Earnings Call: H1 2020

Aug 18, 2020

Hello, and welcome to the Persimmon 2020 Half Year Results Presentation. Please note that for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions later on the call. I will now hand over to your host, Dave Jenkinson, Group Chief Executive of Persimmon Plc to begin today's conference. Thank you. Good morning, everyone, and welcome to our half year presentation Q and A. I hope you've had the opportunity to watch our presentation online and catch up with our trading update. I believe the presentation highlights the resilient financial performance of the business and how we have carefully managed the business through this cycle. I have numerous items I could pick up from the presentation, but in particular, I would like to draw your attention to, firstly, The weekly sales rate at almost 50% above the same time last year. This has given us a forward order book A 21% increase on last year. And we currently have over 13,600 plots Sold for the end of the year with 10 solenoids remaining for year end completions based on current build programs and output. The WIP position is 14% above the same time last year. We have almost 10,500 plots, which we could potentially complete for the end of the year based on current build programs and on current output. Gross margins are proven very resilient. And if we produce a number at least similar to half twenty nineteen, Then we will regain our operational efficiencies in the recent overhead recovery that we lost during half 1 of this year. In the short term, we are in a very strong position. But I am well aware and the medium term challenges associated with COVID-nineteen, rising unemployment and Brexit. How we have managed the business for the last 2 years gives me every confidence we are ready to face into a number of future economic scenarios, The first question comes from the line of Andreas Patke from JPMorgan London. Please go ahead. Yes. Good morning, everyone. I've got 2 questions. Yes. Are you well, Rajesh? I'm very, very, very well. How are you guys? Yes. Fine, thanks. Great. Two questions. First one is on the COVID related cost, the £11,000,000 of cost that you've undertaken. And if you could talk about your decision to capitalize them while some of your peers have expensed through the P and L, if you could provide some color on that. And the second question is on land spend. If you can talk a bit about what you're seeing in the land market at the moment. And Are you looking to continue with caution for the remainder of the year after adding about 1,000 just under 1,000 plots to your land bank in the first half? Thank you. I'll deal with question 2, then I'll pass on to Mike to give you a bit more color on question 1. In terms of land spend, nothing's really changed. The market shift is pretty similar to what we've seen for some time. We remain vigilant. We're always looking for opportunities, and we are picking up 1 or 2 opportunities where we think the risk reflects the reward, but we're being very cautious and it's against the strict criteria, so there's no real change in the land market. In terms of the COVID related costs, this is related to 2 parts. First bit is the COVID cost with additional site overheads. And the second bit relates to the overhead inefficiencies from not having the same volume as what we normally associate with the business. And that was really important to us and part of our decision not to turn your staff, that led to 1 or 2 inefficiencies, but we think it was a price well worth being. I think, Rajesh, from a technical accounting perspective, basically, it's no change at persimmon. We've Continue to apply our accounting policies in a consistent manner. So what costs would normally get expensed have been expensed through the P and L account? And what the cost would routinely get charge to work in progress inventories have been. I think the GBP 11,000,000 that we have Incurred in terms of COVID costs, the bulk of it relates to The increase in site duration, the development time frames. Because if you think about it, given a period of Disruption to production, what that means for a particular site is that it lengthens the development time frame. So as a result of that, we're going to incur additional overhead over and above what the original site budget We'll be indicating for that site just by way of an extension of the development time frames. So we've got about 26,500 plots that are in active development at this point. So all of those active sites have been subject to some extension at this point in time in terms of Development time frame. And the future anticipated revenues off That's actually about £5,700,000,000 of future revenue. So in the context of That future revenue, we've expensed 1,100,000 of the £11,000,000 Through P and L in the first half being recovered against legal completions taken in the first half, the CHF 9,900,000 It's carried in work in progress to expense against future completions in the normal way. We sort of think about the disruption as perhaps an example of A similar set of conditions disrupting site activity would be bad weather window. If you remember the beast from the east a while ago, That did disrupt production for sort of 3 or 4 weeks. But we continue to apply the same accounting policies at that time, and we've done Same this time. So the margin burden, if you will, of that $9,900,000 moving forward is about 17 basis points over the gross development value of the sites that we've got left. And in the normal way, the Within persimmon, we'll be working hard to recover that value over future periods. So We'll wait and see. Yes, at this point, there's a bit of additional cost there. But hopefully, over time, we'll be able to Nibble away at that and get back to the original budget plan for each of those developments. Is that okay, Rudyard? Very clear. Thank you very much. The next question comes from the line of Arnaud Lehmann from Bank of America. Please go ahead. Thank you. Good morning, gentlemen or farewell. I guess three quick questions on my side. Firstly, I mean, your sales Great. Quite impressive. You talked about 49% increase in the beginning of July. How do you Do you see it is underlying market conditions or do you think you're gaining significant market share because it seems to be much stronger than what Some of your peers have reported. My second question is on your margin outlook for the second half. I mean, you're kindly guiding us For similar higher level of completion in H2, do you expect to be able to deliver better margin in H2 2 on the back of that related to the first half. And lastly, I think you in the presentation, you mentioned That the net cash, which is a cash minus the loan credit card, is around €450,000,000 at the end of June. Where would you expect that to develop into the second half with higher completions, but also now you have Kind of small dividend payment coming. Where would you expect to land at year end? Thank you. Okay, Nick. I'll let you do 2 and 3 first, then I'll answer Question 1. Yes. I mean, from the margin outlook, Alna, I think you're right. Your intuition around Margin for the second half improving, I think, is right in terms of direction of travel. Actually, on the trading update in early July, we did point out that really what we've lost as an industry is the ability to Complete the planned legal completion. So we've lost revenue for a period of time. And I guess the industry is playing catch up to a degree to get back to a similar cumulative position over time. So what What that means is that we will deliver more volume through the second half, as Dave already pointed to, And that will improve our overhead recovery rates through the second half. You've seen a housing operating margin in the first half of 26.6%. I think you'll see that move forward Because of overhead recovery improvement, both in gross margin terms, so 31.3 percent housing gross margin Moving ahead a bit. We don't want to give a forecast, but if you maybe 50 basis points improvement on a normalization of overhead recovery through the second half. And then on the OpEx line, you can see that our operating expenses as a percentage of revenue It was around about 5% in the first half, whereas over recent years, you've seen around about 3% being achieved. So I think a return to nearer 3% in the second half is a decent estimate At this point as a guide, so when you put those pieces together, you can, I guess, work out where you think the operating margin for the second half will be? In terms of Cash outlook, I think, obviously, on the prognosis of quite a positive period of delivery on Trading, as Dave's already pointed to, in the second half. I think our cash outlook will therefore be quite strong. And particularly when you sort of think about the activity in the land market, as Dave has already said, We've been quite cautious and will continue to be because that's really the a key part of managing The house building operations through the cycle. So I think it's a positive outlook in terms of cash. I don't particularly want to Estimate a number, but I think if you turn the handle on your forecasts, then I think that it's likely that we would be in an improved cash position from where we are today in terms of direction. To what extent? Well, there are a lot of moving parts to that. But I would as we sat here today, I think we would expect to be in An improved cash position exiting this year into next on the back of The positive outlook we've got certainly for the second half. Thanks a lot, Mike. In terms of sales, I think I know it's a point well made. I do think if you look at all the stats, there's obviously a bit of activity in the marketplace. And we picked up very early During the lockdown period because we could see from our sales staff because we had market intelligence. And there is something actually happening at Persimmon, which I'll put down to Our actions rather than just the marketplace growth because our sales rates are now ahead of this time last year. And importantly, our reservation rates Seemed to be ahead of our peers. And I put down that down to primarily our decisions to invest in with during the lockdown and before lockdown, Which has meant we have the ability to provide stock and our range of sites across the company to customers, which means we're in best position to capture the demand that's out there. The next question comes from the line of Ingrid Lammin from Canaccord. Please go ahead. Good morning, Mike and Dave. Just A couple from me. First of all, wondered if you could comment where you're on the kind of customer care journey. I mean, obviously, now trends in a 5 star rate. I know you're kind of there And in terms of what you set out to achieve? And then secondly, others in the industry have talked about struggling to get much Yes, close to 90% build rate and productivity, etcetera. And you're kind of signaling that you're actually back to where you were pre COVID with a negligible Impact on margins, if I understand it correctly, looking forward. So just wondering if you could provide a bit more color how you can explain how you've got up to Kind of 100% much faster with what you've done very well, obviously. And then secondly, any guidance on the ASP For H2 completions, you obviously got good visibility on those completions. Is it going to be kind of in line with the first half 2/25? Thanks. Well, I'll take 1 and 2, and I'll pass through on to Mike. Obviously, a customer care improvement plan, as you know, wasn't just about the SBS star rating. We had a comprehensive package of scheme, which has a lot of moving parts to it. It's still not fully embedded in the business. And I don't think we'll ever be finished because we always want to improve constantly to provide a better service to our customers. However, what we do know The things we have done, the process and systems are proven very robust. And the results are clearly there by one metric, which is the HBS story. And We're really pleased as we sit here today. We're currently at 89.6% for the year. And really pleasing for us is since January, we've been trending as a 5 And in the event of over the last couple of months, results have improved even further. So in terms of the customer care improvement plan, it looks like it's working. And the great thing for the company is we believe there's further benefit to come. And I was specifically joined by the attention to the retention scheme. We're still at the moment about 40% of our customers are using it. The feedback is very, very good. We were delighted that the consumer could recognize that it is a Best practice within the industry, we believe it's made a material difference to our approach, not just to the customers, but within the business as well. So That's another classic example of things taking place 5 unless there's another one we're getting good results. So the customer care improvement planality in totality Marvin, just a star rating. In terms of the output, I couldn't be happier with the way the business has responded. And you have to think why that is, and I think it's a good point. And I think it sits in three reasons. Firstly, what we did before lockdown secondly, what we did during lockdown and third, what we did after lockdown. And as you know before, lockdown, we took a conscious business decision to invest in WIP because we suspect that there'll be additional demand in the market as Hunter Buy was coming to an end, Which puts us in a very strong position in terms of width as we enter it. And the second important point is you have to remember, we position the business That the shape of our sites in the form of our developments are normal traditional developments. We haven't got high density city developments and high intensity, High volume output sites are same as some of our peers. So it's much easier to inspect social distancing. And by the very nature of the sites, people Generally, I submit it anyway. So it's much easier for us to comply with the social distancing rules than anybody else. Well, that big benefit of us was taking the decision not to fail at the start. Not only did it mean to prepare in the office for coming back to site, But having a sales presence give us good visibility and market intelligence of what was out in the marketplace. We knew That was customers want to hear about houses. We knew our wear segment queries were very high. We knew our credit levels were through the roof. This gives us confidence not only to invest in terms of further and we'll also give us confidence to want to get on-site. It's one of the reasons we possibly could Sure. And as we've got a new management structure, it was very easy to make that happen. And finally, because we had people working, we're able to prepare for getting back to work because we knew what we wanted to achieve. And I think it's a credit to the whole team, and I think you I think that from Richard's presentation yesterday that the process has been very robust. So much so that even with the relaxation As the recent government has guided to 1 meter plus, we've continued to respect the 2 meter rule and we're still being able to achieve the output. So we believe even if there was a further lockdown, we are well prepared for what may happen in the next 4 to 5 months in terms of that aspect. You want to pick up on the ESP, Mike? Yes. I think, obviously, a feature of the first half is a little bit less Affordable housing delivered in the mix. So if you will, that has flattered ASP The overall blended average selling price for the group in the first half, we'd expect a normalization of that moving into the second half To perhaps a more normal mix, which will again serve to Dilute the overall group ASP in the second half. So overall, I think flattish Pricing outlook, albeit behind the scenes, maybe a nudge forward, certainly on the PD side, Given what we're seeing in the market currently, but overall, in terms of group blended ASP, Maybe flattish as compared with where the first half landed. This is all okay, Ainsworth. Yes, all very clear and impressive. Thanks very much. Thank you. The next question comes from the line of Will Jones from Redburn. Please go ahead. Thanks. Good morning, guys. Good morning, Will. First set of questions, I suppose, is more about just exploring that recent sales strength. Could you maybe help us with the Help to Buy component of that? Maybe has it changed in the last couple of months versus, say, where you were across the first half? And I Any numbers within that would be useful. Again, Mike, you just hinted that you haven't got the opportunity in Dutch forward price. Could you push you a bit further maybe on what that might entail? Is that 50 basis points? Or is it maybe 1% to 2%? Or is there a number maybe you could put around what you may be able to do around price? And then linking that also what you can continue to sell at, I think 0.97% is the rate you mentioned for the last few weeks. And historically, presumably, we've talked about 0.7, 0.75 as being its optimum. I appreciate you're very well invested from a WIP perspective and all the rest of it. But Is there a number in mind that you could keep going out for a certain period of time relative to that, that high nearly one time number? So that was all around against recent sales. And then Away from that, could you help us on where the site numbers are currently at versus, I think, the 335 you mentioned in July? And the extent to which you think you need to be at least active to some extent the land market going forward to keep that number moving or to keep it held up? Thanks. Yes. That's quite a comprehensive list there, Will. I've got them all written down. Could I jump on the sites? Yes. I mean, I think site numbers We've remained pretty resilient, well. I think we We enjoyed quite a broad and strong site network. We're slightly down on the same point last year, maybe 1% to 2%. We've got about 340, 335, 340 at the moment, active outlets. Visibility moving forward, we've got about 55 sites that we're earmarking to open through the second half, Which depends on as you know, it depends on the rate of sale that we achieve in terms of longevity of those sites In terms of existing sites and the replacement profile. So it's hard to predict where we'll exit this year. Well, I think we remain confident that we've got good visibility within the site network. So we don't see that materially changing. We might trend through this half at a similar level to last year, say. I don't think there's going to be any significant changes to that profile. So that's the sort of near term outlook On-site numbers. David, do you want to talk about pricing and Yes. I think in terms of think Mike's giving you a guide on prices. I don't want to go into any more detail on that. We're not fast to assess really. What I would say is what we can Every week from our sales and we go through every single plot sale every single week and every price gets reviewed and we reflect the demand on that site. Some forward, some backwards if we're not selling enough on a particular side. At the moment, the current trend is very positive. We're really pleased with the sales prices they are achieving, and we are ticking them forward. But it's not that simplistic, like you put your finger in the air Depend upon one side, on a much more sophisticated business, and that we would never just simply put a price increase in across the board. Each individual recent activity will pause and look down on its own merits, but the trend at the moment is encouraging. Your question in terms of sales trend, I think most things are like people look for a simple answer to this. It's never that simple. It's normally a number of moving parts. Help to buy percent hasn't really changed. If you want to push me for 1 or 2 key reasons what I think it is, I think that Firstly, we don't have our decision to have the whip on the ground. And we can see that in our weekly sales, we have the poses of selling the most of it, the most advanced. And I think our competition are probably struggling to provide the stock the same way as what we have, so we have a bit of a commercial advantage. And I think it's probably more doubt You captured a little bit of market share there. So I don't think it's done with any one particular thing. I think it's done with a lot of things. And Hardly, we're looking to get in terms of these type of things that we have prepared for it. So I might not probably answer that one. No tend to go any more about that. Question 3 was how long can we continue at the sales rate. Well, I think the key element here is the WIP Because we have the land, we have the ultimate coverage to provide it. And what we won't do is make the same mistakes in the past of chasing volume at the cost of customers. But the great thing is at the moment, we do have the work on the ground, so we don't have to make that decision. We can get the volume. We believe We will consider the benefits of our Customer Care Improvement Plan and P and R Customer Care. What is very encouraging is because some of our peers are probably not Investing the same amount as what we are. We are able to get labor at the moment at reasonably attractive rates. So as long as we can gain access to the trade, we'll continue to meet that demand. I think what will be the what will change our sales rates It'd be more about Persimmon's actions. It'd be more to do with the market sentiment or possibly some of our peers getting more stock on the ground. And the final one, and we've tested here, I will reply. The land market, and I'm being consistent from the very start with this. As we've outlined in our presentation this morning, we've had 5.5 to 6 years land supply depending upon what we How you measure output? We have visibility on 133,000 plus. We don't need to buy land. When you need to buy land is when you do a buy deal. What we see at the moment, of course, we're picking up 1 or 2 deals, which we think are attractive, but nothing of the scale to match the replacement that we're actually absorbing. And we won't do that because we don't need to. So as we sit at the moment, we're vigilant. We'll continue to look in. And when that risk, the reward Switches, and obviously, we'll go back into the land market. And we have the balance sheet you're doing at the right time, and we'll make that call at the appropriate time. Understood. That's great. Thank you. The next question comes from the line of Gregor Kuglitsch from UBS. Please go ahead. Hi, good morning. Can you hear me well? Yes, great. It's fine. Yes. I'm doing well. I hope you guys are doing well too. I've got 2 questions, If I may. So the first one is just on volumes. Dave, I think you mentioned, maybe I misunderstood in your first So introductory remarks, do you think you could complete up to 10,500 units? Or was it a build comment? It just sounded like a very high number. I just want to understand What that referred to? And I guess related to that, on your sort of minimum flat volume guidance last year, I'm looking here at 8,300 units, kind of how you see the risk and reward around that? In other words, What's the limit basically given the strength of the sales rate? Essentially, I guess it's a supply build question that limits the potential there. And then the second one is perhaps a longer term one. So we've seen the white paper from government a few weeks back. I'd like to have your Perspective, if you have one, on the sort of potential planning law changes and the impacts 4%, whether that is perhaps part of the reason why buying land or whether you think it's too uncertain right now to assess because It looks in paper relatively radical, but I guess it's still early days. I wanted to have your perspective on what we think about those proposals. Thank you. The second one is easiest to answer. I'm not the type of guy that makes smart judgment. It hasn't come out very long. We'll review the documentation. We'll come until the end of October To respond to that, I'll speak to the teams. I'll take external advice and I'll form reviews on it at that time. To the extent for the I wouldn't really want to give any views until I'm certain what I think. So that's probably too early to give you any advice. In terms of volume, I think you're right. If you look at our sales rates, they're very strong as you worked out. The comment I made was on build rather than on volume. What the point I was making is our WIP position is 14% above this time last year. And potentially, based upon our current build programs and then based upon our current output, we have the potential to build 10,500 plots For the end of the year, obviously, we wouldn't achieve all the imports, but that is the good position we were in. In terms of quarter 3, we're pretty confident what visibility we've got. And we expect to probably pick about 45% of our sales up in September. In quarter 4, there's still a lot of challenges to come. We don't know exactly what's going to happen come the winter. But all things being equal, at the moment, we've positioned this business in the best possible place to capture the demand. And that's not just about sales rates, that's about build. Well, I'm not for one second going to see if we're going to complete 10,500 roofs. I'm going to leave the roof. And you'd never sell everything that you have available. But what we have got is stock And the infrastructure can build that number because you'd want to carry forward as well. But as we sit here, we could not be in a better position to meet the demand that's out there in the marketplace. Thank you. That was clear. Thank you. Thanks, Gregor. The next question comes from the line of John Bell from Deutsche Bank. Please go ahead. Yes. Good morning, Dave. Good morning, Mike. Hope all well. Hi, John. A couple of questions from me. Firstly, on the dividend, obviously, 40p declared. It looks like you're leaving the door very much open to the full 110p. Should we interpret that as you're waiting for the awesome selling season To start to play out before you update us on that number? And the second question is on build costs. I think we're seeing some pressure on lumber prices over in the U. S. I wonder whether you're seeing anything similar Anything else that you want to flag on the supply chain? Thank you. I'll pick up on 2 and 1, and I'll let Mike have his comment on 1 as well. In terms of build costs, What we're seeing at the moment is very encouraging. We're really pleased With the tender that's currently coming in, we've had the fact we got back to work so early and the fact we kept our subcontractors Busy and kept them on employment. And the fact we've paid them on time, we really appreciate that. And the more we've got the sales ahead of us, Some of them want to work for us at the moment as people coming out the woodwork at the moment really keen to work for us because they really know what they're on time and day they know we've got the work. So I'm really encouraged by seeing in terms of build costs. We're not seeing any sort of pressures in terms of material costs. We're not seeing any coming down, but we're not seeing them going up. Although we have done 1 or 2 good deals where we've improved the quality for the same price, but the labor costs are very encouraging, what we're seeing there. Obviously, that made the change as time develops on. But at the moment, we've got no real pressures in terms of build cost of anything that's looking favorable rather than negative. In terms of the dividend, I think the observation is quite right. We take very seriously managing our whole business through the cycle, And we would never do anything that affected the long term future of the business. That's why we what we want to do is we have a modest payment on what we thought we could afford Yes, from what we could see in quarter 3's performance. However, we wanted to keep our options open to see how quarter 4 develops. As an outline, we're obviously in a great position, potentially for the end of the year, our sales position, our build position, but we don't quite yet know What could happen in the next 2 to 3 months? And you would never jeopardize the long term future of the business by doing something that you never regret. So I think the judgment is really, really well. I think it's fair comment. If we get the result we're hoping to get, then our cash position would be very, very strong. And that will give us options, and the Board will make a review of that from November. How much do you want to help, Mark? Yes. I mean, I think just a Final observation, John, on the divvy is that obviously, at the time of the prelims in February just gone, We did outline what we thought the bottom slice In perpetuity, elements of the dividend would be and obviously, we're currently talking about the final dividend That was postponed from July. We're paying 40p on account of that. So we're sort of paying down That £1.10 final dividend for the year 2019, we're paying that down, if you will, partly by the 40p. And as Dave said, we'll continue to assess whether we can pay down a further amount or the rest As we move through the rest of this year. But it's important to note that also at the prelims in February, we did Point out that the bottom slice of the capital return would move forward from £1.10 to £1.25 again to be paid in early July each year. So that's still intended to be, at this point, The final dividend on account of the current year 2020 paid in July 21 And whether or not there's any surplus capital on top of that, then as Dave's already said, we'll continue to review that. And I guess at the next prelims in February next year, we'll be able to update the market in terms of our Views on any top slice of capital return that would normally get paid in early April, Unfortunately, last time around, we had to cancel given the prognosis, the immediate prognosis for the market. So is that clear, John? Yes, very clear. Thanks, gents. Thanks, John. The next question comes from the line of Emigaya from Citigroup. Please go ahead. Good morning, guys. Just two questions from me. Firstly, on the reservations, when you see the sort of trends that you have reported in July, Are there any regional areas that pop out in terms of strength areas of strength? My second question is a follow-up on the cash element. Are there any were there any payment vessels that you're taking in each one that we need to think about in terms of H2 cash outflows? Thank you. Well, there was, and I'll pass to on to Mike. In terms of reservations, this isn't just until July, this isn't until in August as well. We've seen sort of a 6, 7 week period we're talking about here, not just the 4 weeks of July, just to be clear. In regional patterns, not really the only exception is Scotland. We have a bit with a lockdown, but apart from that, it's across the board. Do you want to pick on the question too, Mike? Yes. I mean in terms of cash profile, I think actually you do raise an important point, Ami, in The first half of this year, for the Corporate U. K, not just persimmon, Obviously, the legislation has changed on corporation tax payments. So the first half of this year has seen an acceleration Cash out with respect to corporation tax payments, which amounts to about GBP 90,000,000 for ourselves. That's an additional cash outflow in the first half of this year compared with last year. Moving on to your question, which is the second half of this year. There's not really any sort of one off Cash outflows. I think as we've always said, as Dave's already touched on, We'll continue to adhere to the disciplines of running the business according to our cyclical playbook, if you will, Which means that, as Dave's already indicated, our land replacement strategy will continue to be pretty cautious. And that obviously moves the overall cash generation position or can do. But you do have to recognize we'll continue to pay down our line credit to tail. I think it's about GBP 130,000,000 of additional line credit Claims to go out in the second half of this year. So those obligations will be met. And indeed, that's A positive for the business because it opens up more headroom in terms of additional Capacity to invest at the right time in the cycle, as we've already explained. So Over and above that, I don't think I mean, from a work in progress point of view, I think we'd want to Continue to invest quite strongly in work in progress. So I think we're probably Nearing full investment in WIP at the moment. We may see a little bit more going to work in progress, but it's not going to turn the dial massively from this point. Dave, I don't know if you want to No, that's exactly right, Mike. And I'd just like to pick up on the tax point that Mike makes. It was really important to us not just to support our staff, but to support wider society. And we made a conscious business decision very early that we pay our tax on time. We believe we could afford it. We didn't want to defer it like so. So where we are at the moment, we played our part in the way that society as well is really important to us. Okay, Ami. Thank you. The next question comes from the line of Charlie Campbell from Liberum. Please go ahead. Good morning, Dave. Good morning, Mike. Good morning, Charlie. Yes. So just a couple of sort of detailed Just on Slide 41, I just wanted to explore, there's a couple of negative price movements there. I just wanted to make sure that was mix rather than market effects. And also to understand why the social is down more than the private. So I thought that's Maybe a bit surprising. And then sort of second question really is just on whether you've seen anything changing in terms of down valuations or cancellations in the second half? No, not at all. In terms of question 2, which I'll pick up, down valuation for mortgage market It's been pretty solid and pretty steady. Our cancellations this week, I think, were about 16%, so in line with our historic rates. So nothing materially changed. People are able to get a mortgage out there at the moment. It may take a little bit longer for them to get the mortgage and get through the contract process. But Where we are at the moment is no real issues in terms of mileage availability at all or cancellations. Yes. I mean when you look at the pricing movements, It is subject to mix changes, Charlie, so I can reassure you there. I mean, you're probably looking at Charles Church and thinking, have They've been discounting heavily to get rid of the 5 bedders. That is not the case. We can categorically Say that it is down to mix. We're not having to incentivize Increasingly in this environment, pricing, if anything, is nudging Forward as we've indicated. So I think that actually, when you look at the performance of the Charles Church Brand, we're quite pleased with that in terms of how it's performed, and it is down to mix. And again, in the South, Persimmon South, well, again, there's been, obviously, sites rolling off and sites New sites coming on with perhaps more affordable product coming through a little bit more strongly, Which we're quite pleased with at this point in the cycle because it serves to further Strengthen our offering at lower price points in the market. So I don't think there's anything In there that we're particularly concerned about, if anything, there's a slight strengthening of our market positioning because of the new sites coming on. Is that okay, Charlie? Yes. Thank you very much. Thank you. The next Question comes from the line of Glynis Johnson from Jefferies. Please go ahead. I did promise Michael has one question, but I think I have 2 clarifications. Not so far anyway. You talked about hoping for improved cash position at the end of the year versus first half. Can we just confirm that Including the 40p dividend or is that including the sort of 110p potential? 2nd of all, just in terms of that dividend, should we take the 0.40p interim as part of that, So that €110,000,000 or should we view the €0.40 as an excess and the €1.10 is still a final dividend? And then lastly, actually, what was my question is, it's actually about next year. Are you already selling for next year? Do you have any visibility on that? If you just do conclusions at least the same second half this year versus last year, Will you still go into next year with your build equivalent units being up? I'm not quite sure when you started really building that rip on-site year on year. Do you want to do questions 1 and 2, mate? I'll take off question 3. Yes. I mean on the cash Position, I think rather than being too scientific about does it include the 40P, doesn't it include? But I would So the direction of travel, Glynis, is a positive direction of travel. I think we're positive about the trading outlook, First point. We continue to be cautious, as Dave indicated, on land replacement because we've got Fundamentally, a very strong, high quality landholding position, as you know. And you can see that in the margins And the forward visibility that Dave has already touched on. So I think the direction of travel on the cash book is positive. I wouldn't particularly want to get into pre DB, post DB type So the conversation because there are a lot of moving parts, as you can imagine, except, as I said earlier on, In answer to another question, I think we'd expect to be in an improved position come the end of the year. Obviously, we've not decided to pay down the £1.10 any further. So moving on to the second aspect of the cash flow on the divvy. The GBP 1.10 Is the final dividend on account of 2019? We had to postpone that A short while ago, it was due to be paid in early July, 6th July. We've now stepped forward and said, Look, on the back of the strength of the performance of the business through the first half, We're pleased to be able to pay down 40p of that £1.10 in a modest step forward, And we'll continue to review the prospects for paying The further element of that €1.10 So obviously, there's €70 left. Are we able to pay some or all of that At some point in the future before we get to December. And as Dave has already said, I think probably The time we would communicate our view to the market on that would perhaps be our November trading update. So Just to be clear, 40p is part of the £1.10 and the remainder of that £1.10 will continue to be renewed as we move through the second half of the year. I'll just hand back to Dave to talk about The prognosis for opening the opening position for the next year. Yes. I think it's a point we'll make, Glynis. And obviously, Where we are at the moment with our build position, as you could expect, we're still able to sell for this year. We're not really having to sell them to next year. And one thing I know with the housebuilding business, you have to capture the demand when it's there, and you have to meet that demand when it's there. If you can't capture the meet that demand when it's there, somebody else will pay it and buy a secondhand house. So where we are at the moment with 10,500 pots we could complete by the end of the year. We're not really having to sell into half one 2021 because our build position is so good. As we move across into the year, then obviously that will change because it will be much more difficult because we'll choose not If someone in 10,500 houses full, when they choose to hold them at a different stage, which will affect the ability to complete them for the end of the year. I think the important thing for us is, as long as we can see the demand in the marketplace, we'll continue to meet that demand with our width. And I think we're probably in the sweet spot in terms of work now. As Mike's outlined, we don't probably need to make any net increase in work, but we need to maintain what we've got on the demand we see at the moment. And as long as we can create the demand what we see at the moment with our WIP, And we're very confident that we'll capture on the forward shares for half one twenty twenty one at the right time. But the biggest moving Fact of what half one twenty one looks like will depend upon the number of completions we take in half 2. So I'll let you model that yourself, Chris. How many think you can take between 10,500,000 8,300,000, but Well, any of your view is on that, I'll give you an idea what the forward sales pitch is going to be in the half one twenty twenty plus what you think we can complete afterwards. That makes sense. Yes. That's great. Thank And the next Question comes from the line of John Fraser Andrews from HSBC. Please go ahead. Thank you. Thank you, and good morning, gents. 2 for me. Hey, John. You all right? Yes, good. Thanks, Mike. The first question is Just to continue this theme of what volume you can do in the second half. I mean, clearly, you're not going to do the sort of 27% increase of the 10.5%. But at the same extent, What's to stop you doing your WIP increase, which is a 14% rise? So that's the first question. And the second is on the management, the CEO handover to Dean Finch. That's coming into sites, obviously, In the next trading period, so perhaps you could just outline what the details of that are, please. Thanks. Well, I'll pick up on both of them. The second one is easy. We don't know when Dean is coming yet. So we don't really know in terms of what the handover procedure is going to be. What I can say is, and I hope we can say to the results that I'm incredibly committed to the company and the whole team is working incredibly hard to produce these results. So The uncertainty hasn't affected the business up to now. And I'm sure when Dean comes over, it is a very strong business with a very strong team. In terms of volume, Joao, I'm not going to give you any more color than you've actually got. A lot will depend upon how the year develops, What challenges come in quarter 4? We're pretty confident in quarter 3 because we've got good visibility there and the build has advanced. But in quarter 4, there's Too many moving parts to give you the exact figure. I think I'll let you model it yourself somewhere between the numbers you've actually described, John. But I think Yes. What I can tell you is we'll be trying to produce the best performance we possibly can as always, obviously, because customers need us to finish the houses by certainties we've given them. I think the whip position into next year, John, obviously, as Dave's already indicated, The sales cut off for this year, let's say, end of September, for example, we don't We would normally continue to sell into this year beyond that, but I'm just using it by way of example. In terms of build, We continue to build right through to Christmas. So that naturally puts strength into the forward build position For next year. So I mean that's just a couple of overview comments in terms of The width position, which you were talking about for next year really, but it does depend on the legal completions we take this year, which Dave has already pointed out. I think normally, when you've got such a good forward series, it's much easier to target which parts you actually want to do. We normally sell Up until the end of October, beginning of November, we're very confident we'll take a reservation and complete a house buy. And we target certain houses to take through what we call auction plots So for Christmas, we want to complete before Christmas, and we'll continue to do that. And we'll continue to build safely on-site. And most importantly, we'll continue to ensure the quality of houses we produce of a product standard because we don't want to on demand Improvement of the benefits of the customer care improvement plan. As some uncertainty on Q4, John, I think it'd be inappropriate to give you a I think you have to take your own view and where that figure is. But as I said, at Glynis, we'll be trying our best to see the best performance we can because we've given deals to customers. I think that's the important point that Dave points out. In the Q3, we expect An unusually strong Q3, really because, obviously, we haven't delivered what we'd expected to deliver in Q2 Because of the disruption to sites. So Dave, it pains to point out that there's a hangover, if you will, Of delivery into Q3. So surprise, surprise, we're going to have a different shape on delivery this year compared to normal. And that puts the cash book in an even stronger position come the end of September. So that is it's a bit obvious, but it shouldn't get lost really. That makes sense. And I'm also mindful that there's some government incentives where the windows finish In March. So I imagine that a lot of customers are wanting to complete As soon as they can before that window. But John, that's I think that's a point well, John. And it's obviously that's Part of the reason the company is in such a strong position because we anticipated that and we invested in the WIP to capture some of that demand. Think COVID probably accentuated a little bit and brought forward. But this is going to happen anyway, John. I think it's an observation really, really well made. Yes, it is. So would it be fair to assume that the increase in the forward order book, the lion's share of that, The very high line share of that you anticipate delivering on before the year end. I think what you can see, I've given you the dates when we could, and we've given you a long stop and an up stop. I think the potential is there to do More than to produce our best ever result. If we produce our best ever result, which I'm hopeful we will for the half, Combined with the numbers we've done in half one, I think that probably doesn't just make us the most profitable business, but it probably makes us the biggest as well. So I'll let you come to your own conclusion. What we will be doing, we'll be doing the right thing. We'll be meeting the demand in the marketplace. We'll have the work to meet it. We've given dates to customers for the end of the year. We're trying to get the best result we can. Because the one thing I'm certain of, if we don't capture the demand when it's there, it will be lost to somewhere else. You can't try and manage the delivery. You have to meet the demand when it's there. And that means we have a big half too and we have a big half too. We will meet the demand, that's there. Very good. Thanks, Steve and Mike. Thanks, John. The next question comes from the line of Andrew Murphy from Panmure. Please go ahead. Good morning, Dave. Good morning, Mike. Good morning, Andy. Hi, Andy. Hi, Andy. Hi. I've got a couple of questions left because clearly lots have been answered already. I was just interested to explore fiber less a little bit. You said you got 8,000 people signed up. I was wondering if you could give us a flavor for what the Income per user is on that and how quickly that's growing and to what extent Households are taking up on any individual site. And secondly, I was just interested in your carbon reduction plan. I didn't see too much detail in the statement, but just wondering if you could flesh out a little bit of detail about how you're going about that particular initiative. Thanks. So on the first question, I'll ask Richard to make the deal on fiber nurse to Richard Stanhouse, I'll turn the presentation to see you. Let's see you'll give an update on our carbon reduction strategy. Yes. On fiber, Nestandy, it's still embryonic. Yes. We've got a business there that is gradually maturing. The average revenue per customer It's currently running around £28, £29 per month. So that's gradually improving. Interesting, we offer 6 different packages On fiber, that's different speeds, the different price points. We've got the cheapest entry point in the market. But what we've seen, as you probably second guess, you're probably going to you know what I'm going to say already, but during lockdown, a lot of people Working from home, and there's a lot of schooling being done remotely, etcetera. The demand for high quality fiber connections to the home I've seen it's translated into a migration towards our top packages, So 500 meg, again, which is one of the most I think it is the most offering in the market in terms of those speeds and reliability and service. And we see that coming through Customer feedback. Increasingly, customers are appreciating The reliability and the speed that's being offered. So penetration, if you will, take up It's gradually improving. We're around about 90% now. The other element that is gradually growing and is a big delayed is into the affordable Market space, as you can appreciate, we deliver a certain proportion of our sales Two housing associations for their clients. So when it comes to 5 and S delivery to The clients of Housing Associations, it's once removed, if you will, because they're customers of the Housing Association Rather than our direct customers. But that's gradually building as well. It's an opportunity for us to Continue to work on to it's all wired in and it's available. It's just whether or not Those customers are aware of the facility and wish to take it up, which we're, as I say, we're working on. So I think that The prognosis for Fibonest is positive. And just to remind you, it's our network. We're investing in that network, and it's a valuable asset that we're growing within the persimmon stable, if you will, for the future. And I'm sure there'll be a number of future opportunities to come from that investment as we move forward. So I'll hand over to Richard now to talk about our approach to Carbon reduction, Richard? Yes. Thanks very much, Mike. Good morning, everybody. We've invested I think Dave mentioned in the presentation yesterday, we've now invested in Actual resource, we've dispelt the resource to look at the wider sustainability agenda. And obviously, we appreciate the importance of this. In terms of carbon reduction, during the second half, we'll be undertaking some work with external advisers to establish a science based target for carbon reduction. Also, with regards to the future home standard and what have you, we've got a working group, and we've got people, expertise in the group to assess the impact on Persimmon as and when those final announcements are made. So it's a work in progress at the moment. We've got a clear, focused strategy and looking at our carbon reduction and wider sustainability issues And the ESG type agenda, and we'll be pushing that forward with momentum from the second half through the second half, sorry. We have no further questions. So I'll hand back over to the host of the call for any concluding remarks. Thanks, everyone. This will be my last presentation, and I'm really pleased with what we've achieved over the last 2 years, Especially when you consider the challenges we have faced. This is a credit to our people and our culture. And I hope your day to day shows what a special company Perciman is. I'd like to thank all our staff for their support and commitment. I have absolute belief in them. And this gives me confidence We will continue to deliver the company's new homes and deliver for all stakeholders as we face into the potentially uncertain Economic Future. Thanks, everybody. Thank you. Thank you for joining today's call. You may now disconnect your handsets.