financial Statements
· Amendments to IAS 21 Lack of Exchangeability
· Annual Improvements to IFRS Accounting Standards - Volume 11
The Group is currently considering the implication of these standards,
amendments and improvements with the expected impact upon the Group being
limited to disclosures if applicable.
Going concern
The Group operates with a very strong balance sheet position and delivered an
improved financial performance, and growth in volume of new homes delivered,
as a result of our disciplined and strategic financial investment into the
business. Persimmon's long-term strategy, which recognises the risks
associated with the housing cycle by maintaining operational flexibility,
investing in high quality land, minimising financial risk and deploying
capital at the right time in the cycle, has equipped the business with strong
liquidity and a robust balance sheet.
The Group completed the sale of 10,664 new homes (2023: 9,922), generating a
profit before tax of £359.1m (2023: £351.8m). At 31 December 2024, the
Group's strong financial position included £258.6m of cash (2023: £420.1m),
high quality land holdings, and land creditors of £423.2m (2023: £372.0m).
During the year the Group extended by one year to July 2029 its £700m
Revolving Credit Facility. There remains the possibility to extend the
facility for a further year. The facility was undrawn at the year end.
The Group's forward order book at 1 January 2025 includes 2,360 new homes sold
forward into the private owner occupier market (1 January 2024: 1,877 new
homes forward sold) with an average selling price of c.£276,860. In addition,
the cumulative average private sales reservation rate for the first nine weeks
of 2025 is c.14% stronger than for the same period last year.
The Directors have carried out a robust assessment of the principal risks
facing the Group, as described in note 15 of this announcement. The Group has
considered the impact of these risks on the going concern of the business by
performing a range of sensitivity analyses to the latest base case forecast,
covering the period to 30 June 2026, including severe but plausible scenarios
materialising together with the likely effectiveness of mitigating actions
that would be executed by the Directors. For further detail regarding the
approach and process the Directors follow in assessing the long-term viability
of the business, please see the Viability Statement in note 15.
The scenarios emphasise the potential impact of severe market disruption,
including for example the effect of economic disruption from a cost-of-living
crisis or a war, on short to medium-term demand for new homes. The scenarios'
emphasis on the impact on the cash inflows of the Group through reduced new
home sales is designed to allow the examination of the extreme cash flow
consequences of such circumstances occurring. The Group's cash flows are less
sensitive to supply side disruption given the Group's sustainable business
model, flexible operations, agile management team and off-site manufacturing
facilities.
The first scenario modelled is a severe but plausible downside scenario that
models a fall in housing revenue, when compared to full year 2024, of c.54%
for full year 2025 followed by gradual recovery. The housing revenue modelled
factors in changes in both volumes and average selling prices. The assumption
used in this scenario reflects the experience management gained during the
Global Financial Crisis from 2007 to 2010, it being the worst recession seen
in the housing market since World War Two.
A second, even more extreme, scenario assumes the same significant downturn in
2025 followed by a period of enduring depression of the UK economy and housing
market during 2026, assuming that neither volumes nor revenue recover.
In each of these scenarios, cash flows were assumed to be managed
consistently, ensuring all relevant land, work in progress and operational
investments were made in the business at the appropriate time to deliver the
projected new home legal completions. Each scenario fully reflects the current
estimate of cash outflows, value and timing, associated with the legacy
buildings provision. In each of these scenarios, the Group is able to operate
within its facilities.
The Directors have also considered a 'Reverse Stress Test' to demonstrate the
point at which the Group runs out of liquid funds or breaches covenants but
note the likelihood of this is less than remote.
In addition, the Group has been increasingly assessing climate related risks
and opportunities that may present to the Group. During the period assessed
for going concern no significant risk has been identified that would
materially impact the Group's ability to generate sufficient cash and continue
as a going concern.
Having considered the inherent strength of the UK housing market, the
resilience of the Group's average selling prices and the Group's scenario
analysis as detailed above, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing these financial statements.
Goodwill and brand intangibles
The key sources of estimation uncertainty in respect of goodwill and brand
intangibles are disclosed in note 14 of the Group's annual financial
statements for the year ended 31 December 2024, other than set out below no
trigger events have been identified.
The goodwill allocated to the Group's acquired strategic land holdings is
further tested by reference to the proportion of legally completed plots in
the period compared to the total plots which are expected to receive
satisfactory planning permission in the remaining strategic land holdings,
taking account of historic experience and market conditions. This review
resulted in an underlying impairment charge of £1.6m recognised during the
period. This impairment charge reflects ongoing consumption of the acquired
strategic land holdings and is consistent with prior years.
Investments in associates
In January 2024, the Group acquired £17.5m of interest bearing long-term loan
notes from TopHat Enterprises Limited. At 30 June 2024, a review of both the
investment of £0.7m and the £24.3m of long-term loan notes was undertaken
and the value was written down to £nil. The write down being due to a
re-assessment of risks within the modular build sector.
2. Segmental analysis
The Group has only one reportable operating segment, being housebuilding
within the UK, under the control of the Executive Board. The Executive Board
has been identified as the Chief Operating Decision Maker as defined under
IFRS 8 Operating Segments.
3. Revenue
2024 2023
£m £m
Revenue from the sale of new housing - private 2,606.0 2,195.1
Revenue from the sale of new housing - housing association 257.3 342.5
Revenue from the sale of new housing - total 2,863.3 2,537.6
Revenue from the sale of part exchange properties 322.6 223.7
Revenue from the provision of internet services 14.8 11.9
Revenue from the sale of goods and services as reported in the statement of 3,200.7 2,773.2
comprehensive income
4. Exceptional Items
During the year, the Group recognised an exceptional charge of £25.0m in
relation to its investment and long-term loan notes in TopHat Enterprises
Limited which writes down the value of the investment and long-term loan notes
to £nil. The write down being due to a re-assessment of risks within the
modular build sector. In addition, there is a charge of £7.4m that relates to
costs incurred on professional fees for one-off projects, including for
prospective M&A opportunities and the ongoing CMA investigation (disclosed
in note 14), which have been classified as exceptional given they are
non-recurring in nature.
The Group has also recognised a net exceptional charge of £2.0m in relation
to the anticipated costs of the Group's commitments to the costs of removal of
combustible claddings and other fire related remediation works. Further
details on this provision can be found in note 10.
In total, there was a net exceptional charge of £34.4m (2023: £nil) in the
year, of which £27.0m is non-cash related.
All items have been disclosed as exceptional due to the non-recurring nature
and scale of the charge to aid understanding of the financial performance of
the Group and to assist in the comparability of financial performance between
accounting periods.
5. Tax
Analysis of the tax charge for the year
2024 2023
£m £m
Tax charge comprises:
UK corporation tax in respect of the current year 78.8 81.2
RPDT in respect of the current year 12.3 13.0
Adjustments in respect of prior years (9.1) (0.2)
82.0 94.0
Deferred tax relating to origination and reversal of temporary differences 13.7 2.8
Adjustments recognised in the current year in respect of prior years deferred (3.7) (0.4)
tax
10.0 2.4
Tax charge for the year recognised in statement of comprehensive income 92.0 96.4
The tax charge for the year of £92.0m includes a tax charge of £10.0m
relating to the exceptional items detailed in note 4.
The tax charge for the year can be reconciled to the accounting profit as
follows:
2024 2023
£m £m
Profit from continuing operations 359.1 351.8
Tax calculated at UK standard corporation tax rate of 29.0% (inclusive of 104.1 96.7
RPDT) (2023: 27.5%)
Goodwill impairment losses that are not deductible 0.5 1.8
Expenditure not allowable for tax purposes 2.1 0.9
Items not deductible for RPDT (0.3) (0.6)
Enhanced tax reliefs (1.6) (1.8)
Adjustments in respect of prior years (12.8) (0.6)
Tax charge for the year recognised in statement of comprehensive income 92.0 96.4
The tax charge for the year includes both current and deferred tax. The tax
charge is based upon the expected tax rate for the full year, which is applied
to taxable profits for the year, together with any charge or credit in respect
of prior years and the tax impact of one-off/non-recurring items arising in
the same year. Current tax includes both UK corporation tax and the
Residential Property Developer Tax (RPDT).
Deferred Tax is calculated as the tax payable or recoverable in future
accounting periods in respect of temporary differences which may be taxable or
allowed as deductible. Temporary differences represent the difference between
the carrying amount of an asset or liability in the financial statements and
the relevant tax base.
The effective rate of tax for the period was 25.6% which was lower than in the
prior year (2023: 27.4%) as a result of deductions arising from the
finalisation of prior year tax returns, including one-off items in respect to
the treatment of building safety remediation provisions.
Deferred tax recognised in other comprehensive expense
2024 2023
£m £m
Recognised on remeasurement loss on pension schemes 0.4 9.8
Tax recognised directly in equity
2024 2023
£m £m
Arising on transactions with equity participants
Current tax related to equity settled transactions (0.1) (0.6)
Deferred tax related to equity settled transactions 0.9 (0.7)
0.8 (1.3)
UK adoption of OECD Pillar 2: There is no impact from the implementation of
the UK's domestic top-up tax, as the Group does not have any profits arising
in any entities which are located in a non-UK jurisdiction, and which are
taxed below the minimum rate of tax of 15%.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the year of 319.6m shares (2023: 319.2m) which
excludes those held in the employee benefit trust and any treasury shares, all
of which are treated as cancelled.
Diluted earnings per share is calculated by dividing the profit for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue adjusted to assume conversion of all potentially
dilutive ordinary shares from the start of the year, giving a figure of 323.1m
shares (2023: 321.0m).
Underlying earnings per share excludes the net exceptional charge and goodwill
impairment. The earnings per share from continuing operations were as follows:
2024 2023
Basic earnings per share 83.6p 80.0p
Underlying basic earnings per share 92.1p 82.4p
Diluted earnings per share 82.7p 79.5p
Underlying diluted earnings per share 91.1p 81.9p
The calculation of the basic and diluted earnings per share is based upon the
following data:
2024 2023
£m £m
Underlying earnings attributable to shareholders 294.2 263.0
Net exceptional charge (net of tax) (25.5) -
Goodwill impairment (1.6) (7.6)
Earnings attributable to shareholders 267.1 255.4
At 31 December 2024 the issued share capital of the Company was 319,914,868
ordinary shares (2023: 319,421,416 ordinary shares).
7. Dividends/Return of capital
2024 2023
£m £m
Amounts recognised as distributions to capital holders in the period:
2022 final dividend to all shareholders of 60p per share paid 2023 - 191.5
2023 interim dividend to all shareholders of 20p per share paid 2023 - 63.9
2023 final dividend to all shareholders of 40p per share paid 2024 127.9 -
2024 interim dividend to all shareholders of 20p per share paid 2024 63.9 -
Total capital return to shareholders 191.8 255.4
The Directors propose a 40p final dividend in respect of the financial year 31
December 2024 to shareholders for each ordinary share held on the register on
20 June 2025 with payment made on 11 July 2025. The total anticipated
distributions to shareholders is 60p per share (2023: 60p per share) in
respect of the financial year ended 31 December 2024.
8. Inventories
2024 2023
£m £m
Land 2,265.6 2,103.5
Work in progress 1,426.3 1,431.3
Part exchange properties 154.4 114.6
Showhouses 56.5 51.8
Inventories 3,902.8 3,701.2
The Group has conducted a further review of the net realisable value of its
land and work in progress portfolio at 31 December 2024. Our approach to this
review has been consistent with that conducted at 31 December 2023 and was
fully disclosed in the financial statements for the year ended on that date.
This review gave rise to an impairment of land and work in progress of £nil
(2023: £13.7m). The key judgements and estimates in determining the future
net realisable value of the Group's land and work in progress portfolio are
future sales prices, house types and costs to complete the developments. Sales
prices and costs to complete were estimated on a site by site basis. If the UK
housing market were to improve or deteriorate in the future, then further
adjustments to the carrying value of land and work in progress may be
required.
Net realisable value provisions held against inventories at 31 December 2024
were £16.8m (2023: £18.9m). Following the review, £26.4m of inventories are
valued at net realisable value rather than historical cost (2023: £27.4m).
9. Shared equity loan receivables
2024 2023
£m £m
Shared equity loan receivables at 1 January 32.1 36.0
Settlements (4.6) (5.7)
Gains 1.5 1.8
Shared equity loan receivables at 31 December 29.0 32.1
All gains/losses have been recognised in the statement of comprehensive
income. Of the gains recognised in finance income for the period £nil (2023:
£0.2m) was unrealised.
10. Legacy buildings provision
2024 2023
£m £m
Legacy buildings provision at 1 January 283.2 333.3
Additions to provision in the year 25.0 -
Imputed interest on provision in the year 7.4 4.3
Provision released in the year (23.0) (6.6)
Provision utilised in the year (57.3) (47.8)
Legacy buildings provision at 31 December 235.3 283.2
In 2020 the Group made an initial commitment that no leaseholder living in a
building we had developed should have to cover the cost of removal of
combustible cladding. During 2022 we signed the Building Safety Pledge
(England) and worked constructively with the Government to agree the
'Long-Form Contract' that turned the pledge into a legal agreement. The Self
Remediation Contract was signed on 13 March 2023.
In the year we have been informed by a management company of a potential
liability for fire remediation costs, and we have added one development to the
total number of developments. The number of developments we are now
responsible for stands at 83, of which 40 have now either secured EWS1
certificates or concluded any necessary works. It is assumed the majority of
the work will be completed over the next two years and the amount provided for
has been discounted accordingly.
During the year £57.3m of the provision has been utilised for works
undertaken whilst £7.4m of imputed interest has been charged to the statement
of comprehensive income through finance costs. During the year £23.0m of the
provision has been released and £25.0m has been charged, following a review
of projected costs to complete rectification work. This includes the
recoverability of VAT applicable to such costs resulting in the £23.0m
release, offset by complications and additional rectification works identified
once site works commenced, and facades were stripped, being the basis for the
£25.0m charge. Due to the non-recurring nature of these charges they have
been disclosed as exceptional items to support the understanding of the
financial performance and improve the comparability between reporting periods.
Based on current cashflow forecasts management forecast that £111.4m of the
provision will be utilised within the next 12 months and as a result has been
reported as a current liability in the 31 December 2024 balance sheet.
The assessment of the provision remains a highly complex area with judgments
and estimates in respect of the cost of the remedial works, with investigative
surveys ongoing to determine the full extent of those required works. Where
remediation works have not yet been fully tendered, we have estimated the
likely scope and costs of such works based on experience of other similar
sites. Whilst we have exercised our best judgement of these matters, there
remains the potential for variations to this estimate from multiple factors
such as material, energy and labour cost inflation, limited qualified
contractor availability and abnormal works identified on intrusive
surveys. Should a 20% variation in the costs of untendered projects occur
then the overall provision would vary by +/- £9.6m.
The financial statements have been prepared on the latest available
information; however, there remains the possibility that, despite management's
endeavours to identify all such properties, including those constructed by
acquired entities well before acquisition, further developments requiring
remediation may emerge.
11. Financial instruments
In aggregate, the fair value of financial assets and liabilities are not
materially different from their carrying value.
Financial assets and liabilities carried at fair value are categorised within
the hierarchical classification of IFRS 7 Revised (as defined within the
standard) as follows:
2024 2023
£m £m
Level 3 Level 3
Shared equity loan receivables 29.0 32.1
Shared equity loan receivables
Shared equity loan receivables represent loans advanced to customers and
secured by way of a second charge on their new home. They are carried at fair
value. The fair value is determined by reference to the rates at which they
could be exchanged by knowledgeable and willing parties. Fair value is
determined by discounting forecast cash flows for the residual period of the
contract by a risk adjusted rate.
There exists an element of uncertainty over the precise final valuation and
timing of cash flows arising from these loans. As a result the Group has
applied inputs based on current market conditions and the Group's historical
experience of actual cash flows resulting from such arrangements. These inputs
are by nature estimates and as such the fair value has been classified as
Level 3 under the fair value hierarchy laid out in IFRS 13 Fair Value
Measurement.
Significant unobservable inputs into the fair value measurement calculation
include regional house price movements based on the Group's actual experience
of regional house pricing and management forecasts of future movements,
weighted average duration of the loans from inception to settlement of ten
years (2023: ten years) and discount rate 8.8% (2023: 8.8%) based on current
observed market interest rates offered to private individuals on secured
second loans.
The discounted forecast cash flow calculation is dependent upon the estimated
future value of the properties on which the shared equity loans are secured.
Adjustments to this input, which might result from a change in the wider
property market, would have a proportional impact upon the fair value of the
loan. Furthermore, whilst not easily accessible in advance, the resulting
change in security value may affect the credit risk associated with the
counterparty, influencing fair value further.
12. Reconciliation of net cash flow to net cash and analysis of net
cash
2024 2023
£m £m
Cash and cash equivalents at 1 January 420.1 861.6
Decrease in net cash and cash equivalents in cash flow (161.5) (441.5)
Cash and cash equivalents at 31 December 258.6 420.1
IFRS 16 lease liability (14.5) (12.9)
Net cash at 31 December 244.1 407.2
Net cash is defined as cash and cash equivalents, bank overdrafts and interest
bearing borrowings. At 31 December 2024, £nil (2023: £nil) of cash
recognised was held at third party solicitors with an undertaking.
The Group has a Revolving Credit Facility of £700m which was extended by a
further year during the year out to 5 July 2029. The facility was undrawn at
31 December 2024.
13. Retirement benefit assets
As at 31 December 2024 the Group operated five employee pension schemes, being
three Group personal pension schemes and two defined benefit pension schemes.
Remeasurement gains and losses in the defined benefit schemes are recognised
in full as other comprehensive income within the consolidate statement of
comprehensive income. All other pension scheme costs are reported in profit or
loss.
The amounts recognised in the statement of comprehensive income are as
follows:
2024 2023
£m £m
Current service cost 0.2 0.9
Administrative expense 0.4 0.6
Curtailment cost 0.1 -
Pension cost recognised as operating expense 0.7 1.5
Interest cost 18.6 18.8
Return on assets recorded as interest (24.3) (26.2)
Pension cost recognised as net finance credit (5.7) (7.4)
Total defined benefit pension credit recognised in profit or loss (5.0) (5.9)
Remeasurement loss recognised in other comprehensive income 1.5 35.1
Total defined benefit scheme (gain)/loss recognised (3.5) 29.2
The amounts included in the balance sheet arising from the Group's obligations
in respect of the Pension Scheme are as follows:
2024 2023
£m £m
Fair value of Pension Scheme assets 504.3 552.7
Present value of funded obligations (373.6) (425.6)
Net pension asset 130.7 127.1
The increase in the net pension asset to £130.7m (2023: £127.1m) is due to
an increase in the discount rate assumption applied to scheme obligations to
5.5% (2023: 4.5%) which has been partially offset by the underperformance
asset returns when compared to the standard expected returns at the start of
the year.
During the period, the Persimmon Plc Pension & Life Assurance scheme has
been closed to future accrual.
14. Contingent Liabilities
As disclosed in note 10 the Group has undertaken a review of all its legacy
buildings that used cladding on their facades.
The financial statements have been prepared on the latest available
information; however, there remains the possibility that, despite management's
endeavours to identify all such properties, including those constructed by
acquired entities well before acquisition, further developments requiring
remediation may emerge. There is also the possibility that estimates based on
preliminary assessments regarding the scale of remediation works relating to
buildings yet to be fully surveyed may prove incorrect. The cost of remedial
works will remain under review and be updated as works progress.
On 26 February 2024, the CMA launched an investigation under Chapter I of the
Competition Act 1998 into suspected breaches of competition law by eight
housebuilders, including Persimmon, relating to concerns that they may have
exchanged competitively sensitive information. On 10 January 2025, the CMA
extended the timeline for the initial investigation by five months to May
2025. The Group continues to cooperate with the CMA in relation to their
ongoing market investigation into alleged anti-competitive conduct by
housebuilders. The potential impact, if any, and timing is not yet known.
15. Principal Risks and Viability Statement
Key priorities:
1. Build quality and safety
2. Reinforcing trust: customers at the heart of our business
3. Disciplined growth: high-quality land investment
4. Industry-leading financial performance
5. Supporting sustainable communities
1. UK economic and market conditions
Risk rating Very high
Risk trend No change
Risk appetite Averse
Within tolerance
Risk owners Executive Committee and Regional Chairs
Link to strategic priorities 3 and 4
Risk description
Housebuilding is an inherently cyclical industry, which can be particularly
sensitive to macroeconomic changes and overall consumer confidence and
sentiment. Adverse trends in employment levels, inflation, mortgage
availability and affordability and overall consumer confidence can have a
material effect on demand and pricing for new homes. This could in turn impact
upon our revenues, margins, profits and cash flows and potentially result in
the impairment of asset values.
Changes in the economic environment and market conditions could also drive
changes in competitor strategies and actions that could pose a threat to the
Group's overall strategy and business model. Such changes could include
increased consolidation within the sector.
Key mitigations
· Highly disciplined approach to investments in land and work in
progress, ensuring these are appropriate and reflective of current and
anticipated levels of demand.
· Regular reviews of pricing structures to align with local
market conditions. The Group benefits from a UK-wide network (with no
significant presence in London), mitigating the effects of regional economic
fluctuations.
· Annual Board strategic review monitors and responds to external
conditions.
· Sales prices and incentive schemes to support sales are kept
under constant review by management and can be flexed according to underlying
market conditions.
Risk Monitoring measures
· The Board and Executive Committee closely monitor UK economic
trends, with regular market and economic briefings, from banks, brokers and
others.
· Sales rates and pricing patterns within each operating company
are reviewed on a weekly basis.
· Routine principal risk reporting to the Board includes analysis
of economic indicators, using both internal and external sources, and lending
patterns.
2. Government policy and political risk
Risk rating Very high
Risk trend No change
Risk appetite Averse
Within tolerance
Risk owners Group Director of Strategic Partnerships and External Affairs
Group Planning Director
Regional Chairs
Link to strategic priorities 1 and 5
Risk description
The housebuilding industry is subject to an increasingly complicated legal and
regulatory environment, impacted by political decisions at both national and
local level. Political decision making, in areas such as planning regulations,
support schemes or specific industry taxation, can have a material impact on
operational performance and affect the successful delivery of our strategy.
The impact of Government policy has the potential to adversely affect
revenues, margins, tax charges and asset values, and potentially impact on the
viability of land investments.
Key mitigations
· The Group's mission and our five key priorities are aligned with
the UK Government's objective of delivering an increased volume of new homes
over the course of the current Parliament.
· The Group has expertise in managing and responding to relevant
areas subject to Government involvement at both local and national level,
including through our Group Land, Planning, Technical and External Affairs
departments, and through engagement with industry bodies.
· A focused and methodical approach has been established to build
relationships with councils and ensure alignment of development with local
priorities.
· The Group also engages and participates in industry groups,
including the HBF.
Risk monitoring measures
· Likely evolutions in Government housing policy are monitored
closely by our External Affairs, Technical and Land and Planning departments,
with regular feedback to the Executive Committee and Board.
· Planning refusal rates are monitored closely to ensure our
approach can be adjusted where necessary.
· Routine principal risk reporting to the Board includes updates on
political evolutions at national and local levels.
3. Climate change and sustainability
Risk rating Medium
Risk trend No change
Risk appetite Averse
Within tolerance
Risk owners Group Strategy & Regulatory Director
Group Sustainability Director
Link to strategic priorities 2 and 5
Risk description
The transition to a lower carbon and more sustainability focused economy is
likely to involve an increasingly complex legal and regulatory environment, as
seen with the Future Homes Standard and Biodiversity Net Gain requirements.
This may in turn result in planning constraints, increased costs and
competition for some key materials and skills. Increased physical risks are
developing from climate change, with greater frequency of extreme weather
events such as storms and flooding. Over time these may increase the
likelihood of disruption to construction. The availability of mortgages and
property insurance may also be affected as financial institutions consider
their responses to the impacts of climate change.
Key mitigations
· The Group considers sustainability issues and the potential impacts
of climate change routinely in key business decisions, from land acquisition
through to planning and build processes.
· The Group has set near term carbon reduction targets approved by
the Science Based Targets initiative, and targets to achieve net zero carbon
homes in use to our customers by 2030, and become net zero carbon in our
operations by 2040. Long-term net zero carbon targets to 2045 have been
established and are awaiting approval from the Science Based Targets
initiative.
· Inclusion of the cost of the latest regulatory changes (e.g. FHS)
into land appraisals.
· Diversified production locations minimise risk of local extreme
weather events, with build programmes designed to mitigate risks associated
with adverse weather.
Risk monitoring measures
· The Sustainability Committee meets regularly to review progress on
the Group's climate and sustainability related initiatives.
· Management reporting includes key climate and sustainability
indicators such as CO(2) emissions, diesel usage and waste generation.
· Our scope 1, scope 2, scope 3 Category 1 (Purchased goods and
services) and scope 3 Category 11 (Use of sold products) emissions are subject
to external review.
4. HS&E Event
Risk rating Medium
Risk trend Decrease
Risk appetite Averse
Within tolerance
Risk owners Group HS&E Committee
Group HS&E Director
Group Construction Director
Group Special Projects Director
Link to strategic priorities 1
Risk description
Failures to safeguard our sites, or instances of non-compliance with the
Group's robust framework of HS&E procedures could result in serious injury
or loss of life, or damage to the environment. In addition to the human
impacts of any health, safety or environmental breach or incident, there is
the potential for reputational damage, construction delays and financial
penalties.
Key mitigations
· Comprehensive policies and procedures to manage construction,
manufacturing and office activities safely.
· Training programmes to embed the Group's policies effectively.
· Target Zero initiative to drive awareness of workplace safety and
reduce the volume of safety related incidents in our operations.
· Inspection regime led by our Group HS&E department, with
additional assurance from specialist resource within our Group Internal Audit
department.
· Engagement with industry forums and best practice groups
Risk monitoring measures
· The Group HS&E Director provides regular narrative and KPI
reporting to the Board on HS&E matters.
· Data from inspections by the Group HS&E department feed into
management reports at all levels of the Group.
· The Group Internal Audit department conducts additional HS&E
assurance engagements, with results and follow-up of actions reported to both
executive management and the Audit & Risk Committee.
5. Legacy Buildings
Risk rating High
Risk trend No change
Risk appetite Averse
Within tolerance
Risk owners Group Construction Director
Group Special Projects Director
Link to strategic priorities 1 and 2
Risk description
The Group has a well-established plan for the delivery of remediation works
for legacy safety and quality issues. This includes measures to ensure
resident safety in advance of any scheduled works. Should the remediation
works be disrupted or delayed due to the complex nature of the works, lack of
availability of skilled contractors or evolutions in regulation, or should
further buildings requiring remediation be identified, the Group could be
exposed to increased costs and potential reputational damage.
Key mitigations
· The Group has a dedicated Special Projects team, supported by
specialist consultants, which is responsible for the identification of
affected buildings, assessment of any remediation required, and ensuring that
the work is contracted and completed as quickly as practicable.
· All identified buildings are independently assessed and, where
necessary, interim measures are put in place to ensure resident safety until
remedial works are carried out.
· Independent Quality Controllers, reporting centrally, provide
assurance on the quality and status of remediation works.
· The Group's assumptions on the estimated financial costs
associated with the remediation works have been subject to comprehensive
challenge and are regularly reassessed.
· The Group Building Safety function has also been established.
This provides an additional layer of oversight, ensuring continued alignment
to good practice in building safety over the lifecycle of the homes we build.
Risk monitoring measures
· The Board receives routine reporting on the progress of the works
on legacy buildings.
· The Finance team monitors costs incurred and provides assurance on the
utilisation and ongoing appropriateness of the Group's provision.
6. Land and planning
Risk rating High
Risk trend No change
Risk appetite Cautious
Within tolerance
Risk owners Group Planning Director
Group Director of Land Operations
Group Director of Transformation and Land Strategy
Group Strategic Land Director
Regional Chairs
Link to strategic priorities 3
Risk description
The Group's continued ability to secure an appropriate supply of land is
crucial to ensuring timely availability of outlets and the delivery of our
strategy.
Failure to maintain an adequate supply of high-quality land, due to factors
such as planning constraints or inability to procure land at appropriate
levels of return, could adversely affect future sales, margins and return on
capital employed.
Failure to effectively understand, anticipate or adhere to planning conditions
could result in delays in development of sites.
Key mitigations
· Enhanced approach to building relationships with councils, land
agents, and promoters and ensuring alignment of potential development with
local priorities.
· Scrutiny of all potential land transactions through comprehensive
viability assessments to ensure appropriate returns and alignment with the
Group's overall strategy.
· Land Committee approval process for all land transactions.
Risk monitoring measures
· The Group's Land Committee meets regularly to review the Group's
current land holdings and future needs, and to assess potential land
transactions.
· Volume of planning permissions obtained is monitored and reported on
routinely, including tracking against legal completions via principal risk
reporting.
· Outlet numbers are tracked routinely by management and subject to
detailed reporting.
7. Supply Chain
Risk rating Medium
Risk trend Increase
Risk appetite Cautious
Within tolerance
Risk owners UK MD
Group Commercial Director
Group Procurement Director
Link to strategic priorities 1 and 4
Risk description
The drive for a greater volume of construction of new homes in the UK could
result in increased demand for certain materials, and for skilled labour,
causing availability constraints and increased cost pressures.
Supply chain disruptions could also result from a range of factors, which
potentially impact on availability and pricing of key materials.
Build quality could be compromised if unsuitable materials or labour are
procured leading to damage to the Group's reputation and overall customer
experience.
Key mitigations
· Vertical integration on key materials through investment in our
Brickworks, Tileworks and Space4 facilities.
· Long-term relationships with key suppliers and sub-contractors,
including appropriate payment terms.
· Strategic approach to procurement, led by our Group Procurement team,
with supply chain engagement, robust processes for appointing suppliers and
ongoing performance monitoring.
· Detailed forecasting and planning of material requirements to
inform supplier negotiations.
· Group Commercial oversight and monitoring of operating company
controls, including robust processes to monitor material purchases and stock
holdings to minimise potential for loss or damage during construction.
Risk monitoring measures
· The Group Procurement department provides routine monitoring of
trends and supplier performance.
· Site budgets and performance, including availability and pricing of
materials, are assessed through the bi-monthly valuation process.
· Routine principal risk reporting is provided to the Board, including
commentary from the Group Commercial Director on material purchasing trends
and issues.
8. Finance and liquidity
Risk rating Low
Risk trend NEW
Risk appetite Cautious
Within tolerance
Risk owners Group CFO
Group Financial Controller
Senior Group Accountant
Link to strategic priorities 3 and 4
Risk description
The Group's strategy requires access to significant working capital to fund
investments in land and work in progress. At times, the Group will draw on its
Revolving Credit Facility (RCF) to provide this working capital.
Failure to manage cash requirements effectively could lead to unnecessarily
high borrowing costs, breaches of loan covenants, or an inability to take
advantage of land or other investment opportunities that could benefit the
Group.
Key mitigations
· The Group closely monitors its cash position and forecast cash
utilisation to ensure these are sufficient to support land investments, fund
work in progress and meet other requirements identified through annual budgets
and business planning processes.
· Investment decisions in land are subject to comprehensive appraisal
under the supervision of the Land Committee. Work in progress is tightly
controlled through the bi-monthly valuation process.
· The Group's RCF is considered sufficient to meet all our projected
funding requirements in the short to medium term. The RCF was extended during
the period and now runs to July 2029, with an option to request an extension
for a further year.
Risk monitoring measures
· Utilisation of the RCF and optimisation of cash deposits are
monitored daily by the Group Finance team.
· Covenants on the RCF are monitored and subject to periodic
certification.
· The Board is provided with routine reporting on the Group's
actual and forecast cash positions.
9. Skilled workforce, retention and succession
Risk rating Medium
Risk trend No change
Risk appetite Cautious
Within tolerance
Risk owners Chief HR Officer
Director of Talent & Diversity
Link to strategic priorities 1
Risk description
Attracting and retaining a highly skilled workforce and management teams is
crucial to the delivery of the Group's strategic priorities. The continued
competition for skilled labour, and the ageing construction workforce in the
UK, create risks of increased costs, operational disruption and potential
delays to build programmes.
Key mitigations
· Development of a compelling employee value proposition to attract
a high-quality workforce into the Group.
· Comprehensive training programmes including apprenticeships, Graduate
Scheme and the Persimmon Pathways in core disciplines.
· Talent development and succession planning programmes.
· Competitive remuneration packages to attract and retain talent at
all levels, including our Real Living Wage commitment, Sharesave and other
employee benefits.
· Employee engagement monitoring through surveys and our Employee
Engagement Panel.
Risk monitoring measures
· The Group HR department provides reporting, including metrics such
as training hours, to management at all levels of the Group.
· The Chief HR Officer is a member of the Group Executive Committee
and provides additional periodic reports and updates to the Board on
employment trends.
· Feedback from the Employee Engagement Panel and annual Employee
Engagement Survey is reviewed by the Board.
· Routine principal risk reports issued to each meeting of the
Board include staff turnover data and commentary from the Group HR department.
10. Cyber and data
Risk rating High
Risk trend Increase
Risk appetite Averse
Within tolerance
Risk owners Chief Information Officer
Chief Information Security Officer
Link to strategic priorities 2 and 5
Risk description
The Group's operations are increasingly reliant on the continuous availability
and security of various IT systems. Failure or significant disruption to the
Group's core IT systems, particularly those storing customer data, could
disrupt operations, result in significant financial costs and potentially
cause reputational damage.
Key mitigations
· Oversight from the Security Council, chaired by the Chief
Information Security Officer (CISO) and attended by senior leaders within the
business.
· Comprehensive programme of investment via the Cyber Security
Infrastructure Improvement Programme (CSIIP).
· Robust IT security policies and disaster recovery protocols.
· Routine in-house training and communications to promote awareness of
cyber security and data protection issues.
· Regular external reviews, including penetration testing, to provide
assurance on the effectiveness of the Group's control framework.
Risk monitoring measures
· Routine Board updates provided by the Group's Chief Information
Officer ('CIO').
· Routine CIO reporting to the Group Executive Committee, ensuring
IT and cyber risks are actively considered in all key business decision
making.
· Periodic presentations by the CIO and CISO to the Audit &
Risk Committee.
· Data breaches monitored and reported on via the Group's GDPR
steering group.
11. Reputation
Risk rating Medium
Risk trend No change
Risk appetite Cautious
Within tolerance
Risk owners Group Director of Strategic Partnerships and External Affairs
Group Investor Relations Director
Group Construction Director
Chief Customer Experience Officer
Regional chairs
Link to strategic priorities 1, 2, 4 and 5
Risk description
The Group aims to maintain a reputation for high standards of business conduct
in all aspects of its operations. Failure to live up to our expected high
standards in areas such as governance, build quality (including remediation of
legacy issues), customer experiences and health and safety, or in dealing with
local planning concerns could damage stakeholder relationships and have a
detrimental impact on financial performance.
Key mitigations
· Company values underpinned by Board and Executive Committee level
commitment to a culture of excellence, with particular emphasis on high
quality in construction and customer care.
· Continued significant investments in build quality, through The
Persimmon Way, our commitment to the objectives underpinning the New Homes
Quality Code ('NHQC'), and in addressing legacy issues.
· Processes to build positive relationships with all our stakeholders,
including local authorities and the communities in which we build, through
addressing housing need, supporting local employment and making valuable
contributions to local infrastructure and community causes.
Risk monitoring measures
· Operational performance, including build quality and customer
experience, are subject to routine management oversight, with reporting to the
Executive Committee and Board.
· The Board also oversees stakeholder engagement, including
monitoring feedback from shareholders, and the results of our employee
engagement surveys and the Employee Engagement Panel.
· Routine principal risk reports issued to each meeting of the Board
include a range of internal and external indicators on reputation, such as
NHBC survey data, Trustpilot scores and sentiment of media coverage.
12. Regulatory compliance
Risk rating Medium
Risk trend No change
Risk appetite Averse
Within intolerance
Risk owners Chief Customer Experience Officer
Group Construction Director
Group Director of Legal Services
Company Secretary
Group Strategy & Regulatory Director
Link to strategic priorities 1 and 2
Risk description
The regulatory landscape for the housebuilding industry has become
increasingly complex, particularly in land acquisition, planning, building
regulations and the environmental impact of development. Further regulatory
evolutions through the NHQC, for example, will affect many of our processes.
Failure to comply with regulations in any of these areas could result in
imposition of financial penalties and potential damage to the Group's
reputation.
Key mitigations
· Comprehensive management systems to ensure regulatory and legal
compliance, including policies, procedures and internal training for key areas
of regulation.
· Inspection regimes supported by internal audits and external
reviews on construction quality and compliance.
· Oversight from Group-level functions and cross-functional steering
groups for key areas, such as GDPR compliance.
Risk monitoring measures
· The Board and Audit & Risk Committee are provided with regular
updates on core areas of regulatory compliance and preparation for upcoming
regulatory change.
· Routine principal risk reports issued to each meeting of the Board
include narrative updates on regulatory matters from the relevant specialists
within the business.
Viability Statement
Persimmon's prospects and viability
The long-term prospects and viability of the business are a consistent focus
of the Board when determining and monitoring the Group's strategy. The
identification and mitigation of the principal risks facing the business,
which have been updated to reflect current UK economic conditions and
uncertainties, also form part of the Board's assessment of long-term prospects
and viability*.
Assessing Persimmon's long-term prospects
Persimmon has built a strong position in the UK's housebuilding market over
many years, recognising the potential for long-term growth across regional
housing markets. The Board recognises that the long-term demographic
fundamentals of continued positive population growth and new household
formation, together with the requirement to replace and improve the quality
of the country's housing stock, provide a long-term supportive backdrop for
the industry. However, the Board and the Group's strategy recognises the
inherently cyclical nature of the UK housing market. The Group has therefore
been able to maintain a position of strength with good liquidity, high quality
land holdings and a strong balance sheet throughout the disruption caused by
the cost of living crisis and ongoing geopolitical uncertainty. The future
impacts of these disruptions in creating uncertainty within the UK economy and
subsequent effect on the Group's sales and construction programmes remain
uncertain. The Board has considered these potential impacts in depth when
assessing the long-term prospects of the Group.
Whilst this uncertainty remains, Persimmon possesses the sound fundamentals
required to realise the Group's purpose and ambitions and deliver sustainable
success:
· talented teams focused on consistently delivering good quality
new homes for our customers;
· high quality land holdings that allow us to create attractive
places in areas where people wish to live and work;
· strong customer and local community relationships;
· continued investment in the training and development of our
teams;
· market knowledge, expertise and industry know-how;
· long-term healthy supplier engagement; and
· vertical integration ensuring internalised supply of key
materials.
By continuing to build on these solid foundations through, for example, The
Persimmon Way and our ongoing investments in the customer experience, its
land, development sites and in its supply chain, the Group aims to create
enduring value for the communities we serve and our wider stakeholders. This
is reflected within the Group's materiality assessment, which ensures a
thorough review of stakeholder interests is incorporated within
the assessment of the Group's long-term prospects.
The Group adopts a disciplined annual business planning regime, which is
consistently applied and involves the management teams of the Group's
housebuilding businesses and senior management, with input and oversight by
the Board. The Group combines detailed five-year business plans generated by
each housebuilding business from the 'bottom up', with projections constructed
from the 'top down' to properly inform the Group's business planning over
these longer-term horizons. Zero-based 12-month budgets are established for
each business annually.
This planning process provides a valuable platform, which facilitates the
Board's assessment of the Group's short and long-term prospects. Consideration
of the Group's purpose, current market position, its five key priorities and
overall business model, and the risks that may challenge them are all included
in the Board's assessment of the prospects of the Group.
Key factors in assessing the long-term prospects of the Group:
1. The Group's current market positioning
· Sales network of active developments across the UK providing
geographic diversification of revenue generation.
· Three distinct brands providing diversified products and
pricing deliver further diversification of sales.
· Imaginative and comprehensive master planning of development
schemes with high amenity value to support sustainable, inclusive
neighbourhoods which generate long-term value to the community.
· Disciplined land replacement reflecting the extent and location
of housing needs across the UK provides a high quality land bank in the most
sustainable locations supporting future operations.
· Long-term supplier and subcontractor relationships providing
healthy and sustainable supply chains.
· Sustained investment to support higher levels of construction
quality and customer service through the implementation of initiatives such as
The Persimmon Way.
· Strong financial position, year end net cash and a £700m
working capital credit facility that has been extended to July 2029. There
remains the ability to extend for a further year. In making our assessments we
have assumed we will exercise this extension.
2. Strategy and business model
· Strategy focuses on the risks associated with the housing cycle and
on minimising financial risk and maintaining financial flexibility.
· Focusing on constructing new homes for our customers to the high
quality standards that they expect and helping to create attractive
neighbourhoods.
· Strategy recognises the Group's ability to generate surplus capital
beyond the reinvestment needs of the business.
· Substantial investment in staff engagement, training and support to
sustain operations over the long-term.
· Disciplined land replacement reflecting the extent and location of
housing needs across the UK provides a high quality land bank in the most
sustainable locations supporting future operations.
· Long-term supplier and subcontractor relationships providing healthy
and sustainable supply chains.
· Approach to land investment and development activity provides the
opportunity to successfully deliver much needed new housing supply and create
value over the long-term.
· Differentiation through vertical integration, achieving security of
supply of key materials and complementary modern methods of construction to
support sustainable growth.
· Simple capital structure maintained with no structural gearing.
3. Principal risks associated with the Group's strategy and
business model include
· Disruption to the UK economy and housing market conditions
adversely affecting demand for and pricing of new homes, availability and
pricing of land, or contributing to inflationary pressures.
· Changes in Government policy affecting the housebuilding
sector, such as those relating to taxation, planning conditions or market
support.
· Climate change risk, comprising both transition (legal and
regulatory changes affecting the housebuilding sector) and physical
(operational disruption through more frequent and prolonged adverse weather)
elements.
· Failure to safeguard our sites, our people, our customers or
the environment we work in could impact our reputation or result in financial
penalties.
· Reputational damage and increased costs resulting from
disruption or delays to scheduled remediation works to ensure resident safety.
· Failure to maintain an adequate supply of high quality land due
to planning constraints or inability to procure land at appropriate levels of
return.
· Disruption to supply chains, affecting the availability of key
construction materials.
· Ability of the Group to access significant working capital to
fund investments in land and work in progress.
· Adverse market competition and construction workforce trends,
resulting in an inability to attract and retain high quality workers and an
appropriately experienced management team.
· Cyber and data risk, including potential for significant or
prolonged operational disruption arising from cyber-attack or failure of
critical IT systems.
· Requirement to maintain a reputation for high standards of
business conduct across all aspects of operations whilst working within an
increasing complex regulatory landscape.
See above for the full list of principal risks together with detailed
descriptions.
Disciplined strategic planning process
The prospects for the Group are principally assessed through the annual
strategic planning review process conducted towards the end of each year. The
management team from each of the Group's housebuilding businesses produce a
five-year business plan with specific objectives and actions in line with the
Group's strategy and business model. These detailed plans reflect the
development skill base of the local teams, the region's housing market,
strategic and on-market land holdings and investments required to support
their objectives. Special attention is paid to construction programmes and
capital management through the period to ensure the appropriate level of
investment is made at the appropriate time to support delivery of the plan.
Emerging risks and opportunities in their markets are also assessed at this
local level.
Senior Group management reviews these plans and balances the competing
requirements of each of the Group's businesses, allocating capital with the
aim of achieving the long-term objectives of the Group including our five key
priorities. The five-year plans provide the context for setting the annual
budgets for each business for the start of the new financial year in January,
which are consolidated to provide the Group's detailed budgets. The Board
reviews and agrees both the long-term plans and the shorter-term budgets for
the Group.
The outputs from the business planning process are used to support development
construction planning, impairment reviews, funding projections, reviews of the
Group's liquidity and capital structure, and for the identification of surplus
capital available for return to shareholders via the Group's Capital
Allocation Policy.
Assessing Persimmon's viability
The Directors have assessed the viability of the Group over a five-year
period, taking into account the Group's current position and the potential
impact of the principal risks facing the Group.
The Directors consider the use of a five-year period as the most appropriate
time horizon for the purpose of assessing the viability of the Group, as it
reflects the business model of the Group, with new land investments generally
taking at least five years to build and sell through, and for the development
infrastructure to be adopted by local authorities.
A key feature of the Group's strategy, as documented in the Strategic Report
and set out in the Group's capital allocation priorities, is the Group's
commitment to maintain capital discipline over the long-term through the
housing cycle.
The key principles of the capital allocation policy are:
· maintain a strong balance sheet and low leverage through the housing
cycle, while prioritising our building safety remediation works;
· invest in the long-term performance and growth of Persimmon
through continuing our disciplined approach to land acquisition and investment
into enhancing the Group's operational capabilities;
· pay ordinary dividends at a sustainable level that is well
covered by post-tax profits through the housing cycle, thereby balancing
capital retained for investment in the business with those dividends; and
· return any excess capital to shareholders from time to time,
through a share buyback or special dividend as considered to be appropriate at
the time.
On 12 March 2024, in line with the capital allocation policy, the Directors
declared a final dividend of 40p per share in respect of the financial year
ended 31 December 2023. This final dividend approved at the 2024 Annual
General Meeting and was paid to shareholders on 12 July 2024.
On 8 August 2024, the Directors announced their intention to pay 20p per share
as an interim cash dividend in respect of the financial year to 31 December
2024. This interim dividend was paid to shareholders on 8 November 2024.
On 10 March, the Directors declared a final dividend of 40p per share in
respect of financial year ended 31 December 2024.
On an annual basis, the Directors review financial forecasts used
for this Viability Statement as explained in the disciplined strategic
planning processes outlined earlier. These forecasts incorporate assumptions
on issues such as the timing of legal completions of new homes sold, average
selling prices achieved, profitability, working capital requirements and cash
flows.
The Directors have also carried out a robust assessment of the principal and
emerging risks facing the Group, and how the Group manages those risks,
including those risks that would threaten its strategy, business model,
future operational and financial performance, solvency and liquidity. This
risk assessment was also informed by the performance of the Group's
materiality assessment, incorporating views from the Group's key stakeholders,
and through a comprehensive survey to incorporate input from the Board and
senior management from across the Group. The Directors have considered the
impact of these risks on the viability of the business by performing a range
of sensitivity analyses when compared to base position being the actual
performance for full year 2024, including severe but plausible scenarios
materialising together with the likely effectiveness of mitigating actions
that would be executed by the Directors.
The scenarios emphasise the potential impact of severe market disruption
including, for example, the effect of economic disruption from a cost of
living crisis or a war on the short to medium-term demand for new homes. The
scenarios' emphasis on the impact on the cash inflows of the Group through
reduced new home sales is designed to allow the examination of the extreme
cash flow consequences of such circumstances occurring. The Group's cash flows
are less sensitive to supply side disruption given the Group's sustainable
business model, flexible operations, agile management team and off-site
manufacturing facilities.
The first scenario modelled is a severe but plausible downside scenario that
models a fall in housing revenue, when compared to full year 2024, of c.54%
for full year 2025 followed by a gradual recovery. The housing revenue
modelled factors in changes in both volumes and average selling prices. The
assumption used in this scenario reflects the experience management gained
during the global financial crisis from 2007 to 2010, it being the worst
recession seen in the housing market since World War Two.
A second, even more extreme, scenario assumes the same significant downturn in
2025 followed by a period of enduring depression of the UK economy and housing
market through to 2029, assuming that neither volumes nor revenue recover, but
that mitigations within management's control are exercised.
In each of these scenarios, cash flows were assumed to be managed
consistently, ensuring all relevant land, work in progress and operational
investments were made in the business at the appropriate time to deliver the
projected new home legal completions. Each scenario fully reflects the current
estimate of cash outflows, value and timing associated with the legacy
buildings provision. The Directors assumed they would continue to make
well-judged decisions in respect of capital allocation payments, ensuring that
they maintained financial flexibility throughout and that the RCF would be
extended to July 2030 as permitted by the current agreement.
Based on this assessment, the Directors confirm that they have reasonable
expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period to the end of 31 December 2029.
* The Directors have assessed the longer-term prospects of the Group in
accordance with provision 31 of the UK Corporate Governance Code 2018.
Statement of Directors' Responsibilities
The Statement of Directors' Responsibilities is made in respect of the full
Annual Report and the Financial Statements not the extracts from the financial
statements required to be set out in the Announcement.
The 2024 Annual Report and Accounts comply with the United Kingdom's Financial
Conduct Authority Disclosure Guidance and Transparency Rules in respect of the
requirement to produce an annual financial report.
We confirm that to the best of our knowledge:
· the Group and Parent Company financial statements, contained in
the 2024 Annual Report and Accounts, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the issuer, and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to
assess the Group's position and performance, business model and strategy.
The Directors of Persimmon Plc and their function are listed below:
Roger Devlin Chairman
Dean Finch Group Chief Executive
Andrew Duxbury Chief Financial Officer
Nigel Mills Senior Independent Director
Annemarie Durbin Non-Executive Director
Andrew Wyllie Non-Executive Director
Alexandra Depledge Non-Executive Director
Colette O'Shea Non-Executive Director
Paula Bell Non-Executive Director
Anand Aithal Non-Executive Director
By order of the Board
Dean Finch Andrew Duxbury
Group Chief Executive Chief Financial Officer
10 March 2025
The Group's Annual financial reports, half year reports and trading updates
are available from the Group's website at www.persimmonhomes.com/corporate.
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