We'll get started then. Many thanks to everyone joining the presentation today, in the room or online. We're looking forward to both updating you on the performance from this year and on the strategic process that we have made in taking Crest forward through Project Elevate. As a reminder, the pack contains a note on forward-looking statements, which I'll take as read. Briefly running through the agenda, after some introductory comments from me, Bill will go through the numbers. I'll then give you an update on Project Elevate before handing over to Kenny Duncan, our Group Strategic Land and Planning Director, to provide more color on progress with our Strategic Land Bank.
Given that the work we are doing around Strategic Land and our Land Bank generally is a big part of our strategy, I think it will be useful for you to hear directly from him on some of the important progress we've made in these areas. And then finally, I'll give you some concluding remarks and cover the outlook before we hand over to Q&A. Before I hand over to Bill for the financial review, a few overarching comments from me. We have delivered FY 2025 results in line with expectations set in the November trading update. The first half of the year was encouraging, all in all, but I think everyone is aware of the challenges that face the industry through the second half of the year.
What I would say is that since the turn of the calendar year, we have started to see some encouraging indicators of improvement.
Still very early, of course, but positive signs nevertheless. Bill will go through the balance sheet in more detail during the section, but suffice to say that it continues to move in the right direction ahead of guidance, which is obviously important as we look to take Crest forward. We have made substantial progress on our fire remediation program, achieving the survey completion date agreed with government and having set a clear pathway to completion with our experienced internal team supported by our external partners. We know it is important for everyone to get the work completed, including for ourselves, so that we can then commit all our resources and efforts on growing the business and delivering value for our shareholders.
Finally, I've always said that it was going to take some time to make the changes I believe necessary to ensure Crest is as successful as it can be. Project Elevate, our transformation project, is a key initiative for us, and I'll be able to talk about some of the improvements that are starting to come through from changes we've made since I've been here. There's still a lot more for us to do, but it shows we're on the right path, doing the right things. So with that, I'll hand over to Bill for the financial review.
Thank you, Martyn, and good morning, everyone. This morning, I'll take you through a financial summary of the year, give you some more detailed insight into the sales metrics, our Land Bank realignment progress, the fire remediation update, and then take you through the guidance for FY 2026. Here you can see the key financial headlines. FY 2024 has been restated after we identified a margin issue on one site in the Eastern Division, where profit had been overstated between FY 2022 and FY 2024. The cumulative impact of the adjusted PBT and inventory was GBP 8.3 million, with the impact in FY 2024 being GBP 2.1 million. This is consistent with the position in our November trading update. We've reviewed the rest of the portfolio and satisfied ourselves there are no similar issues elsewhere. Revenue for the year was GBP 610.8 million, and broadly in line with FY 2024.
I'll have more sales metrics for you on the next slide. Adjusted gross margin was up by 30 basis points, with the benefit coming from land sales, and housing margin was in line with 2024. We made good progress on overhead with a reduction of GBP 5.7 million, offset by lower profit in other income, largely from lower rents. Exceptional items before tax was GBP 23.6 million, and I'll take you through these later. Adjusted basic earnings per share was GBP 7.8, up by 56%. On the dividend, the board has proposed the final dividend of GBP 1.8 per share, bringing the total for the year to GBP 3.1 per share, which is in line with the stated policy of dividend cover of two and a half times adjusted earnings.
We're pleased to again beat our guidance on net debt, with the year-end position coming in at GBP 38.2 million, as we made good progress on inventory reduction and thereby funding the fire remediation incurred in the year. On the sales metrics, the average outlets were 40, in line with our expectations, but down from the 44 from FY 2024, with the pace of new outlets openings continuing to be impacted by the challenges of obtaining planning. The open market sales rate for the year was GBP 0.51. After a positive start to the year, with the sales rate improved to GBP 0.53, the sales rate in the second half of the year slipped back to GBP 0.49, in the face of the well-publicised uncertainty in the broader economy. On completions, we delivered 1,691, of which 164 were at joint venture sites.
Our Project Elevate sales improvements drove a 5% increase on open market completions, despite the lower outlet position, offset by planned scaling back of bulk completions. After the seasonal lull in reservations around Christmas and New Year, we've been encouraged by the volume of inquiries, appointments, and reservations in recent weeks. We've seen an uptick in conversion from our new website launch, and the sales rate over the last three weeks is over GBP 0.6. Sales for FY 2026 at the end of last week stood at 848 units across all categories. This reflects a reduction in affordable and bulk volume expectations in the year ahead and the subdued market in the last calendar quarter of 2025. The reduction in the open market ASP is driven by a mixed change, with a higher proportion of apartments than we would typically see.
My expectation is that we will revert to a more typical mix going forward as we complete these sites and consequently an improvement in ASP. In line with our revised strategy, we've been active in the land market to reposition the short-term land bank. We completed five disposal transactions during the year, totaling 1,119 plots, and generated revenue of GBP 81.4 million at 21% margin. These transactions are all for parcels of sites that we would not have been able to access for several years, and therefore both improves balance sheet efficiency and protects the short-term outlet position. We received around GBP 30 million from land sales in FY 2025, with around GBP 50 million set to be received in 2026.
On land buying, there were four transactions during the year for smaller sites that will help our outlet position be more aligned with the mid-premium vision and are less capital intensive.
In FY2026, I expect a similar profile of land disposals and an increase in our activity on land acquisition. Following our realignment activities in the year, the overall position of the land bank shows a reduction of just over 2,000 units. The short-term land bank now stands at 6.5 years based on current volume and is therefore still above our medium-term targets of four to five years. We have nine site openings this year, which will increase the average outlets for the year. Our strategic land bank has continued to develop well, and Kenny will take you through these developments later on. The detail of the exceptional items is as follows. The Combustible Materials Charge was a net increase of GBP 4.1 million, with a projected cost increase of GBP 16.5 million, offset by recoveries received in cash of GBP 12.4 million.
I'll give you some more color on the remediation on the next slide. In December, we reached a settlement on the legal claim in relation to the apartment scheme damaged by fire in 2021, with the costs in the year substantially related to legal and professional fees. We incurred GBP 4.3 million in restructuring costs in relation to Project Elevate, and I would expect a similar charge in the new financial year. We incurred a defined benefit pension scheme cost of GBP 2.2 million in relation to our review of the scheme documentation, and as a result, increasing the allowance for GMP Equalisation. The scheme remains in surplus, and I do not anticipate a cash outflow for this item. On fire remediation, we're pleased with the progress we've made with the program, which is delivering on track with our plans.
All but 2 buildings have been surveyed, and with MHCLG assistance to gain access, these will now be surveyed by March. The key risk to the overall cost is the external wall work, and the table at the top of this chart shows you the analysis of our progress, which is where the bulk of the cost and risk lies in the remediation program. I'm pleased to say that 82 of our buildings do not require any external work. Of the 215 buildings that do require work, these broadly split into three equal categories, of which a third we are either on site or have already completed, a third we have surveyed and have quotes, and many of these are ready to commence work now, and the final third where we have completed the survey and updated our provision based on the experience of the other two-thirds of the portfolio.
We've continued to focus our efforts on the riskiest buildings by height and construction type. Included in the provision are the costs for all known buildings, internal and external work, build cost inflation, project management costs, and our best estimate of the known risks. We recovered GBP 12.4 million in the year and remain active on several other recovery prospects. On the balance sheet, the key movements have been the reduction in inventory and the reduction in the fire remediation provision and land creditors. Inventory reduced by GBP 73 million as a result of the land disposal program and improvements in management of both finished product and part exchange portfolio. These were offset by a smaller increase in WIP, which results from the slowdown in the sales rate in the second half of the year.
The fire remediation provision reduced by GBP 46.5 million, as I explained earlier, and we also made good progress in reducing land creditor exposure, which fell by GBP 58.4 million. Much of the land creditor balance is still made up of large payments for large sites, but as we work through these purchases, it is freeing up our capacity to acquire smaller sites that meet our mid-premium characteristics and, in turn, increase the outlet position. We recently extended the RCF term to October 2029 with the existing lenders, providing a two-year extension on the previous agreement. Our other debt financing is the remaining GBP 65 million of the original GBP 100 million private placement, and the next repayment date on that is in August 2027.
The key movements on the cash flow are the almost GBP 80 million reduction in inventory and the GBP 100 million reduction in payables and provisions from a combination of land creditors and fire remediation. The net GBP 62.6 million from investing and financing is the net drawdown on facilities, offset by payments to JVs, leases, and the dividend. Now, turning to the guidance for FY 2026, and here I've set out our high-level planning assumptions. We're targeting a further uptick in open market sales volumes, with the benefit of our Project Elevate sales initiatives, specification upgrades, an increase in the number of outlets, and a modest improvement in the market as mortgage rates gradually reduce, all supporting this growth. The ASP is expected to return to at least FY 2024 levels, and we expect to continue to improve our discounting.
There will be a further reduction in bulk and affordable volume in line with the stated strategy. I expect a similar level of land sales as in 2025. These will be weighted to the second half of the year. On gross margin, I anticipate an overall improvement with Elevate sales price improvements and a mixed benefit, with the worst of the low-margin sites being soon behind us, but that this will continue to experience low single-digit build cost inflation. Given our seasonality and the expected profile of land sales, I'm expecting 30%-35% of EBIT to be in the first half. The interest charge will increase to between GBP 10 million and GBP 12 million, with the group being in net debt throughout the year. We're guiding adjusted PBT to be between GBP 32 million and GBP 40 million.
On cash, I'm targeting a similar level of debt at year-end as at the end of FY 2025, with a range of plus or minus GBP 25 million. The key assumptions on this are that receipts will be boosted by around GBP 50 million from the deferred element of 2025 land sales, and I'm assuming that the 2026 land sales will have a similar cash profile. We'll continue to manage the level of WIP finished goods and part exchange.
Spend of approximately GBP 85 million-GBP 100 million on delivering the combustible remediation program depends on the pace of progress and when BSF payments are made, and this may be offset by further recoveries. I expect to spend around GBP 100 million on land, and we've already spent GBP 15 million settling the legal claim and the associated costs. The total cash outflow on interest tax and dividends will be about GBP 25 million.
I'll now hand you back to Martyn to take you through progress on Project Elevate.
Thank you, Bill. Alongside that financial update, I want to focus on Project Elevate and give you a sense of where we stand with this important initiative. During this period, we took some significant steps in implementing this plan, which will support the necessary improved financial returns and underpin delivery of our medium-term objectives. To start, I think it is worth reminding everyone why the mid-premium market is so attractive to Crest Nicholson, given the brand position that has been established over the last 62 years. Broadly, there are two sides to this. The first is that, from the macro perspective, it is, in my view, more attractive.
The customers are more affluent, and our independent market research clearly shows that they place real value on location, design, and quality, all of which we are focusing on and are attractive fundamentals for us. It's a segment of the market which is more resilient to the cycles that we see over the long term, enabling us to plan strategically. The second is that the competitive environment suits a house builder of the size and scale of Crest. We can be nimble and drive results across a much smaller business. It is a fragmented segment where we can build on our market share, being one of the few scaled independent players in this space, which enables us to grow profitably, delivering good returns for our shareholders. In essence, the mid-premium market aligns well with Crest Heritage. So, with that market opportunity I've just outlined, what is the vision for Crest?
We are going to be focused on the mid-premium market, building high-quality homes and communities. To be successful at that, as I've said before, we need to put the customer at the heart of everything that we do. Linked to that is a build right first-time culture, which is now beginning to come through in some of the operational metrics which we use to measure our performance. Getting the first two right will, of course, drive value for our stakeholders, and Crest will be a business that everyone can be proud to be associated with. I know I've said this before, that this won't happen overnight, but the more time I spend here, the more confident I am of the potential that Crest has as a business and the returns it will be able to deliver in the future.
To achieve our vision for the business, we have four strategic pillars. They are building exceptional quality homes efficiently, delivering outstanding customer service, ensure we have operational and commercial excellence across Crest, and finally, to make sure we optimize the value of the extensive land portfolio. I'll give an update on each of these pillars shortly, but you can see on the slide that they will all contribute towards both strong value and disciplined volume growth. And what does that look like in FY 2029? Well, completions of over 2,300, gross margins north of 20%, with overheads at circa 7% and a return on capital of over 13%. Standing here today, we can see the potential that Crest has through the successful delivery of this strategy.
The first of the strategic pillars, the build quality and customer experience, is both a big opportunity for us and one where we can already see real traction from the changes and improvements that we've made. I'm proud of the momentum in this area, albeit there is always more to do. We are now incentivizing our build teams on the quality of their work and have more robust and regular inspections. They are both important contributors to the build right first-time culture I've talked about previously. You can see on the right of the slide the real improvements we are beginning to see. The average annual NHBC reportable items per inspection is basically halved in two years, and 0.26 in 2025 compares well to the industry.
Similarly, we have also seen increases in site inspection rates received from the other warranty provider we use, Premier Guarantee, with them awarding our team at Curbridge Meadows the Premier National Award for the development of the year for the 101-150 unit category, something that we are really proud and encouraged by. We're also encouraged by the feedback from the new specifications that we're rolling out, reflecting the positioning of the brand and our market position. Clearly, consistent build quality is an important component of the overall customer experience, but I really do believe that it is an end-to-end journey where each stage matters. From the moment they visit the website or show home through to when they pick up the keys and beyond in the following years of warranty.
To that end, we have made investments alongside new processes and procedures throughout the customer journey, which will make each customer feel valued and special to Crest. This is reflected in much stronger customer satisfaction ratings, and we now enjoy a five-star HBF satisfaction rating. One of the areas where we have made those investments I referenced previously is in our brand support and marketing, and in particular with both the customer-facing portals and training of our people. It just wasn't something that Crest prioritized in the recent past. We are moving from a deal-led transactional approach to a more aspirational experience. I'm really excited by some of the initiatives and improvements that both elevate the brand and make for a much better sales process.
To give you a sense of how we're improving things as part of our digital and product innovation, we've launched a new website and designer-led upgrade range. The sales experience that our customers now go through is also significantly richer, helped through our Digi Suites, where customers can see important information like real-time plot availability, comparing floor plans, and selecting upgrades to their new home via our Ativa options. The website has also evolved materially and allows for personalized journeys for each and every customer. Alongside those innovations, we've also invested in the physical look. We have transformed the sales office environment so they really reflect the mid-premium brand we are building, and this is also reflected in all of our marketing literature and materials. We're evolving our marketing position so that it resonates more effectively with our mid-premium branding and target customers.
Two other initiatives I'd like to mention are the new marketing CRM system, which will make us more effective at prospecting, while we also have changed the incentives and commission structure to reward profit and service rather than just volume. All important building blocks to improve our overall effectiveness and how the customer feels when they deal with us. We continue to improve how we operate as an organization, with a lot of this coming through better, more thorough oversight from the group functions. I mentioned previously that we're investing in management tools so that the management team has better visibility of workflows and expenditure. This means better control and accountability for budgets and early detection of possible problems. Alongside being a better, less fragmented operator, we have made very good progress in improving our supply chain management.
The review of external suppliers provided some good opportunities to make savings and operate more efficiently. Going forward, we are going to be smarter in how we buy materials and services, which will all contribute to improving margins and performance. We've certainly put in place some of the infrastructure necessary to support the long-term profitable growth of the business that we're all working towards. We remain clearly committed to sustainability as part of how we run the business. It is a core driver of long-term value, effective risk management, and stakeholder trust. Over the year, we've also made good progress against our sustainability targets, including carbon and waste reduction. Our focus remains on delivering outstanding customer experience, high-quality, energy-efficient homes, and well-designed places that support thriving communities. We're also well positioned for increasing regulatory and reporting requirements, and the external benchmarks reflect this consistent approach.
As Bill has already explained, there's a lot of value in the Crest Land Bank, but it wasn't quite right for a house builder of our size and geographic spread. Some of the sites are too big, complex, or located in less than ideal areas for effective management. As such, we continue to elevate our current portfolio of land, and hence why we took the decision to sell parcels from a number of sites. We've considered in our sales strategy the most commercial way to sell parcels that balances risk and exposure to future costs, with returns in the short term in line with our strategy. Land opportunities bought throughout internal investment committee since I've joined have been focused on ensuring that they meet set criteria to ensure that any acquisition is aligned with our strategy.
A full range of metrics are reviewed for any proposed new site, and we use a carefully created weighting matrix to ensure that the opportunity is fully understood prior to providing approval to proceed. As you would expect, we consider a wide range of metrics such as, but not limited to, ground conditions, topography, highways infrastructure, ecology design, timing of planning, start dates, margin, return on capital, sales rates, payment profile, alignment to the brand, site size, and divisional need. Again, this is not an exhaustive list in any way, but I can assure you that there is now sufficient rigor within our investment committee to ensure that the decisions we make are all understood. Of course, noting that we can't eliminate all risks in this industry.
We've also been active in the market and acquired some new sites, all of which means that our land bank has been rebalanced over time to better support both our mid-premium positioning and our near-term volume ambitions. The buying land is not where our central oversight will stop. Our investment committee also must sign off every planning application to ensure that the submission aligns with all aspects of Project Elevate, ensuring we understand and capture all value opportunities through the planning process, and in the fullness of time, deliver beautiful homes that our customers can be proud of. Okay. Alongside other initiatives that we have started to support our shift to being a mid-premium house builder, we've also transformed the house types that we intend to build.
This includes launching 38 new standard house types of premium home, from bungalows through to five-bedroom homes, with layouts and specifications our target customers expect. We have an addition kept from our current portfolio, 12 of the most popular, but made them better through redevelopment and improvement of the floor plan and internal layouts, again, making sure they match our mid-premium brand. These new 38 types will enable our planning applications to meet local needs while still retaining the commercial advantages, both from a build and sales perspective, of a standardized, centrally managed portfolio. While they are designed to be appealing, their design is strategically focused on balancing cost against value. Our increased portfolio of house types will support our planning applications and reduce the need for bespoke amendments due to site size, customer demographic, or any specific characteristics determined at the outset by the local planning authority policies.
I do not intend there to be 50 different house types on a site, far from it, but this diverse portfolio does enable the divisional teams to plot types that maximize value across our current and expected future land holdings. Also, it's worth noting that 12 of these types are amended versions of our current portfolio that we do have a planning consent for. So, by optimizing the internal layouts, we can maximize our value on sites without necessarily needing to make wholesale changes to the planning consent granted. Alongside that, we have made a big change to our affordable housing range with 10 new types of home. There have been some interesting developments with regard to both the buying power and demands of the registered providers who we and the industry partner with. They're increasingly requiring higher standards and specifications, or they simply won't buy them.
We're taking this opportunity to match those expectations, and I'm really pleased with the responses so far. Our new housing portfolio range is an opportunity to set the standards for the future. So, providing a little more color on the new Timeless Collection of premium housing, I think the first major point I'd like to make is that we have based our designs and overall approach on proper market research, coupled with the extensive experience that exists within our teams. We understand what our target customers want and have designed and will build those houses accordingly. It is then about having designs, details, and touches the affluent mid-premium customer expects and that suits the way in which more and more people are living their lives.
From having the small details so the house looks attractive as they approach it from the road, through to having the right specification and materials, which both look and feel quality, and importantly, internal designs that reflect modern-day living. This has been an important initiative over the past few months, and we are looking forward to taking them to market. I wanted to put this slide into the deck to show how else we're evolving what we are doing. I've talked through making better houses, more aligned to our mid-premium strategy, but it is also important, sorry, but it is also about making sure the overall site also meets our mid-premium brand while delivering what I see as appropriate returns from our stakeholders.
You can see on the left an old design. In practice, it's actually quite cramped in places with more smaller homes and a higher degree of affordable housing.
It doesn't fit with our mid-premium brand, and to be honest, the returns weren't always what I would have expected them to be either. On the right is how we design the scheme today: fewer but slightly larger homes so the entire site feels more like a mid-premium community. Redesign this site as we have set out here improves GDV, improves margins, is likely to be quicker to get through the planning system, and is what our mid-premium customers want. Now, at the top of the presentation, I mentioned that Kenny would talk through what we are doing on land and planning in more detail. I'll hand over to him to run through that and then update you on Outlook before taking questions.
Okay, thanks, Martyn, and good morning, everyone. I'm Kenny Duncan. I'm the Group Strategic Land and Planning Director at Crest.
I've been at Crest for 15 years, working on Crest Strategic Land Bank, and I've led the Strategic Land Team since the summer of 2020. Prior to that, I was a senior planner in local government. The Strategic Land Bank is in a very strong position, and I'd like to start by just outlining why we think that is so important. There's a window of opportunity with the planning environment being so positive, which Crest Strategic Land Bank is well positioned to take advantage of. We have a large strategic portfolio, and it's concentrated in the south, where the government's planning reforms are particularly impactful. We've made good planning progress in the last 12-18 months to support future outlet growth, and the discounts embedded in the Strategic Land Bank create a strong platform to drive margin as it secures consent.
There are around 18,000 homes across 42 sites within the Strategic Land Bank. 66% of those, around 12,000 homes, are now allocated or draft allocated, which is up from 39% two years ago. In addition, a further 18%, approximately 3,000 homes, are progressing as planning applications, where there's a strong opportunity to get planning permission in response to the planning reforms. What that means is the Strategic Land Bank is in a really strong position to support delivery in an 18-month to three-year time horizon. The average discount across the portfolio is around 19% of market value, which will improve margin across the land bank, and recoverable planning and promotion costs provide the opportunity to increase site margins further. The volume of strategic land that we're expecting to secure planning permission for creates lots of options, but it needs to be actively managed.
We don't typically buy strategic land until planning permission has been granted, so it needs to be sequenced as outlets are required and to manage the costs of acquisition and infrastructure delivery. As Bill outlined, the short-term land bank remains bigger than we'd like it to be, inflated by large former strategic sites with a long build-out period. The conversion of strategic land will assist in reshaping the short-term land bank by providing greater outlet breadth and create a platform to trade outlets that would otherwise be delivered in the longer term. Targeted acquisition of immediate land aligned with a mid-premium strategy is needed to maintain that outlet breadth until the strategic land is consented, acquired, and brought into production.
As Martyn set out, to ensure that we're focused on land that is well aligned with the mid-premium market, we've issued a new land buying guide to the business, which is now being overseen by the Centralized Investment Committee. Part of that land strategy is then to invest in further strategic land so we continue to provide those benefits to the business moving into the future. We've restructured resources in the business into a specialist strategic land and planning team reporting directly to me rather than the previous divisional approach, which slowed down progress. These changes are driving quicker and more consistent decision-making and ensure the best resource is directed at the right priorities. Crest has a really strong heritage and track record in strategic land, with an 85% success rate over the last 15 years.
In excess of 15,000 plots, which is 84% of the portfolio, are now in an advanced planning position, with 27 planning applications either submitted or under preparation. Moving on to planning, it's well publicized the planning environment is positive, and Crest land bank is in a good position to benefit from that. The planning reforms have reintroduced mandatory housing targets and put pressure on local planning authorities to put local plans in place quickly. If they don't, then a land supply test allows for planning permissions to be granted to make up the shortfall. The latest published research indicates that less than a third of planning authorities have an up-to-date local plan, and that is indicated. 74% of authorities where Crest sites are located have no up-to-date local plan. 60% of planning authorities in England do not have a five-year land supply. Only the blue areas on the plan.
That rises to 84% in areas where Crest have strategic sites. Only 17% of planning authorities have both an up-to-date land supply and an up-to-date local plan. Only 7% have both of these where Crest sites are located. As you can see, these trends are particularly acute in the south, in areas where the Crest strategic land assets are concentrated, so we're particularly well placed to benefit from both of these changes. With 66% of the strategic land bank either allocated or draft allocated in a local plan, planning authorities are motivated to grant permission to bolster the land supply. Additionally, 18% of the strategic land bank is progressing planning applications in areas without an allocation and where there's no five-year land supply.
Although it takes time to see the results of systemic change, the government remains committed to its planning reform, which has been reinforced by further changes to national planning policy in December 2025, and most recently urging planning authorities to take a pragmatic approach to planning obligations. Finally, the shift towards a mid-premium strategy and the launch of a new house type range is equally well aligned with national design policy. The government has very recently published design and placemaking guidance for consultation, which aims to drive quality and placemaking through the planning system. The Crest brand and house types resonate well with these changes and enhance the prospects of getting permissions granted as quickly as possible. I'll hand you back to Martyn.
Thanks, Kenny. So, by way of summary, I'm pleased and proud of the progress we have made with Project Elevate.
Our commitment to our customers through the quality of what we build, the experience our sales advisors provide through to the aftercare post-completion are key metrics we continually monitor and drive for improvements. This progress will show that we are headed in the right direction, but there is still more work to be done. We will continue to optimize the land bank, both with disposals and acquisitions, while continuing our operational and commercial improvements. Bill has talked through the financial performance and some of the ongoing actions in this area, and certainly we will continue to make sure that our work in progress management and cash management remain as efficient and effective as possible. This will allow us to continue to invest and grow the business. And finally, we'll keep the momentum up with the fire remediation program.
I said at the beginning of the presentation that we are pleased with the progress in this area, but absolutely focused on getting all the work done as soon as practical. All in all, while there is always more work to be done, I remain confident in delivering the medium-term targets we have set out, and the board is confident in the prospects of Crest Nicholson despite some of the macro challenges, which have been well publicised. And with that, I'll hand over to questions.
Thanks very much. Just to Aynsley Lammin from Investec, two questions. Just on the gross margin and margin outlook for FR26, just a point of clarity, are you saying the gross margins you expect kind of underlying housing gross margins you expect to be 100-200 basis points higher?
And I assume there's no HPI or change in incentives, assuming that's all kind of self-help and Project Elevate. And then kind of connected to the margin, I guess, GBP 55 million overhead in this last year, what do you expect that to be for FY2026? And second question, on the kind of land sales, obviously quite a big land sale last year, and you expect more this year, that's been sold at a profit. So people buying it, presumably buying it at a good gross margin. Can we extrapolate or read into that that that's reflective of a decent land bank in terms of the cost and the value and the gross margin within that? Any reassurance there?
Yep. Okay. So on the gross margin, Aynsley, the 15%-16%, that's what I expect the blended to be. So we haven't given guidance on the land part of it.
We've just given the revenue because I don't know exactly, but I'm not expecting it to be massively different. It might be up a little, down a little, but I'm not expecting it to go down hugely or up hugely from there. So the bulk of it has to come from housing because that's where the bulk of the revenue is. And that's a combination of the self-help, as you rightly identify, and that is better selling. It is also slightly better discount rates, but within that, we've got to absorb some build cost inflation. So yeah, we've got to be reasonably confident we can hit that 15%-16% range. On the overhead, should make a bit more progress on the overhead in 2026.
I'm not going to give you an exact number, but we closed the divisional office back in November, so we'll get the benefit of that come through. But we've also got to make sure we invest in the right areas. The new house type activity costs money. We've got to do it right, get it right so that when we do launch those in 2027 and beyond, we've got the right, we've done it right, and we've done it properly. On the land, what was the question on the land sales? Did I answer it, or?
Yes, just the kind of reassurance it gives. You spoke about a bit of what you've asked again.
So how the accounting policy works is that we blend the margin on the site across all activity on the site, whether it's an affordable sale or a land sale or an open market sale. That's the accounting policy. So what that 21% reflects is the margin on the sites that we've sold. So because they're generally future sites, they're generally going to be a bit better than the stuff we're working through at the moment.
Thanks.
Will Jones from Redburn Atlantic, three, please. First, just back on gross margin. I think past year helped us with the impact of low margin sites in the year that was and going forward in terms of that mix benefit as they become a smaller proportion. And I guess just on the wider, housing target medium term, I think in the end, year one's gone back a bit. We've got a year on the speakers at the moment. I don't know if it's you or at the back. Try again. Maybe hold it closer.
So the first one was .
Yeah, the land mix effect of the low margin sites. If there's any numbers around that.
So GBP 50 million of revenue last year in low margin sites, and that'll continue to drift down.
Okay. Thank you. Maybe just moving back to land buying and the ins and outs. I guess how far through do you think by the end of this financial year will you be on that optimization of the land bank size? Because I guess you're saying it's still six and a half years, but I think you're four to five years on the target volumes. So I guess at some point we need to get back to.
So I think there's two pieces to that. There's clearly more activity this year. I think that'll get us largely in place for where we want the short-term land bank.
But as the strategic land comes through, those are generally going to be sites which are 1,000, 1,500. We're clearly not going to build that out. So as those come through, we need to look at what's the best way to monetize those and get the best level of balance sheet efficiency. So I expect land sales to be a feature of the P&L for a reasonable amount of time to come.
Yeah. And some of the existing sites, obviously, we've sold parcels off. As we build more infrastructure to get to the parcels that we're building, that will free up other parcels to be able to sell in the future as well. And last one is around outlets. I think 42 for year ahead. I just wondered where the spot position was.
Generally, what you see is the potential on that outlet progression as you get back over 2000.
I think we haven't got a specific target, but we kind of want to be adding a net two or three sites each year.
And currently, is it still 40?
Still 40. Yeah.
Thanks. Harry Goad from Berenberg question, probably for Kenny on what you're talking about with regards to strategic land. And you were saying there's opportunity to make the most of where LPAs don't have either updated local plans or five-year house plans. What do you actually mean by that? Do you mean LPAs are more likely to approve sites quicker, or is it a question of getting approval on appeal from central government? How effective is that going to play out in the next couple of years?
There's two parts to that, really.
The first one is we have 66% of that strategic land bank, which is about 12,000 houses, either allocated or draft allocated. So even where the local plans are not in place, where they are emerging, we're seeing a huge proportion of our strategic land bank coming through within those local plans. The second part to it is where we're not identified as a potential development site in a local plan, then the absence of a five-year land supply and the absence of an up-to-date local plan means we can prosecute a planning application either to get a local decision or through the appeals process. So either way, we're able to advance planning applications that get consented quicker because councils are, in other words, desperate to protect their land supplies.
Where we have draft allocations, they want to see those consents come through as quickly as possible so that they don't have to release sites in places they don't want to release them.
Thank you. And are you seeing that happening already, or is that a hope that it will start happening soon?
That is happening. So we have two major sites that are on the cusp of securing planning consent, which will deliver about, well, over 2,000 units to the portfolio. Expect that to happen in the very near future. We've got 27 planning applications then running. Some of those, we've had good positive initial pre-application discussions. I expect us to see the vast majority of those succeed through the planning application process. And most of them are well advanced either in terms of being submitted or very close to being submitted.
Thank you.
Thank you.
Five of those that appealed. I've got a couple of them made, please. One on geography. You've got a sort of Leicester site up there on the screen. You've got a Staffordshire site. I think we saw a sort of strategic land site now in Ipswich. How are you sort of thinking about, I suppose, the core areas you want to be in geographically? And those are probably all on the historic edges of where you've operated. So I'm just wondering, are you sort of just redefining your markets in terms of sort of geography a little bit at the moment? That was the first one. The second one was really around the house types and thinking around, I suppose, the benefits of all the changes you make in the redesign. Are you thinking it's more GM? Are you thinking it's more faster sales rates?
Are you thinking it's helping the brand? And again, I suppose, driving that ASP mix a little bit higher. What are the benefits there? And I suppose the speed at which you'd expect those to kick in because obviously a lot of the new ones are going to have to go through planning again and take some time to build up.
It will. So with the geography, I mean, we did close an office just before Christmas. If you look at where our sites are, ideally, we would like them within about an hour, hour and a quarter of the office. We've drawn some charts up of where our office is located, and generally, we can get to the majority of our sites. There are some that are just on the extremes of that area, which we'll either sell parcels off or work our way through a little bit quicker.
But would we buy new sites at the moment outside of those areas? No. So we're concentrating our efforts within that core area that we've got offices in that we can manage properly. We lose too much money if the site's miles away from the office. We don't have the oversight. The new house types, well, I'd hope all of those, really. Certainly, for those that have been around on any site visits with me, I've shown you the disadvantages of some of our house type ranges where they've been designed to a price cost rather than the value. So the new house type ranges take account of what people want to see. Reflective, of course, of you can't have everything in a three-bed house, but you need to ensure that people have got the basics there. And I think some of our existing portfolio is lacking in that area.
So yeah, I'd like to see certainly gross margin increases by virtue of the fact that people are prepared to make more for them. Average sale prices will go up invariably because the units are slightly bigger. Sales rate is a difficult one to suggest that we'll sell more or sell less. I think if we can continue selling in line with the market and we're making more money with higher ASPs, then I'd be happy with that. And some questions have been asked as to whether 38 is too many, but I don't believe it is. It's quite cheap to design on a piece of paper. And therefore, if we can give the teams the portfolio to say, "Look, choose from that house type range that maximizes the value on that side," then we're not restricting their abilities to do that.
I think that's been the case in the past. They've only had a limited house type range to plot, and we've certainly lost value on that.
Hi. This is Charlie Campbell at Stifel. Thank you. Just two questions, really. One was on the sales rate. So last three weeks, you said over GBP 0.6. I'm sorry, I can't remember what it was last year. So just a comparison year-over-year would be very helpful. And then secondly, you've talked about kind of your forward-looking indicators. I'm guessing that's kind of website traffic, visitors, inquiries, that kind of thing. Just wonder if you'd give us a bit more color on that because your comments sounded quite encouraging. Thank you.
Yeah. I mean, the forward indicators in terms of website traffic we're seeing since approximately day to day before yesterday, increase of 18% year-over-year, which is positive.
And an increase as well in the number of people that are actually going to site again, which is extremely encouraging. Our sales rate compared to last year is about the same as that. Over a three-week period, it's as close to last year as you could make it, which is positive.
Thanks,
Johnson and Jefferies. I think I've got three. They're probably pretty simple, actually. The mix element in terms of selling price, if you can just break that down a little bit, what are the expectations in terms of the bulk sales? Because obviously, those are reducing down. What is the mix impact actually happening within the private, the open market in terms of apartments, geography, those sorts of elements just to help us with the average selling price?
Second one, just in terms of going back to those house types, I wonder if you can just talk about the range or the palette of raw materials. If you have that wider range of housing types, do they still use a more refined palette of raw materials? Does it allow you to get the synergies in terms of with the material producers, with the labor because of the economies of scale? And then lastly, just in terms of land creditors, obviously, it's come down a way. You've given us the guidance for 2026, but should we assume land creditors going forward will be a much smaller part given that smaller sites tend to have less deferred terms? Or is it a percentage of land that we should be working to?
So I'll do first and the last. Yeah. Okay.
Do you want to do the one in the middle first?
Yeah. I mean, raw materials, I mean, when you buy the materials, obviously, nobody really, our suppliers don't know where they're going. So in terms of the house type design, it doesn't make any difference. But we'll certainly be using, as I've shown many of you when we've been on site visits, better bricks. Internal specifications are better with better quality internal doors or skirting stairs, whatever it may be. So that consistency can be applied across the group without any difficulty. Hopefully, that answers the question.
Okay. So on the ASP mix point, Glynis, there's a lot of moving parts on a kind of aggregate basis. The reason for the reduction in 25 is because the mix skewed towards apartments more than I expected it to and less towards houses.
The projection for the year ahead is that we'd have a mix much more like FY 2024. So that'll bring the overall open market ASP back to what we've previously seen. To your point, because there's then a lower proportion in the overall mix of affordable and bulk, that would then give you a further kicker to get the overall ASP up year-on-year, would be my expectation. But there's a lot of moving parts in this between a GBP 100,000 affordable apartment and a GBP 1 million house. So it can move around quite a bit. But when you look at it house type by house type or apartment type by apartment type, then the achieved prices were up about 1% in FY 2025. On land creditors, we will be targeting smaller sites that are less capital intensive.
How that translates into land creditors, I think you're right, is that generally speaking, going forward, we'll have a lower land creditor balance than we've had in the past. Each site is a competition. It depends on, and there's overall price terms, there's payment terms. We're always in competition against someone else. And so if we want the site badly enough, then we'll probably pay more for it upfront than we would otherwise. But it depends on each individual negotiation. But overall, I'm expecting land creditors not to be up at the GBP 130 million-GBP 140 million level we've had in the past .
And sorry, the guidance for the bulk for this year, should we assume half of last year, the guidance for the new number of bulk units?
Yeah, half.
Okay. Okay. No further questions then. So thank you very much. That concludes our presentation for today. Thanks for taking the time to come and see us.