Earnings Call: H1 2021

Jul 8, 2021

Earnings release

Hello, and welcome to the Pacilum Trading Update Analyst Conference Call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask Register your question at any time. And you will be connected to an operator. I will now hand you over to your host, Dean Finch, Group Chief Executive to begin today's call. Thank you. Thank you, Jess. Good morning, everybody. Thanks for joining us this morning. Mike and I can't promise you the drama and excitement of last night. Probably a relief to all of us. We're trying to upscore any home goals, and I've confiscated the green laser tags. So here it goes. So in March, we set out 5 key priorities for the business: building right first time every time Putting customers first and strengthening the brand, responsible growth with build quality, driving profits and cash And driving sustainability in the business. And I think we've made some important progress against these so far this year. I'm really pleased. We've achieved 7,406 completions, which takes us almost back to Pre COVID volumes and indeed PD is up 2.5% on 2019 and very importantly, at much higher rates of customer Today, nearly 92% of our customers would recommend us to a friend, Whereas at the same point in 2019, only 82% of our customers would recommend us. And what's more, our warranty providers' RIs have improved significantly, showing improvements of between 15% 35%, which I think is a real achievement for the business. Back in March, I said that I wanted us to be known for both outstanding service as well as outstanding value. Whilst our ambitions are to go much further, I believe these scores in terms of customer recommendations and build quality show how far we've come in a short space of time. And I'm really proud of the teams in Persimmon who are delivering these fantastic results. I see a real buzz Jeff. I've examined around the place not just because of the footy but amongst our constructions and operations teams, and I see this getting stronger every day. The focus on quality and our service, along with the fact that our houses are still priced at some 15% below the market average, Shows the strength and commitment there is to our customers after all who pay our wages and our dividends. Sales have been incredibly strong in the first half with rates up over 30% compared to 2020 and over 20% up Over 2019. As I said, these are remarkable performances given where we started the year when we were plagued by COVID, labor shortages, Lockdowns and unusually challenging weather. All of these contributed to a slowing down in build in the other part of the year, We are now catching this back up. As we go into the second half of this year, we benefit from an order book that is just Short of the record we achieved this time last year and 12% above 2019. We're also benefiting from a very strong cash position with cash Over €1,300,000,000 at the end of June. And this gives us the confidence to confirm the payment of the surplus capital dividend of €110 Geoff. We've also made some really good progress in terms of adding to our land holdings. We bought over 10,000 plots into the group in the first half of the year, which represents a consumption rate of over Jess. Placement rate of over 130 percent overconsumption. And since September, we brought in nearly 14,000 plots. We've maintained a disciplined and responsible approach to buying land. I'm very pleased to confirm that we've Maintained our hurdle rates when buying on the open market, where we've had some really good successes, buying some high quality sites around the country with strong margins. The strength of demand we've seen since the end of the first lockdown, together with the added delays we've seen in To say that we can see a good line of sight in terms of rebuilding our strength, both in the second half of this year and the first half of next. As reported in the statement, in the second half, for instance, we can see our way to some 85 new outlets coming into production. And subject to planning by this time next year, our outlook position will be substantially above where we are now, And this should enable us to trade from a great, very strong, solid platform. Following our Cutting announcement earlier in the year, we set up a team internally and we've engaged with customers throughout the country, Helping them to secure EWS-one certificates, replace band planning and remediate fire related build defects. We get along with this. I'm also pleased that we've reached assessment with the CNA. The voluntary undertakings we've given are the right thing to do for customers and will cost Persimmon very little. We've all seen the headlines about build cost inflation and material shortages. Persimmon has been affected to some extent, but also protected as a result of the brick and tile factory in Spaceball. We anticipate the house price growth we have seen will absorb build cost inflation. Overall, I'm delighted with the performance of the business in the first half of the year, and I'd like to take this opportunity to thank my colleagues for all their hard work. The outlook is strong, and we anticipate a second half performance broadly similar to the first half. Persimmon enjoys a tremendously strong land bank that will enable us to continue to follow our strategy of pursuing responsible growth Whilst maintaining industry leading margins. But we've also got a great opportunity to continue to Build on the strength of the market and the strength of customer demand as well as take advantage of the many self help opportunities that will come through Building Right first as well as strengthening our brand by putting customers first against the backdrop of a very strong market. So thanks very much. And I'll now open up to any questions. Jeff. And the first question comes from the line of Rajesh Pappque from JPMorgan. Please go ahead. Good morning, Dean. Good morning, Mike. A couple of questions from me. The first one is on Bill cost inflation, if you could provide an update on what you're seeing on that. I mean, your previous comment was for 3% to 4% of bill cost inflation. How have you seen that evolve in the first half? And what do you expect for the full year for both materials and for wages? The second one was on plot additions, which for the first half were around 10,000. Do you see more opportunities to do a similar amount in the second half? And what are the key constraints to it? And Lastly, just on the mix of the proportion of partnership units picked versus the second half of last year, was it 18%. Do you see it getting back towards the 20% you mentioned earlier? Thank you. All right. Thanks, Rajesh. I mean, yes, the build inflation we've seen is probably around 4.5% to 5% now, And we expect to continue to see this through the second half of the year. It's ebbing and flowing, and there's regional variations across the country. But broadly, that is the picture. But we're seeing the increases in selling prices are Absorbing it, and we expect that to continue to be the case in the second half. Very pleased with the performance in terms of buying plots in the first half. We expect that to continue In the second half, I think this is where percent strength comes in. I think whilst there's quite a lot of competition maybe at Smaller end at the larger end, where we are particularly typically pitching ourselves. The competition is not so intense, And we are able to buy some really good opportunities And with really good margins. So very pleased with the progress there and expect that will continue Into the second half, yes, the mix is about 82% private, 18%. Jeff. We expect that will probably tend back to eighty-twenty during the course of the second half, But we're in a very strong place. Yes. Just on that, Rajesh, on the coming back, I mean, that's driven by outlet Numbers and opening up the new outlets as they come through, because as you know, they'll be on a turnkey contract. We'll be selling The 20%, 25%, 30% volume on each site to the registered social landlords. So As we open up these new sites, we've got good visibility there, as Dean points to. We should see that sort of sales mix normalized, as Dean said, over the next sort of 12 to 18 months, I would expect. Great. Thank you. The next question comes from the line of Will Jones from Redburn. Please go ahead. Thanks. Good morning. 3, if I could please, just around a few of the different operating metrics. Just Firstly, exploring sales rates, clearly, a very strong first half. I just wondered how you were thinking more generally about what the second half might bring. I think historically in normal years, you've been back in the 0.6% s from sales rate typically in the second half of the year. But Do you think that might still remain, I guess, above trend in the current market? The second, moving from sales rates, I guess, to build rates. I think if we look at the equivalent unit data you've given today compared to where you were at December and think about the completions that have come out, my math may be wrong, Keith, I think The build rate per week is somewhere around 2.50, 2.60 in the first half. Correct me if I'm wrong on that, but if so, that's Obviously, dip down versus where you were. Maybe that's the weather in the first half of the year, the availability constraints. I guess just more general comments around build rates and The prospects from here would be great, please. And then just tying that up with site numbers 285 for the first half. I think you're still Talking at roughly $300,000,000 for the full year. Are your openings in the second half more higher than is normally the case, about $85,000,000 or so number? Again, assuming the sales rates are going to remain pretty good. So just wondering how that average gets back up to $300,000,000 to $285,000,000 Thank you. Thank you. Yes, look, we expect a more return to more normal seasonal pattern, Which is obviously a bit weaker over the summer period and then a return to strength during the autumn. Look, the forward order book is very strong. So we Build rates were Really impacted at the start of the year. When I was talking to you in January, I could see what was going on then and the business was struggling. We had COVID everywhere. The weather was terrible. We had lots of people not come back from Europe because of Brexit. And that just impacted bill rates and it impacted bill rates during January February, But that has now recovered. And we're now back to building ahead of what we're selling across the business. But we're also, to some extent, a victim of our own success. So for instance, It's a different regional picture across the country in terms of what we're seeing. I was in Kent On Tuesday, they're not seeing a particular shortage of bricklayers down there. But yesterday, I was in South Yorkshire and Lincoln and Grimsby, we are. But having said that, across the north of the business, we've currently got something like 284 Bricklaying gangs, which is a record for us. But we think we need another 62 more. And it's just the strength of demand at the moment. So the business is in great shape really, Jeff. But build rates we do not expect are going to impact on our performance in the second half. Yes, it's tough out there, But our guys are resourceful, and they're managing it very well, in my opinion. Site numbers, yes, we've got some good numbers coming through Through the second half, as you said, we think our outbound number is going to be around about 300 average across the course of the year. And we as I said in my opening few words, The outlook position into next year, subject to planning, is very strong. Thank you. The next question comes from the line of Arnaud Lehmann from Bank of America. Please go ahead. Thank you very much. Good morning, Dean. Good morning, Mike. Good morning. 3 on my side, please. Firstly, can you give us an update on the L2 by 2.0? Obviously, we're well ahead into This process now, are you happy with the way it's running? Are customers happy with it? Any disruption in terms of Shortages of building materials including timber, I think timber frame is one structure that the industry has Been expanding over the last years. So have you seen any slowdown on building sites so far because of Jeff. And lastly, do you mind commenting on the UK building safety rules that I think a couple of days ago, maybe 3 days ago now, where the government, I guess, is trying to get some of the developers to pay Some extra costs. So do you see any implication for Persimmon? Thank you. Thanks, Arnaud. I mean, generally, I think on Help to Buy, look, we didn't miss a beat really. It's about half of demand in the first half. Certainly, We have not really encountered any regional difficulties because of price caps across the course The country demand is just really very strong at the moment. Mike, I don't know whether you've got anything more you want to add. Yes. I mean just a little bit of additional detail. The as Dean points, about half the PD legals in the first half were Sold to customers, you're choosing to use the Help to Buy scheme. And within that, about 30% was old 20% was new scheme, and that seems to continue. The new scheme There's gained good traction in the market and good numbers of first time buyers are taking advantage of it. So I think Jeff. We continue to see good support to customer demand from that angle. So It's been a bit of a seamless transition for ourselves. On, let me look on building supplies, It's another day. It's another issue. I mean, you name it. And we've seen challenges, whether Timber, plastics, chips for appliances, chipboards, yes, Look, the but the message is, yes, it's tight out there. COVID has partly impacted that. Strength of demand has partly impacted that. But we are coping. That is the message. We are coping. The guys are being resourceful, getting ahead of the problem. And we are we're an important consumer For our supply chain, and we're also helped, of course, by our Vertical integration, we're not suffered a tiles issue, For instance, so I was at the Britton Tower Factory yesterday, and we've got Our own bricks, obviously, and that's helping the business. Our own pavers, that's helping the business. Tim Frame is also obviously self help going on there for us. So yes, look, it's we've already in the paper, It is true. It is affecting production, but we're coping with it, and we're managing it. And we're not signaling to you that we think it's Going to cause us a problem in completions in the second half. In terms of the UK Building Safety Rules, I mean, it's only just out to consultation, I believe. So and I've seen Various fairly alarmist accounts of it. I mean, first of all, look, We're not building high rise. Secondly, I think Persimmon SIM is in a strong place here. In terms of the work we've done on cavity barriers, in terms of the work we're doing on cladding and in terms of the quality programs we've got in place and the strength of our internal teams and the focus on safety within the business. I mean it doesn't come as a surprise to me remotely, frankly, coming from a different sector that there should be an interest in having regulation of safety In the construction industry, I mean, the surprise to me is that we don't have it. And that might impose Bill cost on Sutton, I don't think it's going to have much impact on persimmon. But as I said, we have got to see What the bill finally says, it's got to return through consultation. So there's a lot of water to pass under that bridge Before you know, I think there's anything too much for us to worry about. All right. Very clear. Thank you so much. Thanks, Anna. The next question comes from the line of John Bell from Deutsche Bank. Please go ahead. Good morning, Dean. Good morning, Mike. It's coming home. And Three questions from me, if I can. I thought I'd soften you up with that one first. You couldn't resist it, John. I can't. It's too much. So I think I've got three questions. First one really is on land. I think you've mentioned that you You maintained your hurdle rates on new land acquisitions. Can you just remind us what those hurdle rates are, please? The second one is on net cash. And the question is really how much is too much. You've made a tweak to the dividend, an acceleration from December to August, but clearly your cash number is rising. I just wonder where your red lines are really in terms of that number. And the third one, which you're definitely not going to answer, but could you give us a sales rate in the last Couple of weeks, please. So Mike has done a sliding tackle across the desk, And you chalk me out of answering question 1. So sorry, mate, but that's it. I'm on the floor. He's taking me out. Net cash, well, look, obviously, we're in a strong position, And we keep it under review, guys. We signaled what we would do for this Yes, it supports the payment of the dividend next year. But I think Mike has, I think, painted up over The year is a very clear story about the robustness of the Persimmon dividend. I think that's dead right to huge strength of the company. So we keep it under review, but the payout is very much as we signal to the market. I mean, Mark, I don't know whether you want anything more. I mean, I don't you're right, Dane. I don't think there's any change really. I mean, we're pleased that we're able on the back of strong performance Dean outlined earlier and you can see in the statement, it puts us in a great position to be able to accelerate and consolidate that surplus capital Repayment to shareholders in August have been pointed to at the top of the meeting. But we keep it under review, and we bookend the capital structure through the sort of circa 700,000,000 Liquidity requirement to cover off the annual working capital amplitude and a bit of higher power To invest a bit more in land at the right time. So I think there's no change to that. And I think the Board as a whole It's been clear with that stance for over many years. So, yes, we seem to Continue to have a little bit extra liquidity here. But at times like this, that'll a little bit of a stronger hedge against Jeff. Future risk is not a bad place to be. And we remind we were reminded of that early on last year when the pandemic hit, When we didn't need any support from government with respect to furlough or funding schemes, etcetera. So Given that we've spent a large number of years creating such a strong platform, We were reminded that the strategy works and at times of distress, that's why the strategy is there to support The interest of all stakeholders in the business. So I think as a Board, we're very pleased with The discipline that we're continuing to pursue in terms of the operational execution of the strategy of the business. And then just in terms of sales rates, I think all I would say at this stage, we'll give more color at the half year, but They still remain strong. They are still strong and a smidge above normal at the moment. So we're very solid place. And all the lead indicators, John, when we look at our website activity, cancellation rates, Reasons for cancellation in terms of down valves and mortgage application rejections and elements like that, There's no spike or red flags being weighed at this point in time. So It all looks to be running along with a pretty sound market, albeit we're all aware of Obviously, things can change given that we've got a 3rd wave that we're sort of facing into. And you've got to be a little bit concerned about the consequences of that. So I think we're pleased with where we are. We'd like more outlets and a bit more work in progress and choice for customers as Dean has already pointed to. But Dean says, in a way, we're a little bit of a victim of our own success on sales rights. And indeed, on a number of sites, we're now holding back To let Bill catch up. So it's a good place to be. It's a good place to be at this point. Yes. Yes. As Mike says, look, I think the market remains very healthy. I was as I said, I was in Kent on Tuesday looking out my first £1,000,000,000 persimmon house that I've seen anyway. And the customers early bird did that one. It's very strong across the country still. Yes, business is in a good place. We're well forward sold. Yes, we're in a good place. Okay. Another tidbit there, John, and it's probably a subsidiary question that you're hesitating to ask. But In terms of the roll off of the stamp duty window, we're already well sold beyond the end of September. When you look at the roundabout 5,000 private sales that we've got forward sold at June, Around about 50% of those are beyond September delivery. So it's another indication of The strength in the market that Dean points to. And look, when I was in South Yorkshire yesterday, they're selling into next year now. Can I just ask one supplementary, if I can? I mean, the theme of the hour when you guys speak to the market is inflation. If I look at Financial Markets, the kind of reflation trade seems to be hanging by a thread. What's been your previous experience at the margin level if HPI and build cost inflation Jess. Start tempering, start trending down in 3 months' time. How does that tend to impact the margin? Yes. I mean, it's an interesting equation to think about, and it's all about the rate of change of each, isn't it? Yes. I mean, If you plot the graph and look to different scenarios, then it's all about how steep is which line in relation to other Telling price relative to overall build cost inflation. So I think we've got a good firm market. Obviously, we're well forward, so that reflects the current market conditions in terms of clearing price. I think the overall activity in the market continues to be strong, including the wider secondhand market, which has been the benefit of the stamp duty window. That, I think, that confidence supported by the FTSE last night, etcetera, will continue. And We're pretty positive about that. We see being quite too early bird activity where customers express Good interest before you get to a pre res and reservation stage. We're still seeing good indications of interest on that level. And on the cost side, well, nobody really knows. I mean, we all read the commentary around it. I think the material side is where the more acute inflation is being felt. On labor rates, not so much. But those conditions can change. And Jeff. I think that as the supply chain finds a firmer footing, then hopefully, we'll see some of the cost pressure Subside on the material side, albeit we might find labor rates moving in slightly other direction. So it's very I mean, your crystal ball is as good as ours really on that, and it's hard to be definitive. But at this point in time, we would say our margin Rate, and it's important I emphasize margin rate. We expect that to remain at similar levels That we'll be reporting in August for the rest of the year. We may see a little bit of extra at this point in time, so A bit of optimism there, a bit of risk on the upside. And into next year, well, if we continue to sell well And there's a balance between those inflationary effects. Well, we should see that sort of margin position continue. So and as you know, the value driver in our business is the land, and Dean has already said that the replacement Of land has gone well. We're being very disciplined about that, and that will continue to support The superior margins that the business delivers. So we're very confident that we've got a high quality platform Irrespective of what selling price and build costs do in the future because it provides a great Support and cushion, if you will, and provides resilience to those margins as we move forward over the next 2, 3 years and beyond. Yes. Thanks very much, gents. Enjoy the final. Cheers, John. Your next question comes from the line of Glynis Johnson from Jefferies. Please go ahead. Good morning. Good morning, Dennis. I have A few. I'm not even going to say how many. I'm just going to roll them off. They're quite quick, because hopefully, they'll be quite sharp to answer. You talked about outlook counts for next 12 months being substantially ahead. Can you define substantially? I'm wondering whether you can put it in the context of maybe the 350,000,000 that you talked about for the year end 2022. The land intake, I wonder if you can tell us how much of that has been strategic and maybe how much has been freehold strategic. In terms of the selling price, obviously, the order book has an order with selling price upside. What should we be anticipating in terms of the selling price on your PD product? I'm probably being pedantic on wording. You said house price inflation seen will absorb build cost inflation. Is that a difference in timing? If you see continued house price inflation and build cost inflation where it stays, With that margin increase, I think that's what your optimism for H2 is basically saying. I just want to double check. And lastly, just in terms of those outlook counts going up, How should we think about the work in progress requirement? Are we going to see actually that working capital requirement step up and therefore the surplus cash Are you having to absorb that impact? Well, I'll have a go at all of those, because then Mike can Put me on the straight path when I go wrong. I mean, yes, look, I mean, as we increase this, it's bound to absorb work in progress. And we will be getting back towards subject to planning and that's my caveat because planning is really tough at moment, there's no point denying it. There's a delay in the system caused by COVID. But our outlook numbers will be getting towards above 300 And beyond during the call by about this time next year. And we'll Subject to market conditions, we'll be making progress towards the 350. But as we open those up, that will absorb cash and $7,500,000,000 of cash you can easily see get invested in those sites As we build out before we start taking sales. The mix is about fifty-fifty, Which is particularly pleasing. I think I've been as I alluded to when I spoke, I've been particularly impressed at Well, the guys have been able to bring in from the open market and how we've been able to compete at particularly amongst the larger sites. And I think that's our real strength and that obviously gives us a platform for further opportunities downstream. I mean, obviously, we're probably going to answer the question about margin 1,000 times today when you ask it 10,000 different ways. It's good at the moment. It's we're Seeing that inflation is covering bill cost inflation, as Mike just said a few minutes ago, we don't know what's going to happen in the second half In terms of those relativities, we're at the 27.5% 28% at the moment. That's where we hope to be for the second half of the year. Who knows what's going to happen when furlough comes off In terms of what happens to the labor market, I think my view is we could see a bit of easing coming in at that point. But it also is strength of demand. As I said a few moments ago, we're short of We think we're short about of about 62 gangs across the North of England at the moment in terms of We're at record levels of employment. So it's a complex picture, which is moving all the time. But the business is in really good shape. I mean, Mark, I don't know whether you want to No, I think that sort of summarizes it. I mean, the We'll obviously give a bit more color on some of these data points in August as well. So I I think we're particularly pleased with that mix of bringing the plot into the business with around about the fifty-fifty split strategic and open market, and we're seeing good quality right across that. So I think we are particularly pleased with that, sticking to our disciplines. I'm sorry, did I miss it just in terms of the PD pricing? Yes. I mean, you can see that in the forward order book, we're seeing PD pricing still moving forward Compared with 2020, we've got about 3.5% improvement on that. Jeff. That's positive. And we're still seeing great support in the mortgage market, more higher LTV product coming in For those that need it, and I think one contextual point around The prognosis on selling prices is the fact that obviously we all worry about the journey we traveled on the recovery Of capital value since the GFC. And one element to consider and reflect on is affordability, as we all know. And obviously, with the level of interest rates that we're looking at, then okay, there's this John referred to this reflation trade and the response of longer term coupons in respect of that. And that might flick up a little bit in the nearer term, maybe in next year in 'twenty three. And yes, from a percentage perspective, it's a big increase. But given the vast majority of mortgage products are capital repayment, It's a lot less sensitive to interest rate increases. So the real pressure is on buying a ticket to the party In terms of deposit values, and obviously, that's where the Help to Buy scheme that the government provides support with to customers helps. But we are encouraged by the fact that the mortgage lenders are continuing to compete for the new flow of business and are offering great products into the market at that end. So Hopefully, that will continue to develop and that will support selling prices. Thank you. The next question comes from the line of Gregor Kuglitsch from UBS. Please go ahead. Hi, good morning. Maybe a couple left for me then. Can I just Jess? So I guess probably a little bit more of the volume. So obviously, you were close to sort of 'nineteen levels in H1. Obviously, your guidance implies There's a bit of a pullback, I guess, relative to that baseline of 'nineteen in H2. I guess my question is, what's the variability around that? I mean, could that be Materially better or is it basically kind of constrained by the constraining factor basically being bailed? In other words, It's very unlikely to be materially different. And then perhaps related to that, I don't know how you've last commented on this, but Is your kind of base case that by next year you'll be back to the 2019 level? Is that the right way to think about sort of the volume outlook? And then maybe a second question, if you could just give us some detail what you think the additional costs will be as part of the decarbonization to the Part L as we think about sort of one of I don't know how you Think about it, but basically per plot or something like that, what the additional cost will be for you? Or what's your best estimate at this stage? So I think look, in terms of actually, in the first half, private sales were just short 2.5% up On 2019, and we were maybe 200 or 300 down on IHA. The constraint in the second half is going to be outlets. And getting back to 2019 levels, I think, is perfectly possible. But higher build quality level, which is something not to be missed in here, I think, is a function of us getting the outlets out there, Which is itself a function of planning. We can see the line of sight to that coming through during the course of the next 12 months. And with those outlets there, we expect the same rate of sales as we saw in 2019. That will be governed when we're back That overall level of volume, but profitability on it is good. In terms of Additional costs were £3.45 a square foot. And that's our rule of thumb at the moment. Very hard to say in terms of 25 regs, which is still to be determined. As you know, there's an awful lot of water to pass under the bridge there. But I When I think about it, I feel it's a relatively low percentage Of selling price that we need to recover. Yes. I mean, Gregor, it's an interesting point that you raised there, and there's a lot of talk in the industry together with mortgage lenders and the wider industry, Together with mortgage lenders and the wider industry supply chain indeed on this in terms of, well, what does The advent of 25 rigs, 0 carbon, however you want to describe it, mean For home values, does it provide an opportunity in the market to price You know homes differently if they are truly 0 carbon. And I have we haven't got the answer to that. As I say, there's quite a lot of discussion around that because the journey to sustain A viable decarbonization journey does rely on all parties to come to the table. And we're working hard with the industry down the supply chain. We're doing a lot of R and D on this. We're ideally placed with our Phase 4 sheet structure methodology to continue to develop that. And we feel Jeff. Pretty positive about the opportunities there, albeit there are a large number of challenges. Jeff. The supply chain is going to have to step up and capital is going to have to be invested. For example, just the capacity to deliver enough air source heat pump capacity to the market It's massive. And if that's an essential ingredient to achieving these end results, we want to make sure that, that Capacity is there. So there's a large, as always, Brady, there's no simple silver bullet to this. We wish there was, but we're full square behind it and we're working very, very hard to achieve The goals that government policy is trying to deliver because The decarbonization imperative is urgent, and we share in that, and we want to do our bit to achieve it. Thanks. So sorry, I know that you're expressing things in per square foot, obviously. I should probably know this, but if I look at your average property, was it 800, 900? Is that about right? Jess. To get a sense about sort of call it $3,000,000 that's basically the same for the first bit, yes, and then the second bit, I guess, who knows? Yes. And it's a move in, please. I mean, it's Mike yes, that is correct. And as Mike has alluded to in there, I think there's I mean, the way we're looking at it, on the one hand is there's an awful lot of work to be done in the supply chain yet, Which as we're at very low numbers of production of Heat pumps in the country at the moment and that's got to ramp up drastically over the course of the next 5 years, Which is going to have, I think, implications for per unit cost, probably on a downward trend Jeff. As it moves into mass production, but there's other aspects of it that have got to Gear up, and that's heat engineers who can install and maintain Because it's probably not a lot of those in the country at the moment. So that's an issue that's got to be worked through too. But We do expect by the time we get to implementing 25 regs that the unit cost would have fallen. We expect an increment beyond where we are now. I can't say what it is, I'm afraid, but it will be less than I think first thought. And then you have to contextualize that in terms of actually, I think there will be a positive customer Demand for a 0 carbon house, which will impact both demand and relatively smaller Small costs of the overall value of the house as a percentage. Right. Then maybe a final question. What are your views on the sort of Planning Bill and the proposals there, I guess, maybe they never happened, but what do you have for a high level of thoughts? I think the Tory Backbench is providing a very strong opposition to government at the moment. And therefore, I think that There is a lot of dialogue that's got to go on between the government front bench and the government back bench Before we know what the outcome of that is going to be, I don't think anybody knows the answer to that yet. Okay, fair enough. Thank you. Thanks for your answers. Have a good day. Thanks, Greg. The next question from the line of Gavin Jagow from Barclays. Please go ahead. Good morning, Dean. Good morning, Mike. Good morning. Hi Gavin. Yes, just a few if I could please. The first one is just around the HBS survey. Just wondering if you're able to share anything on, I Yes, any progress you've made in the 9 month survey, just with customers, obviously, there's been a strong increase in your 8 week one, but Just in terms of the delta on 9 months, I guess, over the same period. The second one is just a reminder, please, of your capacity in your brick And tile factory, I guess how many maybe just give us a number in how many homes you actually can supply with bricks and tiles over a year? And the final one is just a bit of clarity, please, just on help for reservation rates through the first half rather than the legal completions. Thank you. We're finding about a 10% progress on the 9 month, which is encouraging, but nowhere near where we want it to be. Yes. But we're still dealing with previous several years at the moment. And I do expect with the pull forward on the 8 week, that will have an impact on the 9 month As we look ahead for the next 1 to 2 years, big focus of activity within the business. Look, we're doing a lot on this. We've got a new Head of Customer Care that's just joined the business, And she's building our team and building our infrastructure. We look forward to working, registering with the new homes code And implementing that into the business over the course of the next year. So this is a subject of great focus within the business. And I'm looking forward to continued progress over the course of the next Couple of years, still behind, very much behind where we want it to be, but it's traveling in the right direction. The overall capacity of the brick factory is €80,000,000 At the moment, we're currently using about half of that within the business. We're doing some good things with the bricks. As I said, I was there yesterday. We'll have Generation 4 out in September that will be Available for use within the business, and it's getting better and better. I'm pleased with how the product looks Jeff. They look really good and there's a great take up rate within the business at the moment. So I see that as all very positive, further developments to come in terms of color and range Within the business and broadening out brick pavers, permeable brick pavers that we'll be introducing into the business And stepping up the take up rate within the business. It's actually cheaper than tarmac at the moment. So it's Amazing. So yes, a lot of self help there within the business. And Dean, just to finish on that, in terms of the number of units that would be built using your bricks, it's just kind of equivalent units. How many is that roughly per annum? And I guess on the Tas as well, just to think how much you've got in HAGS at the moment? Well, Tas is a relatively new Addition to the business, so I think the penetration rate is quite low at the moment. It's probably just down about 20%, but I do see that expanding rapidly across the business. Now in the tile capacity, we could supply the whole business, but we choose not to because we it's all about security Supply and we need a healthy supply chain and we're happy to invest in the supply chain as well as have the vertical integration. So We're never going to put our Rx in 1 basket, but we do have the capacity there to inextremist Secure the Supply, which was the whole premise around the investment in the CapEx. So we're quite pleased to have that. And at times like this, it reminds us why we've done it. There is anecdotal evidence around the industry that others are getting pinched here and there in terms of brick supply and roof tile. It depends on the vernacular as well. It won't be applied to render, slappable, it won't be on that either, which is large ways of the country as well. So you've got to you can't think about it as 100%. But actually, when you think about it, it is all about security It was never really to provide a cost advantage, but where you we're going through a period of inflation on manufactured Building supply and you think, well, actually, it does provide some mitigation to that in the face of An external inflationary environment. So I think that it's not the main reason We're investing and providing more capacity for ourselves and the wider industry. There's a second round effect, But it does help to mitigate those cost pressures as well at times like this. So on both fronts, it works pretty hard for us. On the Help to Buy reservation rates, well, yes, I think you're alluding to what was How has the new scheme picked up relative to the old scheme? There's been a bit of a transition. Obviously, we're only able to reserve, Take reservation on new homes, on the new scheme from the middle of December last. So obviously, we've got maybe 6 months under our belt, and it's gone well. We've already said I think we said that In our forward sales, we've got 33% sold forward To customers choosing to use the Help to Buy scheme. So it's going pretty well, Gavin. We're not seeing Any major dislocation because as Dean said earlier, price caps, okay, yes, they crimp around the edges, Well, it's not as we anticipated, it's not a major issue for us. And You can see it in our sales rights. If you want evidence, the sales rates remain pretty strong and All indications are that the fact that the Help to Buy scheme now excludes non first time buyers isn't a particular issue for us. And that probably reflects the fact that we've positioned the business with a good range and choice of homes Across price points, but with a weighting to the lower price points. So I think we feel Confident that the business continues to be positioned well in the market. Excellent. Thanks, gents. Thanks, Gavin. Before we go to the next question, Jess. And the next question comes from the line of Christopher Fremantle from Morgan Stanley. Please go ahead. Hi, good morning. Just a very brief follow-up to, I think it was Glynis' question. Just on the outlet numbers, And I think you were talking about trying to move towards 350,000,000 subject to planning. So About mid teens percent higher than the average you're talking about for 2021. Are these the outlets That you're targeting, are they similar in size and selling price? I mean, are we talking about getting to a point of an average 3 50 outlets? And I mean, I'm asking that obviously because if I look at Revenue consensus a couple of years out, we're only sell side consensus only about 10% higher than where we are in 2021. So I mean, I know there are lots of moving parts. I appreciate you might not want to be raising the bar too high for yourselves at this stage. But are we talking about Getting back to a sort of average 350. Well, look, as I said to you earlier, it depends on progress through planning, Which I think will slows things down a pace and also market conditions. We're not chasing volume for volume sake, but we do have an ambition to grow responsibly at a steady pace Over the course of the next 2 or 3 years subject to markets remaining as they are now. I think 350 is a decent Ambition for the business over the back end of 2022 into 2023 subject to planning. So that's Jeff. Rather than a cross to hand around our necks, that is a target that we're working towards. And I think for me, the thing to focus on is not so much that, but the potential uptick in From where we are now in terms of outlets to where we might get to back end of next year and halfway through next year, back end of next And I think that is potentially quite exciting for the business. I think if you're looking at volume guidance, Chris, I think we said it earlier on, I think Greg Sort of pointed to it in his question that for 'twenty two, we've got the ambition To grow back to 'nineteen volumes, and obviously, that strength of outlets comes through Next year towards the back end of next year into 'twenty three, as Dean said, that puts us in a great position to grow further from there. As always, planning is a particularly difficult place to be at this point in time. So I guess there's risk on slippage there in terms of timings of getting outlets through into production And being able to offer new homes for sale around the country. So I think we've got to remain Ambitious, but realistic, if you know what I mean, because there are challenges there. We'd like more sooner, if we can, and that's what we're driving for. There are no further questions in the queue. So I'll hand the call back to your host for any closing remarks. That's great. Thanks very much. Thanks for joining us. I was expecting another hour of questions, but we'll take it and run. Well, thanks for joining us guys, and let's look forward to the result on the weekend. Thank you. Cheers, now. Thank you for joining today's call. You may now disconnect your lines.