TIDMPSN

RNS Number : 9582I

Persimmon PLC

18 August 2021

PERSIMMON PLC

HALF YEAR RESULTS FOR THE SIX MONTHSED 30 JUNE 2021

Strong trading performance; positive outlook reaffirmed ; creating sustainable value

Persimmon Plc today announces its half year results for the six months ended 30 June 2021.

Dean Finch, Group Chief Executive, said:

"Persimmon's first half performance has been robust. In particular, I am pleased we have delivered strong growth in legal completions whilst also achieving higher levels of build quality and customer satisfaction.

"We made good progress in the land market in the period, bringing over 10,000 plots of high quality land into the business, achieving good visibility of new outlet openings and providing momentum for our future growth. With c. 85 new outlets opening in the second half of the current year, we are improving availability and choice for our customers.

"We're managing the balance of inflationary pressures well and currently anticipate that our industry leading returns will remain resilient. Our forward sales position is c. 9% ahead of the same point in 2019, with our cumulative private sales rate over 20% above that of 2019 for the year to date.

"I would like to thank all my colleagues across the business who have achieved these results.

"Persimmon's high quality land holdings, disciplined land replacement strategy, healthy liquidity, experienced management team and continued resolve to drive improvements in build quality and customer service provide an excellent platform for its future success.

"Our ambition is to be seen by our customers as delivering both outstanding service and outstanding value. I am determined to build on the progress we have made and enhance our capability to consistently provide high quality homes which will help secure sustainable benefits for all of our stakeholders.

"We anticipate successfully delivering c. 10% growth in sales completions this year. The Group has a great platform and good momentum to deliver further disciplined growth into the medium term, creating value for all."

Highlights

 
                                                       H1 2021          H1 2020 
 New home completions                                    7,406            4,900 
                                          --------------------  --------------- 
 New home average selling price                     GBP236,199       GBP225,066 
                                          --------------------  --------------- 
 Total Group revenues(1)                             GBP1.84bn        GBP1.19bn 
                                          --------------------  --------------- 
 New housing operating margin(2)                         27.6%            26.6% 
                                          --------------------  --------------- 
 Profit before tax                                   GBP480.1m        GBP292.4m 
                                          --------------------  --------------- 
 Cash at 30 June                                     GBP1.32bn        GBP0.83bn 
                                          --------------------  --------------- 
 Current forward sales position                      GBP2.23bn        GBP2.48bn 
                                          --------------------  --------------- 
 Current customer satisfaction score(3)                  91.9%            89.6% 
                                          --------------------  --------------- 
 Dividend (per share)                        125p (March 2021)   40p (September 
                                                                          2020) 
                                            110p (August 2021)    70p (December 
                                                                          2020) 
                                          --------------------  --------------- 
 
 
 Strong platform for high quality growth 
 
 --   Experienced management team delivering high quality homes across 
       the Group's 31 housebuilding businesses. 
 --   A diverse UK-wide network, operating on c. 300 active outlets on 
       average during 2021, with a strong pipeline expected to deliver approximately 
       85 new outlets by the end of this year, with a similar number of 
       new outlets targeted to open in the first half of 2022. 
 --   High quality land holdings, with 85,771 plots owned and under control 
       at 30 June 2021 (December 2020: 84,174), with industry leading embedded 
       returns. 
 --   The Group brought 10,272 plots into the business in the period whilst 
       maintaining the Group's high quality return requirements, across 
       48 locations at a replacement rate of c. 140%. Exciting pipeline 
       of deals progressing. 
 --   The Persimmon Way is fully operational across the business focused 
       on delivering consistent high standards of build quality. 
 --   Pre-Covid build rates have been maintained for the last twelve months. 
 
 Industry leading financial performance 
 
 --   Good first half performance against the backdrop of the continuing 
       pandemic and the pandemic's impact in the first half of the prior 
       year - profit before tax of GBP480.1m (2020: GBP292.4m). 
 --   Average private sales rate for the period was over 30% ahead of 2020, 
       the increase reflecting the unprecedented site shutdowns in 2020 
       due to the pandemic, but was also c. 20% ahead of 2019. 
 --   New housing operating margin of 27.6%(2) for the six months to 30 
       June 2021 (2020: 26.6%). 
 --   The business is managing the balance of inflationary pressures being 
       experienced by the industry well. 
 --   GBP479.8m of net cash generation before capital returns of GBP398.7m 
       and land spend of GBP200.4m. 
 --   Underlying return on average capital employed(4) of 37.9% (December 
       2020: 29.4%). 
 --   Over the last 3 years, the Group's average underlying return on capital 
       employed has been 36.5% reflecting the sustainable performance of 
       the business. 
 --   After tax return on equity of 22.6%(5) (2020: 21.5%). 
 
 Focusing on our customers - build right, first time, every time 
 
 --   The Group is delivering increased volumes of legal completions and 
       at higher levels of build quality and customer service; the Group's 
       HBF customer satisfaction rating(3) being ahead of the five star 
       threshold since January 2020. 
 --   Continuing to improve consistency in build quality and customer service 
       remains a key focus for the business. 
 --   As part of the ongoing implementation of The Persimmon Way, the Group 
       is continuing to invest in improving quality assurance, with a 70% 
       increase in the number of Independent Quality Controllers across 
       the business from 31 December 2020. 
 --   The Group continues to invest in its people with increased training 
       and skills development, with for example, c. 400 of our site management 
       team registered to complete National Vocational Qualifications relevant 
       to their role. 
 
 Supporting sustainable communities 
 
 --   Strong sense of purpose supports the Group's sustainable business 
       model in delivering long-term sustainable benefits in the best interests 
       of all stakeholders through the cycle. 
 --   The wellbeing of the Group's workforce, customers and local communities 
       remains a top priority. 
 --   Covid-19 secure operating procedures continue maintaining the stringent 
       two metre social distancing rules. 
 --   The Group's private average selling price of GBP258,220 is c.15%(6) 
       below the UK national average. 
 --   Approximately 50% of homes sold into the owner occupier market were 
       to first time buyers. 
 --   Invested over GBP0.5bn in local communities in the last eighteen 
       months, covering the period since the pandemic began, delivering 
       over 3,500 homes to our local housing association partners. 
 --   The Group supports c. 86,000(7) jobs across our communities and within 
       our wider supply chain. 
 --   The Group's challenging science based targets, which align to the 
       Paris Agreement, are now fully accredited by the Science Based Target 
       Initiative. 
 --   Proud sponsor of Team GB and, through the Persimmon Charitable Foundation, 
       the Group supports local charities and community groups across the 
       UK, having donated c. GBP2.4m to over 1,300 local good causes over 
       the last eighteen months. 
 
 Capital return programme 
 
 --   235p per share paid in respect of the year ended 31 December 2020. 
 --   As announced in March 2021, the Board intends to revert to the pre-Covid 
       profile of capital return of two payments a year, with the payment 
       of the regular annual distribution of 125p per share being made in 
       early July 2022. 
 
 Outlook 
 
 --   Good forward sales of GBP2.23bn, including legal completions in the 
       second half so far, up c. 9% on the more normal trading year of 2019. 
 --   Cumulative average private weekly sales rate for the 33 weeks to 
       date is over 20% ahead of 2019. 
 --   As previously announced, we anticipate delivering c. 10% growth in 
       sales completions this year (FY 2020: 13,575 legal completions), 
       with further growth to come. 
 --   The Group is managing the inflationary effects in the market well 
       and we currently anticipate the Group's industry leading returns 
       will remain resilient supported by its high quality land holdings. 
 --   The Group maintains a strong balance sheet with healthy levels of 
       liquidity. 
 --   Persimmon's well-established strategy which recognises the cyclical 
       nature of the housing market by maintaining financial flexibility 
       and deploying capital at the appropriate time in the cycle, provides 
       a high quality foundation to secure superior long term sustainable 
       returns for all stakeholders. 
 
 Footnotes 
 1.   The Group's total revenues include the fair value of consideration 
       received or receivable on the sale of part exchange properties and 
       income from the provision of broadband internet services. Housing 
       revenues are the revenues generated on the sale of newly built residential 
       properties only. 
 2.   Stated on new housing revenue of GBP1,749.3m (2020: GBP1,102.8m) 
       and underlying profit from operations of GBP483.0m (2020: GBP293.2m) 
       calculated before goodwill impairment of GBP3.9m (2020: GBP1.6m). 
 3.   The Group participates in a National New Homes Survey, run by the 
       Home Builders Federation. The rating system is based on the number 
       of customers who would recommend their builder to a friend. 
 4.   12 month rolling average calculated on underlying operating profit 
       and total capital employed (including land creditors). Underlying 
       operating profit is stated before legacy buildings provisions of 
       GBP75.0m (December 2020: GBP75.0m) and goodwill impairment of GBP6.6m 
       (December 2020: GBP4.3m). 
 5.   12 month rolling profit after tax generated from the average of the 
       opening and closing total equity for the period. 
 6.   National average selling price for new build homes sourced from the 
       UK House Price Index as calculated by the Office for National Statistics 
       from data provided by HM Land Registry. 
 7.   Estimated using an economic toolkit. 
 
 
 For further information please contact: 
 
 Dean Finch, Group Chief Executive       Kevin Smith 
 Mike Killoran, Group Finance Director   Jos Bieneman 
 Persimmon Plc                           Ellen Wilton 
 Tel: +44 (0) 1904 642199                Tel: +44 (0) 20 7638 9571 
 

A presentation to analysts and investors will be available from 07.00 am on 18 August 2021. To view the presentation, please use the webcast link below:

Webcast link: https://edge.media-server.com/mmc/p/7xn5x3jf

There will also be a Q&A session with management, hosted by Group Chief Executive, Dean Finch and Group Finance Director, Mike Killoran via conference call at 09.00 am. Analysts may join the call by using the details below:

 
 Dial in:     +44 (0) 33 0551 0200 
 Passcode:    Persimmon 
 

An audiocast of the call will be available on www.persimmonhomes.com/corporate from this afternoon.

PERSIMMON PLC

RESULTS FOR THE SIX MONTHSED 30 JUNE 2021

CHAIRMAN'S STATEMENT

Persimmon has delivered a robust financial performance in the period, generating new housing revenue of GBP1.75bn in the last six months (2020: GBP1.10bn) and a profit before tax of GBP480.1m (2020: GBP292.4m). The business' diverse UK wide network of sites together with its resilient balance sheet, high quality land holdings and disciplined land replacement provide strong foundations for high quality growth. With The Persimmon Way, the Group's consolidated construction approach, now fully operational in the business providing further opportunity, we are confident that we can deliver high standards of build quality and customer satisfaction, consistently across our new homes whilst increasing our volumes.

Strategy

Persimmon builds communities and creates places where our customers wish to live and work. The Group has been pursuing a consistent strategy for a number of years, building a resilient liquidity position and high quality land holdings. This strategy, which recognises and creates resilience against the cyclical nature of the housing market, maintains financial and operational flexibility and deploys capital at the right time in the cycle. This ensures that the business is able to generate sustainable superior returns for the benefit of all of its stakeholders over the long-term.

Persimmon recognises it plays an important role in society. By following its strategy the Group has again demonstrated its resilience through the recent challenges associated with the ongoing pandemic and which has allowed the Group to be able to continue to contribute more widely to the communities it serves. I am pleased that we have taken important - and industry-leading - steps to address legacy cladding and leasehold issues. By acting and putting customers first we are continuing to work to help remove uncertainty and concern, providing support to local communities.

Capital Return Programme

The Group has now distributed 235p per share to shareholders in respect of the year ended 31 December 2020, after re-iterating its commitment to do so in March 2021. The Board accelerated the payment of the regular annual distribution of 125p per share as an interim dividend, to March 2021 (from early July 2021). In addition, on 13 August 2021, the Group accelerated the return of surplus capital in relation to the year ended 31 December 2020 by way of a payment of 110p per share, rather than making two payments of 55p per share, one to be paid in August 2021 and the second in December 2021 as had previously been indicated. This has returned the Group to distributing two capital return payments every 12 months, a year earlier than originally envisaged. There will be no further dividend payments in relation to the year ended 31 December 2020.

As indicated at the release of Persimmon's final results on 3 March 2021, the Board intends to continue this pre-Covid profile of capital return payments in 2022, being distributions in relation to the financial year ending 31 December 2021. The payment of the regular annual distribution of capital of 125p per share will be paid in early July 2022 and any surplus capital in relation to the financial year ended 31 December 2021 will be paid in late March/early April 2022. The value of the surplus capital return, as always, will be subject to continual assessment by the Board in line with the Group's strategy.

Board Changes

The Board is pleased to welcome Shirine Khoury-Haq who joined as an Independent Non-Executive Director from 1 July 2021. Shirine joined the Board's Audit, Risk and Nomination Committees on the same date.

Rachel Kentleton, Non-Executive Director, will step down from the Board on 31 August 2021 to concentrate on her executive responsibilities, having recently been appointed Chief Financial Officer of St. Modwen Properties Ltd. On behalf of the Board, I would like to thank Rachel for the significant contribution she has made over the last six years and wish her well in her new role. Shirine will succeed Rachel as Chair of the Audit Committee.

The Board would also like to take this opportunity to thank Persimmon's employees, workforce and suppliers for their hard work and commitment.

Persimmon is well positioned for the future with an experienced management team, a strong platform for high quality growth, and a resilient liquidity position and balance sheet. We are confident of the Group's future success.

Roger Devlin

Chairman

17 August 2021

CHIEF EXECUTIVE'S REVIEW

Introduction

The business continues to perform well, with new home sale completion levels approaching those seen in the first half of 2019, whilst also delivering higher levels of customer satisfaction. In the period, we delivered 7,406 legal completions (2020: 4,900), generating gross profit of GBP540.5m (2020: GBP345.2m) and with the Group's new housing operating margin up 100 basis points at 27.6%(1) (2020: 26.6%). I am particularly pleased that our current Home Builders Federation eight week customer satisfaction score continues to run ahead of the five-star threshold at 91.9%(2) and that within our results we saw a growth in private sales when compared to 2019.

We have also managed to deliver these results during a period of notable challenges. I would like to pay tribute to my colleagues across the business for the way they have managed the ongoing challenge presented by the pandemic and maintained strong build rates at improved levels of quality despite the restrictions. Beyond this, we have managed the cost inflation and labour shortages that are effecting the industry well, with our Brickworks, Tileworks and Space4 timber frame manufacturing facilities playing an important role in providing cost efficient security of supply. Alongside the price increases on home sales secured, the Group's high quality asset base, vertical integration and strong cost management have helped maintain industry-leading margins.

Five priorities

At the 2020 final results I commented that in my first six months in post I had been impressed by Persimmon's strengths and had identified areas for renewed focus. I set out five priorities for the business to build on these strengths and enhance our capabilities to become a builder consistently achieving a five-star rating in the HBF eight week customer survey. These priorities are:

 
 --   Build quality: our ambition is to build right, first time, every 
       time; 
 --   Reinforce trust in the brand: consistently trusted to deliver a home 
       to be proud of and a builder customers would readily recommend to 
       others; 
 --   Growth: through our improvements in build quality and increased focus 
       on customer care we will be strengthening our capability to deliver 
       more five-star homes in meeting customer demand; 
 --   Maintaining an industry leading financial performance: sustaining 
       our strong margins and returns and driving healthy profit and cash 
       generation; and, 
 --   Supporting sustainable communities: we will play an active role in 
       the imperative of achieving a net zero carbon economy, as well as 
       setting new biodiversity and sustainable community targets. 
 

In the five months since I set out these priorities we have made important progress in continuing to support the communities we serve, demonstrating our credentials as a responsible business, recognising the wider role we play in society. I am pleased that our carbon reduction targets have been recently fully accredited by the Science Based Target Initiative. We have continued to take action to meet these targets with a switch to fully renewable electricity for our offices and manufacturing facilities, saving over 1,600 tonnes of CO (2) a year.

In February we pledged to support leaseholders in multi-storey developments we built that required cladding removal and in obtaining the EWS1 form they need to sell their home. We created a GBP75m fund and our team has been in contact with management companies and building owners to ensure the required progress is being made, work having been completed on 2 buildings already. In addition, on 23 June we were pleased to lead the industry and agree voluntary undertakings with the Competition and Markets Authority in their leasehold enquiry, including extending our existing Right to Buy scheme for customers to purchase their freehold interest. We are pleased to have reached this agreement and provide certainty to leasehold customers.

Strong platform for high quality growth

I am determined that Persimmon maintains its industry-leading financial performance by incorporating the benefits of providing both outstanding service and outstanding value; a responsible company delivering both the new homes the country needs and opening up the opportunity of home ownership to thousands of families a year. I am more certain than ever that by making continued progress on these priorities, Persimmon will be well placed to deliver that ambition.

Four key features of the business provide a strong, resilient platform for a sustainable future and enable the Group to continue to develop and deliver the disciplined growth we seek. First, our senior management across the business and their teams are deeply experienced in the industry with the knowledge and skills to continue to develop the business and secure its future growth. Second, our disciplined approach to land replacement, investing in the places where our customers wish to live and work. Third, our focus on quality and service, placing the customer at the heart of our business, and lastly, the Group's strong balance sheet, high quality land holdings and healthy liquidity provide the platform from which our future growth will be secured.

Experienced management teams

With highly experienced senior management we continue to invest in our teams' skills and capabilities to secure improvements in operational performance and deliver the future high quality growth of the business.

Increased investment in training is an important part of our approach. The Persimmon Pathway, providing training modules tailored to individual colleagues' needs, continues to be rolled out across the business. Through this initiative, all site management colleagues are being offered the opportunity to secure an NVQ at a level appropriate to their role. In addition, some sales staff have already secured their external accreditation from the Institute of Sales Professionals, another industry first. The Persimmon Pathway will help nurture the Group's talent to deliver the senior management of the future.

Alongside this investment in our colleagues' skills development, we continue to introduce digital technology that supports them in their roles as well as providing enhanced assurance processes across the Group. For example, our leading site manager app provides an efficient digitised and standardised process to check the successful completion of all key stages of construction of each newly built home in line with our construction requirements as embodied within The Persimmon Way. Our customer portal has also been successfully piloted and will provide a means for purchasers to monitor their home's progress and to communicate easily and directly with their local team on any questions they have during both construction and after they move into their new home.

High quality land holdings

In line with the Group's strategy we continue to pursue disciplined land replacement, acquiring land in the right locations, to strengthen our platform for growth.

In the first six months of the year, 10,272 plots were brought into the business, across 48 locations whilst maintaining the Group's high quality return requirements. This land replacement rate of almost 140% enhances our already strong land holdings and provides a good pipeline of future opportunities.

Management has continued with the disciplined execution of the Group's strategy which recognises the strength of the Group's replacement land pipeline. The slower planning processes encountered over the last eighteen months coupled with the strong sales rates achieved has led to a reduction in the number of active outlets over the period. However, the Group has continued to progress its exciting opportunities in the land market and the acceleration of our disciplined land replacement activity will see around 85 new outlets being brought into construction by the end of the year, with a similar number of new outlets targeted to open in the first half of 2022.

This healthy profile of projected new outlet openings provides good momentum for further growth in output into the medium term. As we have experienced over the last eighteen months, continuing to secure planning permission promptly will of course be an important factor that influences the pace at which new outlets are brought forward, but our clear determination is to secure disciplined high quality land replacement opportunities to drive the Group's growth.

Improving quality; delivering value

Continuing to drive improvements in build quality and customer service is important for our future success. As a house builder, building for many what is their most expensive and coveted purchase, it is also the right thing to do. But I also firmly believe that the improvements we are pursuing will secure cost benefits and efficiency savings, delivering greater returns reflecting the enhanced value our homes bring.

In increasing our capabilities to consistently deliver homes that secure five-star customer satisfaction ratings and higher standards of build quality, our ambition is to build right, first time, every time and deliver both outstanding service and outstanding value. We have already made important progress, with the current eight-week customer satisfaction score remaining above the five-star threshold at 91.9%(2) and seeing a continuing reduction in the numbers of construction related items reported by our warranty providers.

I am determined that we build on this progress, to extend and embed it within the organisation and capture the cost efficiencies it will generate. Through The Persimmon Way we will continue to identify areas for further improvement and establish initiatives and new ways of working to secure the enhanced outcomes we want to see.

We have reviewed our technical drawings and standardised our construction guidance, improving consistency, driving best practice across the business which will simplify our processes and remove inefficiencies. This sits alongside our enhanced build quality standards with more exacting tolerances, above current industry norms.

We are making good progress in establishing what we believe will be the industry's largest team of independent inspectors with a 70% increase in the team since December 2020, well on course to meet our target of doubling this resource by the end of the year. They are empowered to ensure construction quality at key stages of build is achieving the Group's requirements through active intervention and guidance, and providing feedback to the construction management team enabling further focused skills training to be delivered where required.

As part of our drive to deliver outstanding service and be a home builder customers would readily recommend to others, we listen to the feedback provided by our customers. We have reviewed our house types and made elevation and specification changes that we believe reflect their views and have broadened the Group's standard house type range to better create the places where our customers would wish to live. We have continued to improve elements of our homes' construction to support our customers' levels of satisfaction whilst living in their new home which we anticipate will also reduce the need for our after-care services.

To reward the achievement of success we have established an internal awards programme to reward excellence in build quality. The Construction Excellence Awards, launched earlier this year, reward site teams that demonstrate innovation and outstanding management skill to achieve excellence on their development. An inaugural national winner will be selected later this year from the winners from each of our operating businesses. More broadly, management incentive programmes have been revised so that successful achievement of improvement in quality and customer care are appropriately rewarded.

Through our continued focus in these areas, I am confident these initiatives will help drive up build quality and customer service standards and secure efficiencies from our build right, first time, every time ambition. This will position the business well in anticipation of the introduction of the New Homes Quality Code once the current consultation process is complete.

Alongside the continued development of The Persimmon Way, we are also working across the industry to help drive up standards in crucial areas. We have, for example, signed the 'Building a Safer Future Charter' as an inaugural member, demonstrating our determination to drive safety improvements within our company and across the industry. We have also partnered with RoofCERT to drive the take up of this independent accreditation for roofers, holding briefings to encourage our sub-contractors to take advantage of the scheme and provide greater assurance within the industry.

Strong financial position

Persimmon has high quality land holdings and healthy liquidity with a cash position of over GBP1.3bn at the end of June. This provides confidence that allows resilient shareholder returns and a platform for disciplined growth. Persimmon has a long track record of delivering sustained and superior returns for the benefit of all its stakeholders and as part of continuing to successfully execute this strategy I am determined to maintain it. Whilst delivering future growth in output we also anticipate our industry leading returns will remain resilient, which will accommodate the anticipated increase in our build cost inflation this year of c. 4.5% to 5.0%, as previously reported. Persimmon's approach to land replacement continues to reinforce the high quality of returns embedded within our land holdings, providing continued surety as to the resilience of the Group's future delivery.

Outlook

The fundamentals of the housing market continue to remain positive with improving consumer confidence, low interest rates, and mortgage lenders that are keen to support customers to buy a home of their own. We expect a more normal seasonal trading pattern to reassert itself through this year compared with 2020, which was disrupted significantly by the pandemic. As such, 2019 provides a more appropriate comparison, reflecting a more typical trading pattern. Our forward sales position, including legal completions to date, is c. 9% ahead compared with 2019 and our cumulative average weekly private sales rate per site for the first 33 weeks of the year is over 20% stronger than 2019. Our forward sales include c. 6,500 homes to private owner occupiers at an average selling price of approximately GBP253,000. Customer enquiry levels remain strong and cancellation rates are in line with historical norms.

We continue to manage the inflationary pressures in the industry well. As predicted, whilst we have experienced increased cost inflation related to certain components of our supply chain, we currently anticipate our industry leading returns to remain resilient.

This is an exciting time for the Group. We have a strong platform for future growth with high quality land holdings, a diverse UK wide network and a business operating from approximately 300 outlets on average throughout the current year. We are expecting an increase of c. 10% in new home legal completions this year (FY 2020: 13,575 legal completions). With c. 85 new outlets opening by the end of this year and a similar number of new outlets targeted to open in the first half of 2022 , subject to the timely granting of planning permission, we have a good pipeline of new outlets coming through the business. This provides us with the opportunity to further strengthen our platform, build on this momentum, and secure additional disciplined growth in the coming years to provide the new homes that the country needs .

The longer-term fundamentals of the UK housing market remain strong. The Government has provided substantial intervention during this period of global crisis to help ensure the UK economy continues to progress. We remain mindful of the evolving situation, including the pandemic and its potential impact on the UK economy, consumer confidence, employment levels together with pressures on the Group's supply chain. However, Persimmon's well established strategy of maintaining financial flexibility and deploying capital at the right time in the cycle safeguards a strong balance sheet, supported by high quality land holdings and a healthy liquidity position to the benefit of all stakeholders. Persimmon's performance over the last eighteen months has demonstrated that successful execution of its strategy provides the business with the flexibility and resilience needed to manage not only the cyclical nature of the housing market but events that create similar market disruption. This, together with an agile and responsive management team, ensures that the business remains well set to continue to generate superior and sustainable returns for the benefit of all its stakeholders.

Dean Finch

Group Chief Executive

17 August 2021

Footnotes

1. Stated on new housing revenue of GBP1,749.3m (2020: GBP1,102.8m) and underlying profit from operations of GBP483.0m (2020: GBP293.2m) calculated before goodwill impairment of GBP3.9m (2020: GBP1.6m).

2. The Group participates in a National New Homes Survey, run by the Home Builders Federation. The rating system is based on the number of customers who would recommend their builder to a friend.

FINANCIAL AND BUSINESS REVIEW

Strong trading

Trading has been strong throughout the period with healthy levels of customer demand and improved selling prices across our regions. Total revenues(1) for the period were GBP1.84bn (2020: GBP1.19bn), with new housing revenue of GBP1.75bn (2020: GBP1.10bn). The Group delivered 7,406 new homes (2020: 4,900) at an average selling price of GBP236,199 (2020: GBP225,066), a 4.9% increase over the first half of 2020.

6,104 new homes were delivered to private owner occupiers (2020: 4,029) at an average selling price of GBP258,220, an increase of 4.9% from the first half of 2020 (2020: GBP246,208), reflecting both the mix of homes sold in the period and some improvement in achieved selling prices. In addition, 1,302 homes were provided to our housing association partners (2020: 871) at an average selling price of GBP132,959 (2020: GBP127,266).

The Group's gross profit for the period was GBP540.5m (2020: GBP345.2m) generating a new housing gross margin of 30.9% (2) (2020: 31.3%). The Group's well established strategy for land replacement supports the business' strong gross margin delivery, with land cost recoveries of 14.1% (3) of new housing revenues for the period (2020: 14.1%). The improved selling prices achieved have combined with good management of the cost inflation we have experienced during the period to continue to deliver industry leading returns.

Underlying operating profit for the Group was GBP483.0m (4) (2020: GBP293.2m) generating an underlying new housing operating margin of 27.6% (5) (2020: 26.6%).

The Group generated a profit before tax of GBP480.1m in the period (2020: GBP292.4m). This result reflects the Group's high quality asset base and the business' expertise in providing its local communities with the appropriate mix of house types in their desired locations.

Robust balance sheet

The Group has a strong balance sheet with high quality land holdings and healthy levels of liquidity. At 30 June 2021, as expected, the Group had work in progress of c. 4,800 equivalent units of new home construction (December 2020: c. 5,600), reflecting the strength of the Group's legal completions in part leading to the past period of lower active outlet availability, and the disruption to construction activity during the first lockdown in 2020 due to the pandemic. Our build rates continue at pre-Covid levels and we are focused on improving our stock position to increase availability and choice for our customers. With the security of availability of our in-house manufactured build components including closed panel timber frame kits, pre-manufactured roof cassettes, brick and roof tiles, the Group remains in a strong position to support its build programmes to deliver our targeted growth in output whilst also achieving a resilient closing stock position at the end of 2021.

The Group's defined benefit net pension asset has increased to GBP116.7m at 30 June 2021 (December 2020: GBP50.6m) largely due to the recovery in markets and good asset performance combined with the actuarial benefit from the increase in discount rates through the period. Total equity increased to GBP3,567.4m from GBP3,518.4m at 31 December 2020. Reported net assets per share of 1,117.9p represents a 1.4% increase from 1,102.7p at 31 December 2020. Underlying return on average capital employed(6) as at 30 June was 37.9% (December 2020: 29.4%), demonstrating the resilience of the business. Underlying basic earnings per share(4) for the first six months of 2021 was 123.8p, a 64.8% increase compared to the prior period (2020: 75.1p).

High quality land holdings

The Group increased its owned and under control land holdings from 84,174 plots at 31 December 2020 to 85,771 at 30 June 2021 to facilitate future growth in output. 42,039 of these plots have detailed planning consents and are under development.

In addition to these land holdings, the Group has c. 14,600 acres of strategic land in its portfolio with the potential to deliver over 100,000 new homes, including good visibility over c. 39,200 plots, c. 25,500 being plots held under option that are proceeding through planning and an additional c. 13,700 plots which are controlled and allocated in local plans.

Persimmon has continued to pursue its disciplined strategy of identifying opportunities to acquire land in areas where people wish to live and work, providing housing in areas with the most need. Whilst maintaining its disciplined land replacement strategy, the Group brought 10,272 plots into the business across 48 locations throughout the UK with 4,788 of these plots converted from our strategic land portfolio. At 30 June 2021, Persimmon's owned land holdings of 66,708 plots (2020: 70,208 plots) have an overall proforma gross margin(7) of c. 33% and a cost to revenue ratio of 11.4%(8) (2020: 12.5%).

In line with our expectations, we have incurred land spend of GBP200.4m in the period, including GBP90.5m of payments in satisfaction of deferred land commitments.

Healthy liquidity

The Group had a cash balance of GBP1.32bn at 30 June 2021 (December 2020: GBP1.23bn) with land creditors of GBP365.7m (December 2020: GBP329.3m), of which GBP97.2m is to be paid by the end of the year. The Group generated GBP479.8m of cash in the period, before returning GBP398.7m surplus capital to shareholders. The Group's healthy liquidity will provide further opportunity to continue to support the future growth of the business.

In addition, the Group has an undrawn Revolving Credit Facility of GBP300m which has a five year turn out to 31 March 2026.

Promoting good health and wellbeing

We recognise our responsibility to our colleagues, customers, and wider society and the health, safety and wellbeing of the Group's workforce, customers and the public has been paramount throughout this period. As such, the Group's Covid-secure operating protocols have been maintained. There are no changes to procedures on our sites or our manufacturing facilities and the stringent two metre social distancing rule remains in place. In addition, our sales offices are continuing to apply social distancing measures. Flexible working is being retained for our office based staff, enabling them to work from home where possible. Recognising the importance of our employees' mental health and wellbeing, the Group's senior management team completed mental health awareness training and we have approximately 160 trained mental health first aiders across the business.

Significant employment opportunities

Persimmon provides significant social value, creating important job and career opportunities both within its direct workforce and in the communities it serves, employing over 5,000 people across the UK and supporting approximately 86,000(9) jobs across its supply chain. The Group's results are a testament to their hard work, diligence and commitment.

Persimmon has continued to invest in its workforce providing c. 6,200 training days during the first half of the year, c. 2,300 of which were provided via in-house online courses. In the current academic year, the Group recruited c. 680 trainees and apprentices, providing them with key skills and on the job training covering a wide range of disciplines. A new graduate scheme has been launched, with the Group's first recruits starting in September 2021. In addition, Persimmon recently began working with the 'Volunteer it Yourself' organisation, rejuvenating local sports facilities and mentoring and upskilling young adults from more deprived areas. Persimmon will continue to offer opportunities for individuals from all walks of life to successfully develop their career at Persimmon, opportunities which are recognised by the Social Mobility Pledge, to which the Group is a signatory.

Having already adopted the principles of the Living Wage for our direct employees, the Group is now working towards full foundation accreditation through seeking similar commitments from our supply chain.

Building sustainable communities

The Group plays an important role creating places in support of sustainable communities in locations where people wish to live and work. Persimmon focuses on building "homes for all" with an average selling price in the owner occupier market which is c. 15% (10) below the UK national average. Approximately 50% of our private homes were sold to first time buyers. In the last eighteen months, covering the period since the pandemic began, the Group has invested over GBP0.5bn in local communities, delivering over 3,500 homes to our local housing association partners. In addition, the Persimmon Charitable Foundation donated c. GBP2.4m to over 1,300 local good causes over the same period.

FibreNest, the Group's ultrafast, full fibre broadband service, which is highly rated by our customers, is now more important than ever, allowing them to work from home and access other online services. Broadband connectivity from moving in day remains a key focus for the Group in delivering the highest levels of service to our customers. FibreNest is currently serving c.16,500 homes across 222 sites.

Helping to safeguard our environment

As a Group, we are committed to playing our part in reducing global greenhouse gas emissions. As such, the Group has set challenging carbon reduction targets, announced in March 2021. The Group is targeting to achieve net zero carbon emissions in our homes in-use by 2030 and across our operations by 2040. In addition, Persimmon has set interim science based carbon reduction targets to reduce carbon emissions from our own operations by 46.2% by 2030 and our indirect operations by 22% per m(2) completed floor area by 2030, in line with the Paris Agreement.

These science based targets have now been fully accredited by the Science Based Target Initiative and the business is developing roadmaps to deliver on these important goals. Emission reduction initiatives include the Group's regional demonstration project in Fulford, York, being run in conjunction with the University of Salford to develop a zero carbon home. Tenants will occupy the home once it is built. The true "in-use" carbon savings, as well as how well suited the home is for family living, will be measured and monitored. In addition, the Group is now purchasing 100% renewable energy for Persimmon's offices and manufacturing facilities saving over 1,600 tonnes of CO2 each year, has introduced electric vehicle options into its fleet and is investigating methods of reducing the business' red diesel consumption through increased digital technology, driver training and alternative fuels.(11)

The Group provides substantial green and diverse open space through its developments as an essential element in making places where communities can be supported to thrive. Over the last five years, Persimmon has planted almost half a million trees and created over 3,000 acres of public open space, enriching its communities and contributing to enhancing biodiversity.

Footnotes

1. The Group's total revenues include the fair value of consideration received or receivable on the sale of part exchange properties and income from the provision of broadband internet services. Housing revenues are the revenues generated on the sale of newly built residential properties only.

2. Stated on new housing revenues of GBP1,749.3m (2020: GBP1,102.8m) and gross profits of GBP540.5m (2020: GBP345.2m).

3. Land cost value for the plot divided by the revenue of the new home sold.

4. Stated before goodwill impairment of GBP3.9m (2020: GBP1.6m).

5. Stated on new housing revenue of GBP1,749.3m (2020: GBP1,102.8m) and underlying profit from operations of GBP483.0m (2020: GBP293.2m) calculated before goodwill impairment of GBP3.9m (2020: GBP1.6m).

6. 12 month rolling average calculated on underlying operating profit and total capital employed (including land creditors). Underlying operating profit is stated before legacy buildings provisions of GBP75.0m (December 2020: GBP75.0m) and goodwill impairment of GBP6.6m (December 2020: GBP4.3m).

7. Estimated weighted average gross margin based on assumed revenues and costs at 30 June 2021 and normalised output levels.

8. Land cost value for the plot divided by the anticipated future revenue of the new home sold.

9. Estimated using an economic toolkit.

10. National average selling price for new build homes sourced from the UK House Price Index as calculated by the Office for National Statistics from data provided by HM Land Registry.

11. The Group's approach to reporting its Sustainability Accounting Standards Board (SASB) disclosures as contained in the 2020 Annual Report (AR) is referenced as good practice by the Financial Reporting Council here: https://www.frc.org.uk/news/july-2021/frc-outline-necessary-action-for-effective-esg-rep and the Group has been notified that the FRC's thematic review of Streamlined Energy and Carbon Reporting (SECR) in the 2020 AR (page 68) is again to be referenced as good practice on publication of the FRC report in September 2021.

PERSIMMON PLC

Condensed Consolidated Statement of Comprehensive Income

For the six months to 30 June 2021 (unaudited)

 
                                                      Six months    Six months       Year to 31 
                                                      to 30 June    to 30 June    December 2020 
                                                            2021          2020 
 
                                              Note         Total         Total            Total 
                                                            GBPm          GBPm             GBPm 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Total revenue                                 3         1,840.8       1,190.5          3,328.3 
 Cost of sales                                         (1,300.3)       (845.3)        (2,433.9) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Gross profit                                              540.5         345.2            894.4 
 
 Analysed as: 
 Underlying gross profit                                   540.5         345.2            969.4 
 Legacy buildings provision                                    -             -           (75.0) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Other operating income                                      4.8           3.4              5.4 
 Operating expenses                                       (66.2)        (57.0)          (116.3) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Profit from operations                                    479.1         291.6            783.5 
 
 Analysed as: 
 Underlying operating profit                               483.0         293.2            862.8 
 Legacy buildings provision                                    -             -           (75.0) 
 Impairment of intangible assets                           (3.9)         (1.6)            (4.3) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Finance income                                              3.4           5.1              8.9 
 Finance costs                                             (2.4)         (4.3)            (8.6) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Profit before tax                                         480.1         292.4            783.8 
 
 Analysed as: 
 Underlying profit before tax                              484.0         294.0            863.1 
 Legacy buildings provision                                    -             -           (75.0) 
 Impairment of intangible assets                           (3.9)         (1.6)            (4.3) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Tax                                           4          (88.9)        (54.8)          (145.4) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Profit after tax (all attributable 
  to equity holders of the parent)                         391.2         237.6            638.4 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Other comprehensive income/(expense) 
 Items that will not be reclassified 
  to profit: 
 Remeasurement gains/(losses) 
  on defined benefit pension schemes           11           65.8        (54.9)           (42.5) 
 Tax                                           4          (16.0)           8.9              6.5 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 Other comprehensive income/(expense) 
  for the period, net of tax                                49.8        (46.0)           (36.0) 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Total recognised income for 
  the period                                               441.0         191.6            602.4 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 Earnings per share 
 Basic                                         5          122.6p         74.6p           200.3p 
 Diluted                                       5          122.1p         74.4p           199.6p 
-----------------------------------------  ---------  ----------  ------------  --------------- 
 
 

PERSIMMON PLC

Condensed Consolidated Balance Sheet

As at 30 June 2021 (unaudited)

 
                                             30 June     30 June   31 December 
                                                2021        2020          2020 
 
                                    Note        GBPm        GBPm          GBPm 
---------------------------------  -----  ----------  ----------  ------------ 
 Assets 
 Non-current assets 
 Intangible assets                             177.9       184.5         181.8 
 Property, plant and equipment                  93.4        86.7          90.4 
 Investments accounted for using 
  the equity method                              0.3         2.1           2.1 
 Shared equity loan receivables      8          35.9        50.2          41.7 
 Trade and other receivables                     3.0         7.1           4.0 
 Deferred tax assets                            10.7         6.7           7.7 
 Retirement benefit assets           11        116.7        23.1          50.6 
---------------------------------  -----  ----------  ----------  ------------ 
                                               437.9       360.4         378.3 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Current assets 
 Inventories                         7       2,815.6     3,227.3       2,901.3 
 Shared equity loan receivables      8          13.1        12.5          14.5 
 Trade and other receivables                   139.2        97.3          86.6 
 Current tax assets                             12.8           -           8.3 
 Cash and cash equivalents           10      1,315.2       828.9       1,234.1 
---------------------------------  -----  ----------  ----------  ------------ 
                                             4,295.9     4,166.0       4,244.8 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Total assets                                4,733.8     4,526.4       4,623.1 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Liabilities 
 Non-current liabilities 
 Trade and other payables                    (190.5)     (173.7)       (179.3) 
 Deferred tax liabilities                     (41.5)      (17.8)        (22.9) 
 Partnership liability                        (23.1)      (27.0)        (27.8) 
---------------------------------  -----  ----------  ----------  ------------ 
                                             (255.1)     (218.5)       (230.0) 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Current liabilities 
 Trade and other payables                    (830.8)     (848.8)       (794.2) 
 Partnership liability                         (5.5)       (5.5)         (5.5) 
 Legacy buildings provision                   (75.0)           -        (75.0) 
 Current tax liabilities                           -       (3.0)             - 
---------------------------------  -----  ----------  ----------  ------------ 
                                             (911.3)     (857.3)       (874.7) 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Total liabilities                         (1,166.4)   (1,075.8)     (1,104.7) 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Net assets                                  3,567.4     3,450.6       3,518.4 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Equity 
 Ordinary share capital issued                  31.9        31.9          31.9 
 Share premium                                  22.9        19.8          22.3 
 Capital redemption reserve                    236.5       236.5         236.5 
 Other non-distributable reserve               276.8       276.8         276.8 
 Retained earnings                           2,999.3     2,885.6       2,950.9 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Total equity                                3,567.4     3,450.6       3,518.4 
---------------------------------  -----  ----------  ----------  ------------ 
 

PERSIMMON PLC

Condensed Consolidated Statement of Changes in Shareholders' Equity

For the six months to 30 June 2021 (unaudited)

 
                                       Share      Share       Capital   Other non-distributable    Retained     Total 
                                     capital    premium    redemption                   reserve    earnings 
                                                              reserve 
 
                                        GBPm       GBPm          GBPm                      GBPm        GBPm      GBPm 
---------------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 Six months ended 30 
  June 2021: 
 Balance at 1 January 
  2021                                  31.9       22.3         236.5                     276.8     2,950.9   3,518.4 
 Profit for the period                     -          -             -                         -       391.2     391.2 
 Other comprehensive 
  income                                   -          -             -                         -        49.8      49.8 
 Transactions with owners: 
 Dividends on equity 
  shares                                   -          -             -                         -     (398.7)   (398.7) 
 Issue of new shares                       -        0.6             -                         -           -       0.6 
 Share-based payments                      -          -             -                         -         6.1       6.1 
 Balance at 30 June 
  2021                                  31.9       22.9         236.5                     276.8     2,999.3   3,567.4 
---------------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 
 Six months ended 30 
  June 2020: 
 Balance at 1 January 
  2020                                  31.9       19.2         236.5                     276.8     2,693.9   3,258.3 
 Profit for the period                     -          -             -                         -       237.6     237.6 
 Other comprehensive 
  expense                                  -          -             -                         -      (46.0)    (46.0) 
 Transactions with owners: 
 Issue of new shares                       -        0.6             -                         -           -       0.6 
 Exercise of share options/share 
  awards                                   -          -             -                         -       (0.2)     (0.2) 
 Share-based payments                      -          -             -                         -         2.4       2.4 
 Net settlement of share-based 
  payments                                 -          -             -                         -       (2.3)     (2.3) 
 Satisfaction of share 
  options from own shares 
  held                                     -          -             -                         -         0.2       0.2 
---------------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 Balance at 30 June 
  2020                                  31.9       19.8         236.5                     276.8     2,885.6   3,450.6 
---------------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 
 Year ended 31 December 
  2020: 
 Balance at 1 January 
  2020                                  31.9       19.2         236.5                     276.8     2,693.9   3,258.3 
 Profit for the year                       -          -             -                         -       638.4     638.4 
 Other comprehensive 
  expense                                  -          -             -                         -      (36.0)    (36.0) 
 Transactions with owners: 
 Dividends on equity 
  shares                                   -          -             -                         -     (350.7)   (350.7) 
 Issue of new shares                       -        3.1             -                         -           -       3.1 
 Exercise of share options/share 
  awards                                   -          -             -                         -       (0.2)     (0.2) 
 Share-based payments                      -          -             -                         -         7.7       7.7 
 Net settlement of share-based 
  payments                                 -          -             -                         -       (2.4)     (2.4) 
 Satisfaction of share 
  options from own shares 
  held                                     -          -             -                         -         0.2       0.2 
---------------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 Balance at 31 December 
  2020                                  31.9       22.3         236.5                     276.8     2,950.9   3,518.4 
---------------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 

PERSIMMON PLC

Condensed Consolidated Cash Flow Statement

For the six months to 30 June 2021 (unaudited)

 
                                                    Six months          Six months          Year to 31 
                                                    to 30 June          to 30 June       December 2020 
                                                          2021                2020 
 
 
 
                                            Note          GBPm                GBPm                GBPm 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash flows from operating activities: 
 Profit for the period                                   391.2               237.6               638.4 
 Tax charge                                  4            88.9                54.8               145.4 
 Finance income                                          (3.4)               (5.1)               (8.9) 
 Finance costs                                             2.4                 4.3                 8.6 
 Depreciation charge                                       7.2                 7.1                14.1 
 Impairment of intangible assets                           3.9                 1.6                 4.3 
 Legacy buildings provision                                  -                   -                75.0 
 Share-based payment charge                                4.7                 2.8                 6.4 
 Net imputed interest expense/(income)                     1.1               (0.6)               (1.4) 
 Other non-cash items                                    (4.2)               (3.9)               (7.3) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash inflow from operating activities                   491.8               298.6               874.6 
 Movement in working capital: 
 Decrease/(increase) in inventories                       90.5              (65.7)               265.0 
 Increase in trade and other receivables                (55.3)              (41.8)              (45.8) 
 Increase/(decrease) in trade and 
  other payables                                          49.1              (70.0)             (116.9) 
 Decrease in shared equity loan 
  receivables                                              9.2                 7.9                16.4 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash generated from operations                          585.3               129.0               993.3 
 Interest paid                                           (2.6)               (2.5)               (4.1) 
 Interest received                                         1.3                 2.6                 4.7 
 Tax paid                                               (92.2)             (129.7)             (228.4) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Net cash inflow/(outflow) from 
  operating activities                                   491.8               (0.6)               765.5 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash flows from investing activities: 
 Joint venture net funding movement                        1.8                   -                   - 
 Purchase of property, plant and 
  equipment                                              (9.3)              (10.1)              (18.9) 
 Proceeds from sale of property, 
  plant and equipment                                      0.5                 0.5                 0.8 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Net cash outflow from investing 
  activities                                             (7.0)               (9.6)              (18.1) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash flows from financing activities: 
 Lease capital payments                                  (1.8)               (1.8)               (3.6) 
 Payment of Partnership liability                        (3.8)               (3.6)               (3.6) 
 Net settlement of share-based 
  payments                                                   -                   -               (2.4) 
 Share options consideration                               0.6                 0.6                 3.1 
 Dividends paid                              6         (398.7)                   -             (350.7) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Net cash outflow from financing 
  activities                                           (403.7)               (4.8)             (357.2) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Increase/(decrease) in net cash 
  and cash equivalents                       10           81.1              (15.0)               390.2 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash and cash equivalents at the 
  beginning of the period                              1,234.1               843.9               843.9 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash and cash equivalents at the 
  end of the period                          10        1,315.2               828.9             1,234.1 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 

Notes

1. Basis of preparation

The half year condensed financial statements for the six months to 30 June 2021 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and with UK adopted International Accounting Standard ("IAS") 34 Interim Financial Reporting. The half year financial statements are unaudited, but have been reviewed by the auditors whose report is set out at the end of this report. This report should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2020, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union.

The comparative figures for the financial year ended 31 December 2020 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2020, as described in those financial statements.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2021:

 
 --   Amendments to IFRS 4 Insurance Contracts 
 --   Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark 
       reform - phase 2 
 

The effects of the implementation of these amendments have been limited to disclosure amendments where applicable.

The Group has not applied the following new amendments to standards which are endorsed but not yet effective:

 
 --   Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent 
      Liabilities and 
      Contingent Assets; and Annual Improvements 2018 - 2020 
 

The Group is currently considering the implication of these amendments with the expected impact upon the Group being limited to disclosures if applicable.

Going concern

The Group has performed well in the six months ended 30 June 2021. Persimmon's long term-strategy, which recognises the risks associated with the housing cycle by maintaining operational flexibility, investing in high quality land, minimising financial risk and deploying capital at the right time in the cycle, has equipped the business with strong liquidity and a robust balance sheet.

The Group delivered 7,406 new homes (2020: 4,900, 2019: 7,584) and generated profit before tax of GBP480.1m (2020: GBP292.4m, 2019: GBP509.3m) in the period. At 30 June 2021, the Group had a strong balance sheet with GBP1,315.2m of cash (2020: GBP828.9m, 2019: GBP832.8m), high quality land holdings and modest land creditors of GBP365.7m (December 2020: GBP329.3m). In addition, the Group has an undrawn Revolving Credit Facility of GBP300m, which has a five year term out to 31 March 2026.

The Group's forward order book, including legal completions taken in the second half, is c. 9% stronger than 2019, and c. 10% down on the elevated levels of 2020, which were impacted by pent up demand as the UK came out of the first period of lockdown. The cumulative average private sales reservation rate for the first 33 weeks of the year is c. 20% ahead of last year.

The Directors have reviewed the Group's principal risks, see note 12 of this announcement, and determined that there are no new principal risks facing the business to those disclosed in the financial statements for the year ended 31 December 2020. The Directors considered the impact of these risks on the going concern of the business when approving these full year financial statements for the Group.

Given the Group's trading performance during the first six months of the year, together with its strong sales rates and forward sales position, the Directors believe that the comprehensive review performed for the viability statement included in the Group's Annual Report 2020, which included three stress testing scenarios in line with one of the potential outcomes of the recent BEIS consultation, 'Restoring trust in audit and corporate governance', remains relevant and valid.

In addition, given the on-going uncertainties surrounding the pandemic, the Directors have assessed the impact of a complete shutdown of the housing market from the date of this announcement to 31 December 2022 on the resilience of the Group. This extreme scenario assumes that the Group does not receive any further sales receipts for the period whilst maintaining its current level of fixed costs.

Throughout this scenario, the Group maintains substantial liquidity with a positive cash balance and no requirement to access the Group's GBP300m Revolving Credit Facility.

Having considered the continuing strength of the UK housing market, the sales rates being achieved by the Group, the resilience of the Group's average selling prices, the Group's scenario analysis and significant financial headroom, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these condensed consolidated half year financial statements.

Estimates and judgements

The preparation of these half year condensed financial statements requires management to make judgements and estimations of uncertainty at the balance sheet date. The key areas where judgements and estimates are significant to the financial statements are land and work in progress (see note 7), shared equity loan receivables (see note 8), goodwill, brand intangibles, provisions and pensions as disclosed in note 3 of the Group's annual financial statements. The estimates and associated assumptions are based on management expertise and historical experience and various other factors that are believed to be reasonable under the circumstances.

Goodwill and brand intangibles

The key sources of estimation uncertainty in respect of goodwill and brand intangibles are disclosed in notes 3 and 13 of the Group's annual financial statements for the year ended 31 December 2020.

The goodwill allocated to the Group's acquired strategic land holdings is further tested by reference to the proportion of legally completed plots in the period compared to the total plots which are expected to receive satisfactory planning permission in the remaining strategic land holdings, taking account of historic experience and market conditions. This review resulted in an underlying impairment charge of GBP3.9m recognised during the period. This impairment charge reflects ongoing consumption of the acquired strategic land holdings and is consistent with prior years.

2. Segmental analysis

The Group has only one reportable operating segment, being housebuilding within the UK, under the control of the Executive Board. The Executive Board has been identified as the Chief Operating Decision Maker as defined under IFRS 8 Operating Segments.

3. Revenue

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Revenue from the sale of new housing                 1,749.3                 1,102.8               3,129.5 
            Revenue from the sale of part exchange 
             properties                                             89.2                    86.7                 196.2 
            Revenue from the provision of internet 
             services                                                2.3                     1.0                   2.6 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Revenue from the sale of goods and 
             services 
             as reported in the statement of 
             comprehensive 
             income                                              1,840.8                 1,190.5               3,328.3 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

4. Tax

Analysis of the tax charge for the period

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Tax charge comprises: 
            UK corporation tax in respect of the 
             current 
             period                                                 91.5                    56.7                 148.5 
            Adjustments in respect of prior years                  (3.8)                   (2.3)                 (6.4) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
                                                                    87.7                    54.4                 142.1 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Deferred tax relating to origination 
             and 
             reversal of temporary differences                       1.2                     0.4                   2.6 
            Adjustments recognised in the current 
             year 
             in respect of prior years' deferred 
             tax                                                       -                       -                   0.7 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
                                                                     1.2                     0.4                   3.3 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
                                                                    88.9                    54.8                 145.4 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

The Group's overall effective tax rate of 18.5% is lower than the mainstream rate of 19% as a result of a prior year tax credit arising from the removal of some uncertainties regarding the Group's prior year tax computations.

The applicable corporation tax rate remains at 19% in line with corporation tax rates effective from 1 April 2017. On 10 June 2021 a new statutory corporation tax rate was enacted into law increasing the tax rate to 25% with effect from April 2023. In relation to the Group's deferred tax calculations, all deferred tax balances have been revalued to reflect this increased rate.

Deferred tax recognised in other comprehensive income

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Recognised on remeasurement charges on 
             pension 
             schemes                                                16.0                   (8.9)                 (6.5) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

Tax recognised directly in equity

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Arising on transactions with equity 
            participants 
            Current tax related to equity settled 
             transactions                                              -                   (0.6)                 (1.1) 
            Deferred tax related to equity settled 
             transactions                                          (1.5)                     1.0                 (0.2) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
                                                                   (1.5)                     0.4                 (1.3) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

5. Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period (excluding those held in the employee benefit trust) which were 319.0m (June 2020: 318.7m; December 2020: 318.8m).

Diluted earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the period, giving a figure of 320.2m (June 2020: 319.5m; December 2020: 319.9m).

Underlying earnings per share excludes the legacy buildings provision charge and goodwill impairment. The earnings per share from continuing operations were as follows:

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
            Basic earnings per share                              122.6p                   74.6p                200.3p 
            Underlying basic earnings per share                   123.8p                   75.1p                220.7p 
            Diluted earnings per share                            122.1p                   74.4p                199.6p 
            Underlying diluted earnings per share                 123.3p                   74.9p                219.9p 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

The calculation of the basic and diluted earnings per share is based upon the following data:

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Underlying earnings attributable to 
             shareholders                                          395.1                   239.2                 703.5 
            Legacy buildings provision (net of 
             tax)                                                      -                       -                (60.8) 
            Goodwill impairment                                    (3.9)                   (1.6)                 (4.3) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Earnings attributable to shareholders                  391.2                   237.6                 638.4 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

At 30 June 2021 the issued share capital of the Company was 319,100,222 ordinary shares (30 June 2020: 318,941,892; 31 December 2020: 319,071,261 ordinary shares).

6. Dividends/Return of capital

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Amounts recognised as distributions to 
            capital 
            holders in the period: 
            2019 dividend to all shareholders of 
             40p 
             per share paid 2020                                       -                       -                 127.5 
            2019 dividend to all shareholders of 
             70p 
             per share paid 2020                                       -                       -                 223.2 
            2020 dividend to all shareholders of                   398.7                       -                     - 
            125p 
            per share paid 2021 
            Total capital return to shareholders                   398.7                       -                 350.7 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

After careful assessment of the capital needs of the business, the Board accelerated the payment of the regular annual distribution of 125 pence per share, as an interim dividend for the financial year ended 31 December 2020, to 26 March 2021 from early July 2021. In addition, on 13 August 2021, the Board accelerated the return of surplus capital in relation to the financial year ended 31 December 2020 by way of a payment of 110 pence per share, rather than making two payments of 55 pence per share, one to be paid in August 2021 and the second in December 2021 as had previously been indicated. This has returned the Group to distributing two capital return payments every 12 months, a year earlier than originally envisaged. There will be no further dividend payments in relation to the financial year ended 31 December 2020.

7. Inventories

 
                                                 30 June            30 June            31 December 
                                                    2021               2020                   2020 
 
                                                    GBPm               GBPm                   GBPm 
-------------------------------------  -----------------  -----------------  --------------------- 
            Land                                 1,701.0            1,896.6                1,722.1 
            Work in progress                     1,046.0            1,223.7                1,091.6 
            Part exchange properties                23.9               55.2                   40.9 
            Showhouses                              44.7               51.8                   46.7 
-------------------------------------  -----------------  -----------------  --------------------- 
                                                 2,815.6            3,227.3                2,901.3 
-------------------------------------  -----------------  -----------------  --------------------- 
 

The Group has conducted a further review of the net realisable value of its land and work in progress portfolio at 30 June 2021. Our approach to this review has been consistent with that conducted at 31 December 2020 and was fully disclosed in the financial statements for the year ended on that date. The key judgements and estimates in determining the future net realisable value of the Group's land and work in progress portfolio are future sales prices, house types and costs to complete the developments. Sales prices and costs to complete were estimated on a site by site basis. There is currently no evidence or experience in the market to inform management that expected selling prices used in the valuations are materially incorrect.

Net realisable value provisions held against inventories at 30 June 2021 were GBP20.3m (2020: GBP29.6m). Following the review, GBP4.6m of inventories are valued at fair value less costs to sell rather than historical cost (2020: GBP8.2m).

8. Shared equity loan receivables

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                                   to 30              to 30 June              December 
                                                                    June 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Shared equity loan receivables at 
             beginning 
             of period                                              56.2                    68.6                  68.6 
            Settlements                                            (9.2)                   (7.9)                (16.4) 
            Gains                                                    2.0                     2.0                   4.0 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Shared equity loan receivables at end 
             of period                                              49.0                    62.7                  56.2 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

All gains/losses have been recognised through finance income in profit and loss for the period of which GBP0.4m was unrealised (June 2020: GBP0.9m; December 2020: GBP1.5m).

9. Financial instruments

In aggregate, the fair value of financial assets and liabilities are not materially different from their carrying value.

Financial assets and liabilities carried at fair value are categorised within the hierarchical classification of IFRS 7 Revised (as defined within the standard) as follows:

 
                                                       30 June            30 June            31 December 
                                                          2021               2020                   2020 
                                                       Level 3            Level 3                Level 3 
 
                                                          GBPm               GBPm                   GBPm 
-------------------------------------------  -----------------  -----------------  --------------------- 
            Shared equity loan receivables                49.0               62.7                   56.2 
-------------------------------------------  -----------------  -----------------  --------------------- 
 

Shared equity loan receivables

Shared equity loan receivables represent loans advanced to customers secured by way of a second charge on their new home. They are carried at fair value. The fair value is determined by reference to the rates at which they could be exchanged by knowledgeable and willing parties. Fair value is determined by discounting forecast cash flows for the residual period of the contract by a risk adjusted rate.

There exists an element of uncertainty over the precise final valuation and timing of cash flows arising from these assets. As a result, the Group has applied inputs based on current market conditions and the Group's historic experience of actual cash flows resulting from such arrangements. These inputs are by nature estimates and as such, the fair value has been classified as level 3 under the fair value hierarchy laid out in IFRS 13 Fair Value Measurement.

Significant unobservable inputs into the fair value measurement calculation include regional house price movements based on the Group's actual experience of regional house pricing and management forecasts of future movements, weighted average duration of the loans from inception to settlement of ten years (2020: ten years) and a discount rate of 5% (2020: 5%) based on current observed market interest rates offered to private individuals on secured second loans.

The discounted forecast cash flow calculation is dependent upon the estimated future value of the properties on which the shared equity loans are secured. Adjustments to this input, which might result from a change in the wider property market, would have a proportional impact upon the fair value of the asset. Furthermore, whilst not easily accessible in advance, the resulting change in security value may affect the credit risk associated with the counterparty, influencing fair value further.

10. Reconciliation of net cash flow to net cash and analysis of net cash

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Cash and cash equivalents at beginning 
             of 
             period                                              1,234.1                   843.9                 843.9 
            Increase/(decrease) in net cash 
             equivalents 
             in cash flow                                           81.1                  (15.0)                 390.2 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Cash and cash equivalents at end of 
             period                                              1,315.2                   828.9               1,234.1 
            IFRS 16 lease liability                                (8.9)                   (9.3)                 (9.6) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Net cash at end of period                            1,306.3                   819.6               1,224.5 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

Net cash is defined as cash and cash equivalents, bank overdrafts, lease obligations and interest bearing borrowings.

11. Retirement benefit assets

As at 30 June 2021 the Group operated four employee pension schemes, being two Group personal pension schemes and two defined benefit pension schemes. Remeasurement gains and losses in the defined benefit schemes are recognised in full as other comprehensive income within the consolidated statement of comprehensive income. All other pension scheme costs are reported in profit or loss.

The amounts recognised in the consolidated statement of comprehensive income are as follows:

 
                                                              Six months              Six months               Year to 
                                                                                                                    31 
                                                              to 30 June              to 30 June              December 
                                                                    2021                    2020                  2020 
 
                                                                    GBPm                    GBPm                  GBPm 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Current service cost                                     0.9                     1.0                   1.9 
            Past service cost                                          -                       -                   0.5 
            Administrative expense                                   0.1                     0.2                   0.6 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Pension cost recognised as operating 
             expense                                                 1.0                     1.2                   3.0 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 
            Interest income on net defined benefit 
             asset                                                 (0.4)                   (0.7)                 (1.7) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Pension cost recognised as a net 
             finance 
             credit                                                (0.4)                   (0.7)                 (1.7) 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 
            Total defined benefit pension cost 
             recognised 
             in profit or loss                                       0.6                     0.5                   1.3 
            Remeasurement (gains)/losses 
             recognised in 
             other comprehensive expense                          (65.8)                    54.9                  42.5 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
            Total defined benefit scheme 
             (gain)/loss 
             recognised                                           (65.2)                    55.4                  43.8 
--------------------------------------------------  --------------------  ----------------------  -------------------- 
 

The amounts included in the balance sheet arising from the Group's obligations in respect of the Pension Scheme are as follows:

 
                                                            30 June            30 June            31 December 
                                                               2021               2020                   2020 
 
                                                               GBPm               GBPm                   GBPm 
------------------------------------------------  -----------------  -----------------  --------------------- 
            Fair value of pension scheme assets               714.2              662.3                  694.4 
            Present value of funded obligations             (597.5)            (639.2)                (643.8) 
------------------------------------------------  -----------------  -----------------  --------------------- 
            Net pension asset                                 116.7               23.1                   50.6 
------------------------------------------------  -----------------  -----------------  --------------------- 
 

The increase in the net pension asset to GBP116.7m (December 2020: GBP50.6m) is largely due to an increase in long-term corporate bond yields increasing the discount rate assumption applied to scheme obligations to 1.9% (December 2020: 1.4%).

12. Principal risks

 
 Pandemic Risk 
 Residual     Impact                                   Mitigation 
  Risk         An increase in the Covid-19              During the current pandemic, the Group's 
  High         transmission rate or a new               business continuity plans were deployed 
               pandemic occurring in the UK             swiftly, with Board oversight. A Covid-19 
  Change       may lead to a requirement for            Steering Committee continues to monitor 
  from year    our workforce and our customers          progress. 
  end          to comply with varying degrees           The Group has a highly experienced 
  No change    of social distancing measures            Group Health, Safety and Environment 
               or other measures introduced             Department with well-established Group 
               to curb the spread of the disease.       policies and procedures together with 
               This action may disrupt continuity       the ability to swiftly enhance or adapt 
               of site construction and access          safe operating protocols to mitigate 
               to labour and materials, leading         against specific risks. For example, 
               to significant delays to the             the Group quickly amended, tested and 
               Group's build programmes and             executed the Group's Covid-19 Risk 
               the legal completions of new             Assessments and associated procedures 
               home sales. The magnitude of             to mitigate the risk of transmission 
               any impact on the business               of the Covid-19 infection. 
               will depend on the extent of             (Also see Health and Safety risk). 
               the measures introduced as               During the Covid-19 pandemic, the Group 
               applied to our workforce, our            was able to rapidly transition to increased 
               customers, and wider society.            levels of remote working through enhanced 
               The pandemic presents an increased       use of technology. The Group's sales 
               health and safety risk to the            teams provided a continuous service 
               public, our workforce and customers      to our customers through our digital 
               on our sites and our employees           sales platform and other online tools, 
               in our offices and in our off-site       which enabled the business to continue 
               manufacturing facilities.                to take sales reservations and legal 
               Social distancing requirements           completions throughout the lockdown 
               have resulted in an increased            period. 
               number of our workforce working          Our remote working processes have been 
               remotely leading to additional           strengthened further through a number 
               IT and information security              of collaboration tools to enable effective 
               risks.                                   home working. 
               An increase in the Covid-19              These enhancements to the Group's remote 
               transmission rate or a new               working capabilities supports appropriate 
               pandemic may also adversely              numbers of our workforce to work from 
               impact the wider economy resulting       home when required, for example in 
               in reduced consumer confidence,          response to amendments to Government 
               lower demand and pricing for             guidance as changes to infection transmission 
               new homes, thereby impacting             rates occur. 
               revenues, margins, profits               The risks of increased use of remote 
               and cash flows and may give              working are mitigated through regular 
               rise to impairment of asset              communication with all users reminding 
               values.                                  them of potential issues, particularly 
                                                        for example in relation to phishing 
                                                        emails and other Cyber security threats. 
                                                        (Also see mitigation of Cyber and Data 
                                                        Risk). 
                                                        The impact of build delays caused by 
                                                        the lockdown were mitigated by our 
                                                        planned increase in levels of construction 
                                                        work in progress coming into the pandemic. 
                                                        This was the result of a strategic 
                                                        decision to provide greater stock availability 
                                                        to our customers, to improve quality 
                                                        and service levels, and in anticipation 
                                                        of increased demand ahead of the end 
                                                        of the Government's current Help to 
                                                        Buy scheme. The Group continues to 
                                                        aim to hold strong levels of investment 
                                                        in construction work in progress to 
                                                        provide an effective buffer to potential 
                                                        build delays. The Group's build programmes 
                                                        returned to pre-Covid levels by July 
                                                        2020 assisted by the Group's decision 
                                                        for all colleagues to continue to prepare 
                                                        for a strong return to site and not 
                                                        to take advantage of the Government's 
                                                        Job Retention Scheme. 
                                                        The vertical integration afforded by 
                                                        our own Brickworks, Space4 and Tileworks 
                                                        production mitigates the risk of potential 
                                                        supply chain disruption. 
                                                        The Group's long-term strategy recognises 
                                                        the risks associated with the cyclical 
                                                        nature of the housing market by minimising 
                                                        financial risk, maintaining operational 
                                                        and financial flexibility and deploying 
                                                        capital at the most appropriate time 
                                                        in the cycle. This strategy and management's 
                                                        preparedness, responsiveness and agility 
                                                        provide us with the sound fundamentals 
                                                        required to enter periods of demand, 
                                                        volume or pricing downturns in a position 
                                                        of strength with strong levels of liquidity 
                                                        and a robust balance sheet. 
             ---------------------------------------  ------------------------------------------------ 
 Strategy 
 Residual     Impact                                   Mitigation 
  Risk         The Group's strategy has been            The Group's strategy is agreed by the 
  Low          developed by the Board as the            Board at an annual strategy meeting, 
               most appropriate approach to             and undergoes a continuous and iterative 
  Change       successfully deliver the Group's         process of implementation, review and 
  from year    purpose and ambition and generate        adaptation at Board meetings and in 
  end          optimal sustainable value for            response to the evolution of conditions 
  No change    all stakeholders.                        in which the Group operates. 
               As political, economic and               The Board engages with all stakeholders 
               other conditions evolve, the             to ensure the strategy is communicated, 
               strategy currently being pursued         understood and effective. For example, 
               may cease to be the most appropriate     an Employee Engagement Panel, Gender 
               approach.                                Diversity Panel and employee engagement 
               If the Group's strategy is               surveys have been established to monitor 
               not effectively communicated             the cultural health of the organisation 
               to our workforce and / or engagement     and ensure strategy is understood and 
               and incentive measures are               implemented. 
               inappropriate, operational 
               activities may not successfully 
               deliver the Group's strategic 
               objectives. 
             ---------------------------------------  ------------------------------------------------ 
 UK's exit from the EU 
 Residual     Impact                                   Mitigation 
  Risk         Whilst the completion of the             We continue to monitor the political 
  High         free trade agreement between             situation, the UK economy and the housing 
               the UK and the EU has relieved           market through the review of external 
  Change       some immediate concerns, including       information and changes in the behaviour 
  from year    regarding increased customs              of our customer base. We robustly manage 
  end          duties on supplies imported              and control our work in progress and 
  No change    from the EU, the broader impact          land investment and our stringent investment 
               of these new trade arrangements          appraisals will continue, aiming to 
               has yet to be seen.                      ensure exposure to market disruption 
               The new arrangements may lead            is reduced. 
               to increased economic uncertainty        We routinely engage with our key suppliers 
               adversely impacting: consumer            and are currently working closely with 
               confidence, demand and pricing           them to ensure that our supply chain 
               for new homes, revenues, margins,        is not materially impacted. We will 
               profits and cash flows and               continue to employ effective tendering 
               may result in the impairment             processes to ensure cost impacts are 
               of asset values.                         mitigated as far as possible. The vertical 
               The new trade arrangements               integration afforded by use of our 
               may result in delays impacting           own Brickworks, Space4 and Tileworks 
               the availability and cost of             production will mitigate the availability 
               imported materials and components        and cost risks further. (Also see mitigation 
               within our supply chain.                 and review of Government policy and 
                                                        Labour and Resources) 
             ---------------------------------------  ------------------------------------------------ 
 National and regional economic conditions 
 Residual     Impact                                   Mitigation 
  Risk         The housebuilding industry               The Group's long-term strategy recognises 
  High         is sensitive to changes in               the cyclical nature of the housing 
               the economic environment, including      market and focuses on minimising financial 
  Change       unemployment, interest rates             risk, maintaining operational and financial 
  from year    and consumer confidence. Any             flexibility and judging the timing 
  end          deterioration in economic conditions     of capital deployment through the cycle. 
  No change    may have an adverse impact               We continually monitor lead indicators 
               on demand and pricing for new            on the future direction of the UK housing 
               homes, which could have a material       market so as to manage our exposure 
               effect on our revenues, margins,         to any future market disruption. We 
               profits and cash flows and               regularly review our pricing structure 
               result in the impairment of              to ensure it reflects local market 
               asset values.                            conditions and continuously monitor 
               Economic conditions in the               the Group's geographical spread. 
               land market may adversely affect         Our diversity of geographical markets 
               the availability of a sustainable        and our range of price points helps 
               supply of land at appropriate            us mitigate the effects of regional 
               levels of return.                        economic fluctuations. In the current 
                                                        climate, our strategy of providing 
                                                        'homes for all' at more affordable 
                                                        price points is proving successful. 
                                                        We control the level of build on site 
                                                        by closely monitoring our stock and 
                                                        work in progress levels. The Group's 
                                                        strong land holdings provide continuity 
                                                        of supply and disciplined and extensive 
                                                        due diligence processes are always 
                                                        undertaken prior to entering into any 
                                                        land investment decisions. These processes 
                                                        have regard to local market demands 
                                                        and conditions, and the Group's existing 
                                                        strategic and on market land holdings. 
                                                        All land additions are reviewed by 
                                                        the Executive Directors. 
             ---------------------------------------  ------------------------------------------------ 
 Government policy 
 Residual     Impact                                   Mitigation 
  Risk         Changes to Government policy             We monitor Government policy in relation 
  High         have the potential to impact             to the housing market closely. Consistency 
               on several aspects of our strategy       of policy formulation and application 
  Change       and operational performance.             remains very supportive of the housebuilding 
  from year    For example, changes to the              industry, encouraging continued substantial 
  end          planning system, changes in              investment in land, work in progress 
  No change    the tax regime, or further               and skills to support output growth. 
               amendment of the Help to Buy             Our strategic objectives, delivering 
               scheme or other housing policies         'homes for all', are aligned with Government 
               could have an adverse effect             priorities for increasing housing stock. 
               on revenues, margins and asset           The devolved Governments continue to 
               values. Changes to the planning          support the industry with their respective 
               system may also adversely impact         Help to Buy and other equity loan schemes. 
               the Group's ability to source            In England, a replacement Help to Buy 
               suitable land to deliver appropriate     scheme opened for customers to reserve 
               levels of return.                        new homes from 16 December 2020 and 
                                                        is available until 31 March 2023. In 
                                                        Scotland, the First Home Fund Scheme 
                                                        reopened on 1 April 2021. 
                                                        We actively manage our land investment 
                                                        decisions and levels of work in progress 
                                                        to mitigate exposure to external influences. 
             ---------------------------------------  ------------------------------------------------ 
 Mortgage availability 
 Residual     Impact                                   Mitigation 
  Risk         Any restrictions in the availability     We monitor Bank of England commentary 
  High         or affordability of mortgages            on credit conditions including the 
               for customers could reduce               monthly approvals for house purchases 
  Change       demand for new homes and affect          and UK Finance's monthly reports and 
  from year    revenues, profits, cash flows,           lenders' announcements for trends in 
  end          and asset values. There has              lending. We ensure that our investment 
  No change    been some tightening of lending          in land and work in progress is appropriate 
               criteria observed post Covid-19.         for our level of sales and our expectations 
                                                        for market conditions. The devolved 
                                                        Government's Help to Buy and other 
                                                        equity loan schemes, support customers 
                                                        to gain access to the housing market 
                                                        across the UK with competitive mortgage 
                                                        rates. 
             ---------------------------------------  ------------------------------------------------ 
 Health, safety and the environment 
 Residual     Impact                                   Mitigation 
  Risk         The health and safety of our             The Board has a very strong commitment 
  High         employees, subcontractors,               to health, safety and the environment, 
               customers and visitors to our            and managing the risks in this area 
  Change       construction sites is of paramount       effectively. This is implemented by 
  from year    importance to us. Accidents              comprehensive management systems and 
  end          on our sites could also lead             controls, managed by our highly experienced 
  No change    to reputational damage and               Group Health, Safety and Environment 
               financial penalties.                     Department, which includes detailed 
               Environmental breaches may               training and inspection programmes 
               result in financial penalties,           to minimise the likelihood and impact 
               undermine the creation of sustainable    of accidents or environmental breaches 
               communities and damage the               on our sites. The Group's established 
               reputation of the Group.                 policies and procedures can be quickly 
                                                        and effectively adapted to evolving 
                                                        health and safety guidance and regulation. 
                                                        This has been recently demonstrated 
                                                        with the swift Group wide adoption 
                                                        of Covid-19 secure operating procedures. 
                                                        While all reasonable steps are taken 
                                                        to reduce the likelihood of an incident, 
                                                        the potential impacts of any such incident 
                                                        are considered to be high. 
                                                        The Group's Health, Safety and Environment 
                                                        Department continues to enhance the 
                                                        Group's environmental processes and 
                                                        policies in partnership with the Group's 
                                                        Sustainability Committee and the wider 
                                                        operational teams. Regional Environmental 
                                                        Champions have been introduced to ensure 
                                                        compliance with these processes on 
                                                        site. 
             ---------------------------------------  ------------------------------------------------ 
 Labour and resources: skilled workforce, retention and succession 
 Residual     Impact                                   Mitigation 
  Risk         Access to an appropriately               We closely monitor our build programmes 
  Medium       skilled workforce is a key               to enable us to manage our labour requirements 
               requirement for the Group.               effectively. We operate in-house apprentice 
  Change       Rising UK house building activity        and training programmes, to support 
  from year    in recent years has increased            an adequate supply of skilled labour. 
  end          demand for skilled labour,               Our in-house Group Training Department 
  No change    which has increased pressure             provides standardised training that 
               on costs.                                is centrally controlled. 
               A skilled management team is             We are also committed to playing a 
               essential in maintaining operational     full and active role in external initiatives 
               performance and the implementation       to address the skills shortage such 
               of the Group's strategy.                 as the Home Building Skills Partnership, 
                                                        a joint initiative of the Construction 
                                                        Industry Training Board and the Home 
                                                        Builders Federation. 
                                                        Where appropriate, we also use the 
                                                        Group's Space4 modern method of construction 
                                                        which helps diversify resource requirements 
                                                        on site. 
                                                        The Group focuses on retaining its 
                                                        key staff through a range of measures, 
                                                        including the establishment of a Gender 
                                                        Diversity Panel, an Employee Engagement 
                                                        Panel, employee engagement surveys, 
                                                        further development of performance 
                                                        management frameworks, career management, 
                                                        and incentives. At the most senior 
                                                        level, the Nomination Committee oversees 
                                                        these processes and promotes effective 
                                                        succession planning. 
             ---------------------------------------  ------------------------------------------------ 
 Labour and resources: materials and land purchasing 
 Residual     Impact                                   Mitigation 
  Risk         Materials availability                   Materials availability 
  Medium       Recent growth in UK housebuilding        Our build programmes and our supply 
               and supply chain disruption              chain are closely monitored to allow 
  Change       caused by the Covid-19 pandemic          us to manage and react to any issues 
  from year    has led to an increased demand           and to help ensure consistent high 
  end          for materials which is placing           quality standards. We build strong 
  No change    greater pressure on some elements        relationships with key suppliers over 
               of the supply chain. This may            the long term to maintain consistency 
               continue to cause availability           of supply and cost efficiency. 
               constraints and increase cost            We have invested in expanding our off-site 
               pressures.                               manufacturing hub at Harworth, near 
                                                        Doncaster, to strengthen security of 
                                                        supply. Our brick plant and roof tile 
                                                        manufacturing facility provide a significant 
                                                        proportion of these materials to our 
                                                        sites. This complements our existing 
                                                        off-site manufacturing capability at 
               Build quality may be compromised         Space4, which produces timber frames, 
               if unsuitable materials are              highly insulated wall panels and roof 
               procured leading to damage               cassettes as a modern method of constructing 
               to the Group's reputation and            new homes. 
               customer experience. 
                                                        Our procurement team ensures that the 
                                                        Group's suppliers provide materials 
                                                        to the expected specification. Materials 
                                                        are inspected on receipt at site. 
                                                        Throughout construction, each of our 
                                                        new homes undergo 21 key stage checks 
               Land Purchasing                          by our Independent Quality Inspectors, 
               Land may be purchased at too             as part of 'the Persimmon Way' (the 
               high a price, in the wrong               Group wide consolidated approach to 
               location and at the wrong time           new home construction), and before 
               in the housing market cycle.             handover to the customer, our management 
                                                        teams perform a seven stage internal 
                                                        quality check process. 
 
                                                        Land Purchasing 
                                                        The Group has strong land holdings. 
                                                        All land purchases undergo stringent 
                                                        viability assessments performed by 
                                                        our dedicated land and planning teams 
                                                        and must meet specific levels of projected 
                                                        returns. 
                                                        The Board review and determine the 
                                                        appropriate timing of land purchases 
                                                        having regard to existing market conditions 
                                                        and sales rates. 
             ---------------------------------------  ------------------------------------------------ 
 Climate change 
 Residual     Impact                                   Mitigation 
  Risk         Should the effects of climate            We monitor our operational efficiency 
  Medium       change and the UK's transition           and direct environmental impact in 
               to a lower carbon economy lead           a number of ways including measuring 
  Change       to increasing national regulation        our scope 1 and scope 2 CO (2e) emissions 
  from year    this could cause additional              and the amount of waste we generate 
  end          planning delays, increase the            for each home we sell. 
  No change    cost and accessibility of materials      The Group maintains a climate change 
               required within our construction         risk register which ensures that the 
               process and potentially limit            management and mitigation of this risk 
               their supply or require additional       is embedded within the Group's risk 
               features which could significantly       management processes. The risk register 
               increase our costs.                      is updated at least once a year and 
               Changes in weather patterns              reviewed by the Group Sustainability 
               and the frequency of extreme             Manager, the Group Internal Audit Manager 
               weather events, particularly             and the Risk Committee. The Group has 
               storms and flooding, may increase        appointed a Group Sustainability Manager 
               the likelihood of disruption             bringing increased focus to both the 
               to the construction process.             risks and opportunities surrounding 
               The availability of mortgages            climate change. 
               and property insurance may               We systematically consider the potential 
               reduce in response to financial          impacts of climate change throughout 
               institutions considering the             the land acquisition, planning and 
               possible impacts relating to             build processes and work closely with 
               climate change. Changes in               planning authorities and other statutory 
               weather patterns may also lead           bodies to manage and mitigate these 
               to increased build costs and/or          risks. For example, we conduct full 
               development timeframes.                  environmental assessments for each 
                                                        parcel of land we acquire for development 
                                                        to ensure our activities fulfil all 
                                                        obligations, respecting the natural 
                                                        environment and the communities for 
                                                        which we are delivering newly built 
                                                        homes. We are keen to adopt Sustainable 
                                                        Urban Drainage Systems on all our new 
                                                        sites, subject to local planning requirements, 
                                                        to address the risk of flooding. 
                                                        Assisted by an independent expert, 
                                                        the Group has set science based carbon 
                                                        reduction targets for its Scope 1, 
                                                        2 and 3 emissions. Steering Groups 
                                                        have been established to plan and manage 
                                                        the Group's carbon reduction pathway 
                                                        to ensure these targets are met. 
                                                        The Group's low carbon home Steering 
                                                        group has launched a Regional Demonstration 
                                                        Project to understand the environmental, 
                                                        social and financial impacts of implementing 
                                                        the Future Homes Standard, monitoring 
                                                        the home's occupants to understand 
                                                        real life 'liveability' through time. 
                                                        Working with Energy House Laboratories 
                                                        at the University of Salford, we will 
                                                        monitor the true in-use carbon savings 
                                                        of the home, impacts to the homeowner 
                                                        as well as potential additional processes 
                                                        and costs to the build process. 
                                                        The aim of the project is to inform 
                                                        UK policy direction and debate on building 
                                                        low carbon homes cost effectively at 
                                                        scale. We will seek to identify the 
                                                        optimum opportunities when considering 
                                                        input costs versus carbon savings for 
                                                        each component used within the demonstration 
                                                        house. The demonstration house will 
                                                        be built in autumn 2021 in Fulford, 
                                                        York, North Yorkshire. 
                                                        We continually seek to strengthen our 
                                                        supply chain, for example, our off-site 
                                                        manufacturing facilities provide us 
                                                        with greater assurance of quality and 
                                                        supply, and use modern methods of construction 
                                                        and technology to assist the mitigation 
                                                        of climate change related risks. The 
                                                        Group procurement team maintain strong 
                                                        links with our suppliers delivering 
                                                        value through our supply chain by regular 
                                                        engagement and robust tendering processes. 
             ---------------------------------------  ------------------------------------------------ 
 Reputation 
 Residual     Impact                                   Mitigation 
  Risk         Damage to the Group's reputation         Management Supervision 
  Medium       could adversely impact on its            The Group has a strong commitment to 
               ability to deliver its strategic         appropriate culture and maintaining 
  Change       objectives.                              the high quality of its operations. 
  from year    For example, should governance,          Oversight from the Board seeks to ensure 
  end          build quality, customer experiences,     key processes are robust and any shortcomings 
  No change    operational performance, management      identified are promptly and effectively 
               of health, safety and the environment    addressed. 
               or local planning concerns               The Group's build quality and customer 
               fall short of our usual high             service processes are a key strategic 
               standards, this may result               priority and significant investment 
               in damage to customer, commercial        has been made in this area with the 
               and investor relationships               Customer Care Improvement Plan now 
               and lead to higher staff turnover.       embedded within the business. Persimmon's 
                                                        Homebuyer Retention scheme, introduced 
                                                        on 1 July 2019 and which is unique 
                                                        in the market, is proving to be both 
                                                        popular with customers and a key driver 
                                                        of behavioural change within the business. 
                                                        The Consumer Code for Housebuilders 
                                                        has highlighted this industry leading 
                                                        scheme as an area of good practice 
                                                        in relation to customer service. 
                                                        Where management oversight identifies 
                                                        inconsistencies in adherence to agreed 
                                                        processes, correcting actions are swiftly 
                                                        taken, for example in the case of incorrect 
                                                        cavity barrier installations where 
                                                        immediate action was taken through 
                                                        inspections and remediation. 
                                                        The Group has introduced the Persimmon 
                                                        Way in order to strengthen build quality 
                                                        and assurance processes and establish 
                                                        a consolidated, consistent Group wide 
                                                        approach to construction. The Group 
                                                        Construction Director is responsible 
                                                        for the implementation of the Persimmon 
                                                        Way and reports to the Group Chief 
                                                        Executive. Independent Quality Inspectors 
                                                        undertake inspections at 21 key stages 
                                                        of the construction process as well 
                                                        as continually assessing the finished 
                                                        quality of our new homes. 
                                                        The Group is to implement a process 
                                                        of complimentary external verification 
                                                        of the key processes to further support 
                                                        Group best practice. 
 
                                                        Stakeholder Relationships 
                                                        We take actions to maintain positive 
                                                        relationships with all of our stakeholders 
                                                        to minimise the risks of reputational 
                                                        damage and aim to comply with best 
                                                        practice in corporate governance. 
                                                        The Group continues to develop engagement 
                                                        activities with all stakeholders. For 
                                                        example, improved engagement with our 
                                                        employees is facilitated through the 
                                                        Employee Engagement and Gender Diversity 
                                                        Panels which meet regularly and report 
                                                        to the Board. The Group has also invested 
                                                        in a number of measures to improve 
                                                        customer experience by putting customers 
                                                        before volume. For example, significant 
                                                        investment in increased work in progress 
                                                        levels, the introduction of a Home 
                                                        Buyer Retention Scheme for customers, 
                                                        and investment in the development of 
                                                        a customer portal which is currently 
                                                        being piloted ahead of a wider Group 
                                                        roll-out. In addition, the Group continues 
                                                        to foster long term, mutually beneficial 
                                                        relationships with its suppliers. 
                                                        We actively support local communities 
                                                        in addressing housing needs, in creating 
                                                        attractive neighbourhoods and employing 
                                                        local people, both on our sites and 
                                                        in the supply chain. Significant contributions 
                                                        are made to local infrastructure and 
                                                        good causes within the communities 
                                                        in which the Group operates. The Group 
                                                        supports Team GB, the British Olympic 
                                                        team, and continues to pursue extensive 
                                                        community support programmes in partnership 
                                                        with Team GB, as part of the Group's 
                                                        Healthy Community charitable activities. 
             ---------------------------------------  ------------------------------------------------ 
 Regulatory compliance 
 Residual     Impact                                   Mitigation 
  Risk         The housebuilding industry               We operate comprehensive management 
  Medium       is subject to extensive and              systems to ensure regulatory and legal 
               complex laws and regulations,            compliance, including a suite of policies 
  Change       particularly in areas such               and procedures covering key areas of 
  from year    as land acquisition, planning            legislation and regulation. Where these 
  end          and the environment and building         systems identify inconsistencies in 
  No change    and fire safety regulations.             adherence to agreed processes, correcting 
               Ensuring compliance in these             actions are swiftly taken. For example, 
               areas can result in delays               our response to the incorrect cavity 
               in securing the land required            barrier installations where immediate 
               for development and in construction      action was taken through inspections 
               and increased costs of development.      and remediation. 
               Any retrospective changes in             We also carefully monitor evolving 
               these regulations or failure             regulations and consider the impact 
               to comply with them could result         on the Group and its responsibilities. 
               in remediation costs, damage             For example, the Group has been closely 
               to the Group's reputation and            assessing the impact of the changing 
               potential imposition of financial        fire safety regulations with respect 
               penalties.                               to multi storey, multi occupancy buildings, 
               The risk has increased from              particularly in respect of buildings 
               the 2019 annual report due               less than 18 metres in height, that 
               to the rapidly and continuously          may have used now-banned materials. 
               evolving regulations and practices       As practices have evolved, the Group 
               regarding fire safety of multi           has responded swiftly and committed 
               storey, multi occupancy buildings.       to perform fire safety remedial works 
                                                        where necessary on buildings that it 
                                                        currently owns and work with owners 
                                                        and other stakeholders on buildings 
                                                        that the Group developed. 
                                                        We engage extensively with planning 
                                                        authorities and other stakeholders 
                                                        to reduce the likelihood and impact 
                                                        of any delays or disruption. In addition, 
                                                        the Group controls sufficient land 
                                                        holdings to provide security of supply 
                                                        for medium term trading requirements. 
             ---------------------------------------  ------------------------------------------------ 
 Cyber and Data Risk 
 Residual     Impact                                   Mitigation 
  Risk         Failure of any of the Group's            We operate centrally maintained IT 
  Medium       IT systems, particularly those           systems with a fully tested disaster 
               in relation to customer information      recovery programme. 
  Change       and customer service could               All infrastructure is highly resilient, 
  from year    result in significant financial          with geographically diverse data centres 
  end          costs, business disruption               that have a series of backups. 
  No change    and reputational damage due              Regular awareness emails are delivered 
               to the loss, theft or corruption         to all users and the Group performs 
               of data either inadvertently             substantial online training activity 
               or via a targeted cyber-attack.          to increase awareness of cyber risks. 
                                                        Specialists within the Group's IT Department 
                                                        provide oversight on the suite of controls 
                                                        in place to ensure they are continually 
                                                        updated to mitigate evolving threats. 
                                                        The Group has detailed and robust systems 
                                                        development and implementation processes 
                                                        in place and a Cyber Incident Response 
                                                        Plan. An Information Security Steering 
                                                        Group has been established to provide 
                                                        oversight of the Group's cyber security 
                                                        strategy and to continue to promote 
                                                        a positive culture for cyber security. 
                                                        Periodic penetration testing is carried 
                                                        out through security partners to test 
                                                        the security of our perimeter network. 
                                                        An externally led review of the Group's 
                                                        cyber security processes and controls 
                                                        has been completed in 2020 and provided 
                                                        assurance over the Group's existing 
                                                        measures. 
                                                        Established GDPR compliant business 
                                                        processes and data management are maintained 
                                                        and regularly reviewed. 
             ---------------------------------------  ------------------------------------------------ 
 

Statement of Directors' responsibilities in respect of the Half Year Report

We confirm that to the best of our knowledge:

 
 --   the condensed set of financial statements has been prepared in accordance with UK adopted International 
      Accounting Standard 
      ("IAS") 34 Interim Financial Reporting 
 --   the Half Year Report includes a fair review of the information required by: 
      --      DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, 
               being an indication of important events that have occurred during 
               the first six months of the financial year and their impact on 
               the condensed set of financial statements and a description of 
               the principal risks and uncertainties for the remaining six months 
               of the year; and 
      --      DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, 
               being related party transactions that have taken place in the 
               first six months of the current financial year and that have 
               materially affected the financial position or performance of 
               the entity during that period; and any changes in the related 
               party transactions described in the last annual report that could 
               do so. 
 
 
 The Directors of Persimmon Plc and their function are listed below: 
 
 Roger Devlin                    Chairman 
 
 Dean Finch                      Group Chief Executive 
 
 Mike Killoran                   Group Finance Director 
 
 Nigel Mills                     Senior Independent Director 
 
 Rachel Kentleton                Non-Executive Director 
 
 Simon Litherland                Non-Executive Director 
 
 Joanna Place                    Non-Executive Director 
 
 Annemarie Durbin                Non-Executive Director 
 
 Andrew Wyllie                   Non-Executive Director 
 
 Shirine Khoury-Haq              Non-Executive Director 
 
 
 By order of the Board 
 
 Dean Finch                      Mike Killoran 
 
 Group Chief Executive           Group Finance Director 
 

17 August 2021

The Group's annual financial reports, half year reports and trading updates are available from the Group's website at www.persimmonhomes.com/corporate

INDEPENT REVIEW REPORT TO PERSIMMON PLC

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2021 which comprises the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Shareholders' Equity, the Condensed Consolidated Cash Flow Statement and the related notes 1 to 12. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2021 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the Group will be prepared in accordance with UK adopted IFRSs. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, is based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Ernst & Young LLP

Leeds

17 August 2021

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