Earnings Call: Q2 2019

Jul 4, 2019

Earnings release

Welcome to the Persimmon Trading Update Analyst Conference Call. Throughout the call, all participants will be in listen only mode and afterwards, there will be a question and answer session. Just to remind you, this call is being recorded. I now hand the floor to our host, David Jenkinson, CEO and Mike Gilloran, F. D. Gentlemen, please begin. Good morning, everyone. Thanks for calling in. What we're going to do, we've got me here and make certain decisions as well. We're going to follow the normal procedure. I'll give a quick opening statement, picking out some of the key areas I want to bring your attention to from the statement, And then we move on to, as normal, to questions and answers. So quickly, the first four areas I'd like to draw your attention to from the statement is firstly, On my appointment, I stated my key focus was an improvement in our customer relationships. I am pleased to say I'm happy with the progress we have made in the 1st 7 months of the HBF reporting period, and this will continue to be my number one priority. Secondly, I've also stated I wanted to restock our shelves by increasing the amount of work we have on the ground to enable us to provide more reliable moving end dates and allow sufficient time for our teams to follow our quality control process. Once again, I'm pleased with the progress we are making on this area, which is reflected in the 19% increase in equivalent build units we have on the ground. The third point I'd like to bring your attention to is that the legal completions are slightly down on Half 1 'eighteen, This is a byproduct of our drive to improve customer care and satisfaction rather than a change in market conditions. However, we are in a strong position for half twenty nineteen with a good forward sales position, strong margins, Excellent outlet network and with hard to build programs in a much better shape. And finally, I would just like to see how proud I am personally of the work Persimmon is doing in getting first time buyers on the housing ladder with 52% of our private completions being to the 1st time buyers. So I'll open now the questions and answers and any questions Anybody may have. Thank Our first question comes from the line of Gregor Kuglitsch of UBS. Hi, good morning. Hi, Gregor. How are you doing? Okay. You can hear me. That's good. Doing well. Thank you. Couple of questions or maybe 3 actually. So the first one is just to come back on the volume point. I just want to explore that a little bit. I think in April, you were kind of indicating flat. I think in the end, you were down kind of 5%, 6%. I appreciate that's a bit Difficult to predict on timing. The comments in your opening remarks suggested a better outlook for the second half. So maybe you can just give us a bit of a feel Where you see things trending on that into second half, do you expect to be kind of at least flat? The second point is, do you have an indication where your I'm sure you tried to track this, where your HBF rating Would come out if you did the survey today, so in terms of percentages, would you be comfortable in saying that you'd be in a sort of 4 Star Builder Run rate. And then final question is, so you've indicated margins are flat for the first half. Any direction from here? Do you expect it to kind of pare back a little bit as some of the costs come through that you're incurring or not so much? Thanks. Okay. Well, I'll deal with the second question first and then make them pick up on the volume point. I'm going to be able to help you out on that as well. And on the third one, Mark, I'll make it pick that up as well. Well, as you know, we ended the last HPF reporting period, which finished in End of September at 79%. We're now 7 months into the period of the next reporting period, And I'm really pleased with the results we've seen, and we've seen a movement in forward from where we were last year. And in particular, in the last 4 months, we've seen a considerable kick up in our results. But I wouldn't want to go on record quite yet until we're further into the reporting period of the 12 months for the HBF rating. But what I can say is that we're confident of where we are at the moment and we're comfortable with what we're seeing. And I think, Greg, the key thing there is that, obviously, a lot of the measures that we are introducing, It's still early days, as we say in the statement. As Dave says, we're seeing good improvement in The results from those initiatives, but it is still early days. So that's quite encouraging, but We need to see how things go, obviously. Just on the volume side, yes, I mean, I think The outlook, the market for us appears to be pretty similar to what we've been seeing Through the first half, and it's remarkably resilient really in terms of the challenges, obviously, that The country faces, we've got to consider the increasing uncertainty with respect to The process of removing the country from the EU, etcetera. So the market In the regions, across the regions has been remarkably resilient. And our private sales rate, I guess, is an indicator of that and that it's been pretty consistent referenced the prior year, which was, We all know quite a strong comparative period for us, and we've been seeing a pretty consistent performance against that. Visitor numbers are good. Cancellation rates remain pretty low. We're not seeing a pickup in down wells or anything like that. So yes, I mean, obviously, it's well rehearsed that products are higher price points, Particularly perhaps in the Southeast and in and around London, it's a bit tougher conditions. But across the regions where the majority of our business is, The product that we're offering, the homes that we're offering to our customers is proving to remain attractive, hence Good visitor levels and good interest. So when what does that mean for the volume outlook? Well, as Dave said, we've got a Very healthy forward sales position. We've got around about 4,000 400 PD units forward sold at the end of June. So that's a good starting point. We will suffer a few cancellations out of there in the normal course. But rule of thumb, if you would say, well, We carry forward maybe 4,000 out of that number and for delivery through the second half. And then it's all about the sales rates through summer and autumn. Traditionally, as you know, It's always a bit slower in autumn and spring. And as you see in the statement, we've done 0.74 of the private sale Persyper Week in the first half, if you were to say an assumption of maybe 20% lower, which would be the traditional sort of pattern. That would give you a sales rate of around 0.59. And then how many weeks, 15, 16 weeks perhaps to sell in a simple way, thinking about it simply, We'll give you a figure of maybe a little bit more than 3,000 expected So when you add those two numbers together, Maybe 7,000, it's not over 7,000, but then you've got the issue of Building the right ones, obviously, we're, as Dave said, very pleased with the progress on construction. So we have obviously to that the units, another, I don't know, 1500, 1600 units on And you can make your own conclusions from that. We've got solid support For the second half, but we want to be measured in terms of delivering the balance of outcomes that Dave touched on already. I think the thing is on that, I think we believe if you look at the different moving parts that's going to produce the results for the second half, we believe we're in a good position. We have a good outlet network with a similar sort of number. We have a really strong forward share position to which to build on. We've got good stock on the ground with the right product, 19% more than what we had this time last year. We believe the margin, It will be pretty strong again. And we also believe the sales rate and the price for the sales unit will be pretty similar to this year. It won't be hard for you to call your own calculation in terms of volume, Gregor, for the second half. Okay. Thank you. But I think it's going to be We're going to be measured about deliveries we have in the first half. I think that pattern will be consistent. So we're not chasing volume. We want to deliver the quality of outcomes. And on the margin plan? Yes. I mean, the margins, yes, we are investing in the business. I think We're indicating, as we have before, that the full year outturn of last year will be a reasonable guide for the first half of this year. In the second half, I think we'd expect that to come back a little bit, but Not significantly. There's a bit more, obviously, investment going into the business as we've said. So yes, we'd expect our margins So Yes. I mean, obviously, we've talked before that quality of the land bank is the key support to that delivery. Excellent. Thanks a lot. Thank you. Our next question comes from the line of of John Fraser Andrews at HSBC. Please go ahead. Your line is open. Good morning, John. Good morning, gents. 2 for me, please. One following up on what you've just outlined there, Mike, on the completions. The missing piece of the jigsaw for the full year completions is what the social private split was in the first half? Yes. I mean, the private was just shy of 6,000 units The legal completions and the HSA sales were around about 1600. Thank you. To give you that sort of 776 ish number. Sure. And then on outlets, can you talk So appreciate you're holding back and you've got higher inventory level. But outlets actually dropped Quite rapidly from the 1st May, where they average for the 4 months, 3.50 And then the 6 month 345. So I mean, was And also your completions clearly were somewhat lower than you guided at that time. Can Can you just explain exactly what did happen on the outlet side? Appreciate the sales rate resilience. Yes. I mean, it's all I mean, we're talking averages here, John. So it's not An absolutely precise science. You'd have to monitor it hour by hour, day by day through the period. So what we've seen through the first half around about 3.50 average, As you say, running through to sort of mid April or back end of April And then slightly lower levels from there through to the end of the year. As you can appreciate, Spring selling season isn't flat. We it does have a different pattern within there. It builds through Into April May, so in June. So obviously, if you've got a few lower Few less sites later on in that period. It can on a weighted basis, it can Influence the numbers according to that higher level of activity later on in the period Because it's just how the market appears to work. So I think we end the year just Slightly lower than the 345 mark, but on average 345 for the whole year for the first half. But I think moving through into the second half, We'd be confident of around the 345 mark at this point because we've got good visibility on new outlets coming through. We've said we plan to open around 85 new sites through the second half. So we've got good visibility. As Dave said, we've got a very strong invested whip position, Which is a good platform to work from through the second half. Is the sole driver Build quality or have there been any planning issues or any market issues that also explain the fall? No, not at all. It's been about the quality before volume and ensuring that we meet on what we said we are going to do. To be clear, My number one priority is to ensure the houses are right, and that's the route we decided to go along. We've got to lose a little bit of volume in the short term to make sure the houses are right. That's a place I'm prepared to pay on standby. Okay. And last one for me then is just on the selling price, which was a little bit firmer On private, is there any market inflation in there? Or is that mix? And are there Any sort of regional variations on price that you could highlight? Yes. And just on the sort of inflationary effect, I mean, again, It's very, very hard to be exactly precise on this, but out of the 1.7% Increase on the PD average selling price thereabouts, we'd say the inflation is probably 1.25 With 50 bps of mix effect, it's hard to be Exact on that, but that's the feel. We are nudging price able to nudge prices forward still. I mean, Dave, regionally, what I think to the north, excluding the southeast and bigger units, the price points are incredibly resilient. We're still seeing some Decent price growth when we release new sites and the pattern hasn't really changed in the last 12 months, to be honest. When we buy the land When we get the right mix and the right product and we present it properly, we're seeing good price growth. As states mature, the larger forebears become a little bit more difficult And the market is certainly a little bit stickier in the Southeast. Okay. Thank you. Thanks, John. Cheers, John. Thank you. And our next question comes from the line of Clyde Lewis at Wedbush Securities. Please go ahead. Your line is open. Thank you. Good morning, Dave. Good morning, Mike. Good morning. Hi, Clive. How are you? Not too bad. Thank you. Not too bad. A couple, if I may. One, could you So a little bit about sort of your land buying and what you're seeing on sort of pricing of land and how hungry you are to sort of to obviously So, and in the market, obviously, you've got your strategic pull through, but just sort of what you're seeing, I suppose, in sort of more open market land buying. The second one I had was on Help to Buy. Are you seeing a drop off at all in terms of usage with the sort of improvement in So the higher LTV Mortgages and the drop in rates that we've seen there. And I suppose the third one was in terms of sort of the increase in stock that you've indicated in the first half. Is that it now? Or do you think there's a little bit more to come in the second half of the year? Well, I'll deal with that. The first one is the easy one, which is Help to Buy. No, we've seen no drop off. There's still really strong demand for 1st time buyers' houses out there and how the buyer works really well in facilitating that. It's something I'm fairly proud of. It couldn't be able to see many people to get on the housing ladder. So we're not seeing any drop off. Land buying, as you know, we're in a very, very strong position. The land bank is extremely low, and the strength of the land bank Undoubtedly strength of the business. And what that does, that gives us options to buy land at the right terms, at the right time, at the right place. We haven't spent quite as much money on land at the moment, but that's a timing issue rather than by design. We have some fantastic strategic land coming through in the next 12 months, and a bit of our focus has been on that. And what our spend will be in the second half will depend how much that comes along. But to summarize on that, it's more of a time issue why this drop in the spend rather than by design. And the third point, increase in stock. I still think we've got a bit more work to do on that. We still haven't got the perfect shape in all our sites where we can offer a product in every different stage when a customer comes along, and that's something I'm very keen to see change. I would like to say probably about another 10% growth. I think about a 19% increase this time. If we generate another 10% increase of stock on the ground, I think that would Put in a much better position for moving the customer care even further than where the improvements we've seen to date. Okay. Perfect. Thank you very much. Thanks, Simon. Thank you. Our next question comes from the line of Will Jones at Redburn. Please go ahead. Your line is open. Good morning, Louis. Good morning. Thanks, guys. Just again, 3, I think, for me, if I could. The first is just coming back to the issue on outlets and maybe some early thoughts, if possible, at all on how they may progress in 2020. I guess just wanted to get back to this 15 to 20 you've held back. Did some of those start to come back into the business, I guess, In terms of their opening next year or and is that when they do come back in, they're netted off by the equivalent holdback on new Sorry for getting it next year. So I'm just trying to get a feel for should we be thinking about circa 350 or a bit less holdings maybe for the next 18 months or can they grow slightly? The second was just to double check on build cost. I don't think it's in the statement, but you had talked around It's the 4% mark or so for your expectation in 2019. Presumably, that is still The case given your margin commentary, but just double check. And then the last one maybe is just to update us on the retention program that's about to get launched for new Reservations, just really where you are logistically on that. Is it ready to roll? And when relevant, what might be the accounting impact of that in terms of the booking of those new sales. Thanks. I'll deal with questions 23, then we'll make them deal with question 1. The first question on build cost, nothing has really changed from where we are before. Labor cost seems to have steadied, material costs have increased a little bit. We've spent A bit more money on customer care, and we've been able to offset that by some cost savings, specifically around the externals type of area we've said before, So the gates we've given on that previously still stands. In terms of the retention, yes, It's fair to say it's been a little bit more difficult than what we envisaged, but we've been working really, really hard with our stakeholders to try and make sure the scheme works, not just But for all our stakeholders, and if you know it, we've actually changed that to ensure that the retention covers not just the items of key release, But also, it happens 1 week later, and that was one of the feedbacks that was coming back from specifically the customer facing type groups. We've got all the documentation in place now. We've done all the drafting. We've had that to solicitors and Probably 99% there. We've got some lenders in a good place on this where they're just about able to support it, And we've got others we're still in discussion with. So we should be in a position to roll this out to anyone who makes a reservation in July We'll get the benefit of the retention. And on the Adelaide's point, Will, I think Dave's already said that we have the ambition to carry More stock moving forward. That will obviously affect the sales release Profile of the sites that come through when we get a detailed ticket to start. So I think that it's difficult to be precise in terms of that unwind of those sort of 20 sites or whatever. We would suspect that it will continue around that sort of level through the second half of this year, And it may even continue into the first half of twenty twenty, but it does depend on the progress that we make Against that ambition to have more availability on-site that is a bit more progressed as Dave's already touched on. So that's our sense of it at this point. Okay. Thank you. Thank you. Our next question comes from the line of Arnaud Lehmann of Bank of America. I have 3 questions, if I may. The first one is just Follow-up on your comments on margins. I'm just trying to understand the moving parts because you mentioned the investment in the quality of the product and the cost inflation offset by your cost cutting initiative. Could you elaborate a bit on the cost cutting? Is it the brickwork? Do you still have some land coming I'm trying to understand the upside and the outlook for this. Secondly, and I'm sorry to bore you with Brexit, But do you have contingency plan for a potential no deal Brexit? In particular, are there any products that you're importing that you started to More locally, do you feel ready for this event? And lastly, maybe one for Mike. You've reduced your loan creditors, I think, in the first half. I mean, is it a timing effect? Or is it a proactive Okay. Yes, mate. I'll just jump in on that land credit support first, if I may. And I'll perhaps, Dave, I'll look The margin pressure. The margin pressure. The margin pressure. The margin pressure. Yes. On the land creditor profile, obviously, it's timing issues when the deals are done. Land creditors are generated on completing the contract for Purchase of the land in simple terms where we agree with the landowner to defer part of the consideration. So it's just a deferral mechanism on the cash out of the business. So It is primarily determined by when the deals drop, when those deals are completed, which is pretty unpredictable. As Dave said earlier on, The land market is still offering decent opportunities. We've got great opportunity within our strategic Land Bank to pull that forward and get them converted and get on and build the houses The country needs, which we're very, very keen to do, obviously. So again, from A profile perspective, I would have thought land creditors may bubble on around the same sort of level moving forward. But again, it depends on the deals and the timing of completion on those deals. So sorry for not being able to be too precise about that. I mean, we put it in the statement because Directionally, they moved in different directions compared with the first half of last year. Just to remind everybody, last year, we started about $570,000,000 ended at June at around about $610,000,000 So we Extended the profile of land creditors in the first half of last year, whereas in the first half of this year, we've Shrunk the line credited, if you will, by about $60,000,000 going from $550,000,000 to around about 5.90. So directionally, we thought it was important just to point that out. And I think it is a bit of a timing issue. We have some large Strategic states, which are going to be coming through in the next 12 months. So I think you're probably going to see that increase in the short term, back up a bit. The maturity is pretty steady. We haven't got any refinancing Risk there, particularly, we've got a nice tail on the amortization. So we're quite happy with that. On the margin front, yes, we've got areas of cost mitigation. I don't think this is Absolute reductions in cost. This is about mitigating cost inflation to limit it around the sort of 4% -ish mark. Yes, we're investing in the business in customer care initiative and obviously areas of specification that We've changed, taking on board feedback from customers along the way as we normally do, and we'll continue to do that. And that's why we've said, well, the margin through the second half will probably come back a little bit Compared with the first half, but for the full year, we'd expect the margin still to be very, very good, Maybe a tad below what we delivered last year, but nothing significant. And I think the prognosis further out. Obviously, we've got an We've got some great quality land. And as always, Land Recovery, we're in a very strong position. We publish and will be publishing all of our stellar Average plot costs, etcetera. And I think that the work that we've been doing on external investment To reduce costs there, this isn't relating to build, but it's part of the build cost, but it's not related to The construction of the home, we've seen decent mitigation Of those costs, we've got a lot of new sites coming on. That's part of what you'll see on the balance sheet in August When we published the balance sheet at June, you'll see an increase in work in progress, and that will be primarily because of the investment in external Works, off-site infrastructure and the like, together with the increase in build units that Dave has already touched on in terms of the 19% increase in equivalent units of build that we're seeing. So Those two key areas are leading to an increase in work in progress. And obviously, you've got to do your external investment To get on to site, open them up so you can get to the plot. So necessary investment, very keen to get on, some great sites coming through, which puts us in a nice position, certainly for the second half and beyond. Okay. That's very clear. Thank you. And on the Brexit Well, obviously, we've had a little bit of time. We've had so many false starts with Brexit that we've had plenty of time to consult with all our suppliers. And we'll have assurances from all of them that the necessary steps are in place, such as using alternative supports. Obviously, we'll continue to review this with our supply chain to make sure what we're going to have in. And I think we're prepared the best we can. The risk area where I see it is probably the areas where we have a problem with certain The tariffs at the moment, but obviously we're dealing with that the best we can. I don't see it being Something which is going to prohibit our delivery in any way. I think what the materials will be available to meet our demand out there in the marketplace. That's great. Thank you very much, gentlemen. Thank you. Thanks, Alan. Thank you. The next question in the queue comes from Ami Galla at Citi. Please go ahead. Your line is open. Thank you. Good morning, guys. Just two questions from me. Hi. Just two questions from me. First one was on part exchange. If you could give us some color as to what's the current utilization level and what sort of threshold are you comfortable with? And the second question really on planning, how do you see the market today? You've touched upon that there are more strategic sites coming through. Do you think planning has become easier or at least more the process is a bit more faster than usual? I think the plan hasn't really changed in the last 2 to 3 years, to be fair. If you know what you're doing, you have the right planners, you have the right teams out on the ground, which we've invested heavily in, in the past. We have a huge team The plan is to grow the business with an expertise, which we think is second to none. When you have the facilities to deal with it, obviously, planning is a fluid thing and it moves. It's not stuck in any one thing. We will look to react and use the skills within the business to enable we don't have the problems. So planning isn't really been a barrier in the last 3 years of delivery other than areas of the Greenbelt where it's very difficult To trump the presumption in favor, use the presumption in favor argument to trump the exceptional circumstances argument. The planning, I'm pretty comfortable where we are in the company, the skill set we've got and what we're working with and the planning system we're working in at the moment. I think on the part exchange point, Ami, we are keen to support existing homeowners to buy newly built homes, obviously, and we've got a lot of capacity to do that with our power exchange and home change facilities. We're looking to support any customer that wants to take advantage of the convenience of those schemes. And we don't set a particular limit or minimum number or We look at each case on its own merits. Obviously, we review the quality of the existing home the customer is looking to move on from and if we can do agree an acceptable Position with them, then we will support them with part exchange. I mean, in terms of Our sense of product exchange is we may see a little bit more being carried because we want to support more customers. And indeed, we've already pointed to the fact that the higher price points perhaps the market is a little bit slower. And what Can be very helpful for customers is to use part exchange in a sensible way. So I think we would encourage and we do encourage all the teams to communicate The availability of that opportunity to customers. I think the encouraging thing that we see in part exchange, which gives us some visibility in the second hand market As those part exchange properties which we take in, we are turning over very quickly. We've got very little edge of stock, which tells us that the secondhand market, Thank you. And our next question comes from the line of Gavin Gio at Pure Hunt. Please go ahead. Your line is open. Good morning, gents. Good morning, Gavin. Just a couple around the customer care initiatives. I was just wondering if you could just Talk us through a little bit on the detail of kind of how the processes have changed, particularly around kind of inspection of properties before moving in. And would you kind of like your view on whether you think A week is long enough to kind of find all snagging issues with a new build house. And then the second was just around the reliability Moving in, Dave, have you got any figures you could give us around how reliable, I guess, they were in maybe the first half of last year compared to what you've seen in the first half of this year? Thank you. I think there's 3 parts to that. Obviously, the Customer Care Inspections, we made a lot of improvements in lots of areas. We've obviously increased our investment We've significantly increased our training. We started to digitize our customer care service. We're the 1st builder to offer out of hours calls and weekend calls as standard for our customers. And I think the point we're driving that is what are we doing to ensure In the business, we've got what's called a 7 point check process, where 7 different people check a house before the customer comes across. And that is partly for the reason for the drop in the volume because we wanted to ensure that, that process is being adhered to. So before a customer moves in, a 7 ks touch points have to be signed off and going through. And we're confident that that process is followed and we'll have enough time to follow that process that will produce the quality of house that the customer expects It's part of our job to get the house right first time. The second point on a week, I think It is adequate time to identify the snagging issues if we get the houses right first time. We're investing very heavily in that area, both in terms of Procedures, additional staff, and we've got an additional investment we're going to make in our own quality control procedure, which we'll give a bit more color on in August. So if we get the houses right first time, I think most of the issues, what we're talking about in the policy of the house will be picked up by the customer. Initially, as you were probably aware, our scheme related to owning up to as a point of care release. Some of the feedback was coming back from our stakeholders It needed a bit longer than that. It needed time for the customer to move into the house, get a look in the house and get familiar with the issues that they would have picked up, they didn't get a chance to pick up. That was something we had to acknowledge, and I think it made sense, and it's part of our drive to listen to our customers and try and give them the best service we can, and that's why we decided That decision, is it weak enough? We'd like to think it is. Obviously, we'll keep that under review if we found out it wasn't, and that's something we can look at later on once we get the Moving in date, the positive thing about the moving in date is it's got a bit of a gestation period. Most of the benefits that we're actually seeing when you look at the data is down to the improvement in customer care service aftercare. We've not really had the full benefit of the moving in yet for our customers because we actually think how this works. If we stopped releasing certain plots in certain places till it got to roof in January, so if you think To take a plot from Virgin to roof, it probably takes 3.5 to 4 months. So that normally takes you to April. Then a customer has to reserve it. The average contract period is 12 months I mean, 12 weeks. So really, the first legal completions where we should really start to see the benefit of the deferred completion will be May June. And the May June completions aren't in the E and P and F, yes, that gives us some confidence that we should see some further improvement as we move forward. Okay. That's useful, gents. Thanks very much. Thank you. Thank And our next question comes from the line of Colin Strong from Oppenheimer. Please go ahead. Your line is open. Hello, Colleen. If you unmute your phone, you can speak. Hello. Okay. There seems to be no response from Colleen's line. So I will once again It's on the line from Jefferies. Hello. So it's Glynis Johnson. Glynis, how are you? I'm not quite sure what happened there. I didn't answer today, McCollan. So I'm going to ask the elephant in the room is What has been the interaction with governments in the recent months? Have you got any feedback in terms of how they are feeling about your customer service? And how are they looking to monitor? What comes out? Are you getting anything from an industry perspective in terms of what government may require So, to quality levels and how they might time to enter up to buy? No, to be honest, obviously, we're in discussions all the time With the government and we have meetings, regular meetings with them. They know and they can see the improvement in quality and the difference that we can see. And obviously, they have visibility on the improvement we've made in the HPF rate in the last several months. The important point is in terms of the industry perspective, where the government looks as undertaking. This is what is an industry ombudsman scheme, and they've announced that they're going to consult on that, which is part of the reason that we are looking So no, I think we'll have discussions with the government. Obviously, all around other issues like Secur and And 0 carbon homes and delivery, and obviously customer care is one of them issues. But I think the main focus where the The design of the extension around Health to Buy 1 is, which I think is part of The question that you were asking, the government in holding the consulting with the industry and others about The design of that, we're in the same place as everybody else. With respect to that, we're not sure as to the exact Criteria that will be adopted in that regard. So but Obviously, you can see that we are very focused on making sure that The quality and service of what we aim to deliver to customers It's increasing and improving, and we're very confident that we'll be able to satisfy Whatever requirements are brought in the future with respect to Help to Buy or customer Support and service moving forward to ensure that we've got the business Nicely positioned moving forward. Thank you. Thanks, Bynet. Thank you. And our next question comes from the line of John Messenger at Redburn Europe. Please go ahead. Your line is open. Hi, Dave, Mike. It's a couple of questions, if I could. One is on the retention side of it. Can I just understand, obviously, some of your peers kind of have questioned whether it's right to go for this kind of mechanism that you're going to use? But more from the point of view of the lenders, Is this what is the issue for some lenders? Is it about the actual kind of putting these through their systems and the fact that there is this retention sitting with So what is the pushback that you're getting? And is there a reason behind it that is more of an obstacle looking forward? Or do you think this is very much something you can get over? And the second one was just obviously beyond Brexit, we've got the current kind of vying for who becomes the next Prime Minister. We look to promises and obviously one of those areas covers stamp duty. It's too early, I guess. But are you or do you have concerns as to What that might do is creating a bit of a hiatus in terms of people coming into sites and this is more at the top end of your range. Obviously, you're much less exposed. But Do you have concerns that there will be kind of people thinking, right, I'll hold back, I'm not going to think about moving, I'll wait until I've seen what the stamp duty scenario looks like beyond September, October time. Just a couple of whatever your thoughts are on those 2, clearly, probably not Yes. I mean, if I yes, John, I'll take The stamp duty uncertainty issue first. I think Dave will handle the retention side of it. Yes. I mean, obviously, we're in a period where there is a selection process going through. Stamp duty has been mentioned. I think the way that we They're interpreting that. You're right in that it's at a higher price point, particularly London market where perhaps On reflection, it has contributed to the slower market to a degree. It's not really our specialist area, as you know. But we understand the concerns Others have expressed relating to that, and we can understand them having those views. So a little bit of help and relief on that would perhaps assist thinking about constituents in those perhaps higher Capital value regions. It does create more uncertainty, as you say, for a short period of time perhaps. Yes. But we're not really seeing that sort of hesitancy or lack of urgency across our regional markets with the price points that we're offering product at. We are at the lower end. We emphasize that In the statement, as you can see, using the land registry data that the ONS used. Yes. So I mean, I think we share your observations on that. I think it does make sense. But it's not something that I mean, you could argue that the chains, etcetera, maybe there's a consideration there that we need to be Just a little bit more aware of, but apart from that, it's hard to predict it really in terms of In terms of the retention, obviously, we know that this is something we're pioneering. We're stepping at the new grounds, and obviously, that can be challenging for different people to come on board and accept something which is new. I don't think it's one particular thing that worries the lender because it depends which one you're actually talking to and which ones where they stand. I think it basically falls into 2 areas. The first one thing, it could be an admin burden for them, which we don't believe to be the case and we put forward processes That was proved that, that wasn't the case. And the second thing is some of this risk around foreclosure, what happens to the money, but we believe that to be a negligible risk. I don't really want to start naming names and saying what the real issue is on this because we're still in discussions with some of these lenders to We'll try and find a way through them through with them, but we have got some lenders in a good place with this. It is something we're absolutely determined to introduce. It's for the customer. It's something we do believe will change behavior within our own company as well to make sure we get the house In our opinion, it's hard to see any why we don't have any real objections to it. And it's something that we're going to continue to push forward to bring forward. Brilliant. And Dave, if you think of the pool of lenders out there, have you got kind of is it half of them have accepted this and the other half The way the mortgage market works is 2 or 3,000,000 players, compared to the majority of it, And the rest are gated by UK Finance. And we've got a main one major player, 89% there. Another major player who's got 1 or 2 reservations and another major player who's got Except the principle of it, but we need to work, make it a little bit more comfortable in 1 or 2 areas about what happens in a foreclosure situation. But we're confident we'll be able to roll this out. We'll be able to confident that I will be a major lender who will support us. And I actually think this will change behavior for the whole industry in time. And I do know that other some of our peers have been in seeing the other So that the bank themselves discussing the retention scheme. Got you. Brilliant. Thanks so much. Thank you. Thank you. And as that was our final question, I'll hand back to our speakers for the closing comments. Yes. Well, thanks everyone for ringing in. We've had some Good question. I hope it will give you a bit more visibility on where the business is and gives you a bit more comfort on some of the queries you had. So just in summary, I'd say to pick up on what we're looking at for half twenty nineteen. Customer Care, we're really pleased with the improvements that we're making. We expect to see even further progress in that area as we start to get the benefit of even more of our initiatives. We have a fantastic range of outlets In place with the fantastic land bank, the forward sales position is very strong. The margin has proved to be very resilient. Sales revenue per plot has been very robust. And most importantly, which pleases me at all, we've been able to get a 19% increase And we're on the ground which places us in a great place to not only increase volume moving forward, but also to improve the quality of houses that we hand over to the customers. Thank you. Thanks very much. This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.