Results Presentation 27 February 2018 51
Agenda Results Presentation 27 February 2018 Page Presented by • Overview 1 Jeff Fairburn • Review of operations 3 Jeff Fairburn • Outlook 13 Jeff Fairburn • Financial review 15 Mike Killoran • Summary 28 Jeff Fairburn Appendices 1 to 10 29 - 49 Results Presentation 27 February 2018
Overview • Outstanding performance 2016 Change 2017 Turnover £3,422.3m £3,136.8m + 9% Operating profits * £778.5m + 24% £966.1m Operating margin * 28.2% 24.8% + 3.4% Pre-tax profits * £782.8m + 25% £977.1m Earnings per share * 205.6p + 26% 258.6p Cash £913.0m n/a £1,302.7m Return on Average Capital Employed ** 51.5% 39.4% + 31% * Underlying performance presented before goodwill impairment of £1 1 .0m (201 6: £8.0m) ** 1 2 month rolling average pre goodwill impairment of £1 1 .0m (201 6: £8.0m) • Disciplined growth and value creation − turnover increased by 9% − 25% increase in underlying profit before tax Results Presentation 27 February 2018 1
Overview • Focused on execution of strategic plan � 16,043 new homes delivered to customers across the UK - increase of 872 over prior year � robust operational efficiency - operating margin up 340bps to 28.2% � forward sales revenue increased 7.5% to £2.03bn • Strong free cash generation - £806m of free cash generated pre capital returns, 18% increase on 2016 • Capital returns enhanced − commitment to additional payments of 125p per share (or c. £390m) each April for next three years − scheduled July payments of 110p per share maintained “Disciplined focus on the Group’s strategic priorities has ensured our operational performance has been excellent” Results Presentation 27 February 2018 2
Review of operations Page • Strategy 4 • Group overview 5 • Consented land 8 • Strategic land 9 • Current trading 10 • Return of surplus capital 12 • Outlook 13 Results Presentation 27 February 2018 3
Strategy to maximise long term shareholder value Growth to Optimise Long term optimal Disciplined Surplus cash capital scale in land capital efficiency of returns to regional investment generated operations shareholders markets Results Presentation 27 February 2018 4
Review of operations - Group overview • Strong UK sales network maintained - 197 new outlets opened in the year • Group’s regional structure strengthened � Nottingham opened in 2017, and Suffolk in January 2018 � Brickworks commissioned and delivering to site • Affordable family housing − 43% of private sales priced below £200,000 − c. 90% of sales are traditional house types • UK economy resilient • Mortgage market disciplined and competitive • Consumer confidence remains firm Regional Offices Results Presentation 27 February 2018 5
Review of operations - Group overview • Expansion in output - 872 additional legal completions • Underlying operating profits up 24% to £966.1m • 25% increase in pre working capital cash inflows, to £996.8m • Return on average capital employed of 51.5% - 31% improvement year on year 2016 Change 2017 Unit completions 15,171 + 6% 16,043 Average selling price £206,765 + 3% £213,321 Operating profits * £778.5m + 24% £966.1m Operating margin * 24.8% + 3.4% 28.2% Pre-tax profits * £782.8m + 25% £977.1m Net cash inflow from operations (pre working capital) £800.5m + 25% £996.8m Cash £913.0m n/a £1,302.7m Return on Average Capital Employed ** 51.5% 39.4% + 31% Net asset value per share 1036.6p 887.3p + 17% * Underlying performance presented before goodwill impairment of £1 1 .0m (201 6: £8.0m) ** 1 2 month rolling average pre goodwill impairment of £1 1 .0m (201 6: £8.0m) Results Presentation 27 February 2018 6
Review of operations - Group overview Product Profile - 12 months ended 31 December 2017: Unit Completions Average selling Average price Plots owned and Plot count completions change price change under control change 6,660 + 7% £190,037 + 7% 39,139 + 4% Persimmon North 42% 40% 4,829 + 3% £250,228 + 3% 29,272 + 2% Persimmon South 30% 30% 1,785 (13%) £351,218 + 9% 11,191 (5%) Charles Church 11% 11% 2,769 + 25% £116,068 + 9% 18,843 (1%) Partnerships 17% 19% Total 16,043 £213,321 98,445 Change vs 31 December 2016 + 6% + 3% +1% • Meeting demand across all regional markets • Growth in average selling price across both private sale brands • Charles Church continues to focus on executive housing in premium locations • 25% increase in volume delivered to affordable housing providers Results Presentation 27 February 2018 7
Review of operations - Consented land • Disciplined investment in compelling land acquisition opportunities − margin will be supported by reduction in owned plot cost to revenue ratio (Dec 2017: 13.2%; Dec 2016: 14.7%) − ex-strategic land content within consented land bank at c. 51% • Total plots owned and under control at 98,445 (Dec 2016: 97,187) − represents c. 6.1 years forward supply (2016: c. 6.4 years) − £602m of land payments (including land creditors) in the year (2016: £483m) − 17,301 new plots added to the consented land bank across 84 locations Results Presentation 27 February 2018 8
Review of operations - Strategic land • Conversion of strategic land supports long term � Strategic � � � interests acquired during superior returns 2017 • 2017 conversion represents 52% of total plot � � Strategic sites � � pulled through during 2017 consumption • 8,296 plots successfully converted in the year over 28 locations including: − Gartcosh, North Scotland - 169 plots − Sandbach, North West - 138 plots − Leeds, West Yorkshire - 46 plots • c. 920 acres of new strategic land interests acquired in the year • c. 16,100 acres held at 31 December 2017 Results Presentation 27 February 2018 9
Review of operations - Current trading • Encouraging start to 2018: − private sales rates c. 7% stronger over first eight weeks of 2017 − cancellation rates remain at historically low levels • Site activity: − increased output despite labour and key material constraints − greater use of Space4 product supporting higher build rates − Brickworks deliveries securing supply of key material − over 100 new outlets anticipated to be opened during H1 2018 − continued delays to new site starts due to planning inefficiencies • Pricing and incentives: − modest selling price improvement − part exchange remains attractive to home movers - 9% of customers utilised Results Presentation 27 February 2018 10
Review of operations - Current trading • Strong position in all local markets moving forwards 1 January Forward Sales Units ASP Revenue 2018 7,758 £174,799 £1,356.1m 2017 7,327 £168,429 £1,234.1m Movement +6% +4% +10% Current Forward Sales (inc. 8 weeks post year end) Units ASP Revenue 2018 10,900 £186,619 £2,034.1m 2017 10,525 £179,762 £1,892.0m Movement +4% +4% +8% Results Presentation 27 February 2018 11
Review of operations - Return of surplus capital • 25p per share, £77.1m, paid 31 March 2017 • 110p per share, £339.5m, paid 3 July 2017 Paid Paid Paid Paid Paid 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL Original Plan 75p 95p 110p 110p 115p 115p 620p Current Plan - scheduled 75p 70p 95p 110p 110p 110p 110p 110p 110p 900p 25p 25p - Feb 2017 increase - Feb 2018 increase 125p 125p 125p 375p 75p 70p 95p 110p 135p 235p 235p 235p 110p 1300p • Capital return per share increased by 110% over original plan to £13.00 • Scheduled annual payments of 110p per share maintained • Additional annual payments of 125p per share to be paid for each of the next three years Results Presentation 27 February 2018 12
Outlook - Overall market • UK economy remains resilient - employment levels strong • Disciplined lending and compelling mortgage offers supporting the market • Market uncertainties surrounding ongoing negotiations of the UK’s exit from the EU • Concerns over job security, wage growth and interest rate increases may undermine confidence in the market • Key challenges to output growth remain − delays in achieving implementable planning consents − availability of skilled trade resources and some key materials Results Presentation 27 February 2018 13
Outlook - Operational priorities • Continue to invest in our sales network across the UK where planning allows • Increase construction output across all regional markets to meet demand • Traditional site layouts utilising core house types • Further investment in off-site manufacturing capabilities • Disciplined investment in new high quality land opportunities • Strategic land investment and conversion • Mitigate market risks through disciplined control of capital and maintaining an optimal capital structure “Focused on delivering disciplined growth by meeting customer demand for well designed homes of quality in locations where people wish to live and work” Results Presentation 27 February 2018 14
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