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REG - Persimmon Plc - Final Results - Part 2 Released: 02/03/2010 - Part 2: For the preceeding part double click [ID:nRSB9007Ha]
expenditure in relation to forward land held on the balance sheet.
· Amendment to IFRS 2 'Share-based Payment' clarifies, amongst
other matters, the treatment of cancelled options. The impact on the
Group is insignificant.
· IFRS 8, 'Operating Segments'. IFRS 8 replaces IAS 14,
'Segment Reporting' and requires the disclosure of segment information on
the same basis as the management information provided to the chief
operating decision maker. The adoption of this standard has not resulted
in a change in the Group's reportable segments. The Group's operating
segments have similar economic characteristics, products, construction
processes and types of customers and meet the aggregation criteria of
IFRS in full. Consequently the Group has aggregated its geographic
operations into one reportable segment, which is housebuilding in the
United Kingdom.
· IAS 23 'Borrowing Costs' (Amendment). This amendment
requires an entity to capitalise borrowing costs directly attributable to
the acquisition, construction and production of a qualifying asset, as
part of the cost of that asset. A qualifying asset is one that takes a
substantial period of time to get ready for use or sale. Inventories
which are produced in large quantities on a repetitive basis over a short
period of time are not qualifying assets. This amendment is not expected
to have any material impact on the Group's financial statements as the
activities performed by the Group do not generally produce qualifying
assets.
2. Exceptional items
2009 2008
Restated
£m £m
Cost of sales:
Inventory write back / (impairment) (i) 74.8 (664.1)
Asset impairment and write-offs (ii) - (24.1)
Operating expenses:
Restructuring costs (iii) - (21.9)
Asset impairment (iv) - (201.0)
Exceptional income / (costs) 74.8 (911.1)
Finance income:
Other interest receivable (v) - 6.3
Exceptional items before tax 74.8 (904.8)
(i) In the year ended 31 December 2008 the Group
recognised a net realisable write-down of its inventory carrying values of
£664.1m (restated). During the year ended 31 December 2009, the Group
conducted further reviews of the net realisable value of its inventory
carrying values which resulted in net reversals of the previous write-down
of inventories of £46.9m and £27.9m in each of the six months ended 31
December and 30 June respectively. Further details are given in note 6.
(ii) In the year ended 31 December 2008 a review of
trade and other receivables resulted in impairments and write-offs of
£24.1m (restated). At 31 December 2009 the review indicated no further
exceptional impairments were required.
(iii) During the year ended 31 December 2008 the Group had incurred £21.9m
in relation to reorganising and restructuring the business. There were no
such costs in 2009.
(iv) At 31 December 2008, the Group conducted an impairment review of its
goodwill. This resulted in an impairment charge of £202.8m of which £201.0m
was considered exceptional. At 31 December 2009, the impairment review gave
rise to a charge of £4.0m, which is not considered exceptional in nature.
(v) Interest receivable in the year ended 31 December 2008 represented monies
due following the receipt of tax repayments. There are no such amounts in the
year ended 31 December 2009.
3. Taxation
2009 2008
£m £m
UK corporation tax in respect of the current year 8.2 0.3
Adjustments recognised in the current year in
respect of prior years - (182.7)
8.2 (182.4)
Deferred tax credit relating to origination and reversal of (1.9) (2.1)
temporary differences
Adjustments recognised in the current year in respect of prior (2.6) 29.5
years deferred tax
(4.5) 27.4
Tax charge / (credit) for the year recognised in profit and 3.7 (155.0)
loss
The charge / (credit) for the year can be reconciled to the accounting
profit / (loss) as follows:
2009 2008
£m £m
Profit / (loss) from continuing operations 77.8 (780.0)
Tax calculated at UK corporation tax rate of 28.0% (2008: 21.8 (222.3)
28.5%)
Accounting base cost not deductible for tax purposes 0.1 1.1
Goodwill impairment losses that are not deductible 1.1 57.8
Losses carried back - 127.5
Losses carried forward - 31.1
Losses brought forward (18.0) -
Expenditure not allowable for tax purposes 1.3 3.0
Adjustments in respect of prior years (2.6) (153.2)
Tax charge / (credit) for the year recognised in profit or 3.7 (155.0)
loss
In addition to the amount recognised in profit and loss, deferred tax of
£19.3m was credited directly to other comprehensive expense (2008: £11.3m
charge), and £nil was recognised in equity (2008: £0.7m charge).
The Group has recognised deferred tax assets of £22.3m (2008: £2.1m) on
£79.6m (2008: £7.7m) out of the total pension deficit of £114.4m (2008:
£95.3m). The Group has not recognised deferred tax assets on c. £44m of
tax losses carried forward (2008: c. £109m).
4. Dividends
2009 2008
£m £m
Dividends paid:
2008 final dividend paid of - 98.1
nil per share (2007: 32.7p)
2009 interim dividend paid - 15.0
of nil per share (2008:
5.0p)
Total dividend - 113.1
Dividends proposed:
2009 no final dividend proposed - -
(2008: no final dividend proposed)
5. Earnings per share
Basic earnings per share is calculated by dividing the profit for the
year attributable to ordinary shareholders by the weighted average number
of ordinary shares in issue during the year, excluding those held in the
Employee Share Ownership Trust, the Employee Benefit Trust and treasury
shares, all of which are treated as cancelled, which were 300.3m (2008:
300.0m).
Diluted earnings per share is calculated by dividing the profit for the
year 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 year, giving a
figure of 302.0m (2008: 301.0m)
Underlying earnings per share excludes exceptional items and impairment
of intangible assets.
The earnings per share from continuing operations were as follows:
2009 2008
Basic earnings / (loss) per share 24.7p (208.3p)
Underlying basic earnings per share 2.1p 35.3p
Diluted earnings / (loss) per share 24.5p (208.3p)
Underlying diluted earnings per share 2.1p 35.2p
The calculation of the basic and diluted earnings per share is based upon
the following data:
2009 2008
£m £m
Underlying earnings attributable to shareholders 6.3 105.9
Exceptional items net of related taxation (including 71.8 (729.1)
exceptional intangible asset impairment)
Goodwill impairment - utilisation of strategic land holdings (4.0) (1.8)
Earnings / (loss) attributable to shareholders 74.1 (625.0)
6. Inventories
2008
2009 Restated
£m £m
Land 1,633.9 1,847.5
Work in progress 485.5 634.0
Part exchange properties 9.3 54.5
Showhouses 59.1 78.5
Total inventories 2,187.8 2,614.5
As set out in note 2, the Group conducted a further review of the net realisable
value of its land and work in progress portfolio during 2009. The impact of these
reviews of our net realisable value provisions is a net exceptional credit to
the consolidated statement of comprehensive income of £74.8m. An impairment of land
and work in progress of £209.3m was recognised in the year (2008: £664.1m (restated))
and a reversal of £284.1m (2008: £nil) on inventories that were written down in a
previous accounting period. These charges / reversals mainly arose due to regional
selling price movements being higher or lower than anticipated by management during
the prior year review. Our approach to our net realisable value review has
been consistent with that conducted at 31 December 2008.
The key judgements in estimating the future net present realisable value of a
site was the estimation of likely sales prices, house types and costs to complete
the developments. Sales prices and costs to complete were estimated on a
site-by-site basis based upon existing market conditions. If the UK housing market
were to improve or deteriorate in the future then further adjustments to the
carrying value of land and work in progress may be required.
Following the 2009 review, £752.3m (2008: £1,088.9m) of inventories are valued
at fair value less costs to sell rather than at historical cost.
7. Reconciliation of net cash flow to net debt
Note 2009 2008
£m £m
Increase in net cash and cash equivalents 160.9 25.9
Decrease in debt and finance lease obligations 174.3 96.7
Financing transaction costs 21.4 1.9
Decrease in net debt from cash flows 356.6 124.5
New finance lease obligations - (0.6)
Non-cash movements (6.1) (0.8)
Decrease in net debt 350.5 123.1
Net debt at 1 January (601.2) (724.3)
Net debt at 31 December 8 (250.7) (601.2)
8. Analysis of net debt
Note 2009 2008
£m £m
Cash and cash equivalents 138.0 0.8
Bank overdrafts - (23.7)
Net cash and cash equivalents 138.0 (22.9)
Bank loans - (65.0)
US and UK senior loan notes due within one year (115.4) (119.4)
US, UK & EU senior loan notes due after more
than one year (299.7) (507.0)
Other loan notes due within one year (1.7) (3.2)
Forward currency swaps 11.3 116.8
Finance lease obligations (1.2) (2.4)
Financing transaction costs 18.0 1.9
Net debt at 31 December 7 (250.7) (601.2)
9. Retirement benefit obligation
At 31 December 2009 the Group operated three employee pension schemes, a
stakeholder scheme and two defined benefit schemes. Actuarial gains and
losses are recognised in full as other comprehensive expense through the
statement of comprehensive income. All other pension scheme costs are
reported as operating expenses in the statement of comprehensive income.
The amounts recognised in the statement of comprehensive income are as
follows:
2009 2008
£m £m
Current service cost 3.2 4.8
Curtailment credit - (2.1)
Interest cost 19.3 19.4
Expected return on scheme assets (13.8) (19.6)
Total (included in staff costs) 8.7 2.5
Net actuarial loss recognised in other comprehensive expense 29.0 43.8
Total defined benefit scheme loss recognised 37.7 46.3
The amount included in the balance sheet arising from the Group's obligation
in respect of its defined benefit schemes is as follows:
2009 2008
£m £m
Present value of funded obligations (387.3) (324.0)
Fair value of scheme assets 272.9 228.7
Deficit in the scheme and net liability in the balance sheet (114.4) (95.3)
Principal risks
The Group's financial and operational performance is subject to a
significant number of risks, which are subject to continual assessment by
management to mitigate and minimise these risks. There are also many risks
which are outside of our control which can affect our business. Our
principal risks are:
Impact Mitigation
National and regional The housebuilding We minimise the level of
economic conditions industry is sensitive to speculative build
changes in job growth, undertaken by closely
interest rates and controlling our work in
consumer confidence. progress levels. We carry
Further deterioration in out extensive due
economic conditions may diligence prior to our
significantly decrease land investment decisions
demand and pricing for to capture best margins.
new homes, which could
have a material effect
on our business
revenues, margins and
profits and result in
the impairment of asset
values.
Mortgage availability Any further restrictions We ensure construction is
in the market matched to our level of
availability of sales. We can use HomeBuy
mortgages for our Direct shared equity to
customers could reduce enable buyers without
demand for our homes and large deposits to purchase
affect revenues, margins our homes.
and profits.
Capital requirements Our ability to continue The Group actively
to manage our business maintains a mixture of
depends on our ability medium and long term debt
to access capital on and bonding lines to
appropriate terms. We ensure sufficient funds
could be adversely and bonding are available
affected by a change in to support operations.
our credit rating or
disruption in the
capital markets
resulting in credit
facilities not being
available. We also
require access to
bonding facilities to
secure planning, road
and sewer agreements for
our developments.
Competitive markets We operate in a market We constantly review our
with many other prices and sales
national, regional and incentives offered to
local housebuilders. customers to maintain
Increasing levels of appropriate sales volumes.
competition for a We plan our developments
reduced number of buyers to provide the right house
could reduce the number styles and specifications
of homes we sell and to suit the local market.
affect revenues, margins
and profits.
Regulatory compliance Our business is subject We hold a landbank
to extensive and complex sufficient to provide
laws and regulations security of supply for
principally relating to short term requirements.
planning, the We operate comprehensive
environment and health management systems to
and safety. Our ensure regulatory
obligations to comply compliance and reduction
with legislation can in reputational risk.
result in delays in land
development and
housebuilding activity
causing us to incur
substantial costs and
prohibit or restrict
land development and
construction.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the undertakings included
in the consolidation taken as a whole; and
· the Annual Report which will be issued on 22 March 2010, includes a fair
review of the development and performance of the business and the position
of the Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and uncertainties
that they face.
By order of the Board
Mike Farley Mike Killoran
Group Chief Executive Group Finance Director
1 March 2010 1 March 2010
The Directors of Persimmon plc are:
John White Group Chairman
Mike Farley Group Chief Executive
Mike Killoran Group Finance Director
Jeff Fairburn North Division Chief Executive
Hamish Leslie Melville Non-executive Director
David Thompson Senior Independent Director
Neil Davidson Non-executive Director
Nicholas Wrigley Non-executive Director
Richard Pennycook Non-executive Director
Jonathan Davie Non-executive Director
The Group's Annual financial reports, half year reports and interim
management statements are available from the Group's website at
www.corporate.persimmonhomes.com
This information is provided by RNS
The company news service from the London Stock Exchange
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