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Persimmon Revalue Their Land + £28m

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Just out on BBC (TV) News.

"Persimmon said it made a £9.8M profit in the six months to june, but it revalued it's land by £28M. If it hadn't done that, the housebuilder would have made a loss of £18M".

:rolleyes:

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Just out on BBC (TV) News.

"Persimmon said it made a £9.8M profit in the six months to june, but it revalued it's land by £28M. If it hadn't done that, the housebuilder would have made a loss of £18M".

:rolleyes:

I thought I was in debt for 10k. However I have recently revalued by 99 reg Volkswagen from 2k to 200k.

Therefore I am now worth 190k. Brilliant. I may sell that old car and buy a Porsche as a result.

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they must have bought a square foot of scotland...that went up from £35 to £40.....clearly, this rise needs to be upscaled for the entire portfolio.

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BBC Website.

http://news.bbc.co.uk/2/hi/business/8219500.stm

Persimmon sees improving market

The UK's largest housebuilder by volume, Persimmon, has said that the housing market is stabilising after months of sharp falls.

"Recently, selling prices have stabilised in most parts of mainland UK," the company said.

For the six months to June, Persimmon reported a pre-tax profit of £9.8m compared with £36.9m last year.

Persimmon said sales in the "historically quieter" weeks of summer were ahead of its expectations.

The company's profit was boosted by a gain of £27.9m after it decided that the value of its assets had increased. Stripping out this gain, the company made an £18.1m loss.

'Improvement'

The housebuilder confirmed it would not set aside any more money for write-downs of the value of its land.

"Mortgage availability continues to be a concern, particularly the scarcity of higher loan to value products," Persimmon said.

"However, the overall situation in respect of the mortgage market and valuations has recently shown signs of improvement."

The average selling price of houses was about £155,524, compared with £181,485 over the same period in 2008.

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That's creative accounting for you. It's such a good idea, I'll follow the example of others above. I've revalued my house from £230K to £310K. In fact, why stop there? ....Let's say £350K.

So what if they've revalued their land upwards, but when they've built houses on it, they still have to reduce the asking prices - does that mean that the building land could be worth more before the houses are built than after? :lol::lol:

Edited by blankster

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Guest DissipatedYouthIsValuable

Am I in an episode of a bizarre financial comedy reality show?

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i like this bit:

The company's profit was boosted by a gain of £27.9m after it decided that the value of its assets had increased.

You have to remember it wrote down its land bank by over 50% last year. It must now believe that was too much.

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Guest DissipatedYouthIsValuable
Land prices are going up. I don't see the problem.

Haha, you will mate, you will.

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i like this bit:

The company's profit was boosted by a gain of £27.9m after it decided that the value of its assets had increased.

Could one of you clever chaps who understands these matters give an opinion as to whether the figure, by fluke, is optimal for the dual aims of remaining solvent and minimising the number of messengers needed to deliver £20 notes to HMRC?

p-o-p

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Persimmon said sales in the "historically quieter" weeks of summer were ahead of its expectations.

Yep you heard that right the historically quieter weeks of Summer.

Meanwhile, Ice Cream salesmen are looking forward to the long dark winter months and the historically busier weeks of Ice Cream consumption!

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Persimmons are aggressively gaining planning permission on whatever land they have.

Threatening local Authorities to lower their 106 agreements and grant permission or they are mothballing.

Planning permission increases the price of land...

Theres a shortage dontUno

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Could one of you clever chaps who understands these matters give an opinion as to whether the figure, by fluke, is optimal for the dual aims of remaining solvent and minimising the number of messengers needed to deliver £20 notes to HMRC?

p-o-p

it means they can increase their borrowings.

bankers and valuations.....they are all guessers.

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Persimmons are aggressively gaining planning permission on whatever land they have.

Threatening local Authorities to lower their 106 agreements and grant permission or they are mothballing.

Planning permission increases the price of land...

Theres a shortage dontUno

From their H1 trading update "* 64,347 plots of land owned and under control - representing c.7 years supply

of land"

http://corporate.persimmonhomes.com/psn/investor/

Interesting income statement...

They are reducing debt but finance costs at 29mn are still high considering profit from operations were 8mn. Not looked at the balance sheet but guess they'll need to get debt down some more. What do others think of these half year results ?

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[For Spike Milligan fans]

'But how do you know your assets increased in value?'

'I've got it written down on a piece of paper!'

LOL

A PLC has to value its stock (land) at lower of cost or market value. Last year they had to reduce the value on their accounts and therefore reported a loss. However they would have been able to claim back tax that they paid in the previous year so whilst their balance sheet took a battering their cash flow would have improved. They can this year declare that that

that write down was too much and revise it. They cannot revise it up above above cost.

Persimmon took a £40m write-down on the value of its owned land, and wrote-off a further £9m in fees relating to potential transactions that it has withdrawn from. (BBC 21 Aug 2008)

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LOL

A PLC has to value its stock (land) at lower of cost or market value. Last year they had to reduce the value on their accounts and therefore reported a loss. However they would have been able to claim back tax that they paid in the previous year so whilst their balance sheet took a battering their cash flow would have improved. They can this year declare that that

that write down was too much and revise it. They cannot revise it up above above cost.

Banks are PLCs...why are they allowed to get away with mark to model?

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Banks are PLCs...why are they allowed to get away with mark to model?

On loans to PLC, where the land has been marked to market the bank will have to make provision, which many have. Where the loan is to a private company the rules are different, as they are not selling shares on the market. They seem to be allowed to mark to model, as you say and in this cases the banks will do likewise.

The problem is there is no market. No developers are buying and significant land and no banks are lending against it. Reason -

1. they have little or no cash

2. there annual sales rate has halved, therefore there landbank, in years has just doubled.

When there is no market the values fall below its 'true value' (what ever that is). It is arguable that the mark to market is too severe and you could see developers and banks clawing back some of their write downs or provisions over the next few years.

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