Our report from Persimmon’s 2024 AGM

On 25th April 2024, we attended Persimmon’s Annual General Meeting (AGM) near the company’s headquarters in York. We would like to thank ShareAction for lending us a share in the company and for their ongoing support for our campaign.

Since September 2023, we have attended the AGMs of seven leading developers – including Berkeley, Barratt, Redrow, Bellway, Crest Nicholson and Taylor Wimpey – and it is worth noting that Persimmon’s AGM had the most prominent coverage of building safety issues during the Board’s presentation.

Work had started on 68% of developments by the end of 2023

During his presentation, Persimmon’s Group CEO, Dean Finch, emphasised “Build quality and safety” as the first of the company’s five key priorities and presented a slide with information on remediation progress year-on-year. He informed shareholders that at the end of December 2023, the building assessment programme was 98% complete. Of the 82 developments expected to need remediation, 39 (48%) had already completed works, 17 (21%) had started works on site, 10 (12%) were moving through the contracting stage, and 16 (20%) were at various pre-tender stages. 

Shareholders were also advised that the next 24 months were expected to be the peak of cash expenditure on remediation. There was no mention of the fact that in Persimmon’s previous annual report, published in March 2023, the company had aimed to start work on all remaining sites by the end of 2023 – a date which has obviously come and gone. In its latest report, it now “expects the work to be largely completed over the next two to three years.” This is partly due to a further 9 buildings being identified during the last year. Despite a significant “slowdown” in the target finish date, the pace of work does appear to be ahead of most peers in the industry. 

Building safety expenditure was not mentioned in the CEO’s presentation, but the company expects to spend a total of £348m on remediation, which is amongst the most expensive programmes in the industry (only behind Bellway and Barratt). It currently has £283m set aside for future works on “legacy buildings” and £65m has already been spent to date, including £48m during 2023. 

A “systemic nationwide problem” 

It seemed positive, but perhaps not surprising, that building safety was relatively prominent at the AGM. In 2019, an independent review by Stephanie Barwise KC – commissioned by Persimmon’s Board after a deluge of customer complaints from housing estates across the country – concluded that the company had a “systemic nationwide problem” with fire prevention measures. In particular, cavity barriers were missing and/or incorrectly installed in a significant proportion of its timber frame properties. Most cases that were publicised were houses rather than multi-storey apartment buildings, but there is no reason to suppose the same issue could not affect both types of property. 

The report concluded that “Persimmon cannot afford the stigma of a corporate culture which results in poor workmanship and a potentially unsafe product” – and the prominence of building safety in the company’s key priorities suggests that the Board may have taken the findings seriously and are trying to address the public perception. 

It is worth noting that Persimmon refers to “developments” rather than individual “building” numbers – and this is something we will ask Persimmon about at a future date. It’s unclear if the £348m of planned expenditure relates only to “relevant buildings” under the Building Safety Act (buildings over 11 metres in height), or whether low-rise apartment buildings and houses are also being remediated on the same developments. After all, as their corporate homepage points out, where a link is provided for cladding enquiries, “As first and foremost a builder of traditional family homes, the Group has not been a major developer of high-rise buildings.” 

“We recognise it is impacting residents’ lives”

We asked the first shareholder question at the AGM, and started by acknowledging that it was good to see the building assessment programme nearing completion. However, we queried why the latest government data gives a rather different impression of remediation progress. DLUHC’s data does not include Wales or Scotland, so we would not expect an exact match with the company’s numbers – but DLUHC reported that at the end of January 2024, works had only started or completed at a far lower 20% of Persimmon buildings

We asked: 

  • Could the Board please clarify the pace of remediation and how this will increase going forward? Understandably, leaseholders and residents would like to see urgency in homes being made safe, sellable and insurable.   

  • Secondly, in Persimmon buildings across the country (from Newcastle to Salford to Birmingham to London), the biggest issue raised with us is the difficulty getting communication about what is happening. Could the Board please describe how it is establishing effective processes to keep residents informed about progress towards meeting your remediation commitments, which is one of the obligations under the contract?   

  • Finally: Would the director responsible for Building Safety be willing to meet with the End Our Cladding Scandal campaign team, to discuss these important issues further?

In response, the CEO reiterated that resident safety remains paramount for Persimmon and that “we recognise this is incredibly important to the residents affected and is impacting their lives.” 

He reconfirmed their internal numbers and was unaware of the reason for the large variation compared to the Government’s reporting, but he said that would be looked into. Shareholders were advised that a dedicated team is “driving hard” to get remediation works completed and he pledged they would do “whatever it takes to get the job done.” It was confirmed that the majority of works will be undertaken in the next two years and the company expects to spend around £100m in both 2024 and 2025. 

He noted that the company had encountered some problems – such as site access issues, occasional contractors going bust, and there only being “a small pool of contractors willing to do work to the quality we expect,” adding that he was “not making excuses, but there have been some real obstacles to progress.”

Our campaign team hears of fewer issues in Persimmon buildings in comparison to other developers of a similar size – although every case is of course one too many – however, a lack of adequate communications is the most common concern raised with us. The CEO accepted this feedback, noting that there was a “fine line to tread” where third parties such as managing agents and resident management companies were involved, but acknowledging that “ultimately it is our responsibility.” 

Outside the main meeting, we highlighted an example of a site where works were 90% completed under the government’s Building Safety Fund when the contractor went bust and since Persimmon had taken over, the new cladding has started to be removed, with very inadequate communication to leaseholders and residents about what was happening and why. One leaseholder now fears that their buyer might pull out – which would be the third sale they have lost due to the remediation works. 

We took the opportunity to speak with several members of Persimmon’s team, including an Independent Non-executive Director who had briefly worked with DLUHC as an independent advisor on the Building Safety Regulator Transition Board.  The CEO also invited us to “give him a kick” if his support was needed. 

We will be arranging a meeting with an appropriate member of Persimmon’s building safety team in the near future so that we can discuss the issues in more detail on behalf of affected leaseholders and residents.

CALL TO ACTION

Are you a leaseholder or resident in a Persimmon building, having issues in relation to assessment or remediation – and unable to get a satisfactory response via your managing agent?

If you need to escalate your concerns to DLUHC, please email [email protected], providing the name and address of your building together with a short summary of your concerns, and detailing the attempts you have made to contact the developer. 

Please copy our team at [email protected] so that we can follow up where necessary. We are particularly keen to hear an update about your situation prior to our meeting with Persimmon in June 2024 (TBC), so that we can ensure your concerns are heard.

The End Our Cladding Scandal campaign calls on the Government to lead an urgent, national effort to fix the building safety crisis.

Follow us on Twitter
for important updates on the campaign, ways to get involved and new information

Find out more about the End Our Cladding Scandal Campaign

The post Our report from Persimmon’s 2024 AGM appeared first on End Our Cladding Scandal.