Persimmon independent review suggests changes to business practices

(Reuters) - Britain's second-largest homebuilder Persimmon Plc PSN.L needs to improve the quality of its homes and review executive bonuses, according to an independent review of its business practices commissioned by the company in April.

FILE PHOTO: A sign is displayed at a Persimmon construction site in Dartford, southern Britain August 21, 2015. REUTERS/Neil Hall/Files

Persimmon in the past has faced criticism over the standard and safety of its houses, as well as a row over management bonuses, after the company benefited from higher sales following a government subsidy scheme.

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.

Persimmon, which has about 4,900 employees, said it had recently started to take action to improve build quality and established a group made up of experienced construction professionals.

“Persimmon cannot afford the stigma of a corporate culture which results in poor workmanship and a potentially unsafe product,” according to the review report.

Devlin added that the review, which made recommendations in nine key areas, including executive pay and customer service, was an “important moment” for the company.

Persimmon 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 $100 million bonus package.

The company’s focus on cheaper family homes helped it increase sales last year at a time when the top end of the UK housing market was suffering from Britons’ nerves about Brexit.

Fears of a hard Brexit rose again this week after reports that Prime Minister Boris Johnson will pass a law likely blocking the extension of an exit transition deal with the European Union beyond 2020.

Persimmon’s shares fell as much as 4.5% to 2,698 pence following the Brexit reports and after the review findings were disclosed.

Jefferies analysts said in a note quality remains key in the homebuilding industry and Persimmon indicated no additional costs were expected to be incurred to implement suggestions from the review.

Reporting by Samantha Machado and Pushkala Aripaka in Bengaluru; Editing by Shounak Dasgupta