Interim Results

PERSIMMON PLC 31 August 1999 PERSIMMON PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999 Highlights Persimmon's best ever six months performance Record net pre-tax profit of £35.7m, (June 1998: £28.1m), an increase of 27% Turnover of £317.6m (June 1998: £270.2m), an increase of 18%* Earnings per share of 13.9p (June 1998: 11.8p), an increase of 18% Operating profit of £41.1m (June 1998: £34.6m), an increase of 19% 3,354 homes legally completed (June 1998: 3,117), an increase of 8%* Average selling price of £94,685 (June 1998: £86,685) Return on capital employed of 17.6% (June 1998: 16.5%), an increase of 7% Over 30,000 plots available for development Dividend of 3.5p (June 1998: 3.3p), an increase of 6% Gearing of 23%, (June 1998: 30%), reduced by 7% *Excludes B.E.S. re-sales Duncan Davidson, Chairman, said: 'These are outstanding results which represent Persimmon's best ever performance over six months. 'Demand for Persimmon homes remains very strong throughout the UK. Our forward sales are at a record level. We are confident that current profit levels are sustainable for the foreseeable future.' ENQUIRIES: Duncan Davidson, Chairman John White, Chief Executive Persimmon plc Tel: 0171 796 4133 on Tuesday, 31 August 1999 only Tel: 01904 642199 thereafter Michael Sandler/Justin Strong Hudson Sandler Limited Tel: 0171 796 4133 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999 CHAIRMAN'S STATEMENT During the six months to 30 June 1999 Persimmon increased its net pre-tax profit by 27 per cent to a record £35.7 million, from £28.1 million in the first half of 1998. We legally completed the sale of 3,354 homes (June 1998: 3,117) at an average selling price of £94,685 (June 1998: £86,685), giving total turnover of £317.6 million (June 1998: £270.2 million). These figures exclude B.E.S. re-sales. In recent years we have incurred a lower corporation tax charge than the statutory rate. In 1998 the charge was 26 per cent, but from 1999 we expect our effective rate of tax to be 30 per cent, loss reliefs arising from the purchase of the Ideal business in 1996 having been fully utilised. Despite this higher tax charge we increased our earnings per share in the first half by 18 per cent to 13.9p per share (June 1998: 11.8p). We are increasing our interim dividend by 6.1 per cent to 3.5p per share. This dividend will be payable on 29 October 1999 to shareholders on the register at 10 September 1999. As before we are offering a scrip dividend alternative. Our net borrowings at 30 June were £80 million giving a gearing level of 23%, as compared with gearing of 30% in 1998. Interest was covered 7.6 times compared with 5.3 times for the first half of 1998. During July 1999 Persimmon raised £96 million of 8-12 year loan notes through the US Private Placement market, at attractive interest rates. These additional long term funds complement our existing debt financing, and together they provide substantial resources for the further expansion of Persimmon. We have succeeded in maintaining our landbank at over 30,000 plots with planning consent, throughout the UK. Our new City Developments operation, which we announced in April, has recently acquired sites in London, Bristol, Birmingham, Manchester and Glasgow. We now have 10 sites across the UK which will be developed as inner-city schemes, creating 600 new apartments producing future sales revenue in excess of £120m. We are very confident of the success of this new venture. Demand for Persimmon homes remains very strong throughout the UK. Our forward sales are at a record level. We continue to concentrate on improving our profitability and returns, our return on capital employed having improved further to 17.6% to June 1999 (June 1998: 16.5%). We are confident that current profit levels are sustainable for the foreseeable future. Our preparations to ensure the business of Persimmon continues to run smoothly on the run up to the millennium and thereafter are well progressed, all live internal systems being year 2000 compliant. We have strengthened our Board by the appointment of David Thompson as a Non- Executive Director. David is Managing Director of Wolverhampton & Dudley Breweries PLC, and we welcome him to Persimmon. I thank everyone on the Persimmon team for their considerable efforts in achieving these record results. Duncan Davidson 31 August 1999 PERSIMMON PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) Six months Six months Year to to 30 June to 30 June 31 December 1999 1998 1998 Note £000 £000 £000 Turnover 324,954 281,106 572,407 Cost of sales (271,635) (235,344) (478,849) ---------- ----------- --------- Gross profit 53,319 45,762 93,558 Net operating expenses (12,193) (11,175) (20,336) ---------- ----------- --------- Operating profit 41,126 34,587 73,222 Net interest payable and similar charges (5,443) (6,505) (12,689) ---------- ----------- --------- Profit on ordinary activities before taxation 35,683 28,082 60,533 Tax on ordinary activities (10,705) (7,021) (15,738) ---------- ----------- --------- Profit on ordinary activities after taxation 24,978 21,061 44,795 Dividends (6,323) (5,880) (18,548) ---------- ----------- --------- Retained profit 18,655 15,181 26,247 ---------- ----------- --------- Basic earnings per share 4 13.9p 11.8p 25.1p Diluted earnings per share 4 13.9p 11.8p 25.1p Dividend per share 3.5p 3.3p 10.4p PERSIMMON PLC CONSOLIDATED BALANCE SHEET (UNAUDITED) 30 June 30 June 31 December 1999 1998 1998 £000 £000 £000 Fixed assets Tangible assets 10,866 10,492 10,569 ---------- -------- ------------ Current assets Stocks and work in progress 628,976 534,795 558,865 BES assets - 14,065 14,065 Debtors 44,738 33,545 41,391 Cash at bank and in hand 3,004 45 184 ---------- -------- ------------ 676,718 582,450 614,505 ---------- -------- ------------ Creditors due within one year Borrowings (14,545) (17,399) (15,809) BES advances - (18,566) (19,128) Other creditors (222,152) (142,892) (169,718) ---------- --------- ----------- (236,697) (178,857) (204,655) ---------- --------- ----------- Net current assets 440,021 403,593 409,850 ---------- --------- ----------- Total assets less current liabilities 450,887 414,085 420,419 ---------- --------- ----------- Creditors due after more than one year Borrowings (68,390) (76,240) (81,270) Other creditors (39,146) (28,767) (18,403) ---------- -------- ------------ (107,536)(105,007) (99,673) ---------- -------- ------------ Net assets 343,351 309,078 320,746 ---------- -------- ------------ Capital and reserves Called up share capital 18,052 17,838 17,873 Share premium account 199,277 197,809 197,920 Merger reserve 3,123 3,123 3,123 Revaluation reserve 1,242 1,242 1,242 Profit and loss account 121,657 89,066 100,588 ---------- -------- ------------ Equity shareholders' funds 343,351 309,078 320,746 ---------- -------- ------------ Net assets per share 190.2p 173.3p 179.5p ----------- ------- ------------ PERSIMMON PLC CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) Six months Six months Year to to 30 June to 30 June 31 December 1999 1998 1998 Note £000 £000 £000 Net cash inflow from operating activities 2 36,454 646 18,014 ---------- ---------- ---------- Return on investments and servicing of finance Interest received 58 69 153 Interest paid (4,891) (6,165) (11,970) Interest paid on finance leases (192) (139) (349) ---------- ---------- ---------- (5,025) (6,235) (12,166) ---------- ---------- ---------- Taxation UK corporation tax received/(paid) 2,344 (4,538) (8,790) ---------- ---------- ---------- Capital expenditure Purchase of tangible fixed assets (1,403) (380) (655) Sale of tangible fixed assets 106 78 745 ---------- ---------- ---------- (1,297) (302) 90 ---------- ---------- ---------- Acquisitions and disposals Acquisition of businesses and subsidiaries (5,479) (1,700) (6,578) ---------- ---------- ---------- Equity dividends paid (10,419) (11,843) (17,320) ---------- ---------- ---------- Net cash inflow/(outflow) before management of liquid resources and financing 16,578 (23,972) (26,750) --------- ----------- ---------- Financing Bank loans advanced 165,020 107,000 187,030 Repayment of bank loans (176,300) (87,000) (162,000) Exercise of share options 1,536 208 208 Repayment of principal under finance leases (1,150) (1,505) (2,028) --------- ----------- ---------- Net cash (outflow)/inflow from financing (10,894) 18,703 23,210 --------- ----------- ---------- Increase/(decrease) in cash 3 5,684 (5,269) (3,540) ====== ====== ====== Notes 1.Accounting policies The interim financial information has been prepared on the basis of the accounting policies set out in the financial statements for the year ended 31 December 1998. In addition, the group has adopted Financial Reporting Standard ('FRS') 12 (Provisions, Contingent Liabilities and Contingent Assets) and FRS 13 (Derivatives and other Financial Instruments: Disclosures). The adoption of these new standards has not impacted upon this interim statement. 2.Reconciliation of operating profit to net cash inflow from operating activities Six months Six months Year to to 30 June to 30 June 31 December 1999 1998 1998 £000 £000 £000 Operating profit 41,126 34,587 73,222 Depreciation charge 1,224 1,031 2,228 Profit on sale of fixed assets (6) (4) (58) LTIP charge 150 - 200 Increase in stocks and work in progress and BES assets (59,276) (46,741) (71,231) (Increase)/decrease in debtors (3,537) 2,964 (7,679) Increase in creditors 56,773 8,809 21,332 ---------- ---------- ---------- Net cash inflow from operating activities 36,454 646 18,014 ====== ====== ====== 3.Reconciliation of net cash flow to net debt Six months Six months Year to to 30 June to 30 June 31 December 1999 1998 1998 £000 £000 £000 Increase/(decrease) in cash 5,684 (5,269) (3,540) Decrease/(increase) in debt and lease finance 12,430 (18,495) (23,002) ---------- ---------- ---------- Decrease/(increase) in net debt from cash flows 18,114 (23,764) (26,542) New finance leases (218) (1,430) (3,042) ---------- ---------- ---------- Decrease/(increase) in net debt 17,896 (25,194) (29,584) Net debt at beginning of period (102,710) (73,126) (73,126) ---------- ---------- ---------- Net debt at end of period (84,814) (98,320) (102,710) ====== ====== ====== Analysed as: Cash at bank and in hand 3,004 45 184 Bank overdrafts (6,645) (11,099) (9,509) Bank loans (39,940) (39,890) (44,920) US senior loan notes (36,350) (42,650) (42,650) Finance leases (4,883) (4,726) (5,815) ---------- ---------- ---------- Net debt at end of period (84,814) (98,320) (102,710) ====== ====== ====== 4.Earnings per share The calculation of earnings per share is based on earnings after taxation of £24,978,000 (six months to 30 June 1998: £21,061,000 and year ended 31 December 1998: £44,795,000) and 179,085,267 ordinary shares (30 June 1998: 178,007,080 and 31 December 1998: 178,134,131) being the weighted average number of ordinary shares in issue during the period. Diluted earnings per share 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 180,247,980 (30 June 1998: 178,709,907 and 31 December 1998: 178,578,294). 5.Year 2000 To minimise the risk that the group's operations will be affected by the year 2000 date change, a project team was established at the start of 1998 to review our computer systems and suppliers. All live internal computer systems have now been verified as compliant at minimal cost. We are currently implementing new computer systems to support the business well into the new millennium. We have adopted a continual process of millennium compliance testing. Management have also sought assurances and confirmation that all key suppliers will be able to service our business needs. Where satisfactory assurances have not been forthcoming management are considering our relationship with them. The project team continues to monitor the situation and contingency plans will be put in place to support the business before, on and after 31 December 1999. 6.The figures for the half years to 30 June 1999 and 30 June 1998 are unaudited. The figures included in the Profit and Loss Account for the year to 31 December 1998, the Balance Sheet at 31 December 1998 and the Cash Flow Statement for the year to 31 December 1998 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.This interim statement is being sent to all shareholders and is available upon request from the Company Secretary, Persimmon plc, Persimmon House, Fulford, York YO19 4FE.

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