|Bid||2,286.00 x 0|
|Ask||2,288.00 x 0|
|Day's Range||2,278.00 - 2,331.19|
|52 Week Range||1,367.50 - 3,328.00|
|Beta (5Y Monthly)||1.16|
|PE Ratio (TTM)||8.66|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Jun. 11, 2020|
|1y Target Est||N/A|
The following are the top stories on the business pages of British newspapers. - President Trump has revived his trade war with Europe with a threat to impose tariffs on $3.1 billion of goods, including British beer, whisky and biscuits. - British house-builder Persimmon has poached Dean Finch from transport operator National Express to succeed David Jenkinson as chief executive.
(Bloomberg Opinion) -- The U.K. housing market — that obsession of middle-class Brits — has been placed in suspended animation. Buyers and renters have been told to delay moving home to limit the spread of coronavirus. While a few transactions are still going through, a functioning market depends on prospective buyers and surveyors being able to view people’s homes. Mobility restrictions and distancing measures make that all but impossible.Set against the loss of life caused by the virus, the anticipated collapse in housing transactions for at least the next few months is a price worth paying. Still, the knock-on effect will be severe across the sector, from the mortgage lenders obliged to offer struggling customers three-month payment holidays to the home-builders like Persimmon Plc and Taylor Wimpey Plc who’ve closed construction sites. For estate agents, struggling even before the pandemic, the standstill will be particularly painful.Boris Johnson’s government is trying to cushion the blow by suspending property taxes for businesses and paying employee wages (yes, even for real estate agents). But smaller outfits, those with weak balance sheets or those that were mismanaged before coronavirus struck, face a very difficult year. In the 2008-2009 downturn thousands of estate agents left the industry.It won’t be just those forced to shutter high street branches that face a bleak period though; while employees of digital property portals such as Rightmove Plc and Zoopla can more easily work from home, they’re being drawn into a brutal price war.With the busy spring and summer selling season poised to start, the timing of the lockdown could hardly be worse. The U.K. property market has already endured a few tepid years of because Brexit worries, stamp duty changes and high house prices that make it harder for people to purchase a home. Now the much ballyhooed “Boris bounce” after his recent election win has been extinguished and 2020 looks like being a write-off, forcing estate agents to slash costs.Countrywide Plc, the country’s biggest estate agent, was already ailing, having piled on debt to fund expansion. Shareholders recapitalized the business in 2018 via a massively discounted rights issue. Its debt covenants were also amended. Now, a takeover by rival LSL Property Services Plc has been called off; an agreed 38 million pound sale of its commercial property arm also failed to complete. Including lease obligations it still has about 194 million pounds of net debt, or almost 6 times ebitda. That’s uncomfortably high.London-focused Foxtons Group Plc is also loss-making but it has no bank or bond debt and held 15.5 million pounds of cash at the end of December. It has since drawn down a 5 million pounds credit line. However, renting office space and the ubiquitous Minis that its agents drive around consumes about 12 million pounds annually, so it too must slash costs. Besides rent, another big outlay for agents is the cost of advertising properties for sale with online portals. On average market leader Rightmove Plc charges agents more than 1,000 pounds a month for each advertiser. Coronavirus has sparked a full-blown rebellion against such fees. Rightmove’s initial offer to defer part of those payments for six months was poorly received, forcing it to backtrack and offer a 75% discount for the next four months instead. This will cost about 70 million pounds, or about one-fifth of estimated revenues. But that’s not the end of it: Rival Zoopla, which was acquired by private equity firm SilverLake in 2018 for $3 billion, is offering agents nine months free if they quit Rightmove. On Friday Rightmove suspended its dividend and scrapped its financial guidance.Loss-making platform Purplebricks Group Plc says it plans to conduct viewings and valuations via Zoom, Facetime and Whatsapp. But its fixed-fee model (customers must pay even if their home doesn’t sell) could come under more pressure. The company is already reeling from a failed U.S. and Australian expansion. German media giant Axel Springer SE doubled its stake last year and now owns 26% of the group, but the shares have since lost about two-thirds of their value. It’s not all bad. The collapse in travel bookings has prompted people who usually let their homes on Airbnb in tourist hotpots like London and Edinburgh to advertise long term rentals instead. Eventually the wider property market should rebound, driven in part by the desire of those who are presently housebound deciding they really do need a bigger home or more green space.Yet the pace of that rebound, and the outlook for prices, will depend on whether government succeeds in preventing the temporary shock of coronavirus wreaking permanent economic damage. As elsewhere, unemployed Britons will be less inclined to purchase a home, and banks could tighten lending standards. Estate agents that survive the current drought will have to work even harder for their fees.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Shares in the company fell as much as 6.4% after it said Jenkinson would leave in due course. It also reported a 4.6% fall in 2019 pretax profit to 1.04 billion pounds ($1.35 billion), in line with expectations. It sold 15,855 new homes in 2019, compared with 16,449 in 2018, when its use of government "Help to Buy" subsidies was marred by customer complaints over the quality of the houses and a $100 million bonus paid to previous CEO Jeff Fairburn.
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The company, however, said it expects pretax profit to be in line with market estimates and that it was in a strong position for the upcoming spring season. Over the past year, Persimmon has faced extensive criticism over the standard and safety of its houses, as well as a row over management bonuses. In December, it set up a group of construction professionals to look into its business practices after an independent review found that the blue-chip company needed to improve the quality of its homes and review executive bonuses.
The review led by Stephanie Barwise of Atkin Chambers covered issues related to the company's corporate culture, structure and HR policies. "The review found that Persimmon had focused on policies around inspections immediately before and after the sale of a home, rather than those governing build quality inspections," Chairman Roger Devlin said on Tuesday.
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Liberum analysts said that was in line with market expectations, and Persimmon shares were little changed at 0900 GMT. The company lost nearly a third of its value last year and appointed company insider Dave Jenkinson as Chief Executive Officer permanently in February after former CEO Jeff Fairburn stepped down after a row over his bonus package. "The change of CEO gives it an advantage to be open and honest about its previous issues and attempt to start its relationship with its customers anew," said Julie Palmer, a partner at corporate restructuring consultancy Begbies Traynor.
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