# Persimmon plc   Board remains confident of the future prospects of the Group

- Link: https://www.directorstalkinterviews.com/persimmon-plc-board-remains-confident-of-the-future-prospects-of-the-group/412773474
- Published: 2019-05-01T07:09:18+01:00
- Author: Charlotte Edwards

**[Persimmon plc](https://www.directorstalkinterviews.com/ftse-company/persimmon-plc/psn.l)**(
LON:PSN) announced the following trading update covering the period from 1 January
2019 to date, ahead of its Annual General Meeting (“AGM”) which is being held at
12.00 noon today.

Persimmon is focussed on building good quality homes at a range of prices offering
customers great choice across the UK. Since the start of the year the new build 
housing market has proved resilient with high levels of employment and low interest
rates continuing to support consumer confidence. With mortgage lenders continuing
to offer attractive products, the level of customer activity has been encouraging
with visitor levels to site, sales conversion rates and cancellation rates all running
in line with our expectations.

As part of our previously communicated plans to improve our service to customers,
in particular providing greater accuracy of anticipated moving-in dates, we are 
continuing to take a more targeted approach to the timing of sales releases on a
number of sites and to progress build to a more advanced stage before releasing 
homes for sale to the market where demand is strong. As expected, these measures
have reduced the number of sales reservations made since the start of the year but
we remain confident that, with the continuation of current market conditions, these
sites will make a good contribution to sales once build has progressed and homes
are released for sale. Overall, sales reservations remain in line with our expectations
and we currently anticipate achieving a similar level of legal completions in the
first half as last year. The Group’s legal completions for the second half of the
year will be similarly determined by our continued focus on progressing our build
programmes ahead of sales release together with prevailing market conditions.

The Group’s current forward sales position is strong with total forward sales revenue,
including legal completions taken to date in 2019, of £2,698 million (2018: £2,798
million). After recognising the actions taken to improve customer service as described
earlier the Group had 350 active sales outlets for the year to date (2018: 375) 
and our weekly private sales rate per site since the start of the year was 5% lower
than the previous year. Pricing conditions remain firm across our regional markets,
the average selling price of sales to the private market in our forward order book
being c. £237,850 (2018: c. £236,500). The Group has also maintained a substantial
forward order book of new homes for delivery to our Housing Association partners.

The Group has opened 43 of the c. 90 new outlets planned for the first half of the
year and is building new homes on all sites that have an implementable detailed 
planning consent. Given the increased uncertainties around the future performance
of the UK economy we have remained very selective with the acquisition of new land
during the period.

Since the start of the year we have announced a broad range of initiatives to improve
the Group’s customer satisfaction levels. These include the actions taken to deliver
greater accuracy of anticipated moving-in dates discussed above, together with a
broad range of improvements and investments in our customer care team, operations
and technology. These measures underpin our commitment to delivering a step change
in the Group’s customer focussed culture and service performance. The initiatives
are already beginning to make an impact and we are confident they will deliver significant
improvement once they have had time to take full effect.

In order to assess the effectiveness of these new measures and processes, and to
determine whether they appropriately position the business for the future, in April
the Group commissioned an independent review. The review will report to the Board
and it is anticipated that the initial overall findings will be presented in the
final quarter of 2019.

We have continued to develop our off-site manufacturing capability based at our 
hub in Harworth, Doncaster to support the Group’s construction programmes. Our brick
manufacturing factory, Brickworks, is now producing at close to optimal capacity
and the construction of a new roof tile manufacturing facility, Tileworks, is well
advanced. We anticipate that Tileworks will be commissioned and commence deliveries
to site during the second half of this year. We continue to expect our overall build
costs to increase by c. 4% for the year. This includes ongoing investment to enhance
specification in support of improved levels of customer satisfaction and is after
mitigation through progressing our off-site manufacturing activity and reviewing
our approach to infrastructure development costs.

The Board is pleased to announce that the Group has recently concluded the renewal
of its £300m Revolving Credit Facility with strong support from the Group’s five
relationship banks. The facility has a five year term out to 31 March 2024 and remains
an important element in providing support to the Group’s working capital flexibility.

Last year the Board announced that three additional payments would be made under
the Capital Return Plan (“the Plan”) of 125p per share, paid each year for the three
years ending 2020. The second of these additional payments amounting to £398m was
made as an interim dividend on 29 March 2019. The Board has also recommended a scheduled
return of 110p per share, or c. £350 million, to be paid to shareholders on 2 July
2019 as a final dividend.

The Board remains confident of the future prospects of the Group.

We will provide a further report in our Trading Update on Thursday 4 July 2019.

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