Preliminary Results
Persimmon PLC
26 February 2008
26 February 2008
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
Excellent results during a challenging year
Record pre-tax profits* up 1% to £585.1m (2006: £582.1m), 12th successive year
of profit increase
Full year dividend increased by 10% to 51.2p (2006: 46.5p) Final dividend of
32.7p per share, 11th successive year of dividend growth
Operating margin* increased to 21.8% (2006: 20.8%) following tight cost control
and synergy savings
Average selling price increased by 1%, to £189,558 (2006: £188,129) with
underlying growth of 3%
Full year synergy savings from the Westbury acquisition more than £50m
Sales of partnership homes up c.40% to 1,962 units
Increasing success of strategic land pull-through (8,181 plots)
Strong and flexible balance sheet with gearing of 31% (2006: 33%)
Improved cancellation rates reduced to c. 20% from over 30% in Autumn 2007
140 outlets to be opened in H1 2008
*Stated before goodwill impairment of £2.4m (2006 comparisons: stated before
reorganisation costs of £15.4m)
John White, Group Chairman said:
'Persimmon has once again delivered an excellent result during what has been a
very challenging year. When confidence returns and sentiment improves we
anticipate a return to a stronger market; in the meantime we remain cautious.
However, with an experienced management team, strong balance sheet and excellent
landbank we remain confident for the future.'
For further information, please contact: Edward Orlebar
John White, Group Chairman Charlotte McMullen
Mike Farley, Group Chief Executive Melanie Blewett
Mike Killoran, Group Finance Director M:Communications
Persimmon plc Tel: +44 020 7153 1523
Tel: +44 (0) 20 7153 1523 on 26 February 2008
Tel: +44 (0) 1904 642 199 thereafter
A webcast of today's analyst presentation will be available on
www.persimmonhomes.com by 2pm today.
CHAIRMAN'S STATEMENT
Persimmon has once again delivered an excellent result during what has been a
very challenging year. The results we announce today show a further improvement
over the record results of the previous year.
RESULTS
Pre-tax profits for the year ended 31 December 2007 were £585.1 million (2006:
£582.1 million). These results are stated before a goodwill impairment charge of
£2.4 million (2006: stated before reorganisation costs of £15.4 million). After
charging goodwill, pre-tax profits were £582.7 million which is a 2.8% increase
on last year (2006: £566.7 million after charging reorganisation costs).
Earnings per share (after all charges) increased to 137.5p (2006: 133.8p).
As already reported, legal completions for 2007 were 15,905, a decrease of 4.8%
on 2006, whilst average selling prices increased to £189,558 (2006: £188,129).
Turnover for the year was £3.015 billion, down 4% on the prior year.
Operating profit (after charging goodwill) increased to £654.9 million (2006:
£637.3 million after reorganisation costs) and operating margins, already at an
industry high level, increased to 21.7% (2006: 20.3%).
The increase in margins during the period reflects the strict disciplines we
apply to all our costs. We also continued to benefit from the synergies achieved
following the acquisition of Westbury. During 2007 we delivered annual synergy
savings of over £50 million which is above the target of £45 million savings
previously stated.
Another focus for our management continues to be strong cash control. We have
generated net cash inflows from operations of £263 million, despite investing an
additional £427 million in stocks and work in progress. This was due to a
combination of investments in good quality land opportunities, particularly in
the early part of the year, and an increase in work in progress as we increased
outlets by c. 7%. Free cash inflow for the year before the payment of dividends
and buyback of Persimmon shares was £67 million.
Net borrowings at the year end were £721 million representing a gearing level of
31% (2006: 33%). We achieved a return on average capital employed of 21.6%
(2006: 23.1% after reorganisation costs).
Our landbank at 1 January 2008 consisted of 78,863 plots which were either owned
or under control. This land has been acquired over a number of years at
attractive prices and provides a strong asset base for our business. In addition
we had a further 11,124 plots proceeding to contract.
We remain focused on progressing planning on numerous strategic land
opportunities, and during the year this accounted for more than 50% of the plots
we acquired. This successful strategy will allow us to continue to be very
selective with regard to new land acquisitions.
As previously stated, we are proposing to increase the full year dividend by 10%
this year to a total of 51.2p per share. This is the eleventh consecutive year
we have grown the dividend. The interim dividend paid was 18.5p. Therefore the
final dividend which will be payable on 25 April 2008 will be 32.7p per share.
The full year dividend is well covered at 2.7 times.
OUTLOOK
We came into 2008 with a forward sales order book of £603 million. Since then
reservations have been lower than the same strong period of 2007. Visitor levels
have improved each week since the beginning of the year but conversion to sales
ratios have remained challenging.
Understandably, potential purchasers are currently taking longer to make
decisions about the timing of their house purchase. There remains an underlying
demand and desire for new homes but we have been experiencing a period of a
'wait and see' approach. However, the negative customer reaction to the credit
squeeze during the autumn now appears to be easing a little following recent
interest rate reductions. Whilst mortgage lending has tightened, the new
criteria are now more clearly understood and our good long term relationships
with all the major lenders continue to work well. Encouragingly, cancellation
rates have reduced since last autumn, and are now at more normal levels whilst
weekly sales volumes have been gradually improving. New house selling prices
across the UK are holding firm, although we expect incentives to continue to be
offered and marketing costs to increase.
We are confident that the underlying supply and demand fundamentals for the
house building industry will once again produce an upturn in market conditions.
As planned, we continue to increase the number of partnership homes we are
building in line with the Government's agenda.
Our order book for 2008, including legal completions to date, is now at c. £1.05
billion (2007: £1.30 billion). Whilst this is lower than the equivalent figure
for 2007 it nevertheless represents a healthy level of sales at this early stage
of the year. Comparatives will become less pronounced through the summer and
autumn months following the slow down of sales from August 2007. Against the
current backdrop we expect the timing of sales and completions this year to be
more weighted to the second half of the year than usual.
During the autumn months we took the opportunity to review our build costs and
overhead efficiency. By working closely with our suppliers and sub-contractors
we have managed to reduce our input costs from the beginning of this year. We
also announced in January the merger of some of our regional offices which
resulted in the closure of 3 offices and associated redundancies. This increased
overhead efficiency and the reduction in some of our build costs will assist in
mitigating the impact of a more difficult housing market whilst setting a clear
course for the medium and long term.
Traditionally the housing market has fluctuated as trading conditions, the
general economy and interest rates change. Our management teams have experienced
many years of these changing markets and have been using this experience to
tackle the challenges and opportunities presented by the current market
conditions. When confidence returns and sentiment improves we anticipate a
return to a stronger market; in the meantime we remain cautious. However, with
an experienced management team, strong balance sheet and excellent landbank we
remain confident for the future.
Finally, I once again thank each and every one of our dedicated staff, advisers,
suppliers and contractors for their assistance and hard work in achieving these
results.
CHIEF EXECUTIVE'S REVIEW
This has been another year of significant progress for the Persimmon Group.
Despite difficult market conditions we have increased our pre-tax profit,
improved our operating margins to 21.7% (post goodwill) and have been successful
in gaining planning consent on over 8,000 plots from our strategic landbank.
The market has varied considerably this year. At the beginning of the year we
saw good reservation levels on our sites across the country. The rate of sales
began to reduce following a number of interest rate rises in the first half. We
then experienced the normal slower summer trading conditions.
During September, due to the well publicised 'credit crunch', we saw a loss in
purchaser confidence and also experienced a change in the credit criteria set by
the mortgage lenders. These two factors led to higher than normal cancellation
rates and a lower forward order book for 2008, although in line with the rest of
the industry.
Set against this background, the business achieved good results for the second
half of the year completing 7,903 homes with overall profitability in the second
half increasing. This was despite a reduction in the number of homes completed
when compared to the first half completions of 8,002.
Throughout the year we have seen underlying price growth of 3% for our private
sale housing. However, an increase in the proportion of the lower cost
partnership homes, and a reduction in the number of Charles Church homes, has
resulted in the small increase of 1% in our average selling price to £189,558
(2006: £188,129). We remained focused on the completion of competitively priced
family homes in all sectors of the market and we continue to have limited
exposure to high rise apartment schemes with only 2.5% of our completions in
2007 from this type of development.
The Government has set out a number of initiatives and targets for the industry,
and the Callcutt Review has outlined a number of strategies to increase
production levels. Persimmon will work with the Government and other
stakeholders to help meet these ambitious targets. In order to achieve these
targets the industry requires improvements to the current planning environment
together with a stable economic environment.
Divisional Structure
The three Divisions have performed well this year and we have ensured that our
brands Persimmon, Charles Church and Westbury Partnerships have been fully
integrated into each Division. Each individual Division has carried out a review
in their businesses to establish a range of house types that retain the local
character for their areas of operation, thus gaining enhanced efficiencies for
procurement, professional fees and cost reduction.
North Division
This Division has completed 3,765 (2006: 4,069) homes, a slight reduction on
last year. This was mainly due to the Yorkshire region experiencing delays due
to planning and more challenging trading conditions. However, this was offset by
a strong financial performance in the North East and Scottish regions.
Price growth in Scotland was 4% due to strong purchaser demand and the
availability of traditional family accommodation. Our new Charles Church
business in Scotland has been well received and we are gaining recognition in
this market for our premium product.
In the North East the market continues to be challenging. However, with our
average selling price only increasing by 3% to £166,954 during the year our
homes remain very affordable in this region.
Due to the challenging market conditions and planning restrictions in the
Yorkshire region we have merged our Yorkshire and East Yorkshire operating
businesses which will give further operational efficiencies in 2008. We retain
three Persimmon operating businesses in the Yorkshire region which will ensure
that our coverage of this important market is comprehensive and provides a
stronger platform for future growth.
Central Division
The Division has seen an overall increase of 4% to its average selling price of
£178,278 from 5,656 homes. In the North West, although the general market has
been competitive, underlying average selling prices rose 5%. The overall North
West average price of £183,013 has been assisted by an increased level of
completions at our high value apartment scheme at Leftbank in Manchester. As
part of our review of operations we have merged two offices in the North West to
reduce overheads in this area.
In the Birmingham region prices have been more muted, however we achieved volume
growth of 3% mainly due to the provision of more affordable homes. We have
recently commenced selling on our large Ironstone development at Lawley, Telford
with English Partnerships. This scheme for 1,100 homes will sustain our business
in this area for a number of years.
South Division
The South Division has increased completions by 3% to 3,905 and our new Severn
Valley business delivered over 150 completions in its first six months of
operation. Our two large strategic sites in Ashford, Kent for 1,020 homes and
our scheme of 325 homes in Gillingham are now under construction and we have
taken our first completions this year. These sites will provide growth for both
our Persimmon and Charles Church businesses in this area.
In our Wales business, one of the Group's largest operations, we completed 940
homes. We have been particularly successful in taking a high level of
completions at our brownfield mixed use regeneration scheme at Swansea Point. We
were very pleased that David Bullock our site manager at Wyncliffe Gardens,
Cardiff was national runner up in the NHBC Pride in the Job Awards.
Charles Church
Our decision to reposition the Charles Church brand into the mid range market
has shown positive results. We have seen good demand for this premium product
and with an average selling price of £257,009 we have seen underlying price
growth of 2% throughout the UK.
It is clear that the market for property values in excess of £300,000 is still
more challenging. Although volumes this year have reduced by 11% to 2,579 (2006:
2,898), this is set against the previous year's growth of 125% and therefore we
believe that in the long term the Charles Church brand will continue to grow on
a national basis.
We have received positive recognition not only from our purchasers but also from
a number of external bodies, including the Welsh Civic Society who gave us an
award for best local design for our traditional housing scheme at Maenol
Glasfryn, Llanelli. We were also awarded the best marina development for our
scheme at Marinus, Cowes, Isle of Wight, by the Mail on Sunday. These awards
demonstrate the diversity of excellent homes produced by the Charles Church
teams.
Westbury Partnerships
Westbury Partnerships continue to grow and this business has expanded by 50% in
its second full year of operation. The combination of the use of our Space4
product with the standard core range of Housing Corporation approved house types
has delivered good efficiencies for this business. In return housing
associations have received high quality, energy efficient and sustainable homes.
The team is developing a partnership with a number of housing associations and
this will deliver further opportunities in the future.
The number of affordable homes built within the Persimmon Group has also
continued to grow and this year we completed 1,962 (2006: 1,402) partnership
homes, an increase of 40%. These numbers will rise as we bring forward more of
our large strategic sites. We have completed the first homes to receive Direct
Grant funding from the Housing Corporation and we have been invited to submit a
further bid for the period 2008-2011.
Space4
This year we have seen a substantial increase in volumes manufactured at our
Space4 factory to 2,629 units (2006: 1,475). The technical changes we have made
have simplified the onsite procedures, thereby reducing our build times onsite
to the benefit of both Westbury Partnerships and our operating businesses using
this system. The Space4 system is well set to meet the Government's targets
regarding the building of sustainable homes and we are looking to further
develop Space4 to meet the new zero carbon home challenge for 2016.
Landbank
In this challenging market we have remained cautious regarding land acquisition
and we have seen a slight reduction in the landbank that is owned and under
control to 78,863 plots (2006: 80,085 plots). This however represents 4.9 years'
land supply at our current level of output. Within our total landbank only 1,700
plots or c. 2% are for inner-city high rise apartments maintaining our strategy
of developing traditional housing schemes.
We remain focused on bringing forward our strategic land and in 2007 we have
obtained planning permission and acquired 8,181 plots (2006: 2,927 plots), a
substantial increase on the previous year. We have seen significant success in
the Central Division with consent on schemes in Peterborough (350 plots) and in
Bridgnorth (317 plots). In the South Division where land is more difficult to
acquire we have enjoyed success in Bridgend, Wales (580 plots) and at Liskeard
(465 plots). Charles Church has also brought forward some smaller schemes in
Tunbridge Wells and Burgess Hill totalling 140 plots.
The ability to acquire over 50% of our replacement plots from our strategic
landbank means we can acquire land selectively in the open market given current
market conditions. We continue to focus on the delivery of 30,000 plots over a
three year period from our strategic landbank and this will help support our
operating margins in the long term.
Corporate Responsibility
The concept of sustainability is becoming an increasingly important part of our
business and we take proper account of all the complex social and environmental
issues in our core operations. We continually seek to improve the sustainability
and energy efficiency of the houses we build, and where practical incorporate
modern methods of construction and technologies. During 2007 we increased the
number of properties which we built to EcoHomes standards to 1,539 units,
representing just under 10% of our homes sold.
We continue to monitor the amount of waste generated from each new home that we
build as one measure of our operating efficiency. During 2007 our total
housebuilding waste was similar to the previous year, but we increased the
amount of waste we recycled to 68% (2006: 66%).
The introduction of new Construction Design and Management Regulations 2007
resulted in a 61% increase in the number of training days we provided to our
construction staff. In conjunction with this additional training, the Reportable
Injuries Disease and Dangerous Occurrences per thousand employees in our
workforce notified to the Health and Safety Executive reduced to 12.2 (2006:
12.9). Having made significant progress over recent years we are again resetting
all our operating businesses performance targets for health and safety to
further improve our performance in this vital area of our business.
We continue to invest heavily in training our staff to improve both the quality
of our homes and our customer service. We have systems which allow us to monitor
how well we are performing, enabling us to identify particular trends and issues
upon which we can focus our efforts. Our internal Customer Care Questionnaire
again recorded that 86% of our customers would recommend Persimmon or Charles
Church to a friend. In the NHBC Pride in the Job Awards we achieved 2 Regional
Award winners, 12 Seal of Excellence and 40 Quality Award winners for the Group,
our highest number of Awards to date.
Current Trading Outlook
We have experienced a slower start to trading in the early part of this year.
Although the number of visitors to our developments has increased since the
start of the year, they currently remain 13% lower when compared to a strong
prior year comparative. We have seen cancellation rates return to more normal
levels at c. 20%, compared to rates of over 30% at the time of the autumn
'credit crunch'. Although visitor levels are lower the quality of the visitors
is good, but in this cautious environment they are taking longer to reserve.
Prices remain firm for both the new and second hand market. We are continuing to
be selective in our use of incentives, with our Part Exchange scheme and
mortgage assistance proving particularly popular.
We have seen the mortgage lenders tighten their lending criteria and this has,
and will, undoubtedly affect prospective purchasers who have a poorer credit
history. However, we have good relationships with the major lenders and we are
not currently experiencing problems with purchasers obtaining mortgages now that
the new lending criteria are clearly understood.
We currently have forward sales with a total value of £1.05 billion. We plan to
open a further 140 new outlets in the first six months of this year and the
number of our overall sales outlets at the start of 2008 was 7% stronger year on
year.
The market remains competitive but with our new outlets and committed management
team we expect sales to continue to grow through the first half of this year.
Summary
This has been another successful year for the Persimmon Group in challenging
market conditions. The business has delivered another record set of profits and
we have improved our operating margins.
We have continued a concerted effort on reducing our cost base. We continue to
work with our suppliers and sub-contractors to exercise good cost control and
some of the initiatives we have introduced in 2007 will bring benefits to the
business in 2008. Our new Severn Valley business has made a good start in the
second half of 2007. However, the closure of three other offices at this time
will help retain our overall operational efficiency. This demonstrates the
flexibility we retain in managing our business as planning and market conditions
change. We have also concentrated on improving our cash flow, culminating in
year end gearing of 31% while maintaining a strong landbank and a solid balance
sheet.
I take this opportunity to thank our staff for their skill, hard work and effort
and for their dedication to our business. With our experienced management team
we are well positioned to meet the challenges of the housing market in 2008.
PERSIMMON PLC
Consolidated Income Statement for the year ended 31 December 2007
------------------------ -------- -------- -------- --------
Note 2007 2006
£m (Restated)
£m
------------------------ -------- -------- -------- --------
Revenue 3,014.9 3,141.9
Cost of sales (2,278.8) (2,404.2)
------------------------ -------- -------- -------- --------
Gross profit 736.1 737.7
Other operating income 40.1 29.6
Operating expenses (122.3) (130.7)
Share of results of jointly 1.0 0.7
controlled entities
------------------------ -------- -------- -------- --------
Profit from operations 654.9 637.3
Finance income 1.9 0.5
Finance costs (74.1) (71.1)
------------------------ -------- -------- -------- --------
Profit before tax 582.7 566.7
Income tax expense 3 (169.2) (170.3)
------------------------ -------- -------- -------- --------
Profit after tax (all attributable to
equity 413.5 396.4
holders of the parent)
------------------------ -------- -------- -------- --------
Earnings per share
Basic 5 137.5p 133.8p
Diluted 5 136.8p 133.1p
------------------------ -------- -------- -------- --------
PERSIMMON PLC
Consolidated Balance Sheet at 31 December 2007
-------------------- ------ ---------- ----------
Note 2007 2006
£m (Restated)
£m
-------------------- ------ ---------- ----------
ASSETS
Non-current assets
Intangible assets 467.8 470.4
Property, plant and equipment 47.8 48.9
Investments 3.2 2.8
Other receivables 17.2 11.5
Deferred tax assets 51.4 62.8
-------------------- ------ ---------- ----------
587.4 596.4
-------------------- ------ ---------- ----------
Current assets
Inventories 3,386.6 2,959.9
Trade and other receivables 180.2 178.7
Cash and cash equivalents 7 2.1 18.9
-------------------- ------ ---------- ----------
3,568.9 3,157.5
-------------------- ------ ---------- ----------
Total assets 4,156.3 3,753.9
-------------------- ------ ---------- ----------
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings 7 (527.5) (511.0)
Forward currency swaps 7 (58.0) (94.8)
Deferred tax liabilities (32.0) (25.9)
Retirement benefit obligation (60.7) (103.7)
Other liabilities (92.4) (96.8)
-------------------- ------ ---------- ----------
(770.6) (832.2)
-------------------- ------ ---------- ----------
Current liabilities
Interest bearing loans and borrowings 7 (130.9) (70.6)
Forward currency swaps 7 (10.0) (6.7)
Trade and other payables (749.0) (706.4)
Current tax liabilities (150.4) (106.7)
-------------------- ------ ---------- ----------
(1,040.3) (890.4)
-------------------- ------ ---------- ----------
Total liabilities (1,810.9) (1,722.6)
-------------------- ------ ---------- ----------
Net assets 2,345.4 2,031.3
-------------------- ------ ---------- ----------
SHAREHOLDERS' EQUITY
Ordinary share capital issued 30.3 29.9
Share premium 233.6 233.4
Own shares - (5.1)
Hedge reserve 0.7 (4.3)
Other non-distributable reserve 281.4 281.4
Retained earnings 1,799.4 1,496.0
-------------------- ------ ---------- ----------
Total shareholders' equity 2,345.4 2,031.3
-------------------- ------ ---------- ----------
PERSIMMON PLC
Consolidated Cash Flow Statement for the year ended 31 December 2007
----------------------------- ------- --------- ---------
Note 2007 2006
£m (Restated)
£m
----------------------------- ------- --------- ---------
Cash flows from operating activities:
Profit for the year 413.5 396.4
Adjustments for:
Income tax expense 169.2 170.3
Finance income (1.9) (0.5)
Finance costs 74.1 71.1
Depreciation charge 9.8 9.6
Amortisation of intangible assets 0.2 0.3
Impairment of intangible assets 2.4 -
Share of results of jointly controlled entities (1.0) (0.7)
Profit on disposal of property, plant and (1.0) (0.7)
equipment
Share-based payment charge 6.0 5.3
Other non-cash items - (8.3)
----------------------------- ------- --------- ---------
Profit from operations before working capital 671.3 642.8
movements
Movements in working capital:
(Increase)/decrease in inventories (426.7) 186.0
(Increase)/decrease in trade and other (7.2) 32.0
receivables
Increase/(decrease) in trade and other payables 25.6 (67.8)
----------------------------- ------- --------- ---------
Net cash from operations 263.0 793.0
Interest paid (66.2) (57.6)
Interest received 1.9 0.5
Tax paid (126.3) (146.8)
----------------------------- ------- --------- ---------
Net cash from operating activities 72.4 589.1
Cash flows from investing activities:
Acquisition of subsidiary - (508.5)
Received from jointly controlled entities 0.6 1.0
Purchase of property, plant and equipment (10.6) (9.6)
Proceeds from sale of property, plant and 4.6 2.6
equipment
----------------------------- ------- --------- ---------
Net cash used in investing activities (5.4) (514.5)
Cash flows from financing activities:
Repayment of borrowings (68.0) (265.8)
Drawdown of loan facilities 75.0 257.3
Finance lease principal payments (1.4) (1.5)
Own shares purchased (25.5) -
Exercise of share options 2.3 3.2
Dividends paid to Group shareholders (114.1) (59.6)
----------------------------- ------- --------- ---------
Net cash used in financing activities (131.7) (66.4)
----------------------------- ------- --------- ---------
(Decrease)/increase in net cash and cash 6 (64.7) 8.2
equivalents
----------------------------- ------- --------- ---------
Net cash and cash equivalents at beginning of 15.9 7.7
year
----------------------------- ------- --------- ---------
Net cash and cash equivalents at end of year 7 (48.8) 15.9
----------------------------- ------- --------- ---------
PERSIMMON PLC
Consolidated Statement of Recognised Income and Expense for the year ended 31
December 2007
----------------------------- -------- --------
2007 2006
£m £m
----------------------------- -------- --------
Effective portion of changes in fair value of cash flow 11.9 (7.0)
hedges
Net actuarial gains/(losses) on defined benefit pension
schemes 36.1 (4.7)
Taxation on items taken directly to equity (15.6) 3.5
----------------------------- -------- --------
Net income / (expense) recognised directly in equity 32.4 (8.2)
Profit for the year 413.5 396.4
----------------------------- -------- --------
Total recognised income for the year 445.9 388.2
(all attributable to equity holders of the parent)
----------------------------- -------- --------
PERSIMMON PLC
Notes
1. Accounting policies
The financial information has been prepared by applying the accounting
policies and presentation that were applied in the preparation of the
Group's published consolidated financial statements for the year ended 31
December 2006, except for the following changes:
Other operating income
Other operating income comprises profits from the sale of land holdings and
ground rents, rent receivable, and other incidental sundry income.
Deposits
New property deposits and on account contract receipts are held within
current trade and other payables until the legal completion of the related
property or cancellation of the sale.
Financial instruments
The Group adopted IFRS 7 (Financial Instruments: Disclosures) on 1 January
2007. The standard serves to consolidate and expand upon existing
disclosure requirements, further details of which will be presented in the
financial statements for the year ended 31 December 2007. Adoption of IFRS
7 has had no impact on the income statement or balance sheet.
2. Restatement
In order to enhance clarity for the readers of these financial statements a
number of disclosure items have been restated, none of which have had an
impact on gross profit, profit from operations or net assets. These changes
comprise:
Other operating income is separately disclosed from operating expenses on
the face of the income statement. Other operating income for the year ended
31 December 2007 is £40.1m (2006: £29.6m).
Land option payments of £77.5m (2006: £69.8m) are separately disclosed in
trade and other receivables.
New property deposits and on account contract receipts previously
classified as a reduction in inventories are now disclosed within current
trade and other payables following the principles applicable to deferred
income. Deposits received and on account contract receipts at 31 December
2007 amounted to £45.0m (2006: £49.1m).
The own share reserve of £5.1m at 31 December 2006 has been reclassified as
a deduction against retained earnings.
3. Taxation
Taxation has been calculated at an effective rate of 29.0% of profit after
financing costs (2006: 30.0%).
4. Dividends
It is proposed to pay a final dividend of 32.7p per share on 25 April 2008
to shareholders on the register at the close of business on 7 March 2008.
In accordance with IAS 10, the liability for the payment of the dividend
has not been included in the financial statements.
During the year the 2006 final dividend of 32.7p per share and the 2007
interim dividend of 18.5p per share were paid to shareholders.
5. Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the year, excluding those: held in the
Employee Share Ownership Trust, the Employee Benefit Trust, and Treasury
shares all of which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary
shares in issue is adjusted to assume conversion of all potentially
dilutive ordinary shares from the start of the accounting period. The
Company has only one category of dilutive potential ordinary shares: those
share options and awards granted to directors and employees where the
exercise price is less than the average market price of the Company's
ordinary shares during the period. Diluted earnings per share is calculated
by dividing earnings by the diluted weighted average number of shares.
Reconciliations of the earnings and weighted average number of shares used
in the calculations are set out below:
--------------- ----------- ---------- ----------- ---------
Earnings Weighted Earnings Weighted
average number average number
of ordinary of ordinary
shares shares
31 December 31 December 31 December 31 December
2007 2006 2006
£m 2007 £m
--------------- ----------- ---------- ----------- ---------
For basic
earnings per
share 413.5 300,673,519 396.4 296,155,856
Options and
awards - 1,539,446 - 1,762,783
--------------- ----------- ---------- ----------- ---------
For diluted
earnings per
share 413.5 302,212,965 396.4 297,918,639
--------------- ----------- ---------- ----------- ---------
6. Reconciliation of net cash flow to net debt
---------------------------- ------ ---------- ----------
Note 2007 2006
£m £m
---------------------------- ------ ---------- ----------
(Decrease)/increase in net cash and cash (64.7) 8.2
equivalents
(Increase)/decrease in debt and finance lease
obligations (5.6) 10.0
---------------------------- ------ ---------- ----------
(Increase)/decrease in net debt from cash flows (70.3) 18.2
Net debt acquired - (394.9)
New finance lease obligations (1.7) (1.9)
Non-cash movements 11.9 (17.4)
---------------------------- ------ ---------- ----------
Increase in net debt (60.1) (396.0)
Net debt at 1 January (664.2) (268.2)
---------------------------- ------ ---------- ----------
Net debt at 31 December 7 (724.3) (664.2)
---------------------------- ------ ---------- ----------
7. Analysis of net debt
---------------------------- ------ ---------- ----------
Note 2007 2006
£m £m
---------------------------- ------ ---------- ----------
Cash and cash equivalents 2.1 18.9
Bank overdrafts (50.9) (3.0)
---------------------------- ------ ---------- ----------
Net cash and cash equivalents (48.8) 15.9
Bank loans (75.0) -
US and UK senior loan notes due within one (73.3) (48.8)
year
US, UK & EU senior loan notes due after more
than one (450.7) (509.1)
year
Other loan notes due within one year (5.3) (17.8)
Forward currency swaps (68.0) (101.5)
Finance lease obligations (3.2) (2.9)
---------------------------- ------ ---------- ----------
Net debt at 31 December 6 (724.3) (664.2)
---------------------------- ------ ---------- ----------
8. Status of financial information
The financial information set out above does not constitute the Company's
consolidated statutory accounts for the years ended 31 December 2007 or
2006 but is derived from those accounts. Statutory accounts for the year
ended 31 December 2006 have been delivered to the Registrar of Companies,
and those for the year ended 31 December 2007 will be delivered following
the Company's Annual General Meeting. The auditors have reported on these
accounts; their reports were unqualified and did not contain statements
under section 237(2) or (3) of the Companies Act 1985.
The annual report will be posted to shareholders on Wednesday 26 March
2008. Copies of the annual report will also be available from the Company
Secretary, Persimmon plc, Persimmon House, Fulford, York,
YO19 4FE.
Further information about 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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