Interim Results

Persimmon PLC 24 August 2004 24 August 2004 PERSIMMON PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004 Highlights • Turnover increased by 21% to £1.036bn (2003: £857.2m) • Completions up 9% at 6,058 homes at an average price of £171,082 (2003: 5,562 homes at £154,110) • Operating margins* enhanced to 22.7% (2003: 19.4%) • Pre-tax profit* up 45% to £220.3m (2003: £151.7m) • 43% growth in earnings per share* to 53.6p (2003: 37.6p) • ROACE** improved to 28.3% (2003: 23.5%) • Operating cash inflow of over £140m and strong balance sheet: Gearing down to 21% (2003: 37%) despite strengthening land bank • Interim dividend increased 30% to 9.1p per share reflecting excellent profit growth and good prospects. Total dividend payout for the year will be not less than 23.0p per share (increase of over 25% on 2003) • Prospects for the full year are excellent with sales of over £1.0bn already booked for second half of 2004. Total of over 12,000 homes for the current year either completed, exchanged or under reservation. * before goodwill amortisation of £5.4m (2003: £5.4m) ** return on average capital employed based on 12 month average excluding goodwill amortisation Duncan Davidson, Group Chairman, said: 'Persimmon is very well placed to deal with whatever conditions the UK housing market may produce. Our long land bank, relatively low average selling price, and excellent record of profitable growth put us in a very competitive position. Our strong balance sheet gives us exciting opportunities for further expansion both organically and by acquisition, if the right situations should arise. Against this background Persimmon is very confident of achieving its planned volume and profit growth in both new and traditional markets across the whole of the UK in 2004 and beyond.' For further information, please contact: Duncan Davidson, Group Chairman Edward Orlebar / Faeth Birch John White, Group Chief Executive Finsbury Group Mike Killoran, Group Finance Director Tel: 020 7251 3801 Persimmon plc - Tel: 020 7251 3801 on 24 August Tel: 01904 642 199 thereafter Photographs are available for media download from www.newscast.co.uk. A webcast of today's analyst presentation will be available on www.persimmonhomes.com by 2.00pm today. PERSIMMON PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004 CHAIRMAN'S STATEMENT Persimmon's pre-tax profits for the first half of 2004 were £220.3 million, an increase of 45 per cent over the £151.7 million achieved in the first half of 2003 and significantly ahead of market expectations. Earnings per share in the six months to 30 June 2004 were 53.6 pence (2003: 37.6 pence). (All figures before goodwill amortisation). This improvement was achieved from both an increase in volumes of circa 9 per cent of new homes sold and also further margin improvement. During the period we completed the sale of 6,058 homes at an average price of £171,082. (2003: 5,562 homes at £154,110). This produced turnover of £1.036 billion. We have further increased operating margins to 22.7 per cent (2003: 19.4 per cent) and due to the fundamental strength and scale of Persimmon we remain confident of our ability to sustain margins at the top end of industry levels. In addition we continue to focus on raising our return on average capital employed, and this reached 28.3 per cent in the period (2003: 23.5 per cent). Persimmon has increased its land bank to 60,287 plots (2003: 56,424 plots), a circa 5 year supply of land. Whilst we were active in the land market during the first quarter of 2004, we adopted an increasingly cautious approach throughout the period adjusting our land buying hurdle rates to ensure purchases were at acceptable prices. We have had considerable success in acquiring large sites, where our financial strength and development expertise gives us a great advantage. Despite the increased land investment, strong operating cash inflow of over £140 million has resulted in a reduction in net borrowings to £266 million at 30 June 2004. This gives a gearing ratio of 21 per cent and interest cover of 16.0 times. (2003: £377 million, gearing of 37 per cent, cover of 11.4 times). In the North Division we completed 2,568 homes at an average selling price of £148,962 (2003: 2,375 homes at £125,956). In the South Division we completed 2,987 new homes at an average selling price of £176,356 (2003: 2,727 homes at £163,749). Thus prices in the North increased by 18.3 per cent in the 12 month period, against a rise of 7.7 per cent in the South. Our premium brand business Charles Church, which we are expanding into new markets across the country, continued its progress with 503 completions at an average price of £252,694. (2003: 460 homes at £242,333). In order to reflect Persimmon's profit growth and our strong confidence in our future performance, we are increasing our interim dividend by 30 per cent to 9.1 pence per share (2003: 7.0 pence per share). This dividend will be payable on 22 October 2004 to shareholders on the Register on 3 September 2004. The total dividends for the full year 2004 will be not less than 23.0 pence per share (2003: 18.3 pence per share) representing an increase of over 25 per cent. Looking ahead, at 23 August 2004 we have already booked sales for the second half of 2004 of over £1.0 billion. As previously stated in the trading update on 29 June 2004, our total sales revenue for 2004 at that date was 28 per cent ahead. Since then sales volumes have been satisfactory with prices remaining stable and at good margins. At present we have sold a total of over 12,000 homes for 2004 including legal completions to date, contracts exchanged and reservations. We currently anticipate growth in average selling prices of circa 11 per cent for the full year. The high specification and low maintenance cost of new homes makes purchasers constantly aware of the very good value of our homes. Persimmon's geographical spread right across the UK enables us to sell homes which continue to be affordable in every area. The majority of our homes are sold to owner occupiers, whose confidence is underpinned by strong employment prospects. Persimmon is therefore not reliant on the investor market. As a result of the slow planning process which is delaying site openings across the industry, demand continues to exceed supply, and is likely to do so for the foreseeable future. Whilst the market has been more subdued since the recent interest rate increases, visitor levels remain good and there has been no significant increase in the use of sales incentives. The action we have taken to roll out Charles Church across the UK, whilst at the same time extending its product offering, has given this business more resilience during a period when the upper end of the market has become more difficult. As we open new developments across the UK we continue to experience great interest and pent up demand. This is particularly important for 2005 as we expect to open over 220 new developments during the next 12 months. These new developments are spread across the whole of the UK, both in our core housing business and Charles Church. We strongly believe that Persimmon is very well placed to deal with whatever conditions the UK housing market may produce. Our long land bank, relatively low average selling price, and excellent record of profitable growth put us in a very competitive position. Our strong balance sheet gives us exciting opportunities for further expansion both organically and by acquisition, if the right situations should arise. Against this background Persimmon is very confident of achieving its planned volume and profit growth in both new and traditional markets across the whole of the UK in 2004 and beyond. I thank all members of the Persimmon team for their hard work and achievements, which have been instrumental in producing these record results. 24th August 2004 Duncan Davidson Group Chairman PERSIMMON PLC Consolidated Profit & Loss Account (unaudited) -------------------------------------------------------------------------------- Six months to Six months to Year to 30 June 30 June 31 December Note 2004 2003 2003 £m £m £m -------------------------------------------------------------------------------- Turnover 1,036.4 857.2 1,883.0 Cost of sales (761.1) (652.5) (1,423.6) -------------------------------------------------------------------------------- Gross profit 275.3 204.7 459.4 Net operating expenses (45.7) (43.8) (88.5) --------------------------------------------------------------------------------- | | |Operating profit before 235.0 166.3 381.7 | |goodwill amortisation | | | |Goodwill amortisation (5.4) (5.4) (10.8)| --------------------------------------------------------------------------------- Operating profit 229.6 160.9 370.9 Net interest payable and (14.7) (14.6) (29.2) similar charges -------------------------------------------------------------------------------- Profit on ordinary 214.9 146.3 341.7 activities before taxation Tax on ordinary 4 (67.8) (46.0) (107.5) activities -------------------------------------------------------------------------------- Profit on ordinary 147.1 100.3 234.2 activities after taxation Dividends (26.1) (19.8) (51.9) -------------------------------------------------------------------------------- Retained profit 121.0 80.5 182.3 -------------------------------------------------------------------------------- Basic earnings per 5 share Before goodwill 53.6p 37.6p 86.8p After goodwill 51.7p 35.7p 83.0p Diluted earnings per 5 share Before goodwill 53.1p 37.3p 86.0p After goodwill 51.2p 35.4p 82.2p Dividend per share 9.1p 7.0p 18.3p -------------------------------------------------------------------------------- The results of the Group relate entirely to continuing operations. PERSIMMON PLC Consolidated Balance Sheet (unaudited) -------------------------------------------------------------------------------- 30 June 30 June 31 December Note 2004 2003 2003 £m £m £m ------------------------------------------------------------------------------- Fixed assets Tangible assets 26.7 24.1 24.1 Intangible assets 176.6 187.4 182.0 -------------------------------------------------------------------------------- 203.3 211.5 206.1 -------------------------------------------------------------------------------- Current assets Stocks and work in progress 1,860.7 1,649.5 1,661.2 Debtors 113.4 118.2 112.4 Cash at bank and in hand 3 24.7 12.0 0.8 -------------------------------------------------------------------------------- 1,998.8 1,779.7 1,774.4 -------------------------------------------------------------------------------- Creditors due within one year Borrowings 3 (11.2) (8.6) (19.7) Other creditors (576.3) (540.2) (498.8) -------------------------------------------------------------------------------- (587.5) (548.8) (518.5) -------------------------------------------------------------------------------- Net current assets 1,411.3 1,230.9 1,255.9 -------------------------------------------------------------------------------- Total assets less current 1,614.6 1,442.4 1,462.0 liabilities -------------------------------------------------------------------------------- Creditors due after more than one year Borrowings 3 (279.0) (380.6) (295.6) Other creditors (65.6) (34.9) (34.8) -------------------------------------------------------------------------------- (344.6) (415.5) (330.4) -------------------------------------------------------------------------------- Net assets 1,270.0 1,026.9 1,131.6 -------------------------------------------------------------------------------- Capital and reserves Called up share capital 28.7 28.3 28.4 Share premium account 217.9 212.8 214.2 Merger reserve 281.4 281.4 281.4 Revaluation reserve 1.2 1.2 1.2 Profit and loss account 740.8 503.2 606.4 -------------------------------------------------------------------------------- Equity shareholders' funds 1,270.0 1,026.9 1,131.6 -------------------------------------------------------------------------------- Net assets per share 441.8p 362.8p 398.7p PERSIMMON PLC Consolidated Consolidated Cash Flow Statement (unaudited) -------------------------------------------------------------------------------- Six months to Six months to Year to 30 June 30 June 31 December Note 2004 2003 2003 £m £m £m -------------------------------------------------------------------------------- Net cash inflow from 140.6 50.1 243.6 operating activities -------------------------------------------------------------------------------- Return on investments and servicing of finance Interest received 0.3 0.2 1.1 Interest paid (14.8) (15.0) (30.6) Interest paid on finance (0.1) (0.1) (0.2) leases -------------------------------------------------------------------------------- (14.6) (14.9) (29.7) -------------------------------------------------------------------------------- Taxation UK corporation tax paid (55.5) (39.9) (89.8) -------------------------------------------------------------------------------- Capital expenditure Purchase of tangible (6.1) (4.6) (7.1) fixed assets Sale of tangible fixed 0.6 2.3 2.9 assets -------------------------------------------------------------------------------- (5.5) (2.3) (4.2) -------------------------------------------------------------------------------- Acquisitions and disposals Acquisition of businesses - (2.6) (48.1) and subsidiaries Net borrowings acquired - (9.0) (9.1) with subsidiaries -------------------------------------------------------------------------------- - (11.6) (57.2) -------------------------------------------------------------------------------- Equity dividends paid (18.2) (22.4) (41.9) -------------------------------------------------------------------------------- Net cash inflow/(outflow) 46.8 (41.0) 20.8 before financing -------------------------------------------------------------------------------- Financing Bank loans advanced - 60.0 - Repayment of bank loans (16.6) (7.9) (32.9) Exercise of share 2.6 2.0 3.5 options Repayment of principal (0.4) (0.9) (1.5) under finance leases -------------------------------------------------------------------------------- Net cash (outflow)/inflow (14.4) 53.2 (30.9) from financing -------------------------------------------------------------------------------- Increase/(decrease) in 2 32.4 12.2 (10.1) cash -------------------------------------------------------------------------------- PERSIMMON PLC Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities -------------------------------------------------------------------------------- Six months to Six months to Year to 30 June 30 June 31 December 2004 2003 2003 £m £m £m -------------------------------------------------------------------------------- Operating profit 229.6 160.9 370.9 Depreciation charge 3.4 3.5 6.5 Amortisation of goodwill 5.4 5.4 10.8 Profit on sale of tangible (0.1) (0.2) (0.2) fixed assets LTIP charge 1.1 0.7 1.7 Increase in stocks and work in (199.5) (179.7) (159.1) progress Increase in debtors (1.0) (3.5) (5.8) Increase in creditors 101.7 63.0 18.8 -------------------------------------------------------------------------------- Net cash inflow from operating 140.6 50.1 243.6 activities -------------------------------------------------------------------------------- PERSIMMON PLC Notes 1. Accounting Policies The financial information has been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 December 2003. 2. Reconciliation of Net Cash Flow to Net Debt ------------------------------------------------------------------------------- Note Six months to Six months to Year to 30 June 30 June 31 December 2004 2003 2003 £m £m £m ------------------------------------------------------------------------------- Increase in cash 32.4 12.2 (10.1) Decrease /(increase) 17.0 (51.2) 34.4 in debt and lease finance ------------------------------------------------------------------------------- Decrease /(increase) 49.4 (39.0) 24.3 in netdebt from cash flows New finance leases (0.4) (1.0) (1.8) ------------------------------------------------------------------------------- Decrease/(increase) 49.0 (40.0) 22.5 in net debt Net debt at beginning of (316.9) (339.4) (339.4) period ------------------------------------------------------------------------------- Net debt at end of 3 (267.9) (379.4) (316.9) period ------------------------------------------------------------------------------- 3. Analysis of Net Debt ------------------------------------------------------------------------------- 30 June 30 June 31 December 2004 2003 2003 £m £m £m ------------------------------------------------------------------------------- Cash at bank and in hand 24.7 12.0 0.8 Bank overdrafts (9.6) (7.0) (18.1) Bank loans due after more than one - (100.0) (15.0) year US and UK senior loan notes due within (1.6) (1.6) (1.6) one year US and UK senior loan notes due after (279.0) (280.6) (280.6) more than one year Finance leases (2.4) (2.2) (2.4) ------------------------------------------------------------------------------- Net debt at end of period (267.9) (379.4) (316.9) ------------------------------------------------------------------------------- 4. Taxation Taxation has been calculated at 30.8% of profit on ordinary activities before taxation and goodwill amortisation (six months to 30 June 2003: 30.3% and year ended 31 December 2003: 30.5%). This is the estimated effective tax rate before goodwill amortisation for the year to 31 December 2004. 5. Earnings Per Share The calculation of basic earnings per share after goodwill is based on earnings after taxation of £147.1m (six months to 30 June 2003: £100.3m and year ended 31 December 2003: £234.2m) and 284,261,574 ordinary shares (30 June 2003: 281,090,575 and 31 December 2003: 282,113,458) being the weighted average number of ordinary shares in issue during the period. Diluted earnings per share after goodwill is calculated by dividing earnings after taxation by the weighted average number of ordinary shares in issue for the period, adjusted for the dilutive effect of shares held under unexercised options. The weighted average number of ordinary shares so calculated is 287,078,220 (30 June 2003: 283,515,908 and 31 December 2003: 284,785,791). The calculations of basic and diluted earnings per share before goodwill are based on earnings after taxation of £152.5m (six months to 30 June 2003: £105.7m and year ended 31 December 2003: £245.0m). 6. Basis of Preparation The figures for the half years to 30 June 2004 and 30 June 2003 are unaudited. The figures included in the Profit and Loss Account for the year to 31 December 2003, the Balance Sheet at 31 December 2003 and the Cash Flow Statement for the year to 31 December 2003 are extracts from the latest published accounts which have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified. 7. The Interim Report was approved by the Board of Directors on 23 August 2004 and is being sent to all shareholders. Further copies are available upon request from the Company Secretary, Persimmon plc, Persimmon House, Fulford, York YO19 4FE. Further information on the Group can be found on the Persimmon website at: www.persimmonhomes.com This information is provided by RNS The company news service from the London Stock Exchange

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