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REG-Persimmon Plc Half Yearly Report - Part 2 Released: 25/08/2009
Part 2 : For preceding part double-click [nRn1Y9310X]
setting out all items of income and expense relating to non
-owner changes in equity. There is a choice between presenting
comprehensive income in one statement or in two statements
comprising an income statement and a separate statement of
comprehensive income. The Group has elected to present
comprehensive income in one statement. In addition, IAS 1
(revised) requires the statement of changes in shareholders'
equity to be presented as a primary statement. The other
revisions to IAS 1 have not had a significant impact on the
presentation of the Group's financial information.
* Amendment to IFRS 2 (Share Based Payments) clarifies,
amongst other matters, the treatment of cancelled options. The
impact 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 has aggregated its geographic
operations into one reportable segment, which is housebuilding
in the United Kingdom.
* IAS 23 (amendment) effective from 1 January 2009. 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.
The comparative figures for the financial year ended 31
December 2008 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 237(2) or
(3) of the Companies Act 1985.
After making due enquiries, 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.
The half year financial statements are unaudited, but have been
reviewed by the auditors whose report is set out on page 14 and
were approved by the Board of Directors on 24 August 2009.
2. Exceptional items
Six months to Six months to Year to
30 June 30 June 31 December
2009 2008 2008
£m £m £m
Cost of sales:
Net realisable value of inventories (i) (27.9) 40.0 652.3
Asset impairment and write-offs (ii) - 9.0 35.9
Operating expenses:
Restructuring costs (iii) - 15.0 21.9
Asset impairment (ii) - - 201.0
Exceptional (income) / costs (27.9) 64.0 911.1
Finance income:
Other interest receivable (iv) - - (6.3)
Exceptional items before tax (27.9) 64.0 904.8
(i) In light of the deterioration in the UK housing market, the Group conducted
a review of the net realisable value of its inventory carrying values which
resulted in a charge of £40.0m at 30 June 2008 and an additional net impairment
of £612.3m at 31 December 2008. At 30 June 2009, the Group continued with this
review process which resulted in a net exceptional credit to the Statement of
Comprehensive Income of £27.9m. Further details are provided in note 6.
(ii) Additional impairment reviews of trade and other receivables, and goodwill,
resulted in exceptional charges which are fully explained in the audited
financial statements for the year ended 31 December 2008. No further exceptional
impairments have occurred at 30 June 2009.
(iii) At 30 June 2008, the Group had incurred expenses of £15.0m in relation to
reorganising and restructuring the business. On further restructuring activity,
total costs comprising staff redundancy, contract severance costs and costs
related to office closures amounted to £21.9m. No such costs were incurred in
the period to 30 June 2009.
(iv) Interest receivable represents monies due following the receipt of tax
repayments associated with the exceptional costs.
3. Tax
The effective corporation tax rate for the half year is
nil% (half year ended 30 June 2008: 28.5% and year ended
31 December 2008: (19.9%)). This is the estimated
effective tax rate for the year ending 31 December 2009,
based upon the current estimate of available loss relief.
4. Dividends
Six months to 30 June 2009 Six months to 30 June 2008
£m £m Year to
31 December 2008
£m
Dividends paid:
Final dividend for the year ended 31 December 2008 of - 98.1 98.1
nil per share (2007: 32.7p)
Interim dividend for the six months to 30 June 2008 of - - 15.0
5.0p per share (2007: 18.5p)
Total dividend - 98.1 113.1
Dividends proposed:
Interim dividend for the six months to 30 June 2009 of - 15.0 -
nil per share (2008: 5.0p)
5. Earnings per share
Basic earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during
the period, excluding those held in the Employee Share
Ownership Trust, the Employee Benefit Trust and treasury
shares all of which are treated as cancelled.
For diluted earnings per share, the weighted average number
of ordinary shares in issue is adjusted to assume conversion
of all potentially dilutive ordinary shares from the start of
the accounting period. The Company has only one category of
dilutive potential ordinary shares: those share options and
awards granted to directors and employees where the exercise
price is less than the average market price of the Company's
ordinary shares during the period. In accordance with IAS 33,
potential ordinary shares are only dilutive when their
conversion to ordinary shares would decrease earnings per
share or increase the loss per share from continuing
operations. Diluted earnings per share is calculated by
dividing earnings by the diluted weighted average number of
shares.
Underlying earnings per share excludes exceptional items and
goodwill impairment.
The earnings per share from continuing operations were as follows:
Six months to Six months to Year to
30 June 2009 30 June 2008 31 December 2008
Basic earnings per share 3.3p 8.8p (208.3p)
Underlying basic earnings per share (3.8p) 24.1p 35.3p
Diluted earnings per share 3.3p 8.8p (208.3p)
Underlying diluted earnings per share (3.8p) 24.0p 35.2p
a) Earnings
Six months to Six months to Year to
30 June 2009 30 June 2008 31 December 2008
£m £m £m
Underlying earnings attributable to shareholders (11.5) 72.2 105.9
Exceptional items net of related taxation (including
exceptional intangible asset impairment) 22.7 (45.8) (729.1)
Goodwill impairment - utilisation of strategic land
holdings (1.4) - (1.8)
Earnings attributable to shareholders 9.8 26.4 (625.0)
b) Weighted average share capital
Six months to Six months to Year to
30 June 2009 30 June 2008 31 December 2008
For basic earnings per share 300,236,765 299,930,754 300,033,700
Options and awards 757,763 912,715 985,716
For diluted earnings per share 300,994,528 300,843,469 301,019,416
6. Inventories
30 June 2009 30 June 2008 31 December 2008
£m £m £m
Land 1,677.9 2,453.2 1,779.5
Work in progress 553.1 867.3 634.0
Part exchange properties 11.4 120.0 54.5
Showhouses 65.2 87.8 78.5
Total inventories 2,307.6 3,528.3 2,546.5
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 the half year ended 30 June 2009. The impact of this
review of our net realisable value provisions is an exceptional credit to the Statement of
Comprehensive Income of £27.9m.The total impairment of land and work in progress recognised
during the half year was £121.4m (June 2008: £40.0m; December 2008: £652.3m) and a reversal of
£149.3m (June 2008: £nil; December 2008: £nil) on inventories that were written down in a
previous accounting period. Our approach to our net realisable value review has been consistent
with that conducted at 31 December 2008 which was fully disclosed in the financial statements
for the year ended on that date.
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 toimprove/deteriorate in the future then further
adjustments to the carrying value of land and work in progress may be required.
Following this review, £904.6m (June 2008: £306.3m; December 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 Six months to Six months to Year to 31 December
30 June 30 June 2008
2009 2008 £m
£m £m
Increasein net cash and cash equivalents 2.0 18.0 25.9
Decrease/(increase) in debt and finance lease obligations 105.7 (203.6) 98.6
Financing expenses paid 21.3 - -
Decrease /(increase) in net debt from cash flows 129.0 (185.6) 124.5
New finance lease obligations - (0.4) (0.6)
Non-cash adjustments (2.7) 1.9 (0.8)
Decrease/(increase) in net debt 126.3 (184.1) 123.1
Net debt at beginning of period (601.2) (724.3) (724.3)
Net debt at end of period8 (474.9) (908.4) (601.2)
8. Analysis of net debt
Note 30 June 30 June 31 December
2009 2008 2008
£m £m £m
Cash and cash equivalents 0.3 14.0 0.8
Bank overdrafts (21.2) (44.8) (23.7)
Net cash and cash equivalents (20.9) (30.8) (22.9)
Bank loans (35.0) (280.0) (63.1)
US and UK senior loan notes due within one year (69.3) (141.0) (119.4)
US, UK & EU senior loan notes due after more than one year (369.9) (385.6) (507.0)
Other loan notes due within one year (2.8) (4.6) (3.2)
Forward currency swaps 3.7 (63.5) 116.8
Finance lease obligations (1.8) (2.9) (2.4)
Financing expenses 21.1 - -
Net debt at end of period7 (474.9) (908.4) (601.2)
On 27 February 2009 the Group reached agreement with its
syndicate of banks providing the current revolving facility on
amendments to the amount, terms and conditions of its existing
credit facilities and also reached agreement with its private
placement investors on amendments to the terms and conditions
of its existing credit facilities. The Group also entered into
a new revolving credit facility. This Forward Start Facility
of £322m will become available for drawing on 24 November 2010
on the maturity of the existing facility and matures on 31
March 2012. Full documentation was finalised and signed on 13
March 2009. This refinancing has been accounted for as a
modification.
9. Defined benefit pension schemes
The amounts recognised in income are as follows:
Six months to 30 June Six months to 30 June Year to
2009 2008 31 December
£m £m 2008
£m
Current service cost 1.7 2.7 4.8
Curtailment credit - - (2.1)
Interest cost 9.7 9.6 19.4
Expected return on schemes' assets (7.0) (9.7) (19.6)
Total recognised in profit after tax 4.4 2.6 2.5
Net actuarial loss 26.1 4.3 43.8
Total recognised in other comprehensive (income) / expense 26.1 4.3 43.8
Total defined benefit schemes loss recognised in the period 30.5 6.9 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:
30 June 30 June 31 December
2009 2008 2008
£m £m £m
Present value of funded obligations (347.8) (308.5) (324.0)
Fair value of schemes' assets 231.5 247.1 228.7
Deficit in the schemes and net liability in the balance (116.3) (61.4) (95.3)
sheet
An update on the 31 December 2008 IAS 19 valuation, adjusted for current market
conditions has been obtained from the schemes' actuary as at 30 June 2009, which
has been used as the basis for these figures.
10. Related parties
Transactions between the Company and its subsidiaries,
which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Principal risks and uncertainties
The principal risks and uncertainties which could impact the Group for the
remainder of the current financial year are those detailed on page 7 of the
Group's Annual Report and Accounts 2008 and have not changed. These include:
poor economic conditions, disruption in the capital markets and restrictions on
mortgage availability. Further details regarding assessment of the risks and
current market conditions are included within the Chairman's Statement in this
Half Year Report. A copy of the Group's Annual Report and Accounts 2008 is
available on the Group's website at www.corporate.persimmonhomes.com.
Statement of Directors' Responsibilities
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU
* the Half YearReport includes a fair review of the information required by:
* (a) DTR 4.2.7R of the Disclosure 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
* (b) DTR 4.2.8R of the Disclosure 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 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
By order of the Board
Mike Farley Mike Killoran
Group Chief Executive Group Finance Director
24 August 2009
The Group's annual financial reports, half yearly reports and interim management
statements are available from the Group's website at
www.corporate.persimmonhomes.com.
Independent Review Report to Persimmon Plc
Introduction
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
2009 which comprises the Condensed Consolidated Statement of Comprehensive
Income, Condensed Consolidated Balance Sheet, Condensed Statement of Changes in
Shareholders' Equity, Condensed Consolidated Cash Flow Statement and the related
explanatory notes. 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.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, annual financial statements of the group are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. 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 Ireland) 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.
Conclusion
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 2009 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK
FSA.
David Morritt
For and on behalf of KPMG Audit Plc
Chartered Accountants
Leeds
24 August 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR USABRKURWUAR
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