Persimmon Plc · LSE:PSN
Persimmon — FY2022 Earnings Presentation
44 slides from Persimmon's earnings presentation, Mar 1, 2023
Slide 1: Actively Managing the Challenges; Building for Growth
@ Persimmon make your home ACTIVELY MANAGING THE CHALLENGES; BUILDING FOR GROWTH Full Year Results Presentation 1 March 2023
Slide 2: Strong performance
(i Persimmon Strong performance ete Industry leading financial results with 5* quality for customers 14,868 completions at higher end of expectations - 15% growth in H2 completions - Average selling price up 5% HBF 5-star achieved for the first time in 50 year history - On course to retain for a sec
Slide 3: Stronger operational capabilities
(i Persimmon Stronger operational capabilities rasan Good progress on all five priorities = Build quality: our ambition has grown from “build right, first time, every time” to becoming trusted kkeikk to deliver 5-star homes consistently: Pasroleneseriracion| - NHBC Construction Quality Review score
Slide 4: Jason Windsor
Jason Windsor (@ Persimmon Together, we make your home
Slide 5: Key highlights
Key highlights © Persimmon Strong margins and returns 2022 2021 Change New home legal completions 14,868 14,551 +2% Average selling price £248,616 £237,078 + 5% New housing revenue £3,696.4m £3,449.7m +7% Gross profit’ £1,142.5m £1,083.8m +5% Gross margin — New housing? 30.9% 31.4% (0.5%) Operating
Slide 6: Operating profit bridge
Operating profit bridge Strong profitability maintained = £77m of additional profit generated from higher volumes and increased selling prices = Proactive control over build cost in the face of economic headwinds (i Persimmon ‘Together, we make your home Operating profit bridge’ £m (17.9) (18.9) 23.
Slide 7: New housing revenue
(i Persimmon New housing revenue rermmon +7% growth reflecting strong H1 demand and ASP uplift 2022 2021 Change = Strong build execution supporting completions Legal completions = Customer demand weakened sharply in the Fane TEA? u20l8 bale fourth quarter Partnerships 2,694 2,533 + 6% = Selling pric
Slide 8: Maintaining strong margins
(i Persimmon Maintaining strong margins see eee eee 30.9% gross margin New housing per plot 2022 2021 Change 2022 2021 Change Revenue £248,616 £237,078 +5% 100.0% 100.0% Land costs (£29,753) (£31,275) -5% (12.0%) (13.2%) | 120bps Build and other direct costs (£142,024) (£131,322) +8% (57.1%) (55.4%)
Slide 9: High quality land investment
(i Persimmon High quality land investment ee Disciplined approach to land replacement Cost to Assumed assumed Number of plots average revenue’ Average plot cost revenue’ Plots owned with detailed planning 35,860 £251,500 £31,104 12.4% Plots owned proceeding to planning 34,908 £269,599 £28,133 10.4%
Slide 10: High quality returns underpinned by land portfolio
(i Persimmon High quality returns underpinned sical by land portfolio Industry leading embedded returns of c.32% Land plots by gross margin (as at 31 December 2022) 60,000 P P = Embedded gross margins of 32% in owned land Een 49,239 holdings © Percent of owned land holding = Only 6% of owned land ho
Slide 11: Focus on cash deployment
(i Persimmon Focus on cash deployment ues Ensuring a strong platform for the future £m (736) 4a2 10 Utilisation IAS2 | een) Gross Increase spend inland 725 Exceptional Increase (210) 65 6) Investin: items in land ___1 Other (30) & fineniee Increase Increase in working — in WIP land creditors | eania
Slide 12: Financial strength and strong returns
(i Persimmon Financial strength and strong returns vasmrwem A strong platform for the future 2022 2021 Change Land £2,092m £1,798m +£294m Work in progress £1,264m £1,054m +£210m = Net asset value per share 1,077p Lelme GiecTierg ETA eo BOOT = £504m growth in land and WIP during 2022 Cash £862m £1,24
Slide 13: Building safety provision
(i Persimmon Building safety provision ete Signalled intent to sign DLUHC developer remediation contract Devel t : sb la remediation contract before the deadline of 13 March At November 2022 ” Newly identified 2 = Additional provision of £275m recognised in 2022 7 bringing total cost to £350m Total
Slide 14: Capital allocation policy
(i Persimmon Capital allocation policy en Proposed dividend of 60p per share in respect of 2022 Overview: = Concluded previous capital return programme in 2022 = Continued focus on ROCE and profitable land investment to sustain the business 2022: = Proposed dividend per share of 60p as the final and
Slide 15: Dean Finch
Dean Finch Group Chief Executive (@ Persimmon Together, we make your home
Slide 16: Building an even stronger business
(i Persimmon Building an even stronger business "arurcemn Disciplined enhancement of key capabilities = Strong operational and financial performance in 2022 - H2 performance especially strong: build rates; completions; profits delivered - Strong cash position £862m at 31 December = Managed the most
Slide 17: Current trading
° (@ Persimmon Cu rrent trad Ing SL Saco san are 2023 backdrop = In 2022 we sold nearly 3,000 homes under Help to Buy. " Proactive response — ‘Boxing Day campaign’ led to Now ceased outside of Wales increased website visitors 4 January Private Forward Sales Units ASP Revenue Website visitors 2023 14
Slide 18: Margin movement
(i Persimmon Margin movement Persimmon Sales incentives & —_ Impact of sales rate Flat ASP. marketing costs reduction & CPI8% 2022 HPI mitigates 8% CPI Further HPI Volume growth ASP £250k -- © Operating profit ‘© Net operating expenses ® Build and direct cost @ Land cost VOLUME 8,500 Op Margin impac
Slide 19: Disciplined controls in place
(i Persimmon Disciplined controls in place SS Nimble, proactive approach = Highly selective approach to land from Q4 2022 - Slow down in land approvals Enhanced disciplines on WIP investment - Matching build programmes with local demand Additional cost control measures applied - Stronger central ove
Slide 20: Disciplined investment
(i Persimmon Disciplined investment Rote High quality land investment: carefully managed 12,000 Total plot additions 10,000 8,000 Total completions 6,000 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 = Brought 14,670 plots into the business across 66 locations t
Slide 21: Responding to the market
(i Persimmon Responding to the market sical Sound market position complemented by proactive response = Sound market positioning - High quality, energy efficient homes at attractive prices in good locations - Nationwide outlet network - Affordability key in these challenging times - First time buyers
Slide 22: Mortgage availability and affordability
(i Persimmon Mortgage availability and affordability baal ral mproving but still a challenge Mortgage product volumes Quoted monthly mortgage rates 7.00 6.00 4,341 5.00 Ree 3,643 | en “00 258 3.00 2.00 ——2 year 75% LTV ——2 year 95% LTV —5 year 75% LTV 5 year 95% LTV 1.00 0.00 Aug-22 Sep-22 Oct-22 Ja
Slide 23: First time buyer mortgage affordability
First time buyer mortgage affordability Improving but still a challenge Mortgage costs as % take home pay FTB (i Persimmon ‘Together, we make your home Mortgage costs to household income vs rents 60% 34% 1 31%| 50% ‘ \e Rent to income 30% 6 40% 29% 30% 26% 20% Mortgage costs to income 22% 10% 0% 18%
Slide 24: Planning environment harder
(i Persimmon Planning environment harder ora Nutrient neutrality further drag, current estimate 120,000 homes delayed Planning permissions granted 350,000 330,000 cava feeeeeeees 290,000 270,000 ‘== Number of housing units securing detailed planning approval (Moving Annual Total) ° + *+** Linear (Nu
Slide 25: Political environment
(i Persimmon Political environment oe Currently more challenging; Labour signalling change = Conservative government - Conflicting statements on 300k target - Levelling Up Bill and NPPF proposals: providing more reasons for local authorities to say ‘no’ and reducing opportunity to challenge - Tone c
Slide 26: Enhanced approach to planning
(i Persimmon Enhanced approach to planning rermmon Signs of improving results = Taking a more sophisticated approach to planning — comprehensive review across the Group - Placemaking framework - Proactive engagement aligning our plans to local priorities = Early success - 16% net increase in outlets
Slide 27: Capitalising on operational enhancements
(i Persimmon Capitalising on operational enhancements vas cemannon Further opportunities for increasing efficiency = Recent operational enhancements will drive improved returns - Improved build efficiencies | = Brickworks supplied 53m bricks in 2022, up 18% iz Cy = Tileworks supplied 12m tiles in 20
Slide 28: Fundamental long term strengths
(i Persimmon Fundamental long term strengths <a Strong business through the cycle 2022 very strong performance; 2023 more challenging, but sales rates have recovered to 0.52 currently Long-term fundamentals of market remain strong - Chronic undersupply of housing continues - Consumer confidence stab
Slide 29: (@ Persimmon
(@ Persimmon Together, we make your home
Slide 30: Appendices
Appendices (@ Persimmon Together, we make your home
Slide 31: Appendices
APPENDICIES (i Persimmon ‘Together, we make your home Quarterly trading performance Underlying trading performance Underlying P&L split by half Trading performance by brand (Persimmon, Charles Church and Westbury Partnerships) Trading performance by division Analysis of new home sales Land holdings
Slide 32: Quarterly trading performance
APPENDIX 1 Quarterly trading performance M Fesinmon @1 @Q@2 HY 2022 @3 @4 FY 2022 Completions 1,950 4,702 6,652 2,270 5,946 14,868 Net private sales rate 0.98 0.89 0.91 0.63 0.30 0.69 First time buyers (% private completions) 33% 46% 42% 42% 42% 42% Help to Buy (% private reservations) 23% 21% 23% 2
Slide 33: Underlying trading performance
APPENDIX 2 Underlying trading performance M Fesinmon 2022 2021 New housing Total % of revenue Total % of revenue Revenue £3,696.4m £3,449.7m Cost of sales: land cost (£442.3m) (12.0%) (£455.1m) (13.2%) build and other direct costs (£2,111.6m) (57.1%) (£1,910.8m) (55.4%) Total cost of sales (£2,553.9
Slide 34: Underlying P&L split by half
APPENDIX 3 Underlying P&L split by half Underlying performance: H2 2022 H1 2022 H2 2021 H12021 New housing Unit completions 8,216 6,652 7,145 7,406 Revenue £2,062.7m £1,633.7m £1,700.4m £1,749.3m Operating profit! £565.8m £440.7m £483.7m £483.0m Operating margin’ 27.4% 27.0% 28.4% 27.6% Net finance
Slide 35: Trading performance - Brand
APPENDIX 4 e Trading performance - Brand @ Persimmon New housing 2022 2021 Change New housing 2022 2021 Change No. No. £m £m Units Persimmon 11,282 10,965 +3% Gross Profit! Persimmon 966.8 913.9 +6% Charles Church 892 1,053 (15%) Charles Church 106.3 108.3 (2%) Partnerships 2,694 2,533 + 6% Partners
Slide 36: Trading performance - Divisional
APPENDIX 5 ° oe (@ Persimmon Trading performance - Divisional Ne pense 31 December 2022 31 December 2022 Annual Plots owned Annual Plots owned Average Sale average and under Average Sale average and under New housing Units No. Price (£) price change control New housing Units No. Price (£) price chan
Slide 37: Analysis of new home sales
APPENDIX 6 ° (@ Persimmon Analysis of new home sales OE vn By Price Band (Private) By House Type (All) / 26% 31% Over £300,000 37% | Petached | 8B 04 £250,000 to £299,999 ar Semi-detached || £200,000 to £249,999 om zal Townhouse | ET 7 £150,000 to £199,999 Apartment aan 6% @ Persimmon 2021 2% © Pers
Slide 38: Land holdings at December 2022
APPENDIX 7 Land holdings at 31 December 2022 © Persimmon Number Number Number Anticipated Cost to ant. Cost to ant. of plots of plots of plots average Average Revenue Revenue Dec 2021 Dec 2022 Change revenue plot cost Dec 2022 Dec 2021 Plots owned with detailed planning 39,079 35,860 (3,219) £251,50
Slide 39: Balance sheet - key items
APPENDIX 8 Balance sheet - key items bo 2022 2021 Change Work in progress £1,263.9m £1,054.1m + £209.8m Land £2,091.7m £1,798.2m + £293.5m Land creditors £472.8m £407.6m +£65.2m Part exchange stock £61.0m £24.8m +£36.2m Shared equity loans £36.0m £45.6m (£9.6m) Cash £861.6m £1,246.6m (€385.0m) Share
Slide 40: Cash flow
APPENDIX 9 Cash flow £m H122 H2 22 FY 22 FY 21 Change Operating cash generated (before working capital movements) 451.8 573.7 1,025.5 985.8 +4% Movement in working capital: (Increase) / decrease in gross land (299.8) 15.9 (283.9) (66.5) Increase / (decrease) in land creditors 85.3 (21.9) 63.4 76.5 N
Slide 41: Cash flow generated from operations
APPENDIX 10 Cash flow generated from operations vue (i Persimmon © Cash from operating activities © Movement in working capital ~O- Underlying operating profit 41 Full Year Results 2022
Slide 42: New housing starts (Great Britain)
APPENDIX 11 ° eo, es (@ Persimmon New housing starts (Great Britain) NE perenne Annual Housing Starts (2009 - 2022) Monthly Housing Starts (2019 - 2022) ‘000s ‘000s 200 18 175 16 150 4 12 125 10 100 8 75 6 50 4 25 2 Co) fo} 2009 201 2013 2015 2017 2019 2021 2019 2020 2021 2022 Source: NHBC Source: N
Slide 43: Monthly Mortgage Approvals
APPENDIX 12 Monthly Mortgage Approvals Nonceanpeee -20% in 2022 (i Persimmon ‘000s 120 Dec 2020: 101,200 100 . Dec 2015: 80 pees 71,000 Dec 2016: Dec 2018: E 68,400 64,800 60 | Dec 2014: f 60,100 Average monthly approvals 40 over last 10 years: 66,754 20 May 2020: 9,300 °'3013.~«°~=C«OM~*~C«CSSC“‘i!
Slide 44: Disclaimer
Disclaimer (@ Persimmon Important Notice Some of the information in this document jnay contain projections or other forward-looking statements regarding future events or the future financial performance of Persimmon Plc and its subsidiaries [the Group). You can identify forward-looking statements by