We're off. Good morning, everybody, and thank you for joining us today. Firstly, I'm delighted to welcome Andrew to his first Persimmon results. I'm sure it won't be his last. In the space of a few weeks, he's hit the ground running, and he's already proving a great addition to the team. Excuse me. Before handing over to Andrew to take you through the results in detail, I want to pull out some of the highlights and progress in our business, and after Andrew, I'll return to set out why we're excited and confident about the future. Given a challenging market, these are good results that demonstrate we're already growing again. I'd like to thank our fantastic teams across the business for all their hard work to deliver them. I'm really pleased with our progress and the further opportunities we have ahead of us.
As I've said before, we've focused on controlling what we can control. That touchstone has delivered improvements in key areas of our business and positioned us for growth as the market recovers. Indeed, as I said a couple of years ago, it was my ambition to recover from the downturn as quickly as possible, and that remains the case. The headwinds we've faced in recent years have been gale force at times. While affordability remains challenging, at last, these headwinds appear to be moderating. There are now encouraging signs of returning consumer confidence, coupled with a pro-building government and, of course, last week's base rate cut by the Bank of England. So let me now turn to our results that I believe vindicate our actions. Reported operating profit is up 2% to GBP 149 million.
Our operating margin of 13% is ahead of consensus, but as expected, down on last year. That's due to lower ASPs in the forward order book at the beginning of January, coupled with embedded build cost inflation washing through. With more volume in the second half, improving ASPs and negligible build cost inflation, we expect the full year margin to recover to be in line with last year. EPS is up 1% at 34.7p. Despite the challenging market conditions in the last six months, we've maintained our dividend. While our continued investment in land is driving an interest cost in the P&L, we expect profit growth over last year in line with market expectations. Cash generation was good, and our cash balance at June was a healthy GBP 350 million. After land creditors, our net cash position was GBP 33 million.
These results are the product of strong delivery. Completions of 4,445 are up 5% on last year. Private completions are up 14%. Our net private sales rate in the period was 0.71. That's up a significant 20% year on year and an encouraging 5% excluding bulk. I'm pleased to say sales rates improved from 0.66 in Q1 to 0.81 in Q2. And sales rates in the normally quieter summer period have remained strong since the end of June. While we've done more bulk deals in the first half than we did last year, for the year, we expect bulk deals will be less than 10% of total sales, more or less in line with last year. Blended ASP in the period was up 3%.
We've continued to use sales incentives in a very controlled way at around 4.5% of asking price. While this is up from 3.2% compared to last year, average ASPs on private gross reservations since the start of the year were also up by about 0.9% compared to the same period last year, mostly canceling out this increase. As I'll come on to later, ASPs and private reservations are markedly compared to Q4 2023. Now, all these headlines have been driven by our significant operational improvements. Our continued investment in new land, alongside our enhanced approach to planning, has seen our owned land with planning permissions grow by 8% compared to last year. What I'm pleased with is that we've grown our total outlets by 3% compared to a 7% drop across the industry.
Our HBF customer satisfaction score is now a record at over 96%. I think that's a demonstration of our strong and sustained improvements over the last few years. Our NHBC reportable item score is nearly 10% better than the same period last year and 43% better than two years ago. I was delighted we more than doubled our Pride in the Job awards this year. Internally, that's a real boost to morale. At 30th of June, our forward order book was up at GBP 1.4 billion, up 3% on last June. Our significant year on year increase in private forward sales, up 22% by value at 30th of June, compared to the same date last year, is very encouraging and gives us confidence for the future.
Last week, the Deputy Prime Minister set out her proposals for wide-ranging reforms to the planning system, along with her ambitious targets for growth over the term of this Parliament. We strongly welcome these proposed reforms and look forward to working with the government to deliver on their ambitions for growth. Our strong land bank and strategic land interests, coupled with improvements we've made in recent years in our capabilities to design and build exemplar but affordable developments, has, I believe, put us on the front foot to play a leading role in the government's highly ambitious plans over the coming years, and that's really exciting. I'll say more on this later, but firstly, Andrew will take you through the numbers in detail. Andrew?
Thank you, Dean. Morning, everybody, and I'm really pleased to be here. So before I get into my slides in detail, I thought I'd just give a few reflections on Persimmon a few weeks into my role. So since joining in mid-June, I've been to our brick and tile works, I've been to our Space4 factory, and I've been to a number of our sites and offices around the country, and I've been really impressed by the caliber and the experience of the people I've met across all disciplines, as well as their energy, their pride, their focus on the customer. And I've been really impressed by the quality of the product we're delivering. I've been impressed by the adoption of digital tools on site.
So I've looked at the site manager app that we've rolled out, for example, and I've been impressed by the quality of the land bank that I've seen as well. So all in all, the business is in really good shape. Of course, there's lots of opportunities to improve further, but I'm excited to have got started. I'd also just like to take the opportunity to thank Mike Smith as well for his excellent work supporting Dean and the board before I joined, and for his help to me since I've been here as well. So thank you, Mike. The strong performance in the six months to 30th of June, that reflects the hard work of our teams up and down the country. We delivered 4,445 homes, that's up 5%, including a 14% increase in the number of private completions.
That change in mix towards more private sales has helped increase the blended average selling price, up 2.7% to GBP 263,000. I'll come back to the mix and the ASP in a little more detail on the next slide. Housing revenue is up 7%, with adjusted operating profit maintained at GBP 152 million. Operating margin remains industry-leading. As guided this time last year, it is, it is down a little bit at 13%, and that reflects the mix of sales and also the residual embedded build cost inflation carried forward from last year. It's worth noting that the build cost inflation in the current year has been much more normal. It's essentially flat this year.
We've continued to invest in new land, as planned, and that's lowered our average cash balance, and that's resulted in increased interest costs in the period. Because of this, profit before tax has reduced to GBP 146 million, including net exceptional charges of GBP 2 million. Just to touch on those, the exceptional items are a release from our building safety provision of GBP 23 million. I'll come back to that later in the presentation. That's offset by the GBP 25 million impairment of our investment in the TopHat modular business. This impairment reflects the challenging volumetric market that TopHat faces. Importantly, we are continuing to work closely with TopHat on new product development, and Dean will cover that later on.
We've generated GBP 165 million cash from operations before changes in working capital, and we invested GBP 195 million in land as we continue to invest in the future. Our return on capital employed is very similar to the full year 2023, which was 10.5%. The fall in the rolling 12-month figure on the slide is driven by the high ROCE in late 2022, which is still influencing the comparative figure. So I'll now come back to the sales mix and ASP in more detail. Of the total new homes delivered, 3,742 were private. That's 14% higher than last year. This included investor bulk sales of 524, which again, is more than this time last year, and partly explains the fall in private ASP with an associated gross margin reduction.
These bulk sales are spread across a number of sites, and we continue to use investor sales where we consider it appropriate for the business. And in fact, we're increasingly proactive, building good long-term relationships in this key part of the market. The ASP in our forward order book at 30th of June has increased, reflecting an improved spring selling season that Dean will cover later on. Importantly, our core product remains affordable, with our private average selling price 20% below the new build national average, with 63% of completions below GBP 300,000 , and with 31% of our completions to first-time buyers. Across the period, average incentives on completions were around 4%. That's higher than the same period last year, but similar to the second half of 2023. This slide provides a bit more color on the underlying operating profit movement.
You can see the positive effect of increased volumes and increased average selling prices. As I've already said, that increase in ASP has been held back by the number of bulk sales, 'cause that they typically attract a higher discount. The adverse movement in the cost line is driven by the build cost inflation seen in 2022 and 2023, and that's carried forward into the embedded margin within ongoing sites. Finally, net operating expenses have increased just GBP 1.3 million. That's a 2% increase, less than the 7% revenue increase, and that shows improved overhead efficiency, driven by a real focus on cost throughout the business. So I'll now move on to the land bank. Disciplined investment into land is key to our growth ambitions, and we've continued to invest through the last year.
I have to say, having just started, I am really pleased that the business had the foresight to continue to invest during the recent challenging market environment, in land and in other operational capabilities. In the period, we invested GBP 195 million in land, with further land spend anticipated in the second half year, and this is on top of the investment that we continued to make over the last few years. We've also had a number of planning successes. We obtained detailed planning consent in the six months on around 5,000 plots. At 30th of June, we had just over 38,000 plots owned with detailed planning consents. That's 8% more than this time last year, and that provides confidence for the future.
In total, in the six months, we've added 3,745 new plots to our owned and controlled land holdings across about 20 locations, and over 40% of these new plots have been successfully pulled through from our strategic land bank. Land holdings currently show a cost to assumed revenue of 11.6%. That's an important indicator of future margin potential, and it's pleasing that this has stayed pretty flat, reflecting the benefit of us having continued to buy land through the last few years. The embedded margin with our, within our owned land holdings remains very good, and we'd expect 90% of our plots to deliver a gross margin in excess of 20%. So this is the normal cash bridge.
We told you in March that we expected cash to reduce this financial year, although that 30th of June position is very strong. The reduction is because of our continued investment. So broadly speaking, our operating cash inflow is being used to fund tax, dividends, building remediation spend, and our investment into land and WIP. So cash reduced in the six months by GBP 70 million. Cash inflow from operations was GBP 165 million. In the six months, we invested GBP 195 million in land and utilized GBP 142 million of land through cost of sales. And within that investment, land creditors reduced by GBP 56 million, and we spent about GBP 85 million on new sites. That's an increase to the same period last year.
Work in progress increased GBP 81 million as we build products for the second half year delivery, and we spent GBP 25 million on our building safety remediation program. Finally, it's just worth noting that the GBP 128 million final dividend for 2023 was paid in July, so that is still included in cash at 30th of June. So cash is part of an overall strong balance sheet, and during the year, we've extended our GBP 700 million RCF out to July 2029. Our balance sheet has allowed us to continue to invest in the business. Land and WIP has increased GBP 81 million since December, reflecting investment in product for delivery in the second half year. Our equivalent units at 30th of June were nearly 300 higher than at the 1st of January.
We held GBP 122 million of PX stock at June. That's a really good sales tool for us, and importantly, the aging of that stock is very good. Around 400 of the 593 properties held were already reserved at 30th of June, with more reserved subsequently. Land creditors have fallen, which is due to the timing of contractual payment terms. We settled GBP 113 million in the period, with around another GBP 100 million of deferred land creditors to settle in the second half. Our building safety provision stands at GBP 238 million. This is reduced due to the GBP 25 million of spend in the period, and we also revised the basis of our estimated future costs, resulting in a further GBP 23 million reduction through exceptional items.
The key thing here, everybody, is that we are getting on with the remediation work, and we're making good progress on it. There's significant further work planned for this year and for next, and the bulk of the remaining spend will be made over the next two years or so. As I mentioned earlier, the return on capital is similar to calendar year 2023, and net assets per share of GBP 10.66 are 15p higher than this time last year. This is a strong balance sheet, and it's something I've been really encouraged by since I've been in the business. Even with our investment in land and our spending on building safety, at 30th of June, we had net cash, including land creditors, of GBP 33 million. That's a negative gearing of 1%. The structure of our capital allocation framework will be familiar to you.
Firstly, we will maintain our strong balance sheet, and we'll maintain low leverage through the cycle. So we've deliberately continued to invest in land over the last year or so at the bottom of the cycle. Around GBP 600 million invested over the last 18 months. This has reduced our current cash position, but provides a really good platform for future growth. Alongside this, we're prioritizing dealing with our building safety remediation, and that will absorb around GBP 100 million this year and next year. But of course, we'll absorb a lot less after that and provide us more flexibility in later years. Just, for the record, in the half year, the cash spend on remediation, that equates to about GBP 0.08 per share. Secondly, we'll continue to grow our number of outlets and driving our organic growth objectives.
Of course, we're also open to acquisition opportunities, but given how well-placed we are for organic growth, any acquisition would need to be looked at in a very disciplined way and would have to be additive. Thirdly, we'll pay a sustainable dividend, well covered by profits through the cycle, with a minimum 60p per year. To be sustainable, we can't over distribute as we need to continue to invest in growth. In line with this approach, we've today declared an interim dividend of 20p per share. Of course, we remain open to returning excess cash to shareholders, if appropriate, later in the cycle. To summarize, I'm really pleased to have joined a business which is in great shape. We've had a very good first half year, and we've got increased confidence in our 2024 full year delivery. Today, we've increased our volume expectations.
We now expect that we'll deliver around 10,500 units in the full year, which is at the top end of our previous guidance. We expect that this will be delivered at a margin similar to last financial year, as we indicated it would be in March. Our land spend will be GBP 300 million-GBP 500 million, as we said previously, and we now expect cash of GBP 100 million-GBP 200 million at December. That's a little bit higher than the previous guidance. All in all, this will represent a very good performance in 2024, and I'm looking forward to the second half year with confidence. With that, I'll hand back to Dean.
Scared off the chairman now. Thank you, Andrew. I now want to turn to some of the key areas where we've been deploying the business, which will position us to drive future growth. I'll start with operational capabilities. As I said earlier, with some signs of improvement in the macroeconomic backdrop and the significant planning policy reforms set out by the new government, I believe we're well positioned to capture any tailwinds because of the progress we made in building our capabilities in recent years. Despite the downturn, we've continued to be active in the land market, whilst competition has been quieter and greenfield prices have been falling. As a result, we've continued to invest in our already strong land bank, as well as add to our strategic land holdings.
We now have around 82,000 plots owned and under control, of which 38,000 have detailed planning consent. Through an enhanced approach to planning, we're drawing on this land bank to open outlets, which, as I mentioned, is against the industry trend. So far this year, this has seen a 7% decline across the industry, against our 3% increase. We've invested and innovated to speed up our build process. A push to digitize key areas of our operations is already making us much more efficient. Because we've invested in our people and our products, we're now building our best ever quality homes and delivering our highest ever customer satisfaction scores. We've prepared for the growing sustainability agenda with innovative trials and around 4,000 zero carbon-ready homes already in our pipeline.
We're looking to be ahead of regulatory changes, resulting in high quality but affordable developments. We've been developing new markets and diversifying our product range to secure new growth opportunities while still maintaining our strict financial criteria. I think that mixed tenure developments are likely to become much more important in the future. Growth in private, affordable, and mixed tenure developments will be key to our future success, and that's why we have been investing a lot of our effort in sales and marketing capabilities, to which I'll now turn. We're now building well-designed and highly attractive developments. They're getting consistently strong customer recommendation scores and reviews, whether that's through the HBF surveys or Trustpilot. Our core Persimmon homes are a compelling product, in part because they're typically priced 20% below the market average.
We've been getting better at selling, not least by improving our online marketing presence and digital capabilities. We've done a lot of work to improve our online visual assets, including 3D walkthroughs for our R21 range, the use of photorealistic CGIs, the improved use of photography, and the use of local area videos. The way in which Persimmon approaches marketing really has changed significantly. We've worked with external experts to improve our paid advertising strategy, we've continued to optimize our use of key portals, improved our search engine optimization, increased our social media presence and advertising, and widened our campaign strategy, and invested in a new head of digital marketing. These are and will increasingly be important. The results are impressive. Website visitors increased by 35% year-on-year.
Sales inquiries to the website are up 13%, and a new CRM system and an upgraded website planned for rollout next year will help drive further improvements. We've invested in our sales teams with training and mystery shopping exercise to target improvements. This is helping to convert more of the increased interest into sales, with a sales rate up 5% year-on-year for private deals. We've also been diversifying in response to the changed market. We've been active in new markets, such as build to rent, and we've developed partnerships to broaden our offering. Unquestionably, these are important growth markets for the future. Investor deals continue to be used in a disciplined manner, and we're completing these earlier in the year to secure better terms and greater certainty. When investor deals are added, our sales rate is up 20%.
The BTR market is a large and growing market. Given the structural challenges the industry has faced over the last two years, it makes sense that it represents a growing share of our mix, not least because it improves our return on investment. We're growing more sophisticated in its use, moving to a planned approach with multi-phase, multi-unit sites, where it enhances our overall returns. We're also looking afresh at our partnership business, given the policy changes this government has signaled on affordable housing and mixed-tenure developments. This hasn't been a core area for Persimmon in recent years, but we've been building our capabilities, and our objective is to secure additional output and enhanced returns.
We're pleased to already be shortlisted for a partnerships contract and to be in discussions with councils and other investors about potential multi-year opportunities, where it makes sense, given the size and strength of our land bank and the potential opportunities that might arise to unlock value earlier in light of the proposed policy changes. We've identified 23,000 plots in our land bank that deliver from 2029, that provide opportunity for accelerated delivery. Whilst the financial positions of RPs is now widely recognized as an important challenge, I'm pleased that the good relationships we've built in the sector means this year's delivery of 106 appears secure.
It's also good to note that in her statement of the House last week, the Deputy Prime Minister confirmed that details of future government investment in social and affordable housing will be brought forward at the next spending review, helping them to deliver their ambition of the biggest increase in affordable housing, house building in a generation. At the premium end of the market, we've been enhancing our use of Charles Church. This area of the market has been more resilient in recent years as high-end cash buyers are less impacted by mortgage affordability. Whereas we saw first-time buyers drop by one-third post the crash, the premium market dropped by only 6% over the same period. We think our Charles Church brand has further value potential.
That's going to help us to diversify and build a stronger, more resilient business, alongside the likely future growth opportunity arising from the government's affordable growth ambitions. We've reviewed our Charles Church specification to enhance it. We've rolled this out in a limited number of our existing locations, including Lichfield, Truro, and Bristol, and have been pleased with the results that have delivered considerably higher ASPs and gross margins alongside good sales rates. This has proven to us that we have pockets of strength in our existing land bank that we've underexploited so far. By identifying sites within our existing land bank, as well as new sites coming to the market that would benefit from premium housing, this product diversification will help enhance our profitability and improve our resilience across the cycle, whilst, of course, retaining a strong focus on our core Persimmon brand.
When an improving sales performance is added to our strong and growing land portfolio, it's a very powerful combination. So let me turn to our land bank. Persimmon's land bank has been an historic source of strength. The embedded margins remain very strong at around 29%, despite our push for growth. At 30th of June, the number of plots with a margin below 10% had reduced by 22% compared to December. 56% of our plots in our land bank are now generating a margin over 29%. The cost to revenue ratio embedded within our land bank remains strong at 11.6%. As you can see from the slide, we've continued to invest in land in recent years while prices were falling.
We've invested GBP 1.3 billion in land and utilized GBP 880 million of it, giving us a strong investment to utilization ratio. That positions us well for the future. Our strategic land holdings remain an important driver of value for the business. During the period, 41% of plots were brought into the business came from our strategic land bank. Also, during the business, we secured options on a further 1,029 new plots. We're converting our land bank into more open outlets, allowing us to grow them from 258 December to 266 at June.
In the second half, we plan to open at least another 50 outlets, and we're currently progressing over 40 new outlet opportunities for the spring 2025 selling season, that could see us growing our outlet network by a further 3%-5% by April of next year. How quickly this convert into completions for next year obviously will depend on the prevailing market at the time. Planning does remain difficult, but we've been working for the last 2 years to improve our own performance in our engagement with local authorities and our design quality. That secured more permissions, more quickly. The planning reforms the government has announced, including last week's update to the NPPF, have the potential to add further to this growing position in the coming years, albeit the changes will take time to affect delivery.
However, it's clear that the new government is already having a positive effect on planning consents. On one day, two weeks ago, we secured Reserved Matters on nearly 1,100 plots across 4 Labour-led authorities. That's nearly 10% replacement of this year's completions in an evening. Our continued investment over the last 18 months or so means that we can remain disciplined and only target land opportunities that pass our stretching criteria. When taken together, we have the compounding benefit of an improving sales rate and a growing outlet base. And as our build improvements show, we're delivering high-quality homes more efficiently on our sites, to which I'll now turn. Our investment and innovation here is already making a real difference. We're now building timber frame houses a week quicker this year compared to last, and we're investing and innovating further to secure additional efficiencies.
A new automated line in our Space4 factory will be operational next year, manufacturing frames more efficiently. The photo on the slide shows the trial house we've erected as an experiment at our Space4 factory this year. Using our timber frame and roof tiles, coupled with TopHat's brick facade product, we went from slab to watertight in five days. Just to put this into context, it normally takes 12 weeks, requiring skilled and scarce bricklayers. This is really exciting and shows the opportunity further innovation has for greater efficiencies to come. Given an average site overhead cost of GBP 13,000 per outlet, the financial prize of even one extra week of saving in build time is significant. At our planned Loughborough factory, the combination of larger frames with closed panels could secure a further two weeks of build efficiency.
Our own brick and tile factories remain equally an asset. They provide security of supply for high-quality products, cost-effectively. That benefit will only grow as market conditions improve. Our vertical integration strengths and innovation and build efficiency is squarely aligned with the new government's targets to rapidly increase supply. Indeed, I believe that moves to increase off-site manufacture will be the only way to deliver these targets efficiently. Having taken you through our operational improvements, I'll show you how this is reflected in our current trading and where we stand now. This slide shows the forward order book at 30th of June, compared with a year ago. I also wanted to show the movement in the forward order book since the start of the year. Compared to a year ago, the total value of our forward order book is 3% higher.
Within this, our private forward order book is 22% higher by value, with volumes up around 18% and ASP up by 3%. Since December, the total order book is up 34%, real progress. Since the start of the year, the private order book is up strongly at 73%, with ASPs up 9%, reflecting the weakness in the December forward order book that we flagged in March. In the five weeks since the period closed, our underlying sales rate is up 34% year-on-year. So my message for the first half is simple: We've delivered a good set of results. We're growing and have enhanced our key operational capabilities. We have an expanding outlet network and strong land holdings that we've continued to invest in. We're selling better from more sites, and we're building our homes more efficiently.
And really importantly, all of these areas have more improvements to come. We're very well placed to benefit from an upturn through the next cycle. Persimmon is now a growing company with growing opportunities. The reforms set out by the new government show that they're looking to achieve an unprecedented acceleration in the delivery of new housing, and there's a significant focus on affordable housing within that, which is one of our sweet spots. But at the heart of their agenda is a presumption that developments will be of a high standard. Persimmon's well-placed to deliver this. The work that we've been doing over the last four years has prepared us well to meet these expectations of higher standards.
Our continued investment in land means that we're immediately ready to respond to the new government's agenda, opening the opportunity of home ownership to thousands of families a year. We're also delivering the broader community infrastructure that the government rightly demands. In recent years, our new homes have funded thousands of new school places to local communities, for example, among many other local benefits. We already have a strong base to build from, and our three strong brands and unique vertical integration capabilities mean we're well-placed to deliver even more as the reforms take effect. Our core Persimmon Homes offer uniquely affordable opportunities for home ownership, with prices 20% below the market average. Our new house type range is also attractive to the growing BTR and partnership market.
Our Westbury Partnerships business has established stronger relationships, and we're looking to grow in the coming years as we diversify our business. And a renewed focus on Charles Church is delivering high-value homes in a market segment that appears resilient. The key operational credentials we've worked hard to strengthen in recent years mean we're now well-placed to meet the government's growth ambitions. We have strong land holdings that we continue to invest in. We're growing outlets, and with the announced policy changes, there's opportunity to grow faster. These changes also mean we're actively reviewing our strategic land portfolio to identify opportunities to accelerate any sites through the planning system, to open them earlier than previously anticipated. We're delivering our homes more efficiently and investing and innovating to drive even greater improvements in the coming years.
And our unique vertical integration provides security of supply to respond nimbly and efficiently to an upturn. Our strong forward order book and improving sales rates are giving us increasing confidence in future delivery. While I'm sure we'll face many challenges ahead, there is, for the first time in a number of years, an exciting opportunity that Persimmon can play a key part of. But of course, we'll remain disciplined, keeping a sharp focus on margin and returns. We'll maintain a prudent balance sheet and recognize that our shareholders look forward to a growing dividend return over the coming years. So in summary, the key points for the first half are, we have maintained the embedded gross margin and the land bank at 29%.
ASPs have remained resilient compared to a year ago, but are growing from the lows we saw at the end of last year. Sales rates improved from Q1 to Q2 and remain strong in Q3 so far. Taking all this together, for this year, we expect completions to be at the upper end of our previous guidance, and this is positioning us for a clear return to growth this year. Also, as I said when I started this morning, we expect margins to recover in the second half, bringing us back into line with last year. Over time, we believe that margins and returns can recover to at least 20%, which, given the structural challenges the industry has faced, our need to improve quality, increased regulation, and the changing nature of the market, would be a considerable achievement.
Added to this, we have a high-quality land bank, which we've continued to invest in. With 38,000 plots owned with detailed planning, we're very well positioned to respond immediately to the new government's plans to deliver a near unprecedented increase in housing supply, as well as this providing excellent visibility to 2025 delivery. Persimmon is a strong, vertically integrated, multi-brand business with private ASPs over 20% below the market average and a market-leading land bank delivering excellent returns over the long run. We're a growing business with growing opportunities, and I'm excited to capture them. On that note, let's turn to questions. First one at the back here.
Thank you. Good morning, it's Harry Goad from Berenberg. I've got two, please. Firstly, on partnerships, interesting comments you make there. You probably won't, but could you give us a feel for maybe what sort of proportion of annual completions we could expect from partnerships over the medium term? And second on partnerships, you alluded to the positive implications on returns, but should we think about some considerations on margins on the other side? The second one was around M&A. Interesting that you just made a comment on it. When you think about M&A, is that to simply boost the land holdings in the business, or do you think about it in terms of diversifying maybe the product offering? Thank you.
Oh, thank you. I think we unquestionably will see an increasing proportion of partnerships going forward, which is driven by the government's desires to increase the affordable housing program. It's difficult to comment precisely at the moment. We need to see what the government's plans are when they make their statement in the autumn, and how they plan to fund that program. But I think it's heartening to see the direction of travel there. So because it will probably be an increased proportion of our mix, you're right, in terms of headline Persimmon margin, group margin, it will be impacted. However, returns will improve.
Which is why I drew out in my speech, the work we've already done on looking at our land bank, and in particular, the focus on the 23,000 plots we know we've got in it for delivery from 2029 onwards. You know, that's a long way out. And so the way we're looking at it is, if there is an opportunity there, is to deliver additional profit over and above what we're already planning to deliver, and to deliver incremental improvements to returns. So, can't be clear on precise numbers at this stage, but I think the direction of travel will inevitably be driven by the government's agenda.
Looking at our land bank, looking at our strategic land bank, where we do see there's opportunities, if we sift that through, and shake that out, Grey Belt, and so on. Of course, it depends on the viability on a site-by-site basis, but, there's clearly opportunities there. I think in terms of M&A, look, the first point I'd make is we don't need to do it. You've seen that this morning, 82,000 plots in our land bank. We've got a strong strategic land bank, and I think crucially, in the short term, you know, nearly 40,000 plots with owned and detailed planning. But if we were to do it, it would, first of all, and critically, need to stand up financially on its own merits. It would need to be additive and not dilutive. It would need to be complementary for us through landholdings, through diversification, as you pointed out, and through synergies.
Thanks.
One at the front here, please.
Thank you. Gregor Kuglitsch from UBS. Can I come back to the sort of the 300 sites, which I think is sort of been a long-standing target? You're kind of flagging maybe you can grow 3-4% if things go well this time next year. So kind of doing the math, are you sort of thinking this is a 3-4-year program, or you think you can accelerate that? And then, I suppose coming back to partnerships, is it the sort of principal idea that whatever you generate from that would be on, on top of that, or, or is it sort of in that already? And then maybe a third question on, on margin. So you reiterated the sort of 29% gross. I think in your final remark, you sort of quoted a 20+, which I guess is EBIT. So I guess the question is: Does that take into account the 20%+ margin ambition, sort of a dilution from partnerships? Is that sort of baked in there to sort of reconcile from the 29, and what you quote in the land bank, and what you're thinking on the EBIT medium term? Thank you.
Do you want to go?
You want me to take those?
Yeah.
Yeah, okay. So, so I think, Gregor, thank you. In terms of outlets, yeah, so look, we're looking to grow, as Dean said, 50 or more new outlets this year, another 40 or so in the first half of next year. That's gross outlets, obviously. So, but that's all about growing the overall net outlets, so we'd expect to see the net outlets growing. So we expect, we are looking to grow back towards 300. I don't think, you know, we want to put a precise time on that because it will depend on so many factors in terms of the market, and sales rates and so on, but we're absolutely growing outlets and growing the outlets, and that's, that's the target we've, we've set ourselves.
So in terms of margins, I mean, the 20% target that Dean talks about, you know, that does incorporate a change of mix. You know, so we've talked about partnerships already. We've talked in the presentation about additional investor sales and bulk sales. Obviously, they have a different margin play in the private development as well. And there's also, you know, various challenges around regulatory costs, Future Homes Standard. You know, we don't know what will happen with nutrient neutrality and what that will mean in terms of cost as well. So there's various kind of things which are playing into the margin progression, which is why, although we're confident of increasing our margins, you know, I'm not sure I necessarily see a kind of straight line growth. I think there may be some, you know, it may be a little bit flatter as we face into some of those initial challenges and still have the carry forward inflation from a couple of years ago, but those targets do factor in the various mix that we see coming through the business as we go forwards.
Partnerships, is it additional?
I see, yeah, I see partnerships. We see partnerships as a, as additional and complementary.
Yeah, as a core business?
Yeah. Yeah, yeah, yeah. And look, you know, we're shaking out. I think we've identified 20 potential additional outlets, sites, that could come forward, but there's a lot of work to do on that. And government funding is, you know, what they say in the Autumn Statement is key.
Thanks. Ami Galla from Citi. Just a few questions from me. The first one was just on the NPPF reforms that we've heard so far. You know, and even the, just the assumption that the process, the planning system, starts improving, and the time taken to get planning permissions is meaningfully better. At what point do you really see that benefit come through? I mean, from a timeline perspective, if you could give us some guide there. The second question, more like clarification: You gave us an example of mitigation of nutrient neutrality issues that you had on your site. Is the mitigation the route out, or do you expect further proposals or regulatory changes from the government to fix the nutrient neutrality issues across sites? And the last one is, more on the Charles Church spec changes that you've talked about.
Is that, is that a factor to think about the gross margin, i.e., does that come at an additional cost? When we look at the H1 gross margin from Charles Church, the reduction over and above the group average, was that just mix, or that's just additional cost going to the product?
Shall I have a go? In terms of planning reforms, I think we will start to see it really stepping into gear in terms of delivery of output from 2026. I would expect the pace of that to continue to accelerate, given what we've seen so far. You know, what we've seen so far is extremely welcome. Clearly, there is an intent to be interventionist, and that is resulting in planning consents coming through much faster than we've seen before. I mean, I think we've even seen one in 13 weeks, which, I mean, certainly in my time here, I haven't seen that. So, you know, we're stunned.
In terms of nutrient, look, it's clearly on the agenda, but we'll have to pay for it. The Housing Minister doesn't want to legislate for it, but maybe he'll have to. So, he's hoping that everyone plays nicely at the moment. We'll see. But, you know, it's a backstop option to make it happen. But, you know, you should expect, I suspect, a tariff system, and that tariff system will be, you know, escalatory, in charge scales. So, which is pretty much really what we're doing within the business now anyway, to bring things forward. And then in Charles Church spec changes, no, I mean, the cost in the first half didn't impact the numbers.
But the opportunity, you know, where it's deployed appropriately, and I think there's a bit of our own confidence issue here. Where we've done it, we've seen a 3-to-1 payback ratio on revenue to cost. And look, it's a unique feature about our land bank that I don't think I've done a particularly good job at selling to you. But you know, we have some great diversity in our sites, and you know, quality of sites that can cope with partnerships and cope with a higher product spec as well. And you know, the Bristol and the Truro sites that I mentioned are great examples of that, where you know, we can sell million-pound houses. Not that we do many of those, but we can, we can sell them, and we can earn a good return on them. And critically, where we've chosen to put them so far, it hasn't impacted sales rate and therefore return on capital. So we've been impressed with what we've done so far. Andrew's been to one of them so far.
I've been to three of those sites.
Three of them.
And y ou've been to three.
It's impressive.
I'm holding back.
Yeah. As Dean says, actually, when you talk to the guys on site, the extra cost of the investment in the spec has more than paid for itself in the sales prices they're getting.
Yeah. Yeah. So look, we're excited by it. It's a, it's a good additional tool for us, and it's underexploited so far in the business, I think.
Thanks. Will Jones from Redburn Atlantic. Try three, if I can, please. First, perhaps you just talk us through how you've approached the first half from a price perspective and price tactics, and whether you think the outlet market's ready for either price up or incentives down. The second may be, Andrew, you mentioned about potentially a flatter initial trajectory on margins ahead of the medium-term aim. But if we look to 2025, and I appreciate too early for guidance, but if volumes increase, I think, by the high single digit or so, the consensus thinks they will, would you imagine that to be a gross margin positive year? And perhaps just as you come into the business and think about the balance sheet and appropriate capital structure, what's your, your view on that, and therefore, what would make for surplus capital in time? Thanks.
Shall I do the first two?
Yeah.
And then we'll maybe share the second one, and you take the third. So, as we highlighted, incentives are still a feature of the market. Look, affordability is, without question, still our biggest challenge. But it's improving, and we see it will continue to improve. If we look at, you know, if I think about some of our hardest pressed regions, if we go back to, you know, the depths of the downturn, in the autumn of 2022, then in our worst affected regions, less than one in three of our customers could secure mortgages. Now, in those same regions today, it's better than one in two, and customers can get, so there's been a mortgage and pass the affordability test.
So there's been a whilst there remains an issue, there has been a clear improvement. I think the recent rate cut and small improvements in mortgage rates is more important to sentiment than it is to the overall affordability calculator. But as we get more rate cuts, I think affordability will then clearly improve. I think also we think in terms of looking at the strength of wage increases and, you know, that's 5%-6%. Another feature, which I won't say is unique to Persimmon, but it very much features in our business, is that a lot of our customers are key workers, doctors, nurses, policemen. And so the recent pay awards are good news for us and are to come.
You know, we sell to a number of junior doctors, so a 22% pay award was cheered on by us. So, clearly, it, the market's still tough, affordability is still a challenge. Incentives are still very much a feature of the business. I highlighted it in my speech. They've gone up, you know, nearly 130 basis points. But, whilst price increases aren't quite offsetting them yet, they're pretty close to. You can see in the forward order book as at, fourth of August, I think it is, that, ASP in the forward order book is up 1.5%. Private ASP is up 1.5% compared to a year ago. So we are seeing increasing ability to price.
And while not all parts of the country are at the same level of strength at the moment, mostly they're traveling in the same direction of travel. So that, that is, that is clearly good news. So I would expect and hope that over the course of the summer and autumn, the quantum of incentives will reduce. But there's no doubt about it, every customer that comes in the door wants a deal at the moment, so we just need to think about that. In terms of margin for 2025, I mean, we do expect it to be a positive gross margin year.
A point I would pick out in the results of the first half is that we have had to invest in cost of sale in terms of selling, and we will continue to have to do that, and I think it cost us about 120 basis points of margin in the first half. But we're confident we're getting a return on that, and I think a real opportunity for us is to get to a proper digital marketing platform, and a proper CRM system. You know, we're getting much better at getting customers into the door. I just don't want to let them out the door until they've bought something. So we need to get better at that, and we need to invest in that. So we will see margin progression.
I think what Andrew means in terms of the trajectories, personally, I think it will be bumpy. I think we will see, I think, I'm confident over time our margin will improve. You know, you see the balance in our first half. Again, of the negative impact of high build cost inflation still coming through and weak ASPs. That's what dented our margin in the first half. Reverse that out, and margin will grow, so there's potential there for good growth. And critically, we've kept our operational capabilities in place so that we can grow our volumes, and the vertical integration we keep banging on about is critical to that. So, though, as you look ahead, I think, you know, regulatory changes, particularly around Future Homes Standard, which we still don't know what they are, they will, I think, see a bump in the road in margins when they come forward in the year, but we'll move on quickly from that.
Hi, well, shall I just pick up on the capital structure? So what I tried to talk about in the presentation, so my view is it's right to look at this through the cycle. So the business, I think, has done exactly the right thing. Over the last couple of years, in the trough, they've continued to invest in capabilities, which Dean's talked about, and they've continued to invest in land, and that's put us into a really good place, ready, you know, well-positioned for the improving market. So I think that's exactly the right thing to have done. And what that means is the balance sheet is you know, has a little bit more leverage.
The cash is lower than it would otherwise have, but that's the right thing to do at that point in the cycle. So I think it's right to look at it across the cycle. I think, you know, the challenge in terms of at what point and what's the trigger for, you know, how much is too much, and when do you get to excess? I mean, you know, kind of let the market improve a little bit first, would be my first thought, kind of right at the start of the improving cycle. And, you know, we'll see how the cycle plays. It'll be a different cycle to the last one. You know, there's, I mean, every cycle is different.
So, but I think the important thing is that we want to keep it, the balance sheet sustainable through the cycle to make sure that we are, you know, we are distributing at the bottom, but we don't overdistribute, you know, later on in the cycle. So we just keep that nice, that nice balance and that sort of medium-term view. So I'm not gonna get kind of drawn onto a particular threshold or trigger. I think it's too, too early to do that. But I think, you know, it's that balance between just looking at this across, you know, that, that longer term view or long-term lens.
Pass to Glynis.
Thank you. Glynis Johnson, Jefferies. I'm gonna go with four. Apologies. Firstly, can you just confirm or deny the new land that you're bringing into the land bank, is it matching the embedded margin of what's already in there? Number two, just in terms of your land going forward, I'm just wondering, what do you think is gonna be the proportion strat land versus open market land? One of your peers earlier in the week has talked about, for example, the number of plots that sit in strategic land, which have active planning, which have, you know, sort of been put forward on the basis of a more sensible planning environment. I'm wondering if you could give us a comparable number or even relative to where you've been before.
Next, just in terms of partnerships, forgive me, are we talking about just forward selling more of the product on sites you already own, or are you talking about buying sites specifically for a greater proportion of affordable? The definition of partnerships is quite a varied one. I wonder if you can clarify what your vision of partnerships are, and will they be confined to new town sites where the affordable requirement is high, or is it gonna be more proactive? And then the last one, Andrew, welcome. Your predecessor came in and put a number of investments in place to, you know, changed a number of the way things work. You've come in. What do you think needs to be done still? What do you think has been completed? Where, you know, what should we anticipate in terms of what you do in the role?
Do you want to start with that?
Well, should I start with that one? Firstly, good morning, Glynis. So, look, I've come in, and I said I've actually been really impressed by what I've seen. Look, the business has invested in the last few years, but I think there is good opportunity to do more. I think we can do more on digital, on data. We can do more on automating, you know, some of the functions internally, and that will help drive efficiency and better support for the business, and particularly as we go into a, you know, hopefully a growing market, that will allow the back office, if you like, to be more supportive of the front office.
So some of the investments that we've made in terms of marketing that Dean talked about, I think there's similar opportunities in some of the back office functions as well. So that's the kind of area where I think we can make a big difference quite quickly, so. B ut as I say, you know, for me, the key thing is that the people that I've met around the business, as I said, in all disciplines, are good, are enthused, are proud of what they're doing here. And, you know, I'd much rather start with that and then focus on investing in systems and processes than the other way around. So that's a really, you know, good start point for me.
So in terms of your other questions, Glynis, in terms of new land, it's broadly in line. Some don't, some up, some down. You'd expect that. It's the nature of the flow. But as you can see, the margin overall is maintained. The bottom end is improved a little bit. So, you know, we're happy, we're happy with that. I think the strat land question is a really interesting one because we, we, you know, you can see just that 40% came in this year. That's in line. That's what we normally do. I do wonder whether, and we need to do the work, and we need to see whether that might increase, as a result of, government proposals. But we can't answer that question at the moment. I don't know.
In terms of partnerships, I think it's both. It's sites we own, and it's also maybe new sites that we might buy. If the returns criteria are right, it's risk and return, isn't it? And, you know, if we can cycle, I guess what really excites me is if we can cycle those sites fast, particularly with, you know, when we get the new line, and we get the new factory, and, you know, we hope we can perfect the TopHat brick facade, and it's accepted in the market. So I know there's a lot there, but, you know, that's what it's about, isn't it? It's about experimenting and innovating. Then that could be a really interesting and an exciting opportunity for the business. Won't be high margin, but it will be high return. And, you know, I think we're well placed to take advantage of that.
I'll take the one at the front.
Morning. It's Charlie Campbell at Stifel. I've got two, and they're unrelated, I'm afraid. But the first one is on first-time buyer. I just wonder what, what the sort of mood music is from first time buyers and whether, you've, you've very kindly given us a split of, of completions to first time buyer. But just wondering if that mix is running a bit richer in the reservations? Obviously aware that rents are going up really quite, quite fast, and that you would have thought might tilt first time buyers, into making more decisions more, more quickly. And the second question is on the new government. I think a lot of investors are sort of worried that, Labour might get greedy in terms of asking for more social on just general sites around the place. That seems to be a common concern. Just wonder what your view would be on, on that question.
Thank you. In terms of first time buyers, I mean, the appetite is on a basis, but the issue is affordability. I do expect that will improve. We've been flat in the period. Affordability is almost always affecting our first time buyers. They're almost always the people that aren't qualifying. So, you know, it remains challenging, and it's particularly pronounced in the Southeast. So it remains an issue. I think it will improve, as I said a few moments ago. But it is what it is at the moment. Clearly, the risk is there that a greater mix of affordable will be required.
They've been quite specific, though, at the moment, in terms of saying: Look, it's 50% from green belt, and it's 40% for new settlements, as they define new settlements. And clearly, us, like everybody else in the industry, will need to look at that and figure out whether that's viable for us on a case-by-case basis. In some cases it will be, in other cases it won't be. My discussions with them so far, they seem very level-headed about that. They seem to understand that. So I am not concerned at this stage, but I recognize, I, I recognize the concerns. But I, I come back to, you know, repeat what I've said, which is, we watch with interest, the Autumn Statement.
Thanks. Sam Cullen from Peel Hunt. Just got two. Going back to the plots with planning, 8% increase year-on-year, I think very slightly down versus December as your completions have gone up. If we ignore kind of the greater proportion of whether it's built to rent or affordable, you might do out of that land bank, would you expect your land bank in years to continue to shrink over the coming years as outlet numbers increase, or do you need to kind of reinvest capital into the land portion of the balance sheet? That's the first one, and then the second one is: In terms of your strategic land bank, do you have a number of what proportion of that is in Green Belt at the moment?
In terms of your first question, I mean, I'm sorry, that's really crystal ball gazing. You know, the beauty of having a strong land bank means that we don't have to do every deal. And, you know, you just can't look from period to period and say, oh, it's gone up, or it's gone down. You know, you've got to look at the overall strength of it. So don't know. You know, we're pretty secure. We've got a good glide path of supply, and it really will depend on market conditions, and deals we're doing on a case-by-case basis. I can't answer the Green Belt, Grey Belt question at the moment because that's work in progress. So we'll have to come back to you in due course about that, but we will have an answer in due course. There's one here.
Good morning, Charlotte Edwards from JP Morgan. Just one question from me. We're obviously pretty excited about the Labour plans, but obviously, there probably is a skill shortage. So if there's anything you can give on your conversations with the government that you expect to, to sort of, remediate those concerns.
Yeah, well, that's why, you know, I've said that I think off-site manufacture is absolutely crucial to the future. There is a skill shortage, and it's something the industry repeatedly has to grapple with as numbers ramp up. Off-site manufacture is gonna be the only answer to it.
Sorry, I arrived a bit late. Steven Rawlinson from Applied Value. Just a question about moving forward. I mean, in terms of margins, Persimmon was getting 29%-30% operating margins at the peak, and ROCE in excess of 40%. Is that? Do you see that happening in the future, and if so, would there be a political kickback to that, which might cause further policy changes of the style that Charlie alluded to earlier on? I mean, is there a board discussion in and around that whole area of what is an acceptable ROCE and acceptable gross margin moving forward, or acceptable net margin, sorry, moving forward? And are you mindful of that and how the government might therefore change policy to adapt to others who are prepared to accept a lower margin?
I don't think the government has enough players in the industry to be choosy about what, who's gonna build. I mean, when I speak to them, certainly the housing minister, he's very well aware of the enormity of the target that has been set for him, and needs the industry to play along with that.
So you're saying that you could be moving it back up to 30% operating margin and you've given me a political answer.
But I.
It's very good.
But I think that, you know, my dealings with them so far, very sensible, and recognize that they need the private sector to play a full role in the delivery they are looking for. On that note, I seem to have killed every question. So look, thank you very much for joining us today. Delighted to have Andrew on board. As you can see, he's really been transformational for us already. We've done a lot of work to improve our capabilities. You know, we're in good shape for this year, and we're excited about the future. So thank you very much for joining us this morning.