Khaki Plc (LON:PSN) announced its half-year results for the six months ended June 30, 2022.
● Strong demand – average private sales rate for the period around 1% year-on-year, with a strong forward sales position and reiterates guidance of 14,500-15,000 legal deliveries this year;
● 6,652 deliveries of new homes (2021: 7,406) as the Group rebuilds its position in points of sale;
● Solid financial performance with margins and a ROCE among the best in the sector;
● Solid customer service, build quality and efficiency;
● On track to achieve an increase of around 10% in active points of sale by the end of the current year with 60 points of sale opened during the period;
● 8,829 plots brought into the business at 37 sites – a replacement rate of more than 130%;
● Return of £750m to shareholders by July 2022.
|H1 2022||H1 2021|
|Completions of new houses||6,652||7,406|
|Average selling price of a new home||£245,597||£236,199|
|Total Group turnover1||£1.69 billion||£1.84 billion|
|Gross margin of new housing2||31.0%||30.9%|
|Profit before tax||£439.7 million||£480.1 million|
|Cash at June 30||£0.78 billion||£1.32 billion|
|Property assets owned and controlled as of June 30||89,052 plots||85,771 plots|
|Current position of futures sales||£2.32 billion||£2.23 billion|
|Return on capital (per share)||125p (April 2022)110p (July 2022)||125p (March 2021)110p (August 2021)|
Dean Finch, khaki Group Chief Executive, said:
“Persimmon continues to perform well. We are making significant strides in quality, service, land investment opportunities and efficiency to build an even stronger business, while continuing to deliver the strong financial returns Persimmon is known for. Demand for our high-quality, attractively priced homes remained robust, with our average private sales rates for the period being approximately 1% higher year-over-year. Our customer satisfaction score3 is currently 92%. We have exciting new sites entering the business at industry leading margins, with a land replacement rate for the period of over 130% and increased production at our own brick, tile and frame mills in wood, which further improves the resilience of our supply and our costs. efficiency, allowing us to reiterate our goal of 14,500 to 15,000 legal completions for the full year.
“We are on track to achieve an increase of approximately 10% in our active outlets by the end of the current year as we work to rebuild our outlet position after a pause of purchase of land three years ago and that we are addressing ongoing challenges in the planning system. We are strengthening our proactive engagement with local authorities, improving our approach to developing attractive communities and raising the bar on design to help alleviate planning challenges. We continue to expect our delivery volume to be significantly higher in the second half of the year.
“Our combination of affordability and high levels of service and build quality, coupled with our well-located sites, provides a unique, strong and enduring customer proposition. It is by further strengthening this proposition that we will achieve our ambition to become Britain’s best homebuilder for customers and shareholders, consistently delivering high quality homes, excellent customer service and industry leading financial returns.
Build an even stronger business
Solid performance in the first half
● Strong first half performance vs strong comparator – pre-tax profit of £439.7m (2021: £480.1m);
● Effectively manage the balance of inflationary pressures – housing gross margin2 up compared to the same period last year (31.0% against 30.9%);
● The average rate of private sales over the period was around 1% higher year-on-year;
● Underlying return on average capital employed4 of 30.9% (December 2021: 35.8%) – over the last 3 years, the Group’s underlying return on average capital employed was 34.2%, reflecting the continued success of the business;
● 235 pence per share paid for the financial year ended December 31, 2021.
Putting customers at the heart of our business
● Persimmon Way fully integrated across the business and running smoothly;
● HBF customer satisfaction score over 8 weeks3 currently at 92%;
● Trustpilot5 score improved by 30% since the beginning of the year;
● NHBC Reportable Items6 improved by 25% since December 2020;
● Largest team of independent quality inspectors in the industry providing quality assurance on each of our homes;
● New range of products, change of marketing brand and improvement of services strengthen our offer to customers to meet their aspirations and gain their trust and loyalty;
● Our average private sale price of £267,325 is approximately 20% below the UK national average sale price7, demonstrating the enduring strength of our value proposition to customers.
Build a solid platform for success
● A high-quality land portfolio, with 89,052 plots of land owned and controlled as of June 30, 2022 (December 2021: 88,043), with a land cost to anticipated income ratio8 of 12.2% (December 2021: 11.9%);
● Disciplined land replacement – 8,829 plots brought into the business across 37 sites with industry-leading margins;
● On track to achieve approximately 10% increase in our active stores by year-end, with 60 openings in the first half and approximately 70 openings expected in the second half, although planning delays persist present a risk;
● Improved construction rates by around 10% compared to pre-Covid levels;
● Continue to invest in our people – around 90% of our site colleagues have achieved a relevant NVQ qualification (December 2020: 21%) and we have been recognized as one of the top 100 employers of apprentices.
● BrickWorks, TileWorks and Space4 factories are all ramping up production, ensuring supply resilience and efficiency;
● Improved data and management tools introduced to ensure greater consistency in construction times and quality;
● Strengthened centralized procurement to improve efficiency and pool shared resources to manage procurement issues.
● To offer homes that are approximately 30% more energy efficient than the existing housing stock, making them more profitable to operate for our customers;
● Investing over £610m in local communities over the past 18 months, delivering 3,632 homes to our partner housing associations
● Continue to protect tenants from longshoring costs; five of our developments have obtained EWS1 certificates. Proactively engage with management companies and their agents on work required on all other identified developments built by Persimmon.
● Demand is strong with the Group’s average private sales rate over the period around 1% year-on-year and a strong forward order book of £2.32 billion;
● Solid start to the second half; average private sales rates for the first seven weeks, down 11% YoY vs a strong comparator and as we return to a more normal seasonal pattern, and up 8% vs 2019, most recent and typical business year;
● Currently more than 90% sold forward for the current year;
● Selling price inflation is currently mitigating cost inflation in the industry;
● Continue to aim for around 10% growth in outlets by the end of the current year, with an improved creative and design approach and proactive engagement of local authorities which should mitigate planning challenges In progress ;
● Reiterate our forecast of 14,500 to 15,000 completions for the full year;
● While short-term uncertainties persist, longer-term fundamentals remain solid. Our work to become Britain’s best homebuilder will create an even stronger and more sustainable business, serving customers and shareholders.
1 Total Group revenue includes the fair value of consideration received or receivable on the sale of properties for partial exchange and revenue from the provision of broadband Internet services. Housing income is income generated from the sale of newly constructed residential properties only.
2 Based on new home revenue of £1,633.7m (2021: £1,749.3m) and gross profit of £506.2m (2021: £540.5m).
3 The Group takes part in a national survey of new housing, conducted by the Federation of Home Builders. The rating system is based on the number of customers who would recommend their builder to a friend.
4 Moving average over 12 months calculated on underlying operating income and total capital employed (including mortgagees). Underlying operating profit is presented before goodwill impairment of £5.5m (December 2021: £6.2m).
5 Trustpilot is a digital review platform open to the public. Scores are based on all service reviews received on the platform.
6 A reportable item is an area of non-compliance with NHBC standards. The article is completely rectified before the completion of the house.
7 National average selling price for new homes from the UK House Price Index, as calculated by the Office for National Statistics using data provided by HM Land Registry.
8 Value of the land cost for the land divided by the expected future income from the new house sold.
There will be a presentation to analysts and investors at 09:00 today, hosted by Group Chief Executive Dean Finch and Chief Financial Officer Jason Windsor.
Analysts who cannot attend in person can listen live via conference call by registering using the link below:
The presentation can be viewed via webcast using the link below:
An archived webcast of today’s presentation to analysts will be available at www.persimmonhomes.com/corporate beginning this afternoon.