I'm the Non-Executive Chairman of the company. I think I've actually been awarded a slide. I've been here five years, and I think today I have a slide of the day, but unfortunately, it's not showing, and it's probably due to my inability to make it show. There we are. There we are. My name on a slide. Can we have the next one now, please? So I'm here really to introduce the day and talk just a little bit about the agenda. You are all aware that this is Peter's final results session as our Chief Executive. I'm going to say a little bit about Peter at the end of this, but there is also something very special about today for Peter. It's his birthday! So happy birthday, Peter.
What a day to choose to have your birthday, or is it what a day to choose to have the results? Which way around is it? Anyway, we hope you have a very good day. So you're going to do an introduction, an overview. Bill's gonna tackle the numbers, and of course, we've had Bill now with us for about, what, eight, nine months?
Six, seven , yeah.
When he first arrived, I referred to him as young Mr. Floydd. I'm now referring to him as Bill. So there we go. And then Peter will come back with a market overview, and then we'll have some Q&A, and then I'll bring it to an end. Then I want to introduce you to Martyn Clark, who, as you know, has been appointed as the CEO and will take over tomorrow from Peter. So again, thank you all for being here. I hope we have a good session, and I think that's the point at which I hand over to you, Peter.
Thank you very much, Ian, and let me start with the overview for the period. The trading conditions have presented a mixed picture, both within more narrow bands than was the case at this time last year. We haven't seen the extreme volatility that was around in 2023. More so, it has at times felt like a race that wants to get going but has suffered a few false starts. Certainly, sales were sluggish at the end of 2023 before we saw healthy rates start to come through in the first few months of 2024. However, this strength gradually declined as the expected interest rate cuts failed to materialize, and more lately, of course, as the general election has come into focus.
The Bank of England rate has remained stable at 5.25% throughout the period, in strong contrast to the series of hikes in 2023. But mortgage rates are set on forward expectations, and the hopeful rate reductions are still for the future. The first cut, psychologically, is crucial in marking the start of a new and lower rate cycle. It will come, and the market reaction will be positive when it does, but it didn't happen in our first half, and that has restricted our sales in the period. Overall, our sales rate in the first half was 0.4, broadly as we expected. Pricing has remained firm and stable, with no net loss or gain against our anticipated assumptions. A bold land buying activity was undertaken this time last year, and we've become highly selective in our land acquisition in the first half.
A period that has seen competition for spot market deals start to become very competitive. The only addition to the land bank was a 241-unit acquisition in Elland, Yorkshire. The land buying activity undertaken by us in 2022 and 2023 leaves us in a good position for the years ahead. Going forwards, we'll mostly be acquiring land by drawing down options from our strategic land portfolio, with only a few open market acquisitions needed, mostly to serve our growing Yorkshire division, or where an opportunity that presents outstanding value materializes. Our focus, therefore, will be both the strategic land conversions and, of course, obtaining implementable planning consents on these.
As mentioned in our January AGM trading update, following some unexpected cost overruns on four legacy sites, we undertook, in conjunction with a third party specialist consultant, a thorough review of all of our portfolio of closed site liabilities that sit outside of the possible materials related defects. This work has been completed, and Bill will outline the findings and implications more fully in his section to follow. Balance sheet remains strong. We have moved from a positive cash position this time last year to a small debt position at the end of the first half, but the overall position has improved against our previous expectations, with a lower net debt range also now projected for the full year. Our finances remain strong. As I've outlined, much of the heavy lifting on land investment has been undertaken in recent years.
In summary, market conditions remain stable when compared to last year, and we've continued to work through our legacy issues and lower margin sites. The operating platform going forwards is far more sustainable, and we have a quality land portfolio. Strong focus and better processes that have been attended to this period leave us with the confidence that Crest Nicholson can deliver strong results over the medium term. So let me now hand over to Bill Floydd for his finance section.
Thank you, Peter, and good morning, everyone. This morning, I'll give you a financial summary of the half, provide you with an update on our progress at Farnham, take you through the outcome of the completed sites review, and conclude with the guidance for FY 2024. Here you can see the key lines from the income statement. At the back of the presentation is a full income statement, as well as the balance sheet and the cash flow. Overall, it was a solid performance in a less than active market and as the business navigated through some challenges. Revenue for the half was GBP 257.5 million, down 9% on last year, reflecting the weak forward order book as we came into the year.
Adjusted Gross Margin fell from 17.9%- 13.6%, with the mix of sales being more heavily weighted to lower margin sites. I will give you more insight on our progress in working our way out to the low margin sites later in the presentation. Adjusted Operating Profit was GBP 6.2 million, after charging GBP 5.9 million from the completed site review. Exceptional items before tax were GBP 33.5 million, and I will take you through these on a separate slide. Adjusted Basic Earnings Per Share was GBP 0.007, down by 89%. On the dividend, the board has declared an interim dividend of GBP 0.01.
On sales metrics, the average number of outlets were 45, down from 48 in HY 2023, with the pace of new outlets being impacted by challenges in obtaining planning, and we expect the average number of outlets for the year to end at 45. The open market SPO rate was 0.47. After a slow start to the year, the SPO rate improved to 0.54 in February and March. Recent performance has moderated, but we entered H2 with a forward order book to be delivered in the half of 450 open market and 277 affordable homes, and as such, are 80% covered for the year. We consider that our planning assumption for FY 2024 of a SPO rate of 0.45 is still appropriate.
On completions, we achieved 788, of which 145 were at the joint venture sites. The group ASP improved by 2.3% to GBP 349,000 as a result of mix, with the ASP in the individual categories marginally down, but again impacted by mix. We've made good progress working through the remaining deliverables at Farnham, progressing in line with our plan, albeit with some minor delays and some modest cost creep due to scope gaps and rework. We've completed one of the two remaining apartment blocks, and completion of the second remains on track for June as planned, sorry, July as planned. The renovation of the Grade I listed building is substantially complete, with minor works to finish over the remainder of June.
We've been delayed in starting work on the road and pavement on the northern boundary of the site, but this work is now underway and should complete in August. We're still awaiting final planning permission for the pedestrian bridge, but this work is now fully costed and should not pose a material risk. As a result, with the exception of the pedestrian bridge, our build program is on track to be completed in August. On sales, we've continued to make good progress, with 55 of the total 239 apartments still to sell, and now- I now expect those to be fully sold by the end of FY 2025. Over the next couple of slides, I've got a few before and after pictures comparing what we showed you at the FY 2024 prelims and where we are now.
The work on the Grade I listed building is nearing completion. The extension to the left on the picture here is now fully built. That goes right the way around the back of the building. The pictures on the right show you the interior of the building, and this is now substantially complete and ready for handover to the tenants for them to commence the full internal fit out. In these pictures, you can see we've completed all external building works. The ReeL Cinema is now open, and we've completed the external work on that last, last remaining apartment building. And finally, in this last picture, you can see the overall scheme. The remaining work on the site is the fit out of this building here and this landscaping area here, and then we exit this way over the bridge.
The work on the road is kind of up in this top corner here. As you can see, the site's now substantially built. Now turning to the completed sites review. Initially, we intended to focus on the four sites previously identified and other complex sites completed prior to 2019. As a reminder, these are sites that are non-standard house building developments, sorry, that we are building today, but complicated bespoke designs that were undertaken historically. We subsequently decided to expand the scope of the review to cover all completed non-standard sites and a smaller number of standard sites for which the group maintains an outstanding obligation. In total, this is approximately 140 sites. External consultants have been working with our teams over an 8-week period to review our approach, challenge our estimates, and make recommendations on process improvements going forward.
Given the increased scope, the overall estimate increased to GBP 31.4 million. The accounting treatment for recording the charge is that where the site is of a non-standard and bespoke nature and predates the change in strategy to focus on house building, then the charge is recorded as exceptional. Costs related to standard housing developments are recorded within adjusted operating profit. It is important to note that the costs on standard developments are almost all related to infrastructure such as the roads and drainage, rather than to individual homes. The most substantive work to be carried out is on the four sites previously identified, and the balances were more realistic estimates of previously known issues across a large number of sites.
I expect the cash spend profile to be approximately over three years, and the next step is to set out a new roadmap and discipline so that we deal conclusively with all these matters. The details of the other exceptional items are as follows: The main changes on the combustible materials provision is an increase of GBP 8.9 million as a result of build cost inflation and scope changes, offset by recoveries of GBP 4.4 million from a third party in respect of defective design and workmanship. There's also an interest, imputed interest cost of GBP 3.2 million. There have been no substantive developments with respect to the legal claim made against the group relating to the fire at an apartment scheme in 2021. The tax credit on these exceptional charges is GBP 8.4 million.
Moving on to the land portfolio. Since the end of the year, the reduction in plots arises from some land being reclassified as more suitable for commercial usage, some reduction as a result of planning decisions, but mainly from sales achieved in the half. On the gross margin of the land bank, we have traded through just over a quarter of the sites where gross margin is less than 15%. We recognize revenue in FY 2023 of GBP 117 million, with site margins of 10% or below. I'm anticipating a similar value in FY 2024, and then the balance to approximately half in FY 2025 before unwinding in FY 2026. The value of revenue from between 10% and 15% margin should be fairly consistent before unwinding in FY 2027.
This change in mix gives us good confidence that going into FY 25, gross margin will be on an upwards trajectory. On the balance sheet, the key points to note are the land WIP increase since the end of the year of GBP 17 million, expected in preparation of better market conditions. The group's land creditors are GBP 175.9 million, reflecting new commitments of GBP 32 million and payments of GBP 62 million. The chart on the right highlights our expected payment profile of the current commitments, with GBP 82 million of spend expected in H2. Net assets reduced from GBP 876.6 million to GBP 803.1 million, in large part due to the completed site costs and the dividend payments.
The group's committed debt facilities are an RCF of GBP 250 million that matures in September 2026, and a GBP 100 million private placement, with GBP 50 million being repaid in August this year, and the balance tranches to FY 2029. As such, I remain comfortable with the group's balance sheet and the availability of liquidity. The net cash outflow in the half was GBP 73.9 million, of which GBP 29.5 million was the dividend. The balance of the cash outflow is substantially due to working capital. The improvements in our outlook on net debt for the year reflects that we have established a more disciplined approach to cash management in the business, some deferral of the combustibles payments, and that we are less likely to commit further land payments in the financial year.
As a result, I now expect the net debt at the end of the year to be between GBP 40 million and GBP 60 million, with the key dependencies being the end point on sales and whether the speed of planning impacts any land or WIP payments. Turning to our guidance for the remainder of the year, and here I give you our latest planning assumptions. We expect sales volumes to continue to be impacted by the weak market and until the election is over and interest rates do start to fall. As such, we are unlikely to see positive momentum from the market that will deliver benefits in this financial year. We expect sales prices to remain stable and that build costs will continue to remain broadly stable as well on average, with lower materials costs offset by modest labor inflation.
On profitability, the key point to note is that the mix of site margins will be slightly worse than FY 2023. Improvements in how we manage cash have reduced our estimate to finance costs to between GBP 8 million and GBP 9 million. Phasing of profitability is weighted towards the second half of the year, given the weak entry point to FY 2024. As such, we're now able to guide to an adjusted PBT range of GBP 22 million-GBP 29 million, including the GBP 5.9 million one-off impact of the closed site review and the reduction in expected completions.
On cash, as I said previously, I'm expecting year-end net debt position in the range of GBP 40 million-GBP 60 million, with the key assumptions being committed land creditor payments of GBP 82 million, investments in WIP so that we are ready for a potential return to better market conditions in FY 2025, and an increase compared to H1 on the cash outflow for combustibles remediation as the program starts to ramp up. Finally, moving on to my operational summary of the half. We've delivered a step change in operational discipline in the half, with further benefits to come as new processes are rolled out and become fully embedded in the DNA of the organization. It's pleasing that both our safety and customer service metrics are trending positively. We've concluded the completed site review and are now comfortable that we're in a sensible position.
The share of revenue from low margin sites is set to fall in FY 2025, and importantly, we are substantially completing the build phase of these sites in FY 2024 and early FY 2025. Land acquisition undertaken in FY 2022 and FY 2023 means that we have sufficient land in advanced stages of planning for FY 2025 and into FY 2026. We are increasing discipline on the balance sheet, which has improved the net debt position and will provide greater flexibility despite the additional costs we have identified. These measures will enable us to deliver stronger performance as the market conditions improve. With that, I'll hand you back to Peter.
Thanks very much, Bill, and I can now turn on to the market context, an update on our operational performance and the environment that we've operated within over the last six to nine months. Compared to some of the volatility that we saw through 2023, it's actually been relatively calm. One subject has dominated, of course: when are we going to see first interest rate cut? This has swung up and down over the period as data flowed in, and actually the market has been quite sensitive to that news flow. I think this points to affordability still being the principal issue facing home buyers, as well as confidence, but to a lesser extent. These factors are, of course, elevated in the south of England, where average selling prices are higher, and this is also, of course, where we have the bulk of our own operations.
Overall, pricing has remained stable, as have volumes, albeit at lower levels than we would ideally like to see in a normal market. We really do want to see that first interest rate cut. Now we have the election. There's a clear favorite, of course, and usually an election result with a clear winner has seen confidence in the housing market return quickly. But in all likelihood, volumes will be challenged during the campaigning period and of course, we've seen a little bit of this already. Globally, there remain risks around Ukraine and the Middle East and potentially others bubbling under the surface, but supply chains have normalized now, and the market is largely looking through these potential risks. As I've said, pricing is holding up. Affordability is stretched still, but gradually, as wage growth outstrips inflation and mortgage rates reduce, this will ease.
If this occurs, coupled with confidence returning, and of course, given the supply side being so constrained, I can see some house price inflation coming through in 2025. Build costs, of course, have also now stabilized, with flat price inflation in the period and an expectation that this will continue through the rest of the year. The land supply side is very constrained, and regardless of which party wins the election, this will not change quickly. Planning system operates at a snail's pace. Nutrient neutrality and other blockers have to be dealt with, and no number of new towns planned or Green Belt, while they're great, rolled back, will produce homes for people to buy for many years ahead. The single most important thing any government can do is to reintroduce and enforce mandatory housing targets based on demand factors.
I'd say the actual test of the supply and demand imbalance in recent years has been the resilience in the market. No matter what the economists predicted, the simple fact is, in the end, huge demand, driven by population growth and household formation, when met with decades of insufficient supply, has kept pricing solid, albeit of course, alongside lower transaction levels, given the affordability challenge. On to our operational update. At our preliminaries presentation in January, we set out our key priorities for this financial year, so let me therefore update you on progress against these. Firstly, we need to regain our five-star customer service rating. I'm pleased to report continued strong progress against this item. We've been tracking above 90% now since last February, and the current measurement year, of course, are also ahead of this measure.
There is still work to do, but we're in a very good place. We continue to operate our flexible multi-tenure platform. Although there are no deals to report in H1, we are working on a number of exciting opportunities that we would hope to close out in the second half of the year. Operationally, our main priority is getting planning consents through in order to increase outlets and to secure our land position for future years. We've had some success, but a lot of work remains. In particular, we have a number of our larger sites due to go to planning committees in the next few months.
But I can't close out this particular point without mentioning the huge step forward in planning at our scheme at Longcross in Surrey, which went to committee in May and now has a resolution to grant consent for up to 1,700 dwellings. We still have the Section 106 to close out, but this is a really significant step forward. We're making progress around building remediation, but with very complex legal requirements and a myriad of stakeholders to bring with us, progress is inevitably a little bit slower than we would wish. Of the buildings in scope, we have a good understanding of the risk profile of all of these and are able to properly prioritize the work stream in relation to the risk. Some work started on a total of 58 buildings in the period. Health and safety will always be our number one priority.
While we must and will not be complacent, our scores around safety across a suite of measures are the strongest in the period since I've been leading Crest Nicholson. And credits must go to our home teams for their diligence in this area. Although market conditions remain stable, the cyclical nature of the housing market in the U.K. and the ongoing supply and demand imbalance means that over time we will prosper. What differentiates Crest Nicholson and why our long-term investment case is so strong is threefold. One, we have a large, well-located land portfolio to develop. Of course, we have a number of planning consents to secure in order to convert that land into outlets, but we will not need to participate meaningfully in the open market land in the few years ahead, where without doubt, demand will outstrip supply.
Secondly, we now have a stable and efficient operating platform based on low-rise, standardized house designs focused on the family market. All of our sites going forward will be based upon low-rise, standardized housing. We're at the latter stages of dealing with our low margin complex legacy sites, and these will be replaced by simplified higher margin sites. Finally, we have a well-defined strategy and new leadership team with the very skills that are necessary to deliver this future plan. Skills around control, discipline, and strong processes. As you can see from the chart, which has been updated from January, we have most of the land that we need to grow and deliver until 2027, either under our control or held under option.
The main task now is to convert land colored brown from outline to full consent, and to obtain planning consent on the turquoise colored land, which is within local plans. It's worth reinforcing that most of the land held in the strategic land bank is as yet unpriced, and can be acquired on a one-to-one basis at a discount to market value. Of course, with tougher market conditions to deal with, it would be very easy to dilute our responsibilities around climate change. I'm pleased to say this is far from the case, and that we've remained well on track around the targets we've set. In reducing Scope 1 and 2 emissions, utilizing renewable energy, and reducing waste in the shorter term, and also progressing to Net Zero in the medium to long term.
Mitigating our impact on the environment will remain a key component of how we operate going forward. We, in the sector in general, have embraced the Future Homes Standard and are well positioned for when this is mandated, and currently this is planned for sometime between the end of 2025 and the end of 2026. However, I would just caution that we do rely on other stakeholders to progress equally for this to be realized. In particular, we need government to finalize its requirements quickly, so that the detailed design work for these homes can be completed, and to work with other bodies to ensure the availability of electricity and water capacity in all locations when change does come. We just cannot have another situation like nutrients that crept up on us and resulted in swaths of the country effectively closing down new house building.
Crest Nicholson performed well across a multitude of the SP benchmarks you can see in the table, and this does provide external recognition for the strong progress that we've made and continue to make in this area. So to round up with the summary, there are, of course, ongoing challenges around the market, although there is degrees of stability, as I mentioned, compared to a year ago. In these uncertain times, the most important thing management can do is to retain a strong balance sheet, and this has been achieved, notwithstanding the very challenging times that we've seen in recent years. Our debt position year-end forecasts have improved over the period, given the continued strong focus in this area.
As the early signs of the improving macro environment emerge, we're well positioned to participate in the likely better years ahead. I acknowledge in recent years we've had a number of legacy issues to overcome on top of the difficult market conditions that all house builders faced. Historically, we have built a disproportionate quantity of complex and bespoke developments, which has led to large remediation costs and the distraction that this has caused. Thus, we have a clear path ahead now, a much better understanding of our, of our portfolio than we did a year ago, and as I've explained, we do have a highly valuable land portfolio for us to develop in future years as we move away from zero margin sites, which have had a disproportionate impact on our P&L in recent years.
This land not only provides stronger margins, but equally a clear and visible path to volume growth on a greater scale, and this will include wider geographical footprint as our Yorkshire operation matures. Of course, I'm stepping away to enjoy my retirement. The business will now benefit from the leadership of Martyn Clark, who is taking up the reins, and I wish him, Bill, and all of my other colleagues, every success in the years ahead. Let me now move on to the Q&A session. If we first take questions from the floor, and I'd just be grateful if people could-
... Just, let me have your names where you're from, for the benefit of people that have dialed in. And then after we've finished in the room, we'll then move to people from remote dialing.
Thank you very much. It's Ian Lambert from Investment, I think just got three actually. Just to clarify my understanding, where you've got these slides in front of portfolio, is it correct to understand that if 95% of that land portfolio is met up at margins, that you'd expect to be more in line with the sector average in the market? And effectively you're going to work through the other 5% by 2024. That's the question. Definitely just interested to kind of see your view of what's happening in the land markets, literally becoming a bit more kind of excited and land market trends. And I just kind of provision the GBP 31 million, exactly the third party agree to kind of analysis of a few months, probably years and previous years against more complex.
Okay. So I'll go on one, you go on two, and-
Yeah, I'll go. Sure.
Yeah. Okay. So the first question I think aimed at me was around 5% on the low margin site, so therefore, is 95% on the what we call normal margin stuff. Yes, correct?
Yeah, sector average.
Yeah. Now, in terms of the unwind of that remaining 5%, there'll be but this year's is kind of the same as last year. It's gonna half next year, so we've said GBP 120, then you cut down to GBP 50-60 next year, and then there's a bit less to go in FY 2026 and FY 2027, it's kind of well now.
Okay.
Thank you. So if I pick up the second one around the land market, and the land market is actually very interesting because there was still a market last year, but it was dominated mostly, I would have said, by medium-sized house builders, with a lot of the volume house builders effectively out of the market. What we see now is continuation of the medium-sized house builders that's still very active. But I'd say all of the volume house builders are now back in the market, and it's probably more a regional basis. You wouldn't say anyone is strongly active in every market, but certainly regions of the large house builders are there and are being equally competitive with the medium-sized house builders. So it's a pretty strong market at the moment.
Then I think the question was, what comfort do we get from the third-party review? The process they've been engaged in is to work through with the team, our teams over the course of eight weeks, all the material sites, understanding what the challenges are, and then, reviewing our estimates and quotes on what we've done and how we've done it. My personal benefit I get from it is that I'm not a quantity surveyor, and they are. And so they can, they've been able to give me a view of, look, these are the ones we think are the highest risk. These are the ones you need to go back and have another look at, and that's allowed us to refine those bigger sites as we go, just to understand, you know, all the things that we need to think about.
So, you know, this is now in a overall a sensible place. There'll be ups and downs individually, I'm sure, but overall, my sense is this is something we can work with, and the teams are tasked to bring this in for less. You know, we've got to now focus on getting that work done and getting off our plates.
Thanks, Will. Just let's take three as well, please. First off, the gross margin for the current year, I'm just wondering if you had an overall range in mind of where you think that lands within the EPC guidance and just whether anything's changed, I guess, the moving parts and your expectation. In the first half that you mentioned, slightly worse site mix than previous. Anything else there? And then just extending that to the land bank. I think back at the half year review, numbers and charts around land bank gross margin was a bit soft and overall it's around 23%. And I've got three years gross margin. Is that still a decent figure? And then the last one, I guess, bulk sales, very little, I think, in the first half. Was that an active decision?
Was it about affordability, and should we expect-
If I take the third one, and then I'll let Phil answer the first two.
Just on bold, look, it's always going to be happenstance. We've always been in the market engaging with partners on sites. When they come through, they're fairly lumpy. Nothing came through in H1, working on some things. They might come through in H2, they might have an impact; they might not. It's always going to be deal driven. It's never going to be desperation.
Well, on the gross margin question, I've given you the top, and I've given you the bottom, and if there's material movement in between, I'm trying to call that out. So you can probably work out the rest. On the gross margin of the land bank, overall, 23%, that's still a sensible number to work with.
On Christmas Millington. Can I ask about Longcross, first of all, and what your plans are there? Perhaps you can give us a bit of detail as to what investments in the balance sheet, but also, would you consider third-party sales there, which you think might be quite profitable? So that's number one.
Next one really is just about recent sales, recent demand. I mean, you mentioned in the statement a little bit, the cooling demand. I don't know if you can point to a sales rate in May or just give us a little bit of color around that. And the final one really is just about outlets. I mean, you've given this program of land working out for 2025, 2026. I understand it's, it's party independent, but would we expect outlet growth as we have over the last two years or a more stable platform?
Okay. Thank, thank, thanks, Chris. I'll certainly pick up the Longcross one. The asset is held in a joint venture with a financial institution. It's fully owned, so there's no uplift payments that are due on that. It is an equity share of that ownership, and we have been in discussion for some time about potentially buying the whole joint venture and controlling the whole. I think let's get the planning through first, and then I think Martyn and the team going forward will look at the strategy around, do we want to develop all 1,700, or do we want to do some land sales? I think that'll be a decision for the future for the future leadership team.
But, you know, we've made significant progress, I think, on what is a good, well-placed asset in probably the best market location in the country.
So on the recent sales, Chris, SPO rate since the close of the half, it's gone between 0.4 and 0.45. Bit weaker at the beginning of that period. I suspect some of that might be our own ways of working. It's got better the last couple of weeks, so but it's just kind of evening out, and I think with the number of sites we've got and the number of weeks, I can't read too much into it at this point. On the number of outlets, that's something we've got to get into over the course of the balance of the half. Quite much can we actually pull in for next year? We'll give, we'll give good guidance on that, but I'm not expecting it to go down.
Marcus Cole, UBS. I've got two questions. Just on the nutrient neutrality, you mentioned a few times in the presentation. Can you remind us how many... Sorry, what challenge?
Nutrient neutrality.
Yeah. Can you just remind us how many outlet sites are impacted by that? And then in terms of land creditors, skip your comments to GBP 100 million for the year-end of recent, personally?
I'll let Bill pick up the land creditor one.
Yeah, on nutrient neutrality, it's around half a dozen sites that are currently held up. One in particular, the large site we've got at Kilnwood Vale in Crawley. We have actually appealed the decision, got a number of reserved matters applications. Already got out one in second. It was called in by the Secretary of State. We were quite hopeful, but of course, now with the election, that result has been delayed, and that is also part of the reason why we haven't got quite as many, quite as much volume as we would possibly have expected. On the land creditors, it's yeah, GBP 176, down by GBP 82 in the half.
And then if we top anything up, we might do something in Yorkshire, but there might be other sites that come along. But yeah, 100 is probably launched. But, you know, if we do stuff, it's not going to be massive, in my expectation.
Paul Hughes.
Thank you. Glynis Johnson, Jefferies. I have four questions. I'm not quite sure. First, just in terms of the land sales, what's the profitability on that? Is it comparable to the rest of the group, or is that diluted or increased at what we're seeing? Second of all, just in terms of within the charges, why are there still obligations to sites that you, you know, finished building out, you know, five years ago? Is it something to do with the adoption of the roads? Is it something else that we need to be wary of and it repeats? Thirdly, just in terms of the land bank, how much of the short-term land bank is owned, and how much is controlled? I guess I'm thinking particularly about where I haven't yet paid for those plots.
And then lastly, and this is really thinking about going forward, how many standard firm types do you have? How many do you actually use, and is that where there needs to be more focus still going to?
Right. Let me pick up a couple of those. I'll ask Bill, certainly pick up on the land sales profit points, and also the owned versus controlled elements of the land bank. We might not have that data here. If we have to, obviously, they have that separately. I'll have a go at the charges and the reasons, but Bill will probably also expand upon that. And standard homes, I mean, all of the homes come with planning from a standard house, like major going forward. We have just under 50 in the portfolio, but that does include one-off specials. Typically, around 20 are used commonly, maybe 80/20 rule. About 20 of those have been used.
So, on the old sites, I mean, this is not a Crest Nicholson thing. This is an everyone thing. We all have sites that closed and roads, sewers, open spaces, waiting, pending adoption. I think we have a disproportionate number that have been slow to get over the line. I think some of the other distractions have been part of the reason for that. Most of those do relate to things like adoptions. But there are other issues which, of course, have been highlighted with four particular schemes and buildings. I don't know, Bill, have you had to deal with them?
On the land sales margins in the teens, so it's kind of not really moved from the overall average. Can you remind me the other questions, Glynis? Sorry. I'm scribbling away but didn't quite get—I didn't write enough down, sorry.
That is the only controlled land bank. How much of the land bank-
Oh, that one. We're gonna have to come back to you on that one.
On the affordability of designs, you perhaps were impacted than others. What are you seeing from your, your buyers? Is it kind of discretionary buyers pulling back because they can't see good percent rates or half a 5% rate? Was it people who got pulling power LTV, LTI, chances to earn money back?
It's mostly the discretionary buyer, and it's more weighted towards the south, where affordability is higher, and the impact of higher interest rates is there. I think we saw that really good start to the year because the mortgage market reacting to swap rates had quite aggressively forward-priced mortgages, and I think buyers recognized that. But of course, as those rates started to go up, the number of people, if they're discretionary buyers, just will wait to see what happens first. That's why that first rate reduction, I think, is so important. I don't think it's necessarily whether we get two, or three, or four. It's the first one that shows the shift in direction, that will have an impact on the market.
Affordability is the other thing that also is gradually improving, 'cause it's not just about mortgage rates, it's also around wage inflation, general inflation that is just helping affordability gradually.
Well, do you think that's helping more buyers than others? Do you think that's a quite common environment?
No, it's a more general thing, but particularly with mortgages, because of the higher ASP, there is more of an impact on the south than there is. Data out yesterday that reinforced that on a much bigger sample than we could ever produce.
Any questions?
Sorry, but then we'll follow up. Just we asked that question, I think, in the crowd. I think usually you have a seven-month window between June results and January. Should we expect some kind of follow-up date strategic thinking between now and then? I would imagine it's too early. Any early thoughts on the areas of focus?
Too early for that one. Well, as we kind of go through the summer, when there's something to say, we'll say something.
Y eah.
Great, can we go to the phone questions, please?
Thank you. We have a question from Harry Goad from Berenberg. Your line is now open. Please go ahead with your question.
Yeah. Hi, good morning. Thank you for taking my question. Peter, I think in your earlier remarks, you talked about, when you were talking about sort of possible planning changes, you talked about the implementation of mandatory targets being the most important thing a future government could do. How easy do you think that is actually to implement? And if implemented, how long would it take for the effect of that to actually flow through? Thank you.
Thanks, Harry. Look, there are short and long-term things that any incoming government can do to increase the supply. So it's important that we get short-term ones as well as long-term ones, and they just mandate those targets. As happened with the original version of the NPPF, we actually saw quite a rapid transformation in outline consents coming through. The blocker then became reserved matters, consents, and all the technical approvals. There isn't one thing that's going to increase supply quickly, but I think enforcing the top-down targets will at least get that moving, and start to see an impact in perhaps two to three years' time, rather than into the next parliament, which I think new towns and rolling back the Green Belt and reforming the planning system holistically will take.
Great. Thank you.
Operator, any more phone questions, please?
We have no further questions.
Thank you. We'll pass the call back to Iain now. Thank you.
I think the next slide is an instruction to me. It says, "Wrap up." I will do what it says. So what I do want to do at this stage is to pay tribute to Peter and say thank you to Peter. It's been quite a tough five years, and I don't think you win any prizes for choosing five easy years to be the Chief Executive, Peter. I guess if we'd known when we started together, we started more or less on the same day, back in 2019, if we had known what we were facing into, I wonder what we might have done slightly differently. We will never know. But we've had COVID, post-COVID, and all the issues of the paying for COVID and what that's done to the financial sector, and what that's done to the cost of debt.
As we were just getting through that, of course, we discovered that, President Putin had got desires on some territory in Ukraine, so we've had all the issues of the Ukraine war and what that has done. Then we've had Brexit, because we tend to forget that the final piece of Brexit happened during this last five years, and very recently we've got a conflict in Gaza. So there's been quite a lot happening internationally, but of course, there's been quite a lot of political turmoil as well in this country. We're on Prime Minister number three, and before Peter finally retires, we're almost certain it'll be on Prime Minister number four. We've had five chancellors in that period. Quite incredible when you actually look at it. Most people forget Sajid Javid was a chancellor.
He was a chancellor for seven months, which is quite long in the current sort of government, but he didn't actually do anything, which is probably a relief. I tried to find out how many housing ministers there had been, and I gave up because I kept on finding that some of them had had two goes at it, which was interesting. Peter has led Crest Nicholson through all of that period with great courage. It's tough doing this. Great courage, great fortitude, and he has put in a huge amount of personal effort into this. He's highly respected throughout the business, and through that period, and he's talked about it, we have a new, very focused strategy as a house builder, standardized house types, new operating model.
Underlying systems have been sorted out so that they're actually fit for purpose for the future, and there's been the creation of a great land bank, and I think one of Peter's great legacies for us is a fantastic land bank, a very high quality portfolio of sites. So, Peter, thank you. Huge thank you. Thank you for being a wonderful colleague as well. You get to know people really well when the going's tough, and we've had plenty of opportunities to get to know each other. And I have to say, you have been a light, an absolute light as a colleague throughout that. So I know I speak on behalf of all my colleagues. A huge thank you. Thank you very much, and all the very best in whatever you decide to do in the future. Now, of course, the king is dead. Long live the king!
So my next slide should say, if it turns up, here we go. Introduction to Martyn Clark. Well, we're delighted to have you, Martyn. Most people will know your background, most recently from Persimmon, before that, from Bloor Homes. Lots of experience in this industry. Your job is to turn that great land bank and that great set of facilities and the great, the great potential within the business into reality and create something with a great opportunity for the future. We're delighted to have you. Do you want to stand up so everybody can see you?
Morning, all. Morning. So I've had a few months off since leaving Persimmon. Batteries are fully recharged and, yeah, I'm really looking forward to getting on with the job. I think that the company does have massive potential, so that's my aim, to release that potential.
Thank you, Martyn. Right, that ends the day. I think there's quite a lot of tea and coffee around. There are some pastries, et cetera, and we will be around and anybody wants to ask any questions, please feel free. And again, thank you very much indeed for coming. Thank you for your support. And, you know, we look forward to seeing what you write about it. I see Gwynne keeps tapping away here all the time, so we will see what comes out of that. Thank you all very much indeed, and I hope the rest of the day goes well. Thank you.