Slide 1: Full Year Results Presentation
FULL YEAR RESULTS PRESENTATION December 2020 KS reac | ! Persimmon To sie QRS,
Slide 2: Persimmon is a strong business with an exciting future
Persimmon is a strong business with an exciting future Securing a reputation for outstanding service and quality The whole company is focused on growing from a platform of strength to produce long term sustainable returns for the benefit of all stakeholders 2
Slide 3: Agenda
AGENDA Page Presented by Financial review 4 Mike Killoran Building on strength 17 Dean Finch Agile, responsible approach to Covid 24 Andy Fuller The Persimmon Way 28 Andy Fuller Customer connectivity 33 Liam Ronan Homes for all 36 Dean Finch The Group’s growth potential 37 Dean Finch
Slide 4: Financial Review
FINANCIAL REVIEW Page Robust performance 5 Industry leading margins 7 Persimmon, a responsible builder 8 High quality land holdings 9 Off-site manufacturing - supporting growth potential 10 Robust financial platform 11 Well judged capital deployment 12 Strong liquidity 13 Strength
Slide 5: Robust Financial Performance
ROBUST FINANCIAL PERFORMANCE 2020 2019 Change Operating profit Underlying profit £862.8m New home legal completions 13,575 15,855 (14%) Legacy building provision (£75.0m) Average selling price £230,534 £215,709 + 6.9% Goodwill impairment (£4.3m) New housing revenue £3,129.5m £3,420.1m (8%) Reported
Slide 6: Robust Trading Performance
ROBUST TRADING PERFORMANCE 2020 2019 Change Significant Covid-19 related disruption to site operations Legal completions Private 11,363 12,463 (9%) Partnerships 2,212 3,392 (35%) • Housing revenues down 8% Total 13,575 15,855 (14%) Average selling price Private £241,985 + 4% • Mitigated by strong
Slide 7: Industry Leading Margins Maintained
INDUSTRY LEADING MARGINS MAINTAINED New housing 2020 2019 2020 2019 Per plot: FY FY Change FY FY Change Revenue £230,534 £215,709 + 6.9% 100.0% 100.0% Land costs (£32,733) (£30,290) + 8.1% (14.2%) (14.0%) (0.2%) Build and other direct costs (£126,390) (£114,106) + 10.8% (54.8%) (52.9%) (1.9%) Gross
Slide 8: Persimmon, a Responsible Builder
PERSIMMON, A RESPONSIBLE BUILDER Residents safety is our priority Persimmon is prepared to step forward to undertake works where those that are responsible do not Identified 26 multi-storey, multi-occupancy developments constructed using cladding material that may no longer fully comply with c
Slide 9: 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 42,963 £220,022 £28,667 13.0% Plots owned proceeding to planning Total owned 24,242 67,205 £208,260
Slide 10: Off-Site Manufacturing – Supporting Growth Potential
OFF-SITE MANUFACTURING – SUPPORTING GROWTH POTENTIAL Vertical integration securing the supply of key products and materials • Brickworks facility has the capacity to produce c. 80m bricks and block pavers annually • Tileworks supplied c. 2.5m roof tiles to over 100 sites during the year Space4 d
Slide 11: Robust Financial Platform for Future Growth
ROBUST FINANCIAL PLATFORM FOR FUTURE GROWTH 2020 2019 Change Effective management of the housing cycle - strong land platform for growth Land £1,722m £1,939m (£217m) Work in progress investment allowing for effective Work in progress £1,092m £1,095m (£3m) quality assurance procedures Land credit
Slide 12: Well Judged Capital Deployment
WELL JUDGED CAPITAL DEPLOYMENT 2020 2019 Change Effective management of the housing cycle - well judged deployment of capital Cash inflow from operations £875m £1,054m (£179m) Selective land investment preserving Decrease in land £226m £148m + £78m Decrease in land creditors (£111m) (£118m) + £7
Slide 13: Strong Liquidity
STRONG LIQUIDITY Free cash generation before capital returns of £741m (2019: £544m generated) - includes £90m of accelerated corporation tax paid on time and in full Working capital effectively managed through disciplined land investment whilst reducing land creditor commitment Strong net cash
Slide 14: Sustaining Strength Through the Cycle
SUSTAINING STRENGTH THROUGH THE CYCLE Group strategy recognises the inherent cyclicality of the UK housing market - judging scale and timing of capital deployment critically important for all stakeholders Selective, disciplined approach to land replacement Ensure work in progress levels are ma
Slide 15: Capital Returns to Shareholders
CAPITAL RETURNS TO SHAREHOLDERS Covid-19 impact: • Appropriate 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 be paid 6 July 2020 • Given the strong performance of the business du
Slide 16: Market Leading Long Term Returns
MARKET LEADING LONG TERM RETURNS Persimmon plc - Long term margin and returns Total shareholder returns over the past 20 years (rebased to 100) 45.0% 5,000.0 Δ COVID Change (%) 20 years 15 years 10 years 5 years 1 year outbreak2 40.0% 4,500.0 Persimmon 2,631% 337% 1,057% 94% 7% (12%) 4,000.0 3,200 U
Slide 17: Building on Strength
BUILDING ON STRENGTH Key areas of operational focus: • Commitment to build quality • Reinforcing trust • Growth with industry leading returns • Strong financial foundations • Developing sustainable communities 17
Slide 18: Commitment to Build Quality
COMMITMENT TO BUILD QUALITY Build right, first time, every time The Persimmon Way - consistent quality assurance More exacting build tolerances - going further than existing industry standards Investment in Independent Quality Controllers - increasing resource “Persimmon Pathway” - tailore
Slide 19: Reinforcing Trust
REINFORCING TRUST A dependable partner for all customers - providing outstanding value and service Trending above the HBF 5* threshold since January 2020 Persimmon Homebuyer Retention Scheme - highlighted as good practice by the Consumer Code Improved communication - customer portal roll out
Slide 20: Growth with Industry Leading Returns
GROWTH WITH INDUSTRY LEADING RETURNS Unlocking great potential for growth Developing capabilities to capture demand Industry leading land platform Disciplined approach to maintain high quality new land investment Developing market share where we can meet housing needs Continuing to inves
Slide 21: Strong Financial Foundation
STRONG FINANCIAL FOUNDATION Industry leading land holdings - embedded margins in excess of 32.5% Strong national coverage - “homes for all” Excellent liquidity - over £1.2bn cash held at 31 December 2020 Modest land creditor commitment - substantial headroom available Commitment to strengt
Slide 22: Developing Sustainable Communities
DEVELOPING SUSTAINABLE COMMUNITIES Supporting customers, colleagues and communities Putting customers before volume Delivering “homes for all” Providing opportunities for all across the nation Working towards becoming a Living Wage Foundation accredited employer Well established charity
Slide 23: Pathway to Net Zero
PATHWAY TO NET ZERO Net zero carbon homes in use by 2030 Aim to be net zero carbon in our operations by 2040 Ambitious science based carbon reduction targets developed providing a pathway to net zero • Reduce emissions from our homes in use and our supply chain by at least 22% per m² completed
Slide 24: Covid-19: An Agile, Responsible Response
COVID-19: AN AGILE, RESPONSIBLE RESPONSE Response was responsible, swift and effective Prioritised safety of workforce, colleagues, customers and local communities Full compliance with Government guidance in England, Wales and Scotland - verified by independent third party Safe operating pro
Slide 25: 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 supply chain maintained throughout • Clear visibility re forward commitment and cash flows Persimmon’s operational agility enabled safe and efficient restart of build programmes
Slide 26: Effective Sales Process
EFFECTIVE SALES PROCESS Virtual sales support throughout first lockdown period Persimmon and Charles Church websites attracting record levels of interest Online digital sales reservation platform supporting customer activity and strong sales performance Site sales offices and showhomes open
Slide 27: Customer Communication Maintained
CUSTOMER COMMUNICATION MAINTAINED Emergency appointments only during initial period of disruption Routine maintenance now recommenced subject to devolved Government regulation “Passport to work scheme” introduced for all operatives • Individual risk assessments for each customer Digital New
Slide 28: Continuing to Support Our Customers
CONTINUING TO SUPPORT OUR CUSTOMERS The Persimmon Way - aims to ensure we consistently provide good quality homes to all our customers Industry leading Homebuyer Retention Scheme - highlighted as good practice by the Consumer Code • c. 50% of private new home customers utilised the scheme during
Slide 29: The Persimmon Way – Build Right, First Time, Every Time
THE PERSIMMON WAY – “BUILD RIGHT, FIRST TIME, EVERY TIME” Key foundation of the customer care improvement plan Clearly defined “end to end” build policy for all regions in the Group Detailed quality control procedures • Assessment of site based workforce to ensure fit for purpose • Standardisa
Slide 30: The Persimmon Way – Quality Assurance
THE PERSIMMON WAY – QUALITY ASSURANCE Enhanced assurance process improving quality and build efficiencies Independent Quality Controllers critically assessing compliance with the Persimmon Way • “check the checker” principle providing additional assurance • Key stages identified requiring 100% c
Slide 31: The Persimmon Way – Strengthening Skills
THE PERSIMMON WAY – STRENGTHENING SKILLS Training - suite of training modules developed and delivered in 2020 • Comprehensive pathway programme for site managers and assistant site managers being developed during 2021 • Modular learning and on-site tool box talk for site staff and sub-contractors
Slide 32: The Persimmon Way – Build Right, First Time, Every Time
THE PERSIMMON WAY – “BUILD RIGHT, FIRST TIME, EVERY TIME” The Persimmon Way ensures: • A Group policy that delivers consistently strong build quality • Pre-start processes, house types and workforce are fit for purpose • Completion of all build stages to a consistent standard across the Group • Al
Slide 33: Move In, Get Connected
MOVE IN, GET CONNECTED Only UK housebuilder providing connectivity from moving in date FibreNest, ultra fast, full fibre to the home service well established Aligned with the Government’s digital strategy All new sites connected to full fibre network Countrywide network coverage • Currentl
Slide 34: Customer Choice and Value
CUSTOMER CHOICE AND VALUE Price points and speeds to suit all customer needs 34
Slide 35: Investment for Growth
INVESTMENT FOR GROWTH December December 2019 2020 Investment in nationwide full fibre network c. 60% growth in live sites through 2020 35
Slide 36: Delivering Homes for All
DELIVERING HOMES FOR ALL Strong network of active sites across the UK served by our 31 regional operating businesses House prices range from £40,000 to £800,000 • 29% of private sales priced below £200,000 • 8% of private sales priced lower than £150,000 • Average private selling price c. 17% lo
Slide 37: Delivery of the Group's Growth Potential
DELIVERY OF THE GROUP’S GROWTH POTENTIAL Key drivers for growth Exceptional quality of our operational teams Reputation for outstanding service and value Strong and flexible balance sheet Maintaining strong liquidity levels and the appropriate deployment of cash Harnessing the Group’s in
Slide 38: Disciplined Land Acquisition Based on Strict Criteria
DISCIPLINED LAND ACQUISITION BASED ON STRICT CRITERIA Established strategy of minimising risk and investing capital at the right time Strategic in the cycle interests acquired during FY 2020 Every new land opportunity reviewed in detail • No need to do a “bad deal” • Focus maintained on achievin
Slide 39: Strong Platform to Deliver Future Growth
STRONG PLATFORM TO DELIVER FUTURE GROWTH Strong forward sales - £2.3bn Since 1 January, private weekly sales rate per site c. 7% 1 January Forward Sales Units ASP Revenue ahead of last year 2021 8,976 £188,190 £1,689.2m 2020 7,692 £176,347 £1,356.5m Disciplined approach to sales release - putt
Slide 40: Long Term Sustainable Returns for All
LONG TERM SUSTAINABLE RETURNS FOR ALL Near term growth assured and return to pre-Covid volumes by 2022 Unlocking the growth potential of the business through: Industry leading land holdings Industry leading margins and returns Strong reputation for service, quality and value Growth from
Slide 41: Appendices
APPENDICES Appendix 1 - Investing in our colleagues Appendix 2 - Supporting our colleagues Appendix 3 - Engaging with our communities Appendix 4 - Supporting our communities Appendix 5 - FY 2020 performance Appendix 6 - Half yearly profit & loss Appendix 7 - Financial record: Income St
Slide 42: Appendix 1: Investing in Our Colleagues
APPENDIX 1: INVESTING IN OUR COLLEAGUES Securing talent for the future • 159 colleagues promoted during 2020 • c. 13% of current workforce participate in a formal training programme Structured learning and development programmes • c. 12,600 training days delivered during the year - c. 1,700 deli
Slide 43: Appendix 2: Supporting Our Colleagues
APPENDIX 2: SUPPORTING OUR COLLEAGUES Continued to invest and support staff throughout the year • Introduction of remote working • Retained all staff on full pay • Pay increases and bonus paid to staff Mental health support and resource provided Employee Engagement Panel - positive feedback re
Slide 44: Appendix 3: Engaging with Our Communities
APPENDIX 3: ENGAGING WITH OUR COMMUNITIES Proactive engagement and consultation throughout the planning and development process Master planning and design reflecting community preferences Engagement with local schools supported by our partnership with Team GB Delivering new amenities and imp
Slide 45: Appendix 4: Supporting Our Communities
APPENDIX 4: SUPPORTING OUR COMMUNITIES Creating attractive neighbourhoods in areas where people wish to live and work Provided £303m of affordable housing designed to promote social inclusion Engaging local suppliers and tradespeople in local economies • Working with over 5,150 suppliers suppo
Slide 46: Appendix 5: FY 2020 Performance
APPENDIX 5: FY 2020 PERFORMANCE Underlying trading (adjusted for goodw ill im pairm ent and legacy building provision) 2020 2019 New housing Total % of revenue Total % of revenue Revenue £3,129.5m- £3,420.1m Cost of sales: - land cost (£444.3m) (14.2%) (£480.2m) (14.0%) - build and other direct cost
Slide 47: Appendix 5: FY 2020 Performance
APPENDIX 5: FY 2020 PERFORMANCE Brand Profile - 12 months ended 31 December 2020: Unit Completions Average selling Average price Plots owned and Plot count completions change price change under control change 5,584 (14%) £213,098 + 4% 32,755 (9%) Persimmon North 41% 39% 4,699 (2%) £270,476 + 2% 27,4
Slide 48: Appendix 6: Half Yearly Profit & Loss
APPENDIX 6: HALF YEARLY PROFIT & LOSS Underlying performance: 2020 2020 2019 2019 H2 H1 H2 H1 New housing Unit completions 8,675 4,900 8,271 7,584 Revenue £2,026.7m £1,102.8m £1,774.8m £1,645.3m Operating profit * £569.6m £293.2m £526.6m £510.1m Operating margin * 28.1% 26.6% 29.7% 31.0% Net finance
Slide 49: Appendix 7: Financial Record - Income Statement
APPENDIX 7: FINANCIAL RECORD - INCOME STATEMENT 2016 2017 2018 2019 2020 Unit completions 15,171 16,043 16,449 15,855 13,575 New housing revenue £3,136.8m £3,422.3m £3,545.8m £3,420.1m £3,129.5m Average Selling Price £206,765 £213,321 £215,563 £215,709 £230,534 Operating profit * £778.5m £966.1m £1,
Slide 50: Appendix 7: Financial Record - Balance Sheet
APPENDIX 7: FINANCIAL RECORD - BALANCE SHEET 2016 2017 2018 2019 2020 Shareholders' funds £2,737.4m £3,201.6m £3,194.5m £3,258.3m £3,518.4m Cash £913.0m £1,302.7m £1,048.1m £843.9m £1,234.1m Net asset value per share 887.3p 1036.6p 1006.0p 1021.7p 1102.7p Work in progress £617.2m £723.9m £881.8m £1,
Slide 51: Appendix 8: Half Yearly Sales Profile
APPENDIX 8: HALF YEARLY SALES PROFILE Appendix 8 51
Slide 52: Appendix 9: Trading Performance - Brand
APPENDIX 9: TRADING PERFORMANCE - BRAND 2020 2019 New housing FY FY Change No. No. Units Persimmon Core 10,283 11,327 (9%) Charles Church 1,080 1,136 (5%) Partnerships 2,212 3,392 (35%) Total 13,575 15,855 (14%) £ £ Average Selling Price Persimmon Core 239,318 230,036 + 4% Charles Church 361,147 361
Slide 53: Appendix 9: Trading Performance - Brand
APPENDIX 9: TRADING PERFORMANCE - BRAND 2020 2019 New housing FY FY Change £m £m Gross Profit * Persimmon Core 799.2 924.0 (14%) Charles Church 117.8 129.2 (9%) Partnerships 52.4 77.5 (32%) Total 969.4 1,130.7 (14%) Gross Margin ** Persimmon Core 32.5% 35.5% (3.0%) Charles Church 30.2% 31.5% (1.3%)
Slide 54: Appendix 9: Trading Performance - Brand
APPENDIX 9: TRADING PERFORMANCE - BRAND 2020 2019 New housing H2 H2 Change No. No. Units Persimmon Core 6,628 5,857 + 13% Charles Church 706 643 + 10% Partnerships 1,341 1,771 (24%) Total 8,675 8,271 + 5% £ £ Average Selling Price Persimmon Core 240,724 227,691 + 6% Charles Church 373,169 363,596 +
Slide 55: Appendix 9: Trading Performance - Brand
APPENDIX 9: TRADING PERFORMANCE - BRAND 2020 2019 New housing H2 H2 Change £m £m Gross Profit * Persimmon Core 510.6 464.8 + 10% Charles Church 81.3 71.0 + 15% Partnerships 32.3 39.4 (18%) Total 624.2 575.2 + 9% Gross Margin ** Persimmon Core 32.0% 34.9% (2.9%) Charles Church 30.9% 30.4% + 0.5% Part
Slide 56: Appendix 9: Trading Performance - Brand
APPENDIX 9: 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 57: Appendix 9: Trading Performance - Brand
APPENDIX 9: 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 58: Appendix 10: Trading Performance - Divisional
APPENDIX 10: TRADING PERFORMANCE - DIVISIONAL 31 December 2020 New housing Units Average Sale Annual average Plots owned and No. Price (£) price change under control Yorkshire 954 195,847 + 4% 5,484 Scotland 1,080 210,303 + 10% 8,267 North West 927 168,331 + 7% 3,301 North East 1,055 185,240 + 6% 10
Slide 59: Appendix 10: Trading Performance - Divisional
APPENDIX 10: TRADING PERFORMANCE - DIVISIONAL 31 December 2020 New housing Units Average Sale Annual average Plots owned and No. Price (£) price change under control Shires 2,235 271,217 + 10% 13,401 Western 1,700 230,902 + 9% 10,958 Southern 1,172 244,461 (4%) 6,434 Wales 872 185,599 + 10% 5,356 Pe
Slide 60: Appendix 10: Trading Performance - Divisional
APPENDIX 10: TRADING PERFORMANCE - DIVISIONAL 31 December 2020 New housing Units Average Sale Plots owned and No. Price (£) under control Charles Church 1,298 326,508 9,224 31 December 2019 1,413 319,632 11,819 Change (8%) + 2% (22%) Appendix 10 - 3 of 3 60
Slide 61: Appendix 11: Analysis of Unit Sales
APPENDIX 11: ANALYSIS OF UNIT SALES * Persimmon data represents completions in the period ** NHBC data represents registrations in the period NHBC Source: NHBC Housing Market Report (January 2021) Appendix 11 - 1 of 3 61
Slide 62: Appendix 11: Analysis of Unit Sales - Product Mix
APPENDIX 11: 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 (January 2021) Appendix 11 - 2 of 3 62
Slide 63: Appendix 11: Analysis of Unit Sales - Price Range
APPENDIX 11: ANALYSIS OF UNIT SALES - PRICE RANGE Appendix 11 - 3 of 3 63
Slide 64: Appendix 12: Land Holdings at 31 December 2020
APPENDIX 12: LAND HOLDINGS AT 31 DECEMBER 2020 Number Number Number Anticipated Average Cost to Cost to of plots of plots of plots ave. revenue plot cost revenue revenue Dec 2019 Dec 2020 Change Dec 2020 Dec 2019 Plots owned with detailed planning 46,055 42,963 (3,092) £220,022 £28,667 13.0% 14.5% P
Slide 65: Appendix 13: Balance Sheet
APPENDIX 13: BALANCE SHEET 2020 2019 Change Work in progress £1,091.6m £1,094.6m (£3.0m) Land £1,722.1m £1,938.6m (£216.5m) Land creditors £329.3m £435.2m (£105.9m) Part exchange stock £40.9m £71.8m (£30.9m) Shared equity debt £56.2m £68.6m (£12.4m) Cash £1,234.1m £843.9m + £390.2m Shareholders' fun
Slide 66: Appendix 14: Cash Flows
APPENDIX 14: CASH FLOWS H1 20 H2 20 FY 20 FY 19 Change £m £m £m £m Operating cash (before working capital movements) 298.6 576.0 874.6 1,053.8 -17% Investment in working capital: Decrease in gross land 46.8 179.2 226.0 148.2 Decrease in land creditors (63.4) (47.9) (111.3) (118.2) Net land movement
Slide 67: Appendix 15: Mortgage Approvals
APPENDIX 15: MORTGAGE APPROVALS 150 Average monthly approvals since beginning of 1993: 79,870 Dec 2020: 103,400 Approvals - Volume ('000) 100 Dec 2013: Dec 2019: 72,800 67,300 Dec 2015: 71,000 Dec 2017: 62,000 Dec 2009: 59,000 Dec 2011: 52,300 Dec 2014: Dec 2016: Dec 2018: 60,100 68,400 64,800 50 De
Slide 68: Appendix 16: New Housing Starts
APPENDIX 16: NEW HOUSING STARTS Source: NHBC Housing Market Report (January 2021) Appendix 16 68
Slide 69: 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