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Persimmon Plc

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Their results were out today and they make quite interesting reading ,they say that the rise in the average house price was down to people wanting houses not apartments.A land bank of nearly 60,000 plots too.

From The Wall St Journal:

LONDON (Dow Jones)--Persimmon PLC (PSN.LN) Tuesday announced a sharp rise in first-half earnings as building completions jumped, selling prices climbed and it booked a gain from the revaluation of its inventory, allowing the U.K. house builder to restore its interim dividend even though it maintained a cautious outlook.

Persimmon's performance benefited from GBP70.7 million in net realizable value provisions, essentially a reversal of the write-downs in the value of land and other assets that the company and virtually all its rivals were forced to take as house prices plunged as the U.K. economy tumbled into recession.

After net costs of GBP7.1 million for the early redemption of U.S. senior loan notes, Persimmon recorded an exceptional credit of GBP63.6 million.

The company has retained GBP288.4 million of net realizable value provisions that Chief Executive Mike Farley estimated would insulate Persimmon from a further drop in house prices of 10% before any balance sheet adjustments were required.

"It's nice to have that ability," he told Dow Jones Newswires in an interview.

Persimmon said over the next few months it plans to open 75 new sites, mostly in the south of England, that will maintain the strength of its outlet network, but it noted that mortgage lenders remained cautious. It hopes that government spending plans to be announced in October will create greater certainty that may help to improve sentiment.

Farley said the new outlets will create 600 new jobs by the end of the year, comprising 200 new staff, 60 trainees and apprentices and work for 340 contractors.

Sales have slowed in the seasonally quieter summer period, as expected, following strong sales through the spring, but the company said it has a healthy forward sales position and has sold 95% of its full-year target with a further 1,700 homes already reserved to carry forward into 2011.

Persimmon, the U.K.'s largest house builder by market capitalization, has a land bank of 58,957 plots, which is equivalent to about six years' work.

"Overall, whilst we currently remain cautious, we are optimistic about the future of our business," said Chairman John White in a statement.

The company reported pretax profit after goodwill impairment and exceptional items in the six months ended June 30 soared to GBP101.4 million from GBP9.8 million in the same period a year earlier. Operating margin on the same basis rose to 8% from 1.6%, helped by building costs that were down 14% from peak levels.

Persimmon intends to remain vigilant on costs. "We are looking to run a tight ship at the present time," said Farley. The company generated cash inflow of GBP185.6 million and reduced net borrowings at June 30 to GBP122.1 million from GBP494.2 million a year earlier.

Revenue rose 27% to GBP776.6 million from GBP611.8 million as legal completions jumped 16% to 4,657 homes from 4,006 and the average selling price climbed 8.6% to GBP168,936 from GBP155,524. The higher average selling price largely is due to a shift in product mix to more houses and fewer apartments, and Farley said only about 3% of the hike represented "real price growth."

Persimmon reported a net profit of GBP34.3 million, from a loss of GBP12.9 million a year ago.

Net assets per share increased 9.7% to 565.1 pence from 515.1 pence.

Persimmon proposes to pay shareholders an interim dividend of 3 pence per share. It paid no dividend a year ago.

The reinstatement of a dividend was a clear sign of confidence, said J.P. Morgan Cazenove, which maintains a neutral rating on Persimmon. "We would expect the shares to perform strongly today."

At 0822 GMT, its shares up 6 pence, or 1.9%, at 353 pence, making it one of the biggest gainers in the FTSE 250 index, which traded down 1%. The stock has shed 26% in value since the start of 2010

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I've said it before and i'll say it again, my experience of owning a persimmon home was not a pleaseant one.

The build quality was poor, the house badly designed, the company bullying and the whole thing left me with a bad taste in my mouth.

If they are like this everywhere I am surprised they are still in business.

Edited by TheCountOfNowhere

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I've said it before and i'll say it again, my experience of owning a persimmon home was not a pleaseant one.

The build quality was poor, the house badly designed, the company bullying and the whole thing left me with a bad taste in my mouth.

If they are like this everywhere I am surprised they are still in business.

Would that be any better with any UK builder since 1945? Unlikely.

Perhaps we could improve our housing problems by opening up to builders from those countries where they do a better job (like Germany, Scandinavia). I expect that would have to mean doing away with the ever more elaborate financial crap we have in the name of "low cost housing".

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Would that be any better with any UK builder since 1945? Unlikely.

Possibly, but from my experience Persimmon is worst of the worst.

I have a friend who bought, I think bovis, well designed, well put together very helpful.

I think the building industry is worse than the car industry, probably because of the amount of money involved.

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I think the building industry is worse than the car industry, probably because of the amount of money involved.

I've moved around a lot and rented toward the top end, around the 1k a month mark, and I've never lived in a place that I would actually buy. The newbuilds are unavoidably built with new materials, but they are poorly designed and seem to be more about ticking the boxes of x many bedrooms and y bathrooms instead of making a decent place to live. It's a game of how many boxes can we tick in as small a space as possible. They also never have adequate parking. Older properties are in dire need of modernisation, in terms of sound/heat insulation and equipment, as well as decor.

The best are usually conversions of older properties that have been done recently, then you get a reasonable layout at least with more passable equipment, and often the insulation is ok. However a lot of these conversions are done on the cheap and you end up with poor insulation and cheap and nasty equipment, wasting the opportunity of a rare and interesting building.

I have yet to live in a place I would actually buy, due to the poor quality stemming from the quick buck 'bodge it and leg it' mentally that the housing/building industry in this country consists solely of. It's ridiculous that in 2010 something as easy and fundamental as proper housing is still unavailable to all but the multi-millionaires.

It's sh1t here, it really is. You pay through the nose and all you get is cr4p.

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Persimmon, the U.K.'s largest house builder by market capitalization, has a land bank of 58,957 plots, which is equivalent to about six years' work.

Are these plots paid for?

I have a friend who was handed a deposit and has a contract to sell the land at full price in something like 5 years time. 58,957 plots sounds impressive, but do not represent a substantial asset if only deposits have been paid.

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Just proves the dead cat bounce we had from late 09 to June 10 (Dr Bubb on the money there) - vendors sold at buoyant prices. Now all I read is of continued credit contraction and EAs are doing v little business.

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Would that be any better with any UK builder since 1945? Unlikely.

Perhaps we could improve our housing problems by opening up to builders from those countries where they do a better job (like Germany, Scandinavia). I expect that would have to mean doing away with the ever more elaborate financial crap we have in the name of "low cost housing".

National housebuilders are known for build quality issues and lengthy snagging lists, due to the speed of the build, the pressure put on the site staff to stick to the build programme, and the fact that you have underpaid and perhaps underqualified labour working for subcontracters instead of skilled craftsmen. The saving on the wage bill is reflected in the cars driven by the subbies.

I have worked for several of the major UK housebuilders including Persimmon where I can accross the most apalling build quality I have seen. In my opinion the product quality is a major issue with this company but seems to be largely ignored in a sea of bureaucracy which seems to encourage hitting quartely figures rather than focusing on the foundations of the business such as product quality and long term customer satisfaction. Reputation is the key to success in any businesss and the customer is king, the board of directors must either be;

1) Ignorant to this fact and more concerned about hitting their bonuses in what will be a short lived career at a plc...

2) Don't really care as long as they get their bonuses....

3) Completely clueless overpaid fat heads.

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There was a builder round here who made a bit of effort, unfortunately, like the others, he had a lot of debt and went under in Feb 2009, David Payne. Mostly pricey developments though in my experience:

http://www.stourbridgenews.co.uk/news/4174683.Housebuilder_launches_bitter_attack_on_bankers/

The developments done by Mucklow in the 50s and 60s round here seem to have aged well.

Personally, I once lived in Barratt house, awful.

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Are these plots paid for?

I have a friend who was handed a deposit and has a contract to sell the land at full price in something like 5 years time. 58,957 plots sounds impressive, but do not represent a substantial asset if only deposits have been paid.

They also aren't substantial liabilities either...

These contracts tend to be options to purchase at a fixed price at some future date. The premium they pay (the "deposit") tends to be very cheap relative to what one should pay for such an option, given Black Scholes or even a bit of common sense. If the land goes up in price, the developers get land under current market value. If the land drops in price, they walk away from the contract, forfeiting the risible deposit.

Developers are scum. You should have seen the games they played with my family and their neighbours when we sold them a couple of farms for development. The option was about to expire and they came around wanting to extend it for 6 months (to see whether the land would be rezoned in the state government's plan a few months after option expiry.) Given that the value of the land had doubled since the option was taken out, this was a bit of cheek. So, my family said "no, pay now or we have a new contract." They had the cheque to us the next day.

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Personally, I once lived in Barratt house, awful.

Add Taylor-Wimpey to that list. Have lived in 2 of them. Dreadful. Unliveable. All about box ticking: 3 bedrooms, 1 kitchen etc. Poorly designed. Lots of unusable space in what are already undersized houses. It is a crime that councils give planning approval for these blights on the housing stock.

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I moved to the UK in 1990, rented a new build for 6 months. I'm not not sure who built it, but whoever fitted the stair case couldn't be bothered to wipe, or sand off the part numbers that had been written on the banisters before staining them. I didn't know the owner, we rented through an agency. I couldn't understand why anyone would want to pay good money for such poor quality.

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No. You're thinking of Beazer.

VOE :(

Haven't worked for them - but from others within the industry I have heard the stores.

There was a builder round here who made a bit of effort, unfortunately, like the others, he had a lot of debt and went under in Feb 2009, David Payne. Mostly pricey developments though in my experience:

http://www.stourbridgenews.co.uk/news/4174683.Housebuilder_launches_bitter_attack_on_bankers/

The developments done by Mucklow in the 50s and 60s round here seem to have aged well.

Personally, I once lived in Barratt house, awful.

Yes shame to see the smaller type firms suffer - these are the ones who can feel the importance of producing a quality product. They are also less likely to have ridiculous paper chains which swallow man hours and time, meaning they have more money in the kitty to spend on better quality materials.

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Add Taylor-Wimpey to that list. Have lived in 2 of them. Dreadful. Unliveable. All about box ticking: 3 bedrooms, 1 kitchen etc. Poorly designed. Lots of unusable space in what are already undersized houses. It is a crime that councils give planning approval for these blights on the housing stock.

I don't know about that. I grew up in a Wimpey built semi-detached that was built in 1983. Pretty basic house, its got a small hallway, living room, dining room, kitchen, two bedrooms, a boxroom and bathroom. Decent sized gardens too - big lawn in the back garden for my and my brother playing football against one another when we were kids.

Both bedrooms had enough space for 2 single beds or 1 double bed, plus a double wardrobe and a chest of drawers or two. Me and my brother had enough room in our bedroom for a portable telly and a computer on top of that. My sister had the boxroom, which was pretty small but still comfortably fitted a single bed and a wee wardrobe chest of drawers thing (and yes, this boxroom being used as a bedroom did have a window :lol:). So I'm not sure if it really was that badly designed.

In terms of build quality, well the original kitchen and bathroom must have lasted for at least 10-15 years before my mum had them replaced, maybe longer. Every internal door that came with the house is still in its place and those seem to be good quality to me. All the skirting boards in the house are fine, the bannister and staircase also in good condition. In fact all the materials used to build it must have been good - believe it or not the windows in the house are the original ones that came with it (my mum never got round to getting DG put in). Although that does mean she has to paint her wooden window frames every few years To my knowledge there's never been any problems with the plumbing, and in terms of the electrics the only thing I can think of is that one of the plug sockets in the dining room is faulty and can't be used. Every plug socket and light switch is the original one that came with the house, and other than the faulty one they all work OK nearly thirty years after the house was built.

Maybe the Wimpey houses you lived in were much newer? Or maybe my mum was freakishly lucky with her purchase?

Edited by Jie Bie

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  • 146 Brexit, House prices and Summer 2020

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