Interim Results

RNS Number : 4090K

Persimmon PLC

21 August 2012

 



HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

Persimmon plc today announces half year results for the six months ended 30 June 2012.

Highlights

·    Underlying pre-tax profits* increased 65% to £98.7m (2011: £59.7m)

·    Revenue 13% ahead at £806.7m (2011: £712.8m)

·    Legal completions up 6% to 4,712 (2011: 4,439) and average selling price increased 7% to £171,206 (2011: £160,583)

·    Strong improvement in operating margin** increasing 320bps to 12.2% (2011: 9.0%)

·    Excellent cash generation of £112.9m (2011: £55.1m) with net cash of £135.2m as at 30 June 2012 (June 2011: net borrowings of £15.2m)

·    Landbank strengthened, 5,779 new plots acquired on 50 sites in the first half of the year, bringing the total of owned and controlled plots to 63,786 (2011: 62,364), representing over 6.5 years supply at current sales levels

·    Continued focus on the development of strategic land with c.34% of replacement land successfully converted from the Group's strategic landbank

·    Net assets per share increased 4% to 625.7p (2011: 601.1p)

·    Underlying basic earnings per share* increased 66% to 25.7p (2011: 15.5p)

·    Strong forward sales of £1,041m (2011: £1,005m) - up 4%

_{*stated before exceptional items of £1.7m (2011: £2.2m) and goodwill impairment of £2.1m (2011: £1.6m)}

_{** stated before exceptional items of £1.7m (2011: £12.0m) and goodwill impairment of £2.1m (2011: £1.6m)}

Capital Return Plan

·    Strong first half performance represents an excellent start to the delivery of the new strategy and plan to return £1.9bn (620p per share) to shareholders over 9 years

·    Group well on track to make first dividend payment of 75p per share in June 2013

Nicholas Wrigley, Chairman said: "The Group has made an excellent start to the current financial year, underlying pre-tax profit up 65% and an operating margin of 12.2% - an improvement of 320bps compared to the first half of 2011.  These results reflect the early success of Persimmon's new strategy to grow into a stronger, larger business whilst returning £1.9bn of surplus cash to shareholders. 

The future growth of Persimmon will continue to be based on the solid foundations of the good results achieved in the first half of 2012."

For further information, please contact: Mike Farley, Group Chief Executive Mike Killoran, Group Finance Director Persimmon plc Tel: [phone] (on 21 August 2012) Tel: [phone] (thereafter)

Simon Rigby Kevin Smith Lindsay Noton Citigate Dewe Rogerson Tel: [phone]

Analysts unable to attend in person may listen to today's presentation live at 9:00am, please use the dial in details below:

Telephone number: [phone]          

Confirmation code: 4360957                  .

A webcast of today's analyst presentation will be available on www.corporate.persimmonhomes.com this afternoon.

HALF YEAR REPORT - TUESDAY 21 AUGUST 2012

CHAIRMAN'S STATEMENT

The Group's strong performance in the first half of 2012 represents an excellent start to the delivery of the new strategy announced at the start of the year.  This strategy involves the return of £1.9bn of surplus capital to shareholders over the next nine years whilst investing further in the business to support Persimmon's growth into a stronger, larger business at the end of the capital return period, 2021.  Underlying profit before tax was 65% ahead of last year at £98.7m (2011: £59.7m), operating margins reached 12.2% (2011: 9.0%), cash holdings amounted to £135.2m at the end of June (June 2011: £15.2m net borrowings) and our consented land bank increased to 63,786 plots (June 2011: 62,364 plots).

RESULTS

Legal completions for the first half of 2012 increased 6% to 4,712 new homes (2011: 4,439).  With average selling price increasing 7% to £171,206 (2011: £160,583) due to the completion of a greater volume of family homes, total revenues were £806.7m an increase of 13% on the prior year (2011: £712.8m).

Persimmon Homes, our family housing business, legally completed 2,838 new homes in the first half of the year, 4% ahead of the prior year, with the North division volumes up 21% to 1,080 new homes.  The average selling price* in the Persimmon Homes business of £171,703 was 3% ahead of the prior year due to change in sales mix, underlying pricing having remained stable.

Charles Church has continued to perform well with an increase of 30% in legal completions to 1,123 new homes in the first half of the year representing 23.8% of our total sales (2011: 19.5%).  Average selling price* of £233,565 was 8% up from £215,963 in the first half of last year in this premium housing business.

Westbury Partnerships delivered 751 affordable housing legal completions in the first half, down 12% on the previous year.  However, the forward sold position remains strong and we therefore expect to complete a similar number of affordable homes for the full year when compared to 2011 (1,789 new homes).  Whilst average selling prices achieved in the first six months were 7% lower than the prior year at £89,485, average prices in the forward order book are c. 9% higher at c. £98,000.

We remain focused on pursuing further improvement in our profitability and returns.  Underlying gross margin for the first six months of 2012 was 16.7%, up from 13.7% last year.  This increase reflects the realisation of increases in development value from historic land investments, the introduction of more recently acquired sites and the continued close control of the Group's cost base.  The increase in the Group's underlying operating margin to 12.2% (2011: 9.0%) is in line with these gross margin gains.  Underlying operating profit of £98.1m is 53% ahead of the prior year (2011: £64.2m).

As a result of the continued margin expansion we have increased our free cash generation from operating activities for the first half of 2012 to £112.9m (2011: £55.1m).  Our strong liquidity has resulted in net finance income of £0.6m (2011: net finance cost of £4.5m).

Underlying basic earnings per share increased by 66% to 25.7 pence (2011: 15.5 pence).  Net assets per share increased to 625.7 pence (30 June 2011: 601.1 pence; 31 December 2011: 608.6 pence).

DIVIDEND

The Group's new strategic plan incorporates the payment of £6.20 per share of surplus capital to shareholders over the next nine years.  The first payment of 75 pence per share is planned to be made by way of a dividend payment in June 2013.

CURRENT TRADING

Private sales weekly reservation rates through the first half of the year were up 18%, well ahead of the prior year.  In line with the normal quieter summer selling period sales rates have now slowed, but our private weekly sales rate has remained 5% ahead of the prior year since the start of our third quarter.

The value of our current forward sales, including legal completions from 1 July 2012 is now 4% up on the same point last year at £1,041m (2011: £1,005m).

Selling prices have continued to remain stable and cancellation rates remain at historically low levels of c. 18%.  Our sites continue to deliver improving gross margins with the margins in the forward order book building on the progress we have made in the first half of the year.  We opened 65 new sites during the first half which provide additional opportunity for margin growth.  We anticipate opening a further c. 60 new sites in the second half of the year to maintain our strong nationwide outlet network at c. 380 sites.

Although the UK housing market remains constrained by the reduced availability of mortgage credit we have continued to see strong demand from first time buyers for the Government backed FirstBuy shared equity scheme.  We have retained a shared equity interest in c. 30% of our sales in the first half of the year, up from c. 24% last year, due to the availability of the FirstBuy scheme.  We anticipate a lower proportion of sales supported by our FirstBuy offer in the second half of the year as we sell through our allocation under this scheme.  As a result we expect a similar proportion of our full year sales to be supported by an element of shared equity as last year at c. 26%.

Customers are also seeking to take advantage of our part exchange facilities in growing numbers with over 20% of our private sale customers using this incentive.  This facility provides a convenient way of assisting customers with their house move in this challenging market.  Our part exchange stock holding remains low at £47.3m (2011: £36.4m).  In addition, we are actively marketing the Government backed NewBuy 5% deposit mortgage product launched in March 2012 which is now generating good levels of customer interest.  We have achieved total sales, including legal completions to date, of 220 new homes using the NewBuy mortgage product.

LAND

At 30 June 2012 we had 63,786 plots of land owned and under control (30 June 2011: 62,364 plots), representing over six and a half years of forward land supply at the current level of sales.

We continue to identify good investment opportunities in the land market which will support further improvement in returns as the sites are released for sale in the future.  We acquired 5,779 new plots on 50 sites in the first six months of the year, c. 34% of which were converted from our strategic land holdings.  Sites converted from our strategic land, such as at Newark (189 plots), Harleston in East Anglia (120 plots) and Abergavenny in South Wales (240 plots) provide valuable anchor sites for our regional businesses at excellent margins.

We are generally encouraged by our early experience of working within the new National Planning Policy Framework and remain confident that our c. 16,100 acres of strategic land has the potential to deliver up to 90,000 plots of consented land at low cost, underpinning the Group's aim to grow into a stronger, larger business over the strategic plan period to 2021.

OUTLOOK

We expect conditions in the UK housing market to remain challenging reflecting the wider issues within the economy.  However, we anticipate continued firm underlying demand for new homes but this will remain constrained by the low level of mortgage availability.

We are continuing to work with the mortgage lending institutions to help provide customers with appropriate opportunities to gain access to the housing market and also to move to their next home as their lifestyle requirements change.  Government initiatives such as NewBuy are an important feature in helping the industry deliver the new homes and associated infrastructure which will support UK economic growth over the next few years.  We are pleased to see recent rate reductions by the lenders which should help affordability.

Our continued efforts in promoting land through the planning system in partnership with local communities will deliver excellent new sites from our strategic land bank in line with the requirements of the new National Planning Policy Framework.

I am confident that the future growth of Persimmon will continue to be based upon the solid foundations which have delivered such a good result in the first half of 2012 in line with the long term strategic course we have set out.  This success is based upon the hard work, imagination and determination of all our employees across the UK.  On behalf of the Board I congratulate all our staff on their performance and look forward to their future achievements.

Nicholas Wrigley

Chairman

20 August 2012

All underlying performance figures are stated before goodwill impairment and exceptional items.

* Calculated from nominal value of turnover - before fair value charge on shared equity sales.

PERSIMMON PLC

Condensed Consolidated Statement of Comprehensive Income

For the six months to 30 June 2012 (unaudited)

Continuing operations		Six months to 30 June 2012			Six months to 30 June 2011			Year to 31 December 2011
	Note	Before exceptional items £m	Exceptional items (note 3) £m	Total £m	Before exceptional items £m	Exceptional items (note 3) £m	Total £m	Before exceptional items £m	Exceptional items (note 3) £m	Total £m
Revenue		806.7	-	806.7	712.8	-	712.8	1,535.0	-	1,535.0
Cost of sales		(672.3)	1.7	(670.6)	(615.4)	12.0	(603.4)	(1,312.0)	13.3	(1,298.7)
Gross profit		134.4	1.7	136.1	97.4	12.0	109.4	223.0	13.3	236.3
Other operating income		8.0	-	8.0	3.7	-	3.7	8.9	-	8.9
Operating expenses		(46.4)	-	(46.4)	(38.5)	-	(38.5)	(83.3)	-	(83.3)
Profit from operations before impairment of intangible assets		98.1	1.7	99.8	64.2	12.0	76.2	153.0	13.3	166.3
Impairment of intangible assets		(2.1)	-	(2.1)	(1.6)	-	(1.6)	(4.4)	-	(4.4)
Profit from operations		96.0	1.7	97.7	62.6	12.0	74.6	148.6	13.3	161.9
Finance income		4.2	-	4.2	3.2	7.1	10.3	7.5	7.1	14.6
Finance costs		(3.6)	-	(3.6)	(7.7)	(16.9)	(24.6)	(12.4)	(16.9)	(29.3)
Profit before tax		96.6	1.7	98.3	58.1	2.2	60.3	143.7	3.5	147.2
Tax	4.1	(21.1)	(0.4)	(21.5)	(12.9)	(0.6)	(13.5)	(37.3)	(0.9)	(38.2)
Profit after tax  (all attributable to equity holders of the parent)		75.5	1.3	76.8	45.2	1.6	46.8	106.4	2.6	109.0
Other comprehensive (expense)/income
Actuarial (loss)/gains on defined benefit pension schemes	10	(11.1)	-	(11.1)	42.7	-	42.7	7.8	-	7.8
Tax	4.2	2.7	-	2.7	(12.0)	-	(12.0)	(3.0)	-	(3.0)
Other comprehensive (expense)/income for the period, net of tax		(8.4)	-	(8.4)	30.7	-	30.7	4.8	-	4.8
Total recognised income for the period		67.1	1.3	68.4	75.9	1.6	77.5	111.2	2.6	113.8
Earnings per share i
Basic	5			25.4p			15.5p			36.1p
Diluted	5			25.2p			15.4p			35.9p
Non-GAAP measures - Underlying earnings per share ii
Basic	5			25.7p			15.5p			36.8p
Diluted	5			25.5p			15.4p			36.5p

ⁱEarnings per share is calculated in accordance with IAS 33 'Earnings Per Share'.

ⁱⁱUnderlying earnings per share excludes exceptional items and goodwill impairment.

PERSIMMON PLC

Condensed Consolidated Balance Sheet

At 30 June 2012 (unaudited)

	Note	30 June 2012 £m	30 June 2011 £m	31 December 2011 £m
Assets
Non-current assets
Intangible assets		248.6	253.8	250.8
Property, plant and equipment		29.2	28.9	28.7
Investments accounted for using the equity method		3.0	3.0	3.0
Available for sale financial assets		186.9	137.2	164.0
Trade and other receivables		3.1	5.5	2.7
Deferred tax assets		27.8	25.8	25.2
		498.6	454.2	474.4
Current assets
Inventories	7	1,965.8	2,019.8	2,003.4
Trade and other receivables		65.7	56.6	52.8
Cash and cash equivalents	9	136.9	1.0	41.0
Assets held for sale		1.1	2.9	2.0
		2,169.5	2,080.3	2,099.2
Total assets		2,668.1	2,534.5	2,573.6
Liabilities
Non-current liabilities
Trade and other payables		(99.5)	(100.3)	(94.0)
Deferred tax liabilities		(18.8)	(20.9)	(19.6)
Retirement benefit obligation	10	(71.4)	(48.6)	(59.5)
		(189.7)	(169.8)	(173.1)
Current liabilities
Loans and borrowings		(1.7)	(16.3)	(0.1)
Trade and other payables		(505.1)	(453.3)	(482.4)
Current tax liabilities		(77.7)	(84.6)	(78.7)
		(584.5)	(554.2)	(561.2)
Total liabilities		(774.2)	(724.0)	(734.3)
Net assets		1,893.9	1,810.5	1,839.3
Equity
Ordinary share capital issued		30.3	30.3	30.3
Share premium		233.7	233.6	233.6
Other non-distributable reserve		281.4	281.4	281.4
Retained earnings		1,348.5	1,265.2	1,294.0
Total equity		1,893.9	1,810.5	1,839.3

PERSIMMON PLC

Condensed Consolidated Statement of Changes in Shareholders' Equity

For the six months to 30 June 2012 (unaudited)

	Share capital £m	Share premium £m	Other non- distributable reserve £m	Retained earnings £m	Total £m
Six months ended 30 June 2012:
Balance at 31 December 2011	30.3	233.6	281.4	1,294.0	1,839.3
Profit for the period	-	-	-	76.8	76.8
Other comprehensive (expense)/income	-	-	-	(8.4)	(8.4)
Transactions with owners:
Dividends on equity shares	-	-	-	(18.2)	(18.2)
Issue of new shares	-	0.1	-	-	0.1
Exercise of share options/share awards	-	-	-	2.1	2.1
Share-based payments	-	-	-	3.7	3.7
Satisfaction of share options from own shares held	-	-	-	(1.5)	(1.5)
Balance at 30 June 2012	30.3	233.7	281.4	1,348.5	1,893.9
Six months ended 30 June 2011:
Balance at 31 December 2010	30.3	233.6	281.4	1,198.7	1,744.0
Profit for the period	-	-	-	46.8	46.8
Other comprehensive (expense)/income	-	-	-	30.7	30.7
Transactions with owners:
Dividends on equity shares	-	-	-	(13.6)	(13.6)
Exercise of share options/share awards	-	-	-	0.2	0.2
Share-based payments	-	-	-	2.5	2.5
Satisfaction of share options from own shares held	-	-	-	(0.1)	(0.1)
Balance at 30 June 2011	30.3	233.6	281.4	1,265.2	1,810.5
Year ended 31 December 2011:
Balance at 31 December 2010	30.3	233.6	281.4	1,198.7	1,744.0
Profit for the year	-	-	-	109.0	109.0
Other comprehensive (expense)/income	-	-	-	4.8	4.8
Transactions with owners:
Dividends on equity shares	-	-	-	(25.6)	(25.6)
Exercise of share options/share awards	-	-	-	(1.1)	(1.1)
Share-based payments	-	-	-	4.7	4.7
Satisfaction of share options from own shares held	-	-	-	3.5	3.5
Balance at 31 December 2011	30.3	233.6	281.4	1,294.0	1,839.3

PERSIMMON PLC

Condensed Consolidated Cash Flow Statement

For the six months to 30 June 2012 (unaudited)

	Note	Six months to 30 June 2012 £m	Six months to 30 June 2011 £m	Year to 31 December 2011 £m
Cash flows from operating activities:
Profit for the period		76.8	46.8	109.0
Tax charge recognised in profit or loss	4.1	21.5	13.5	38.2
Finance income		(4.2)	(3.2)	(7.5)
Finance costs		3.6	7.7	12.4
Depreciation charge		1.9	1.9	3.8
Amortisation of intangible assets		0.1	0.1	0.3
Impairment of intangible assets		2.1	1.6	4.4
Profit on disposal of property, plant and equipment		-	(0.3)	(0.4)
Share-based payment charge		2.5	2.2	4.2
Exceptional items		(1.7)	(2.2)	(3.5)
Other non-cash items		1.4	0.8	2.5
		104.0	68.9	163.4
Movements in working capital:
Decrease in inventories		39.3	65.4	83.0
(Increase)/decrease in trade and other receivables		(9.2)	(2.6)	7.9
Increase/(decrease)  in trade and other payables		24.9	(37.2)	(42.6)
Increase in available for sale financial assets		(22.9)	(22.0)	(48.8)
Cash generated from operations		136.1	72.5	162.9
Interest paid		(1.2)	(9.4)	(10.9)
Make-whole fees on early redemption of senior loan notes		-	(15.3)	(15.3)
Interest received		0.1	0.2	0.2
Receipts on cancellation of swaps		-	7.1	7.1
Tax paid		(22.1)	-	(22.1)
Net cash inflow from operating activities		112.9	55.1	121.9
Cash flows from investing activities:
Investment in existing jointly controlled entities		-	(0.2)	(0.2)
Purchase of property, plant and equipment		(1.7)	(2.2)	(4.0)
Proceeds from sale of property, plant and equipment		0.1	0.7	1.1
Proceeds from sale of assets held for sale		0.4	-	0.6
Net cash outflow from investing activities		(1.2)	(1.7)	(2.5)
Cash flows from financing activities:
Repayment of borrowings		-	(40.7)	(41.4)
Early redemption of senior loan notes		-	(136.4)	(136.4)
Financing transaction costs		-	(3.6)	(3.7)
Finance lease principal payments		(0.1)	(0.5)	(0.5)
Share options consideration		0.8	0.1	2.4
Dividends paid		(18.2)	(13.6)	(25.6)
Net cash outflow from financing activities		(17.5)	(194.7)	(205.2)
Increase/(decrease) in net cash and cash equivalents	8	94.2	(141.3)	(85.8)
Cash and cash equivalents at the beginning of the period		41.0	126.8	126.8
Cash and cash equivalents at the end of the period	9	135.2	(14.5)	41.0

Notes to the condensed consolidated half year financial statements (unaudited)

1.	Basis of preparation
	The half year financial statements for the six months to 30 June 2012 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. The half year financial statements are unaudited, but have been reviewed by the auditors whose report is set out on page 14. This report should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with IFRSs as adopted by the European Union. The comparative figures for the financial year ended 31 December 2011 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2011, as described in those annual financial statements. The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2012:
	∙	Amendments to IFRS 7 Financial Instruments: Disclosures - Transfers of Financial Assets. This has had no significant impact on the Group's financial position or performance.
	The Group has not applied the following amendments to standards which are EU endorsed but not yet effective:
	∙	Amendments to IAS 1 Presentation of Items of Other Comprehensive Income.
	∙	Amendments to IAS 19 Employee Benefits.
	The Group is currently considering the implication of these amendments on the financial position and performance of the Group.
	Going concern
	After making due enquiries, and in accordance with the FRC's 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009', the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these condensed consolidated half year financial statements.
2.	Segmental analysis
	The Group's operating segments have similar economic characteristics, products, construction processes and types of customers, and meet the aggregation criteria of IFRS 8 in full. Consequently, the Group has aggregated its geographic operations into one reportable segment which is housebuilding in the United Kingdom.
3.	Exceptional items
	Impairment of inventories At 30 June 2012, the Group reviewed the net realisable value of its land and work in progress carrying-values of its sites. This resulted in a net reversal of the previous write-down of inventories of £1.7m (2011: £12.0m). Further details are provided in note 7.
4.	Taxation
4.1	Income tax recognised in profit or loss
								Six months to 30 June 2012				Six months to 30 June 2011			Year to 31 December 2011
								£m				£m			£m
	Tax charge comprises:
	UK corporation tax in respect of the current period							26.3				15.9			34.4
	Adjustments in respect of prior periods							(5.2)				(2.7)			(4.9)
								21.1				13.2			29.5
	Deferred tax relating to origination and reversal of temporary differences							0.2				0.5			7.4
	Adjustments recognised in the current period in respect of prior periods deferred tax							0.2				(0.2)			1.3
								0.4				0.3			8.7
	Tax charge for the period recognised in profit or loss							21.5				13.5			38.2
4.2	Deferred tax recognised in other comprehensive (expense)/income
								Six months to 30 June 2012				Six months to 30 June 2011			Year to 31 December 2011
								£m				£m			£m
	Recognised on actuarial (losses)/gains on pension schemes							(2.7)				12.0			3.0
								(2.7)				12.0			3.0
4.3	Deferred tax recognised directly in equity
								Six months to 30 June 2012				Six months to 30 June 2011			Year to 31 December 2011
								£m				£m			£m
	Arising on transactions with equity participants
	Related to equity-settled transactions							(1.2)				(0.4)			(0.5)
	As at 30 June 2012, the Group has recognised deferred tax assets on temporary deductible differences, giving rise to the prior period deferred tax charge of £0.2m. It has also recognised a deferred tax asset on the pension scheme deficit amounting to £17.1m (2011: £12.6m), which has given rise to the credit of £2.7m within other comprehensive (expense)/income. The budget on 21 March 2012 announced that the rate of UK corporation tax will fall at a rate of 1% per year for the next two years in addition to the reduction of 2% to 24% from 1 April 2012. This will reduce the Group's future current tax charge accordingly.
5.	Earnings per share
	Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding those held in the Employee Benefit Trusts and treasury shares, all of which are treated as cancelled, which were 302.5m (June 2011: 301.2m, December 2011: 301.3m). Diluted earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the period, giving a figure of 304.7m (June 2011: 303.4m, December 2011: 303.2m). Underlying earnings per share excludes exceptional items and goodwill impairment. The earnings per share from continuing operations were as follows:
				Six months to 30 June 2012						Six months to 30 June 2011					Year to 31 December 2011
	Basic earnings per share			25.4p						15.5p					36.1p
	Underlying basic earnings per share			25.7p						15.5p					36.8p
	Diluted earnings per share			25.2p						15.4p					35.9p
	Underlying diluted earnings per share			25.5p						15.4p					36.5p
	The calculation of the basic and diluted earnings per share is based upon the following data:
				Six months to 30 June 2012						Six months to 30 June 2011					Year to 31 December 2011
				£m						£m					£m
	Underlying earnings attributable to shareholders			77.6						46.8					110.8
	Exceptional items net of related taxation			1.3						1.6					2.6
	Goodwill impairment			(2.1)						(1.6)					(4.4)
	Earnings attributable to shareholders			76.8						46.8					109.0
6.	Dividends
													Six months to 30 June 2012	Six months to 30 June 2011			Year to 31 December 2011
													£m	£m			£m
	Dividends paid:
	Final dividend for the year ended 31 December 2011 of 6.0p per share (2010: 4.5p)												18.2	13.6			13.6
	Interim dividend for the six months to 30 June 2011 of 4.0p per share (2010: 3.0p)												-	-			12.1
	Total dividend												18.2	13.6			25.7
	The Group's new strategic plan incorporates the payment of £6.20 per share of surplus capital to shareholders over the next nine years. Full details of this capital return plan are contained within the Group's annual financial statements for the year ended 31 December 2011. The first payment of 75 pence per share is planned to be made by way of a dividend payment in June 2013.
7.	Inventories
								30 June 2012 £m				30 June 2011 £m		31 December 2011 £m
	Land							1,404.0				1,516.2		1,484.2
	Work in progress							463.8				420.9		427.8
	Part exchange properties							47.3				36.4		39.1
	Showhouses							50.7				46.3		52.3
								1,965.8				2,019.8		2,003.4
	As set out in note 3, at 30 June 2012 the Group conducted a further review of the net realisable value of its land and work in progress portfolio. The impact of these reviews on the net realisable value of inventories is a net exceptional credit to the consolidated statement of comprehensive income of £1.7m (2011: £12.0m). A reversal of £14.3m (2011: £48.7m) on inventories that were written down in a previous accounting period and an impairment of land and work in progress of £12.6m (2011: £36.7m) were recognised during the half year. This reversal/charge arose due to forecast selling prices and development costs on individual sites being higher or lower than previously estimated by management as a result of changing conditions, and/or development plans. Our approach to our net realisable value review has been consistent with that conducted at 31 December 2011 which was fully disclosed in the financial statements for the year ended on that date. The key judgements in estimating the future net present realisable value of a site were the estimation of likely sales prices, house types and costs to complete the developments. Sales prices and costs to complete were estimated on a site-by-site basis based upon existing market conditions. If the UK housing market were to improve or deteriorate in the future then further adjustments to the carrying value of land and work in progress may be required. Following this review £273.3m (2011: £454.9m) of inventories are valued at fair value less costs to sell rather than at historical cost.
8.	Reconciliation of net cash flow to net cash/(debt)
					Note		Six months to 30 June 2012					Six months to 30 June 2011				Year to 31 December 2011
							£m					£m				£m
	Increase/(decrease) in net cash and cash equivalents						94.2					(141.3)				(85.8)
	Decrease in debt and finance lease obligations						0.1					177.6				178.3
	Increase in net cash/decrease in net debt from cash flows						94.3					36.3				92.5
	Non-cash movements						-					(2.0)				(2.0)
	Increase in net cash/decrease in net debt						94.3					34.3				90.5
	Net cash / (debt) at beginning of period						40.9					(49.6)				(49.6)
	Net cash / (debt) at end of period				9		135.2					(15.3)				40.9
9.	Analysis of net cash / (debt)
			Note			30 June 2012 £m			30 June 2011 £m					31 December 2011 £m
	Cash and cash equivalents					136.9			1.0					41.0
	Bank overdrafts					(1.7)			(15.5)					-
	Net cash and cash equivalents					135.2			(14.5)					41.0
	Other loan notes due within one year					-			(0.7)					-
	Finance lease obligations					-			(0.1)					(0.1)
	Net cash/(debt) at end of period		8			135.2			(15.3)					40.9
10.	Retirement benefit obligation
	The amounts recognised in the statement of comprehensive (expense)/income are as follows:
						Six months to 30 June 2012				Six months to 30 June 2011				Year to 31 December 2011
						£m				£m				£m
	Current service cost					2.6				1.4				2.8
	Interest cost					9.4				10.7				21.5
	Expected return on scheme assets					(9.2)				(9.8)				(19.8)
	Total (included in staff costs)					2.8				2.3				4.5
	Actuarial loss/(gain) recognised in other comprehensive income					11.1				(42.7)				(7.8)
	Total defined benefit scheme loss/(gain) recognised					13.9				(40.4)				(3.3)
	The amounts included in the balance sheet arising from the Group's obligation in respect of its defined benefit schemes are as follows:
							30 June 2012 £m				30 June 2011 £m			31 December 2011 £m
	Present value of funded obligations						(393.6)				(365.1)			(392.6)
	Fair value of scheme assets						322.2				316.5			333.1
	Deficit in the scheme and net liability in the balance sheet						(71.4)				(48.6)			(59.5)
	An update on the 31 December 2011 IAS 19 valuation, adjusted for current market conditions has been obtained from the schemes' actuary as at 30 June 2012, which has been used as the basis for these figures.
11.	Related parties
	There are no disclosable related party transactions (as required by DTR 4.2.8R) during the period (2011: nil)
12.	Seasonality
	In common with the rest of the UK housebuilding industry, the Group experiences the highest level of sales in spring and autumn, which also results in peaks and troughs in the Group's working capital profile. Therefore, any economic weakness which affects the peak selling seasons can have a disproportionate impact on the reported results.

Principal risks and uncertainties

The principal risks and uncertainties which could impact the Group for the remainder of the current financial year are those detailed on page 25 of the Group's Annual Report and Accounts 2011 and have not changed. These include: poor economic conditions, disruption in the capital markets and restrictions on mortgage availability. Further details regarding assessment of the risks and current market conditions are included within the Chairman's statement in this Half Year Report. A copy of the Group's Annual Report and Accounts 2011 is available on the Group's website at www.corporate.persimmonhomes.com.

The Chairman's statement and the above section on principal risks and uncertainties comprise the Company's interim management report.

Statement of Directors' responsibilities in respect of the Half Year Report

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU

·      the Half Year Report includes a fair review of the information required by:

o  (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

o  (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The Directors of Persimmon Plc are:

Nicholas Wrigley	Chairman
Mike Farley	Group Chief Executive
Mike Killoran	Group Finance Director
Jeff Fairburn	Group Managing Director and North Division Chief Executive
Richard Pennycook	Senior Independent Director
Neil Davidson	Non-executive Director
Jonathan Davie	Non-executive Director
Mark Preston	Non-executive Director

By order of the Board

Mike Farley	Mike Killoran
Group Chief Executive	Group Finance Director

20 August 2012

The Group's annual financial reports, half year reports and interim management statements are available from the Group's website at www.corporate.persimmonhomes.com.

Independent Review Report to Persimmon Plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2012 which comprises the Condensed consolidated statement of comprehensive income, Condensed consolidated balance sheet, Condensed consolidated statement of changes in shareholders' equity, Condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half yearly financial report in accordance with the DTR of the UK FSA.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Iain Moffatt

For and on behalf of KPMG Audit Plc

Chartered Accountants

1 The Embankment, Neville Street

Leeds LS1 4DW

20 August 2012

 

END

 

 

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