TIDMPSN

RNS Number : 2430W

Persimmon PLC

17 August 2022

HALF YEAR RESULTS FOR THE SIX MONTHSED 30 JUNE 2022

Building an even stronger business whilst sustaining industry-leading performance

Persimmon Plc today announces its half year results for the six months ended 30 June 2022.

 
 --   Strong demand - average private sales rate for the period c.1% ahead 
       year on year, with robust forward sales position and re-iterate guidance 
       of 14,500 -15,000 legal completions this year; 
 --   6,652 new home completions (2021: 7,406) as Group rebuilds its outlet 
       position; 
 --   Robust financial performance delivering industry-leading margins and 
       ROCE; 
 --   Strong customer service, build quality and efficiency; 
 --   On track to achieve c.10% increase in active outlets by the end of 
       the current year with 60 outlets opened in the period; 
 --   8,829 plots brought into the business across 37 locations - a replacement 
       rate of over 130%; 
 --   Returned GBP750m to shareholders by July 2022. 
 

Highlights

 
                                                    H1 2022             H1 2021 
 New home completions                                 6,652               7,406 
                                         ------------------  ------------------ 
 New home average selling price                  GBP245,597          GBP236,199 
                                         ------------------  ------------------ 
 Total Group revenues(1)                          GBP1.69bn           GBP1.84bn 
                                         ------------------  ------------------ 
 New housing gross margin(2)                          31.0%               30.9% 
                                         ------------------  ------------------ 
 Profit before tax                                GBP439.7m           GBP480.1m 
                                         ------------------  ------------------ 
 Cash at 30 June                                  GBP0.78bn           GBP1.32bn 
                                         ------------------  ------------------ 
 Owned and under control land holdings         89,052 plots        85,771 plots 
  at 30 June 
                                         ------------------  ------------------ 
 Current forward sales position                   GBP2.32bn           GBP2.23bn 
                                         ------------------  ------------------ 
 Capital return (per share)               125p (April 2022)   125p (March 2021) 
                                           110p (July 2022)        110p (August 
                                                                          2021) 
                                         ------------------  ------------------ 
 

Dean Finch, Group Chief Executive, said:

"Persimmon continues to perform well. We are making important progress in quality, service, land investment opportunities and efficiencies to build an even stronger business, while continuing to deliver the strong financial returns that Persimmon is renowned for. Demand for our attractively priced, high quality homes has remained robust, with our average private sales rates for the period being c.1% ahead year on year. Our customer satisfaction score(3) is currently 92%. We have some exciting new sites coming into the business at industry-leading margins, with a land replacement rate for the period of over 130% and expanded production in our own brick, tile and timber frame factories, is further enhancing our supply resilience and cost efficiency, enabling us to re-iterate our guidance of 14,500 - 15,000 legal completions for the full year.

"We are on track to achieve a c.10% increase in our active outlets by the end of the current year as we work to rebuild our outlet position after a land buying pause three years ago and are tackling the on-going challenges in the planning system. We are stepping up proactive engagement with local authorities, enhancing our approach to developing attractive communities and raising the bar on design to help mitigate planning challenges. We continue to expect our volume delivery to be significantly higher in the second half of the year.

"Our combination of compelling affordability and high levels of service and build quality, coupled with our well-located sites provides a uniquely strong and sustainable customer proposition. It is by strengthening this proposition further that we will achieve our ambition of becoming Britain's best homebuilder for both customers and shareholders, consistently delivering high quality homes, excellent customer service and industry-leading financial returns."

Building an even stronger business

Robust first half performance

 
 --   Robust first half performance against strong comparator - profit before 
       tax of GBP439.7m (2021: GBP480.1m); 
 --   Managing the balance of inflationary pressures effectively - housing 
       gross margin(2) up on same period last year (31.0% vs 30.9%); 
 --   Average private sales rate for the period was c.1% ahead year on year; 
 --   Underlying return on average capital employed4 of 30.9% (December 
       2021: 35.8%) - over the last 3 years the Group's underlying return 
       on average capital employed has been 34.2% reflecting the sustained 
       success of the business; 
 --   235p per share paid in respect of the year ended 31 December 2021. 
 

Placing customers at the heart of our business

 
 --   Persimmon Way fully embedded across the business and operating well; 
 --   HBF 8-week customer satisfaction score(3) currently 92%; 
 --   Trustpilot score(5) improved by 30% since the start of the year; 
 --   NHBC Reportable Items(6) improved by 25% since December 2020; 
 --   Largest team of independent quality inspectors in the industry providing 
       quality assurance on each of our homes; 
 --   New product range, marketing rebrand and service enhancements are 
       strengthening our offer to customers to meet their aspirations and 
       earn their trust and loyalty; 
 --   Our average private selling price of GBP267,325 is c.20% below the 
       UK's national average selling price(7) , demonstrating the enduring 
       strength of our value offer to customers. 
 

Building a strong platform for success

 
 --   High quality land holdings, with 89,052 plots owned and under control 
       at 30 June 2022 (December 2021: 88,043), with a land cost to anticipated 
       revenue ratio(8) of 12.2% (December 2021: 11.9%); 
 --   Disciplined land replacement - 8,829 plots brought into the business 
       across 37 locations at industry-leading margins; 
 --   On track to achieve a c.10% increase in our active outlets by the 
       end of the year, with 60 opened in the first half and around 70 forecast 
       to open in the second half of the year, although on-going planning 
       delays continue to present risk; 
 --   Build rates improved by c.10% compared with pre-Covid levels; 
 --   Continuing to invest in our people - around 90% of our site colleagues 
       have achieved a relevant NVQ qualification (December 2020: 21%) and 
       we have been recognised as a Top 100 Apprentice Employer. 
 

Driving value

 
 --   BrickWorks, TileWorks and Space4 factories all increasing output, 
       providing supply resilience and efficiency; 
 --   Enhanced data and management tools introduced to drive greater consistency 
       in build times and quality; 
 --   Strengthened centralised procurement driving efficiencies and pooling 
       shared resource to manage supply challenges. 
 

Our communities

 
 --   Delivering homes around 30% more energy efficient than existing housing 
       stock making them more cost efficient to run for our customers; 
 --   Invested over GBP610m in local communities over the last 18 months, 
       delivering 3,632 homes to our housing association partners 
 --   Continuing to protect leaseholders from the cost of cladding removal; 
       five of our developments have secured EWS1 certificates. Proactively 
       engaging with Management Companies and their agents on works required 
       on all other identified developments built by Persimmon. 
 

Outlook

 
 --   Demand is strong with the Group's average private sales rate in the 
       period around 1% ahead year on year and a robust forward order book 
       of GBP2.32bn; 
 --   Robust start to the second half; average private sales rates for the 
       first seven weeks 11% down year on year against a strong comparator 
       and as we return to a more normal seasonal pattern, and up 8% on 2019 
       being the most recent, more typical trading year; 
 --   Currently over 90% forward sold for the current year; 
 --   Sales price inflation currently mitigating the cost inflation the 
       industry is experiencing; 
 --   Continue to target around 10% growth in outlets by the end of the 
       current year, with enhanced placemaking and design approach and proactive 
       local authority engagement expected to mitigate on-going planning 
       challenges; 
 --   Re-iterate our guidance of 14,500-15,000 completions for the full 
       year; 
 --   While near term uncertainties continue the longer-term fundamentals 
       remain strong. Our work to become Britain's best homebuilder will 
       build an even stronger and sustainable business delivering for customers 
       and shareholders alike. 
 

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 GBP1,633.7m (2021: GBP1,749.3m) and gross profits of GBP506.2m (2021: GBP540.5m).

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 goodwill impairment of GBP5.5m (December 2021: GBP6.2m).

5 Trustpilot is a digital review platform open to the public. Scores are based on all of the service reviews received on the platform.

6 A Reportable Item is an area of non-compliance with NHBC standards. The item is rectified fully before completion of the home.

7 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.

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

 
 For further information please 
  contact: 
 
 Dean Finch, Group Chief Executive   Kevin Smith 
 Jason Windsor, Chief Financial      Jos Bieneman 
  Officer 
 Persimmon Plc                       Ellen Wilton 
 Tel: +44 (0) 1904 642199            Tel: +44 (0) 20 7638 9571 
 

There will be an analyst and investor presentation at 09.00 today, hosted by Group Chief Executive, Dean Finch and Chief Financial Officer, Jason Windsor.

Analysts unable to attend in person may listen live via conference call by registering using the link below:

https://register.vevent.com/register/BIeec490705a9148279d0424360eec3206

The presentation can be viewed via the webcast using the link below:

https://edge.media-server.com/mmc/p/x3tot3oz

An archived webcast of today's analyst presentation will be available on www.persimmonhomes.com/corporate from this afternoon.

CHIEF EXECUTIVE'S REVIEW

Building an even stronger business

Overview

The business has performed well in the period. Demand has been strong, with the Group's average private weekly sales rate running at around 1% ahead year on year. In the period, we delivered 6,652 homes (2021: 7,406 homes) as we build up our outlet position whilst maintaining our disciplined approach to land investment opportunities. The Group's average selling price of GBP245,597 (2021: GBP236,199) has increased by 4% year on year resulting in housing revenue of GBP1.63bn (2021: GBP1.75bn). The Group's housing gross margin(1) was ahead of last year (31.0% vs 30.9%) as we managed the cost inflationary pressures impacting our industry effectively and underlying housing operating margin(2) was 27.0% (2021: 27.6%) reflecting the lower first half volumes on the rate of overhead recovery. The Group generated a profit before tax of GBP439.7m (2021: GBP480.1m) in the period.

We are continuing to deliver an industry-leading financial performance whilst building an even stronger business for the future. During the period, we delivered higher quality homes at improved levels of build efficiency. The Group's average build rates per site were around 10% higher than pre-Covid levels and our customer satisfaction survey score(3) continues to achieve a five-star rating. We are identifying exciting land investment opportunities whilst maintaining our disciplined approach. Our active outlet position is growing and the business remains on track to achieve a c.10% improvement in outlet numbers by the end of the year, despite the significant delays the industry is facing in achieving planning consents. Our off-site manufacturing facilities continue to provide both efficiency and resilience in supply, augmented by a strengthened and enhanced group procurement function.

We are building an even stronger business that will sustainably deliver the high quality homes our customers and stakeholders expect, while maintaining the industry-leading financial performance that underpins our superior shareholder returns.

Building sustained success

Earlier this year we launched a new Mission, Vision and Values statement to guide the next stage of our development. Our Mission is to build homes customers can rely on at prices they can afford. To achieve this our Vision is to be Britain's leading homebuilder, with quality and customer service at its heart, building the best value homes on the market in sustainable and inclusive communities. Our five Values provide the behaviours that will help us achieve this Mission and Vision: customer focused; value driven; team work; social impact; and excellence always.

We have a clear strategy to build an even stronger business while protecting Persimmon's great strengths. Reflecting the progress we have already made, I have refreshed and renewed the five priorities for the business that I launched shortly after I joined:

 
 --   Build quality: our ambition has grown from "build right, first time, 
       every time" to trusted to deliver five-star homes consistently; 
 --   Reinforcing trust: in seeking to build a compelling brand we will 
       place customers at the heart of our business, trusted to deliver the 
       best value homes customers can be proud of; 
 --   Disciplined growth: maintain our stringent appraisal, investing in 
       high quality land in the right areas; 
 --   Industry-leading financial performance: sustain our industry-leading 
       margins and returns and drive healthy profit and cash; 
 --   Supporting sustainable communities: actively part of the net zero 
       carbon economy transition, the communities we operate in and efforts 
       to widen opportunity. 
 

These enhanced ambitions and renewed priorities are not ends in themselves. They recognise that Persimmon has an important role to play in society, including as a responsible company and employer. It is by strengthening our ability to consistently deliver high quality and service that we will sustain Persimmon's industry-leading financial performance. In the next section I will explain the progress we have made and the further opportunities ahead.

Building an even stronger business

There are five key features of the business that will continue to drive our industry-leading performance and returns. First, quality and service remain our priorities and reflect our determination to bring the customer into the heart of the business. Second, a relentless focus on driving value helps underpin both our unique value proposition and strong returns. Third, our experienced management teams across the business are driving our new ambitions across the country. Fourth, our disciplined land replacement strategy is being augmented by site planning and design standards that deliver attractive communities and engagement with local authorities to drive timely outlet openings. And, fifth, maintaining the Group's strong financial position is crucial.

Customers at the heart of our business - quality and service

We are placing customers at the heart of our business and I am determined to continue to drive improvements in build quality and customer service. This is key to our continued success and will deliver efficiencies across the Group.

The Persimmon Way, the Group's construction excellence programme is fully embedded within the business and driving real results for our customers. We were delighted to be awarded a five-star rating in the annual HBF survey for the first time in Persimmon's history and have continued to track ahead of the five-star threshold for this survey year (current score: 92%(3) ). Further encouraging evidence of our progress is provided by our 9 month HBF customer satisfaction score(3) currently indicating a 25% improvement over the last two survey years. Our Trustpilot score(4) has also improved markedly, increasing by 30% since the start of the year.

Our team of 62 independent inspectors, which we believe to be the largest of its type in the industry, provides quality assurance at key stages of the build process for each home that we deliver. Working with the local management teams as an independent challenge they are helping to drive real improvement, with NHBC Reportable Items(5) improving by 25% over the last eighteen months. We are embedding our new approach through independent assurance and analysis to help drive improved standards. Construction Quality Reviews (CQR) are now conducted by the NHBC, analysing the root cause of any quality issues. Our CQR score is currently running nearly 3% ahead of last year's average. We are conducting an external audit of the Persimmon Way's implementation across all of our businesses to identify key learnings and share best practice across the Group. Our 'Building a Safer Future Charter Champion' accreditation involves thorough reviews of our approach across all of our businesses and is progressing well. Three of our site managers recently achieved the NHBC's coveted Pride in the Job Awards.

Our average private selling price of GBP267,325 is currently c. 20%(6) below the market average. In striving to consistently deliver high build quality and service excellence, we are seeking to offer customers best value they can trust. Our new product range, enhanced service and improved marketing is seeking to deliver options that meet customers' aspirations at whatever stage of home buying they are at. We want to earn customers' trust and then keep it through repeat sales for them and those they recommend us to.

FibreNest, our ultrafast full fibre broadband provider, continues to provide our customers with an important service. It currently has c.25,000 customers across over 310 sites.

Driving value

Alongside continually striving to build at a better quality more consistently, we are always seeking to drive value. The Group's build rates are around 10% higher than pre-Covid levels. As planned, we are expanding our vertical integration capabilities and driving efficiencies. The Group's Space4 factory provides us with an excellent advantage as timber frame homes can be built over 20% faster than traditionally built houses, and help mitigate challenges around the availability of some trades. In the period, 35% of the homes we delivered used timber frames. We have been actively reviewing where we can expand the use of timber frame construction. It is pleasing therefore that our Space4 factory has seen a 20% increase in its forward order book at the end of June, compared to the same time last year. We have recently submitted our pre-application plans to the local authority for our new Space4 factory and are targeting a full planning submission by the end of the year, to further increase production in the coming years.

In addition, through new analytical approaches and data-based management tools we are identifying areas for focus and opportunities for sharing best practice in build programmes across the business to continue to secure improvements.

Each of our off-site manufacturing facilities, BrickWorks, TileWorks and Space4, provide a resilience of supply alongside good cost efficiency. We are on track to expand production within BrickWorks by nearly 20% this year, with around 10% of further growth to come next year. Our TileWorks factory is projected to increase output by around 40% this year alone.

Our strengthened central procurement team has helped use our Group-wide purchasing power to secure enhanced deals with key suppliers and supported regions experiencing specific material issues by sharing available resources, including from centrally-held contingency stock on key at-risk items.

Land a nd planning

Our well-established strategy of disciplined land investment, acquiring sites with embedded industry-leading margins in areas of high demand, has continued. In the first six months of the year we brought 8,829 plots into the business, across 37 locations. Since 1 January 2021, we have brought around 30,000 plots across c.140 sites into our already strong land holdings, a replacement rate of around 140%. At 30 June 2022, the Group had 89,052 owned and under control plots (December 2021: 88,043), with a land cost to anticipated revenue ratio(7) of 12.2% (December 2021: 11.9%).

While we have been strengthening our land pipeline, the combination of strong demand in 2020 and 2021, with lower land additions in 2019 and 2020, meant we were operating from a relatively low number of outlets at the start of the year. We remain on track to open around 70 outlets in the second half of the year, growing our position by around 10% over the course of the year, providing a robust platform for the future.

It remains the case, however, that the delays and increasing complexity in the planning system are impacting our ability to open new outlets as promptly as we would like. We previously highlighted the impact of Natural England's nutrient neutrality guidance across the industry, with c.120,000 plots currently stalled in England. The Government's recent statement on the issue does not appear to offer the short-term clarity the industry hoped for, so we continue to see around 1,500 of our plots affected, a number that is likely to grow until a resolution is found. Around 90% of the Group's 2023 volume delivery has planning consent, with around 75% with detailed planning permission. Our operational teams are working hard to secure the remaining consents required and this will be an important factor in determining our 2023 volume delivery.

We have stepped-up our approach to working with local authorities and communities to secure planning consents as quickly as possible. Our new housing range and 'Placemaking Framework', which sets out planning and design techniques to develop attractive communities, provide local teams with enhanced tools to meet customer needs and local planning authority requirements. A new stakeholder engagement team is proactively engaging local authorities across the country to identify how we can help them deliver their key objectives. We are offering support on nutrient neutrality to help interested local authorities identify solutions and deal with the challenge and unlock permissions.

Strong financial position

Whilst building an even stronger business, we have continued to deliver an industry-leading performance and maintained Persimmon's high quality land holdings and healthy liquidity. After returning GBP399m to shareholders and investing GBP416m in high quality land opportunities, the Group held GBP0.78bn of cash at 30 June 2022 (December 2021: GBP1.25bn) with deferred land commitments of GBP135m to the end of the current year, providing a robust balance sheet to support resilient shareholder returns and provide a platform for disciplined growth. Underlying return on average capital employed(8) was 30.9% (December 2021: 35.8%), further demonstrating the strength of the business.

Experienced teams

Persimmon has highly experienced teams across the Group and the new management structure introduced at the beginning of the year is working well. We are determined to become an employer of choice and attract more of the best talent from across the industry. It is pleasing, therefore, that our recent Employee Survey's engagement score was 83%, up 5 points from last year and 11 points above our benchmark group. Our annual July pay reviews saw awards reflecting the unique cost of living challenges, with those on lower incomes receiving proportionately the highest increases.

We continue to increase our investment in training with a Learning Management System in place for all colleagues, as well as enhanced tailored training for specific areas. Around 90% of site management colleagues have received an NVQ qualification appropriate to their role (December 2020: 21%); 127 sales colleagues have completed the Sales Excellence programme in conjunction with the Institute of Sales Professionals. We were delighted to recently be recognised as a Top 100 Apprentice Employer and have invested in an academy in Bridgend alongside the local college to provide on-site classrooms for brickwork and joinery apprentices. This is a model we are looking to extend further.

I would also like to welcome Jason Windsor, our new Chief Financial Officer. Jason joined us from Aviva in mid-July. His wealth of experience from other industries complements the deep knowledge in the existing management team, further strengthening our operational leadership. I look forward to working with Jason in the years ahead.

Our communities

We recognise that as a responsible company we have an important role to play in society. We remain proud of our leadership in pledging 18 months ago to protect leaseholders from the cost of cladding removal and five of our developments have already secured successful EWS1 certificates. While we are in active discussions with the HBF and government to convert the commitments made in April's Developer Pledge into a legal document and resolve areas of current uncertainty, we continue to proactively engage with Management Companies and their agents on works required on all other identified developments built by Persimmon.

Building on our Germany Beck project, we have recently secured planning permission for a second Zero Carbon home at a site in Malmesbury. This is an example of our determination to develop building techniques and technology that meets the sustainability challenge in a way that is cost effective for customers. Our Priory Green and Moorland Grove sites are heated through the use of air source heat pumps demonstrating our drive to improve sustainability across our business. In addition, our homes are already around 30% more energy efficient than the existing housing stock, a gap that is likely to only increase and become even more important as cost of living pressures become ever more pressing.

Outlook

The UK housing market is strong with demand exceeding supply, relatively low interest rates (despite the recent rises) and good levels of mortgage availability. The Group's average private sales rates for the period were strong, c.1% ahead of last year. We have made a robust start to the second half; whilst the Group's average private sales rate for the first seven weeks is 11% down year on year as we return to more normal seasonal trading patterns, it is 8% up on 2019 being the most recent, more typical trading year and our cancellation levels remain low. Sales price inflation is currently mitigating the cost inflation the industry is experiencing. The current value of our forward sales is GBP2.32bn, with 10,542 homes (2021: 11,140), 5,992 of which are sold into the private market (2021: 6,471). The Group is over 90% forward sold for the full year. The average selling price of new homes forward sold to owner occupiers was c.GBP284,000, c.12% ahead of the prior year (2021: c.GBP253,000).

We re-iterate our year end volume expectations of delivering 14,500 to 15,000 units with forecast full year profit in line with our expectations. While risks remain, we expect to continue to grow our outlet position, opening around 70 outlets in the next six months, providing a robust platform for the future.

We are mindful of the scope for further interest rate raises as well as the broader economic challenges recently set out by the Governor of the Bank of England, alongside the wider industry challenges including the withdrawal of Help to Buy. The longer-term fundamentals of the UK housing market, however, remain strong. We will continue to focus on consistently delivering high quality homes and high standards of service, earning our customers' trust and loyalty in meeting their aspirations. Through the work we are doing in building an even stronger business, we are confident in our continued success, protecting and enhancing Persimmon's great strengths and driving sustainable industry-leading returns for shareholders.

Dean Finch

Group Chief Executive

16 August 2022

Footnotes

1 Stated on new housing revenues of GBP1,633.7m (2021: GBP1,749.3m) and gross profits of GBP506.2m (2021: GBP540.5m).

2 Stated on new housing revenue of GBP1,633.7m (2021: GBP1,749.3m) and underlying profit from operations of GBP440.7m (2021: GBP483.0m) calculated before goodwill impairment of GBP3.2m (2021: GBP3.9m).

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 Trustpilot is a digital review platform open to the public. Scores are based on all of the service reviews received on the platform.

5 A Reportable Item is an area of non-compliance with NHBC standards. The item is rectified fully before completion of the home.

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

8 12 month rolling average calculated on underlying operating profit and total capital employed (including land creditors). Underlying operating profit is stated before goodwill impairment of GBP5.5m (December 2021: GBP6.2m).

FINANCIAL REVIEW

Strong trading

Trading has been strong in the period with good levels of customer demand and cancellation rates remaining at historic lows throughout. The Group generated total revenues(1) of GBP1.69bn (2021: GBP1.84bn), with new housing revenue of GBP1.63bn (2021: GBP1.75bn).

Legal completions, as anticipated, were lower than the prior year and reflect delays in achieving planning consents on our new outlet openings. The Group delivered 6,652 new homes (2021: 7,406) at an average selling price of GBP245,597 (2021: GBP236,199) which is 4% higher year on year, reflecting the underlying strength of demand in the UK housing market.

The Group delivered 5,553 new homes to its private owner occupier customers (2021: 6,104) at an average selling price 3.5% higher than a year ago (2022: GBP267,325; 2021: GBP258,220), reflecting both improvement in selling prices achieved and the mix of homes sold in the period. To supplement this, the Group delivered 1,099 homes to our housing association partners (2021: 1,302) at an average selling price of GBP135,813 (2021: GBP132,959).

The increased prices achieved in the period have mitigated the impact of cost inflation of around 8 - 10%, with an increase in the Group's housing gross margin(2) compared with 2021 (2022: 31.0%; 2021: 30.9%). The Group's gross profit delivery for the period of GBP506.2m (2021: GBP540.5m) continues to be supported by the Group's well established land replacement strategy, with land cost recoveries(3) of 11.9% of new housing revenue for the period (2021: 14.1%).

Underlying housing operating margin(4) of 27.0% has been impacted by operating deleverage due to the reduced levels of completions (2021: 27.6%). Underlying operating profit(5) for the Group was GBP440.7m (2021: 483.0m).

The Group generated a profit before tax of GBP439.7m in the period (2021: GBP480.1m).

Robust balance sheet

The Group has a robust balance sheet with high quality land holdings, strong levels of work in progress investment and healthy levels of liquidity. The Group remains committed to investing in its future with, since 31 December 2021, land investment increasing by GBP304.6m to over GBP2.10bn and work in progress investment increasing by GBP172.0m to GBP1.23bn at 30 June 2022.

At 30 June 2022, the Group had work in progress of c.4,400 equivalent units of new home construction (December 2021: c.4,100), reflecting our c.10% increase in build rates compared with pre-Covid levels and with a focus on improving our stock position to increase availability and choice for our customers. The Group remains in a strong position to deliver a resilient closing stock position at the end of 2022 whilst achieving its targeted growth in output.

The Group's defined benefit net pension asset has increased to GBP209.4m at 30 June 2022 (December 2021: GBP148.8m) mainly reflecting gains through changes in assumptions to discount and inflation rates that have decreased the value placed on the schemes liabilities offset in part by falling asset values. Total equity decreased to GBP3,613.8m from GBP3,625.2m at 31 December 2021. Reported net assets per share of 1,131.7p represents a 0.4% decrease from 1,135.7p at 31 December 2021. Underlying return on average capital employed(6) as at 30 June was 30.9% (December 2021: 35.8%), demonstrating the resilience of the business and the investment made to support future growth and returns. Underlying basic earnings per share(5) for the first six months of 2022 was 107.5p, a 13.2% decrease compared to the prior period (2021: 123.8p).

High quality land holdings

The Group has continued to maintain its disciplined approach to land investment, identifying opportunities to acquire land in areas where new housing is most needed and in areas where people wish to live and work.

During the period the Group increased its owned and under control land holdings to 89,052, from 88,043 plots at 31 December 2021, with 37,771 of these plots benefitting from a detailed planning consents and are under development.

The Group brought 8,829 plots into the business across 37 locations throughout the UK with 3,626 of these plots converted from our strategic land portfolio. At 30 June 2022, Persimmon's owned land holdings of 72,036 plots (2021: 66,708 plots) have an overall proforma gross margin(7) of c.33% and a cost to revenue ratio of 11.8% (8) (2021: 11.4%).

To supplement these land holdings, the Group has c.13,300 acres of strategic land in its portfolio with the potential to deliver up to 100,000 new homes. This includes excellent visibility over c.30,500 plots of which c.21,050 being plots held under option that are proceeding through planning. The remaining c.9,450 plots are controlled and allocated in local plans.

During the period the Group incurred land spend of GBP415.9m, including GBP137.4m of payments in satisfaction of deferred land commitments.

Healthy liquidity

The Group had a cash balance of GBP0.78bn at 30 June 2022 (December 2021: GBP1.25bn) with land creditors of GBP493.8m (December 2021: GBP407.6m), of which GBP135.2m is expected to be paid by the end of the year. The Group generated GBP451.1m of cash from operating activities in the period (2021: GBP491.8m), before returning GBP399.0m surplus capital to shareholders and investing GBP387.7m in working capital (being principally c.GBP215m in net land and GBP172.0m in net work in progress). This investment in land and work in progress along with 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 4 year term out to 31 March 2026.

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. New housing revenues are the revenues generated on the sale of newly built residential properties only.

2 Stated on new housing revenues of GBP1,633.7m (2021: GBP1,749.3m) and gross profits of GBP506.2m (2021: GBP540.5m).

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

4 Stated on new housing revenue of GBP1,633.7m (2021: GBP1,749.3m) and underlying profit from operations of GBP440.7m (2021: GBP483.0m) calculated before goodwill impairment of GBP3.2m (2021: GBP3.9m).

5 Stated before goodwill impairment of GBP3.2m (2021: GBP3.9m).

6 12 month rolling average calculated on underlying operating profit and total capital employed (including land creditors). Underlying operating profit is stated before goodwill impairment of GBP5.5m (December 2021: GBP6.2m).

7 Estimated weighted average gross margin based on assumed revenues and costs at 30 June 2022 and normalised output levels.

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

PERSIMMON PLC

Condensed Consolidated Statement of Comprehensive Income

For the six months to 30 June 2022 (unaudited)

 
                                                Six months    Six months       Year to 31 
                                                to 30 June    to 30 June    December 2021 
                                                      2022          2021 
 
                                        Note         Total         Total            Total 
                                                      GBPm          GBPm             GBPm 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Total revenue                           3         1,688.6       1,840.8          3,610.5 
 Cost of sales                                   (1,182.4)     (1,300.3)        (2,526.7) 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Gross profit                                        506.2         540.5          1,083.8 
 
 
 Other operating income                                6.2           4.8              6.4 
 Operating expenses                                 (74.9)        (66.2)          (129.7) 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Profit from operations                              437.5         479.1            960.5 
 
 Analysed as: 
 Underlying operating profit                         440.7         483.0            966.7 
 Impairment of intangible assets                     (3.2)         (3.9)            (6.2) 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Finance income                                        4.6           3.4              9.9 
 Finance costs                                       (2.4)         (2.4)            (3.6) 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Profit before tax                                   439.7         480.1            966.8 
 
 Analysed as: 
 Underlying profit before tax                        442.9         484.0            973.0 
 Impairment of intangible assets                     (3.2)         (3.9)            (6.2) 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Tax                                     4          (99.9)        (88.9)          (179.6) 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Profit after tax (all attributable 
  to equity holders of the parent)                   339.8         391.2            787.2 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Other comprehensive income 
 Items that will not be reclassified 
  to profit: 
 Remeasurement gains on defined 
  benefit pension schemes                12           59.4          65.8             83.3 
 Tax                                     4          (16.7)        (16.0)           (24.8) 
-------------------------------------  -----  ------------  ------------  --------------- 
 Other comprehensive income for 
  the period, net of tax                              42.7          49.8             58.5 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Total recognised income for 
  the period                                         382.5         441.0            845.7 
-------------------------------------  -----  ------------  ------------  --------------- 
 
 Earnings per share 
 Basic                                   5          106.5p        122.6p           246.8p 
 Diluted                                 5          105.9p        122.1p           245.6p 
-------------------------------------  -----  ------------  ------------  --------------- 
 

PERSIMMON PLC

Condensed Consolidated Balance Sheet

As at 30 June 2022 (unaudited)

 
                                             30 June     30 June   31 December 
                                                2022        2021          2021 
 
                                    Note        GBPm        GBPm          GBPm 
---------------------------------  -----  ----------  ----------  ------------ 
 Assets 
 Non-current assets 
 Intangible assets                             176.2       177.9         175.6 
 Property, plant and equipment                 107.6        93.4          99.0 
 Investments accounted for using 
  the equity method                              0.3         0.3           0.3 
 Shared equity loan receivables      8          32.4        35.9          35.7 
 Trade and other receivables                     0.6         3.0           0.6 
 Deferred tax assets                             9.7        10.7           9.7 
 Retirement benefit assets           12        209.4       116.7         148.8 
---------------------------------  -----  ----------  ----------  ------------ 
                                               536.2       437.9         469.7 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Current assets 
 Inventories                         7       3,402.7     2,815.6       2,920.7 
 Shared equity loan receivables      8           7.9        13.1           9.9 
 Trade and other receivables                   151.5       139.2         123.9 
 Current tax assets                             32.5        12.8          21.4 
 Cash and cash equivalents           11        782.0     1,315.2       1,246.6 
---------------------------------  -----  ----------  ----------  ------------ 
                                             4,376.6     4,295.9       4,322.5 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Total assets                                4,912.8     4,733.8       4,792.2 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Liabilities 
 Non-current liabilities 
 Trade and other payables                    (267.6)     (190.5)       (203.4) 
 Deferred tax liabilities                     (74.0)      (41.5)        (54.6) 
 Partnership liability                        (18.9)      (23.1)        (23.8) 
---------------------------------  -----  ----------  ----------  ------------ 
                                             (360.5)     (255.1)       (281.8) 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Current liabilities 
 Trade and other payables                    (863.6)     (830.8)       (807.0) 
 Partnership liability                         (5.6)       (5.5)         (5.5) 
 Legacy buildings provision          9        (69.3)      (75.0)        (72.7) 
                                             (938.5)     (911.3)       (885.2) 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Total liabilities                         (1,299.0)   (1,166.4)     (1,167.0) 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Net assets                                  3,613.8     3,567.4       3,625.2 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Equity 
 Ordinary share capital issued                  31.9        31.9          31.9 
 Share premium                                  25.6        22.9          24.9 
 Capital redemption reserve                    236.5       236.5         236.5 
 Other non-distributable reserve               276.8       276.8         276.8 
 Retained earnings                           3,043.0     2,999.3       3,055.1 
---------------------------------  -----  ----------  ----------  ------------ 
 
 Total equity                                3,613.8     3,567.4       3,625.2 
---------------------------------  -----  ----------  ----------  ------------ 
 

PERSIMMON PLC

Condensed Consolidated Statement of Changes in Shareholders' Equity

For the six months to 30 June 2022 (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 2022: 
 Balance at 1 January 
  2022                         31.9       24.9         236.5                     276.8     3,055.1   3,625.2 
 Profit for the period            -          -             -                         -       339.8     339.8 
 Other comprehensive 
  income                          -          -             -                         -        42.7      42.7 
 Transactions with 
  owners: 
 Dividends on equity 
  shares                          -          -             -                         -     (399.0)   (399.0) 
 Issue of new shares              -        0.7             -                         -           -       0.7 
 Share-based payments             -          -             -                         -         4.4       4.4 
 Balance at 30 June 
  2022                         31.9       25.6         236.5                     276.8     3,043.0   3,613.8 
------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 
 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 
------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 
 Year ended 31 December 
  2021: 
 Balance at 1 January 
  2021                         31.9       22.3         236.5                     276.8     2,950.9   3,518.4 
 Profit for the year              -          -             -                         -       787.2     787.2 
 Other comprehensive 
  income                          -          -             -                         -        58.5      58.5 
 Transactions with 
  owners: 
 Dividends on equity 
  shares                          -          -             -                         -     (749.6)   (749.6) 
 Issue of new shares              -        2.6             -                         -           -       2.6 
 Share-based payments             -          -             -                         -         8.1       8.1 
 Balance at 31 December 
  2021                         31.9       24.9         236.5                     276.8     3,055.1   3,625.2 
------------------------  ---------  ---------  ------------  ------------------------  ----------  -------- 
 

PERSIMMON PLC

Condensed Consolidated Cash Flow Statement

For the six months to 30 June 2022 (unaudited)

 
                                                    Six months          Six months          Year to 31 
                                                    to 30 June          to 30 June       December 2021 
                                                          2022                2021 
 
                                            Note          GBPm                GBPm                GBPm 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash flows from operating activities: 
 Profit for the period                                   339.8               391.2               787.2 
 Tax charge                                  4            99.9                88.9               179.6 
 Finance income                                          (4.6)               (3.4)               (9.9) 
 Finance costs                                             2.4                 2.4                 3.6 
 Depreciation charge                                       7.5                 7.2                14.5 
 Impairment of intangible assets                           3.2                 3.9                 6.2 
 Share-based payment charge                                5.9                 4.7                 6.4 
 Net imputed interest income                               1.2                 1.1                 6.1 
 Other non-cash items                                    (4.2)               (4.2)               (7.9) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash inflow from operating activities                   451.1               491.8               985.8 
 Movement in working capital: 
 (Increase)/decrease in inventories                    (477.2)                90.5               (9.8) 
 Increase in trade and other receivables                (31.2)              (55.3)              (59.5) 
 Increase in trade and other payables                    113.3                49.1                37.4 
 Decrease in shared equity loan 
  receivables                                              7.4                 9.2                18.9 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash generated from operations                           63.4               585.3               972.8 
 Interest paid                                           (2.6)               (2.6)               (3.7) 
 Interest received                                         1.4                 1.3                 1.9 
 Tax paid                                              (109.5)              (92.2)             (186.2) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Net cash (outflow)/inflow from 
  operating activities                                  (47.3)               491.8               784.8 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash flows from investing activities: 
 Joint venture net funding movement                          -                 1.8                 1.8 
 Acquisition of a subsidiary                             (0.2)                   -                   - 
 Purchase of property, plant and 
  equipment                                             (13.7)               (9.3)              (20.9) 
 Proceeds from sale of property, 
  plant and equipment                                      0.7                 0.5                 0.9 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Net cash outflow from investing 
  activities                                            (13.2)               (7.0)              (18.2) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash flows from financing activities: 
 Lease capital payments                                  (1.8)               (1.8)               (3.3) 
 Payment of Partnership liability                        (4.0)               (3.8)               (3.8) 
 Share options consideration                               0.7                 0.6                 2.6 
 Dividends paid                              6         (399.0)             (398.7)             (749.6) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Net cash outflow from financing 
  activities                                           (404.1)             (403.7)             (754.1) 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 (Decrease)/increase in net cash 
  and cash equivalents                       11        (464.6)                81.1                12.5 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash and cash equivalents at the 
  beginning of the period                              1,246.6             1,234.1             1,234.1 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 Cash and cash equivalents at 
  the end of the period                      11          782.0             1,315.2             1,246.6 
-----------------------------------------  -----  ------------  ------------------  ------------------ 
 

Notes

1. Basis of preparation

The half year condensed financial statements for the six months to 30 June 2022 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 2021, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and UK adopted IFRS.

The comparative figures for the financial year ended 31 December 2021 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 2021, as described in those financial statements.

The following relevant UK endorsed new amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022:

 
 --   Amendments to IFRS 1 First-time Adoption of IFRS; IFRS 9 Financial 
       Instruments; IAS 41 Agriculture; and Annual Improvements to IFRS 
       2018 - 2020 
 --   Amendments to IAS 37 Onerous Contracts 
 --   Amendments to IAS 16 Property, Plant and Equipment 
 --   Amendments to IFRS 3 Reference to the Conceptual Framework 
 

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:

 
 --   IFRS 17 Insurance Contracts, including Amendments to IFRS 17 
       and Initial Application of IFRS 17 and IFRS 9 - Comparative Information 
 

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 2022. 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 6,652 new homes (2021: 7,406) and generated profit before tax of GBP439.7m (2021: GBP480.1m) in the period. At 30 June 2022, the Group had a strong balance sheet with GBP782.0m of cash (2021: GBP1,315.2m), high quality land holdings and land creditors of GBP493.8m (December 2021: GBP407.6m). In addition, the Group has an undrawn Revolving Credit Facility of GBP300m, which has a four year term out to 31 March 2026.

The Group's forward order book, including legal completions taken in the second half, is c.4% stronger than 2021.

The Directors have reviewed the Group's principal risks, see note 13 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 2021. 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 2021 remains relevant and valid.

In addition, the Directors have assessed the impact of a severe but plausible downside scenario for the housing market, from the date of this announcement to 31 December 2023, on the resilience of the Group. This scenario assumes a c.44% reduction in volumes and a c.14% reduction in average selling prices through to 31 December 2023 along with the likely effectiveness of mitigating actions that would be executed by the Directors. The combined impact results in a c.51% fall in the Group's housing revenues. The assumption used in this scenario reflects the experience management gained during the Global Financial Crisis from 2007 to 2010, it being the worst recession seen in the housing market since World War Two. 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 and note 10), 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 2021.

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 GBP3.2m 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 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Revenue from the sale of new 
             housing                                        1,633.7                  1,749.3                   3,449.7 
            Revenue from the sale of part 
             exchange 
             properties                                        50.9                     89.2                     155.4 
            Revenue from the provision of 
             internet 
             services                                           4.0                      2.3                       5.4 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Revenue from the sale of goods 
             and services 
             as reported in the statement of 
             comprehensive 
             income                                         1,688.6                  1,840.8                   3,610.5 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

4. Tax

Analysis of the tax charge for the period

 
                                                         Six months               Six months                   Year to 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Tax charge comprises: 
            UK corporation tax in respect of 
             the 
             current period                                    98.6                     91.5                     181.2 
            Adjustments in respect of prior 
             years                                                -                    (3.8)                     (8.3) 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
                                                               98.6                     87.7                     172.9 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Deferred tax relating to 
             origination 
             and reversal of temporary 
             differences                                        1.3                      1.2                       5.4 
            Adjustments recognised in the 
             current 
             year in respect of prior years' 
             deferred 
             tax                                                  -                        -                       1.3 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
                                                                1.3                      1.2                       6.7 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
                                                               99.9                     88.9                     179.6 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

The Group's overall effective tax rate for the period of 22.2% is higher than the mainstream corporation tax rate of 19%, and reflects the additional 4% Residential Property Developer Tax ("RPDT") on profits arising from residential property activity with effect from 1 April 2022. This additional tax rate was enacted in the current period and accordingly the effective tax rate includes the effect of revaluing deferred tax assets and liabilities at this higher rate. The RPDT will add to the increased mainstream corporation tax rate of 25% which is legislated to take effect from April 2023.

Deferred tax recognised in other comprehensive income

 
                                                            Six months               Six months                   Year 
                                                                 to 30               to 30 June                     to 
                                                             June 2022                     2021                     31 
                                                                                                              December 
                                                                                                                  2021 
 
                                                                  GBPm                     GBPm                   GBPm 
------------------------------------------------  --------------------  -----------------------  --------------------- 
            Recognised on remeasurement charges 
             on 
             pension schemes                                      16.7                     16.0                   24.8 
------------------------------------------------  --------------------  -----------------------  --------------------- 
 

Tax recognised directly in equity

 
                                                         Six months               Six months                   Year to 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Arising on transactions with 
            equity 
            participants 
            Current tax related to equity 
             settled 
             transactions                                         -                        -                       0.1 
            Deferred tax related to equity 
             settled 
             transactions                                       1.5                    (1.4)                     (1.8) 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
                                                                1.5                    (1.4)                     (1.7) 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

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 319.2m (June 2021: 319.0m; December 2021: 319.0m).

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 320.8m (June 2021: 320.2m; December 2021: 320.2m).

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 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
            Basic earnings per share                         106.5p                   122.6p                    246.8p 
            Underlying basic earnings per 
             share                                           107.5p                   123.8p                    248.7p 
            Diluted earnings per share                       105.9p                   122.1p                    245.6p 
            Underlying diluted earnings per 
             share                                           106.9p                   123.3p                    247.6p 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

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

 
                                                         Six months               Six months                   Year to 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Underlying earnings attributable 
             to shareholders                                  343.0                    395.1                     793.4 
            Goodwill impairment                               (3.2)                    (3.9)                     (6.2) 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Earnings attributable to 
             shareholders                                     339.8                    391.2                     787.2 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

At 30 June 2022 the issued share capital of the Company was 319,317,641 ordinary shares (30 June 2021: 319,100,222; 31 December 2021: 319,206,474 ordinary shares).

6. Dividends

 
                                                         Six months               Six months                   Year to 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Amounts recognised as 
            distributions to 
            capital holders in the period: 
            2020 dividend to all shareholders 
             of 
             125p per share paid 2021                             -                    398.7                     398.7 
            2020 dividend to all shareholders 
             of 
             110p per share paid 2021                             -                        -                     350.9 
            2021 dividend to all shareholders                 399.0                        -                         - 
            of 
            125p per share paid 2022 
            Total capital return to 
             shareholders                                     399.0                    398.7                     749.6 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

On 1 April 2022 125p per share (or GBP399.0m) of surplus capital was returned to shareholders as an interim cash dividend in respect of the financial year 31 December 2021.

On 8 July 2022 110p per share (or GBP351.1m) of surplus capital was returned to shareholders as an interim cash dividend in respect of the financial year 31 December 2021.

In total, 235p per share of surplus capital has been returned to shareholders during 2022 in respect of the financial year 31 December 2021. There will be no further distributions to shareholders in relation to the financial year 31 December 2021.

7. Inventories

 
                                          30 June     30 June          31 December 
                                             2022        2021                 2021 
 
                                             GBPm        GBPm                 GBPm 
-------------------------------------  ----------  ----------  ------------------- 
            Land                          2,102.8     1,701.0              1,798.2 
            Work in progress              1,226.1     1,046.0              1,054.1 
            Part exchange properties         27.2        23.9                 24.8 
            Showhouses                       46.6        44.7                 43.6 
-------------------------------------  ----------  ----------  ------------------- 
                                          3,402.7     2,815.6              2,920.7 
-------------------------------------  ----------  ----------  ------------------- 
 

The Group has conducted a further review of the net realisable value of its land and work in progress portfolio at 30 June 2022. Our approach to this review has been consistent with that conducted at 31 December 2021 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 2022 were GBP15.0m (30 June 2021: GBP20.3m; 31 December 2021: GBP18.6m). Following the review, GBP3.8m of inventories are valued at fair value less costs to sell rather than historical cost (30 June 2021: GBP4.6m; 31 December 2021: GBP4.1m).

8. Shared equity loan receivables

 
                                                         Six months               Six months                   Year to 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Shared equity loan receivables at 
             beginning 
             of period                                         45.6                     56.2                      56.2 
            Settlements                                       (7.4)                    (9.2)                    (18.9) 
            Gains                                               2.1                      2.0                       8.3 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Shared equity loan receivables at 
             end 
             of period                                         40.3                     49.0                      45.6 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

All gains/losses have been recognised through finance income in profit and loss for the period of which GBP0.2m was unrealised (June 2021: GBP0.4m; December 2021: GBP4.2m).

9. Legacy buildings provision

 
                                                  Six months          Six months             Year to 31 
                                                  to 30 June          to 30 June          December 2021 
                                                        2022                2021 
 
                                                        GBPm                GBPm                   GBPm 
----------------------------------------  ------------------  ------------------  --------------------- 
       Legacy buildings provision at 
        beginning of period                             72.7                75.0                   75.0 
       Provision utilised in the period                (3.4)                   -                  (2.3) 
----------------------------------------  ------------------  ------------------  --------------------- 
       Legacy buildings provision at 
        end of period                                   69.3                75.0                   72.7 
----------------------------------------  ------------------  ------------------  --------------------- 
 

In 2020 we made a commitment that no leaseholder living in a building we had developed, including all those above 11 metres, should have to cover the cost of cladding removal. As part of this commitment, we created a GBP75.0m provision to cover the cost of any necessary works. Work has been ongoing throughout 2022 at a cost of GBP3.4m (2021: GBP2.3m). The provision at 30 June 2022 remains management's best estimate of the costs of completing works to ensure fire safety on the remaining affected buildings under direct ownership and on those under third party ownership we have developed. As a result no further charge to the Statement of Comprehensive Income has been made in the period. These estimates may change over time as further information is assessed, remedial works progress and the interpretation of fire safety regulations further evolves. This is a highly complex area with judgements and estimates in respect of the cost of the remedial works and the scope of the properties requiring remedial works may change should regulation further evolve.

10. 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 
                                                   2022        2021                 2021 
                                                Level 3     Level 3              Level 3 
 
                                                   GBPm        GBPm                 GBPm 
-------------------------------------------  ----------  ----------  ------------------- 
            Shared equity loan receivables         40.3        49.0                 45.6 
-------------------------------------------  ----------  ----------  ------------------- 
 

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 (2021: ten years) and a discount rate of 5% (2021: 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.

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

 
                                                         Six months               Six months                   Year to 
                                                              to 30               to 30 June               31 December 
                                                          June 2022                     2021                      2021 
 
                                                               GBPm                     GBPm                      GBPm 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Cash and cash equivalents at 
             beginning 
             of period                                      1,246.6                  1,234.1                   1,234.1 
            (Decrease)/increase in net cash 
             equivalents 
             in cash flow                                   (464.6)                     81.1                      12.5 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Cash and cash equivalents at end 
             of period                                        782.0                  1,315.2                   1,246.6 
            IFRS 16 lease liability                           (9.8)                    (8.9)                     (8.8) 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
            Net cash at end of period                         772.2                  1,306.3                   1,237.8 
---------------------------------------------  --------------------  -----------------------  ------------------------ 
 

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

12. Retirement benefit assets

As at 30 June 2022 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               to 30 June                December 
                                                            June 2022                     2021                    2021 
 
                                                                 GBPm                     GBPm                    GBPm 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
            Current service cost                                  0.9                      0.9                     2.0 
            Administrative expense                                0.2                      0.1                     0.6 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
            Pension cost recognised as 
             operating 
             expense                                              1.1                      1.0                     2.6 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
 
            Interest income on net defined 
             benefit 
             asset                                              (1.4)                    (0.4)                   (0.7) 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
            Pension cost recognised as a net 
             finance 
             credit                                             (1.4)                    (0.4)                   (0.7) 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
 
            Total defined benefit pension 
             (income)/cost 
             recognised in profit or loss                       (0.3)                      0.6                     1.9 
            Remeasurement gains recognised in 
             other 
             comprehensive expense                             (59.4)                   (65.8)                  (83.3) 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
            Total defined benefit scheme gain 
             recognised                                        (59.7)                   (65.2)                  (81.4) 
-----------------------------------------------  --------------------  -----------------------  ---------------------- 
 

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 
                                                        2022        2021                 2021 
 
                                                        GBPm        GBPm                 GBPm 
------------------------------------------------  ----------  ----------  ------------------- 
            Fair value of pension scheme assets        658.4       714.2                751.9 
            Present value of funded obligations      (449.0)     (597.5)              (603.1) 
------------------------------------------------  ----------  ----------  ------------------- 
            Net pension asset                          209.4       116.7                148.8 
------------------------------------------------  ----------  ----------  ------------------- 
 

The increase in the net pension asset to GBP209.4m (December 2021: GBP148.8m) is largely due to an increase in long-term corporate bond yields increasing the discount rate assumption applied to scheme obligations to 3.9% (December 2021: 1.9%) offset by falling asset values.

13. Principal risks

 
 1. Pandemic risk 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   The potential for                                            The Group can draw   The successful 
   Residual        increased rates                                              upon extensive       Covid-19 
   risk rating:    of transmission,                                             Board                vaccination 
   Medium          further variants                                             and management       programme 
                   of Covid-19 or a                                             experience           and the 
   Change from     new pandemic occurring                                       from the response    government's 
   year end:       in the UK, could                                             to                   removal 
   Decrease        have significant                                             the initial          of remaining 
                   impacts across the                                           Covid-19             restrictions, 
                   Group's operations.                                          outbreak. During     have reduced the 
                   These could include:                                         this                 immediate 
                    *    Increased health and safety risk to our workforce,     outbreak, robust     risks associated 
                         our customers and the wider public.                    and                  with 
                                                                                comprehensive        the pandemic. 
                                                                                policies             These positive 
                    *    Disruption to build programmes and delays in sales,    and procedures       evolutions have 
                         due to staff absences and material and labour supply   were                 allowed 
                         issues.                                                developed under      the Group to 
                                                                                the                  retire its 
                                                                                supervision of the   Covid-19 policy 
                    *    Economic downturn, with reduced consumer confidence,   Health, Safety and   and supporting 
                         demand and pricing for new homes, thereby affecting    Environment          procedures. 
                         revenues, margins, profits and cash flows and          Department.          Measures are 
                         impairment of asset values.                            These procedures     still in place to 
                                                                                allow                reduce 
                                                                                for safe             the spread of 
                                                                                continuity           respiratory 
                                                                                of operations        infections in the 
                                                                                under                workplace, 
                                                                                various pandemic     and are set out 
                                                                                conditions,          in the 
                                                                                if required.         Group's new 
                                                                                                     Health and 
                                                                                Remote working       Wellbeing 
                                                                                capabilities         Standards. 
                                                                                are in place, 
                                                                                facilitated          The Group retains 
                                                                                through enhanced     its 
                                                                                use                  strong balance 
                                                                                of technology.       sheet, 
                                                                                This                 high liquidity 
                                                                                supports             and robust 
                                                                                continuity           financial 
                                                                                of operations in     disciplines, 
                                                                                the                  which ensure we 
                                                                                event of ongoing     are well 
                                                                                or                   placed to manage 
                                                                                future pandemic      challenges 
                                                                                conditions.          should further 
                                                                                The risks            Covid-19 
                                                                                associated           variants or other 
                                                                                with increased use   pandemic 
                                                                                of remote working    conditions 
                                                                                are                  materialise. 
                                                                                mitigated through 
                                                                                a 
                                                                                combination of IT 
                                                                                controls 
                                                                                and user awareness 
                                                                                training. 
 
                                                                                Potential 
                                                                                disruption 
                                                                                of supply is 
                                                                                mitigated 
                                                                                through 
                                                                                centralised 
                                                                                procurement and 
                                                                                management 
                                                                                of key materials. 
                                                                                The 
                                                                                vertical 
                                                                                integration 
                                                                                afforded by use of 
                                                                                our own 
                                                                                Brickworks, 
                                                                                Space4 and 
                                                                                Tileworks 
                                                                                production 
                                                                                provides 
                                                                                further mitigation 
                                                                                for some critical 
                                                                                materials. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 2. Strategy 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   The Group's strategy                                         The Group's          Our 
   Residual         has been developed                                          strategy             well-established 
   risk rating:     by the Board as                                             is agreed by the     strategy 
   Low              the most appropriate                                        Board                continues to 
                    approach to successfully                                    at an annual         reflect a 
   Change from      deliver the Group's                                         strategy             firm 
   year end:        purpose and ambition                                        meeting. The         understanding of 
   No change        and generate optimal                                        strategy             the risks 
                    sustainable value                                           undergoes a          associated with 
                    for all stakeholders.                                       continuous           the economic 
                    As political, economic                                      and iterative        cycle and 
                    and other conditions                                        process              the housing 
                    evolve, the strategy                                        of review and        market. Through 
                    currently being                                             adaptation           minimising 
                    pursued may cease                                           at Board meetings    associated 
                    to be the most appropriate                                  and                  financial risk 
                    approach.                                                   in response to the   and judging 
                    If the Group's strategy                                     evolution of         the deployment of 
                    is not effectively                                          conditions           capital 
                    communicated to                                             in which the Group   at the right time 
                    our workforce and                                           operates.            in the 
                    / or engagement                                             The Board engages    cycle, the Group 
                    and incentive measures                                      with                 has safeguarded 
                    are inappropriate,                                          all stakeholders     its strong 
                    operational activities                                      to                   balance sheet 
                    may not successfully                                        ensure the           and maintained 
                    deliver the Group's                                         strategy             its positioning 
                    strategic objectives.                                       is understood and    for continued 
                                                                                effectively          future success. 
                                                                                communicated. For 
                                                                                example, 
                                                                                an Employee 
                                                                                Engagement 
                                                                                Panel, Diversity 
                                                                                and 
                                                                                Inclusion Council 
                                                                                and 
                                                                                employee 
                                                                                engagement 
                                                                                surveys are in 
                                                                                place 
                                                                                to monitor the 
                                                                                cultural 
                                                                                health of the 
                                                                                organisation 
                                                                                and ensure 
                                                                                strategy 
                                                                                is understood and 
                                                                                implemented. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 3. National and regional economic conditions 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   The housebuilding                                            The Group's          The Board and our 
   Residual         industry is sensitive                                       long-term            operational 
   risk rating:     to changes in the                                           strategy is          management teams 
   High             economic environment,                                       focused              have 
                    including unemployment                                      on the cyclical      continued to 
   Change from      levels, interest                                            nature               monitor the 
   year end:        rates and consumer                                          of the housing       economic 
   No change        confidence.                                                 market               environment 
                                                                                and minimising       closely 
                    Deterioration in                                            financial            throughout the 
                    economic conditions,                                        risk, maintaining    year, with 
                    including increasing                                        operational          particular focus 
                    interest rates,                                             and financial        on the 
                    lower consumer confidence                                   flexibility          impact of 
                    as well as those                                            and judging the      inflationary 
                    brought about by                                            timing               pressures within 
                    factors such as                                             of capital           our supply 
                    the continued effects                                       deployment           chain. 
                    of the Covid-19                                             through the cycle. 
                    pandemic and the                                                                 Despite these 
                    war in Ukraine,                                             The Board monitors   challenges, 
                    could affect demand                                         lead indicators on   market conditions 
                    and pricing for                                             the future           remain 
                    new homes. This                                             direction            positive, with 
                    has the potential                                           of the UK housing    strong 
                    to affect our revenues,                                     market               demand for 
                    margins, profits                                            to enable informed   housing and 
                    and cash flows and                                          management of        resilience in 
                    potential impairment                                        exposure             selling 
                    of asset values.                                            to potential         prices. The 
                                                                                market               longer-term 
                    Economic conditions                                         disruption.          fundamentals of 
                    in the land market                                          Pricing              the housing 
                    may adversely affect                                        structures are       market remain 
                    the availability                                            regularly            strong. 
                    of a sustainable                                            reviewed to 
                    supply of land at                                           reflect 
                    appropriate levels                                          local market 
                    of return.                                                  conditions. 
                                                                                The Group's 
                                                                                geographical 
                                                                                spread is 
                                                                                continuously 
                                                                                monitored to help 
                                                                                mitigate 
                                                                                the effects of 
                                                                                regional 
                                                                                economic 
                                                                                fluctuations. 
 
                                                                                In line with the 
                                                                                Group's 
                                                                                strategy, levels 
                                                                                of 
                                                                                build on site are 
                                                                                closely 
                                                                                monitored and land 
                                                                                investment 
                                                                                decisions 
                                                                                are subject to 
                                                                                comprehensive 
                                                                                due diligence 
                                                                                processes 
                                                                                to ensure the most 
                                                                                effective 
                                                                                deployment 
                                                                                of capital 
                                                                                possible. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 4. Government policy 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   Changes to government                                        Government policy    Recent government 
   Residual         policy have the                                             in                   actions, 
   risk rating:     potential to impact                                         relation to the      such as the 
   High             on several aspects                                          housing              introduction 
                    of our strategy                                             market is            of the 
   Change from      and operational                                             monitored            Residential 
   year end:        performance. For                                            closely.             Property 
   No change        example, the forthcoming                                    Consistency          Developer Tax, 
                    withdrawal of the                                           of policy            the proposed 
                    Help to Buy scheme                                          formulation          changes to the 
                    in 2023, amendments                                         and application      planning 
                    to planning regulations                                     remains              process and the 
                    and the recent government                                   supportive of the    forthcoming 
                    requirement to pay                                          housebuilding        withdrawal of the 
                    a contribution to                                           industry as a        Help 
                    a fund to cover                                             whole,               to Buy Scheme in 
                    the cost of fire                                            encouraging          2023, 
                    safety remediation                                          continued            have a strong 
                    works, could have                                           substantial          influence 
                    an adverse effect                                           investment           on our business 
                    on revenues, margins,                                       in land, work in     and the 
                    tax charges and                                             progress             broader sector. 
                    asset values.                                               and skills to        However, 
                                                                                support              the government 
                    The Department for                                          output growth. Our   continues 
                    Levelling Up, Housing                                       mission to build     to recognise the 
                    and Communities                                             homes                need 
                    (DLUHC) has demanded                                        with quality our     for increased 
                    that residential                                            customers            construction 
                    property developers                                         can rely on at a     of new homes, 
                    take a lead in the                                          price                providing 
                    funding and rectification                                   they can afford      a broadly 
                    of unsafe cladding                                          and                  supportive 
                    and fire safety                                             our strategic        environment 
                    issues on buildings                                         objectives           for the industry. 
                    over 11 metres in                                           are aligned with 
                    height constructed                                          government           On 5 April 2022, 
                    in the last 30 years.                                       objectives to        Persimmon 
                    The government asked                                        increase             signed the DLUHC 
                    developers to sign                                          housing stock.       pledge, 
                    a pledge committing                                                              which was 
                    to pay for all the                                          Land investment      consistent with 
                    necessary remediation                                       decisions            the 
                    on buildings they                                           and levels of work   industry-leading 
                    constructed. The                                            in progress are      commitment 
                    government has also                                         tightly              we made over a 
                    required developers                                         controlled in        year ago, 
                    to make additional                                          order                that leaseholders 
                    contributions to                                            to mitigate          in any 
                    an industry-wide                                            exposure             multi-storey 
                    scheme that protects                                        to external          building 
                    all leaseholders                                            influences.          Persimmon 
                    from paying towards                                                              constructed 
                    any works.                                                  Persimmon has led    would not have to 
                                                                                the                  pay 
                    To reinforce this                                           industry in its      to remove any 
                    demand, the government                                      commitment           cladding 
                    has introduced through                                      to rectifying        or correct fire 
                    the Building Safety                                         legacy               related 
                    Act, a 'Building                                            safety works. The    safety issues. 
                    Industry Scheme'.                                           Group                Persimmon 
                    Membership of this                                          has a GBP75m         continues to work 
                    scheme will be determined                                   legacy               closely 
                    by the government,                                          buildings            with the Home 
                    based on the developer's                                    provision            Builders 
                    commitments and                                             to fund necessary    Federation to 
                    actions to rectify                                          work                 convert 
                    cladding and fire                                           on these             the initial 
                    safety related issues                                       buildings.           pledge into 
                    on buildings it                                             In addition,         a legal agreement 
                    has developed. The                                          Persimmon            with 
                    government has indicated                                    will not claim       the government. 
                    they would use the                                          from 
                    powers conferred                                            the Government's 
                    through the amendments                                      Building 
                    to block planning                                           Safety Fund. We 
                    and building control                                        hope 
                    permissions for                                             these actions will 
                    developers that                                             lead to us 
                    are not members                                             becoming 
                    of the scheme.                                              a member of the 
                                                                                government's 
                    DLUHC have also                                             new 'Building 
                    introduced the Levelling                                    Industry 
                    Up and Regeneration                                         Scheme' and 
                    Bill. This bill                                             continue 
                    emphasises the importance                                   to engage in 
                    of a Local Plan                                             positive 
                    and the need for                                            discussions with 
                    local 'support'                                             officials. 
                    for the development 
                    it identifies. The                                          We have stepped-up 
                    bill will be complemented                                   our approach to 
                    by an update to                                             working 
                    the National Planning                                       with local 
                    Policy Framework.                                           authorities, 
                                                                                with our new 
                                                                                Placemaking 
                                                                                Framework and new 
                                                                                stakeholder 
                                                                                engagement team 
                                                                                proactively 
                                                                                engaging with 
                                                                                local 
                                                                                authorities across 
                                                                                the country to 
                                                                                identify 
                                                                                how we are helping 
                                                                                them deliver their 
                                                                                key objectives and 
                                                                                enhance support 
                                                                                for 
                                                                                our schemes. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 5. Health, safety and environment 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   In addition to the                                           The Board retains    The effective 
   Residual         human impacts of                                            a                    management 
   risk rating:     any accident, there                                         very strong          of health, safety 
   High             is the potential                                            commitment           and 
                    for reputational                                            to health and        environmental 
   Change from      damage, construction                                        safety               risks has 
   year end:        delays and financial                                        and managing the     remained a 
   No change        penalties from any                                          risks                critical area 
                    health, safety or                                           in this area         of focus for the 
                    environmental incident.                                     effectively.         Board 
                                                                                This is              and our 
                                                                                implemented          management teams 
                                                                                by comprehensive     throughout the 
                                                                                management           year to 
                                                                                systems and          date. 
                                                                                controls, 
                                                                                managed by our       To ensure 
                                                                                highly               continuous 
                                                                                experienced Group    improvement 
                                                                                Health,              in this key area, 
                                                                                Safety and           a comprehensive 
                                                                                Environment          review of the 
                                                                                Department, which    Group's 
                                                                                includes             Health & Safety 
                                                                                detailed training    policies 
                                                                                and                  and procedures is 
                                                                                inspection           being 
                                                                                programmes           undertaken. In 
                                                                                to minimise the      addition, 
                                                                                likelihood           the Group is 
                                                                                and impact of        deploying 
                                                                                accidents            a new and 
                                                                                on our sites.        wide-ranging 
                                                                                While                Environmental 
                                                                                all reasonable       Management 
                                                                                steps                System to further 
                                                                                are taken to         strengthen 
                                                                                reduce               the Group's 
                                                                                the likelihood of    controls. 
                                                                                an 
                                                                                incident, the 
                                                                                potential 
                                                                                human, 
                                                                                reputational 
                                                                                and financial 
                                                                                impacts 
                                                                                of any such 
                                                                                incident 
                                                                                are considered 
                                                                                high. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 6. Skilled workforce, retention and succession 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   Shortages of skilled                                         Access to an         High demand for 
   Residual         labour, driven in                                           appropriately        labour 
   risk rating:     part through the                                            skilled workforce    has continued to 
   High             continued effects                                           and                  be observed 
                    of the UK's exit                                            experienced          throughout the 
   Change from      from the EU and                                             management           year, and 
   year end:        from increased UK                                           team is essential    has contributed 
   No change        housebuilding activities,                                   in                   to increased 
                    create risks of                                             maintaining          cost pressures. 
                    increased costs                                             operational 
                    and delays and disruption                                   performance and      The Group has 
                    to build programmes.                                        ensuring             continued 
                                                                                the successful       to invest in its 
                    High staff turnover                                         delivery             people 
                    or loss of staff                                            of the Group's       and processes to 
                    in key roles could                                          strategy.            mitigate 
                    result in disruption                                                             this risk. In 
                    to operations.                                              The Group operates   particular, 
                                                                                a range of           several 
                                                                                apprenticeships      'Persimmon 
                                                                                and in-house         Pathway' 
                                                                                training             schemes have been 
                                                                                and excellence       developed 
                                                                                programmes,          to provide 
                                                                                under the            structured 
                                                                                supervision          training 
                                                                                of the Group         programmes across 
                                                                                Training             core operational 
                                                                                department, in       disciplines. 
                                                                                order 
                                                                                to support an        As an accredited 
                                                                                adequate             Living 
                                                                                supply of skilled    Wage employer, 
                                                                                labour.              the Group 
                                                                                In addition, the     also voluntarily 
                                                                                Group                commits 
                                                                                is committed to      to going further 
                                                                                supporting           than 
                                                                                industry             the government 
                                                                                initiatives          mandated 
                                                                                to address the       minimum wage 
                                                                                skills               levels for 
                                                                                gap. The Group's     its workforce, 
                                                                                Space4               including 
                                                                                manufacturing        both directly 
                                                                                facility,            employed 
                                                                                which produces       and 
                                                                                timber               sub-contracted 
                                                                                frames, highly       labour. 
                                                                                insulated 
                                                                                wall panels and 
                                                                                roof 
                                                                                cassettes, 
                                                                                improves 
                                                                                build efficiency 
                                                                                and 
                                                                                requires less 
                                                                                on-site 
                                                                                labour than a 
                                                                                traditionally 
                                                                                built home, 
                                                                                mitigating 
                                                                                some labour 
                                                                                shortage 
                                                                                risk. 
 
                                                                                Additional 
                                                                                measures 
                                                                                have been deployed 
                                                                                to increase 
                                                                                retention 
                                                                                across the 
                                                                                workforce. 
                                                                                These include 
                                                                                increased 
                                                                                focus on employee 
                                                                                engagement, 
                                                                                further 
                                                                                development 
                                                                                of performance 
                                                                                management 
                                                                                frameworks, career 
                                                                                management, and 
                                                                                financial 
                                                                                incentives. At the 
                                                                                most senior level, 
                                                                                the Nomination 
                                                                                Committee 
                                                                                oversees these 
                                                                                processes 
                                                                                and promotes 
                                                                                effective 
                                                                                succession 
                                                                                planning. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 7. Materials and land purchasing 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   Materials availability                                       Materials            Certain aspects 
   Residual         Ensuring access                                             availability         of material 
   risk rating:     to the right quantity                                       Our build            supply chains 
   High             and specification                                           programmes           continue 
                    of materials is                                             and supply chain     to suffer from 
   Change from      critical in delivering                                      are                  disruption. 
   year end:        high quality homes.                                         closely monitored    The sources of 
   No change                                                                    to                   the disruption 
                    Heightened levels                                           allow us to manage   include the 
                    of demand for materials                                     and react to any     sustained 
                    may cause availability                                      supply               growth in UK 
                    constraints and                                             chain issues and     housebuilding 
                    exacerbate inflationary                                     to                   activities, 
                    pressures. Furthermore,                                     help ensure          continued 
                    build quality may                                           consistent           impacts of the 
                    be compromised if                                           high quality         Covid-19 
                    unsuitable materials                                        standards.           pandemic, issues 
                    are procured leading                                        We build strong      associated 
                    to damage to the                                            relationships        with the UK's 
                    Group's reputation                                          with key suppliers   exit from 
                    and customer experience.                                    over the long term   the EU, and the 
                                                                                to ensure            war in 
                    Land Purchasing                                             consistency          Ukraine. These 
                    Land may be purchased                                       of supply and cost   factors 
                    at too high a price,                                        efficiency. Our      have contributed 
                    in the wrong location                                       Group                to increased 
                    and at the wrong                                            Procurement team     lead times and 
                    time in the housing                                         works                inflationary 
                    market cycle.                                               with our operating   pressures for 
                                                                                businesses to        some materials. 
                                                                                ensure               To date, these 
                                                                                the Group's          have been 
                                                                                suppliers            largely offset by 
                                                                                provide materials    house 
                                                                                to                   price inflation. 
                                                                                the expected         The vertical 
                                                                                specification        integration 
                                                                                and quantities.      afforded by 
                                                                                                     our own 
                                                                                The Group's          Brickworks and 
                                                                                Brickworks           Tileworks 
                                                                                and Tileworks        manufacturing 
                                                                                manufacturing        facilities 
                                                                                facilities           has helped 
                                                                                provide a            mitigate some 
                                                                                significant          material 
                                                                                proportion of the    shortages in 
                                                                                bricks               key areas. 
                                                                                and roof tiles 
                                                                                used                 In respect of 
                                                                                across our sites,    land, we 
                                                                                providing            have maintained 
                                                                                security of          our 
                                                                                supply.              well-established 
                                                                                This complements     disciplined 
                                                                                our                  approach to 
                                                                                existing off-site    replacement. 
                                                                                manufacturing        Within the 
                                                                                facility at          year to date, the 
                                                                                Space4,              Group 
                                                                                which produces       has continued to 
                                                                                timber               invest 
                                                                                frames, highly       in high quality 
                                                                                insulated            land 
                                                                                wall panels and      opportunities 
                                                                                roof                 at 
                                                                                cassettes.           industry-leading 
                                                                                                     embedded 
                                                                                Land Purchasing      margins. 
                                                                                The Group 
                                                                                maintains 
                                                                                strong land 
                                                                                holdings. 
                                                                                All land purchases 
                                                                                undergo 
                                                                                comprehensive 
                                                                                viability 
                                                                                assessments 
                                                                                and must meet 
                                                                                specific 
                                                                                levels of 
                                                                                projected 
                                                                                returns, taking 
                                                                                into 
                                                                                account 
                                                                                anticipated 
                                                                                market conditions 
                                                                                and 
                                                                                sales rates. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 8. Climate change 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   The effects of climate                                       The Group takes a    In 2021, the 
   Residual         change and the UK's                                         range                Group set 
   risk rating:     transition to a                                             of measures to       science-based 
   Medium           lower carbon economy                                        monitor              carbon reduction 
                    could lead to increasing                                    and improve its      targets, in line 
   Change from      levels of regulation                                        operational          with 
   year end:        and legislation,                                            efficiency and       the Paris 
   No change        as seen with the                                            direct               Agreement, which 
                    Future Homes Standard.                                      environmental        were fully 
                    These may in turn                                           impact,              accredited 
                    result in planning                                          including            by the Science 
                    delays, increased                                           measuring            Based Targets 
                    costs and competition                                       CO(2) emissions      Initiative. We 
                    for some materials.                                         and                  have set 
                                                                                the amount of        ambitious 'net 
                    Changes in weather                                          waste                zero' targets, 
                    patterns and the                                            we generate for      aiming to deliver 
                    frequency of extreme                                        each                 'net 
                    weather events,                                             home we sell.        zero' homes in 
                    particularly storms                                                              use to 
                    and flooding, may                                           The Group            our customers by 
                    increase the likelihood                                     maintains            2030 
                    of disruption to                                            a detailed climate   and become 'net 
                    the construction                                            change risk          zero' 
                    process. The availability                                   register,            in our operations 
                    of mortgages and                                            which ensures that   by 2040. 
                    property insurance                                          the management and 
                    may reduce in response                                      mitigation of the    The Group 
                    to financial institutions                                   risk                 continues to 
                    considering the                                             is embedded within   make good 
                    possible impacts                                            the Group's risk     progress on 
                    relating to climate                                         management           its carbon 
                    change.                                                     process.             reduction roadmap 
                                                                                                     with a number of 
                                                                                We systematically    projects 
                                                                                consider             to research the 
                                                                                the potential        most effective 
                                                                                impacts              method of 
                                                                                of climate change    delivering a 
                                                                                throughout           'net zero' home 
                                                                                the land             in use 
                                                                                acquisition,         and engaging a 
                                                                                planning and build   third party 
                                                                                processes and work   expert to measure 
                                                                                closely with         the 
                                                                                planning             embodied carbon 
                                                                                authorities and      of our 
                                                                                other                homes. Our homes 
                                                                                statutory bodies     are already 
                                                                                to                   significantly 
                                                                                manage and           more energy 
                                                                                mitigate             efficient than 
                                                                                these risks.         existing 
                                                                                                     housing stock and 
                                                                                The government's     our 
                                                                                'Future              pathway to 'net 
                                                                                Homes Standard'      zero' 
                                                                                will                 homes in use by 
                                                                                be introduced by     2030 has 
                                                                                2025.                clear interim 
                                                                                To plan for and      milestones. 
                                                                                manage 
                                                                                the transition to    Operationally, 
                                                                                low                  the Group 
                                                                                carbon homes, a      has introduced 
                                                                                low                  electric 
                                                                                carbon homes         vehicle options 
                                                                                working              into its 
                                                                                group (consisting    fleet, is now 
                                                                                of                   purchasing 
                                                                                members from         100% renewable 
                                                                                across               energy 
                                                                                the Group's          for its offices 
                                                                                various              and manufacturing 
                                                                                disciplines) has     facilities and 
                                                                                been                 continues 
                                                                                established. The     to investigate 
                                                                                Group                methods 
                                                                                engages              of reducing the 
                                                                                proactively          Group's 
                                                                                with the             red diesel 
                                                                                housebuilding        consumption 
                                                                                industry and the     and increasing 
                                                                                government           the use 
                                                                                to develop           of alternative 
                                                                                industry             fuels. 
                                                                                wide solutions to 
                                                                                meet                 The Group 
                                                                                the requirements     undertook climate 
                                                                                of                   scenario analysis 
                                                                                the Future Homes     in 2021 
                                                                                Standard.            and has developed 
                                                                                                     a prioritised 
                                                                                We continually       action plan to 
                                                                                seek                 continue 
                                                                                to strengthen our    to assess and 
                                                                                supply               mitigate 
                                                                                chain, for           potential risks 
                                                                                example,             and maximise 
                                                                                our off-site         opportunities. 
                                                                                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. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 9. Reputation 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   Damage to the Group's                                        Management           The Persimmon Way 
   Residual         reputation could                                            Supervision          continues 
   risk rating:     adversely affect                                            The Group is         to drive benefits 
   Medium           its ability to deliver                                      committed            throughout 
                    its strategic objectives.                                   to ensuring an       the business, and 
   Change from      If governance, build                                        appropriate          supports 
   year end:        quality, customer                                           culture and          our desire to 
   No change        experiences, operational                                    maintaining          'build right, 
                    performance, management                                     the high quality     first time, every 
                    of health and safety                                        of                   time'. 
                    or local planning                                           its operations. 
                    concerns fall short                                         This                 Persimmon 
                    of our usual high                                           is subject to        formally 
                    standards, this                                             oversight            commenced 
                    may result in damage                                        from the Board.      the registration 
                    to customer, commercial                                                          process 
                    and investor relationships                                  Maintaining trust    for the New Homes 
                    and have a detrimental                                      in                   Quality 
                    impact on financial                                         our quality of       Code (NHQC) on 14 
                    performance.                                                build                January 
                                                                                is central to our    2022, one of the 
                                                                                reputation.          first 
                                                                                In addition to our   housebuilders to 
                                                                                commitments to       do so. 
                                                                                address              We have welcomed 
                                                                                legacy issues,       the introduction 
                                                                                significant          of the NHQC, 
                                                                                investments have     which aims 
                                                                                been                 to drive up 
                                                                                made in the          quality and 
                                                                                Persimmon            customer service 
                                                                                Way, the Group's     across 
                                                                                construction         the industry 
                                                                                excellence           together 
                                                                                programme.           with the 
                                                                                This includes        appointment of 
                                                                                comprehensive        a New Homes 
                                                                                training             Ombudsman 
                                                                                programmes,          Service. 
                                                                                ongoing assurance 
                                                                                through              The Group 
                                                                                the Group's team     continues to 
                                                                                of                   invest in its 
                                                                                Independent          people and 
                                                                                Quality              processes, 
                                                                                Controllers          driving 
                                                                                (IQCs).              operational 
                                                                                                     improvements. 
                                                                                Stakeholder          These 
                                                                                Relationships        enhancements 
                                                                                We take actions to   reduce the 
                                                                                maintain positive    probability 
                                                                                relationships        of operational 
                                                                                with all of our      issues 
                                                                                stakeholders         and the 
                                                                                to minimise the      consequent 
                                                                                risks                reputational 
                                                                                of reputational      damage they can 
                                                                                damage               cause. 
                                                                                and aim to comply 
                                                                                with 
                                                                                best practice in 
                                                                                corporate 
                                                                                governance. 
 
                                                                                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. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 10. Regulatory compliance 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   The housebuilding                                            Comprehensive        Key regulatory 
   Residual         industry is subject                                         management           areas of 
   risk rating:     to extensive and                                            systems are in       focus within the 
   Medium           complex laws and                                            place                year 
                    regulations, particularly                                   to ensure            have included 
   Change from      in areas such as                                            regulatory           planning 
   year end:        land acquisition,                                           and legal            conditions, with 
   No change        planning, building                                          compliance,          the Group, 
                    regulations and                                             including a suite    in common with 
                    the environment.                                            of                   the wider 
                    Ensuring compliance                                         policies and         industry, 
                    in these areas can                                          procedures           continuing to 
                    result in delays                                            covering key areas   experience delays 
                    in securing the                                             of legislation and   to outlet 
                    land required for                                           regulation.          openings due to 
                    development and                                             Additional           the delays 
                    in construction.                                            oversight is in      within the 
                    Any failure to comply                                       place                planning system. 
                    with regulations                                            through the          These delays have 
                    could result in                                             Group-level          been 
                    damage to the Group's                                       functions and        compounded by a 
                    reputation and potential                                    cross-functional     Covid-related 
                    imposition of financial                                     steering groups      backlog and 
                    penalties.                                                  for                  increasing 
                                                                                key areas, such as   complexity of 
                                                                                GDPR compliance.     regulation, 
                                                                                Where                including 
                                                                                these systems        considerations 
                                                                                identify             such as Natural 
                                                                                inconsistencies in   England's 
                                                                                adherence to         nutrient 
                                                                                agreed               neutrality 
                                                                                processes,           guidance. 
                                                                                corrective           These matters 
                                                                                actions are          continue 
                                                                                swiftly              to be actively 
                                                                                taken.               managed 
                                                                                                     by our 
                                                                                We engage            operational 
                                                                                extensively          teams. 
                                                                                with planning 
                                                                                authorities          Persimmon 
                                                                                and other            formally 
                                                                                stakeholders         commenced 
                                                                                to reduce the        the registration 
                                                                                likelihood           process 
                                                                                and impact of any    for the NHQC on 
                                                                                delays               14 January 
                                                                                or disruption. In    2022. The aims of 
                                                                                respect              the 
                                                                                of land, the Group   Code and its 
                                                                                controls             supporting 
                                                                                sufficient           process are 
                                                                                holdings to          consistent 
                                                                                provide              with the Group's 
                                                                                security of supply   own focus 
                                                                                for medium term      on further 
                                                                                trading              improving build 
                                                                                requirements. Our    quality and 
                                                                                land                 customer service 
                                                                                needs and            standards. 
                                                                                potential 
                                                                                acquisitions are 
                                                                                subject 
                                                                                to extensive due 
                                                                                diligence 
                                                                                to manage planning 
                                                                                risks and 
                                                                                uncertainties 
                                                                                and maintain an 
                                                                                effective 
                                                                                pipeline. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 11. Cyber and data risk 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   The Group relies                                             The Group IT         As the Group's 
   Residual         on its IT systems                                           department           use of 
   risk rating:     being consistently                                          includes dedicated   technology to 
   High             available and secure.                                       cyber security       support 
                    Failure of any of                                           resource             operational 
   Change from      the Group's core                                            in order to manage   processes 
   year end:        IT systems, particularly                                    and oversee          continues to 
   Increase         those in relation                                           security             develop, 
                    to customer information                                     controls. This       cyber and data 
                    and customer service                                        includes             risks have 
                    could result in                                             use of third party   become an area of 
                    significant financial                                       expertise to         increased 
                    costs, reputational                                         ensure               focus for the 
                    damage and business                                         implementation of    Group. This 
                    disruption.                                                 good-practice        is reflected in 
                                                                                controls.            the elevation 
                    The risk has increased                                                           of this risk from 
                    in prominence recently,                                     Periodic             'medium' 
                    due to heightened                                           penetration          to 'high'. 
                    geopolitical uncertainty                                    testing is carried 
                    and instability,                                            out through          The Group has 
                    and the use of cyber-attacks                                external             continued 
                    by state actors.                                            security partners    to strengthen its 
                                                                                to                   mitigation 
                                                                                test the security    measures in 
                                                                                of                   respect of 
                                                                                our perimeter        cyber risk, under 
                                                                                network.             the 
                                                                                                     supervision of 
                                                                                In the event of an   the Information 
                                                                                incident, the        Security Steering 
                                                                                Group                Group 
                                                                                has a defined        (ISSG) and 
                                                                                Cyber                through the 
                                                                                Incident Response    work of the Group 
                                                                                Plan.                IT department. 
 
                                                                                Training and         To develop 
                                                                                regular              controls further, 
                                                                                communications are   an externally led 
                                                                                delivered to all     review 
                                                                                users                of the Group's 
                                                                                to increase          cyber security 
                                                                                awareness            measures has been 
                                                                                of cyber risks,      carried 
                                                                                with                 out. This review 
                                                                                particular focus     has benchmarked 
                                                                                on                   the Group's 
                                                                                risks associated     controls and 
                                                                                with                 will assist in 
                                                                                remote and hybrid    the development 
                                                                                working.             of improvement 
                                                                                                     actions 
                                                                                                     to further 
                                                                                                     strengthen 
                                                                                                     our cyber risk 
                                                                                                     mitigations. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 12. Mortgage availability 
 Risk assessment   Risk description                                             Approach to risk     Developments in 
                                                                                mitigation           2022 
                  -----------------------------------------------------------  -------------------  ------------------ 
                   Reduced availability                                         We monitor Bank of   The fundamentals 
   Residual         or affordability                                            England commentary   of the 
   risk rating:     of mortgages for                                            on credit            UK housing market 
   High             customers could                                             conditions           remain 
                    reduce demand for                                           including the        strong, with 
   Change from      new homes and affect                                        monthly              robust consumer 
   year end:        sales prices, revenues,                                     approvals for        demand and 
   No change        profits, cash flows,                                        house                confidence 
                    and asset values.                                           purchases, reports   in evidence 
                                                                                from UK Finance      through our 
                                                                                and                  strong forward 
                                                                                lenders'             sales position. 
                                                                                announcements        We also continue 
                                                                                for trends in        to see 
                                                                                lending.             good levels of 
                                                                                Our investment in    mortgage 
                                                                                land                 availability from 
                                                                                and work in          lenders. 
                                                                                progress             While mortgage 
                                                                                is monitored         rates remain 
                                                                                continuously         at historically 
                                                                                to ensure it is      competitive 
                                                                                appropriate          levels, 
                                                                                for our level of     supporting 
                                                                                sales                affordability 
                                                                                and our              for new homes, 
                                                                                expectations         lending 
                                                                                of the current       trends continue 
                                                                                market               to be 
                                                                                conditions. The      an area of close 
                                                                                government's         management 
                                                                                Help to Buy          scrutiny 
                                                                                scheme,              following recent 
                                                                                which is scheduled   increases in the 
                                                                                to remain in place   Bank 
                                                                                until 2023,          of England base 
                                                                                supports             rate. 
                                                                                customers to gain 
                                                                                access 
                                                                                to the housing 
                                                                                market 
                                                                                across the UK with 
                                                                                competitive 
                                                                                mortgage 
                                                                                rates. 
                  -----------------------------------------------------------  -------------------  ------------------ 
 

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: 
          o   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 
          o   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 
 
 Jason Windsor        Chief Financial Officer 
 
 Nigel Mills          Senior Independent 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              Jason Windsor 
 
 Group Chief Executive   Chief Financial Officer 
 

16 August 2022

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

INDEPENDENT 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 2022 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 13. 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 2022 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) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. 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 are prepared in accordance with UK adopted international accounting standards. 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".

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.

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.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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, including our Conclusions Relating to Going Concern, are 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) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. 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.

Victoria Venning

Ernst & Young LLP

Leeds

16 August 2022

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August 17, 2022 02:00 ET (06:00 GMT)

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