Earnings Call: H1 2020

Feb 5, 2020

Just letting everyone settle. Good morning, all. It's great to see you all here. I know that some of you have got a busy morning as one of the other house builders, Pedro, announced in this morning. But if I could just start off. I mean, I'm going to give an overview of our performance and then give an update on our progress in relation to our operational targets. And Steven and Jessica will then talk you through initially are operational and then our financial performance. And I'll then review the market fundamentals talk about our business and the sustainable business that we're building. And finally, I'll look at current trading and outlook. If we just look at the key highlights, I mean, I'm very pleased to say that our team have delivered another vase strong operational and financial performance in the first half of the year. We've delivered a significant increase in our first half completions. And clearly, part of this is delivering a better balance remains very supportive. There are clearly attractive fundamentals in terms of demand, mortgages and land availability. You can see that we are continuing to make very good progress against our medium term targets. And we've also made significant progress in relation to our margin target. We remain very committed to continue to grow the business but we are definitely going to do that our industry leading position on both quality and customer service. So our business remains resilient. Our balance sheet is in good shape. We have effective cash generation and we continue As you know, we published our vision and our priorities 6 years ago And we've remained absolutely focused on that vision. To lead the future of house building, by putting the customer at the our culture and the way that we do business. We all passionately believe that we need to put the customer first. For the long term. We aim to lead construction and we are continually striving for excellence. And clearly embracing modern methods of construction and investing in our people is absolutely vital deploying successful strategies for both retention and recruitment to help us to meet the skills challenge. We have a clear ambition to be the leading national sustainable house builder. We believe connecting social environmental and economic value across our business will lead to a better long term outcome. Following our vision and priorities, it enables us to deliver both a strong financial and operational performance and ensure that we are building a business that will create long term value for all of our stakeholders. We've looked previously at I believe that we have very clear differentiators that define a strong investment case We run 1 of the shortest land banks in the industry, which improves our return on capital employed. And reduces our longer term risk. We have very effective cash generation and our balance sheet is ever stronger. We have who are very rightly proud of the standards that they meet. Our delivery on quality and service has been very consistent and excellent across the last decade, but we are going to keep striving to improve Our quality and service performance is absolutely key to the strength of business. It is our reputation. It is our license to operate in communities across the country. And finally, a broad geographic spread gives us a balanced market exposure. These differentiators clearly make us very well placed for our shareholders And we believe that further improvements in the efficiency All of these are measured and reflected in our medium term targets We've made good progress against our medium term targets. To remind you, these are to grow wholly owned volumes by 3% to 5% per annum in the medium term to acquire land at a minimum gross margin of 23% and to achieve a minimum of a we are continuing to grow volume. We have delivered our highest level of completions We're clearly well on track to deliver 3 to 5% growth in wholly owned completions in FY 2020. As we grow volumes, we continue to ensure we're maintaining our standards of quality and service. Consider that the operational structure of the business has capacity of around 20,000 homes per annum. We continue to buy land at a minimum of a 23% gross margin. The first half adjusted gross margin was 23%, up 60 basis points from the first half last year. We have now made significant progress on our margin targets, and on closing the margin gap with many of our peers. We delivered a strong return on capital performance at 29.3 percent. And we also achieved our target to reduced land creditors to be between 25% 30% of the owned land bank. Thank you. And I'll now pass over to Steven. Thank you, David, and good morning, everyone. I'd now like to take you through the operational aspects of the business. So starting with sales, we have delivered a strong performance in the first half across all regions. As a group, we achieved a private sales rate of 0.69 reservations per outlet per week. The group private sales rate has improved significantly by 7.8% with a strong performance from our regional businesses which has improved by 8 It is at a level where we can match build with sales. We had a strong end to the half year. And so far in the second half, our trading performance has been good with a net private sales rate of 0.83. David will cover off our current trading in more detail. The JV sales rate for the prior year includes a bespoke design and build arrangement, Excluding this, the JV sales rate is in line with the prior year. Now looking at completions. We have achieved our highest level of half year completions for 12 years. We have delivered strong completion growth for the first half, at 8214 units, including JVs, up 9.1%. The increase in completion volumes in the half year reflects growth and our aim for a smoother delivery profile of completions across the financial year. We are on track to deliver 3% to 5% growth in wholly owned completions in FY2020. Looking in more detail at the future drivers of our completion growth. Our regional businesses, excluding our Cambridgeher division, have performed strongly with a growth in completions of almost 5%. As you know, over the last few years, we have repositioned our London region to focus on Outer London. We have delivered a significant increase in completions from our Outer London developments, and expect to see continued growth as our new sites come on stream. Our Cambridge division is now in its 2nd full year of trading, and has delivered a significant step up in volumes, in line with planned growth to meet its targeted capacity. As you will recall, we are focused on rebalancing our first half and second half delivery. This half year, We have benefited from an increase in affordable homes for our London business, reflecting delivery on new sites and the waiting of delivery towards the first half. Our landbank across the business reflects high quality sites that will support volume growth. We have a current business capacity for 20,000 completions per year, and we continue to target 3% to 5% volume growth over the medium term. We have delivered a similar completion profile to the last half year Completions from Help to Buy with 34%, down from 38%. The scheme remains an important support for the industry. Affordable completions were 21% and in line with our expectations for FY 2020. This is consistent with the prior full year, and reflects the delivery profile of land acquisitions. Part exchange continues to be a valuable sales tool for certain purchases at 12% of completions. Turning to pricing. The group private average selling price and completions was 1,000, down 1.7% from the prior year. Regionally, the private ASP of GBP 304,000 is 2.6% higher than the prior half year. The principal driver of this is changes in product mix to larger family homes and geographic mix towards higher ASP regions. All units at our landmark place development in Central London are now completed or forward sold with an average selling price in H1 of 1,000,000. This is reflected in the London Private ASP in the period The ASP on JVs is 1,000 compared to the prior year of 1,000. Reflecting delivery from London JV sites. Now looking at land supply. We continue to see an overall positive impact due to NPPF on increasing the amount of consented land in the market. There were 380,000 annual consents in England. This compares to only 169,000 newbuild completions in England. Greenfield land price growth remains modest and prices are still well below pre downturn levels. We are continuing to acquire land that meets our hurdle rates. There continues to be a high quality opportunities across the country. We are seeing a number of large scale opportunities, and we remain well positioned to develop larger sites, which are often highly suitable fraudulent branding and wide product ranges. We remain focused on securing standard product sites for the regional businesses. In the first half, we approved over 9200 plots across forty four sites. We continue to expect to approve 18000 to 22000 plots per annum. During the half year, 98% of land acquired in our regional business was for our standard product house types. Here are just two typical examples of the high quality locations in areas of strong demand that we've recently approved. On the left, we have Wembley Park in London. This site will be developed as a joint venture with TFL. It's a former TFL site, in an area benefiting from significant regeneration and excellent transport links. The site falls on from our success at Black Horse Road Development which we've also acquired through the TFL property panel. We will be building 446 terms with 43% affordable content and a private average selling price of around We expect to commence work on-site at the start of the next calendar year. And on the right, we have a Greenfield site at Penston near Sheffield. It's a great location with excellent commuter links by car and train, providing easy access to the M1 and major towns and cities including Sheffield And Leeds. Here, we're planning to use both our Bharat and David Wilson brands to deliver 459 units from our wide product ranges. The site has a 30% affordable content. The layout has been designed to take advantage of the semi roller environment, and Riverside settings. The private average selling price is around 1,000,000 and work is expected to start on-site during the summer. We continue to remain focused on driving further improvements in operating margin. We have delivered significant margin growth over the past 6 years for our continued operational improvements, including delivery from strategic land, and the use of our new product ranges. The benefits of these are now flowing through into our operating margin. So firstly, an update on strategic land. During the half year, we delivered 1942 completions from strategically sourced land. This generally traded at an enhanced margin of circa 300 basis points compared to instantly acquired sites. During the half year, we converted 2400 and 21 plots of strategic land into our owned and controlled land bank, broadly in line with the last half year and in excess of our strategically sourced completions for the period. Our closing position is strong at nearly 13,000 acres with a good geographic spread. Around 35% of our strategic land is allocated or included in draft local plans. We continue to target 30 percent of completions from strategically sourced land in the medium term. As you know, in 2016, we launched new product ranges for both of our brands to support margin growth. We're continuing to make good progress on the rollout and the benefits of delivering margin improvements. During the half year, we delivered nearly 4500 Homes from our new ranges, a significant increase on the prior half year of around 2200 Homes. We expect to deliver around 10000 completions at the full year from our new product ranges. Currently, 76% of our outlets are building the new product. The remaining sites are the trading out of our previous range, or our non standard schemes, including our London projects. We'd expect that our new product range would be suitable for around 80 Our new products has been well received by customers and is delivering operating margin improvements, while not compromising on quality or service. The simplified construction of our new product is also delivering a reduction in build speeds by an average of 4 weeks, resulting in site overhead savings. We continuously review our product designs and specifications and refine them to drive further efficiencies. More recently, we've introduced hip roof designs to a number of the house types. The expected cost saving of this ranges between per unit. This change has been made considering increases in recent years of the cost of brickwork. As part of our continued review process, we have further refined our standard house type designs. This includes optimizing internal floor plans, and clever space planning to achieve more usable and salable living spaces. By way of an example, In some house types, we've been able to increase a single bedroom to a double without impacting the footprint of the house. These changes helps improve demand and increase revenue with minimal cost impact. The refined designs have only recently been launched, but provided an example of our continual focus to drive margin improvements. Turning now to build costs. Actively manage our supply chain to support the delivery and quality of our product. All pricing for our material spend is fixed to June 20 with half of the expected spend already fixed to December 20 and over a third fixed to June 21. We're forecasting an overall increase of 1.5% in material costs for FY2020. Despite some inflationary pressure, we have seen reductions in prices in some commodities, including timber, which accounts for a substantial element of our material spend. Leber cost inflation is generally eased with improved availability of trades, although remains some pressure in certain areas. We continue to attract resource due to our quality of our award winning site management, with trades preferring to work on well managed and organized sites. We've helped mitigate labor shortages and inflation, by simplifying our designs, creating apprentices and through the increased use of off-site manufacturing. We now expect to overall build cost to increase in total by around 3% in FY2020. This is at the lower end of our previous guidance of 3% to 4%. As you know, Bharat is absolutely committed to leading the industry in quality and customer service. As I said, in September, to lead the industry's required long term investment in our processes, controls and systems, our people and our products. At each bill stage, we conduct comprehensive quality control checks. The NHBC independently check each plot at 5 key bill stages from foundation through to bill completion. Any items requiring attention are reported by NHPC's Building inspector and are known as reportable items. For the 12 months to December 2019, we achieved the lowest reportable items ratio in the large house builder group. The average of the large house builder group is around 70% higher. This independent review of all plots is a good indication of our outstanding build quality. The NHBC Pradner Jumbo was recognized excellence in build quality and site management. Our site managers achieved 84 quality awards in the NHBC private job awards in 2019. That's more than any other house builder for the 15th consecutive year. We're also extremely proud that Mark Summers Gil, has recently been announced as a Supreme National UK winner in the large builder category of the NHBC's Pride And Job Awards. As a business, this is the 4th time in 5 years we have won a Supreme award and achieved this prestigious accolade. No other house builder has achieved this level of success and recognition for quality in the same period. This level of performance requires investment over many years and we remain fully committed to delivering high quality homes for our customers in the years to come. As huge returns, including high levels of customer satisfaction. It also removes the disproportionate cost of remedial costs. As you know, we are the only major house builder to have been awarded 5 stars for customer satisfaction for the last 10 consecutive years. So in summary, a strong performance over the first half, we have delivered an excellent sales performance across the group, We've achieved strong completion growth. We continue to make good progress in improving operating margin, through our initiatives with continued deliveries from strategic land, increased delivery from our new product ranges, continuous focus on refining our products and tightly managing our cost base. We continue to drive operational improvements throughout the business while at the same time delivering industry leading quality, customer service and maintaining a focus, on health and safety. So thank you, and I'll now hand over to Jessica. Thank you, Steven, and good morning everyone. Firstly, I'd like to cover some key highlights of our performance. We've delivered another strong set of results in the half year. Our revenue was 1,000,000,000, was up 6.3%, reflecting growth in our half year completions. As David and Steven have covered, we expect wholly owned completion growth of 3% to 5% in this financial year. You will recall that since FY 'eighteen, we separately identified items presented in our income statement as adjusted items. Adjusted items are one off exceptional items that are not reflective of our normal trading performance, and I'll cover these in more detail later. After these adjusted items, gross profit was up 4.5 percent to 1,000,000. Administrative expenses were 1,000,000 and we delivered an operating of the group of 1,000,000. We closed the half year with net cash of 1,000,000, up 1,000,000 on the prior year. And our ROCE was strong at 29.3 percent similar to last year. As usual, I'll provide specific areas of guidance and the detail side is included in the appendix for ease of reference. Our wholly owned home completions were 8000 up 8.1%. Total home completions including joint ventures were 8314. Private average selling price reduced by 1.7 percent to GBP312,000, reflecting geographical mix changes we delivered a lower proportion of private units in London this half year. Our overall average selling price was similar to last year, at GBP 279,800. The reduction is due to a higher proportion of affordable completions in the first half, and Stephen has provided some more detail on our first half delivery profile. On guidance, we continue to expect around 21 percent of completions to be affordable for FY 'twenty. The ASP of our closing land bank of remains representative of our total mix going forward, and we continue to expect around 750 joint venture completions, and 1,000,000 of joint venture profit in the full year. I'd now like to cover margin in some more detail. Our operational improvements over the last few years have enabled us to make significant progress on margin. Our adjusted operating margin is now points higher than it was in the first half 80 basis points on last year to 23%. We continue to acquire land at a minimum 23% gross margin facilitated by our new product range. The development of the new sites bought at this hurdle rate is delivering margin improvements. Our operating margin our adjusted operating margin was 40 basis points higher than last year at 19.4%. In the half year, we incurred and accrued 1,000,000 of exceptional or adjusted items in relation to sites where we've had where we've agreed to remove or replace cladding. Also we have no obligation to do these works in line with our commitment to put customers first, we have estimated and recognized the total cost based on currently available information. We've previously set out 5 key areas of focus to deliver margin improvement. We're making good progress against each of them. I'll now take you through some of these areas in more detail. Of the 31st December, 78% of our owned land bank was purchased at the new rate put in place at the start of FY 2018, demonstrating the benefit of our short land bank gives in terms of being able to transform it quickly. Steve Ann outlined earlier the results of the time new product range and strategic land are delivering. We're also seeing operational efficiency come through our move to industry standard warranty terms with a significant reduction in plots under warranty, which is down 31% from its peak. We saved 1,000,000 on show home costs compared with the first half last year as our lease port value continues to decline. Let's now break down the components of our operating margin movement. As I outlined last year, we had nonrecurring items in the first half of FY 'nineteen which benefited margin by 80 basis points, giving a normal operating margin of 18.4%. This is the start point for assessing our progress this half year. Our margin initiatives are successfully delivering improvement, so strong delivery from the regional business, which contributed a margin improvement of 210 basis points We had a 10 basis point benefit from the cessation of show home leaseback but saw a 40 basis point reduction from Central London as we traded out of our last Wholly owned site. We now have 2 wholly owned central London units left to legally complete. Was a reduction of 40 basis points from mix on ongoing sites, commercial and other changes. Administrative expenses decreased margin by 40 basis points reflecting the phasing of certain expenditure, our new Oregon and Cambridge operations and investment in our IT capabilities. On guidance, we continue to expect administrative costs of around 1,000,000 this year. Together, these gave us 100 basis point improvement from trading and an adjusted or pre exceptional operating margin of 19.4%. After the million of adjusted items, which reduced operating margin by 80 basis points, we delivered an operating margin of 18.6%. We have a clear well embedded operating framework underpinning a strong balance sheet. In the half year, we have reduced land creditors to 27% achieving our target to reduce them to 25% to 30% of the owned land bank. We expect land creditors going forward to be in our target to 25% to 30% range. We maintain appropriate financing facilities And in November, we extended our GBP 700,000,000 revolving credit facility through 2024 on the same term. I'd now like to cover our balance sheet in more detail. Our gross landbank increased by 1,000,000 to 1000000 a 3 point 7 year owned land bank in accordance with our operating framework. As I've already outlined, our land creditors have reduced by 1,000,000 27.4 percent of the owned land bank. Trade payables were at a similar level to last year at 1,000,000 Other working capital was 1,000,000 higher than the last year at 1,000,000. This was mainly due to an additional 1,000,000 of advanced payments received primarily for affordable housing construction. Further assets and liabilities movement of 1000000 to 1000000 is reflective of changes in the government's tax regime. Our balance sheet is strong with net assets at 31st December for 1,000,000,000 We have removed we have improved the resilience of our business significantly over the last 5 years, decreasing our half year gearing to 10% at 31st December 2019 from 35% at 31st December 2015. We maintain a disciplined approach and remain focused on ensuring we manage our total gearing in line with our operating framework. We are a cash generative business with an operating cash inflow in half year, and continue to run our business with average net cash. Across the half year, we had average net cash of 1,000,000 This was higher than anticipated as incurred less land spend in the half year, spending around 1,000,000, approximately 40% of our full year expectation. We now expect average net cash of around 1,000,000 across our whole financial year due to our land spend being more second half weighted. We also now expect interest costs to be around 1,000,000, of which 1,000,000 is cash and 1,000,000 is noncash interest. Land is our most significant asset and we had a landholding of 1,000,000,000 as of 31st December. As David outlined earlier, we continue to operate with a short land bank model and our aim is for around 3 point 5 years owned and 1 year's controlled land in each division. We closed the half year with a 4 point 6 year owned and controlled land bank, supporting our discipline volume growth. In total, we have 80,846 owned and controlled plots, and a further 5656 joint venture flops. I will now cover work in progress in more detail. With this increased by 1,000,000 from last year to 1,000,000,000. This reflects expected volume growth in line with our medium term targets and is appropriate to maintain our high quality and service standards was recognized in health and safety needs. We've also increased includes an increase related to our own show home holding of 3 81 units at a value of 1,000,000, an increase of 1,000,000 on last half year. Our own show home holding will continue to increase over the next couple of years as we currently have 1,000,000, these show homes remaining. We've also invested around 1,000,000 in infrastructure on our larger sites, reflecting our volume delivery and focus on return on capital facilitated by both of our brands and our wide product range. Across our business, we closely control whips levels by matching build rates with sales rates. Our sites have efficient site execution plans, and we continue to leave monitor sites in progress and unsold sites per site. Moving on to our cash flow. Our million operating profit generated a significant cash inflow. And from this, we've both invested in our business and returned cash to shareholders through our substantial dividend payments. Looking at the detail, we made net cash interest and tax payments of GBP 179,000,000 as we paid GBP 4.40 installments in the half year due to the government's change in Corporation tax payment regime. This timing change resulted in us paying around 1,000,000 more tax than in the first half last year. We had a million movement from other noncash and working capital items. We invested GBP 150,000,000 in WIP And Parts Exchange reflecting our volume growth, infrastructure investment and increase in own show homes. We spent 1,000,000 on land in the period, reducing our land holding by GBP 34,000,000 and invested GBP 131,000,000 in land creditor reduction as we reduced them to our framework level of GBP 25,000,000 to GBP 30 percent of the owned land bank. There was a cash inflow of 1,000,000 from joint ventures as trading has reduced their working capital requirements. As a result, our operating cash inflow for the half year was 1,000,000. We made 1,000,000 of dividend payments and invested 1,000,000 in other investing and financing activities leading to a net cash outflow of 1,000,000 in the half year. At half year end, cash position was strong at GBP 434,000,000. For the point of guidance, we continue to expect that total cash spend on land in FY 'twenty will be around 1,000,000,000. This spend is weighted to our second half and we expect to incur around 1,000,000 in the second half. Of our total spend around half full related payment of land creditors held at June 2019. We now expect net cash to be around 1,000,000 at June 2020, the improvement from our expectations at our full year results due to trading and reduced working capital requirements The board recognizes an ongoing dividend stream is an important part of total shareholder return. It continues to propose to target an ordinary dividend cover of 2.5 times, when market conditions allow, ordinary dividends will be supplemented by special returns. It remains the board's preference to make special returns through special dividends. Consistent with last year, Our interim dividend is calculated based on the profit attributable to our shareholders for the 12 months to 31st December, 2019. Of our ordinary dividend cover of 2.5 times, we will pay onethree of this amount as an interim dividend. Our interim dividend is per share up from £9..6 last year. The board is proposing to extend our capital return plan by a further year. And return, subject to shareholder approval and additional 1,000,000 in November 2021, demonstrating our confidence in the business going forward. In summary, we've delivered a strong performance in the half year across our key financial metrics, Trading and profit margin improvement has come through strongly, resulting in an adjusted operating margin of 19.4%. We delivered a record first half profit before tax of 1,000,000. We have a strong and resilient balance sheet and our disciplined approach continues to deliver in our operating framework. We have achieved the line credit reduction we targeted and reduced our half year total gearing to 10% including net cash of GBP 434,000,000. The strength of our business and our cash generation supports the extension we've made to our capital return plan today. Thank you. And I'll now hand over to David Thanks, Jason. Okay. Thank you, Jessica. I first line, I know I'm biased, but I thought there were really excellent presentations from Steven and Jessica. Yes, fantastic. Okay. So Stephen and Jessica, I've really, I think, outlined, as I said at the beginning, that I do believe that we have a very strong investment proposition. We are clearly growing completion volumes. We've made significant improvement in terms of operating margin, whether we look over a 6 month period or whether we look over a 3 year period. And quality and service are clearly embedded within our we continue to see a very attractive market backdrop. The lending environment is very positive. Especially for new build. The government housing policy clearly remains very supportive. We have clarity on Help to Buy through to 2023 and the modifications to the scheme for 2021 have been clearly outlined. The government has a target of building 300,000 homes per annum to address years of undersupply and have said that they would like to reach that target by the middle of this decade. And as Steven has outlined, the land market has remained very attractive. So moving on to the mortgage environment, and I understand that this is just an overview with 2 charts that we update each time we report. But these are very important indicators On the left hand chart, you can see that the average mortgage rates, both for 85% loan to value and also for Help to Buy related mortgages remain very low compared to historical levels. There is a competitive mortgage environment, which is enabling our customers to take advantage of very attractive rates. The chart on the right shows the proportion of average income spent on monthly mortgage interest and repayments This Halifax data shows that affordability of mortgages remains good, with mortgage costs as a proportion of earnings well below the long run average. This is due to low borrowing rates, some wage inflation and tempering house price inflation. I outlined our priorities earlier. These are supported by the principles which you can see on the ground floor of the house, keeping people safe being a trusted partner safeguarding the environment, building strong community relationships and ensuring the financial health of our business. Both our priorities and principles are fully embedded across our business. We are building a sustainable and successful business for the long We continue to focus As I said earlier, we published these priorities and principles 6 years ago. Not only do we track and report against our targets, but as I will show you later, we are also able to measure ourselves against external benchmarks that show we are building a sustainable and industry leading business. I'm going to look at three areas in more depth. What we're doing to become the leading national sustainable house builder The way in which we're embracing change within our construction, looking at design, innovation, and continuing to invest in modern methods of construction. And the way we're investing in our people focusing on future talent and retention of existing talents. As I mentioned earlier, one of our key principles is safeguarding the environment. We aim to be the leading national sustainable house builder across our business. Over the past few years, there has understandably been an increasing focus on sustainability and in particular, environmental issues. Since 2015, we have reduced our carbon emissions by 22%. And this week, we have become the 1st house builder to announce science based targets to reduce our carbon emissions by 29% by 2025 and to reduce the emissions from our We are very focused on building high quality energy efficient homes. Also reducing embodied carbon in our supply chain by using low carbon materials such as timber, and through further increasing our in how we meet the future home standard and how we design homes, which will not be connected to the gas grid from 2025. In addition, waste produced by the industry and its impact is considerable. Our operations are focused on a week to week basis on practical steps we can take to reduce waste. We have biodiversity action plans in place for the majority of our developments. And we are working towards being net positive for biodiversity on all of our developments. On construction, we are committed to increasing the number of homes we build using modern methods of construction This is both to boost efficiency but also to mitigate the challenges posed by the shortages of skilled workers within the industry. We continue to trial, implement and develop modern methods of construction across the country. We set a new target to use modern methods of construction for 25% of our homes by 2025. As you know, in June 2019, we acquired Oregon, a supplier of timber frame, The acquisition helps to secure our supply chain and further assist in increasing our utilization of MMC. We're very pleased that the integration of Oregon into our business is going well. We expect to deliver over 800 units from Oregon this year. And in recent months, we have started to install Oregon Timber Friends across sites in England as well as in Scotland. We delivered an increase used timber frame or large format block. We continue to challenge ourselves on an ongoing basis in terms of how we can improve the efficiency of our build operations. It is clearly a relentless focus. Skills shortages remain a key constraint for the industry, with increasing levels of volume and aging workforce and reducing levels of overseas labor, it is ever more important that we focus on this and ensure that quality and service do not suffer as a result. So investing in our people is a key priority. We aim to attract and retain our people We are investing for the future and we continue to develop award winning schemes, including those for graduates, apprentices, former armed forces personnel, and our own degree apprenticeship in Residential Development And Construction in conjunction with Sheffield Hallum University. We now have around around two seventy people into our future talent schemes. But it's not just about recruitment, It's also about retention. We've substantially enhanced our employment proposition and really focused on retention. We've seen a further reduction in employee turnover in the last 12 months. Now a level below 15% compared to a peak of nearly 20% in 2015. And importantly, we're very pleased to announce that we are now an accredited living wage employer. Making us one of the first major house builders to achieve the accreditation. We recognize that business is about balance. It is clearly not just about financial performance. It is about looking at a balanced scorecard and ensuring that we're continually challenging ourselves to improve that scorecard. We can measure our performance in some of the most important areas both by our internal metrics and also third party metrics. As Steven touched on, and I'm sure you all know that we are the only major house builder to have been awarded 5 stars for customer satisfaction for the last 10 years. We are very proud that our site managers have won more awards than any other house builder for the last 15 years. Stephen outlined our performance on the NHBC awards. And in particular, highlighting Mark Summers' goal as a Supreme award winner. But I think it is worth reinforcing that this is the 4th time in the last 5 years that one of our site managers has won the National Supreme award We've won more building for life awards than the rest of the industry put together. We also received an award from next generation Next generation is a homebuilding sustainability benchmark, and we received their crystal award for the transparency of our disclosures around sustainability We're hugely proud as a business to have achieved the overall House Builder of the Year award at the Fort House Awards. And the large House Builder of the Year at the House Builder Awards 2019, a unique achievement for our business to achieve both award received both awards in the same year. And underlines our absolute commitment to quality and service. So we are very proud of what we're achieving. We're very proud of the quality of our homes and proud of our customer service. But we are going to drive hard for further improvement on all of these metrics. So let me now bring you up to date on current trading We've clearly seen good customer demand across the business. And although it's been a relatively short current trading period, it has been an encouraging start to the second half. Our private sales rate at 0.83 is up 12% on the prior year. Coupled with average outlet numbers at 355, which are down on the prior year, that gives us net private reservations per average week of 290 4. When we look at the forward sales position, clearly at 1,000,000,000 and in line with last year, we are in good shape for 2020. So in summary, it's been a very strong first half. Our current trading position, our forward order book, mean that we're positive on outlook. We continue to make very good progress on our medium term targets and the market fundamentals are clearly attractive. We continue and we are confident that we're building a strong sustainable business for the future. Thank you. And we'll now be happy to take questions. Right. We're going to go into questions now. I'm going to start with Gregor because he said that he had another appointment. Thank you. Two questions from me. First, on margins. So if we look at the first half, your growth is essentially in line with your minimum hurdle rate of 23. I suppose the big picture question is, do you think you can push forward the level you achieved in the first half. Because obviously, it looks like you've almost reached what you perhaps envisioned a few years ago in terms of the run rate. Question number 1. Question number 2 is on cash and linked with that dividends. Obviously, you can see a 1,000,000 average cash balance, I appreciate there's a bit of timing in there. I think you previously said you want to be kind of 0 to positive So the question is, why aren't you distributing more capital to Shell? Because it looks like you're building up an excess and obviously with the dividend announcement today, that may well continue to increase. Okay. So I think on margin, Jessica, we'll pick up the question on margin I mean, I think on cash, Gregor, what I would say is that we've set out the dividend policy in terms of our ordinary dividend and our special dividend policy. And as you said, we've extended the special through to November 21. But I think the absolutely key point is that we are very much on the front foot in terms of land acquisition. When you look at our land acquisition over the last 3 or 4 years, we've been guiding broadly to 18000 to 22000 plots. We see that there's a good land market out there. The backdrop in terms of the market fundamentals look strong, and we would much prefer to invest our cash in land. We will obviously keep that position under review, but that's the primary focus for us in terms of investment. In terms of margin, we're very pleased with the progress that we've made in recent years. As you can see, we've delivered 330 basis points improvement on the first half. In FY 'sixteen to 19.4 percent, pre exceptional margin we delivered this time. As Stephen outlined, we're very focused in terms of operational improvements in our business and making refinements to continue to deliver margin improvement. Such as the hip roof changes we've made and refinements we've made in terms of the product range. However, the key reference point is that we continue to buy land at a minimum 23% gross margin, and I would emphasize the minimum 23% gross margin, we delivered a 23% gross margin in the first half of this year, and that gave us an operating margin of 19.4%. So we've made great progress, and we're close to the end than the beginning, but we're very much focused on margin improvement. Okay. So we'll maybe work from the back of the room forward because I was just doing Gregor a favor. Thank you. It's John Fraser Andrews, HSBC. 2 for me, please. The first one is, can you say something where you are on the size of sites in the land market and how you're seeing that land market at various sizes. And then second one is on selling prices in current trading. Can you say what you're doing, please? Whether you've got an intention to slow down the very strong sales rate you've seen so far. Thank you. Okay. Well, if I start in just generally in terms of land acquisition and site sizes, and then Steven can talk about what we're seeing in the marketplace in terms of pricing and so on. I mean, in terms of land, I mean, if you look at the data, I mean, we're obviously publishing the data every 6 months. You can see that if you look over the last 4 or 5 years, the average site size has increased. We see that a significant advantage that we feel we have is our ability to have both Barrett and David Wilson trading on the same side. Secondly, our balance sheet strength our financial capacity has clearly increased dramatically over the last 4 or 5 years. So we would generally be looking at larger sites than we would have been or 5 years ago. When you look at land availability and Stephen touched on it in his presentation, there is an strong amount of land that is coming through the planning system. So I think the backdrop generally is very positive. But more typically focusing on larger sites than we would have been certainly 4 or 5 years ago. And that's been a fairly gradual change to the market. Over the last few years. Yes, yes, a bit more on that in terms of detail. Yes, we're seeing good availability, across the entire business on sites. As I said in the presentation, there's some like 180,000 planning consents granted. Our sort of sweet spot of operation tends to be in the site size between 10500 plots. And what we're seeing is very limited competition in sites above 300 units. That is a good place for us because at 300 units, it's ideal to split two ways, Barrett and DWD brands. So that sort of really plays to our strength. Below 100 units, we don't tend to, we're not that active. I think there's a lot of the regional house builders who are in that marketplace. They're sort of supported by the Owens England Home Builders Fund, which they released 18 months ago. That supports them in that sort of marketplace, but think what we're seeing is Mar sites above that side of 150 unit category on the basis out. If you go back in the NPPF, the first sites to start coming through with a sort of bolt on community sites, 100, 150 units, 3, 4 years ago, we were buying sites at 125 units average. The sites now starting to come through are in that 100 to 500 category, which are perhaps a little more difficult to get through the planning process it's taken a bit longer. Hence, they're now coming through, and that's what we're seeing. And, as I say, it plays to our strength with dual branding. So hopefully that helps. I think just I mean, in terms of pricing, I mean, I would say that the nature of the business is that we are managing 350 to 400 sites on a week to week month to month basis. And I think it's very much about looking at the supply demand trends site by site. So I don't think we're in a camp of NASH price rises on specified days, it's not a subscription type business. I think we're in a position that we're just trying to get the best balance on every site in terms of volume and price. And that has to be managed at a local level and therefore, prices will be adjusted on a regular basis at a local level. And Stephen, do you want to say that? Yes, a bit more on that. I mean, our process, we're not like to say, say, the car industry, what increases the prices every 3 months. We look at our prices, our selling prices every week, where the meeting, where the teams look at them every week, as we release each unit for sale on a 1 by 1 basis, we look at the selling price on those units on a 1 by 1 basis, and that's where the system operates. A quick follow-up on that. I was just going back to, Stephen, your comment that you're comfortable at at just under 0.7 or around there of sales rate. And clearly, you're at 0.83 with a very strong start. So I'm just just wondering if you can build to that level of sales rate. And if we see that continuing in the spring, clearly, there has implications for your pricing. Yes. I mean, the sales rate, we're happy with this current sales where it is. What we've done to the product over the last few years is simplified it in terms of design. It's making it quicker and easier for us to build. We've added timber framing, and we've seen some big benefits in terms of speed of erection. So so we're quite happy to build at the sales rate we are currently achieving. We don't see any real issues. There's good labor availability. I think above all that, we are delivering a smoother flow of construction. Each month, we're producing the build equivalents we need to achieve. So we're producing in line with our sales rep. And there's opportunity to move it up further. So I'm just waiting for Mike to answer. Okay. Will and you've got Mike. Thanks, Will Jones from Rupert. 3, if I could, please. First, just picking up off the reports on sales rate, we're not stronger this side of the new year, but the outlet numbers have also looked like it did quite a bit versus last time, can you just put that in context of your aspirations to kind of gradually grow the outlets and just what's the reason behind that in this short term period, the second was maybe just picking on labor availability, which we talked about improving. Can we just understand a bit beyond your apprentice hiring in the Saudi world. Is that more about the workload across construction markets dropping therefore the same workforce being more available or is actually the workforce count you think you're actually seeing more people coming into construction work as it were And then maybe as you can just touch on, you talked about health bank clarity to 2023, but there are clearly changes happening, in spring of next year. How are you looking at that from terms of how you position the business ahead of exclusion of homebuilders and the price council? Thanks. Okay. So if I am maybe just talk about Help to Buy and labor availability and, Stephen, your top perhaps just through in terms of site numbers, just in terms of general trends as to what we're looking at. I mean, if we do help to buy first of all. I mean, I think the good thing we've helped to buy for everyone is the future of direction is very clear. So we understand that from 2021, the scheme will be for first time buyers only. And we understand that there are regional price caps that will come in. And clearly, they vary the price caps vary by region and they have still to be confirmed, but there's been some indication of the price caps that will come in. And then the scheme will expire completely from 2023. I think our approach to that is very straightforward. We want to make sure that we're pulling forward product for second time buyers as much as we can in 2020. And that's clearly something that we've been on with since the changes were announced. Secondly, we'll then have a position where we have first time buyers qualifying for Help to Buy. Help to Buy scheme is clearly a hugely powerful scheme and we'll continue to attract a lot of first time buyer. Participants. And then beyond the expiry of Help to Buy in 2023, we're just back to looking at having a balanced product mix making sure that we have the right mix of houses and apartments, 2 bedroom houses, 3 to 5 bedroom houses, just offering a full product mix. I think in terms of labor, I mean, just to generalize that there was a huge step change for the industry post the introduction of Help to Buy, both in terms of volume, but also in terms of the recruitment apprentices. So you can look at industry data and see that there was a massive step up in terms of recruitment of apprentices trainees. Typically apprenticeships are running over a 3 year period. And therefore, with a lot of labor coming in in 20 13, 2014, we're clearly starting to see that trained labor coming into the marketplace now. So I think that is a big factor that is, helping labor availability. Secondly, there is an impact in terms is doing more, for example, timber frame, more factory based production, then that is taking some of the strain off in terms of labor. So we're seeing that as Steven touched on in inflation. We're just seeing that feeding through in terms of, inflation where there is clearly still labor inflation, but it is at reduced levels. And the most acute labor inflation has and will continue to be around, for example, players. So I think that would be a backdrop. You see any of that? Yes. In terms of site numbers, yes, as you can see, they're selling pretty well. That does impact outlet numbers. But looking forward, we've got over 72 opening H2, We've opened 15 of them so far. So we see outlet numbers remaining broadly flat. I think what we're seeing in the numbers, those are with the land buying we talked about earlier, our average site size is increasing. So whereas a few years ago, it was around 25 units per plot per site. We're now sort of seeing typically site sizes averaging 200, 210, a couple of examples are put on the screen, both for 5460 units. So the site duration will start kicking in, so it will be longer going forward. So we'll be finishing this quickly, so to speak. But that's where our income statement was broadly sort of flat. Post 2020, yes, continuing, we've got a good pipeline coming through, and, remaining around about the same. Just become whoever else got the mic, Emily. Good morning, everyone. Emily Bitoff Credit Suisse. I've got 3 questions, please. The first one, just I wondered if you'd come back. I think most of us thought the 110 basis points deliver from the regional business year on year in terms of margin improvement might slow a bit. And I just wondered if you could give us a bit more color on that sort of 210 basis points and how it's quite so strong. And secondly, the big step up in affordable ASP Is that a lead indicator that you might have sort of higher priced site openings and therefore, we can be sort of more positive on private ASP And then thirdly, you've obviously reached a middle of that land creditor target range. As we think about cash flow for next year, is there a chance you've come back and sort of be more conservative on that land creditor, 25% to 30% range, or the land creditors become more neutral in that cash flows for next year? Thanks very much. Okay. So I think if, I mean, Jessica will cover margin and the affordable ASP, And just so I don't give them all to Jessica, I'll have a go at the land creditors. No, I mean, I think the land creditors really we've guided down, we bear in mind, at one point, our land creditors were up at 38%. I think that was the highest percentage we have of the land bank. So we've systematically guided down online creditors initially to say that we would not go outside that 35 to 40 range and then down from there. So we're very comfortable operating in a 25 to 30 range. But we're pretty indifferent really as to whether that's at 25 or whether it's at 30. So it'll depend a lot on the deals that come forward. The extent to which we're at the top middle or bottom of that range. Firstly, just to pick up the Affordable ASE. So we had more London delivery from our Outer London schemes come through in the first half, which has reflected in the AF P on the affordable units in the first half. That's very much driven by the great opportunities we have and the new sites that we had coming through that we talked about previously. Looking forward, the 2 77 in our own land market is absolutely representative of our mix going forward. In terms of margin uplift from the regional business, we've delivered really well. As we said, we've been buying land at 23% minimum gross margin hurdle, right? And that's come through into the profit and loss account, the delivery from the new product range, and our land buying is delivering the benefits that we said it would Hey, good morning, John Bell from Deutsche Bank. I think I've got 3. You've referred on Help to Buy to the regional price cap still to be confirmed. I just wonder whether there's any debate or lobbying going on in that respect. Second one is, you've got a capacity at present of about 20,000. You told us that any ambition to go beyond that number in time. And if so, how might you do that? I'm guessing you're not intending to go back into Central London. Anytime soon, but correct me if I'm wrong on that. And then third and finally, just any expectations for the budget particularly on stamp duty? Thank you. Okay. So I think I'll run through those. I mean, in terms of the regional price caps, we recognize that price caps when you look around the regions that the north and some areas of the Midlands, the price caps from our perspective look to be low. But I think we also recognize that government have created a huge amount of support through Help to Buy and Helpwise obviously a very, very strong consumer offer, but there clearly has to be a finite level of funding. So I think on the price caps, we see that it's really a nil sum game. So if the price caps in the north are just the price caps in the South will be adjusted as well. We're a national builder, and I think we've just got to take that in the round. That the total level of funding is clearly huge under the Help to Buy program. The price caps will have to be confirmed So we would expect the price caps to be confirmed in a final form over the next 3 or 4 months. I mean, on completion volumes, I mean, we definitely do not lack ambition. So 20,000 is not some ceiling that we're placing on completions. I think we're just saying that when you do the the sort of arithmetic around the number of divisions and what we think is an optimum level of output, broadly, we think we can get to around 20,000 and Stephen covered optimal levels of output on one of his slides. We did open a new office in Peterborough for our CambridgeSure Division. And as Dean touched on that, that is progressing well. And we continue to look at options in terms of new, offices that we could open and we'll obviously just update on that as and when. But I think the capacity that we have, is attractive. If you know, to be able to grow the business from where we are up to 20,000 is attractive both. In terms of expectations for the budget, I mean, we we don't have expectations for the budget. Mean, I think if you look at what the government have done in terms of the housing market, I think it would be very difficult for us to put forward proposals to government to say, look, we really think you need to provide funding for that. So we really need to think you provide funding for that. So I mean, the budget date has been scheduled is clearly a good thing and we'll obviously see what comes out of it, but we certainly don't have expectations for it. Clyde, I think on this side here, and then that side's finished. Thank you, Clyde Lewis at Peel Hunt 3, if I may as well. Firstly on the sustainability point, applaud you for, obviously, sort of, making that sort of drive more public, more obvious. Are there any implications for costs and I suppose the mix within the group. And I suppose the redesign of houses, etcetera, etcetera. I mean, it's probably early days, but maybe you can give us a little bit of a guide as to where you think the bulk of those savings and improvements will come from. The second one was on MMC, I mean, the M is it modern matters of construction, timber frame has been around for a very long time. Large format block has been around for a very long time, is 25% including those 2 measures a little bit of a soft target. I mean, I'm being a little bit cheeky, but where else can you really sort of go with your aspirations, I suppose, in terms of sort of trying to change the way that you build your product going forward. And the last one was on London. I mean, John touched on that a little bit, but Are you seeing more opportunities in zones 1 and 2 at the moment? Is that changing in any shape or form post the budget in particular post the election in particular. Okay. So this is a little bit of me and a little bit of Steven I can just do the first one in terms of London, it's very straightforward. I mean, we're not bidding in on sites in zone 1, and the kind of inner edge of zone 2, I mean, the outer edge of zone 2, yes, possibly, but we're just not bidding. I think we are keeping the market under review. We've never said that we won't operate and we clearly have credentials to operate, but we're absolutely not bidding in that area. So we see that growth for our London business is about zone 3 to 6. In terms of sustainability, I mean, I think probably at two levels. I mean, first of all, as a business. And I think for any business, for the executive of any business, I think it's very, very important that we are on the front foot in terms of the broad area of sustainability. I think there are some very specific areas that are coming down the pipeline for the house building industry. And if you take a view over a 5 or 10 year period, there are going to be dramatic changes for the industry. So, just with time constraints, I mean, the 2 that I would call out will be 1, no connections to the gas grid from the end of 2025, that is a big change for the industry. We are very confident that we will come up with the technical solutions to achieve that change. Cost at this point in time looks to be more cost to achieve the change. But the reality is when we used to have technologies like solar panels, we said it would be more cost because solar panels were very expensive, but the reality is as we saw volume come in, prices dropped dramatically. So we would expect that if you're looking at, for example, heat pumps, whether they'd be ground or air source heat pumps, but the unit cost of them will drop dramatically if there is volume coming in to those areas. Our second area would be that the environmental bill, which will become the environment act during the course of the next fall, the 12 months, will require all house building developments to deliver biodiversity net gain of at least 10%. Currently a lot of local authorities will work for you to achieve, specified objectives in terms of biodiversity but not in universal biodiversity net gain. We believe that that can be achieved. We don't see the costs of that as being substantial it is a big hurdle on the sustainability agenda for the industry. When you take a longer term view, So let's say a 3 to 5 year view rather than a 1 to 3 year view, these items simply get costed into the cost of moving business. And therefore, the primary location for the cost tends to be the land value, when people are buying land. But a key point is that you need a level playing field, so government need to put the direction in place. And the future home standard, which government are currently consulting on, it has got ambitious targets in terms of carbon reduction. And when the future home standards comes into play, then that will create that level playing field going forward. In terms of MMC, if I do the easy bit, well, yes, I think we would accept that 25% is a soft target. I mean, we're at 19 or 20 already, I personally quite liked 25 by 25, but Yes, we're obviously focused on delivering more than that. But I think the key thing is we have got a target in place, and we will obviously update that But Stephen, I'm sure can give you a bit more background in terms of some of the things that we are doing to bring more MMC into the business. Yes. In terms of MMC, in terms of house systems, we're using essentially 2 timber frame and large format block. Large format block is relatively new to this country. We're talking about blocks, which are full height, full story height, floor to ceiling panels, maybe 2 foot, 3 feet wide. So we've sort of developed that with Cellcom and we've used that on a number of sites. But our main system of NMCs is expected to timber frame. Obviously, I haven't acquired Oregon last June. And I know timber frame has been around a long time and indeed 100% of our product in Scotland is timber frame, but the timber frame systems we are using today far more enhanced than they were 20, 30 years ago. For example, the systems we use come complete with floor cassettes So flars don't come in individual flargice, it comes as 2 panels, trending, done. So it's much, much speedier form of erection. In due course, we've got sort of plans to take it to, more advanced pharma construction fitting, windows, doors, insulation, panels. In terms of production, I think in the full year, last year, we did something like 2300 timber frame units out of 2600 NMC construction. Timofrem, 300 flash follow-up buck and a bit of steel frame there. In the half year, we've done something like 13 50 timber frame, and we'd bet to get to around about 3000, you close to 3000 timber frame units in the year. 100% in Scotland, but we're now rolling it out into England. I think the slide that David had on the screen there was one of the first sites we've rolled it out into East Ashley Leeds, going really well. Site Team's really benefiting from it. Seen improvements in speed of erection, which is a big improvement for us. So, a lot to do on timber frame the next few years and need to develop it to further stages. Amikala from Citi. A few questions from me. Firstly, on the sales rate in your current region, can you clarify whether there were any one deals in the number 2nd, if you could give us some regional color of the trading that you've seen across the developments, since the election, And my third question really is on the bill cost. You've given us a very useful chart of how your margins your gross margins have improved from 2016 onwards. Can you give us a number as to how much has built cost per square foot for your business moved from 2016 to the first half today? Okay. I sense that the answer to question 3 is no, but, but Steven can talk about build costs and maybe some of the things that we are seeing on build costs. So I think if I pick up initially, so the second question was regional color on trading. Yes, sorry. And Steven will pick up in terms of the regional color on trading. So I mean, I mean, I think in terms of current trading, we've seen a strong opening in terms of current trading. I mean, clearly, that's demonstrated in the numbers. Do you, Steve, do you want to maybe talk about regional trends? Yes. I mean, regional trends, we're seeing very consistent performance. We've got 27 divisions, Aberdeen down to Exeter, very much a similar picture, strong performance. Divisions are achieving the levels we expect them to achieve in terms of budget performance are better. So we've had a a very strong performance, which is reflected in our first half. And our more recent trading is a similar position. I think, I mean, on build costs, just as an opener, I mean, we've talked before that we have standard house types and we have a methodology to track build costs, a house by house and division by division. So we are very, very focused in terms of the control of build cost. You Stephen, do you want to add? Yes, yes, I mean, build cost I think key to the bill cost is our central procurement, and 90% of our materials are procured centrally by the group. So we control our sort of cost and cost inflation. Giving an indication of what we expect our inflation to be in terms of materials, which, as I said, unfortunately, I think some reductions in timber have brought down the price cost increases we were anticipating. The variable tends to be labor. Labor is in relatively, good supply. I think part of that is helped by our smoother build programs. We're not sort of seeing the peaks where we need 500 bricklayers in 1 month. We're sort of operating at maybe 400 bricklayers throughout 12 months of the year. So that is helping us. So that's taking pressure off the build, labor prices. We analyzed all our costs every 3 months, we sit down with every division, go through the cost and keep a check on any sort of increases. Okay. Thank you. In Ainsley and I'm Glass. Just two quick ones actually. First of all, on the guidance for completions growth, I think you'd previously spoken about maybe being towards the bottom now. Kind of 3% to 5% range. Given the good grades you saw in the first half and your comments around build rates and recent reservations, should we now expect that actually close to the top end of that range for this financial year. And then just secondly, you mentioned you'd rather kind of invest in land rather than return capital to shareholders to see your good opportunities. As we look into next financial year, should we expect a bigger step up in land spend? Are you now more comp and these kind of aiming for that 20,000, just to get your ambition around that as it changes to all post the elections. Okay. Thanks, James. So Jesco will talk about the guidance in terms of completion volumes. I mean, just in terms of land, I mean, If you go back over the last probably 4 or 5 years, I think the most plots that we've approved in a 12 months period is around 24,000 And a huge amount of our focus, and particularly for Steven, is about land acquisition. So we're guiding at 18 to 22, we would be very happy to hit the high end of that range. And clearly, if you're looking at cost per plotter, 60,000, there's a huge delta between the bottom and the top of the range in pounds terms. So yeah, we're keen to bring in as land as we can within reason. So that's the first thing. I think the second thing is we also need to recognize that we are distributing a lot of cash So 2.5 times cover and 1,000,000 of special dividend is a substantial distribution. So it's not as though we're not distributing cash and we're buying land. I think we're doing both things quite effectively. Jessica, do you want to? Yes, in terms of completion growth, we're very pleased with our performance in the first half of the year. We've been talking for period of time now that we wish to achieve a smoother delivery profile between the first half and the second half and that we were aiming for a 45, 55 percent split, and we're pleased that we've achieved that this year. In terms of the guidance of the year, we're very comfortable that we'll be in the 3% to 5% range. Glynis Johnson, Jefferies. I'm going to launch straight in given the time constraints because I have 4. Hopefully, they'll be quick. Pop cost for ASP on your land bank has come down by about 50 basis points. Can we assume that's an increase in profitability of the lands or is that going to be offset by other build elements. 2nd of all, in terms of the cost for cladding, should we anticipate any more? Is there provision on the balance sheet? Thirdly, in terms of the size of site increases, this is a slightly more bigger picture one, but should we anticipate that short land bank that you posted about on your very first slide that might edge up slightly or should we anticipate that you're selling rates will increase because you'll actually be able to build faster hopefully sell faster. And then lastly, really trying to help to buy the changes. I appreciate you've guided to a 2 77 ASP on your land bank, which is slightly lower than what you reported in the half year. But if I look at your regional slides, most of your regions look like they are selling quite above the cap that certainly we are is currently indicated. You talk about pulling forward but should we anticipate the mix in that land bank, some price, there's a movement between private and affordable or should we assume that you will sell less using Help to Buy post April 21. Okay. All right. I think I've got all that. We had a suite that it would be 6 going on, so 4 was good. Right, Okay. So Jesco will pick up in terms of the plot cost to ASP and I'll pick up on cladding and also in terms of Help to Buy. And Stephen will pick up about site sizes. I'm sure we weren't boasting about the land bank, but site sizes and also just what we expect in terms of the land bank 3.5 years and so on. So if I just start off, I mean, in terms of Help to Buy, well, we recognize, as we talked about earlier, that there are regional price caps and the Veda around the country. I think the important point from the government's perspective is that they are looking at it on the basis of where they believe there is a shortage of housing of a particular size. So if you said to the government, Luke, do you think there's a shortage of housing in the north of the country and you're trying to stimulate more new 3 and 4 on 5 bedroom homes to be built, I think the government's answer on setting the price originally was no. They would believe that there's a shortage of houses in the southeast and therefore they've got a much higher price cap. That's all to be reviewed. Our businesses are fully aware of the price caps, and they're also looking at that on a week to week basis when they're buying land. So I think we just, recognize that that will come in, but the caps will not be announced in a final form I'm sure for a 3 to 4 months time frame. In terms of cladding, I mean, just to, perhaps expand on that slightly going on. So I mean, clearly, post the Grenfell Tower Fire fire, I think we recognize most people in the industry recognize that there was a need for us go back and review our buildings. And we, I've said previously that we undertook a review, an initial review of more than 500 individual buildings, essentially higher rise buildings with Cladding. There's been very few issues identified on that review of more than 500 buildings and the costs that we announced in FY 2019 and we've announced further costs this morning, is everything that we know about in relation to the remediation costs for those buildings. The government over the last, I suppose now a couple of years, have issued 23 separate advice notes to the industry, the most recent one being a consolidated note that was issued about 10 days ago, So our review is ongoing, but all costs that we're aware of at this point are fully provided. In terms of the plot cost ratio, so in the land bank or plot cost to ISP ratio is 16.4%. And we're adding to the land back at around 17%. Clearly, that's only related to the land cost. It can be other costs such as Section 106 costs that need to be taken into account infrastructure costs depending on the individual site. So the key piece to note is that our hurdle rates remain the same, and we are buying at a minimum 23% gross margin hurdle rate. In terms of land bank, as Ziv just touched on, we're wrapping that $18,000 to $22,000 in the year category. We don't see the need to increase our land bank. We have 3 0.5 years earned 1 year conditionally. On top of that, you have to bear in mind, we have a strong pipeline of terms agreed coming through for approval, And then on top of that, we've got strategic and coming into the business as well. So when you take all that into account, the 280,000 annual consents, There's a good supply of land out there. There's no need really for us to increase our land bank years. There's a lot of promoters out there sort of getting on through the planning system and putting it into the market. A lot of the sites are in that sort of 250,500,600 category, which, again, as I've mentioned, plays to our strengths in terms of limited competition for that type of site. So going forward in the current market, good availability of land, and no need for us to increase our land bankiers. Sorry, the, just the cash extra for the Cladding. And then just in terms of the number the year staying the same in terms of land bank and the size of site is increasing, It suggests that the outlook growth rate isn't as strong as perhaps the volume. Are you happy to be selling more per site? Is that what we should be anticipating? That Mara will be talking about as we go through the next years, then we'll be taking more conclusions on each site because those sites are effectively getting larger. Okay. If I cover the outlet and Jessica can cover the cash, that is now 6, Glynis. Okay, so Sorry, just on outlets, I mean, look, the ratio of outlets to plots, I think, is a very, very important ratio. So you can look at every house builder on that basis. And I think it's a fundamentally important ratio in terms of efficiency. We can achieve efficiency by putting David Wilson or Barrett on as a partner on the site, and we can achieve efficiency team is actually if we just can get a distinction on the product mix, we can potentially have 2 Barrets and 1 David Wilson, for example, And we've got a number of sites, for example, around Milton Keynes, large sites, where we ourselves have got more than 2 outlets on the sites. So that ratio, I think, is fundamentally important. I think our destination of last choice is selling land But we clearly will sell land as Nestry and bring another house builder on if we feel that those ratios are getting out of line. But that overall land bank efficiency is important because if we just keep buying sites at 300 plus and we don't that efficiency ratio, then clearly, the return on capital will drop dramatically. So we're very focused on that. Just in terms of the cladding, so the total cost in the half year was GBP 17,800,000, GBP 4,500,000 of that was cash and the remaining GBP 13,300,000 has provided and therefore future cash spend. Okay. Excellent. I think that's all the questions. So thank you very much and we'll see you again in 6 months time. Thank you.