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Persimmon plc

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Persimmon plc
Company typePublic limited company
LSE: PSN
FTSE 100 Component
IndustryHousebuilding
Founded1972; 52 years ago (1972)
HeadquartersYork, England, UK
Key people
Roger Devlin (Chairman)[1]
Dean Finch (CEO)[2]
RevenueDecrease £2,773.2 million (2023)[3]
Decrease £346.9 million (2023)[3]
Decrease £255.4 million (2023)[3]
Number of employees
6,000 (2023)[4]
SubsidiariesCharles Church
Westbury Partnerships
Space 4
Websitewww.persimmonhomes.com

Persimmon plc is a British housebuilding company, headquartered in York, England. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

History

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Persimmon was founded by Duncan Davidson in 1972. The company is named after a horse which won the 1896 Derby and St. Leger for the Prince of Wales (the future Edward VII). After leaving George Wimpey, Davidson had formed Ryedale Homes in 1965, selling it to Comben Homes in 1972 for £600,000. Davidson restarted development again in the Yorkshire area; Persimmon began to expand regionally with the formation of an Anglian division in 1976 followed by operations in the Midlands and the south-west.[5] In 1984, Persimmon acquired Tony Fawcett’s company Sketchmead; Fawcett had been a director of Ryedale and he became deputy managing director at Persimmon. The enlarged company was floated on the London Stock Exchange in 1985, by which time the Company was building around 1,000 houses per year.[6]

Steady regional expansion proceeded throughout the late 1980s, taking volumes up to 2,000 homes per year by 1988.[5] By the start of the 1990s, the company was regarded as one of the safest housebuilders from a stockholder's perspective.[7] During April 1990, the managing director of Persimmon, Norman Lilley, was killed after his aircraft exploded mid-flight.[8] One year later, the company conducted a rights issue to raise £33 million for land purchases.[9] It was negatively impacted by the early 1990s recession, although sales figures showed signs of recovery as early as March 1992.[10][11]

During February 1993, John White was appointed chief executive of Persimmon in place of Davidson, who continued to hold the position of executive chairman.[12] By thus point, the firm was selling roughly 2,300 houses per year, and recording an annual profit of £10.16 million, which was considerably down from the peak figure achieved for 1989–1990 of £32 million.[13] In March 1994, shortly after Persimmon's announcement that it had almost doubled its pre-tax profits year-on-year to £18.6 million, it raised £49 million from shareholders to expand its land bank by a third in preparation for future development.[14] The positive results achieved around this time were attributed to favourable market conditions, including falling costs and a gentle rate of inflation on house prices; Persimmon was able to cut selling costs down to £3,700 per unit in early 1994.[15]

During late 1995, Persimmon made the first of a series of major acquisitions. Ideal Homes, once the largest housebuilder in the country and then part of Trafalgar House was bought for £176 million, giving the Group a much stronger presence in the south-east.[16][17] Amid the acquisition of Ideal Homes, Davidson issued a public denial that family influence had played a role in the purchase.[18][19] Following the acquisition, Persimmon was able to increase its margins and recorded a pre-tax profit of £33.1 million for 1996.[20] Around this time, the firm's construction strategy was centred on the principle of 'quality over quantity'.[21]

During April 1998, it completed the purchase of the Scottish housing business of John Laing Group in exchange for £18 million, increasing its Scottish landbank by roughly one-third to almost 3,000 plots.[22][23] Another acquisition was of the Scottish housebuilding business Tilbury Douglas Homes.[5][24] In 1999, the firm launched a new subsidiary focused on interurban development.[25] Throughout the late 1990s, Persimmon recorded a series of increases to its profits.[26]

In early 2001, Persimmon acquired Beazer Homes UK in exchange for £612 million, which brought the company's annual output to over 12,000 homes per year.[27][5] The deal came about after Beazer and Bryant announced a 'merger of equals' that was to create a new house builder called Domus.[28] However, Taylor Woodrow stepped in with a £556 million bid for Bryant while Persimmon bought Beazer.[29][30] The acquisition of Beazer brought with it the upmarket housing business Charles Church;[31] months after the purchase, Persimmon incurred considerable losses as well as legal action that related to Church.[32]

In January 2006, Persimmon completed the acquisition of Westbury, another listed UK house builder, for a total consideration of £643 million.[33][34] Around the same timeframe, it also purchased the regional house builder Senator Homes in exchange for £25 million.[35] As a result of its acquisitions, the firm became the largest housebuilder in the UK.[36]

The company was heavily impacted by the onset of the Great Recession; in 2008 alone, it lost £780 million along with impairments totalling £905 million.[37] However, it returned to profitability in early 2009.[38] In early 2013, Persimmon recorded a near-doubling of profits and total revenues of £1.72 billion;[39] some of these gains were attributed to the British government's Help to Buy scheme.[40]

During 2019, the firm completed 15,855 homes and recorded an annual profit of £1.09 billion, which was the largest ever achieved by a British housebuilder; however, sales were declining amid recent reputational damage to Persimmon much of which was due to alleged quality control issues.[41]

In May 2024, Persimmon was reported to be considering a bid for Legal & General's subsidiary Cala Homes, which was valued at around £1 billion.[42]

Operations

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Driveway entrance to the offices of Persimmon plc in York

It builds homes under the Persimmon Homes, Charles Church and Westbury Partnerships brands.[43]

Criticism

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Build quality

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Persimmon has regularly been criticised for the poor build quality of some of its homes.[44][45][46][47][48][49]

In 2008, a boy was killed by a falling mantelpiece. Persimmon, which sub-contracted company KD Childs to fit the fireplaces, had not checked the standards and had never received documents about how fireplaces were fitted. A mantelpiece had previously fallen at another Persimmon Home but was treated as a "one-off" incident.[50]

Persimmon's build quality was the subject of a Channel 4 Dispatches documentary broadcast on 15 July 2019.[51][52] In August 2019, Persimmon appointed an independent team of construction quality inspectors to ensure its homes are built to required standards.[53]

In April 2019, Persimmon launched an independent review of customer care and quality of work following criticism. Persimmon had been ranked the lowest major housebuilder in the Home Builders Federation annual customer satisfaction survey.[54] The review, published in December 2019, criticised Persimmon for not having minimum construction standards, increasing the risk of build defects,[55] with a "systemic nationwide failure" of missing and/or incorrectly installed fire cavity barriers in its timber frame properties.[56][57] In March 2021, Persimmon CEO Dean Finch announced plans to double the firm's team of independent quality inspectors to over 60 by the end of 2021.[2]

In 2021, Persimmon built a block of properties the wrong way round in Colchester. The local authority required them to ensure the building was completed to the original designs submitted.[58]

Censorship

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In 2019, Persimmon paid to take control of and then shut down a Facebook group, called Persimmon Homes Unhappy Customers, which detailed complaints about the company, and had almost 14,000 members.[59] The company defended deleting the group.[60]

Health and safety failure

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In 2001, Persimmon was fined £125,000 after an employee was crushed to death. HSE investigating inspector Tony Mitchell said: "Companies need to ensure that all safety devices are fully operational. In this case properly fitted interlocks would have prevented access to the enclosure, and saved a life".[61]

Executive pay

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In December 2017, Persimmon's chairman, Nicholas Wrigley, resigned over his role in awarding Jeff Fairburn, the CEO, a £128 million bonus.[62] The Persimmon bonus scheme was believed to be the UK's "most generous ever", scheduled to pay more than £800 million to 150 senior staff from 31 December 2016.[62]

In October 2018, Fairburn received widespread criticism after refusing to discuss the bonus awarded to him the previous year. When the bonus was awarded he said he would forgo half his shares: the final bonus which therefore was awarded £75 million. This was the largest bonus award by a listed UK company in history.[63] Fairburn has said he would give a "substantial proportion" of the bonus to charity; however no details of the charities were given (and no charitable involvement could be identified three years later).[64][65] He left the following month in a decision that the company described as being by "mutual agreement and at the request of the company".[66]

Late payment

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In April 2019, Persimmon Homes was suspended from the UK Government's Prompt Payment Code for failing to pay suppliers on time.[67] It was reinstated around 10 months later.[68]

Competition

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In February 2024, Persimmon was among eight UK house-builders targeted by the Competition and Markets Authority in an investigation into suspected breaches of competition law. The CMA said it had evidence that firms shared commercially sensitive information with competitors, influencing the build-out of sites and the prices of new homes.[69]

References

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  1. ^ "Persimmon appoints Roger Devlin as new chairman". Scottish Construction Now. 15 March 2018. Retrieved 1 August 2021.
  2. ^ a b "New Persimmon chief on quality control drive". The Construction Index. 3 March 2021. Retrieved 3 March 2021.
  3. ^ a b c "Preliminary Results 2023" (PDF). Persimmon plc. Retrieved 12 March 2024.
  4. ^ "Chairman addresses prestigious Cardiff Business Club". Persimmon. 5 June 2023. Retrieved 11 February 2024.
  5. ^ a b c d Wellings, Fred: Dictionary of British Housebuilders (2006) Troubador. ISBN 978-0-9552965-0-5
  6. ^ Company Prospectus
  7. ^ "07Sep90 UK: PERSIMMON INTERIM PROFITS TO JUNE 1990 DOWN 4% TO £16.2M". constructionnews.co.uk. 6 September 1990.
  8. ^ "20Apr90 FRANCE: PERSIMMON BOSS DIES IN AIR TRAGEDY". constructionnews.co.uk. 19 April 1990.
  9. ^ "05Apr91 UK: PERSIMMON ANNOUNCES £33M RIGHTS ISSUE". constructionnews.co.uk. 4 April 1991.
  10. ^ "12Mar92 UK: PERSIMMON REPORTS 23% FALL IN PRETAX PROFITS TO £22.3M IN YEAR ENDING DECEMBER 1991". constructionnews.co.uk. 12 March 1992.
  11. ^ "11Mar93 UK: HOUSING MARKET – PERSIMMON PROCEEDS WITH CAUTION". constructionnews.co.uk. 11 March 1993.
  12. ^ "11Feb93 UK: APPOINTMENT AT PERSIMMON". constructionnews.co.uk. 11 February 1993.
  13. ^ "20May93 UK: PERSIMMON'S STRENGTH IN NUMBERS". constructionnews.co.uk. 20 May 1993.
  14. ^ "17Mar94 UK: PERSIMMON TO EXPAND LAND BANK". constructionnews.co.uk. 17 March 1994.
  15. ^ "08Sep94 UK: PERSIMMON ADVANCES – INTERIM RESULTS". constructionnews.co.uk. 8 September 1994.
  16. ^ "Chips cashed in too soon?". constructionnews.co.uk. 18 January 1996.
  17. ^ Fishlock, Bill (1 February 1996). "Merger mania on way says Persimmon boss". constructionnews.co.uk.
  18. ^ "Persimmon boss denies family influence". constructionnews.co.uk. 1 February 1996.
  19. ^ "Persimmon benefits from an Ideal fit". constructionnews.co.uk. 5 September 1996.
  20. ^ "Persimmon improves margins". constructionnews.co.uk. 13 March 1997.
  21. ^ "Quality is up Persimmons street". constructionnews.co.uk. 4 September 1997.
  22. ^ "Persimmon grows". constructionnews.co.uk. 9 April 1998.
  23. ^ "Persimmon's perfect reply". constructionnews.co.uk. 3 September 1998.
  24. ^ "Annual Results announcement 2001" (PDF). Interserve. Retrieved 22 March 2015.
  25. ^ "Persimmon tracks city lights". constructionnews.co.uk. 13 May 1999.
  26. ^ "Home comfort but outlook mixed". constructionnews.co.uk. 11 March 1999.
  27. ^ "Persimmon offers £538m for Beazer". BBC News. 24 January 2001.
  28. ^ "BUSINESS – Persimmon to enter Beazer race". BBC News. 15 January 2001. Retrieved 21 March 2015.
  29. ^ Gow, David (12 January 2001). "Taylor makes late bid". The Guardian.
  30. ^ "News Analysis: Beazer-Bryant Deal Is Hit By Housebuilders' Consolidation". investorschronicle.co.uk. 26 January 2001.
  31. ^ "About Charles Church". charleschurch.com. Retrieved 21 March 2015.
  32. ^ Barry, Sean (3 May 2001). "Persimmon reels at Church losses". constructionnews.co.uk.
  33. ^ "Business – UK housebuilders announce tie-up". BBC News. 24 November 2005. Retrieved 21 March 2015.
  34. ^ Griffiths, Ian (25 November 2005). "£640m secures win-win housebuilding deal". The Guardian.
  35. ^ "Persimmon swoops for Senator". constructionnews.co.uk. 14 December 2005.
  36. ^ "Persimmon becomes UK's No 1 with £643m Westbury deal". constructionnews.co.uk. 24 November 2005.
  37. ^ Whitten, Nick (3 March 2009). "Persimmon records £780m loss". constructionnews.co.uk.
  38. ^ Whitten, Nick (25 August 2009). "Persimmon reports half year profit boosted by landbank write up". constructionnews.co.uk.
  39. ^ Bell, Matthew (25 February 2013). "Persimmon's sales and profits surge ahead". constructionnews.co.uk.
  40. ^ Mair, Lucy (6 November 2013). "Help to Buy boosts Persimmon home sales". constructionnews.co.uk.
  41. ^ Kollewe, Julia (15 January 2020). "Persimmon sales fall as reputation suffers but profits hold up". The Guardian.
  42. ^ "Persimmon tipped for Cala bid". The Construction Index. 28 May 2024. Retrieved 28 May 2024.
  43. ^ "Corporate Profile". Persimmon. Retrieved 30 August 2024.
  44. ^ "More moans about new homes". Watchdog. Archived from the original on 6 June 2011.
  45. ^ "ITV New Homes from Hell". charles-church.org.uk. Retrieved 30 August 2024.
  46. ^ "Poorly-fixed lintel killed child". BBC News. Retrieved 21 March 2015.
  47. ^ "£30k damage after plumbing nightmare". Wiltshire Times. 15 May 2008. Retrieved 21 March 2015.
  48. ^ "Dream homes turn into a nightmare for neighbours on Persimmon's Hunters Gate development in Grantham". Grantham Journal. 23 May 2014. Archived from the original on 10 August 2016. Retrieved 15 May 2016.
  49. ^ "Persimmon homeowners in Newquay warn would-be buyers with signs". BBC News. 19 July 2018. Retrieved 19 July 2018.
  50. ^ "Death of boy was caused by poorly fixed mantelpiece". Herald Scotland. 20 December 2008. Retrieved 12 May 2016.
  51. ^ O'Dwyer, Michael (15 July 2019). "Market report: Persimmon slips as it apologises for TV show's home truths". The Telegraph. Retrieved 17 July 2019.
  52. ^ "Britain's New Build Scandal: Channel 4 Dispatches". Channel 4. Retrieved 17 July 2019.
  53. ^ Morby, Aaron (20 August 2019). "Persimmon calls in independent site quality enforcers". Construction Enquirer. Retrieved 20 August 2019.
  54. ^ Busby, Mattha (6 April 2019). "Persimmon launches review in drive to rebuild its image". The Guardian. Retrieved 6 April 2019.
  55. ^ Prior, Grant (17 December 2019). "Report blasts Persimmon over construction standards". Construction Enquirer. Retrieved 18 December 2019.
  56. ^ "Persimmon faces up to its failings". The Construction Index. 18 December 2019. Retrieved 18 December 2019.
  57. ^ Neate, Rupert (17 December 2019). "Persimmon accused of building homes with 'intolerable' fire risk". The Guardian.
  58. ^ "Cowdray Centre: Developer has to alter homes after mistake". Colchester Gazette. 13 October 2021. Retrieved 13 October 2021.
  59. ^ "Persimmon profits fall as housebuilder looks at repairing reputation". The Guardian. 20 August 2019. Retrieved 27 February 2024.
  60. ^ "Persimmon defends shutting Facebook group to 'gag critics'". The Times. 5 July 2019. Retrieved 27 February 2024.
  61. ^ Stewart, Dan. "Persimmon fined £125,000 after crush death". Building. Retrieved 12 May 2016.
  62. ^ a b Neate, Rupert (15 December 2017). "Persimmon chair resigns over chief executive's 'obscene' £128m bonus". The Guardian. Retrieved 15 December 2017 – via www.theguardian.com.
  63. ^ "£75m bonus boss walks off over pay question". BBC News. 19 October 2018. Retrieved 25 November 2018.
  64. ^ Neate, Robert (14 February 2021). "Ex-Persimmon chief fails to set up charity three years on from bonus row". The Guardian. Retrieved 3 March 2021.
  65. ^ Treanor, Jill (11 November 2018). "Persimmon bonus row boss retained £15m". BBC News. Retrieved 25 November 2018.
  66. ^ "Building boss out over £75m pay row". BBC News. 7 November 2018. Retrieved 7 November 2018.
  67. ^ Morby, Aaron (29 April 2019). "Industry giants shamed over late payment". Construction Enquirer. Retrieved 29 April 2019.
  68. ^ Prior, Grant (12 February 2020). "F M Conway suspended from Prompt Payment Code". Construction Enquirer. Retrieved 13 February 2020.
  69. ^ Morby, Aaron (26 February 2024). "Competition probe launched into 8 major house builders". Construction Enquirer. Retrieved 26 February 2024.
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