Earnings Call: H1 2018

Jul 5, 2018

Earnings release

Hello, and welcome to the Persimmon Analyst Conference Call. Throughout this, all participants will be in listen only mode. And after, there will be a question and answer session. Today, I'm pleased to present Jeff Furban, CEO and Mike Killoran, SD. Gentlemen, Please begin. Good morning, everyone. Apologies for the slight delay there, but we've got strong interest call. So we always like to get as many people on as possible before we make a start. So welcome, everyone, to the trading update in relation to the 6 month period to the end of June 2018. As you can see from the trading update, we've had a very Solid period of trading. I'm very pleased with the additional volume of legal completions that we've achieved in the period, particularly given the pretty harsh weather earlier on in the year, which is quite difficult to believe as we look out of the window. But In the 6 months, we managed to sell and complete nearly 300 extra houses, which is the equivalent of a new operating company. Obviously, persimmon is keen to grow, and I think we've shown good growth over the last few years with 6 new operating companies opened in the last 3 years, and we're keen to continue to follow that We've got good affordability. We, as everybody knows, aim particularly at The more affordable end of the market, so our selling price is still at a relatively Low point to compare to the industry at £216,000 which is up just 1.5% in the period. New Homes revenue for the 6 months totaled $1,750,000,000 And actually, with the combination of increased selling price and volume increases, up 5% over the same period last year. Total completions, therefore, were 8,072, which, out of interest, is the strongest performance in the first half year that We have had a persimmon, which is encouraging. We expect further improvement on the operating margin, Building on the 28.8 percent we reported in the half two twenty seventeen, and albeit we're seeing inflationary pressure In the both the labor and the material cost side of the business, it's within the range that we've reported before 3% to 4%, but we continue to drive good efficiency in the business through various means, including the additional volume, which gives us good visibility on Volume, which gives us good visibility on continuing to improve that margin as we go forward. We've made good progress in land acquisition in the period with 11,000 new plots purchased over 44 sites And total land spend for the 6 months was £343,000,000 One of our strong performance metrics Over recent times has been the generation of very strong free cash for our trading. And at the 30th June, The group held $1,150,000,000 of cash, which compares favorably to last year, and this was prior to the payment of the 1 point 10 Per share dividend on the 2nd July, which was a total of 344,000,000 So our capital return strategy has produced excellent results for the shareholders. And just to recap on the dividend return plan, As you will recall, earlier this year, we announced that we intend to return at least £2.35 per share or circa $740,000,000 for the next 3 years, including this one with an underlying Capital return thereafter of £1.10 per share into the long term. We've got a very strong balance sheet, and we have significant embedded value in our land bank, which stands at over 100,000 plots at this time. I think that the whole team has done an excellent job Yet again, in creating and unlocking value by growing the business whilst maintaining high quality returns. And we now look forward to the second half of the year with a strong forward order book, which is 5% higher This time last year, dollars 1,680,000,000 And the sales rates have remained strong over the first half of the year at 0.78 sales per per week, and we've got good interest for all of our house types on the site as we maintain that affordable mix across All of our developments. We expect to generate good fresh interest on the new sites. And in the second half of the year, we're anticipating opening around about 100 new outlets, which is similar to the first half. Build is progressing well. And as I mentioned earlier, following a bit of difficult start in terms of weather, I think that we did very well. We came into the year with a strong build position, which put us in A good position in terms from a sales perspective and has carried us through that period of more difficult build. And now we're into the good weather and we're making very good progress on-site. Our foundation stats, The amount of build that we've got looking forward is very good and strongly ahead of last year. And also additional information on the Brickworks, we're very pleased with the progress that we've made with that. And Volume is growing and we're currently delivering about 1,000,000 bricks a week to our sites And that will continue to increase as we go through the year up to capacity. So the business is in good shape, And we're very pleased with where the company is at the present time, and we look forward to a good second half. So that's really the overview for me at this stage. Mike and myself are very happy now to take any questions that you've got for us. Thank you. Thank you. On your phone keypad now in order to enter the queue. And then after I announce you, just ask that question. And if you find that question has been answered Our first question is from the line of Aynsley Lamon at Canaccord. Please go ahead. Your line is open. Hi, thanks. Good morning. And just two questions for me. Wondered if you could give a bit more color on that kind of average So I think it was running at 0.85 when you reported in April. Just wanted to give, say, a bit more color on the trends you've seen kind of Yes, maybe on a monthly basis through to the end of June. And is there anything there we should be worried about that slowed off in terms of the underlying market? And then secondly, just Interested to hear your thoughts. Obviously, we've had the draft report from that win. Anything in there that surprised you, worried you or Anything your view essentially? Sure. Ainsley, thanks for the questions. I'll deal with the letwin Issue first and then Mike will come back on the sales rate. Yes, I mean, we've been engaged with the review that Oliver Letwin has been doing and obviously It produces interim report. And I think that it's a well considered piece Work, I think that, I mean, it's a very narrow field of review actually in terms of whether the rates of sale and build can increase on those bigger outlets. And we know that that's been a feature of the planning system for some time. Certainly, the industry is keen to obviously explore all of the issues surrounding that, particularly Why we are at that situation where we've got fewer larger outlets. And it really is linked, as we know, through to the planning system. And we particularly would like to see more sites Released into the system through the planning process. So I think that's the first point. But I think, in essence, I mean, one of the issues that you raised or as a possibility for increasing volume was in terms of tenure mix. And there is some certainly some logic to that suggestion in terms of looking at widening tenure on And I think one of those, it could be particularly the Some form of discount to market value, which has been talked about over recent times, to enable more people at a lower level to access the housing ladder. And we'd be keen to see something of that type of nature. I think that there are challenges, and We take issue with 1 or 2 points in relation to particularly the availability of resource. And as again, looking at large sites in areas, it is very difficult To increase output given the constraints of local labor in those areas, you're pulling from a wider and wider area to bring more people Into those particular sites. And the industry is working really at the top end of where It ever has in terms of rate of sale and build in that regard. So I think we're doing pretty well in that regard. And I think that, I mean, you singled out the issue about bricklayers being in short supply. I think it's all tradesmen that are in short supply, but I think the issue about bricklayers is that it's quite a gestation period to get anybody up So you're looking at minimum 3 to 5 years to bring new bricklayers through, whereas other trades, it's a little quicker than that. So I think there's a number of issues, but obviously, we're pleased for the confirmation on the land banking issue. I think you quite clearly saw that The builders are working very well on-site and driving through good performance. So overall, I think as an interim stage, those will be my principal observations, and we'll see what it comes out with as we go through the rest of the year. Sorry? On sales rates, Aynsley, I think that we would recognize a rate of 0.8 Of a private sale per site per week is at quite an optimal rate of sale in any market. And to be sort of roundabout that sort of level for the first We're quite happy with that, and it's in line with our expectations. In terms of how The year the first half of the year has developed. I think we've just got a slightly different shape On activity, I mean, we've seen this year in, year out. This year, the market was particularly strong in the 1st 8, 9 weeks, where our Our sales rates outperform strong comparatives, but the strength in the market did increase through the first half of last Whereas this year is slightly different where the market has calmed down a bit, I guess, Over ensuing weeks. But overall, we would look at the half year rate of around about 0.8, Just shy of that, within 1% to 2% of that as being demonstrating Solid market fundamentals. And if you reflect on the level of employment around the country, The regional economies appear to be doing quite well. Obviously, we're very aware and mindful of The major global issues that are swirling around and obviously, the Brexit transition, if you will, But certainly demand in our regional markets for our sort of product, and Jeff has already mentioned, we'll We're seeing good, strong, solid demand for our type of product in the region. So I think we're quite happy with where we are. I think the other thing, Ainsley, on that is that, And I've said numerous times before about the issue about how long people, particularly in our space, the first time buyers, That once these customers have generally made their decision and they've got a mortgage agreed, they They've got the deposit. They want to get on with it. So we're always keen to make sure that we've got a good forward build position, which is why we came into the year. We were very pleased with that, and we sold strongly off the back of that. But I think that unfortunately was eroded a little with The slowdown in build that we had through to the from the bad weather. So opportunity wanes a little bit, but we're getting that back now. So More builds gives us more selling opportunity, and we expect to push on through the summer. I think I mentioned on in terms of foundations, Actually, when you look at year on year, we're about 17% ahead in terms of the number of founds we've put in The ground, which gives us opportunity to sell well going forward. And it's keeping a careful eye on product and price points, all of those things. So Yes, I think we're positioned well going forward. Great. Sounds great. All very clear. Thank you. Thanks, Enzil. Thanks, Enzil. Okay. We're now over to the line of Will Jones at Redburn. Please go ahead, Will. Your line is now open. Good morning, guys. A couple for me, please, if I could. The first one is just exploring, guess the customer mix a little bit more and perhaps you could just flesh out how Charles Church performed in the first half against kind of Corpus Simon, just given some of the anecdotes that are out there on higher price points. And I guess as a slight counter to that, did first time buyer activity lift in the first half, given obviously it was the first full period of The stamp should be changed for those guys. And then second area is more around land. I guess 11,000 plots, quite a decent number for the first half in terms of approval. Any insights you can give us there into the kind of the margin intake levels compared to say last year and I guess roughly where your expectations are in terms of replacement rates I guess for the full year? Thanks. Yes. Thanks, Will. Yes, I mean, on the land front, as you know, it depends on when these Particular deals drop in terms of when they conclude. So we've always got quite a pipeline in So we've got good visibility on land coming through, and We're quite pleased to conclude those deals in that time and capture strong margin. I think that we're seeing a little bit more competition in the land market around some of the regional areas we're operating in as All the developers look to distribute their spend according to the business. So that's been a bit of a feature, but I think that this was it was always our intention really to get our ahead and we're well ahead in terms of our land market position and the sustainability of the land that we've got in each of our operating areas. So we're really well placed in that regard. And Certainly, we're continuing to maintain and Look at strong margins, return on capital opportunities for sites that are coming through, And we're opportunistic in that regard. But we've got a good pipeline of land deals. We're always pretty cautious. And as I say, we're in a position where we can afford to be quite selective in that respect. And we won't do a deal unless it absolutely meets our criteria. But I mean, in terms of New input land in terms of what land is looking like going forward for margin, I think that we've reached a level that is maximizing the point where we actually buy. And we always said that, that would happen. So we're pleased with what we've got. We're pleased with what we can see coming through. I think there's a little bit more competition in some areas. And I think, again, this is a bit of a feature now that you can see in some of the places we operate where other developers have now opened up competitive sites alongside Where the customer has got a bit more choice. So I think you bear that in mind in terms of the overall market as well. So I think that's sort of general position on the land. We'll give them a lot more detail obviously at the full half Results will, but Mike will give you an idea on the customer. Yes. On the sales mix, What we found in the first half, we have delivered a few more New homes to our housing association partners around about Just shy of 1500 units in the first half against around about 1300 in the first half of last year. So good growth in terms of delivery on the affordable from there. And just to remind you that in the forward sales of the 30th June, despite that increase in delivery, We've still got a very strong forward Association Partners, where we've got about 4,500 units in the forward order book. So We've got great visibility on that part of the business moving forward. And in part, that is down to the fact that we've invested well over the last Few years, as you know, which puts us in a position where we can discuss opportunity with housing associations and the like quite early in the process to make sure that they get the opportunity to acquire new units to serve their clients in their markets at the same time as derisking the build and Our development projects to a degree as a result of that. On the private sale market, well, yes, we've delivered about 50 Private sale units half year on half year. But within that, we've seen a reduction in Charles Church of about 100 and 25 units, whereas the difference 175 additional units coming through the Persimmon brand. I think that is largely down to obviously product positioning. I think It's well trialed in the higher price points in the market. The market is perhaps a little bit slower. But again, given the regional spread that we've got within the business with our 30 operating companies, Together with the range and choice that we continue to offer on our sites, it puts In a great position, as Jeff said earlier, to kick on into the second half where we've got good visibility of New outlet openings against perhaps less demanding comparatives as we move forward into the second half. Thank you. Okay. We're now over to Greg Kugelich, UBS. Please go ahead, Greg. Your line is now open. Hi, good morning. I've got 3 actually. Can you just come back on the growth volume growth point? So Just want to make sure I understand what you're saying. It sounds like build constraints in the early parts of the year kind of held back Both sales rates and completions. And now that that's picking up, are you pointing towards Higher completion growth. Obviously, we can see the comps get a little bit easier in the second half. So that's question Number 1. Question 2 on margins. Obviously, you're pointing for another increase sequentially on second half. I think that's I guess I want to understand kind of some directional on Quantum the extent that you can, although I appreciate you're going to report all the details in August. And then finally, on the LTIP, Can you give us an update on the amount of sort of option exercises that have actually occurred? Because obviously, I think quite a lot happened post the period in terms of the or the final vesting. And then whether you've seen any And it may be too early to see this, but have you seen any people depart post vesting? Is there any churn That has occurred or not really? Thank you. Thanks, Ricky. I'll just try and Deal with that first point, and then we'll move on from there. So on volume, I think I mean, what I'm saying is that the opportunity to sell is affected by build. So I think that we've always made this point here. We're pushing pretty hard in terms of build to continue to drive more Houses through the business, it is obviously constrained by numerous issues, not least The number of outlets, but also constraints on resource. So it's quite challenging actually to continue to increase The number of units, and particularly given the size of some of our operating companies, and I've given a range before Operating efficiency of a company, 350 to 400 units up to 700 ish. If you start pushing beyond that, then we know that the Get very stressed, which is why we continue to look for opportunities in sustainable opportunities To grow and open new operating companies, but only where we believe that those companies will exist into the future of sustainable land supply and all of the issues that surround that as well. So I think it's about how effective the Companies can be at building and that affects, it's not just building, it does affect sales. So I think you can imagine customers coming to site, they in These days, people don't particularly tend to buy off plan, not in any great numbers. So they want to The key thing for them is they want to know what the timescale would be for the point at which they purchase when they could legally complete. And if you're constrained on build, those data being pushed further and further forward, which puts people off. So we tend to push that bill to give us more opportunity to sell. In the 1st part of the year, I mean, it's Amazing to think now, but we had particularly bad weather, and build was constrained. We were in a fortunate position coming into the year, which gave us good opportunity to sell, but So that forward build was eaten into by the slowdown in that build process. But we can see more momentum on that now when we continue to Push now which we're looking on each site on a site by site versus house type by house type To cover all the price points, so you've got availability of houses at affordable price points for people to buy. If you've got that, you've got yourself a good position to take sales. So it's all of those things have an effect, And we're focused on improving that. So a better build position gives us a better opportunity. I think Margins, Mike? Yes. I mean, on margins, Greg, you can see the language we've used in the statement. And you're right, we will put more flesh on the bones from August when we issue the full results. But suffice to say that we do expect some betterment over the second half of last year. You've seen that trend over previous more recent years. But we have continued to paint a picture that obviously the growth In those margins will slow as the pressures in terms of Cost inflation in the supply chain, together with the land or the ability to buy Land values that offer slightly better returns starts to add. I mean, obviously, there's a planning a complex planning backdrop behind the land market that needs We continue to expect is one where it will eventually plateau out. And the big question is What sort of level? I think that our expectation would be to expect that plateauing out to be some point over the next couple of years probably. But nearer term, as I say, we'd expect Another step forward in the first half of this year, but probably not to the same extent as you've seen in recent years, being mindful of that overall shape to the curve, if you will, that we've been painting for some time. So I think I think the other feature on that Sorry, my comment, Gregor, is that there is a little bit more pressure, I would say, in terms of upward pressure on pricing In the supply chain, which we're seeing at the moment. So there's quite a bit of work In that area to try and make sure that we've got good availability and working with our supply partners to make sure that processes We fit with their processes in an efficient manner to contain that upward pressure on the supply Network and in addition to which, obviously, all of the other things that we continue to do in the business through efficient build processes, standard details, In house process design through engineering and architectural planning But also now, obviously, the internal manufacturing of the brick, the space for, and containing Our prices and improving on those things wherever we can. So that's the margin situation. On the LTIP, I think the first thing to bear in mind there is that, yes, £0.10 of that £1.10 triggered the The complete conclusion of the 2012 scheme. So the LTIP is vested now in full, albeit we're in a closed period. So there won't be any exercising of those options until the results are released. And in terms of retention, we've not seen any change in behavior there. We've said for some I know that there will be some natural Retirement process in the senior staff, but that's normal. And I think it's very important To recognize that Persimmon is very good, excellent, I would say, bringing people through the business. We've got a Great track record, and we develop talent all the time. So we've got good visibility on people coming through for the future In that respect, but we don't see any big exodus in terms of the current staff. Okay. One final question on the cash. I think in the full year presentation, you talked about €88,000,000 for the first tax settlement on the LCIP. Has that actually occurred or is it much lower than that, yes? Yes. I mean, if you obviously, the value on that settlement is determined by Individual choice around date of exercise because it's the value is determined by closing price on that day. So what we've seen in the first half relating to the first vesting date, which was last December, is that it was a cash outflow of 50 around about $54,000,000 in the first half. So in terms of your cash flows, just to help a little there, if you recognize that we Brought forward cash of $1,300,000,000 We're closing out at June of $1,150,000,000 If you add back the capital return of 3.88, 3.89, together with the 54 Cash out on that settlement, that gives you a free cash pre those items of around about 2.96, 2.97, which compares with an equivalent figure last year of about 2.80 before working other working capital movement. So there's good symmetry, if you will, in terms of the cash Generation of the business, which continues to be very strong. Thank you. Very clear. That's very good. Thanks, Greg. Okay. We're now over to Ali Murphy at Bank of America Merrill Lynch. Please go ahead. Your line is open. Good morning, Jeff. Good morning, Mike. I've got Two sort of related questions and a third one, which is a point of clarity. Can you just talk about the partnership sales in the first half And what percentage of completions they were of the TOEFL? And what your best estimate would be for the rest of the year. And the second question kind of related to that, and it sort of falls into the forward sales as well, is If that figure is increasing, what would be the figure into, say, next year And is there a sort of fundamental change in the proportion of partnership volumes that you're anticipating? The final question was just a bit of clarity on the IFRS 15 change. I just want to make sure that There's effectively no change to the profitability or the cash. Would that be the correct reading of it? It's just a recognition issue. Yes. On the IFRS 15, the update does actually say there's no change to profit Cash. So I think the answer is there. It is just a grossing up exercise in terms of The recognition of the revenues associated with the sale of the part exchange properties that We agree to buy in support of customers buying a new home from ourselves around about the country. So That's at IFRS 15. And in Note 1 to the trading update, we I've tried To provide some clarity around the effect of that and the comparatives, The partnership content, I think that, again, this tends to wax and wane depending on the timing of doing the deals with the housing associations. I think we do we're very we've got a very strong partnership business. We're one of the biggest providers of new build affordable housing in the country. And given the spread of our regional businesses and the outlets that we have, we can offer Great choice to housing associations to pick up new units. So we're very keen to develop that partnership business, it's important for us. And it's an essential part, we would say it's an essential Part of creating more sustainable communities around the country, which is important. So In terms of the exact percentage of legal completions, in the first half, it's nearer Sort of 19% against near of 16% in the first half of last year. So not a fundamental change, I would say, in terms of the second half proportion The sales mix, it's hard to predict because of the uncertainty around when the deals are completed and the units are handed over. So and as Jeff's already outlined, a large part of that is delivering the build. So we're very keen to continue to grow the partnership deliveries we are on in the private sales market. But I don't think there's any conscious strategic change in terms of the direction of developing that partnership business, we've always been keen on it and we'll continue to move it forward hopefully. Yes. No, it's relative to the overall business. If you look to the trend, I mean, it's trended down a bit actually, but it depends on individual sites and individual locations In terms of what the requirements are for affordable housing. But as a trend, I don't see any upward trend at all, Andy. It's pretty much We'll continue over the short to medium term in similar sort of numbers to what we've seen over the last couple of years. Okay. I'll just follow-up in that case. On the 5% growth in the forward sales book, can you give us the growth rate for Private versus partnership, is that possible? Yes. I mean, private in the forward order, in terms of volume, you're slightly over 10% on and you're sort of 1% to 2% down on PD, you've got about 4,900 units sold forward into the This time last year, so within spitting distance, whereas The affordable is just shy of 4,500 as I said earlier against a figure last That was just shy of 4,000 units sold forward. So, yes, I mean the fact I think that's a testament to the fact that we've invested well in new land parcels over recent years, and we have Good opportunity to talk to our housing association partners for those new opportunities on those sites. So and they seem quite keen to take those opportunities. So that's important I think the key thing there is delivery time table, Andy, that when those houses are delivered, Albeit, they're in the forward order book. Delivery tends to be projected over a longer period of time. Sure. Okay. Thanks very much, guys. Thanks, Mark. Okay. We are now over to Chris Millington in Numis. Please go ahead. Your line is open. Good morning, Jeff. Good morning, Mike. Just a couple of market ones and then just one other. So I was just wondering if you could just comment on the regional profile, what you're I appreciate you haven't got a lot around the M25, which is the focal point, but just anything you can say there. Also, when you've talked about build cost inflation, you've talked about efficiencies offsetting the pressures there. But there's been no comment on house price inflation, so perhaps you could flesh that out. And the final one is just really seeing how you're faring from kind of a customer care via operating point of view. Yes. Thanks, Chris. I think regional profile in terms of sales, It's been pretty consistent, really in terms of the customer Interest around the country. I think where the difference really is towards is about more about competition concise competing against us and a bit more in our space on the smaller houses In particular, so land investment over time has changed from some of the competitors and new sites opening Provides more competition, but the overall marketplace to me in the areas that we Develop is pretty consistent with previous periods. I think, I mean, in terms of the house price Inflation, similar pattern really. We've probably seen the slides slowing down of the house price Inflation, but it's still positive, which is good around Maybe, say, around about 2%, Chris, in that regard. But so still positive. In terms of customer care, we've got a great focus on customer care, and the quality of the product is very good. We continue to make progress on that. And I don't want to give any Misleading star rating guidance to you. But I can tell you that It continues to improve. And again, that's part of that challenge that we have from through trying to Grow volumes, but also deliver a quality experience for the customer. It's not necessarily about the quality of the house at handover, which I think it's very good. It's about the customer experience and managing the customer through the process. So we've continued to improve on that, and we're very pleased with the progress that we've made. Okay. Thank you. Thanks, Chris. Okay. We're now over to Charlie Campbell of Libera. Please go ahead. Your line is open. Good morning. Yes, lots of the obvious questions already gone. But just on build cost inflation, just wonder if you Could you give us a number for where that's been in the first half and where you'd see it for the full year? And then also just in terms of mortgages, I think you made a comment that Mortgage revenues is still good, but just wonder if you could give us any comments around any color around that, any changes in other direction, things getting a bit easier, getting a bit worse? And maybe on kind of valuations as well, any signs of down valuations becoming more of an issue anywhere in the country? Okay. Well, Michael, while we come back on the build cost inflation issue, but mortgage availability It continues to be very good. It's a competitive market. We still see lenders with Excellent deals for customers and more proliferation of additional smaller lenders looking to Try and take a bit of the market. So it's positive in that regard and there's excellent rates and deals for customers. So We haven't seen any issues, particularly in that respect. And I think that flows through into the valuation process as well that There's not any perceptible change to valuations. It's a pretty robust process. We get challenged. And of course, there are occasions where we get disagreements, but No noticeable change to what we've seen over recent times. So I think characterization of the mortgage market is It's a good place. I think there's good competition, And we're finding that the quality of the customers that we see these Is much better than it has been over long term history. And generally, a lot of those customers are in a good position and do qualify for mortgage. So Generally, a good place on that and very well controlled. I think on build cost inflation, Charlie, I think the We've said 3% to 4%. That's our expectation for the full year. And I guess for the first half, it's running along in that sort of range, perhaps At the top end of that range. As Jeff has already said, it's down to us to try and mitigate those pressures, which are there both on the labor side and on materials components. And we need to continue to think hard about how we approach those challenges. An example of that would be with the brick our own brick production coming on stream now. That is going to help in that regard. And indeed, add a bit more capacity to the whole industry because We've seen at times through the first half, Brickers on occasion has been a bit tighter. So that we feel We've made the right choices in that regard to just take step As I say mitigate the pressure for ourselves in that regard, but it also in adding capacity to the industry, hopefully, Yes, it helps the industry move forward a little bit better because the industry can capture brick supply in a more measured fashion, if you will. I think brick is a good example because The brick industry would like to drive the price up, obviously. And I think there's Certainly, moves to produce more of the upper end product, which is a more expensive product. And therefore, the average price of bricks will continue to increase in my view. So I think we're well positioned And we just keep a careful eye on everything really to make sure. The principal the primary objective is to have availability of resource. And going back Let one review. I mentioned this was one of the perhaps parts that we disagree into. There's been a lack of investment in the supply in the manufacturing chain, which has caused Some blockages and I think there's only one way that's going to go and it's to drive price up and then invest in more capacity. So those are going to continue to be challenges for us. Yes. Excellent. Thank you very much. Thank you. Thanks, Charlie. Thanks, Charlie. Okay. We now are over to John Bell of Barclays. Please go ahead. I think I've got 2, Actually, the first one is on Help to Buy, just keen for thoughts on timing of any government announcements And what your kind of working assumptions are? And the second one is on land intake margins. Just wonder whether there was a benefit from renegotiating some of your land contracts in the immediate aftermath of the Brexit vote that are now starting to show through. Yes. Thanks, John. Well, I think on the Help to Buy, we've not heard any more on that. But there's a good flow of cash now, well controlled, Available for the volumes, the customers that to enable them to buy. So a good flow of cash there for them. And volumes are being supported in that way. So we don't see any immediate change. I think what I've said before is that we expect to be some further discussion As we go forward, but whether that will be this year, I suspect it's more likely to be well into next year before we see Any debate about that. And I think Land, yes, you will recall, we talked about Brexit and we took The opportunity to review some of the negotiations we had at that time. There will be a bit of that feeding through both delivery