REG - Persimmon Plc - Half Year Results
17/08/2022 07:00
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RNS Number : 2430W Persimmon PLC 17 August 2022
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
Building an even stronger business whilst sustaining industry-leading
performance
Persimmon Plc today announces its half year results for the six months ended
30 June 2022.
● Strong demand - average private sales rate for the period c.1% ahead year on
year, with robust forward sales position and re-iterate guidance of 14,500
-15,000 legal completions this year;
● 6,652 new home completions (2021: 7,406) as Group rebuilds its outlet
position;
● Robust financial performance delivering industry-leading margins and ROCE;
● Strong customer service, build quality and efficiency;
● On track to achieve c.10% increase in active outlets by the end of the current
year with 60 outlets opened in the period;
● 8,829 plots brought into the business across 37 locations - a replacement rate
of over 130%;
● Returned £750m to shareholders by July 2022.
Highlights
H1 2022 H1 2021
New home completions 6,652 7,406
New home average selling price £245,597 £236,199
Total Group revenues(1) £1.69bn £1.84bn
New housing gross margin(2) 31.0% 30.9%
Profit before tax £439.7m £480.1m
Cash at 30 June £0.78bn £1.32bn
Owned and under control land holdings at 30 June 89,052 plots 85,771 plots
Current forward sales position £2.32bn £2.23bn
Capital return (per share) 125p (April 2022) 125p (March 2021)
110p (July 2022) 110p (August 2021)
Dean Finch, Group Chief Executive, said:
"Persimmon continues to perform well. We are making important progress in
quality, service, land investment opportunities and efficiencies to build an
even stronger business, while continuing to deliver the strong financial
returns that Persimmon is renowned for. Demand for our attractively priced,
high quality homes has remained robust, with our average private sales rates
for the period being c.1% ahead year on year. Our customer satisfaction
score(3) is currently 92%. We have some exciting new sites coming into the
business at industry-leading margins, with a land replacement rate for the
period of over 130% and expanded production in our own brick, tile and timber
frame factories, is further enhancing our supply resilience and cost
efficiency, enabling us to re-iterate our guidance of 14,500 - 15,000 legal
completions for the full year.
"We are on track to achieve a c.10% increase in our active outlets by the end
of the current year as we work to rebuild our outlet position after a land
buying pause three years ago and are tackling the on-going challenges in the
planning system. We are stepping up proactive engagement with local
authorities, enhancing our approach to developing attractive communities and
raising the bar on design to help mitigate planning challenges. We continue to
expect our volume delivery to be significantly higher in the second half of
the year.
"Our combination of compelling affordability and high levels of service and
build quality, coupled with our well-located sites provides a uniquely strong
and sustainable customer proposition. It is by strengthening this proposition
further that we will achieve our ambition of becoming Britain's best
homebuilder for both customers and shareholders, consistently delivering high
quality homes, excellent customer service and industry-leading financial
returns."
Building an even stronger business
Robust first half performance
● Robust first half performance against strong comparator - profit before tax of
£439.7m (2021: £480.1m);
● Managing the balance of inflationary pressures effectively - housing gross
margin(2) up on same period last year (31.0% vs 30.9%);
● Average private sales rate for the period was c.1% ahead year on year;
● Underlying return on average capital employed4 of 30.9% (December 2021: 35.8%)
- over the last 3 years the Group's underlying return on average capital
employed has been 34.2% reflecting the sustained success of the business;
● 235p per share paid in respect of the year ended 31 December 2021.
Placing customers at the heart of our business
● Persimmon Way fully embedded across the business and operating well;
● HBF 8-week customer satisfaction score(3) currently 92%;
● Trustpilot score(5) improved by 30% since the start of the year;
● NHBC Reportable Items(6) improved by 25% since December 2020;
● Largest team of independent quality inspectors in the industry providing
quality assurance on each of our homes;
● New product range, marketing rebrand and service enhancements are
strengthening our offer to customers to meet their aspirations and earn their
trust and loyalty;
● Our average private selling price of £267,325 is c.20% below the UK's
national average selling price(7), demonstrating the enduring strength of our
value offer to customers.
Building a strong platform for success
● High quality land holdings, with 89,052 plots owned and under control at 30
June 2022 (December 2021: 88,043), with a land cost to anticipated revenue
ratio(8) of 12.2% (December 2021: 11.9%);
● Disciplined land replacement - 8,829 plots brought into the business across 37
locations at industry-leading margins;
● On track to achieve a c.10% increase in our active outlets by the end of the
year, with 60 opened in the first half and around 70 forecast to open in the
second half of the year, although on-going planning delays continue to present
risk;
● Build rates improved by c.10% compared with pre-Covid levels;
● Continuing to invest in our people - around 90% of our site colleagues have
achieved a relevant NVQ qualification (December 2020: 21%) and we have been
recognised as a Top 100 Apprentice Employer.
Driving value
● BrickWorks, TileWorks and Space4 factories all increasing output, providing
supply resilience and efficiency;
● Enhanced data and management tools introduced to drive greater consistency in
build times and quality;
● Strengthened centralised procurement driving efficiencies and pooling shared
resource to manage supply challenges.
Our communities
● Delivering homes around 30% more energy efficient than existing housing stock
making them more cost efficient to run for our customers;
● Invested over £610m in local communities over the last 18 months, delivering
3,632 homes to our housing association partners
● Continuing to protect leaseholders from the cost of cladding removal; five of
our developments have secured EWS1 certificates. Proactively engaging with
Management Companies and their agents on works required on all other
identified developments built by Persimmon.
Outlook
● Demand is strong with the Group's average private sales rate in the period
around 1% ahead year on year and a robust forward order book of £2.32bn;
● Robust start to the second half; average private sales rates for the first
seven weeks 11% down year on year against a strong comparator and as we return
to a more normal seasonal pattern, and up 8% on 2019 being the most recent,
more typical trading year;
● Currently over 90% forward sold for the current year;
● Sales price inflation currently mitigating the cost inflation the industry is
experiencing;
● Continue to target around 10% growth in outlets by the end of the current
year, with enhanced placemaking and design approach and proactive local
authority engagement expected to mitigate on-going planning challenges;
● Re-iterate our guidance of 14,500-15,000 completions for the full year;
● While near term uncertainties continue the longer-term fundamentals remain
strong. Our work to become Britain's best homebuilder will build an even
stronger and sustainable business delivering for customers and shareholders
alike.
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. Housing revenues are the revenues
generated on the sale of newly built residential properties only.
2 Stated on new housing revenues of £1,633.7m (2021: £1,749.3m) and gross
profits of £506.2m (2021: £540.5m).
3 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.
4 12 month rolling average calculated on underlying operating profit and total
capital employed (including land creditors). Underlying operating profit is
stated before goodwill impairment of £5.5m (December 2021: £6.2m).
5 Trustpilot is a digital review platform open to the public. Scores are based
on all of the service reviews received on the platform.
6 A Reportable Item is an area of non-compliance with NHBC standards. The item
is rectified fully before completion of the home.
7 National average selling price for new build homes sourced from the UK House
Price Index as calculated by the Office for National Statistics from data
provided by HM Land Registry.
8 Land cost value for the plot divided by the anticipated future revenue of
the new home sold.
For further information please contact:
Dean Finch, Group Chief Executive Kevin Smith
Jason Windsor, Chief Financial Officer Jos Bieneman
Persimmon Plc Ellen Wilton
Tel: +44 (0) 1904 642199 Tel: +44 (0) 20 7638 9571
There will be an analyst and investor presentation at 09.00 today, hosted by
Group Chief Executive, Dean Finch and Chief Financial Officer, Jason Windsor.
Analysts unable to attend in person may listen live via conference call by
registering using the link below:
https://register.vevent.com/register/BIeec490705a9148279d0424360eec3206
(https://register.vevent.com/register/BIeec490705a9148279d0424360eec3206)
The presentation can be viewed via the webcast using the link below:
https://edge.media-server.com/mmc/p/x3tot3oz
(https://edge.media-server.com/mmc/p/x3tot3oz)
An archived webcast of today's analyst presentation will be available on
www.persimmonhomes.com/corporate (http://www.persimmonhomes.com/corporate)
from this afternoon.
CHIEF EXECUTIVE'S REVIEW
Building an even stronger business
Overview
The business has performed well in the period. Demand has been strong, with
the Group's average private weekly sales rate running at around 1% ahead year
on year. In the period, we delivered 6,652 homes (2021: 7,406 homes) as we
build up our outlet position whilst maintaining our disciplined approach to
land investment opportunities. The Group's average selling price of £245,597
(2021: £236,199) has increased by 4% year on year resulting in housing
revenue of £1.63bn (2021: £1.75bn). The Group's housing gross margin(1) was
ahead of last year (31.0% vs 30.9%) as we managed the cost inflationary
pressures impacting our industry effectively and underlying housing operating
margin(2) was 27.0% (2021: 27.6%) reflecting the lower first half volumes on
the rate of overhead recovery. The Group generated a profit before tax of
£439.7m (2021: £480.1m) in the period.
We are continuing to deliver an industry-leading financial performance whilst
building an even stronger business for the future. During the period, we
delivered higher quality homes at improved levels of build efficiency. The
Group's average build rates per site were around 10% higher than pre-Covid
levels and our customer satisfaction survey score(3) continues to achieve a
five-star rating. We are identifying exciting land investment opportunities
whilst maintaining our disciplined approach. Our active outlet position is
growing and the business remains on track to achieve a c.10% improvement in
outlet numbers by the end of the year, despite the significant delays the
industry is facing in achieving planning consents. Our off-site manufacturing
facilities continue to provide both efficiency and resilience in supply,
augmented by a strengthened and enhanced group procurement function.
We are building an even stronger business that will sustainably deliver the
high quality homes our customers and stakeholders expect, while maintaining
the industry-leading financial performance that underpins our superior
shareholder returns.
Building sustained success
Earlier this year we launched a new Mission, Vision and Values statement to
guide the next stage of our development. Our Mission is to build homes
customers can rely on at prices they can afford. To achieve this our Vision is
to be Britain's leading homebuilder, with quality and customer service at its
heart, building the best value homes on the market in sustainable and
inclusive communities. Our five Values provide the behaviours that will help
us achieve this Mission and Vision: customer focused; value driven; team work;
social impact; and excellence always.
We have a clear strategy to build an even stronger business while protecting
Persimmon's great strengths. Reflecting the progress we have already made, I
have refreshed and renewed the five priorities for the business that I
launched shortly after I joined:
● Build quality: our ambition has grown from "build right, first time, every
time" to trusted to deliver five-star homes consistently;
● Reinforcing trust: in seeking to build a compelling brand we will place
customers at the heart of our business, trusted to deliver the best value
homes customers can be proud of;
● Disciplined growth: maintain our stringent appraisal, investing in high
quality land in the right areas;
● Industry-leading financial performance: sustain our industry-leading margins
and returns and drive healthy profit and cash;
● Supporting sustainable communities: actively part of the net zero carbon
economy transition, the communities we operate in and efforts to widen
opportunity.
These enhanced ambitions and renewed priorities are not ends in themselves.
They recognise that Persimmon has an important role to play in society,
including as a responsible company and employer. It is by strengthening our
ability to consistently deliver high quality and service that we will sustain
Persimmon's industry-leading financial performance. In the next section I will
explain the progress we have made and the further opportunities ahead.
Building an even stronger business
There are five key features of the business that will continue to drive our
industry-leading performance and returns. First, quality and service remain
our priorities and reflect our determination to bring the customer into the
heart of the business. Second, a relentless focus on driving value helps
underpin both our unique value proposition and strong returns. Third, our
experienced management teams across the business are driving our new ambitions
across the country. Fourth, our disciplined land replacement strategy is being
augmented by site planning and design standards that deliver attractive
communities and engagement with local authorities to drive timely outlet
openings. And, fifth, maintaining the Group's strong financial position is
crucial.
Customers at the heart of our business - quality and service
We are placing customers at the heart of our business and I am determined to
continue to drive improvements in build quality and customer service. This is
key to our continued success and will deliver efficiencies across the Group.
The Persimmon Way, the Group's construction excellence programme is fully
embedded within the business and driving real results for our customers. We
were delighted to be awarded a five-star rating in the annual HBF survey for
the first time in Persimmon's history and have continued to track ahead of the
five-star threshold for this survey year (current score: 92%(3)). Further
encouraging evidence of our progress is provided by our 9 month HBF customer
satisfaction score(3) currently indicating a 25% improvement over the last two
survey years. Our Trustpilot score(4) has also improved markedly, increasing
by 30% since the start of the year.
Our team of 62 independent inspectors, which we believe to be the largest of
its type in the industry, provides quality assurance at key stages of the
build process for each home that we deliver. Working with the local management
teams as an independent challenge they are helping to drive real improvement,
with NHBC Reportable Items(5) improving by 25% over the last eighteen months.
We are embedding our new approach through independent assurance and analysis
to help drive improved standards. Construction Quality Reviews (CQR) are now
conducted by the NHBC, analysing the root cause of any quality issues. Our CQR
score is currently running nearly 3% ahead of last year's average. We are
conducting an external audit of the Persimmon Way's implementation across all
of our businesses to identify key learnings and share best practice across the
Group. Our 'Building a Safer Future Charter Champion' accreditation involves
thorough reviews of our approach across all of our businesses and is
progressing well. Three of our site managers recently achieved the NHBC's
coveted Pride in the Job Awards.
Our average private selling price of £267,325 is currently c. 20%(6) below
the market average. In striving to consistently deliver high build quality and
service excellence, we are seeking to offer customers best value they can
trust. Our new product range, enhanced service and improved marketing is
seeking to deliver options that meet customers' aspirations at whatever stage
of home buying they are at. We want to earn customers' trust and then keep it
through repeat sales for them and those they recommend us to.
FibreNest, our ultrafast full fibre broadband provider, continues to provide
our customers with an important service. It currently has c.25,000 customers
across over 310 sites.
Driving value
Alongside continually striving to build at a better quality more consistently,
we are always seeking to drive value. The Group's build rates are around 10%
higher than pre-Covid levels. As planned, we are expanding our vertical
integration capabilities and driving efficiencies. The Group's Space4 factory
provides us with an excellent advantage as timber frame homes can be built
over 20% faster than traditionally built houses, and help mitigate challenges
around the availability of some trades. In the period, 35% of the homes we
delivered used timber frames. We have been actively reviewing where we can
expand the use of timber frame construction. It is pleasing therefore that our
Space4 factory has seen a 20% increase in its forward order book at the end of
June, compared to the same time last year. We have recently submitted our
pre-application plans to the local authority for our new Space4 factory and
are targeting a full planning submission by the end of the year, to further
increase production in the coming years.
In addition, through new analytical approaches and data-based management tools
we are identifying areas for focus and opportunities for sharing best practice
in build programmes across the business to continue to secure improvements.
Each of our off-site manufacturing facilities, BrickWorks, TileWorks and
Space4, provide a resilience of supply alongside good cost efficiency. We are
on track to expand production within BrickWorks by nearly 20% this year, with
around 10% of further growth to come next year. Our TileWorks factory is
projected to increase output by around 40% this year alone.
Our strengthened central procurement team has helped use our Group-wide
purchasing power to secure enhanced deals with key suppliers and supported
regions experiencing specific material issues by sharing available resources,
including from centrally-held contingency stock on key at-risk items.
Land and planning
Our well-established strategy of disciplined land investment, acquiring sites
with embedded industry-leading margins in areas of high demand, has continued.
In the first six months of the year we brought 8,829 plots into the business,
across 37 locations. Since 1 January 2021, we have brought around 30,000 plots
across c.140 sites into our already strong land holdings, a replacement rate
of around 140%. At 30 June 2022, the Group had 89,052 owned and under control
plots (December 2021: 88,043), with a land cost to anticipated revenue
ratio(7) of 12.2% (December 2021: 11.9%).
While we have been strengthening our land pipeline, the combination of strong
demand in 2020 and 2021, with lower land additions in 2019 and 2020, meant we
were operating from a relatively low number of outlets at the start of the
year. We remain on track to open around 70 outlets in the second half of the
year, growing our position by around 10% over the course of the year,
providing a robust platform for the future.
It remains the case, however, that the delays and increasing complexity in the
planning system are impacting our ability to open new outlets as promptly as
we would like. We previously highlighted the impact of Natural England's
nutrient neutrality guidance across the industry, with c.120,000 plots
currently stalled in England. The Government's recent statement on the issue
does not appear to offer the short-term clarity the industry hoped for, so we
continue to see around 1,500 of our plots affected, a number that is likely to
grow until a resolution is found. Around 90% of the Group's 2023 volume
delivery has planning consent, with around 75% with detailed planning
permission. Our operational teams are working hard to secure the remaining
consents required and this will be an important factor in determining our 2023
volume delivery.
We have stepped-up our approach to working with local authorities and
communities to secure planning consents as quickly as possible. Our new
housing range and 'Placemaking Framework', which sets out planning and design
techniques to develop attractive communities, provide local teams with
enhanced tools to meet customer needs and local planning authority
requirements. A new stakeholder engagement team is proactively engaging local
authorities across the country to identify how we can help them deliver their
key objectives. We are offering support on nutrient neutrality to help
interested local authorities identify solutions and deal with the challenge
and unlock permissions.
Strong financial position
Whilst building an even stronger business, we have continued to deliver an
industry-leading performance and maintained Persimmon's high quality land
holdings and healthy liquidity. After returning £399m to shareholders and
investing £416m in high quality land opportunities, the Group held £0.78bn
of cash at 30 June 2022 (December 2021: £1.25bn) with deferred land
commitments of £135m to the end of the current year, providing a robust
balance sheet to support resilient shareholder returns and provide a platform
for disciplined growth. Underlying return on average capital employed(8) was
30.9% (December 2021: 35.8%), further demonstrating the strength of the
business.
Experienced teams
Persimmon has highly experienced teams across the Group and the new management
structure introduced at the beginning of the year is working well. We are
determined to become an employer of choice and attract more of the best talent
from across the industry. It is pleasing, therefore, that our recent Employee
Survey's engagement score was 83%, up 5 points from last year and 11 points
above our benchmark group. Our annual July pay reviews saw awards reflecting
the unique cost of living challenges, with those on lower incomes receiving
proportionately the highest increases.
We continue to increase our investment in training with a Learning Management
System in place for all colleagues, as well as enhanced tailored training for
specific areas. Around 90% of site management colleagues have received an NVQ
qualification appropriate to their role (December 2020: 21%); 127 sales
colleagues have completed the Sales Excellence programme in conjunction with
the Institute of Sales Professionals. We were delighted to recently be
recognised as a Top 100 Apprentice Employer and have invested in an academy in
Bridgend alongside the local college to provide on-site classrooms for
brickwork and joinery apprentices. This is a model we are looking to extend
further.
I would also like to welcome Jason Windsor, our new Chief Financial Officer.
Jason joined us from Aviva in mid-July. His wealth of experience from other
industries complements the deep knowledge in the existing management team,
further strengthening our operational leadership. I look forward to working
with Jason in the years ahead.
Our communities
We recognise that as a responsible company we have an important role to play
in society. We remain proud of our leadership in pledging 18 months ago to
protect leaseholders from the cost of cladding removal and five of our
developments have already secured successful EWS1 certificates. While we are
in active discussions with the HBF and government to convert the commitments
made in April's Developer Pledge into a legal document and resolve areas of
current uncertainty, we continue to proactively engage with Management
Companies and their agents on works required on all other identified
developments built by Persimmon.
Building on our Germany Beck project, we have recently secured planning
permission for a second Zero Carbon home at a site in Malmesbury. This is an
example of our determination to develop building techniques and technology
that meets the sustainability challenge in a way that is cost effective for
customers. Our Priory Green and Moorland Grove sites are heated through the
use of air source heat pumps demonstrating our drive to improve sustainability
across our business. In addition, our homes are already around 30% more
energy efficient than the existing housing stock, a gap that is likely to only
increase and become even more important as cost of living pressures become
ever more pressing.
Outlook
The UK housing market is strong with demand exceeding supply, relatively low
interest rates (despite the recent rises) and good levels of mortgage
availability. The Group's average private sales rates for the period were
strong, c.1% ahead of last year. We have made a robust start to the second
half; whilst the Group's average private sales rate for the first seven weeks
is 11% down year on year as we return to more normal seasonal trading
patterns, it is 8% up on 2019 being the most recent, more typical trading year
and our cancellation levels remain low. Sales price inflation is currently
mitigating the cost inflation the industry is experiencing. The current value
of our forward sales is £2.32bn, with 10,542 homes (2021: 11,140), 5,992 of
which are sold into the private market (2021: 6,471). The Group is over 90%
forward sold for the full year. The average selling price of new homes forward
sold to owner occupiers was c.£284,000, c.12% ahead of the prior year (2021:
c.£253,000).
We re-iterate our year end volume expectations of delivering 14,500 to 15,000
units with forecast full year profit in line with our expectations. While
risks remain, we expect to continue to grow our outlet position, opening
around 70 outlets in the next six months, providing a robust platform for the
future.
We are mindful of the scope for further interest rate raises as well as the
broader economic challenges recently set out by the Governor of the Bank of
England, alongside the wider industry challenges including the withdrawal of
Help to Buy. The longer-term fundamentals of the UK housing market, however,
remain strong. We will continue to focus on consistently delivering high
quality homes and high standards of service, earning our customers' trust and
loyalty in meeting their aspirations. Through the work we are doing in
building an even stronger business, we are confident in our continued success,
protecting and enhancing Persimmon's great strengths and driving sustainable
industry-leading returns for shareholders.
Dean Finch
Group Chief Executive
16 August 2022
Footnotes
1 Stated on new housing revenues of £1,633.7m (2021: £1,749.3m) and gross
profits of £506.2m (2021: £540.5m).
2 Stated on new housing revenue of £1,633.7m (2021: £1,749.3m) and
underlying profit from operations of £440.7m (2021: £483.0m) calculated
before goodwill impairment of £3.2m (2021: £3.9m).
3 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.
4 Trustpilot is a digital review platform open to the public. Scores are based
on all of the service reviews received on the platform.
5 A Reportable Item is an area of non-compliance with NHBC standards. The item
is rectified fully before completion of the home.
6 National average selling price for new build homes sourced from the UK House
Price Index as calculated by the Office for National Statistics from data
provided by HM Land Registry.
7 Land cost value for the plot divided by the anticipated future revenue of
the new home sold.
8 12 month rolling average calculated on underlying operating profit and total
capital employed (including land creditors). Underlying operating profit is
stated before goodwill impairment of £5.5m (December 2021: £6.2m).
FINANCIAL REVIEW
Strong trading
Trading has been strong in the period with good levels of customer demand and
cancellation rates remaining at historic lows throughout. The Group generated
total revenues(1) of £1.69bn (2021: £1.84bn), with new housing revenue of
£1.63bn (2021: £1.75bn).
Legal completions, as anticipated, were lower than the prior year and reflect
delays in achieving planning consents on our new outlet openings. The Group
delivered 6,652 new homes (2021: 7,406) at an average selling price of
£245,597 (2021: £236,199) which is 4% higher year on year, reflecting the
underlying strength of demand in the UK housing market.
The Group delivered 5,553 new homes to its private owner occupier customers
(2021: 6,104) at an average selling price 3.5% higher than a year ago (2022:
£267,325; 2021: £258,220), reflecting both improvement in selling prices
achieved and the mix of homes sold in the period. To supplement this, the
Group delivered 1,099 homes to our housing association partners (2021: 1,302)
at an average selling price of £135,813 (2021: £132,959).
The increased prices achieved in the period have mitigated the impact of cost
inflation of around 8 - 10%, with an increase in the Group's housing gross
margin(2) compared with 2021 (2022: 31.0%; 2021: 30.9%). The Group's gross
profit delivery for the period of £506.2m (2021: £540.5m) continues to be
supported by the Group's well established land replacement strategy, with land
cost recoveries³ of 11.9% of new housing revenue for the period (2021:
14.1%).
Underlying housing operating margin(4) of 27.0% has been impacted by operating
deleverage due to the reduced levels of completions (2021: 27.6%). Underlying
operating profit(5) for the Group was £440.7m (2021: 483.0m).
The Group generated a profit before tax of £439.7m in the period (2021:
£480.1m).
Robust balance sheet
The Group has a robust balance sheet with high quality land holdings, strong
levels of work in progress investment and healthy levels of liquidity. The
Group remains committed to investing in its future with, since 31 December
2021, land investment increasing by £304.6m to over £2.10bn and work in
progress investment increasing by £172.0m to £1.23bn at 30 June 2022.
At 30 June 2022, the Group had work in progress of c.4,400 equivalent units of
new home construction (December 2021: c.4,100), reflecting our c.10% increase
in build rates compared with pre-Covid levels and with a focus on improving
our stock position to increase availability and choice for our customers. The
Group remains in a strong position to deliver a resilient closing stock
position at the end of 2022 whilst achieving its targeted growth in output.
The Group's defined benefit net pension asset has increased to £209.4m at 30
June 2022 (December 2021: £148.8m) mainly reflecting gains through changes in
assumptions to discount and inflation rates that have decreased the value
placed on the schemes liabilities offset in part by falling asset values.
Total equity decreased to £3,613.8m from £3,625.2m at 31 December 2021.
Reported net assets per share of 1,131.7p represents a 0.4% decrease from
1,135.7p at 31 December 2021. Underlying return on average capital employed(6)
as at 30 June was 30.9% (December 2021: 35.8%), demonstrating the resilience
of the business and the investment made to support future growth and returns.
Underlying basic earnings per share(5) for the first six months of 2022 was
107.5p, a 13.2% decrease compared to the prior period (2021: 123.8p).
High quality land holdings
The Group has continued to maintain its disciplined approach to land
investment, identifying opportunities to acquire land in areas where new
housing is most needed and in areas where people wish to live and work.
During the period the Group increased its owned and under control land
holdings to 89,052, from 88,043 plots at 31 December 2021, with 37,771 of
these plots benefitting from a detailed planning consents and are under
development.
The Group brought 8,829 plots into the business across 37 locations throughout
the UK with 3,626 of these plots converted from our strategic land portfolio.
At 30 June 2022, Persimmon's owned land holdings of 72,036 plots (2021: 66,708
plots) have an overall proforma gross margin(7) of c.33% and a cost to revenue
ratio of 11.8%(8) (2021: 11.4%).
To supplement these land holdings, the Group has c.13,300 acres of strategic
land in its portfolio with the potential to deliver up to 100,000 new homes.
This includes excellent visibility over c.30,500 plots of which c.21,050 being
plots held under option that are proceeding through planning. The remaining
c.9,450 plots are controlled and allocated in local plans.
During the period the Group incurred land spend of £415.9m, including
£137.4m of payments in satisfaction of deferred land commitments.
Healthy liquidity
The Group had a cash balance of £0.78bn at 30 June 2022 (December 2021:
£1.25bn) with land creditors of £493.8m (December 2021: £407.6m), of which
£135.2m is expected to be paid by the end of the year. The Group generated
£451.1m of cash from operating activities in the period (2021: £491.8m),
before returning £399.0m surplus capital to shareholders and investing
£387.7m in working capital (being principally c.£215m in net land and
£172.0m in net work in progress). This investment in land and work in
progress along with the Group's healthy liquidity will provide further
opportunity to continue to support the future growth of the business.
In addition, the Group has an undrawn Revolving Credit Facility of £300m
which has a 4 year term out to 31 March 2026.
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 Stated on new housing revenues of £1,633.7m (2021: £1,749.3m) and gross
profits of £506.2m (2021: £540.5m).
3 Land cost value for the plot divided by the revenue of the new home sold.
4 Stated on new housing revenue of £1,633.7m (2021: £1,749.3m) and
underlying profit from operations of £440.7m (2021: £483.0m) calculated
before goodwill impairment of £3.2m (2021: £3.9m).
5 Stated before goodwill impairment of £3.2m (2021: £3.9m).
6 12 month rolling average calculated on underlying operating profit and total
capital employed (including land creditors). Underlying operating profit is
stated before goodwill impairment of £5.5m (December 2021: £6.2m).
7 Estimated weighted average gross margin based on assumed revenues and costs
at 30 June 2022 and normalised output levels.
8 Land cost value for the plot divided by the anticipated future revenue of
the new home sold.
PERSIMMON PLC
Condensed Consolidated Statement of Comprehensive Income
For the six months to 30 June 2022 (unaudited)
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
Note Total Total Total
£m £m £m
Total revenue 3 1,688.6 1,840.8 3,610.5
Cost of sales (1,182.4) (1,300.3) (2,526.7)
Gross profit 506.2 540.5 1,083.8
Other operating income 6.2 4.8 6.4
Operating expenses (74.9) (66.2) (129.7)
Profit from operations 437.5 479.1 960.5
Analysed as:
Underlying operating profit 440.7 483.0 966.7
Impairment of intangible assets (3.2) (3.9) (6.2)
Finance income 4.6 3.4 9.9
Finance costs (2.4) (2.4) (3.6)
Profit before tax 439.7 480.1 966.8
Analysed as:
Underlying profit before tax 442.9 484.0 973.0
Impairment of intangible assets (3.2) (3.9) (6.2)
Tax 4 (99.9) (88.9) (179.6)
Profit after tax (all attributable to equity holders of the parent) 339.8 391.2 787.2
Other comprehensive income
Items that will not be reclassified to profit:
Remeasurement gains on defined benefit pension schemes 12 59.4 65.8 83.3
Tax 4 (16.7) (16.0) (24.8)
Other comprehensive income for the period, net of tax 42.7 49.8 58.5
Total recognised income for the period 382.5 441.0 845.7
Earnings per share
Basic 5 106.5p 122.6p 246.8p
Diluted 5 105.9p 122.1p 245.6p
PERSIMMON PLC
Condensed Consolidated Balance Sheet
As at 30 June 2022 (unaudited)
30 June 2022 30 June 2021 31 December
2021
Note £m £m £m
Assets
Non-current assets
Intangible assets 176.2 177.9 175.6
Property, plant and equipment 107.6 93.4 99.0
Investments accounted for using the equity method 0.3 0.3 0.3
Shared equity loan receivables 8 32.4 35.9 35.7
Trade and other receivables 0.6 3.0 0.6
Deferred tax assets 9.7 10.7 9.7
Retirement benefit assets 12 209.4 116.7 148.8
536.2 437.9 469.7
Current assets
Inventories 7 3,402.7 2,815.6 2,920.7
Shared equity loan receivables 8 7.9 13.1 9.9
Trade and other receivables 151.5 139.2 123.9
Current tax assets 32.5 12.8 21.4
Cash and cash equivalents 11 782.0 1,315.2 1,246.6
4,376.6 4,295.9 4,322.5
Total assets 4,912.8 4,733.8 4,792.2
Liabilities
Non-current liabilities
Trade and other payables (267.6) (190.5) (203.4)
Deferred tax liabilities (74.0) (41.5) (54.6)
Partnership liability (18.9) (23.1) (23.8)
(360.5) (255.1) (281.8)
Current liabilities
Trade and other payables (863.6) (830.8) (807.0)
Partnership liability (5.6) (5.5) (5.5)
Legacy buildings provision 9 (69.3) (75.0) (72.7)
(938.5) (911.3) (885.2)
Total liabilities (1,299.0) (1,166.4) (1,167.0)
Net assets 3,613.8 3,567.4 3,625.2
Equity
Ordinary share capital issued 31.9 31.9 31.9
Share premium 25.6 22.9 24.9
Capital redemption reserve 236.5 236.5 236.5
Other non-distributable reserve 276.8 276.8 276.8
Retained earnings 3,043.0 2,999.3 3,055.1
Total equity 3,613.8 3,567.4 3,625.2
PERSIMMON PLC
Condensed Consolidated Statement of Changes in Shareholders' Equity
For the six months to 30 June 2022 (unaudited)
Share capital Share premium Capital redemption reserve Other non-distributable reserve Retained earnings Total
£m £m £m £m £m £m
Six months ended 30 June 2022:
Balance at 1 January 2022 31.9 24.9 236.5 276.8 3,055.1 3,625.2
Profit for the period - - - - 339.8 339.8
Other comprehensive income - - - - 42.7 42.7
Transactions with owners:
Dividends on equity shares - - - - (399.0) (399.0)
Issue of new shares - 0.7 - - - 0.7
Share-based payments - - - - 4.4 4.4
Balance at 30 June 2022 31.9 25.6 236.5 276.8 3,043.0 3,613.8
Six months ended 30 June 2021:
Balance at 1 January 2021 31.9 22.3 236.5 276.8 2,950.9 3,518.4
Profit for the period - - - - 391.2 391.2
Other comprehensive income - - - - 49.8 49.8
Transactions with owners:
Dividends on equity shares - - - - (398.7) (398.7)
Issue of new shares - 0.6 - - - 0.6
Share-based payments - - - - 6.1 6.1
Balance at 30 June 2021 31.9 22.9 236.5 276.8 2,999.3 3,567.4
Year ended 31 December 2021:
Balance at 1 January 2021 31.9 22.3 236.5 276.8 2,950.9 3,518.4
Profit for the year - - - - 787.2 787.2
Other comprehensive income - - - - 58.5 58.5
Transactions with owners:
Dividends on equity shares - - - - (749.6) (749.6)
Issue of new shares - 2.6 - - - 2.6
Share-based payments - - - - 8.1 8.1
Balance at 31 December 2021 31.9 24.9 236.5 276.8 3,055.1 3,625.2
PERSIMMON PLC
Condensed Consolidated Cash Flow Statement
For the six months to 30 June 2022 (unaudited)
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
Note £m £m £m
Cash flows from operating activities:
Profit for the period 339.8 391.2 787.2
Tax charge 4 99.9 88.9 179.6
Finance income (4.6) (3.4) (9.9)
Finance costs 2.4 2.4 3.6
Depreciation charge 7.5 7.2 14.5
Impairment of intangible assets 3.2 3.9 6.2
Share-based payment charge 5.9 4.7 6.4
Net imputed interest income 1.2 1.1 6.1
Other non-cash items (4.2) (4.2) (7.9)
Cash inflow from operating activities 451.1 491.8 985.8
Movement in working capital:
(Increase)/decrease in inventories (477.2) 90.5 (9.8)
Increase in trade and other receivables (31.2) (55.3) (59.5)
Increase in trade and other payables 113.3 49.1 37.4
Decrease in shared equity loan receivables 7.4 9.2 18.9
Cash generated from operations 63.4 585.3 972.8
Interest paid (2.6) (2.6) (3.7)
Interest received 1.4 1.3 1.9
Tax paid (109.5) (92.2) (186.2)
Net cash (outflow)/inflow from operating activities (47.3) 491.8 784.8
Cash flows from investing activities:
Joint venture net funding movement - 1.8 1.8
Acquisition of a subsidiary (0.2) - -
Purchase of property, plant and equipment (13.7) (9.3) (20.9)
Proceeds from sale of property, plant and equipment 0.7 0.5 0.9
Net cash outflow from investing activities (13.2) (7.0) (18.2)
Cash flows from financing activities:
Lease capital payments (1.8) (1.8) (3.3)
Payment of Partnership liability (4.0) (3.8) (3.8)
Share options consideration 0.7 0.6 2.6
Dividends paid 6 (399.0) (398.7) (749.6)
Net cash outflow from financing activities (404.1) (403.7) (754.1)
(Decrease)/increase in net cash and cash equivalents 11 (464.6) 81.1 12.5
Cash and cash equivalents at the beginning of the period 1,246.6 1,234.1 1,234.1
Cash and cash equivalents at the end of the period 11 782.0 1,315.2 1,246.6
Notes
1. Basis of preparation
The half year condensed financial statements for the six months to 30 June
2022 have been prepared in accordance with the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority and with UK adopted
International Accounting Standard ("IAS") 34 Interim Financial Reporting. The
half year financial statements are unaudited, but have been reviewed by the
auditors whose report is set out at the end of this report. This report should
be read in conjunction with the Group's annual financial statements for the
year ended 31 December 2021, which have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006 and UK adopted IFRS.
The comparative figures for the financial year ended 31 December 2021 are not
the company's statutory accounts for that financial year. Those accounts
have been reported on by the company's auditors and delivered to the Registrar
of Companies. The report of the auditors was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 31 December 2021,
as described in those financial statements.
The following relevant UK endorsed new amendments to standards are mandatory
for the first time for the financial year beginning 1 January 2022:
● Amendments to IFRS 1 First-time Adoption of IFRS; IFRS 9 Financial
Instruments; IAS 41 Agriculture; and Annual Improvements to IFRS 2018 - 2020
● Amendments to IAS 37 Onerous Contracts
● Amendments to IAS 16 Property, Plant and Equipment
● Amendments to IFRS 3 Reference to the Conceptual Framework
The effects of the implementation of these amendments have been limited to
disclosure amendments where applicable.
The Group has not applied the following new amendments to standards which are
endorsed but not yet effective:
● IFRS 17 Insurance Contracts, including Amendments to IFRS 17 and Initial
Application of IFRS 17 and IFRS 9 - Comparative Information
The Group is currently considering the implication of these amendments with
the expected impact upon the Group being limited to disclosures if applicable.
Going concern
The Group has performed well in the six months ended 30 June 2022. 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 delivered 6,652 new homes (2021: 7,406) and generated profit before
tax of £439.7m (2021: £480.1m) in the period. At 30 June 2022, the Group had
a strong balance sheet with £782.0m of cash (2021: £1,315.2m), high quality
land holdings and land creditors of £493.8m (December 2021: £407.6m). In
addition, the Group has an undrawn Revolving Credit Facility of £300m, which
has a four year term out to 31 March 2026.
The Group's forward order book, including legal completions taken in the
second half, is c.4% stronger than 2021.
The Directors have reviewed the Group's principal risks, see note 13 of this
announcement, and determined that there are no new principal risks facing the
business to those disclosed in the financial statements for the year ended 31
December 2021. The Directors considered the impact of these risks on the going
concern of the business when approving these full year financial statements
for the Group.
Given the Group's trading performance during the first six months of the year,
together with its strong sales rates and forward sales position, the Directors
believe that the comprehensive review performed for the viability statement
included in the Group's Annual Report 2021 remains relevant and valid.
In addition, the Directors have assessed the impact of a severe but plausible
downside scenario for the housing market, from the date of this announcement
to 31 December 2023, on the resilience of the Group. This scenario assumes a
c.44% reduction in volumes and a c.14% reduction in average selling prices
through to 31 December 2023 along with the likely effectiveness of mitigating
actions that would be executed by the Directors. The combined impact results
in a c.51% fall in the Group's housing revenues. 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. Throughout this scenario, the Group maintains
substantial liquidity with a positive cash balance and no requirement to
access the Group's £300m Revolving Credit Facility.
Having considered the continuing strength of the UK housing market, the sales
rates being achieved by the Group, the resilience of the Group's average
selling prices, the Group's scenario analysis and significant financial
headroom, 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 condensed consolidated half year financial statements.
Estimates and judgements
The preparation of these half year condensed financial statements requires
management to make judgements and estimations of uncertainty at the balance
sheet date. The key areas where judgements and estimates are significant to
the financial statements are land and work in progress (see note 7), shared
equity loan receivables (see note 8 and note 10), goodwill, brand intangibles,
provisions and pensions as disclosed in note 3 of the Group's annual financial
statements. The estimates and associated assumptions are based on management
expertise and historical experience and various other factors that are
believed to be reasonable under the circumstances.
Goodwill and brand intangibles
The key sources of estimation uncertainty in respect of goodwill and brand
intangibles are disclosed in notes 3 and 13 of the Group's annual financial
statements for the year ended 31 December 2021.
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 £3.2m recognised during the
period. This impairment charge reflects ongoing consumption of the acquired
strategic land holdings and is consistent with prior years.
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
Six months to 30 June 2022 Six months Year to 31 December 2021
to 30 June
2021
£m £m £m
Revenue from the sale of new housing 1,633.7 1,749.3 3,449.7
Revenue from the sale of part exchange properties 50.9 89.2 155.4
Revenue from the provision of internet services 4.0 2.3 5.4
Revenue from the sale of goods and services as reported in the statement of 1,688.6 1,840.8 3,610.5
comprehensive income
4. Tax
Analysis of the tax charge for the period
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Tax charge comprises:
UK corporation tax in respect of the current period 98.6 91.5 181.2
Adjustments in respect of prior years - (3.8) (8.3)
98.6 87.7 172.9
Deferred tax relating to origination and reversal of temporary differences 1.3 1.2 5.4
Adjustments recognised in the current year in respect of prior years' deferred - - 1.3
tax
1.3 1.2 6.7
99.9 88.9 179.6
The Group's overall effective tax rate for the period of 22.2% is higher than
the mainstream corporation tax rate of 19%, and reflects the additional 4%
Residential Property Developer Tax ("RPDT") on profits arising from
residential property activity with effect from 1 April 2022. This additional
tax rate was enacted in the current period and accordingly the effective tax
rate includes the effect of revaluing deferred tax assets and liabilities at
this higher rate. The RPDT will add to the increased mainstream corporation
tax rate of 25% which is legislated to take effect from April 2023.
Deferred tax recognised in other comprehensive income
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Recognised on remeasurement charges on pension schemes 16.7 16.0 24.8
Tax recognised directly in equity
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Arising on transactions with equity participants
Current tax related to equity settled transactions - - 0.1
Deferred tax related to equity settled transactions 1.5 (1.4) (1.8)
1.5 (1.4) (1.7)
5. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period (excluding those held in the
employee benefit trust) which were 319.2m (June 2021: 319.0m; December 2021:
319.0m).
Diluted earnings per share is calculated by dividing the profit for the period
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 period, giving a figure of
320.8m (June 2021: 320.2m; December 2021: 320.2m).
Underlying earnings per share excludes the legacy buildings provision charge
and goodwill impairment. The earnings per share from continuing operations
were as follows:
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
Basic earnings per share 106.5p 122.6p 246.8p
Underlying basic earnings per share 107.5p 123.8p 248.7p
Diluted earnings per share 105.9p 122.1p 245.6p
Underlying diluted earnings per share 106.9p 123.3p 247.6p
The calculation of the basic and diluted earnings per share is based upon the
following data:
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Underlying earnings attributable to shareholders 343.0 395.1 793.4
Goodwill impairment (3.2) (3.9) (6.2)
Earnings attributable to shareholders 339.8 391.2 787.2
At 30 June 2022 the issued share capital of the Company was 319,317,641
ordinary shares (30 June 2021: 319,100,222; 31 December 2021: 319,206,474
ordinary shares).
6. Dividends
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Amounts recognised as distributions to capital holders in the period:
2020 dividend to all shareholders of 125p per share paid 2021 - 398.7 398.7
2020 dividend to all shareholders of 110p per share paid 2021 - - 350.9
2021 dividend to all shareholders of 125p per share paid 2022 399.0 - -
Total capital return to shareholders 399.0 398.7 749.6
On 1 April 2022 125p per share (or £399.0m) of surplus capital was returned
to shareholders as an interim cash dividend in respect of the financial year
31 December 2021.
On 8 July 2022 110p per share (or £351.1m) of surplus capital was returned to
shareholders as an interim cash dividend in respect of the financial year 31
December 2021.
In total, 235p per share of surplus capital has been returned to shareholders
during 2022 in respect of the financial year 31 December 2021. There will be
no further distributions to shareholders in relation to the financial year 31
December 2021.
7. Inventories
30 June 30 June 31 December
2022 2021 2021
£m £m £m
Land 2,102.8 1,701.0 1,798.2
Work in progress 1,226.1 1,046.0 1,054.1
Part exchange properties 27.2 23.9 24.8
Showhouses 46.6 44.7 43.6
3,402.7 2,815.6 2,920.7
The Group has conducted a further review of the net realisable value of its
land and work in progress portfolio at 30 June 2022. Our approach to this
review has been consistent with that conducted at 31 December 2021 and was
fully disclosed in the financial statements for the year ended on that date.
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. There is currently
no evidence or experience in the market to inform management that expected
selling prices used in the valuations are materially incorrect.
Net realisable value provisions held against inventories at 30 June 2022 were
£15.0m (30 June 2021: £20.3m; 31 December 2021: £18.6m). Following the
review, £3.8m of inventories are valued at fair value less costs to sell
rather than historical cost (30 June 2021: £4.6m; 31 December 2021: £4.1m).
8. Shared equity loan receivables
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Shared equity loan receivables at beginning of period 45.6 56.2 56.2
Settlements (7.4) (9.2) (18.9)
Gains 2.1 2.0 8.3
Shared equity loan receivables at end of period 40.3 49.0 45.6
All gains/losses have been recognised through finance income in profit and
loss for the period of which £0.2m was unrealised (June 2021: £0.4m;
December 2021: £4.2m).
9. Legacy buildings provision
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Legacy buildings provision at beginning of period 72.7 75.0 75.0
Provision utilised in the period (3.4) - (2.3)
Legacy buildings provision at end of period 69.3 75.0 72.7
In 2020 we made a commitment that no leaseholder living in a building we had
developed, including all those above 11 metres, should have to cover the cost
of cladding removal. As part of this commitment, we created a £75.0m
provision to cover the cost of any necessary works. Work has been ongoing
throughout 2022 at a cost of £3.4m (2021: £2.3m). The provision at 30 June
2022 remains management's best estimate of the costs of completing works to
ensure fire safety on the remaining affected buildings under direct ownership
and on those under third party ownership we have developed. As a result no
further charge to the Statement of Comprehensive Income has been made in the
period. These estimates may change over time as further information is
assessed, remedial works progress and the interpretation of fire safety
regulations further evolves. This is a highly complex area with judgements
and estimates in respect of the cost of the remedial works and the scope of
the properties requiring remedial works may change should regulation further
evolve.
10. 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:
30 June 30 June 31 December
2022 2021 2021
Level 3 Level 3 Level 3
£m £m £m
Shared equity loan receivables 40.3 49.0 45.6
Shared equity loan receivables
Shared equity loan receivables represent loans advanced to customers 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 assets. As a result, the Group has
applied inputs based on current market conditions and the Group's historic
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 (2021: ten years) and a discount rate of 5% (2021: 5%) 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
asset. 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.
11. Reconciliation of net cash flow to net cash and analysis of net cash
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December 2021
£m £m £m
Cash and cash equivalents at beginning of period 1,246.6 1,234.1 1,234.1
(Decrease)/increase in net cash equivalents in cash flow (464.6) 81.1 12.5
Cash and cash equivalents at end of period 782.0 1,315.2 1,246.6
IFRS 16 lease liability (9.8) (8.9) (8.8)
Net cash at end of period 772.2 1,306.3 1,237.8
Net cash is defined as cash and cash equivalents, bank overdrafts, lease
obligations and interest bearing borrowings.
12. Retirement benefit assets
As at 30 June 2022 the Group operated four employee pension schemes, being two
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 consolidated statement of
comprehensive income. All other pension scheme costs are reported in profit
or loss.
The amounts recognised in the consolidated statement of comprehensive income
are as follows:
Six months to 30 June 2022 Six months to 30 June 2021 Year to 31 December
2021
£m £m £m
Current service cost 0.9 0.9 2.0
Administrative expense 0.2 0.1 0.6
Pension cost recognised as operating expense 1.1 1.0 2.6
Interest income on net defined benefit asset (1.4) (0.4) (0.7)
Pension cost recognised as a net finance credit (1.4) (0.4) (0.7)
Total defined benefit pension (income)/cost recognised in profit or loss (0.3) 0.6 1.9
Remeasurement gains recognised in other comprehensive expense (59.4) (65.8) (83.3)
Total defined benefit scheme gain recognised (59.7) (65.2) (81.4)
The amounts included in the balance sheet arising from the Group's obligations
in respect of the Pension Scheme are as follows:
30 June 2022 30 June 2021 31 December 2021
£m £m £m
Fair value of pension scheme assets 658.4 714.2 751.9
Present value of funded obligations (449.0) (597.5) (603.1)
Net pension asset 209.4 116.7 148.8
The increase in the net pension asset to £209.4m (December 2021: £148.8m) is
largely due to an increase in long-term corporate bond yields increasing the
discount rate assumption applied to scheme obligations to 3.9% (December 2021:
1.9%) offset by falling asset values.
13. Principal risks
1. Pandemic risk
Risk assessment Risk description Approach to risk mitigation Developments in 2022
The potential for increased rates of transmission, further variants of The Group can draw upon extensive Board and management experience from the The successful Covid-19 vaccination programme and the government's removal of
Covid-19 or a new pandemic occurring in the UK, could have significant impacts response to the initial Covid-19 outbreak. During this outbreak, robust and remaining restrictions, have reduced the immediate risks associated with the
Residual risk rating: Medium across the Group's operations. These could include: comprehensive policies and procedures were developed under the supervision of pandemic. These positive evolutions have allowed the Group to retire its
the Health, Safety and Environment Department. These procedures allow for safe Covid-19 policy and supporting procedures. Measures are still in place to
- Increased health and safety risk to our workforce, our customers and the continuity of operations under various pandemic conditions, if required. reduce the spread of respiratory infections in the workplace, and are set out
wider public.
in the Group's new Health and Wellbeing Standards.
Change from year end:
- Disruption to build programmes and delays in sales, due to staff absences
Decrease and material and labour supply issues. Remote working capabilities are in place, facilitated through enhanced use of
technology. This supports continuity of operations in the event of ongoing or The Group retains its strong balance sheet, high liquidity and robust
- Economic downturn, with reduced consumer confidence, demand and pricing for future pandemic conditions. The risks associated with increased use of remote financial disciplines, which ensure we are well placed to manage challenges
new homes, thereby affecting revenues, margins, profits and cash flows and working are mitigated through a combination of IT controls and user awareness should further Covid-19 variants or other pandemic conditions materialise.
impairment of asset values. training.
Potential disruption of supply is mitigated through centralised procurement
and management of key materials. The vertical integration afforded by use of
our own Brickworks, Space4 and Tileworks production provides further
mitigation for some critical materials.
2. Strategy
Risk assessment Risk description Approach to risk mitigation Developments in 2022
The Group's strategy has been developed by the Board as the most appropriate The Group's strategy is agreed by the Board at an annual strategy meeting. The Our well-established strategy continues to reflect a firm understanding of the
approach to successfully deliver the Group's purpose and ambition and generate strategy undergoes a continuous and iterative process of review and adaptation risks associated with the economic cycle and the housing market. Through
Residual risk rating: Low optimal sustainable value for all stakeholders. at Board meetings and in response to the evolution of conditions in which the minimising associated financial risk and judging the deployment of capital at
Group operates. the right time in the cycle, the Group has safeguarded its strong balance
As political, economic and other conditions evolve, the strategy currently
sheet and maintained its positioning for continued future success.
being pursued may cease to be the most appropriate approach. The Board engages with all stakeholders to ensure the strategy is understood
Change from year end:
and effectively communicated. For example, an Employee Engagement Panel,
If the Group's strategy is not effectively communicated to our workforce and / Diversity and Inclusion Council and employee engagement surveys are in place
No change or engagement and incentive measures are inappropriate, operational activities to monitor the cultural health of the organisation and ensure strategy is
may not successfully deliver the Group's strategic objectives. understood and implemented.
3. National and regional economic conditions
Risk assessment Risk description Approach to risk mitigation Developments in 2022
The housebuilding industry is sensitive to changes in the economic The Group's long-term strategy is focused on the cyclical nature of the The Board and our operational management teams have continued to monitor the
environment, including unemployment levels, interest rates and consumer housing market and minimising financial risk, maintaining operational and economic environment closely throughout the year, with particular focus on the
Residual risk rating: High confidence. financial flexibility and judging the timing of capital deployment through the impact of inflationary pressures within our supply chain.
cycle.
Change from year end: Deterioration in economic conditions, including increasing interest rates,
Despite these challenges, market conditions remain positive, with strong
lower consumer confidence as well as those brought about by factors such as The Board monitors lead indicators on the future direction of the UK housing demand for housing and resilience in selling prices. The longer-term
No change the continued effects of the Covid-19 pandemic and the war in Ukraine, could market to enable informed management of exposure to potential market fundamentals of the housing market remain strong.
affect demand and pricing for new homes. This has the potential to affect our disruption. Pricing structures are regularly reviewed to reflect local market
revenues, margins, profits and cash flows and potential impairment of asset conditions. The Group's geographical spread is continuously monitored to help
values. mitigate the effects of regional economic fluctuations.
Economic conditions in the land market may adversely affect the availability In line with the Group's strategy, levels of build on site are closely
of a sustainable supply of land at appropriate levels of return. monitored and land investment decisions are subject to comprehensive due
diligence processes to ensure the most effective deployment of capital
possible.
4. Government policy
Risk assessment Risk description Approach to risk mitigation Developments in 2022
Changes to government policy have the potential to impact on several aspects Government policy in relation to the housing market is monitored closely. Recent government actions, such as the introduction of the Residential
of our strategy and operational performance. For example, the forthcoming Consistency of policy formulation and application remains supportive of the Property Developer Tax, the proposed changes to the planning process and the
Residual risk rating: High withdrawal of the Help to Buy scheme in 2023, amendments to planning housebuilding industry as a whole, encouraging continued substantial forthcoming withdrawal of the Help to Buy Scheme in 2023, have a strong
regulations and the recent government requirement to pay a contribution to a investment in land, work in progress and skills to support output growth. Our influence on our business and the broader sector. However, the government
fund to cover the cost of fire safety remediation works, could have an adverse mission to build homes with quality our customers can rely on at a price they continues to recognise the need for increased construction of new homes,
effect on revenues, margins, tax charges and asset values. can afford and our strategic objectives are aligned with government objectives providing a broadly supportive environment for the industry.
Change from year end:
to increase housing stock.
No change
The Department for Levelling Up, Housing and Communities (DLUHC) has demanded
On 5 April 2022, Persimmon signed the DLUHC pledge, which was consistent with
that residential property developers take a lead in the funding and Land investment decisions and levels of work in progress are tightly the industry-leading commitment we made over a year ago, that leaseholders in
rectification of unsafe cladding and fire safety issues on buildings over 11 controlled in order to mitigate exposure to external influences. any multi-storey building Persimmon constructed would not have to pay to
metres in height constructed in the last 30 years. The government asked
remove any cladding or correct fire related safety issues. Persimmon continues
developers to sign a pledge committing to pay for all the necessary to work closely with the Home Builders Federation to convert the initial
remediation on buildings they constructed. The government has also required
pledge into a legal agreement with the government.
developers to make additional contributions to an industry-wide scheme that Persimmon has led the industry in its commitment to rectifying legacy safety
protects all leaseholders from paying towards any works. works. The Group has a £75m legacy buildings provision to fund necessary work
on these buildings. In addition, Persimmon will not claim from the
Government's Building Safety Fund. We hope these actions will lead to us
becoming a member of the government's new 'Building Industry Scheme' and
To reinforce this demand, the government has introduced through the Building continue to engage in positive discussions with officials.
Safety Act, a 'Building Industry Scheme'. Membership of this scheme will be
determined by the government, based on the developer's commitments and actions
to rectify cladding and fire safety related issues on buildings it has
developed. The government has indicated they would use the powers conferred We have stepped-up our approach to working with local authorities, with our
through the amendments to block planning and building control permissions for new Placemaking Framework and new stakeholder engagement team proactively
developers that are not members of the scheme. engaging with local authorities across the country to identify how we are
helping them deliver their key objectives and enhance support for our schemes.
DLUHC have also introduced the Levelling Up and Regeneration Bill. This bill
emphasises the importance of a Local Plan and the need for local 'support' for
the development it identifies. The bill will be complemented by an update to
the National Planning Policy Framework.
5. Health, safety and environment
Risk assessment Risk description Approach to risk mitigation Developments in 2022
In addition to the human impacts of any accident, there is the potential for The Board retains a very strong commitment to health and safety and managing The effective management of health, safety and environmental risks has
reputational damage, construction delays and financial penalties from any the risks in this area effectively. This is implemented by comprehensive remained a critical area of focus for the Board and our management teams
Residual risk rating: High health, safety or environmental incident. management systems and controls, managed by our highly experienced Group throughout the year to date.
Health, Safety and Environment Department, which includes detailed training
and inspection programmes to minimise the likelihood and impact of accidents
on our sites. While all reasonable steps are taken to reduce the likelihood of
Change from year end: an incident, the potential human, reputational and financial impacts of any To ensure continuous improvement in this key area, a comprehensive review of
such incident are considered high. the Group's Health & Safety policies and procedures is being undertaken.
No change
In addition, the Group is deploying a new and wide-ranging Environmental
Management System to further strengthen the Group's controls.
6. Skilled workforce, retention and succession
Risk assessment Risk description Approach to risk mitigation Developments in 2022
Shortages of skilled labour, driven in part through the continued effects of Access to an appropriately skilled workforce and experienced management team High demand for labour has continued to be observed throughout the year, and
the UK's exit from the EU and from increased UK housebuilding activities, is essential in maintaining operational performance and ensuring the has contributed to increased cost pressures.
Residual risk rating: High create risks of increased costs and delays and disruption to build programmes. successful delivery of the Group's strategy.
The Group has continued to invest in its people and processes to mitigate this
Change from year end: High staff turnover or loss of staff in key roles could result in disruption The Group operates a range of apprenticeships and in-house training and risk. In particular, several 'Persimmon Pathway' schemes have been developed
to operations. excellence programmes, under the supervision of the Group Training department, to provide structured training programmes across core operational disciplines.
No change in order to support an adequate supply of skilled labour. In addition, the
Group is committed to supporting industry initiatives to address the skills
gap. The Group's Space4 manufacturing facility, which produces timber frames,
highly insulated wall panels and roof cassettes, improves build efficiency and As an accredited Living Wage employer, the Group also voluntarily commits to
requires less on-site labour than a traditionally built home, mitigating some going further than the government mandated minimum wage levels for its
labour shortage risk. workforce, including both directly employed and sub-contracted labour.
Additional measures have been deployed to increase retention across the
workforce. These include increased focus on employee engagement, further
development of performance management frameworks, career management, and
financial incentives. At the most senior level, the Nomination Committee
oversees these processes and promotes effective succession planning.
7. Materials and land purchasing
Risk assessment Risk description Approach to risk mitigation Developments in 2022
Materials availability Materials availability Certain aspects of material supply chains continue to suffer from disruption.
The sources of the disruption include the sustained growth in UK housebuilding
Residual risk rating: High Ensuring access to the right quantity and specification of materials is Our build programmes and supply chain are closely monitored to allow us to activities, continued impacts of the Covid-19 pandemic, issues associated with
critical in delivering high quality homes. manage and react to any supply chain issues and to help ensure consistent high the UK's exit from the EU, and the war in Ukraine. These factors have
quality standards. We build strong relationships with key suppliers over the contributed to increased lead times and inflationary pressures for some
long term to ensure consistency of supply and cost efficiency. Our Group materials. To date, these have been largely offset by house price inflation.
Change from year end:
Procurement team works with our operating businesses to ensure the Group's The vertical integration afforded by our own Brickworks and Tileworks
Heightened levels of demand for materials may cause availability constraints suppliers provide materials to the expected specification and quantities.
No change and exacerbate inflationary pressures. Furthermore, build quality may be
manufacturing facilities has helped mitigate some material shortages in key
compromised if unsuitable materials are procured leading to damage to the areas.
Group's reputation and customer experience.
The Group's Brickworks and Tileworks
manufacturing facilities provide a significant proportion of the bricks and In respect of land, we have maintained our well-established disciplined
Land Purchasing roof tiles used across our sites, providing security of supply. This approach to replacement. Within the year to date, the Group has continued to
complements our existing off-site manufacturing facility at Space4, which invest in high quality land opportunities at industry-leading embedded
Land may be purchased at too high a price, in the wrong location and at the produces timber frames, highly insulated wall panels and roof cassettes. margins.
wrong time in the housing market cycle.
Land Purchasing
The Group maintains strong land holdings. All land purchases undergo
comprehensive viability assessments and must meet specific levels of projected
returns, taking into account anticipated market conditions and sales rates.
8. Climate change
Risk assessment Risk description Approach to risk mitigation Developments in 2022
The effects of climate change and the UK's transition to a lower carbon The Group takes a range of measures to monitor and improve its operational In 2021, the Group set science-based carbon reduction targets, in line with
economy could lead to increasing levels of regulation and legislation, as seen efficiency and direct environmental impact, including measuring CO(2) the Paris Agreement, which were fully accredited by the Science Based Targets
Residual risk rating: Medium with the Future Homes Standard. These may in turn result in planning delays, emissions and the amount of waste we generate for each home we sell. Initiative. We have set ambitious 'net zero' targets, aiming to deliver 'net
increased costs and competition for some materials.
zero' homes in use to our customers by 2030 and become 'net zero' in our
operations by 2040.
Change from year end:
The Group maintains a detailed climate change risk register, which ensures
Changes in weather patterns and the frequency of extreme weather events, that the management and mitigation of the risk is embedded within the Group's
No change particularly storms and flooding, may increase the likelihood of disruption to risk management process. The Group continues to make good progress on its carbon reduction roadmap with
the construction process. The availability of mortgages and property insurance
a number of projects to research the most effective method of delivering a
may reduce in response to financial institutions considering the possible 'net zero' home in use and engaging a third party expert to measure the
impacts relating to climate change.
embodied carbon of our homes. Our homes are already significantly more energy
We systematically consider the potential impacts of climate change throughout efficient than existing housing stock and our pathway to 'net zero' homes in
the land acquisition, planning and build processes and work closely with use by 2030 has clear interim milestones.
planning authorities and other statutory bodies to manage and mitigate these
risks.
Operationally, the Group has introduced electric vehicle options into its
fleet, is now purchasing 100% renewable energy for its offices and
The government's 'Future Homes Standard' will be introduced by 2025. To plan manufacturing facilities and continues to investigate methods of reducing the
for and manage the transition to low carbon homes, a low carbon homes working Group's red diesel consumption and increasing the use of alternative fuels.
group (consisting of members from across the Group's various disciplines) has
been established. The Group engages proactively with the housebuilding
industry and the government to develop industry wide solutions to meet the
requirements of the Future Homes Standard. The Group undertook climate scenario analysis in 2021 and has developed a
prioritised action plan to continue to assess and mitigate potential risks and
maximise opportunities.
We continually seek to strengthen our supply chain, for example, our off-site
manufacturing facilities provide us with greater assurance of quality and
supply, and use modern methods of construction and technology to assist the
mitigation of climate change related risks. The Group Procurement team
maintain strong links with our suppliers delivering value through our supply
chain by regular engagement and robust tendering processes.
9. Reputation
Risk assessment Risk description Approach to risk mitigation Developments in 2022
Damage to the Group's reputation could adversely affect its ability to deliver Management Supervision The Persimmon Way continues to drive benefits throughout the business, and
its strategic objectives.
supports our desire to 'build right, first time, every time'.
Residual risk rating: Medium
The Group is committed to ensuring an appropriate culture and maintaining the
If governance, build quality, customer experiences, operational performance, high quality of its operations. This is subject to oversight from the Board.
management of health and safety or local planning concerns fall short of our
usual high standards, this may result in damage to customer, commercial and Persimmon formally commenced the registration process for the New Homes
Change from year end: investor relationships and have a detrimental impact on financial
Quality Code (NHQC) on 14 January 2022, one of the first housebuilders to do
performance. Maintaining trust in our quality of build is central to our reputation. In so. We have welcomed the introduction of the NHQC, which aims to drive up
No change addition to our commitments to address legacy issues, significant investments quality and customer service across the industry together with the appointment
have been made in the Persimmon Way, the Group's construction excellence of a New Homes Ombudsman Service.
programme. This includes comprehensive training programmes, ongoing assurance
through the Group's team of Independent Quality Controllers (IQCs).
The Group continues to invest in its people and processes, driving operational
improvements. These enhancements reduce the probability of operational issues
Stakeholder Relationships and the consequent reputational damage they can cause.
We take actions to maintain positive relationships with all of our
stakeholders to minimise the risks of reputational damage and aim to comply
with best practice in corporate governance.
We actively support local communities in addressing housing needs, in creating
attractive neighbourhoods and employing local people, both on our sites and in
the supply chain. Significant contributions are made to local infrastructure
and good causes within the communities in which the Group operates.
10. Regulatory compliance
Risk assessment Risk description Approach to risk mitigation Developments in 2022
The housebuilding industry is subject to extensive and complex laws and Comprehensive management systems are in place to ensure regulatory and legal Key regulatory areas of focus within the year have included planning
regulations, particularly in areas such as land acquisition, planning, compliance, including a suite of policies and procedures covering key areas of conditions, with the Group, in common with the wider industry, continuing to
Residual risk rating: Medium building regulations and the environment. Ensuring compliance in these areas legislation and regulation. Additional oversight is in place through the experience delays to outlet openings due to the delays within the planning
can result in delays in securing the land required for development and in Group-level functions and cross-functional steering groups for key areas, such system. These delays have been compounded by a Covid-related backlog and
construction. as GDPR compliance. Where these systems identify inconsistencies in adherence increasing complexity of regulation, including considerations such as Natural
to agreed processes, corrective actions are swiftly taken. England's nutrient neutrality guidance. These matters continue to be actively
Change from year end: Any failure to comply with regulations could result in damage to the Group's
managed by our operational teams.
reputation and potential imposition of financial penalties.
No change
We engage extensively with planning authorities and other stakeholders to
reduce the likelihood and impact of any delays or disruption. In respect of Persimmon formally commenced the registration process for the NHQC on 14
land, the Group controls sufficient holdings to provide security of supply for January 2022. The aims of the Code and its supporting process are consistent
medium term trading requirements. Our land needs and potential acquisitions with the Group's own focus on further improving build quality and customer
are subject to extensive due diligence to manage planning risks and service standards.
uncertainties and maintain an effective pipeline.
11. Cyber and data risk
Risk assessment Risk description Approach to risk mitigation Developments in 2022
The Group relies on its IT systems being consistently available and secure. The Group IT department includes dedicated cyber security resource in order to As the Group's use of technology to support operational processes continues to
Failure of any of the Group's core IT systems, particularly those in relation manage and oversee security controls. This includes use of third party develop, cyber and data risks have become an area of increased focus for the
Residual risk rating: High to customer information and customer service could result in significant expertise to ensure implementation of good-practice controls. Group. This is reflected in the elevation of this risk from 'medium' to
financial costs, reputational damage and business disruption.
'high'.
Change from year end:
Periodic penetration testing is carried out through external security partners
The risk has increased in prominence recently, due to heightened geopolitical to test the security of our perimeter network. The Group has continued to strengthen its mitigation measures in respect of
Increase uncertainty and instability, and the use of cyber-attacks by state actors.
cyber risk, under the supervision of the Information Security Steering Group
(ISSG) and through the work of the Group IT department.
In the event of an incident, the Group has a defined Cyber Incident Response
Plan.
To develop controls further, an externally led review of the Group's cyber
security measures has been carried out. This review has benchmarked the
Group's controls and will assist in the development of improvement actions to
Training and regular communications are delivered to all users to increase further strengthen our cyber risk mitigations.
awareness of cyber risks, with particular focus on risks associated with
remote and hybrid working.
12. Mortgage availability
Risk assessment Risk description Approach to risk mitigation Developments in 2022
Reduced availability or affordability of mortgages for customers could reduce We monitor Bank of England commentary on credit conditions including the The fundamentals of the UK housing market remain strong, with robust consumer
demand for new homes and affect sales prices, revenues, profits, cash flows, monthly approvals for house purchases, reports from UK Finance and lenders' demand and confidence in evidence through our strong forward sales position.
Residual risk rating: High and asset values. announcements for trends in lending. Our investment in land and work in We also continue to see good levels of mortgage availability from lenders.
progress is monitored continuously to ensure it is appropriate for our level While mortgage rates remain at historically competitive levels, supporting
of sales and our expectations of the current market conditions. The affordability for new homes, lending trends continue to be an area of close
government's Help to Buy scheme, which is scheduled to remain in place until management scrutiny following recent increases in the Bank of England base
Change from year end: 2023, supports customers to gain access to the housing market across the UK rate.
with competitive mortgage rates.
No change
Statement of Directors' responsibilities in respect of the Half Year Report
We confirm that to the best of our knowledge:
● the condensed set of financial statements has been prepared in accordance with
UK adopted International Accounting Standard ("IAS") 34 Interim Financial
Reporting
● the Half Year Report includes a fair review of the information required by:
o DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the year; and
o DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so
The Directors of Persimmon Plc and their function are listed below:
Roger Devlin Chairman
Dean Finch Group Chief Executive
Jason Windsor Chief Financial Officer
Nigel Mills Senior Independent Director
Simon Litherland Non-Executive Director
Joanna Place Non-Executive Director
Annemarie Durbin Non-Executive Director
Andrew Wyllie Non-Executive Director
Shirine Khoury-Haq Non-Executive Director
By order of the Board
Dean Finch Jason Windsor
Group Chief Executive Chief Financial Officer
16 August 2022
The Group's annual financial reports, half year reports and trading updates
are available from the Group's website at www.persimmonhomes.com/corporate
INDEPENDENT REVIEW REPORT TO PERSIMMON PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed
Consolidated Statement of Changes in Shareholders' Equity, the Condensed
Consolidated Cash Flow Statement and the related notes 1 to 13. We have read
the other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Victoria Venning
Ernst & Young LLP
Leeds
16 August 2022
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