Earnings Call: H1 2018

Feb 21, 2018

Welcome to our presentation. Thank you very much for coming along. I'm going to start with a summary of the overall group positioning. And just touch on margin. Before Steven and Jessica will then take you through our operational and financial performance. I'm then going to come back and illustrate our key differentiators the market fundamentals and also the challenges before covering our capital return plan current trading and outlook. So if we start with a summary, We've clearly delivered a very strong operational and financial performance during the period, we've seen positive progression on all our key financial metrics. The market backdrop remains very supportive. We recognize that there are strong fundamentals in terms of consumer demand, mortgage availability and also access to land. We also see strong consumer demand for our homes, which is at least in part because of the recognized quality and service levels that we are providing. I think we can clearly say that we are industry leading in that regard. As you know, we are very focused on driving operational improvements through the business. And I'm very pleased to see that we are beginning we're targeting modest volume growth for the full year. Right? We recognize that that growth is not inconsequential for a house builder of our size, and we are very much on track to deliver that growth. In addition we have a number of active initiatives in place to address the challenges facing the industry around scales and also modern methods of construction. We continue to deliver attractive cash returns for our shareholders and this is further illustrated by the extension of our capital return plan that we've announced today. Our confidence in the business going forward is very much reflected in our land buying and in our capital return plan. As Barrick marks its 60th year, and having built more than 450,000 homes across the country, I'm pleased to report that we see continued Before I hand over to Steven, I'd just like to remind you of some of the key initiatives we are undertaking in terms of margin improvement. On this slide, you can see an indication of when we will begin to see the positive financial benefit, and when we will show the full benefit, these guides remain very much as when I presented them to you in September. So now if we look at the different levers, As you know, we have begun to roll out the new housing ranges across our sites. It is still early days, but Steven will give you more color on this and the excellent progress that we've made so far. We are also rapidly increasing to ensure that we get This has very much been an ongoing story since 2012, and it will continue to have a positive impact both on our land supply and our margin for years to come. Our removal of the 5 year warranty will begin to have some benefit in FY18, but it will not be fully effective until FY 2020, when we will then have no remaining customers under the original scheme. And it is a similar picture in terms of the cessation of our show home lease scheme, where we have effectively traded an operating charge for a lower interest charge. And we are now holding show home assets on the balance sheet until each site is completed. So as you can see these will continue to progress. However, We are also now looking at further self help levers we can prove to ensure that we deliver margin improvement on an ongoing basis through the business. I'll now hand over to Steven. Thank you, David. 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. As a group, we achieved a private sales rate of 0.68 per outlet per week. This is a good rate and one which we are very comfortable with at a level where we can match build to sales. We've seen particularly strong sales rates in commuter towns such as Milton Keynes, Daventry and Nalesbury. While London sales rates are down, reflecting a more challenging central London market, the current rate is still very good and is still well above the regional business. Also putting London into perspective, it was less than 5% of our wholly owned reservations in the half. JV sales rates have normalized, with a greater proportion of delivery from sites outside of London. Moving on to completions. We are continuing to grow volumes and our regional completions were at the highest level in 10 years. London and completions were up nearly 7%, but from a low base, as completions are expected to be significantly weighted to the second half, as they were in the prior year. JVs were down 4.5%, but we still expect around 750 completions for the full year in line with guidance. We have delivered a similar completion profile for last year. Helped to buy remains an important support for the industry and 36% of our total group completions utilized this scheme. The affordable completions at 18% were in line with last year, although we expect this to be around 20% for FY18, as a result of timing of delivery on sites. However, in the medium term, we expect them to return to our average run rate of around 18%. Investors sales were down to 4% from 6% last year, as the market adjusted to the stamp duty changes and reduced tax relief available to landlords introduced last spring. Now turning to pricing. The group's private average selling price on completions was GBP 315,000, up 6%. This benefited from changes in mix and some underlying inflation. We continue to target a full market mix and to optimize all of our brands. Outside London, the private average selling price was GBP 302,000, up 5.5%. In London, private ASP was GBP794,000, up over 9% reflecting site mix changes towards higher price point sites. For example, there has been a number of completions on Central London sites, such as Chapter Street, Westminster, and Lombard Wharf battersea in zones 12, respectively. Now looking at land supply. The chart on the right shows that non urban greenfield land prices have grown at a slightly slower rate and house prices over the last few years, and they still remain well below pre downturn levels. Additionally, With a good supply of consented land and an increased industry focus on strategic land, the supply demand pressures of the operational land market have not returned to pre downturn levels. Prices remained stable, and there is a good flow of excellent opportunities across the country. We are focused on securing standard product sites for regional businesses, whilst in London, we are targeting zone 3 and outwards. In the first half, we approved over 13,000 plots across fifty one sites, and we expect to approve over 20,000 plots for FY18. The land approval figures are ahead of historical levels, will give us scope to grow and also support the opening of our new Cambridge Division. They are also indicative of some of the excellent opportunities we are seeing, and I will outline some of the examples on this next slide. Looking at land approvals, the table on the right shows our calendar year approvals. From this, you can see that while we haven't increased the number of sites we have approved, the average number of plots per site has increased by nearly 40% in calendar year 17 versus calendar year 'sixteen. This is due to some excellent large opportunities such as Ladden, Garden Village, Northgate near Bristol, where we plan to build around 2000 new homes and optimize our dual brands. This is a major investment for Barrett, and one of our largest ever projects outside of London. However, we are not only buying large sites, and we continue to see good opportunities throughout the market, as you can see from our median site size. For example, We've recently bought a site in Cambridgeher for around 450 Homes and 1 in Scotland for just 35 homes. These are all excellent sites in areas of high demand for new housing. And as an aside, it's probably worth noting that we have not approved a site in London's zones 1 or 2 since 2014. We operate a diversified business with a broad market exposure. Looking at the chart on the left, You can see our land bank reflects our national coverage with 94% of our private plots within the regional business. And representative of our divisional structure. The chart on the right shows that 97% of our private owned land bank in England as an ASP of below 600 k, leaving us well placed to continue to benefit from Help to Buy. Now looking more closely at our London land bank, excluding JVs. We continue to make progress on widening our spread across the capital, with 91% of plots now in zones 3 and beyond. Compared to 83% at the previous December. To put this into context, we have just 395 plots in zones 12. The chart on the right shows that only 5 percent of plots in our London land bank are priced above 1,000,000. Down from 8% a year ago. And we expect this to continue to reduce as we trade through higher ASP sites. Looking at FY 'nineteen and beyond, we expect a significant proportion of our completions to be priced at 600 k or below, with a focus on zone 3 outputs. As you know, improving operating margin is a key priority for us. We are achieving this in a number of ways, including increasing our delivery from strategic land and with our new product ranges. And doing so without compromising our commitment to quality and service. So firstly, looking at strategic land, The market provides extensive opportunities for strategic land and is supported by a positive planning framework. During the half year, 28 percent of completions came from strategic land, but from 25% at the full year, and moving towards our 30% medium term target. Strategic Land generally traded at an enhanced margin of circa 300 basis points compared with instantly acquired sites. Our closing position is strong, 11,806 Acres, with a good geographic spread across 2 sixty six locations to support future growth and margin performance. Then we continue to make good progress on planning. With nearly half of the plots under option either allocated, consented, or of an allocation in an emerging local plan. Another key driver to improving margin is product. Last year, we launched our new ranges, which we will deliver simplified build and improved layout coverage. To give you an update on progress, we have identified 157 sites for our new Barret range, We are currently building first two sixty seven plots from this new range, which is being well received by customers and contractors alike. Contracts is like the simpler designs and footprints as they are less complex, making them easier and quicker to build. This also means that the new Barret products is more suitable for alternative methods of construction. We've also now launched new house types across our David Wilton brand as well as our Scottish and Wealth ranges. So in total, across all ranges, we have now identified 304 sites, which will deliver over 40,000 units we are currently building our new product ranges on 150 sites. All new Landfaster standard product is expected to incorporate our new product ranges. The additional margin improvements from these sites will have some impact in FY18, but with a greater impact materializing from FY19. As you know, we believe the quality of our new homes and the customer service we deliver is a fundamental driver of our success. For example, all our site managers use our own latest quality and control software. Every plot is subject to 446 separate inspections throughout the build process. We use more than 1000 categories to record faults, providing valuable insight, which with feedback from our construction teams and our customers helps us to constantly improve the product we build. The success of our internal processes is also recognized externally through the NHBC Pratt and the Job Awards, and the HBF satisfaction survey. These are the industry benchmarks, which provides us with detailed monitoring information on a weekly basis, They are a key part of the controls and balances around our business, and I'd like to give you a little more detail on both of these. Firstly, the Pradman job awards are based on stringent inspections cut out by NHBC on each new home. Their reports are an independent assurance of the quality we deliver and is supported by our exceptional performance in their annual primary job award, acknowledged as the industry's defining recognition of quality site management. We've won more of these awards than any other house builder for the past 13 years. And we tried once again last month within the Supreme National Award in the large builder category for our site at Forest Chase Lester. And this is the 2nd time in 3 years we've won this top accolade. We also have an excellent track record in customer service, where the industry benchmark is the HBS customer satisfaction survey. All new homeowners have contacted 8 weeks after legal completion and offered the opportunity to answer 24 questions on quality, design and their customer journey experience. The response rate is high with 60% of new homeowners returning their survey. Using the question, would you recommend your builder to a friend, a star rating is allocated? A positive response of 90% or above will grant the builder, the maximum 5 stars. For the past 8 years, Barat and David Wilson Homes have achieved the highest 5 star rating. The only major national house builders to do so. Our divisions constantly monitor results and verbatim feedback And in the current survey year, 180 of our developments have maintained a 100% recommend rate. We are very proud of the recognition we have received and of our people who've earned these accolades for us. We talk a lot about quality of our product and customer service and how we believe the differentiators from our competition. We take quality seriously, not just because we think it's the right thing to do, but because it improves the value of our product, and reduces risk. It helps us reduce snagging and aftercare costs and enhances our profit as well as our reputation. Now turning to build costs. On materials, we are expecting some modest inflationary pressure All of our material pricing is fixed for FY18. And we are beginning of the negotiation cycle for FY19 but have already fixed around 1 third of our materials. We are seeing cost pressures on some materials, timber and insulation, for example, However, many products and commodities remain freely available with competition in the marketplace, ensuring minimal inflationary impact moving forward. On labor, some pressure still remains on availability of skilled trades. However, generally, this is eased. We continue to attract resource due to the quality of our award winning site management, with trades preferring to work on well managed and organized sites. And we continue to help mitigate labor shortages and inflation by simplifying our designs, training and apprentices, and through the increased use of off-site manufacturing. Overall for FY18, we expect circa 3% to 4% increase in total build costs and we expect this to be at a similar level in FY2019. So in summary, A strong performance over the half year. We have achieved some strong sales rates, along with positive pricing trends, and we continue to successfully manage our cost base. We have increased our delivery from strategic land. We are securing excellent operational land opportunities, and we are driving margin improvements throughout the business, while continuing to deliver industry leading quality and customer service. So thank you. I'll now hand over to Jessica. Thank you, Stephen, and good morning, everyone. We delivered a strong set of results in the half year. Revenue was up 9.5% to 1,990,000,000. Adjusted gross profit was up 10.1 percent to 1,000,000 at a margin of 20.8 percent. After net administrative expenses of 1,000,000, we delivered an operating profit of 1,000,000. We made further progress on operating margin, which improved slightly to 17.9%. Our profit before tax was GBP 342,700,000, a record first half profit for the group. We closed the half year with net cash of 166,000,000, 31,000,000 lower than the prior year, reflecting our additional investment in land and higher dividend payments. Our Rocky was 28.3%. Up 1.3 percentage points on the prior year. Wholly owned completions were 6944, up 2.4%, in line with our target of modest volume growth for the full year. Total completions, including joint ventures, was 7324. Private average selling price increased by 6 point 1 percent to GBP314,600, driven by mix changes and some underlying price inflation. Outside of London, our private average selling price was £301,700. Overall average selling price increased by 6.5 percent to 1,000,000, which compares to a closing land bank of 266,000. In terms of average selling price, we expect a similar average selling price for the full year to that we achieved in the first half. This is slightly higher than the average selling price in our own land bank this year due to the delivery from our higher end central London scheme. As David and Steven have already outlined, we remain focused on improving our margin. Our operating margin improved by 0.1 percentage points in the period to 17.9%. We have delivered a 0.6 percentage point improvement in margin in the half year from new sites, mix changes including our new product range, and other items. There was no overall net profit impact from half year from inflation. Older sites trading out have also contributed point 3 percentage points. Against this, we see margin dilution come from the continued headwinds in the high end Central London market. Which has an impact of 0.4 percentage points, phasing differences in admin costs between the first and second half and our commercial segment. Whilst we are delivering on our margin initiatives as demonstrated in the half year, we recognize that the headwinds in the high end lender market may dilute some of these percentage margin improvements as we trade out of these schemes over the next couple of years. In terms of completions, excluding joint ventures, in FY 'seventeen, we delivered 152 completions in London in the first half and 1145 in total. This year, we have delivered 162 completions in the first half. And would expect to deliver around 800 completions this year. As Stephen has outlined, our London deliveries naturally second half weighted due to the build program. Turning to the balance sheet. Our gross land bank increased by 1,000,000 from last December, to 1,000,000,000, with land creditors representing 37 percent of the owned land bank. This increase reflects the quality of the land opportunities we have seen, our volume growth aspirations and supports our new division. Net assets at the 31st December were 1,000,000,000. At the 31st December, we had a 5 year supply of owned and controlled land. This is slightly higher than our operating framework of 4.5 years, which remains in place. The graph on the left hand side demonstrates the progress that we have made in terms of reducing the proportional cost of land in our land bank over the last 4 years to 18.3 percent of average selling price. This morning increase of 0.3 percent in the half year reflects the site mix we've acquired. Now turning to work in progress. We visit a similar level to the prior year. We had more build active sites than the prior year, and currently have a small number of high websites in London, which are expected for delivery over the next 2 years. We ensure that we match fields for future sales rates and control the level of unsold stock on our sites with unsold stock remaining appropriate at one point two units. Proactive outlook. Here is an update on our progress in terms of legacy asset reduction. Legacy assets reduced by 1,000,000 in the half year to 1,000,000 whilst they will continue to reduce forward, the rate of reduction will decrease. The reduction in legacy sites was margin enhancing in the 1st half, legacy sites had a gross margin of 10.3% compared to 21.5% from our ongoing portfolio. Turning to the cash flow. The group delivered a million operating profit in the year. You made net cash interest and tax payments of GBP 72,000,000. We invested net cash of GBP 270,000,000 in land, and GBP 193,000,000 in other net site and joint venture investment. After noncash and other working capital movements, Our net operating cash outflow for the half year was GBP 205,000,000. We made GBP 348,000,000 of dividend payments resulting in a net cash outflow of 1000000 and a half year net cash position of 1000000. As a point of guidance, we now expect the total cash spend on land for FY 'eighteen to be around 1,000,000,000. Of that, around GBP 500,000,000 will relate to the payment of land creditors held at June 2017. Our business is strongly cash generative. We had average net cash during the first half, and we now expect that we will have a net neutral cash position over our financial year. We're focused on ensuring that we manage our total gearing across the cycle. Since December 2013, our total gearing has reduced from 44 of tangible net assets to 30% at December 17. The increase on the prior year reflects our investment in land this half year. We have a clearly defined operating framework of year internet cash and land creditors of 30% to 35% of the owned land bank. Looking forward, we expect the level of our line creditors to be 30% to 35% in FY18 and year end net cash to be around GBP 500,000,000. Now turning to a few errors of specific guidance for FY18 not covered previously, the majority of which are unchanged. We expect modest growth in wholly owned completions with affordable completions of around 20% of the total and around 150 joint venture completions. Administrative expenses are anticipated to be around 150,000,000 reflecting the reduction in the expected level of sundry income this year. Our share of profits from joint ventures is now expected to be around 1,000,000 We continue to expect interest costs to be around 1,000,000 with cash interest at around 1,000,000. To conclude, it's been another half year of good performance for the group, and we have delivered a strong set of results. Our balance sheet is in good shape and our cash generation supports our enhanced capital return plan. I will now hand over to David for market fundamentals, current trading and outlook. Thanks, Jessica. So if I can just start and cover what I see as being really clear differentiators for our business, As you know, we run 1 of the shortest land banks in the industry, and this clearly improves our return on capital employed. And also reduces our longer term risk profile. We have a strong balance sheet And as Jessica touched on, we expect to have 1,000,000 of net cash at the year end. We remain industry leading in terms of quality and service, as Steven has outlined, and we have very experienced build and sales teams on-site, which allow us to deliver both our sales targets and build targets during the year. I've said before that in our business, quality and service is simply non negotiable. And we can demonstrate that we are continuing to improve both of these metrics within our business Our sales and marketing remains industry leading with our sales rates at the higher end. Supporting our aim to both build and sell homes more quickly. And finally we are a national house builder, and therefore, we have a more diversified business and gives that gives us a broader market exposure. These differentiators have allowed us to deliver disciplined completion growth with volumes including joint ventures up by over 55% in the past 6 financial years. We have delivered both growth and maintained quality and service. We continue to improve our financial metrics particularly on return on capital employed and on operating margin. And we have also seen strong cash generation and have today further extended our capital return plan. So now if we look at the market where the fundamentals remain very positive. The lending environment remains positive, especially for new build. And I'll add a little more color on this shortly. The government's housing policy is very supportive. The government recently fully funded the Help to Buy team until at least 2021. They continue to look at measures to improve the planning system. And they recently announced the elimination of stamp duty for first time buyers. There is clearly strong demand for new homes across the country, and we are still well behind government targets for new housing. And as Steven outlined, we see that the land market remains very attractive. So let's move on and just have a closer look at the mortgage market. On the left hand chart, you can see that average mortgage rates remain very low compared to historic levels. There was clearly a spike ahead of the November interest rate increase, but this is corrected to reflect only the 0.25% increase that was announced. It's definitely worth noting that this just takes us back to pre EU referendum levels for base rate and we have not seen any adverse effect in terms of customer demand. Additionally, newbuild offers a significant advantage for customers with a 5% deposit. Under helped by equity share, mortgage rates are typically up to 200 basis points lower than for the equivalent 95 percent mortgage rates for a secondhand home. These low rates in new build also reflect the emergence of new entrants into the mortgage market and the increased competition coming from that over the last few years. The chart on the right shows average income spent on monthly mortgage interest and repayments. This Halifax data shows that affordability of mortgages is well below the long run average. Due to low borrowing rates, some wage inflation, and tempering house price inflation over the last 12 to 18 months. Bosterve outlined the positive nature of the market backdrop there are a number of key challenges for the industry, particularly if we want to keep growing volumes with a big uplift in completions from the major house builders over the last few years, skill shortages are an ongoing challenge for the industry. We are increasingly looking at alternative methods of construction. However, this is not something that can simply replace traditional build methods in the short to medium term. Additionally, as the industry continues to grow volume, And given the skill shortage, it is increasingly important that the industry continues to focus on delivering quality and service. We want to ensure at Barratt that the customer gets the home they deserve And Stephen has already talked about how this is a key priority. As I've said, whilst we have growth ambitions, a limiting factor for both us and the wider industry is the availability of skilled labor. We are working hard to address this and we are committed to investing of apprentices in the industry, and we also offer a number of graduate and training programs that sit alongside our apprentice programs. We are also looking outside the traditional tools for skilled labor. And we have very successfully trialed a program to recruit and train ex armed forces personnel in site management. In 2013, despite some claims from peers to the contrary, we were the 1st house builder to launch a degree course. The residential development and construction degree in conjunction with Sheffield Hallum University. And we are now seeing the first graduates from this degree program fully trained and working in our business. Additionally, we continue to develop trial and implement modern or alternative methods of construction, which can help to address specific skill shortages such as the availability of bricklayers. As Stephen mentioned, Another benefit of our new housing range is that the Barrett brand is now more suitable for these alternative methods of construction. For example, we plotted the new product on one of our sites in Yorkshire. And we use timber frame to speed up delivery and capitalized on pent up demand in the area. Bill times for the whole site were about 6 months faster than expected using the more traditional methods of construction. We continue to look at other methods of construction and we have successfully trialed light gauge steel frame and large format block. However, we recognize that the supply chain for these materials is not well established, and traditional methods of building will continue to dominate the industry, certainly in the short to medium term. We are also looking at off-site construction including things such as precast concrete garages, illustrated on the photograph on the slide, foundation systems and pre insulated roof panels. So whilst there are industry challenges, we are certainly focused on addressing these. We have increased our delivery of homes by 55% over the last 6 years, and we will deliver further modest growth in FY 2018. While we need to be disciplined in our future growth and ensure quality is of the right standard, we absolutely have ambitions to continue to grow. We intend to grow volumes organically And we are very comfortable with our current sales rates, so we will drive volumes mainly from a growth in site numbers. We have looked to areas of very strong demand and in response, are opening a new Cambridgeshire division. It clearly will take a little time to get this division up and running at full volume output. But to put our current numbers in perspective, we would expect each Barratt division to deliver around 750 completions and each David Wilson division to deliver around 700 completions. Therefore, within our overall structure, we have both the capability and the ambition to grow to 20,000 completions per annum over the medium term. Let's move on to the capital return plan. The board clearly recognizes that an ongoing dividend stream is an important part of total shareholder return. As we announced in February 17 Given the significant operational and financial improvements that the group had made, we improved and extended the capital return plan. As part of this return plan, the board proposes to target an ordinary dividend cover of 2.5 times And in line with that policy, we've announced an interim dividend of £8..6 this morning. When market conditions allow, those ordinary dividends will be supplemented with the payment of special dividends. We are pleased to extend the special dividend plan further and have announced a special dividend of 175,000,000 proposed for November 19. During the 5 years to November 19, total dividend payments are expected to be close So let me now bring you up to date on current trading. We have seen good consumer demand across the business, and it has clearly been a very strong start to the second half. Our private sales rate of 0.82 is up 6.5%. But I think it is very important to note that for the financial year to date, our reservation rate is up by a more modest 1.5%. We expect reservation rates to remain broadly flat for the balance of the year, And as previously guided, we expect to deliver modest volume growth for the full year. Looking briefly at forward sales, our total forward sales position is clearly strong. It's up 2% by value at 3,100,000,000 at a record level for the group. The wholly owned forward sales are up 4%, driven largely by timing of some affordable reservations. The joint venture sales are down 16% on a strong prior which included a bulk sale at our 9 ounce site for 118 units. Just to briefly touch again on our operating framework, which we covered previously, in previous presentation. But I think it's important that we restate that our target is to operate with an owned land bank of around three and a half years. We want to have land creditors reduced down to between 30% 35% as Jessica commented on. And operate at low levels of average net debt, always returning the business to a cash positive position at each financial year end. We are absolutely committed to our capital return plan and committed within that to returning any excess cash to shareholders. Finally, moving onto outlook. In short, we are very positive on outlook. We are absolutely not complacent We recognize that the operational and the financial performance is strong, but we remain focused on driving improvements through the business, particularly targeted on improving operating margins, whilst growing volumes in a disciplined way. We have a clearly defined operating framework, and we have an extended capital return plan. And lastly, we have a strong forward order book that I think sets the business up very well for FY18 and beyond. Thank you. And we will now be happy to take questions. Thank you. Good morning. Mark Hausen from HSBC. Three questions, if I may. Just, total land purchases, current land purchases, can you give us an idea on what gross margin you're acquiring those on, obviously, that may factor in the new house types, going on-site. That's the first question. I'm happy to go through these one at a time or sort of give the all 3 of the one going subject. We would prefer to do all three because then it gives us much more time to think of the answers. So that's a good plan. Just a second. On the, I think it's less than 20%, I think of the total plots is from modern methods of construction. Obviously, give the figure for Timper Frank, presumably that includes social. And can you give us a feel for your initial thinking for what MMC could be as a percentage of the total sort of, you know, the medium term. And just finally for me, just all the, it's just issued this land banking question, is three and a half year owned land bank. Can you give us a feel for how much of that is actually ready to go to build tomorrow? You know, you've got full blown, consent to go. Just give us a feel for that. Thank you. Okay. So I think, Stephen will talk about modern methods of construction. And where we are in terms of modern mass construction. And if I, if I just take the first question and the last question, so I'll talk about gross margin and talk about for a short period of time and not give you any numbers. And then talk about land banking. So I think in terms of gross margin, I mean, we've said historically that our minimum gross margin is at our minimum land acquisition hurdles is a 20% gross margin and 25% return on capital employed. And we've also said that all of our land up opportunities are exceeding those hurdles. And I think that remains to be our position in terms numbers. We are absolutely seeing great opportunities, and on a number of our land acquisitions, we have significantly exceeded those hurdles. And that's where we have confidence in terms of delivery of higher margins higher operating margins in the future. In terms of the land bank, I mean, our position on it is very clear We operate 1 of the shortest land banks in the industry, of the major house builders, possibly the shortest land bank in the industry. We have got no implementable planning permissions where we are not on-site. But clearly, we have a mix of outline consents and detailed consents, our ambition in relation to land is simply to get on-site as quickly as we can, and put that land into production. Do you see anything you want to cover at MMC? In terms of MMC, yes, as David mentioned, we are stepping up the use of MMC. The new Barratt range we introduced last year was designed with that in mind. It was simplified in terms of, making it more regular shape. So it's suited timber frame. For the current year, we're expecting to move our timber frame production up, towards 17, 1800 units. We did 12.70 last year. So we've gone from 7% moving towards 10%. As David mentioned, there are constraints on the supply chain. There isn't a great availability. But we continue to see that growing steadily into the sort of medium term. We'd maybe expect get towards 15% to 20%. Our Scottish business is predominantly 100%. It's not ration to just, social housing, it is, private as well, but our target is to see a bit more timber frame construction, in England, okay? People are going to follow-up the microphone around. So it's coming into Chris next to him. Oh, no. Okay. No. Chris, sorry. Stand down, Chris. Thank you, the ones. Andy Murphy from Bank of America Merrill Lynch, just a couple of quick questions. On the private site reservation numbers, you mentioned they were up quite strongly in the 1st few weeks of this year, and I guess more comment around the full year figures. Was that just a function of, of, site changes or, Laura, small numbers or some issues on the last year? A little bit of exploration around that, please. And second, on the labor, it sounds like you, on the one hand, you're saying that, labor costs are under pressure, but actually the price is approximately labor costs are not necessarily rising even though the pressure is there. So I wonder if you sort of just a bit of a bit of color around what's happening with the labor availability and costs. Thank you. Okay. So if I cover the reservations and Steven can talk about labor and labor cost trends that we're seeing. I mean, in terms of reservation, so we provided the split for the first half between London and the region. For reservation trends and also for current trading. So what we've seen with current trading is just that we just came out the blocks very fast. So good reservation trends right from the beginning of January and both for London and the regional business. And therefore, both both sides of the equation are up on a year on year basis. It's not really our plan to run the business on higher reservation rates. And I would come back to the fact that cumulatively we're only up 1.5%. And therefore, we really expect that growth is going to come from more site numbers if site numbers are up a couple of percent in the year rather than from those reservation trends. Okay. On labor costs, yes, there are pressures on labor costs. It's, reasonably specific, but typically, we're sort of seeing labor increase on trades of between 3% 5%. So bricklayers will be at the top end of the that level at towards 5% join as groundwork as Plaster's 3%. We've seen over the last 6 months or so the pressure to start easing, there has been some substantial increases over the last 5, 6 years with bricklayers, gone 70% over 5 years. Bear in mind, there were down probably 20% after the recession from pre recession levels. So, but the last 6 months, we've seen a stabilization in labor, mild labor availability, which has sort of taken some of the pressure off. Leverage. Chris, you've got the microphone. It must be you. Yeah, good morning, Chris Wellington from Numis. Just a couple. You just mentioned there about circa 2% on outlets for this year. I just wanna give us a bit more detail on average for H2 and kind of expectations for 'nineteen. 2nd one is really just about the future ASP. You're running ahead of the land bank at 1,000,000. I think it's in there at 1,000,000 in the land bank. In the absence of kind of HPI, how long do you think that sort of graduation back to the average will take? If you understand the question there. And the final one's really just on strategic land and it's kind of benefits of future margins. I've been 28 now, you talk about getting to 30, but the benefit seems to come from that shaded chop some way out. It just doesn't strike me. That's a big move from where we are moment. And therefore, is that a major component of this margin improvement? Okay. So if, I mean, Steven will talk through about strategic one, just pick up from what you covered in the presentation, and Jessica will cover the outlet question. I think in terms of ASP, I mean, if you look at the ASP in the land bank, we obviously publish that every 6 months. And you look at the ASP that we've delivered, that we've published, say, over the last 4 or 5 years, the ASP in the land bank is quite a good proxy for the ASP that we're going to deliver. So therefore, the variation that we're seeing just now, which Jessica touched on in the presentation is really simply because of this high end London delivery. So I think what we're going to see is some movement away from the ASP in the land bank first half of this year, second half of this year as Jessica outlined, maybe up at 280,000 ASP. But beyond then as we go beyond FY 2019, we'll start to move back to the SP and the land bank because the as Steven touched on, we've only got around 400 plus left to deliver from Central London. So all of that will get delivered through during FY18 and FY19. And then we should revert back to that much more consistent trend where it equates to the SP and the land bank. In terms of product mix, beyond that central London movement, I think there's very, very little mix impact that, you know, the sort of 80% houses, 20% apartments, I think, is going to be a pretty consistent position for us as we go forward. And we're not looking to build larger homes or homes in fundamentally different locations apart from the move out of Central London. So would you be saying 280 this year, 266 next year? I presume it's a gradual trend to kind of get back to that 266. Just trying to think of the revenue impacts. Yes, you know, I'm not I'm not qualified to give you that number. But there's going to be some movement downwards, but it will take slightly through FY 2019 to clear out all of the Central London. But clearly, it's going to be between those two numbers, the IE260 and 280. Okay. Jessica, do you want to pick up on outlets? So I mean, in terms of outlets for Heartgate one we had modest growth on last year, so operating from an average of 376 versus 3.74 last year. We very much see that for this financial year, we will again have modest growth in terms of outlook. So last year, we operated from 3 77 outlets. And as I said, we'd expect modest growth in terms of that. And when we're looking forward more into the future, we'll be looking at growth of maybe 3% to 5% going forward. Yes, as we mentioned, we've seen, we've had a good flow of strategic land come through over the last few years. I think FY 'seventeen, we saw something like 6700 plots pulled through into our landbank. And in the half, we achieved 28% of our completions were on strategic land. As I've mentioned in my presentation, I think, about we're seeing a 3% margin enhancement, on strategic land acquired since 2009. We see that sort of increasing to us 30, as you noted. And I think it's fair to say that within the landbank, the risks and the strategic land where we necessary didn't have that 3% margin uplift. So as that gets replaced, you'll see, more strategic land coming through with a higher margin content. Yes. Yeah. Excuse me, mate. So Gavin Jacob, Peel Hunt, 3 of a good, please. First one is just continuing with the London theme. I think Jessica, you said there was about a 40 bps drag in the first half from the London sites. Kind of follow-up from Chris's question, as those kind of London sites come through through the end of FY 'nineteen, is that drag going to be a similar level FY 'nineteen and therefore you'd expect kind of a kicker in FY 'twenty, kind of 40 bps or so. In terms of H. B. O. On the order book, can you give us a sense for where the underlying HPIs, I think, the actual mix element is showing lower ASP, but what's the underlying in that? And then finally, just on Help to Buy, I think probably a year ago, we're sat here and through the results season, most of House builders said we'd expect some clarity on where Help to Buy going to be by the end of December 'seventeen, obviously, we're into the new year now and still stuck at kind of 2021 as you're looking to buy some of these larger sites what you're feeling on where Help to Buy is actually going to end up in terms of government action. Yes, I mean, I think if I cover on, the Helpwise question, and then also if I just touch on the HPI, and Jessica will talk about margin. So I mean, if we do HPI, first of all, I mean, we measure HPI, I think we measure HPI fairly successfully within our regional business because it's relatively easy to get a plot by plot comparison. Whereas in the London business, it's clearly more difficult because of non standard product. And as you move up floors in the building, there tends to be price differentials. So I mean, overall, we'd look at in the period is something like 2.5% to 3%. So reasonably positive HPI trends, but clearly, as Steven touched on, we accompanying that with, with, build cost inflation. In terms of Help to Buy, I think clearly for the house builders, the main thing we would like is the clarity and certainty of what will happen beyond 2021. I think it was a big positive that the scheme was fully funded in November through 2021 because I think that was the initial obstacle is all the funding going to be there. And I think if you look at the calculations on the quarterly numbers, it looks very fully funded through to 2021. So that is a big positive. We see benefits in there being a clarification. And in the absence of that clarification, we're just assuming that sales rate will be at lower levels beyond 2021. So as Stephen touched on, some of the larger sites that we have purchased, And therefore, in relation to larger sites, we would just have softer sales assumptions against those sites. Okay. And then with regards to the margin, firstly, the first half was very strong in terms of margin performance. So you can see the improvement that's come through from the regional business and the 60 basis points improvement that has come through from that. I think if you look back at the operating margin performance in terms of H1 at 17.9%. That's marginally up on last year's 17.8%. And H2 last year, we delivered 16.8% in terms of operating margin, reflecting the phasing of billings and completion and also the phasing of how admin costs come through business. I think with regards to H2, definitely it's going to be a challenge for us with regards to the drag from the high end London sites coming to and we will we will work hard towards that level. As Stephen said, there's around 400 units on the high end London sites and they will trade through over the next couple of years and they I would see to be continue to be a drag on margin while they trade out. 2 to 3%. Does that kind of followed through into the order book coming in in the 1st couple of months of this year as well? Yeah. I mean, because we're just transitioning as opposed to looking back on a year on year basis. So we're not seeing any change in terms of pricing trends. And, you know, over what is a relatively short period. Thank you, Gregor Kugich from UBS. I've got three questions just trying to come back to the London Point. Can you actually give us sort of a sense where the margin's actually trading. Are we talking down 10 percentage points or something like this? And therefore, sort of margin that's in the low double digits. So we can get a sense for us to get into point how that, reverses out once you actually trade it through those, those 400 units. I think you, in your introductory remarks, talked about further initiatives for margin enhancement. Do you care to elaborate what you mean? And then the final point is obviously, you still have kind of a, I think it's a 500,000,000 intra year cash swing think you said average debt roughly 0, 500 at the year end. I understand that the dividends and all those sort of things. But from an operational perspective, Is there an advantage to bringing that more in line? Because obviously, this mainly reflects the work in progress cycle. Think some other house bills have talked about if you actually don't manage the balance sheet, the 31st June or 30th June, depending on, of course, your financial year end that actually there's financial benefits. Is there something you're looking to do more aggressively? Okay. I mean, I think if Jessica talks through in terms of just margin, one of the things in the presentation is we're just stitching together the different bits of information because I think because you've got the margin dilution, there quite a bit of information in there, but Jessica can talk through that in terms of London. And, if I cover initially just on Other things in terms of margin enhancement, talk briefly about the cash position and Stephen can then talk about what we're doing in terms of smoothing production, which I think is the point that you're referring to So I think in terms of margin enhancement, we see that there are plenty of other initiatives that we can look at. And a lot of them do revolve around product. So having launched new product, I think we recognize that we've got to continually refine that. And that's something that Steven is now working on effectively the next review of product and the extent to which we should make any further alterations to the product range, I think the second thing, which is a big driver in terms of potential margin enhancement is just everything that we can do regarding layouts and coverage and the extent to which we can achieve improved financial metrics through that process So I think that will be an illustration of the kind of main thrust of what we're looking at. In terms of the cash, cash variation. I mean, the variation from peak to trough historically, we've probably been somewhere between 500,000,001,000,000 in terms of variations between peak and trough. And as you say, Gregor, a big driver of that is about the extent to which we have to build everything before we can complete and the completions are very heavily skewed into November, December, May, June. So I think that if you look at our performance over the last 4 or 5 years, A couple of things that I would highlight from that. First of all, we've gone from 37% of our completions being in the first half of the year. And we're trying to get ourselves up to a position of around 45% of completions. I think we always recognize that we will be weighted towards the second half of our year with springsummer being a more popular time for people to move. Having got the first half, second half mix on the move, and we have moved that in each of the last 5 years, what we're now focused on is trying to get less completions in November, December, less completions in May June and more of a spread around that. So Stephen, do you want to move on? Yes, I don't think there's a good deal to add to what David said in terms of, obviously, we're targeting the business really to drive more production in the first half, second half. So targeting to get back to a solid of 45, 55 percent split H1 H2. MMC is helping in many respects, as David mentioned in his presentation, we've seen sort of some benefits in timescale by, LMC and controlling the work in progress. To drive that business through in that period. Lender margin? I haven't I haven't forgotten Gregor. I think in terms of looking at London Margin, If you look at the 40 basis points dilution in the first half and then clearly look at the phasing in terms of completions. So as I said, we delivered 162 completions in terms of wholly owned completions, in the first half from the London business, and we would expect 800 completions in the full year. And as Stephen said, there are 400 completions in terms of zone 12, which we'll trade out over the next couple of years. Okay. Glenn is fine. Deutsche Bank stole the mic very quickly there. A couple on margin and then one further. Can you just remind us or maybe things have changed? The page 4, the the drivers of the margin, are they listed in terms of the scale of the benefit to margin? And then following on from that, if you've taken 0.6 percentage points up, basis, which rather a margin improvement in a period where that scale looks very light green. Do you have any more comfort to give us maybe guidance of the total margin improvement that you think these these, issues or these processes can bring. Also I'm very conscious that doesn't involve any upside in terms of gross margin on your intake of land, which should be supplementary to that. So I'm just wondering should we be looking at more margin more in line with industry average? Potentially, quite a few questions in that one. The next one is just in terms of divisions. You talk about slightly different number of completion numbers for Barrett and David Wilson, can you just clarify how many divisions are Barrett and how many David Wilson divisions you have just so we can do that summation together? And finally, just in terms of the large sites, and there clearly has been increase in the size of sites you're buying, should we anticipate a sharp pickup in infrastructure that may be required on those sites of cash going into sites before we necessarily see returns come through. Okay. So I think if Stephen will pick up maybe in terms of size of sites, Stephen touched on in his presentation, I think we have picked up some bigger sites, if you look back over the last 12 months. If I cover capacity I mean, I think rather than saying we'll multiply three times this and four times that, I mean, I think if you're using an assumption of 725, we have, with the Kenricher Office opening, we will have 25 regional divisions. And we see that the London business has got capacity to deliver 1500, 1750 completions. It's been as high as 2000. And that will give you some feel for the overall capacity. In terms of margin, I mean, I think the way you step through it, Glenn, is absolutely right. But our starting point is that we recognize that our operating margin at 17%. Is a long way behind the industry average. And whilst there's a whole lot of reasons for that, we have scope to expand our margin into that gap. When you look at the large drivers of margin improvement, it will mainly be around product, coverage and strategic land. Those are the 3 big drivers. I think strategic land, as I touched on, is well underway. Our strategic land was down at 5% in 2012, and as Steven touched on, we're heading towards 30% sometime soon. So I think that's something that is well underway. In terms of product, we've delivered the product, but as Stephen touched on, the take up of that is at a very early stage. Around 270 completions in the first half of the year. So clearly, there's a lot of scope to expand margin in relation to product. And all of these things are really rolled up into land acquisition, to be able to buy the land at higher margins, we've got to have these efficiencies, And therefore, that is enabling us to buy land at higher margin and has been enabling us to do that over the last 12 to 15 months. So therefore, we are increasing hurdles and buying land that are margins. Stephen, do you want to talk about the infrastructure? In terms of the London infrastructure, Linis, Yes, we are seeing a few more sites come through in the sort of 250 to 500 unit category. I think a lot of that is put down to the MPPF where promoters have been sort of putting those sort of medium sized sites forward. For our point of view, ideal because we can sort of dual brand to site. Once you get above 250 to 300 units, it's absolutely perfect for dual branding 125, 150 unit per barrett or David Wilson Fehr. So that's a good buy for us. We are buying sites that involve lots of infrastructure, bypasses, bridges, things, tunnels and things like that. The straightforward sites. And I think in that category of sight, we're also finding there isn't that much competition because there aren't that many house builders who can take on a 250 to 500 unit site, which also means that we're able to get them available on good terms with good payment terms as well, with good deferred payment levels. To add on sort of infrastructure about more work in progress. I mean, I think directionally, we would expect that our average work in progress on a per site basis will reduce because whilst we might be taking on larger sites in the regional business, in moving out of Central London, the investment in Central London schemes has always historically been very high. And so that will clearly run off over the next couple of years. And we've touched previously on the fact that we have a lot of concentration of our whip around a limited number of sites. So that, that concentration will substantially reduce over the next couple of years as we trade out. I'm looking at you, Will, but Mike's going the other way. Okay. Thanks. Will Jones from Red Bend through as well if I could, please. First is coming back. I think there was a comment made earlier that, is it 40,000 plots have been identified for the new product range give or take, should we see that again? The 80 odd 1000 in the owned and controlled land bank. So it's about half the coverage and what can you maybe run us through what makes a site a for the new product range. I appreciate London and bespoke stuff wouldn't be, but how high the percentage go, I guess, that's the new product range versus the land bank? Second is just around the full year guidance on volume, modest growth. I think in the past, you've categorized that as 1% to 3%. Would it be fair to say given the first half performance given private volumes up 5, I think, in the order book that you're more likely to be at the upper end of that range than the lower end, are you around 3 perhaps? And the last one was just if you could explore the change in London sales rates. First half, I think, was down 20 odd percent plus year over year. Jan and Feb up 20 plus year over year, very volatile. Is that you guys pushing more on price? Is there a bulk side in there in Jan and Feb? Or is it just a firm and London market terms of customer activity? Okay. So if I just pick up in terms of the volume and the sales rates and Steven can just talk about the the sort of potential in terms of the new products and how that will come in over the plots. I think in volume terms, when it strictly, I think our definition of modest is 1 to 2. So we would expect to be at the top end of that range. And I think we delivered 2%. Our reservation rate year to date is up by 1.5%. So I don't think we're really too far adrift from that, but we have said that in the medium term, we see that 3% to 5% is deliverable, and we clearly demonstrated we can deliver that sort of level. In terms of sales rates, I mean, I think it's just that we're looking at it on a year on year basis. As I touched on earlier, we've we felt that we really came out of from right at the beginning of January, strongly. And we'll just need to see how we continue to trade. I mean, that's obviously benefited both the regional business and the London business, where we've seen a reverse of the previous reservation trends in London. The customer in London, certainly, I think at the high end, people are back in the market, perhaps the budget announcement in November saying there is no change to stamp duty at the higher end. Has made people realize that if they want to come and buy, that's the stamp duty environment that they're going to be buying in. Whereas perhaps there was some feeling in the run up to the budget that there might be a change to standard duty and therefore, people were holding off. Price action in terms of the way you push the product in Janum, Feb versus the 6 months before Well, I mean, we'll always look to adjust prices. I mean, the only sites that we would be taking price action in terms of reducing prices would be on those sort of five sites in zone 1. But clearly, the majority of the business, which is giving you that reservation trend, prices would be broadly unchanged. In terms of the, the new product will yeah, the 40,000 plots relates to the London Control landbank, so that I have. So the Bharat Range was introduced back into 2016. David Wilson in 2017, so the new site's coming through since that point in time. Have been plotted with new Barrett and new David Wilson. We've also gone back over our existing sites where and whether sufficiently large enough to substitute we've been substituting existing, schemes, to the extent that looking back at some of our, our land approvals and we're achieving something like 98% of the land we agreed to buy excluding London. Has standard product top, which is, I think, reflective of the planning system and the type of sites we've been able to buy in the last, 12 months. But, historically, we would sort of try and achieve 18.75 80 percent standard products on those sites, but we're getting nearly towards 100% of our product coming through will be standard, which has its benefits as well. Just one on the extensions of the capital return program. Given the kind of very positive and confident of medium term outlook percentage. So I just wondered why it wasn't extended maybe further into 2020 or 2021 even. Or $175,000,000 was an increase. It just seems cautious. Is that concerns around where we are in the cycle or anything else you were thinking? Well, I mean, I think we probably be naturally reasonably cautious. I mean, we feel that the ordinary part of the program is is clearly well defined that 2.5 times cover. So it's just a question of, the extension on the special dividend program. Our feeling was that we're giving a clear direction of travel in terms of the special dividend. And Bear in mind that the $175,000,000 level, it did step up from, 100 to $125,000,000 and then step up to 175. So we felt it was appropriate just to keep it at that level. And that's something that the board will just continue to review. I think the important thing for shareholders is that we are absolutely committed that where we have surplus cash, that we will distribute surplus cash by way of special dividend. But I'm going right down to the back to Alisto now. Sorry, Ken. From Stockfield Securities. Just to quickly, following on from stamp duty had a question to go. Have you noticed any impact on first time buyers from the, virtual removal of stamp duty? Or it's helped to buy really, your main attraction to first time buyers. And, I I couldn't find it, I may have missed it, but what is first time, but what are first time buyers as an overall percentage of unit sales. I mean, I think stamp duty in terms of the removal of stamp duty for first time buyers was clearly another positive for the market. So we've had a lot of commentary from customers saying, well, this is a good thing, but the extent to which you could say that it is driving additional demand. I think it's very difficult for us to quantify. But clearly, if we look at the trading numbers, then we are seeing strong trading numbers presently. So, that's a positive. I think the other thing just to touch on is that if you go back on first time buyers, to prior to November 14, and you look at the stamp duty system that existed at that point in time, to where a first time buyer is now. I mean, if somebody was buying a property at, say, 250,300,000, you're looking at a reduction in costs of maybe £7000 to £9000, which is clearly substantial in terms of cash paid So over a period of time, it's become a much more positive environment for first time buyers. In terms of our overall percentages and for time bars. I mean, it varied between Barrett and David Wilson. David Wilson clearly being a lower percentage But on Barratt, somewhere in the order of 40%, forty percent plus being first time bars, I think we'd not be an unreasonable estimate. Again, Kevin, I think I've still got 2. One on really following on from Will's point about sort Have you changed sort of selling prices? I'm wondering whether you actually changed sort of part X or other incentives since the start of the year, again, trying to sort of understand whether that sort of side of the equation has changed year on year and trying to explain again that better, better sort of sales performance. And the start of the year is certainly relative to a few of the peers that we've heard from. The second one I had was on London, Central London. I mean, obviously, it's you know, it's obviously a no go area at the moment, but how big is the gap, you know, in terms of land prices and returns and margins that you can get from Central And London prices and opportunities at the moment, are you still a blank no or is it starting to look starting to look a little bit more appealing? Okay. Well, if I cover both of those off, I mean, in terms of Central London, so if we're saying zone 1 in our edge of zone 2, we're just a flat note at this point in time. We believe that there are a lot of opportunities in 3 to 6 We've been successfully acquiring some large sites in 3 to 6. So for example, at Hays, what was the former Nestle factory Hounds Law where we're now on-site in Harrow. So those are 3 big sites that we've acquired. And we think we're better just to deploy our land teams where there is certainty that we can acquire. They spent a lot of time in calendar 1516 bidding on Central London and being unsuccessful, we just couldn't get the numbers to work. So we're so that is a kind of flat and arduous now. In terms of anything that we're doing, there's probably 2 parts to that. I think we've touched on Central London. Where we've adjusted prices in Central London, it's simply because the demand is not working, and therefore, we've adjusted prices, that would be 4 or 5 sites. In terms of, consumer offer, we ran a consumer offer, across the board on Barret and David Wilson, starting in, effectively boxing day or in about boxing day through until the end of January. And that was carpets as part of the purchase. Now the reality is that carpets would be part of the proposition on quite a lot of sales, but we ran that as a sort of uniform offer. Clearly, the cost lots are relatively low. And as I say, it would apply to most sales. But that's the only Yeah. Just just just really one. When when we when we sit here and and listen to what you'd been saying about, the sales rate, difficult to push any higher. When you talk about still wanting to achieve University Commerce modest growth be that 2, 3, 4, or 5. And when we look at what your experience in the land bank, not just in this 6 months we're looking at, but are things broadly similar? Pattern was happening in the second half of last year, I. E, the average size being bigger. You know, I guess we might be forgiven for thinking that the only real way to achieve 3, 4 or 5 percent volume is to have at least that level of new site openings at least that level. And if you extrapolate the tendency for for bigger science, is there, you know, are we looking at an inescapable medium term, where it costs you more in balance sheet terms to run the business. Or is it possible that, you know, one of your differentiators, I. E, the short land bank actually, you know, starts to disappear in the next 3 years in that pursuit of growth. And frankly, I obviously can't speak for everyone, but I'm not even sure to what extent that would be seen as a a positive or a negative differentiator anyway, you know, it might be that the market would actually value the possibility of the business growing higher than it would value the fact you've got a smaller land bank. And well, I suppose what I'm asking is that is that a a feasible way in which the business developed in the next few years, or or do you think that is just a quirk of the last 12 months I am buying? Yes, I think more a quirk of the last 12 months. I mean, Stephen obviously presented the information on the land banking. I mean, it's probably unusual, but we both two top the average and the median because I think the reality is that when you look at the average, it has been very skewed by a limited number of sites. So if you take Yates as an example in Bristol, which Steven touched on, I mean, we will have a number of Barrett and David Wilson outlets on those on that side, but it will clearly take time to get those going. We see that an owned land bank around three and a half years is very adequate for us to run the business. And clearly, we can grow on that sort of land bank, we've hit that number pretty consistently as we've grown from 12,000 units up to 17,000 units. So we can clearly grow on that. I think on the overall investment. I mean, a lot, I don't know. I can't go back to numbers, but a lot of that growth would have come from the sales rate rather than anything else, wouldn't it? Yes, no, a lot of it would have come from silver rate, definitely. And I mean, this has been one of the battles that we've had is that as sales rates have accelerated, we've lost the site numbers. So if you look over the last 5 years, we're back at sort of site numbers that we were at 4 or 5 years ago. So when you look at land that we've approved through the last 3 years, we definitely have approved enough land for us to grow site numbers. And there shouldn't be any particular pressure on in terms of the balance sheet for land that's 3.5 years. I think the upside that we touched on briefly is that in terms of work in progress, I think we should see some of the pressure come off in terms of working progress levels as we move forward over the next couple of years and the Central London sites drop out of the equation. Okay. So what you're saying is, in effect, the same sort of balance sheet that we're looking at now. Would support this business near a 20,000 units? Correct. Because it's just it's the pace of growth. You know, the the reality is that if we are if we're growing at 10% per annum. And we did compound 8, as you said, primarily on sales rate, but not entirely. But, if we, if we grow fast, that's when we've got to load the balance sheet. If we're growing up at reasonably controlled rates, you know, 3% to 5% per annum, there's much less loading on the balance sheet. Okay. I think that's it for all the questions. Thank you very much, everyone. Thank you.