AGM 2020

Apr 29, 2020

Slides

Good morning, ladies and gentlemen. Welcome to Persimmon's 2020 AGM. I'm very sorry that the COVID-nineteen pandemic has made a physical gathering of shareholders impossible today. But to those who are joining us via the webcast, I would like to extend a very warm welcome and congratulations for making the technology work. Let's hope we don't get Zoom bombed. I'm joined today by Dave Jenkinson, the Group Chief Executive Mike Killoren, Group Finance Director and we, 3 shareholders, make the quorum required for the meeting. All of our nonexecutive directors have joined the meeting by telephone. As usual, we've released a trading update to the stock exchange this morning, which covers the period from the 1st January 2020 to date, so it includes the performance of the business before the COVID-nineteen outbreak and during it. I'd like to start today by briefly outlining the actions we have taken during the pandemic and our plans for the next phase. Since the start of this outbreak, our number one priority has been to ensure the safety of our staff, customers, contractors and suppliers. From the 26th March, we closed all our sales offices and regional offices with only a skeleton staff to facilitate the wider workforce working from home. All our construction sites commenced an orderly shutdown with only essential work taking place. We entered this period of uncertainty with a very strong financial position, a robust operational performance and a strong forward order book. But after very careful consideration and in these most extraordinary times, the board has decided that the priority must be to conserve cash and maximize financial flexibility for the long term benefit of the business and all its stakeholders. Consequently and with regret, the Board decided to cancel the proposed 1 100 and 25p per share interim dividend payable on the 2nd April 2020 and to postpone the proposed annual final dividend payment of 1 100 and 10p per share on the 6th July 2020. We undertook to reassess the decision on the final dividend later in the calendar year when the events of this virus will be clearer. I'm very pleased to report the reaction of our staff to this outbreak has been nothing short all our staff have remained on full pay with no recourse to government funding. Where colleagues were able to work on longer term projects, technical drawings, progressing planning, permissions, procurement and so on, they have done so with great dedication and enthusiasm. And for those unable to work their full hours, we have seen huge contributions to the national effort, both in their local communities and went through hundreds of people volunteering to help the NHS in many different ways. They say in a crisis, you tend to see the best of people, and that has certainly been the case with our colleagues at Persimmon. We are immensely proud of their resilience, their community spirit and their compassion throughout this period. Now, if I may, to our plans to return to work. From the start of the pandemic, we've had a team looking at ways to get back to work on site, while still abiding by the government's social distancing restrictions. This team developed a detailed set of protocols. And with the full support of government, we announced last week that we are starting a phased return to work using the new measures, which are fully compliant with U. K. Government and Construction Leadership Council guidance. Persimmon is getting back to work safely and steadily and with always the well-being of our workforce and the public at large as our overarching priority. It will take some time. It will be different and it will be difficult at times, but we are starting once again to build the homes that Britain needs. On remuneration, since the COVID-nineteen outbreak, executive directors have waived their entitlement to any bonus in 2020, and all directors have reduced fees or salary by 20% from the 1st April. We are not changing the targets relating to the forthcoming PSB awards, which were set before the outbreak and which have been published in the annual report. We intend to continue with PSB awards on the published basis is after the AGM for Mike Killoren and for senior management, and we will review the share price to be used at the time of award. We are very clear that we intend to be fair and treat workforce management and Board directors alike. Notwithstanding COVID-nineteen, in the last year, we have seen transformative change throughout the company. I had hoped that Dave would now take you through the usual presentation on the company's progress and performance over the year. However, as shareholders are unable to attend today, we have decided it is best simply to place the slides of the presentation on the company's Investor Relations website for shareholders to read when they wish. So for the purposes of this meeting, I would just like to highlight what I think have been the key changes at Persimmon over the last year or so. Firstly, the business is putting customers before volume. Customer is at the very heart of the business, and getting it right for them is critical. We are investing strongly in a whole range of customer care initiatives. We've introduced our home buyer retention. We're communicating better customers and we're using technology more thoughtfully to improve the customer experience. Secondly, our build quality and consistency is improving. We're developing the Persimmon Way to establish consistent instruction and quality processes across the whole group. The Persimmon Way, which is currently being trialed in 4 businesses and will be rolled out across the group over the second half of the year is a clear articulation of the processes and procedures that we have had to go through to make sure we consistently build high quality houses, first time and every time. Thirdly, persimmon has embraced its broader responsibilities and considers more carefully the needs of all its stakeholders, including our people, our supply chain, partners, local communities and government. And environmental and sustainability responsibility and initiatives are. And finally, although it's just one measure, we're pleased to report that we are now a 4 star builder under the HBF's rating system. You'll remember in April last year, we commissioned an independent review led by a respected QC to take a fresh look at aspects of our business, in particular to evaluate whether the changes we were making went far enough, fast enough. The review was completed in December last year. And while it recognized we were already underway with many of the most important areas, it also identified a number of areas where we had more work to do. We have embraced those recommendations. The review also challenged us on the culture of Persimmon and said we could be clearer on our purpose and ambition. We've considered these points very carefully. Dave's presentation on the website addresses this. In summary, the scale of the work undertaken during 2019 to make the essential changes necessary to deliver improved customer care and quality was substantial. It simply couldn't have been achieved without absolute clarity about our objectives and without total commitment from our people. We know there's more to do, but I think the progress we've made so far speaks volumes about our purpose and the culture of the company. We entered the very significant coronavirus disruption in good shape. In 2019, a year of significant change and investment, volumes and profitability fell only slightly. Our margins remain industry leading. Our balance sheet is exceptionally robust. Our land is high quality and has been bought well. Persimmon has the financial will strengthen the current coronavirus disruption while looking after our customers, our people and our wider stakeholders. Our continued operational success before coronavirus hit is a reflection of 2 things: the willingness at Persimmon to embrace the changes that were needed and the skillful leadership of the company by the senior team led by Dave. As you will have seen, alongside the results in February, we also announced that Dave has informed the board of his wish to step down after 23 years at Persim. Dave has offered to stay in his CEO role just as long as the business requires, but this will be his last AGM. So I wanted to pay tribute to Dave for his tremendous service to the business and especially for his leadership over the last 18 months or is so. Right from the start, Dave understood the depth of change required and the urgency that was needed. He's not only plotted a new course for this business, but he's done so while navigating by a new set of stars. And his skill in doing so has been the cornerstone for the company's program of change. This has been achieved without severely impacting the financial performance of the business, without diminishing the inherent strengths of the company and with the full support of everyone at Persimmon. This is Dave's legacy and one I think he should be thoroughly proud of. And I should add, his leadership through this pandemic has been exceptionally strong, decisive and compassionate. When he steps down, he will leave with the gratitude and best wishes of everyone at Persimmon, both for his contribution to the business over nearly a quarter of a century but his steady leadership in this critical period. The Board would like to also to thank Marion Sears for her significant contribution that she has made to the group during her 7 years with Persimmon. Marion retires as a director on the 30th June. The search for a new CEO is making good progress. As you'll understand, there are some logistical challenges when conducting a search process while social distancing measures are in force, but we have seen some strong candidates. I look forward to updating you in due course. Persimmon has made great progress in restoring trust and repairing our reputation. The culture of the business has changed in subtle but important ways, but there is more work to do. We may be a 4 star builder, but we are setting our sights on becoming a 5 star builder. And indeed, we are currently trending close to that rating. And important those star ratings are, the overarching aim is to continue to develop all elements of customer occur through the tireless implementation of our improvement plan. The whole board is determined that our program of change and renewal will continue uninterrupted through the CEO change period, whenever that may be. But we're also determined that as the rapid evolution of the business continues, we don't lose sight of the things that have made Persimmon a great and differentiated business, such as smart long term land acquisition, a cost conscious culture, a relentless focus on operational efficiency and an entrepreneurial culture with quick decision making. While we all fight this pandemic, please be assured that your company is determined to keep doing the right things for its people, its customers, its suppliers, its contractors and its stakeholders I'd now like to begin the formal business of the AGM, and I will take the notice as read. As we announced on the 25th March 2020, in the light of the current uncertainty caused by the COVID-nineteen pandemic and its operational impact on U. K. Economic activity. The board is will impact on U. K. Economic activity. The board has decided to postpone the proposed annual final dividend payment of 1 100 and pence per share and reassess it later in the calendar year when the effects of the virus will hopefully be clearer. We have therefore withdrawn Resolution 2 as set out in the notice. Shareholders were invited to submit questions to the board in advance of the meeting, and we have received 2 questions from shareholders to put to the AGM. They are as follows: what is being done to correct bad workmanship in existing homes and improve build quality to ensure that future homes are built to building regulations. Thank you, Ms. Price, for your question. The vast majority of our homes have no issues. If there are problems, there is a very clear process to resolve, and we are really focused on dealing with any cases with urgency and thoroughness. If any customer is dissatisfied, we encourage them to contact their local persimmon office, who will take all reasonable action to put things right. And if after that process they are unsatisfied with Persimmon's response, they should consult their warranty provider's dispute resolution service. It is our firm intention that problems should not reach this stage. As I've already outlined, we are committed to addressing all build quality issues and are confident we've already improved processes. We're introducing the Persimmon Way. Construction Working Group will deliver uniform, technically robust guidelines, which all regions will follow. Our newly appointed construction champion will promote the Persimmon Way with our 31 independent quality inspectors performing assurance work throughout the construction process. We intend to implement an external audit process similar to our health and safety procedures to ensure the seven way is being followed. This will translate into the production of high quality homes with resulting higher customer satisfaction. We have a second question from another shareholder, Mr. Stoecker, who represents ShareAction. Thank you for sending your question in. And the question is and it is quite a long one, I warn you shareholders aren't able to ask questions at your AGM today as you haven't held your AGM virtually despite other companies holding AGMs online. As you haven't, here is my question to the Board. Mr. Soka's question today relates to the voluntary is by the Living Wage Foundation. I was pleased to learn that Persimmon have adopted the wage rate set by the foundation. Accrediting as a living wage employer would op only indicate good corporate governance to your investors, but it would signal a strong commitment to Persimmon's direct employees impacted workers. I am conscious that Persimmon has been faced with unprecedented challenges as a result of the pandemic. However, more than ever, investors are looking for companies to take a responsible approach to managing their workforce. Retaining a well trained and committed workforce will benefit companies, when business operations are able to resume. And in this light, I, that is Mr. Stoecker, would like to ask the board to provide made an update to Persimmon's position in regards to accrediting as a living wage employer. My response as follows. In regard to your first question about the format of our AGM today, the company's articles do not permit fully virtual AGMs. Under the government's current measures, shareholders are not able to attend the meeting in person, so we have instead taken the decision to make the proceedings available by this webcast to enable shareholders to listen to the proceedings of the AGM from their homes. Your other question referred to the voluntary living wage. And at this stage, we are continuing with our decision to pay all our employees in line with the payment criteria of the living wage foundation. We are not currently pursuing living wage accreditation. As your question notes, Persimmon has implemented a range of measures in response to the COVID-nineteen outbreak. 30% of our group colleagues have been unable to work during the shutdown period but have continued to be paid in fall by the company. Some employees are now returning to work as part of our phased restart to work on-site in support of U. K. Government's objective of getting the construction sector back to work. The group has not made use of the government's coronavirus job retention scheme. We are proud of the way our Pacific colleagues have responded to the COVID-nineteen challenge to support their local communities through voluntary work, charity support and other practical measures such as the donation of essential PPE did by way of a poll. And on a poll, every member has one vote for every shareholder. Voting by poll takes account of all shareholders' votes lodged by proxy in advance and nominating the Chairman of the meeting to vote on their behalf, and I now declare this poll open. As Chairman of the meeting, I'm empowered to cast these votes in the way that shareholders have instructed, so I now declare the poll to be closed. As there are only a minimum of shareholders in attendance today, we can announce the results of the poll. I'm pleased to inform you that all of the resolutions put to the meeting today have been passed with between 98% to 99% of votes in favor except for the resolution to hold general meetings, at 14 days, which has received 94% votes in favor. The detailed results of the poll will be released to the London Stock Exchange and published on our website as soon as possible this afternoon. Ladies and gentlemen, that now concludes is the formal business of the meeting, and I now declare this Annual General Meeting to be closed.