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Persimmon confident as it goes through phased building restart
29th Apr 2020 08:06
(Sharecast News) - Persimmon worked to assure shareholders of its position amid the coronavirus crisis on Wednesday, ahead of its annual general meeting later in the day and as it went through a phased restart of building on its sites.
The FTSE 100 housebuilder said it saw a "strong" start to the year before the Covid-19 lockdown, with an average private sales rate per site around 10% higher year-on-year in the first 11 weeks.
It said customer enquiries had remained at good levels through the lockdown, providing the board some encouragement on the resilience of demand.
Persimmon's current forward sales position, including legal completions taken to date in 2020, remained robust at ?2.4bn, down from ?2.7bn year-on-year.
The average private selling price of a new Persimmon home in its forward order book was around ?244,500, up from ?237,850 year-on-year but still 17% below the UK national average.
"As announced on 24 April, having developed and tested new site protocols incorporating the latest government and Construction Leadership Council guidance on social distancing and protective measures, the group has commenced a phased restart to work on site," the board said of its current operations amid the Covid crisis.
"To protect our entire workforce, these new measures will be strictly enforced by a specialist team, with a 'Covid-19 Passport to Work' governing site operation."
Persimmon noted that it had not made use of the Coronavirus Job Retention Scheme to furlough staff, and had no current plans to access any UK government Covid-19 funding.
It said the implementation of its customer care improvement plan remained a "key priority", with customer care teams remaining active through the shutdown period, and scheduled works to restart as soon as restrictions on home visits are relaxed.
The firm's investment in its 'Homebuyer Retention Scheme', and customer care resource and training, had led to a 20% reduction in the time taken to resolve snagging items prior to the onset of the Covid-19 outbreak.
Persimmon said the first phase of its customer portal, supporting customers from the point of their new home demonstration, would be operational "shortly", with phase two due to be rolled out in the second half of 2020.
Looking at its operations amid the pandemic going forward, Persimmon said "careful management" of housing cycle risk was enabling it to respond from a position of strength.
It claimed to have a "strong, sustainable" business model that placed customers at the centre of its business, maintained high quality land holdings, judged capital deployment at the right time in the cycle and minimised financial risk.
The company said its liquidity was in a "robust" position, with a current cash position of ?600m as at 24 April, deferred land commitments of ?163m to the end of the current year, and access to an undrawn ?300m revolving credit facility.
Persimmon said its strong financial liquidity had enabled it to maintain its operational capability by supporting all of its colleagues on full pay through the site shutdown period.
The group's suppliers and subcontractors had been offered financial support, to help them manage through the crisis and preserve jobs, and to ensure continuity of supply at the recovery stage.
Its staff working from home had continued to progress critical tasks during the site shut down period to prepare sites for the restart of activity, Persimmon said, adding that home working would continue subject to further guidance provided by the government and Public Health England.
The firm's increased investment in work-in-progress over 2019 and 2020 placed it in a "strong position" to support customers, the board added, and provided some mitigation to the temporary site closures.
Its off-site manufacturing facilities would also provide continuity of supply of key materials, and would apparently help to mitigate any disruption as construction activity recommenced.
"In these unprecedented times we continue to be guided by our clear purpose of delivering long term sustainable returns for all our stakeholders," said group chief executive officer Dave Jenkinson.
"Focussed management of the risks inherent in the housing market cycle has given us the financial strength to respond effectively and responsibly to the crisis and support our customers, our colleagues and suppliers, and the local communities we work in across the country, as the UK meets the challenges of the pandemic.
"We recognise the important contribution we make to the economy and wider society, and are determined to play our part."
Jenkinson said Persimmon's "strong" financial position and liquidity enabled it to maintain its operational capability by retaining all staff on full pay through the period, without recourse to any government financial assistance.
It also allowed it to offer necessary support to its suppliers, subcontractors and local tradespeople, and to maintain its community and charity programmes, despite the economic shock of the pandemic.
"Persimmon is responding to the crisis from a position of strength, to the benefit of all its stakeholders; our long-term strategy and business model recognises the cyclical nature of the housing market, minimises financial risk through the cycle, and provides the flexibility needed to manage effectively through this difficult period.
"The government has been clear that it wants the UK's housebuilders to get back to building and this week we have started the phased process of getting back to work safely on site in order to deliver the new homes the country needs."
At 0845 BST, shares in Persimmon were down 0.18% at 2,206p.
The FTSE 100 housebuilder said it saw a "strong" start to the year before the Covid-19 lockdown, with an average private sales rate per site around 10% higher year-on-year in the first 11 weeks.
It said customer enquiries had remained at good levels through the lockdown, providing the board some encouragement on the resilience of demand.
Persimmon's current forward sales position, including legal completions taken to date in 2020, remained robust at ?2.4bn, down from ?2.7bn year-on-year.
The average private selling price of a new Persimmon home in its forward order book was around ?244,500, up from ?237,850 year-on-year but still 17% below the UK national average.
"As announced on 24 April, having developed and tested new site protocols incorporating the latest government and Construction Leadership Council guidance on social distancing and protective measures, the group has commenced a phased restart to work on site," the board said of its current operations amid the Covid crisis.
"To protect our entire workforce, these new measures will be strictly enforced by a specialist team, with a 'Covid-19 Passport to Work' governing site operation."
Persimmon noted that it had not made use of the Coronavirus Job Retention Scheme to furlough staff, and had no current plans to access any UK government Covid-19 funding.
It said the implementation of its customer care improvement plan remained a "key priority", with customer care teams remaining active through the shutdown period, and scheduled works to restart as soon as restrictions on home visits are relaxed.
The firm's investment in its 'Homebuyer Retention Scheme', and customer care resource and training, had led to a 20% reduction in the time taken to resolve snagging items prior to the onset of the Covid-19 outbreak.
Persimmon said the first phase of its customer portal, supporting customers from the point of their new home demonstration, would be operational "shortly", with phase two due to be rolled out in the second half of 2020.
Looking at its operations amid the pandemic going forward, Persimmon said "careful management" of housing cycle risk was enabling it to respond from a position of strength.
It claimed to have a "strong, sustainable" business model that placed customers at the centre of its business, maintained high quality land holdings, judged capital deployment at the right time in the cycle and minimised financial risk.
The company said its liquidity was in a "robust" position, with a current cash position of ?600m as at 24 April, deferred land commitments of ?163m to the end of the current year, and access to an undrawn ?300m revolving credit facility.
Persimmon said its strong financial liquidity had enabled it to maintain its operational capability by supporting all of its colleagues on full pay through the site shutdown period.
The group's suppliers and subcontractors had been offered financial support, to help them manage through the crisis and preserve jobs, and to ensure continuity of supply at the recovery stage.
Its staff working from home had continued to progress critical tasks during the site shut down period to prepare sites for the restart of activity, Persimmon said, adding that home working would continue subject to further guidance provided by the government and Public Health England.
The firm's increased investment in work-in-progress over 2019 and 2020 placed it in a "strong position" to support customers, the board added, and provided some mitigation to the temporary site closures.
Its off-site manufacturing facilities would also provide continuity of supply of key materials, and would apparently help to mitigate any disruption as construction activity recommenced.
"In these unprecedented times we continue to be guided by our clear purpose of delivering long term sustainable returns for all our stakeholders," said group chief executive officer Dave Jenkinson.
"Focussed management of the risks inherent in the housing market cycle has given us the financial strength to respond effectively and responsibly to the crisis and support our customers, our colleagues and suppliers, and the local communities we work in across the country, as the UK meets the challenges of the pandemic.
"We recognise the important contribution we make to the economy and wider society, and are determined to play our part."
Jenkinson said Persimmon's "strong" financial position and liquidity enabled it to maintain its operational capability by retaining all staff on full pay through the period, without recourse to any government financial assistance.
It also allowed it to offer necessary support to its suppliers, subcontractors and local tradespeople, and to maintain its community and charity programmes, despite the economic shock of the pandemic.
"Persimmon is responding to the crisis from a position of strength, to the benefit of all its stakeholders; our long-term strategy and business model recognises the cyclical nature of the housing market, minimises financial risk through the cycle, and provides the flexibility needed to manage effectively through this difficult period.
"The government has been clear that it wants the UK's housebuilders to get back to building and this week we have started the phased process of getting back to work safely on site in order to deliver the new homes the country needs."
At 0845 BST, shares in Persimmon were down 0.18% at 2,206p.