Persimmon PLC · LSE:PSN
Persimmon — Investor Presentation (May 2004)
29 slides from Persimmon's investor presentation, May 19, 2004
Slide 1: Persimmon Plc Analyst Visit to the North East - 19 May 2004
PERSIMMON PLC ANALYST VISIT TO THE NORTH EAST - 19 MAY 2004 0 North East Analyst Visit 19 May 2004
Slide 2: Agenda
Agenda 1. Itinerary 3. Operational structure 2. Overview John White Mike Farley Group Chief Executive South Division Chief Executive 4. Charles Church MD 5. Regional opportunities operational brief Barry Richardson Jeff Fairburn MDCharles MD CharlesChurch ChurchNorth NorthEast East Regional MD North
Slide 3: Itinerary
Itinerary 11.45 a.m. Arrival at Redworth Hall, County Durham 12.00 noon Presentation commences 1.00 p.m. Lunch 1.45 p.m. Depart Redworth Hall 2.15 p.m. Arrive Wynyard site 2.50 p.m. Depart Wynyard 3.10 p.m. Arrive Castle Eden site 3.40 p.m. Depart Castle Eden 4.10 p.m. Arrive Ingleby Barwick - drive
Slide 4: Overview
Overview 3 North East Analyst Visit 19 May 2004
Slide 5: Group - current trading
Group - current trading • Continued development of the main themes of the “Outlook” provided at the Preliminary Announcement and Annual General Meeting – stronger weekly sales activity as compared to 2003 - affordability maintained – organic growth supported by strong sales outlets – selling prices
Slide 6: Persimmon's potential for growth
Persimmon’s potential for growth • Core Housing • Core housing output extension –maximising returns from existing invested overhead 2003 Future Change Number of regional businesses 24 26 +2 Average annual output 465 600 +29% Total annual completions 11,173 15,600 +40% • Core housing operating margin
Slide 7: Charles Church progress and potential
Charles Church progress and potential • Status at acquisition March 2001 (Map - Appendix 1) – 4 businesses - South Midlands, North London, Southern and South East – annual output to June 2000 of only 438 units – weak management disciplines but with strong brand - operating margins in decline • Progr
Slide 8: Operational structure
Operational structure 7 North East Analyst Visit 19 May 2004
Slide 9: Integrated management
Integrated management • Divisional Operating Boards – objectives – responsibilities • Regional structure – objectives – responsibilities • Key strengths • Complementary benefits between Core and Charles Church 8 North East Analyst Visit 19 May 2004
Slide 10: Charles Church operating strategy
Charles Church operating strategy • Issues that received urgent attention - creating a robust business model – management focus and structure – customer complaint backlog – build quality and process efficiency – procurement pricing – land acquisition strategy – product mix and offer (Sales analysis
Slide 11: Charles Church operating strategy
Charles Church operating strategy • The market opportunity - identification of new markets • Build on Group competitive advantages – land access - approach to land acquisition and site allocation – procurement – build process expertise – bespoke product development • Development of the product range
Slide 12: Charles Church MD operational brief
Charles Church MD operational brief 11 North East Analyst Visit 19 May 2004
Slide 13: Launch of Charles Church in the North East
Launch of Charles Church in the North East • Pre-acquisition experience • Post-acquisition change management – management focus and philosophy – land acquisition – product range : Pandongate, Kelso – procurement support – brand progression 12 North East Analyst Visit 19 May 2004
Slide 14: Launch of Charles Church in the North East
Launch of Charles Church in the North East • Benefits of being part of larger Persimmon Group – land introduction and referral - raising development values – strengthened regional and national network – adoption of best practices - enhanced specification : Signature items - house type portfolio deve
Slide 15: Progress of Charles Church in the North East - a case study
Progress of Charles Church in the North East - a case study • Formed 1 July 2001 • Output expansion with greater market penetration 6 months to 12 months to 12 months to Target to December December December December 2001 2002 2003 2004 Volume 39 163 204 250 Statutory gross margin 17.5% 19.5% 21.8% 2
Slide 16: The next phase of growth
The next phase of growth • Expand volumes to over 300 units per annum • Land selection and acquisition - maintain a land bank of c. 3.5 years supply • Strengthen brand awareness • Pursue opportunities identified by customers feedback • Continue to improve operating margins further • Continue to inve
Slide 17: Regional opportunities
Regional opportunities 16 North East Analyst Visit 19 May 2004
Slide 18: Persimmon in the North East
Persimmon in the North East • Persimmon has seen many years of consistent growth in the North East market • Core Housing completion volumes were 734 in 2003 - 12% of the market (Appendix 6) • Persimmon will increase its market share over the medium term • The local economy is now more balanced (Appe
Slide 19: Benefits of the Beazer acquisition in the North East
Benefits of the Beazer acquisition in the North East • Excellent fit with complementary land position • Persimmon had large number of active outlets, Beazer had invested in three major anchor sites • Improved operational efficiency • Great opportunity for the introduction of Charles Church on the pr
Slide 20: Persimmon's organic growth
Persimmon’s organic growth • Persimmon’s “tried and tested” approach to further volume expansion • Launch of the new Core Teesside business – management – land investment – outlet expansion – volumes and growth potential - creating opportunity 2003 2004 Future North East 740 440 650 Teesside - 400 5
Slide 21: Summary
Summary • The Persimmon Group has exciting potential for organic growth - excellent forward sales • Core Housing volumes will progress • Charles Church will continue to penetrate new regional markets on an increasingly profitable basis • Extensive land bank platform in place - c. 58,000 plots owned
Slide 22: Appendices
Appendices Q Appendix 1 Charles Church developments in 2001 Q Appendix 2 Charles Church developments in 2003 Q Appendix 3 Charles Church developments for 2004 Q Appendix 4 Charles Church property types analysis Q Appendix 5 Examples of the Charles Church product range Q Appendix 6 The North East mar
Slide 23: Charles Church 2001 developments
Charles Church 2001 34 developments Regional offices existing progressing at acquisition: •South East •Southern •North London •South Midlands 19 May 2004 North East Analyst Visit Appendix 1 22
Slide 24: Charles Church 2003 developments
Charles Church 2003 86 developments Regional offices existing progressing at acquisition: •South East •Southern •North London •South Midlands Opened post acquisition: •Western •Yorkshire •North East 19 May 2004 North East Analyst Visit Appendix 2 23
Slide 25: Charles Church 2004 developments
Charles Church 2004 93 developments Regional offices existing progressing at acquisition: • South East • Southern • North London • South Midlands Opened post acquisition: • Western • Yorkshire • North East Launches to come: 19 May 2004 • North West North East Analyst Visit • Scotland Appendix 3 24
Slide 26: Charles Church property types analysis
Charles Church property types analysis 29% Detached 46% 14% Semi Detached 6% Townhouse 18% 23% Apartments 36% 24% 3% Bungalow 1% 0% 10% 20% 30% 40% 50% NHBC distribution * Charles Church distribution * Source: NHBC New House-Building Statistics (2003 Quarter 4) Appendix 4 25 North East Analyst Visit
Slide 27: Examples of the Charles Church product range
Examples of the Charles Church product range Appendix 5 26 North East Analyst Visit 19 May 2004
Slide 28: The North East market
The North East market • Total North East market new house completions were c. 6,000* in 2003, an increase of 2% on 2002 • The North East market average selling price was £148,000*, c. 10% lower than the national average • The economy has undergone significant restructuring over recent years - the de
Slide 29: Major components of the North East economy
Major components of the North East economy 18% 27% 7% 7% 6% 15% 10% 10% Percentage of North East GDP (approx.) Manufacturing Manufacturing - 27% Business services Business services - 15% Retail Retail &&Wholesale Wholesale- 10% Health Health &&Social Social- 10% Construction Construction - 6% Educat