Slide 1: Half year results presentation 30 June 2020
: ee, op Persimmon Pic iS TEAM GB op Persimmon os ieaaenEes Half year results presentation 30 June 2020 ee
Slide 2: Focused delivery of our purpose - resilient first half performance
“Focused delivery of our purpose - producing a resilient first half performance for the benefit of all stakeholders
Slide 3: Agenda
AGENDA Page Presented by Company purpose and strategic focus 3 Dave Jenkinson Covid-19 5 Richard Stenhouse Operational review 11 Dave Jenkinson Financial review 21 Mike Killoran Strong platform 32 Dave Jenkinson Summary 38 Dave Jenkinson Appendices 39
Slide 4: Long term sustainable returns for all
LONG TERM SUSTAINABLE RETURNS FOR ALL A clear vision which the whole company is working towards, to produce long term sustainable returns for all Our company purpose on how we achieve that vision is now fully embedded within the business Company purpose To build good quality homes at a range
Slide 5: Our clear company purpose has never been more important
OUR CLEAR COMPANY PURPOSE HAS NEVER BEEN MORE IMPORTANT IN PERIODS OF UNCERTAINTY AND DISRUPTION This clear purpose has been fundamental to: 1. How we responded to the threat of Covid-19 2. The Group’s half year performance 3. Our strong platform to deliver the country’s homes 4
Slide 6: Prioritised safety of workforce, colleagues, customers and local communities
PRIORITISED SAFETY OF WORKFORCE, COLLEAGUES, CUSTOMERS AND LOCAL COMMUNITIES Response was responsible, swift and effective Compliance with Government guidance in England, Wales and Scotland Safe operating procedures developed covering all disciplines Oversight and enforcement of Covid-19 con
Slide 7: Minimised and contained disruption – ensuring sound future planning
MINIMISED AND CONTAINED DISRUPTION – ENSURING SOUND FUTURE PLANNING Persimmon has not taken advantage of any Covid-19 Government support • All taxes paid in full and on time This ensured responsible stewardship whilst maintaining operational momentum • All staff paid in full throughout ensuring
Slide 8: Safe and agile response to construction on site
SAFE AND AGILE RESPONSE TO CONSTRUCTION ON SITE Orderly shutdown of all sites through April 2020 • Close contact with key suppliers maintained throughout Persimmon’s operational agility enabled safe and efficient restart of build programmes • From 27 April 2020 construction recommenced in Englan
Slide 9: Effective sales process during lockdown
EFFECTIVE SALES PROCESS DURING LOCKDOWN A remote sales presence provided throughout the lockdown period From 25 March 2020 all site sales offices closed Online reservation procedure Site sales offices now open in all regions Strong sales performance since the end of lockdown 8
Slide 10: Customer communication maintained
CUSTOMER COMMUNICATION MAINTAINED Emergency appointments only Routine maintenance commenced from 15 June 2020 in England and Wales (from 13 July 2020 in Scotland) “Passport to work scheme” introduced for all operatives • Individual risk assessments for each customer Digital New Home Demonstr
Slide 11: Continued comprehensive, flexible response to Covid-19
CONTINUED COMPREHENSIVE, FLEXIBLE RESPONSE TO COVID-19 Health and safety protocols implemented and monitored in line with official guidance All areas of the Group can react to local and national restrictions if required Persimmon is maintaining strict Covid Secure working practices Fully pre
Slide 12: Agile response to Covid-19
AGILE RESPONSE TO COVID-19 The challenges of Covid-19 were responded to sympathetically and with agility Reflected in the key areas of our business focus: 1. Financial performance 2. Implementation of Customer Care Improvement Plan 3. Providing homes for all 4. Workforce training and relationshi
Slide 13: Resilient financial performance
RESILIENT FINANCIAL PERFORMANCE H1 2020 H1 2019 Change New home legal completions 4,900 7,584 (35%) Average selling price £225,066 £216,942 + 3.7% New housing revenue £1,102.8m £1,645.3m (33%) Operating profits * £293.2m £510.1m (43%) Operating margin - New housing ** 26.6% 31.0% (4.4%) Profit befor
Slide 14: Resilient financial performance
RESILIENT FINANCIAL PERFORMANCE Trading performance resilient through period of disruption • Profit before tax of £292m • Industry leading operating margin of 26.6%* (2019: 31.0%) • Strong liquidity with cash of £829m (2019: £833m) Work in progress of £1.22bn to support positive second half outt
Slide 15: Customer Care Improvement Plan progressing and delivering
CUSTOMER CARE IMPROVEMENT PLAN PROGRESSING AND DELIVERING Significant progress across a suite of measures Communications improved and customer portal being rolled out Homebuyer Retention Scheme delivering customer and behavioural benefits - highlighted as good practice by the Consumer Code P
Slide 16: Strong signs of progress
STRONG SIGNS OF PROGRESS HBF star rating only one metric • Star rating trending above 5* since the start of 2020 • Currently scoring 89.5% for the 2019/20 HBF reporting year Over 40% of customers now using the Homebuyer Retention Scheme Over 8,000 FibreNest customers We welcome the introduct
Slide 17: Providing homes for all
PROVIDING HOMES FOR ALL 31 regional housebuilding offices across the UK • Ability to flex output to over 20,000 new homes per annum • Wide range and choice of new homes across all developments House prices range from £40,000 to £900,000 • 32% of private sales priced below £200,000 • 10% of priva
Slide 18: Workforce training – long standing commitment
WORKFORCE TRAINING – LONG STANDING COMMITMENT TO PROVIDE OPPORTUNITIES FOR ALL Career development opportunities • Further 95 colleagues promoted during H1 2020 • c. 15% of our workforce across all disciplines are trainees - including over 420 traditional apprentices Significant training programm
Slide 19: Sympathetic workforce relationship
SYMPATHETIC WORKFORCE RELATIONSHIP Continued to invest and support staff during lockdown • Introduction of remote working • Retained all staff on full pay • Pay increases and bonus paid to staff Provided additional mental health support and resource Positive feedback from Employee Engagement P
Slide 20: Building sustainable homes
BUILDING SUSTAINABLE HOMES Continued development of focused sustainability strategy • Dedicated resource established Work underway to assess appropriate science based carbon reduction targets • Evaluation of the impact of Future Homes Standard Full environmental assessment undertaken on all si
Slide 21: Building sustainable homes and communities
BUILDING SUSTAINABLE HOMES …. AND COMMUNITIES Supporting customers, colleagues and communities • Signatory to the Covid-19 Business Pledge • c. 50,000* jobs supported across our communities and supply chain In first half of 2020 over £370,000 donated to our Community Champions £1m pledge for 2
Slide 22: Financial review
FINANCIAL REVIEW Page Robust first half performance 22 Margins and cost recoveries 23 High quality land holdings at 30 June 2020 24 Off-site manufacturing - commitment to self help 25 Strong balance sheet 26 Strong liquidity 27 Managing the cycle 28 Capital return 29 Future value d
Slide 23: Robust first half performance
ROBUST FIRST HALF PERFORMANCE H1 2020 H1 2019 Change Legal completions Covid-19 related build disruption Private 4,029 5,963 (32%) Partnerships 871 1,621 (46%) Total 4,900 7,584 (35%) • Housing revenues down 33% Average selling price Private Partnerships £246,208 £242,912 £121,413 + 1% + 5% • Miti
Slide 24: Industry leading margins maintained
INDUSTRY LEADING MARGINS MAINTAINED New housing 2020 2019 2020 2019 2019 2019 Per plot: H1 H1 Change H1 H1 Change H2 H2 Revenue £225,066 £216,942 + 3.7% 100.0% 100.0% £214,579 100.0% Land costs (£31,682) (£30,309) + 4.5% (14.1%) (13.9%) (0.2%) (£30,272) (14.1%) Build and other direct costs (£122,926
Slide 25: High quality land holdings underpin future margins
HIGH QUALITY LAND HOLDINGS UNDERPIN FUTURE MARGINS Number Anticipated Average Cost to of plots ave. revenue plot cost revenue Cost to revenue percentage of owned & Plots owned with detailed planning 47,053 £218,811 £29,994 13.7% Plots owned proceeding to planning Total owned 23,155 70,208 £200,211
Slide 26: Off-site manufacturing - commitment to self help
OFF-SITE MANUFACTURING - COMMITMENT TO SELF HELP Vertical integration allows security over key material availability and cost • Over 100m bricks manufactured by Brickworks to date • Tileworks commenced deliveries to sites in spring 2020 - c. 2m tiles manufactured Self-help action - supporting im
Slide 27: Strong balance sheet
STRONG BALANCE SHEET H1 2020 H1 2019 Change Excellent platform for future growth - effective management of Work in progress £1,224m £1,024m + £200m the housing cycle Land £1,897m £2,013m (£116m) Substantial work in progress investment Land creditors £374m £484m (£110m) • £200m increase over June
Slide 28: Strong liquidity
STRONG LIQUIDITY Free cash absorption before capital returns of £15m (2019: £182m generated) - H1 2020 includes c. £90m of accelerated corporation tax paid on time and in full Working capital investment of £170m during first half of 2020 (2019: £212m) - includes £129m in work in progress (2019:
Slide 29: Successful management of the cycle
SUCCESSFUL MANAGEMENT OF THE CYCLE In paying all taxes in full and on time, H1 2020 includes c. £90m of accelerated corporation tax payments when comparing to prior year Judging scale and timing of capital deployment through the cycle critically important to strategic success Selective land re
Slide 30: Modest capital return to shareholders
MODEST CAPITAL RETURN TO SHAREHOLDERS Reinvestment in the business and working capital needs remain a priority Covid-19 impacts: • Cancellation of the 125p per share return of surplus capital due to be paid 2 April 2020 • Postponement of the 110p per share final dividend for 2019 that was due to
Slide 31: Market leading long term returns
MARKET LEADING LONG TERM RETURNS Persimmon plc - Long term margin and returns 45.0% 5,000.0 Total shareholder returns over the past 20 years (rebased to 100) 4,500.0 4,200 Δ COVID 40.0% Change (%) 20 years 10 years 5 years 1 year YTD outbreak2 4,000.0 Persimmon 2,711.1% 1,002.3% 57.7% 14.5% (15.2%)
Slide 32: Strong platform to deliver future value
STRONG PLATFORM TO DELIVER FUTURE VALUE AND TO NAVIGATE POTENTIAL CHALLENGES Strong forward sales - £2.5bn Since 1 July, private weekly sales rate of 0.97 homes Half Year Forward Sales Units ASP Revenue per site, c. 49% ahead of last year June 2020 10,105 £184,005 £1,859.4m June 2019 9,128 £177,
Slide 33: Strong platform to deliver the country's homes
STRONG PLATFORM TO DELIVER THE COUNTRY’S HOMES Skilled management of the housing cycle places Persimmon in a position of strength for the future • Strength of the balance sheet • Cash deployment • Strength of land holdings • Benefits of the Customer Care Improvement Plan • Existing infrastructure
Slide 34: Balance sheet strength provides options
BALANCE SHEET STRENGTH PROVIDES OPTIONS Cash at the end of June of £829m No debt - £300m revolving credit facility undrawn High quality land holdings - c. 6 years supply depending upon volume delivery Modest land creditors with a good payment profile Strong position to navigate future chal
Slide 35: Managing the housing cycle – skilful cash deployment
MANAGING THE HOUSING CYCLE – SKILFUL CASH DEPLOYMENT Vital to deploy and disinvest capital at the correct time in the cycle - in housebuilding this manifests in how you manage your land holdings Strength of land bank gives us options on when we need to buy land • Total plots owned and under cont
Slide 36: Disciplined land acquisition based on strict criteria
DISCIPLINED LAND ACQUISITION BASED ON STRICT CRITERIA Strategic interests acquired during H1 2020 Strategic land bank of c. 15,900 acres - potential to deliver a further 100,000 new homes Land creditors reduced to £374.5m with the majority settled over three years The ability to deploy more ca
Slide 37: Customer Care Improvement Plan – confidence for future growth
CUSTOMER CARE IMPROVEMENT PLAN – CONFIDENCE FOR FUTURE GROWTH The Customer Care Improvement Plan is in the process of being fully embedded in the business Systems and processes proving to be both efficient and resilient Culturally the customer is now at the centre of our business Confidence
Slide 38: Strong infrastructure – supporting opportunities for growth
STRONG INFRASTRUCTURE – SUPPORTING THE OPPORTUNITIES FOR GROWTH 31 operating companies - ability to increase output at the appropriate time Excellent range and choice of sites and product across the country Skilled and motivated employees with an overwhelming commitment to Persimmon Senior m
Slide 39: Company purpose – at the heart of the company
COMPANY PURPOSE – AT THE HEART OF THE COMPANY Challenges posed by Covid-19 shows the exceptional quality of the business Response both principled and agile to balance the needs of all our stakeholders Persimmon is positioned in a great place for the future • Proven record of managing the housi
Slide 40: Appendices
APPENDICES Appendix 1 - H1 2020 performance Appendix 2 - Half yearly profit & loss Appendix 3 - Financial record: Income Statement and Balance Sheet Appendix 4 - Half yearly sales profile Appendix 5 - Trading performance - Brand Appendix 6 - Trading performance - Divisional Appendix 7
Slide 41: Appendix 1: H1 2020 performance
APPENDIX 1: H1 2020 PERFORMANCE Underlying trading (adjusted for goodw ill im pairm ent) H1 2020 H1 2019 New housing Total % of revenue Total % of revenue Revenue £1,102.8m- £1,645.3m Cost of sales: - land cost (£155.2m) (14.1%) (£229.8m) (13.9%) - build and other direct costs (£602.4m) (54.6%) (£86
Slide 42: Appendix 1: H1 2020 performance
APPENDIX 1: H1 2020 PERFORMANCE Brand Profile - 6 months ended 30 June 2020: Unit Completions Average selling Average price Plots owned and Plot count completions change price change under control change 1,872 (40%) £208,098 + 2% 34,926 (2%) Persimmon North 38% 39% 1,783 (24%) £266,871 (2%) 28,984 (
Slide 43: Appendix 2: Half yearly profit & loss
APPENDIX 2: HALF YEARLY PROFIT & LOSS Underlying performance: 2020 2019 2019 H1 H1 Change FY New housing Unit completions 4,900 7,584 (2,684) 15,855 Revenue £1,102.8m £1,645.3m (£542.5m) £3,420.1m Operating profit * £293.2m £510.1m (£216.9m) £1,036.7m Operating margin * 26.6% 31.0% (4.4%) 30.3% Net
Slide 44: Appendix 3: Financial record - income statement
APPENDIX 3: FINANCIAL RECORD - INCOME STATEMENT 2018 2018 2019 2019 2020 HY FY HY FY HY Unit completions 8,072 16,449 7,584 15,855 4,900 New housing revenue £1,742.0m £3,545.8m £1,645.3m £3,420.1m £1,102.8m Average Selling Price £215,813 £215,563 £216,942 £215,709 £225,066 Operating profit * £518.2m
Slide 45: Appendix 3: Financial record - balance sheet
APPENDIX 3: FINANCIAL RECORD - BALANCE SHEET 2018 2018 2019 2019 2020 HY FY HY FY HY Shareholders' funds £2,836.3m £3,194.5m £2,837.5m £3,258.3m £3,450.6m Cash £1,154.6m £1,048.1m £832.8m £843.9m £828.9m Net asset value per share 906.3p 1006.0p 890.8p 1021.7p 1081.9p Work in progress £749.6m £881.8m
Slide 46: Appendix 4: Half yearly sales profile
APPENDIX 4 : HALF YEARLY SALES PROFILE Appendix 4 45
Slide 47: Appendix 5: Trading performance - brand
APPENDIX 5: TRADING PERFORMANCE - BRAND 2020 2019 New housing H1 H1 Change No. No. Units Persimmon Core 3,655 5,470 (33%) Charles Church 374 493 (24%) Partnerships 871 1,621 (46%) Total 4,900 7,584 (35%) £ £ Average Selling Price Persimmon Core 236,769 232,547 + 2% Charles Church 338,455 357,917 (5%
Slide 48: Appendix 5: Trading performance - brand
APPENDIX 5: TRADING PERFORMANCE - BRAND 2020 2019 New housing H1 H1 Change £m £m Gross Profit Persimmon Core 288.6 459.2 (37%) Charles Church 36.5 58.2 (37%) Partnerships 20.1 38.1 (47%) Total 345.2 555.5 (38%) Gross Margin Persimmon Core 33.3% 36.1% (2.8%) Charles Church 28.8% 33.0% (4.2%) Partners
Slide 49: Appendix 6: Trading performance - divisional
APPENDIX 6: TRADING PERFORMANCE - DIVISIONAL 30 June 2020 New housing Units Average Sale Annual average Plots owned and No. Price (£) price change under control Yorkshire 341 191,015 + 1% 5,095 Scotland 271 204,926 + 10% 9,093 North West 363 165,587 + 7% 4,135 North East 337 181,226 - 11,327 Midland
Slide 50: Appendix 6: Trading performance - divisional
APPENDIX 6: TRADING PERFORMANCE - DIVISIONAL 30 June 2020 New housing Units Average Sale Annual average Plots owned and No. Price (£) price change under control Shires 828 271,522 + 9% 14,601 Western 652 226,607 + 7% 11,807 Southern 455 248,743 (1%) 6,077 Wales 353 169,810 (4%) 5,396 Persimmon South
Slide 51: Appendix 6: Trading performance - divisional
APPENDIX 6: TRADING PERFORMANCE - DIVISIONAL 30 June 2020 New housing Units Average Sale Plots owned and No. Price (£) under control Charles Church 474 301,920 10,148 30 June 2019 630 311,549 11,956 Change (25%) (3%) (15%) Appendix 6 - 3 of 3 50
Slide 52: Appendix 7: Analysis of unit sales
APPENDIX 7: ANALYSIS OF UNIT SALES * Persimmon data represents completions in the period ** NHBC data represents registrations in the period NHBC Source: NHBC Housing Market Report (July 2020) Appendix 7 - 1 of 3 51
Slide 53: Appendix 7: Analysis of unit sales - product mix
APPENDIX 7: ANALYSIS OF UNIT SALES - PRODUCT MIX Persimmon data represents completions in the period and NHBC data represents registrations in the period NHBC Source: NHBC Housing Market Report (July 2020) Appendix 7 - 2 of 3 52
Slide 54: Appendix 7: Analysis of unit sales - price range
APPENDIX 7: ANALYSIS OF UNIT SALES - PRICE RANGE Appendix 7 - 3 of 3 53
Slide 55: Appendix 8: Land holdings at 30 June 2020
APPENDIX 8: LAND HOLDINGS AT 30 JUNE 2020 Number Number Number Anticipated Average Cost to Cost to of plots of plots of plots ave. revenue plot cost revenue revenue Dec 2019 Jun 2020 Change Jun 2020 Dec 2019 Plots owned with detailed planning 46,055 47,053 + 998 £218,811 £29,994 13.7% 14.5% Plots ow
Slide 56: Appendix 9: Balance sheet
APPENDIX 9: BALANCE SHEET 2020 2019 2019 H1 H1 Change FY Work in progress £1,223.7m £1,024.0m + £199.7m £1,094.6m Land £1,896.6m £2,013.0m (£116.4m) £1,938.6m Land creditors £374.5m £484.0m (£109.5m) £435.2m Part exchange stock £55.2m £61.8m (£6.6m) £71.8m Shared equity debt £62.7m £73.7m (£11.0m) £
Slide 57: Appendix 10: Cash flows
APPENDIX 10: CASH FLOWS H1 20 H1 19 Change £m £m Operating cash (before working capital movements) 298.6 516.2 -42% Investment in working capital: Decrease in gross land 46.8 69.0 Decrease in land creditors (63.4) (66.7) Net land movement (16.6) 2.3 Increase in WIP, part exchange and showhouses (112
Slide 58: Appendix 11: Mortgage approvals
APPENDIX 11: MORTGAGE APPROVALS 150 Average monthly approvals since beginning of 1993: 79,650 Approvals - Volume ('000) 100 Dec 2015: Dec 2019: Dec 2013: Dec 2017: 71,000 62,000 68,200 72,800 Dec 2009: 59,000 Dec 2011: 52,300 Dec 2016: Dec 2018: Dec 2014: 50 68,400 64,800 60,100 Jun 2020: Dec 2012:
Slide 59: Appendix 12: New housing starts
APPENDIX 12: NEW HOUSING STARTS Source: NHBC Housing Market Report (July 2020) Appendix 12 58
Slide 60: Disclaimer - Important Notice
DISCLAIMER Important Notice Certain statements in this results presentation are forward looking statements. Forward looking statements involve evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those stat