All right. Good morning, all. Thank you for joining us today. Despite the extremely challenging conditions, which were almost overnight, there was such a significant and dramatic change in the market. I believe we delivered as strong an outcome as possible last year. We delivered an industry-leading margin while still ensuring a robust balance sheet. At the same time, we continued to significantly improve our product offering and service, and in doing so, we positioned the group for growth in 2024 and beyond. I'm very grateful to my colleagues who have worked so hard to deliver this. I'm very proud of them and grateful to be part of such a great team. Before handing over to Mike for the detailed numbers, I'll briefly pull out some key points on how we've navigated such a challenging market and, in doing so, what that's achieved.
So let me start by looking at the key areas where we've made great strides in the year. We adopted a new approach to planning that saw our owned land with detailed consent grow by 7% in the year. You've heard me talk before about our focus on improving customer service and build quality. The result was that last year we combined our highest quality new homes with our highest-ever customer satisfaction score at almost 93% and a significant reduction in reportable items. Three years ago, when I became CEO, we didn't have a marketing function or any digital marketing capabilities. Our investment here helped our sales rates improve from the depths of late 2022 to an average of 0.58 across the year. So what's that achieved? As you can see, our completions reached 9,922 in the year, ahead of our initial guidance.
We drove further vertical integration through the business, reduced build costs, negotiated lower rates with our subcontractors, and secured significant cost savings in our overheads. Just as we guided last year, margins fell, but through the actions we took, we worked hard to maintain the fall to 14%, which is ahead of our competitors. By carefully aligning build rates with sales rates, controlling our WIP, and investing selectively in the land market, we delivered a robust balance sheet at the year-end with a cash balance of GBP 420 million. Our current forward sales position has grown 4% compared to last year to GBP 946 million. In this challenging market, our focus on Persimmon's core strengths of affordability and efficiency has been combined with action on key priorities such as quality and service, and it's this combination which has produced a compelling proposition to customers.
I'll say more later on the actions we've taken to make us match fit for the future. Mike will now go through the group's financial performance in more detail.
Thanks, Dean, and good morning, everyone. Our financial performance for the 2023 full year has been better than we expected a year ago. Against a challenging backdrop following the mini-budget in late 2022, we delivered total volume ahead of our expectations. Volumes, however, are down on 2022, but we've achieved growth in blended average selling price of 3%. As a result, statutory and housing revenue are down year on year. This, as expected, has a negative impact on our reported margins, yet our underlying housing operating margin at 14% remains industry-leading. After net finance income of GBP 5 million, we have generated a profit before tax of GBP 352 million. Finally, I'd like to highlight the dividend. The board has today declared a final dividend of GBP 0.40 per share, bringing the full-year dividend to GBP 0.60 per share in line with our previously announced capital allocation policy.
The next slide is an update to a slide we first used this time last year, where Dean provided a possible 2023 margin outturn against a few scenarios. Here, I'll use the bridge to take us through the key components of how we moved from 2022's 30.9% gross margin to 2023's 20.5%. As you'll see, much of what we said could happen happened. Build cost inflation has been more stubborn than we expected, and after taking into account any house price inflation, the net effect is a decrease in margin of 480 basis points. The reduction in volume and change in sales mix has had a significant impact of 270 basis points on our delivered margin. Our conscious decision to enhance our sales and marketing processes, along with an increased use of cash incentives, has resulted in an additional margin deterioration of 2.2%.
After reflecting the one-off cost that Dean noted in January, we're reporting an underlying housing gross margin of 20.5%. The reduction in volume has also impacted the overhead recovery efficiency of the business. This, along with targeted investments in improving our IT capabilities and wage inflation, resulted in a reduction in our underlying housing operating margin to 14% from the 27.2% reported last year. Despite this, we're pleased to be able to report our margins remain industry-leading. In response to the challenges faced, we've been proactive in managing the cost base. Headcount across the business has reduced through targeted redundancies and a recruitment freeze. We estimate that these changes will give us an annual cash saving of around GBP 23 million.
On the next slide, I'll dig a little deeper into our underlying trading. We delivered 9,922 new homes, of which 77% were to private purchasers. This was 82% in 2022.
2023's volume delivery includes bulk sales totaling 780, 12% fewer than the number delivered in 2022. These sales are spread across a number of purchasers and have been sought through locally negotiated deals. Pricing has remained resilient through the year across all brands. Private average selling price at just below GBP 286,000 were 5% ahead of last year, whereas our investment in our partnerships team continues to reap rewards with an 8% year-on-year increase in average prices. The challenging sales environment has, however, meant incentive usage increase as we've moved through the year. Across the year, average incentives were around 4% compared to 2% in 2022. We continue to focus on being affordable and attainable for all our customers. 63% of our private completions had a selling price less than GBP 300,000.
Our private average selling price remains over 20% lower than the national average, and we delivered 31% of our private completions to first-time buyers. Moving on to one of the key components of our business and a key factor in our future growth ambitions: land. We've continued our disciplined approach to land investment. In doing so, we've maintained our focus on capital efficiency and identified new sites across the UK where people want to live. In total, we've added 7,230 new plots to our owned and under-control land holdings. These plots are spread across 42 locations, with 23% of the new plots having been successfully pulled through from our excellent strategic land portfolio. Good examples of this being the 469 plots at our site in West Somerton, as well as the 350 plots at Market Harborough.
We've also seen a number of planning successes, where we've obtained detailed planning consent on around 11,000 plots. In all, 58% of our own plots now have a detailed planning consent. This is a 7% increase on the position a year ago and now provides us with great visibility for the near term. Plot visibility is important, but the quality of our land holdings is just as important to us and is a key part of us being able to deliver industry-leading margins. With our owned and under-control land holdings currently showing a cost-to-assumed revenue of 11.6%, we can be confident that we'll continue to deliver margins at the top end of the industry. This is further evidenced on the next slide, where I'll look at the embedded margins within our owned land holdings.
Based on assumed revenues and current costs, the embedded margins within our owned land holdings remain an industry leader at 29%. The decrease from prior years is reflective of the tough cost environment we have faced into June 2023 and the challenges all our teams face with minimal sales price inflation to help offset build cost inflation. However, we remain confident in the quality of our owned land holdings. Based on current costs and revenues, we would expect 92% of our plots to deliver a gross margin in excess of 20%. Even with an immediate 10% fall in private sales price across all owned plots, we would only see a GBP 28 million impairment in the carrying value of our owned land holdings. These high-quality land holdings are the bedrock to our volume growth ambitions, which in turn will support the group in its generation of free cash.
This leads me onto the next slide, where I'll take you through the key components of the group's cash flow statement. During the year, we absorbed GBP 442 million of cash, ending the year with GBP 420 million of cash in the bank. This is after returning GBP 255 million of cash to our shareholders through a final dividend for the 2022 financial year and a 2023 interim dividend paid in November. Obviously, the lower volume delivered in the year had resulted in lower cash generation from operations. As noted in the previous slides, we've been disciplined in our land investment. The cash spend associated with this investment was a net GBP 398 million, which includes GBP 253 million on the settlement to land creditors and GBP 28 million of land receipts. We've also continued to invest in work in progress through the year.
With a net increase of GBP 167 million, we're now well positioned to grow our outlet network through 2024 and beyond. The increased use of part exchange through the year, which is used in part consideration for new home sales, has also impacted our cash generation. GBP 54 million of the GBP 130 million within other working capital and other movements is due to the increased level of part exchange stock held at the year-end. With a cash position of GBP 420 million at the start of the year and an ambition to further invest in new land opportunities and work in progress, we expect to utilize our new GBP 700 million bank facility during 2024.
Our current expectation is that we will be cash positive at the end of 2024, but will be no higher than GBP 200 million. I'll now quickly take you through the key areas of the December year-end balance sheet.
Our balance sheet resilience continues to provide us with a strong platform for future growth. Net assets at GBP 3.4 billion equate to a net assets per share of GBP 10.70. As I've just mentioned, we've invested more into work in progress. After constructing over 10,000 equivalent units in the year, we have entered 2024 with an EU stock position 2% higher than this time last year. Following the GBP 253 million of land creditors settlements in the year, our deferred land payables total GBP 372 million at the end of 2023. Of this, just over GBP 200 million is payable this year, with the balance predominantly to be settled across the following two years. As already noted, another significant movement in the balance sheet has been the increase in our part exchange stock holding.
At the end of the year, we had 591 properties in stock with a carrying value of GBP 115 million, GBP 54 million higher than at the start of the year. We see part exchange as an important sales tool for home movers and will continue to use this key sales incentive moving forward, the main focus being that we turn the stock efficiently but not recklessly in order to realize the cash tied up. We continue to put customer safety front and centre on the work we're undertaking across all developments where we're responsible for building safety remediation. After increasing our total provision last year by GBP 275 million to GBP 350 million, we're well on the way with the scheduled works. At 31st of December, we have a total provision for all expected costs to complete of GBP 283 million.
These scheduled works are planned to be completed over the next 2-3 years. Having good visibility of capital commitments like legacy buildings provides us with the confidence over our capital allocation policy. I'll now quickly remind you all of the policy and how this will be applied in 2024. In November 2022, we announced our new capital allocation policy of paying a sustainable dividend from the company's earnings, balancing any payouts with capital retained whilst recognising inherent cyclicality in our business. We'll do this by retaining sufficient capital in the business to deploy cash in a balanced way, ensuring we grow in a sustainable way. Last year, we set our baseline dividend at GBP 0.60 per share in line with that paid in May 2023 and in respect to the 2022 financial year.
In November, we paid a GBP 0.20 per share interim dividend in respect to the 2023 financial year. The directors have today proposed a GBP 0.40 per share final dividend for 2023 that'll be paid in July. This will bring the total dividend for the 2023 financial year to GBP 0.60 per share, in line with the payment made for 2022 and the baseline payout previously declared. The final slide is one that we've not previously given in such a formal way, but we feel, given the uncertainty that remains in the market, some general ranges across a couple of key areas may be useful. Obviously, anything on this slide is subject to change if market conditions dictate, but one of the key takeaways is our current view of finance costs in the income statement.
As we expect to utilize our new banking facility through 2024, this will come at a cost to the business. We expect to move from a bank interest receivable position to a net payable. As a result, we expect our net finance costs for 2024 to be somewhere between GBP 15 million-GBP 20 million, a switch from the GBP 5 million net finance income reported in 2023. It's also worth noting that with average selling prices down year-over-year in the forward order book and some of last year's build cost inflation still embedded within our closing work in progress, our first-half margins will be affected. My final point is that we'll continue our disciplined approach to land investment. This will be subject to planning successes and will have a consequence on our cash position.
As previously stated, we currently expect to be somewhere between GBP 0 and GBP 200 million cash positive by the end of 2024. I'll now hand you back over to Dean, who will take you through our operational successes against our five key priorities before we open up for Q&A.
Thanks, Mike. While last year was clearly challenging, we performed well in the circumstances by controlling what we can control. What we're seeing now is the benefit of our focus on the five priorities I first set out three years ago. Let me take a minute to remind you of those, and then I'll take you through how we've been implementing each priority. Recognizing that Persimmon was a fantastic business with many great strengths, but realizing that the world was changing, I set out three years ago five key priorities to make Persimmon match fit for the future. Persimmon needed to change to meet the needs of a changing market.
Growing regulation, increased customer power, and the upcoming removal of Help to Buy meant that Persimmon needed to change in key areas to make sure it was a sustainable business and will continue to prosper for many years to come. My five key priorities identified the areas where Persimmon could build on its existing strengths and enhance its capabilities to meet the new challenges. I'm pleased to say that we've made good progress on all these priorities. This progress has positioned the group to have the potential to grow this year and be in a position to grow quickly when the market recovers. Our response to the need to change has made us a stronger and more sustainable business. The foundation has been a drive to consistent excellence in build quality and customer service, and it's to them I'll now turn, starting with build quality.
We needed to change on build quality. Our industry has been subject to growing regulatory scrutiny. Indeed, last week we activated our membership of the New Homes Quality Code, and last month CMA Market Study made further recommendations on build quality to government. Customers are also more informed in the digital age, with greater choice at their fingertips. When combined with the market we've been in recently, brand strength is crucial. We've been working hard in recent years to make sure we're ready for this, so I'm very pleased we've delivered our best-ever quality homes in 2023. We did this through our Persimmon Way build quality program. The Persimmon Way has driven this improvement through a comprehensive approach that sets stretching new standards with enhanced checking and independent audit processes in place.
This has been supported by new training programs, strengthened management teams, and aligned incentive regimes and investment in new technology. The results are clear. The key measure here is the NHBC reportable items from their independent checks for our homes. These have improved 58% between 2019 and 2023. Our position within the industry has also improved markedly. We were bottom of the pack, 15th out of 15 peers when I started. We ended last year in sixth place. We've improved further since. Our investment in quality is also making us more efficient. We expect lower remediation costs through better build quality. Investment in new technology, such as the Persimmon Way app, is improving our site productivity. We've invested in our own brick, tile, and timber frame products to enhance their quality and capitalize further on the efficiency and security of supply they provide. This is making us a better business.
Our safety measures have improved, and we're proud to have achieved Charter Champion status with Building a Safer Future. We're now building much better quality homes. This improvement in our build quality is also reflected in our progress on reinforcing trust, our second priority. The same trends of greater regulatory scrutiny and increased customer power also demonstrated the clear need to change on customer service. We've invested significantly in customer service in recent years. Another comprehensive program of new standards, investment in colleagues, and technology is again borne out in these results. Our eight-week HBF rating has improved significantly in recent years. As the graph shows, we've gone from being a three-star builder to a five-star builder for the first time in 2021. We have since retained our five-star rating and hope to repeat it again in the upcoming announcement.
Our relative position against our peers has again shown a dramatic improvement. We stood bottom when I joined. We ended the last survey year fifth, and that has again improved, that standing as we enter the new year. Our Trustp ilot score has also improved from 2.9 at the beginning of 2022 to 4.2 now. Persimmon has a compelling customer offer and a position in the market. As Mike said, our new private homes selling prices are on average 20% below the market average. So in order to access these customers, we created a new marketing function Persimmon has not traditionally invested in. We're also invested in our systems to make sure that when customers choose us, we manage the sales process efficiently. Enhanced CRM and digital capabilities are being complemented by a training program for our sales colleagues.
This has provided a clearer customer proposition and enhanced our brand awareness. Alongside this focus on improving customer service and sales, we've been strengthening our platform for growth by maintaining a disciplined approach to new land opportunities and enhancing our planning approval success. To ensure we delivered on our priority of disciplined growth, we needed to change our approach to planning. The recent CMA Market Study identified planning as a key driver in the under-delivery of new homes. While this is a challenge for the whole industry, we focused on what we can do better. Many councils are demanding higher quality applications, and the approval process has become more political. So we've transformed our approach by improving the quality of our applications and enhancing our local political engagement to improve our success rate.
New design standards have improved the quality of our schemes as well as maintained and often enhanced our plotting efficiency. By combining local teams' detailed knowledge and experience with the central team's best practice expertise, we've raised the bar and focus on placemaking, building new communities and not just homes. We're complementing this with proactive engagement with local authorities and key stakeholders to identify how we can deliver what local communities want. Our experience is that we're more likely to secure approvals and also get them more quickly when local communities believe you're delivering new homes for their area, not just houses in their area. This proactive approach also extends to issues such as nutrient neutrality.
We're working with local authorities to identify possible solutions, having invested in our own mitigation schemes, such as in Norfolk, to seek to unlock a number of sites that are otherwise held up by nutrient concerns. Again, the results are clear. Our refusal rate last year was half the average of the previous five years. As this slide shows, we've made clear progress on approvals. There are clear examples where this enhanced approach has secured faster approvals. 98% of this year's expected completions already have a detailed planning permission in place. This is as strong a position as we've ever been in. We're determined to continue to grow our business. We'll continue to invest in excellent new land opportunities at stretching hurdle rates. I believe we're well positioned for a return to growth and have taken further actions to enhance our competitive cost advantages.
Persimmon has key competitive advantages that we have strengthened. Across our land buying, build efficiency, and cost base, Persimmon is improving our cost advantages to sustain our leading financial performance. Persimmon's land bank remains a real source of strength. We reversed the decline in outlets and grew our average number of outlets by 3% during the year. The number of outlets opened did drop towards the end of the year because of faster sales and the conscious decision to delay the opening of new sites until the new year. We remain on track to open between a net 10 and 20 outlets by the end of April, as I previously guided. In gross terms, 13 new sites have opened so far this year, and we expect to open another 17 by the end of April.
During this year, we could see a net increase of between 20 and 30 outlets pending planning approvals. Our aim remains to get back to around 300 outlets in the medium term. Embedded gross margins within our land holdings are 29%. This figure demonstrates the continued key strength of our approach to land buying, as does our low land-to-revenue ratio of 11.6%. We continue to enhance our build cost advantages and lower overhead costs. We identified plot specification optimizations that reduce costs without affecting build quality or customer satisfaction. We renegotiated with subcontractors to drive price reductions. We invested in our vertical integration to drive innovations that secure further competitive advantages. And while we already have a very low cost base compared to our peers, we secured significant headcount savings in the year. These actions helped to enhance our competitive advantages and deliver our industry-leading margin of 14%.
Our investment in a partnership team to drive our engagement with the affordable home sector also continues to deliver benefits. The average selling price we secured here improved further in 2023. The relationships and the credentials this team is building are likely to prove an increasingly useful asset to the business in the coming years. I mentioned our investment in vertical integration above. This investment will play an important role in delivering further efficiency and strengthen our growth platform, and it's to that I'll now turn. We need to invest in innovation to enhance our competitive advantages while meeting the changing needs of tomorrow's homes. We've invested in our existing products to drive their takeup and therefore extend our cost advantages. Our Gen 4 bricks are an excellent brick and embraced by our operational teams in a way that earlier versions weren't.
54% of bricks used last year were our own product, up from 22% in 2020. Our bricks offer saving of up to GBP 1,800 a plot. Our tile is, I believe, an industry-leading product and now provides 81% of all tiles used, up from 28% in 2020, again offering another saving around GBP 600 a plot. Using Space4 for timber frame provides a saving of around GBP 1,200 a plot compared to competitors. And we're also investing further in new products to secure additional build efficiency and cost savings. Our investment in TopHat has given us access to their pioneering brick façade product. We're building a trial home at our Space4 factory that uses the façade with our timber frame, providing a complete, highly insulated, watertight wall unit with windows installed that should start arriving on site in the second half of next year. There is significant potential here.
We believe that this fully enclosed panel could end up halving construction times compared to traditional build methods. Our site overhead per EU is currently around GBP 12,000 a plot. There is significant cost-saving potential here, making us even more competitive, especially in the affordable homes market. With a new robotic line installed in our Space4 factory next year, the manufacturer itself will be even more efficient. Through our partnership with TopHat, we've also trialed their modular units on two sites last year. Each saw two homes built as we developed the capabilities to deliver these highly energy-efficient and low-carbon homes. As well as an interesting product to look to deliver more on our own land, we're also exploring the potential to deliver the units in partnership with TopHat itself on land we don't own.
While a targeted and discrete area of interest, we hope to have more to sell on this in the future. So we're investing in innovation that will drive further cost advantages. Innovation is also at the heart of our approach to sustainability. Sustainability is another area where there is a clear need to change. As well as being the right thing to do, growing customer and political demands have made innovation in this area an imperative. We're always guided by the need to make the necessary changes in as cost-effective ways as possible. Our zero-carbon home trials have tested meeting new regulations with the most cost-effective build solutions. As well as meeting the greater customer concern around sustainability, improved energy efficiency should also see a benefit in bills. We're pleased to partner with Octopus Energy to provide a Zero Bills offer for the homeowner on a Malmesbury zero-carbon home.
But this is also an area of greater political interest, and many authorities are raising the bar to secure planning approvals. As a responsible business, we're innovating ahead of regulation. We currently have around 4,000 homes with planning permission that includes air source heat pumps due to be built ahead of any regulatory changes coming in. In fact, we have 17,000 plots currently with planning permission with air source heat pumps or electric heating sources to be installed. So we're innovating to meet commitments ahead of the requirement, but also keeping our customers and affordability front of mind. We were pleased our commitment was also recognized by the Carbon Disclosure Project upgrading our rating to A minus in the most recent survey. As a responsible developer, we recognize the important role we play in communities across the country, and that's one reason we led the industry on building safety.
Our leadership on building safety starts from a conviction that resident safety is a key priority. We're making good progress on meeting our building safety commitments and expect the next two years to be the peak of the cash expenditure. The table demonstrates that 98% of buildings have been assessed, work on 48% had been completed by December. We continue to believe our provision is appropriate. This progress reflects the drive and focus we brought to this after being the first developer to pledge to protect leaseholders over three years ago. Before concluding, I'll briefly update on our current trading. We're making good progress so far in 2024, and we're trading in line with our expectations. While there were some small, relatively encouraging signs of mortgage rates in the early part of the year, affordability challenges clearly remain.
Our three core brands continue to provide us with a unique position in a market where affordability is key. Our private average selling price is over 20% below the market average. Our investment in marketing has helped strengthen our brand reputation. This investment has helped to improve our sales rates, up 9% compared to last year. It's up 6% year on year when bulk sales are removed. This is reflected in our forward sales position, which has improved further from our January update. The number of units in our current forward order book is up 7% compared to this time last year. Our revenue is up 4% year on year. Overall, our pricing remains resilient. However, average selling price is down year on year. This reflects the different mix of house types and geography of sales this year compared to last.
But as you can see, with private average selling prices in the forward order book recently improving 5% compared to the 1st of January, we don't think this half-year position will be reflective of the full year. We continue to use incentives in a disciplined way. Turning now to my concluding slide. As I said, we navigated a challenging market in 2023 well. I believe we performed as well as possible in the circumstances. I'm pleased that the actions we took ensured our drop in margin was contained and we retained a strong balance sheet. We also are well positioned for growth this year. With the sales rates I've just outlined, our completions target for this year is higher at between 10,000 and 10,500. And we expect our full-year margin to be at least in line with last year. I'm confident in our growth prospects beyond this year as well.
We're growing outlets again, reversing the previous decline, and making progress towards having 300 outlets in the medium term. Our record build quality and customer service performance strengthens our position in the market. Our three core brands provide a compelling affordability offer that I believe will prove a real enduring strength in the coming years. We've achieved this while improving our existing competitive advantages in land buying, build efficiency, and our lean cost base. Our investment in our vertical integration and innovation is and will continue to drive these existing advantages even further. Our progress in all of these key areas provides an exciting opportunity for growth when the market improves. In an improved market, our growing outlet position will help drive volume growth and further enhance sales rates.
When combined with a return to average selling prices outstripping build cost inflation on a sustained basis, the opportunity for strong and sustained margin and profit growth is real. We'll, of course, continue to be disciplined in the way we pursue these opportunities. The progress I've set out today means we now have the potential for strong organic growth in the coming years, and it's an exciting opportunity. It's an opportunity I look forward to working with my colleagues to capture.
Thank you. Arnaud, I've caught my eye first.
Thank you for that. I'll start just with a couple of questions.
Thank you very much, Arnaud Lehmann from Bank of America. A couple of questions. The improvement in ASP year to date, is it mostly a mixed effect? Are you keeping the incentives, or are you reducing the incentives already, or not yet? And also related to that, your sales rate is maybe a little bit below some of your peers. Do you think that's a mixed effect or just the maturity of your outlet, or are you favoring ASP and quality? That's my first question. The second one is on the cash outflows for 2024. The net cash will go down, as you mentioned. Could you give us a bit of color? What is going to be land investment, spending on remediation, and I guess work in progress in the new outlets? And lastly, if I may, I mean, Mike is doing a tough job.
Do you have an update on the timing of the new CFO joining, please?
Thanks, Arnaud.
Of course.
Mike is doing a tough job brilliantly. Shall I? Well, just on Andrew, I'm expecting I will clear Andrew will be here for the August presentation, so we very much look forward to seeing him before that. So shall I do trading and you do cash flow? Is that all right?
Look, there's a lot of moving parts. So if I can, I'll try and talk through all of that and put that all into some form of context. So as I said, I mean, look, we're quite pleased with our sales rates. Sales rates are headline 0.59 against 0.54, which is a 9% improvement, excluding bulk, because this time last year we had First Homes, and First Homes are now part of the 106, and so they've effectively dropped away. So we're at 0.53 against 0.5. So that's a 6% improvement year-on-year.
Against what we're seeing in the market, look, if we'd have took absolutely everything that is on the books at the moment, I could be sitting here today telling you it's 0.67. But we haven't done that because we've only taken what's currently contracted. And maybe that's a bit misleading. So anyway, I'm pleased with the improvement in sales rate. But I think it's worth just pausing for a moment to think about what's actually happening in the mortgage market. And you'll all know this better than me, but it's quite interesting. If I look at all LTVs, for an average two-year fixed, in February 2023, it was 5.44%. February 2024, it's 5.56%. For an average five-year, all LTVs, it's 5.2% against 5.18%. Well, whoopidoo.
On a 90%, which is mostly our customers, this time last year you were looking for a two-year at 5.66-5.61, five-year 5.14 against 5.32. So not a vast improvement out there. However, what we're very pleased with is sales rates have improved. ASPs have gone up strongly since the 1st of January. We've gone from 266 to 280. So that's a 5% improvement. And actually, and forgive me, this is probably going to confuse rather than help, but if you just look at the first 10 weeks of reservations and take out the forward order book in both years, we're at 289 against 289. So it's okay. And I think that is reflective of action we took at the end of last year to push pricing. If I tell you how much, clearly I'm going to go to jail, so I won't tell you how much.
But we did push pricing because this is a margin-focused business, and revenue is obviously a function of both sales rate and ASP. And we've got more outlets open. But I would say with outlets where we're opening them, they take a time to get established. They're slower starting than established outlets, as you'd expect. And you've got to create more of a built environment for customers in this market to purchase. So that's where we are on sales. As I'll inevitably get the question, I might just follow that through in terms of but we're still pulling forward build cost inflation from last year of about 3%-5%. Currently, inflation is next to nothing. We expect it will tick up again April, May time as bricks and blocks and others try and push through increases.
We've seen an uptick in incentives in the first 10 weeks of the year, which I kind of would expect because we pushed pricing. So net-net, there's going to be a squeeze on gross margin, and certainly in the first half. But we expect overall for the full year, the volume increase will offset that if you take all of those effects into the round. But we're only the first 10 weeks into the year, of course, and we've got 30 more trading weeks to go. So hopefully that answers the question. We're a margin-focused business. Do you want to cover?
Yeah. On the cash flow side for 2024, I think the easy element to talk about is the fire safety. We've got GBP 283 million to spend. We're committed to spending that as soon as possible, as quickly as possible.
We're indicating that's going to be maybe over the next principally over the next two years. So you're looking at three figures, GBP 100 million potentially spent going out of the business in 2024, maybe something similar in 2025, and the tail in 2026 and maybe into 2027. The land WIP spend investment is determined by our growth in our outlets, which then is predominantly based on the successes that we're getting planning. We're hopeful that everything that we've got in the pipeline will come through in the timelines that we have assumed. So that will consume cash. So I think in terms of net investment in land, I'm expecting that to be, as I sit here now with all planning following the timescales that we would like, and fingers crossed, we could be somewhere between a GBP 150 million increase in land on there.
That will then drive, obviously, further investment in work in progress to get the outlets open, as Dean's alluded to. My view is I don't think it will be as high as what we've seen in 2023 in our GBP 167 million increase in work in progress. But I think we'll be getting towards GBP 100 million as we sit here now. I may change my mind in April.
Is somebody passing?
James.
Pass the mic along.
Will. Will.
Gregor Kuglitsch from UBS. Can I just come back to margins? So back in January, you kind of made a point of stripping out some one-off costs and sort of called the margins flat on obviously a slightly higher number. Now you're sort of saying flattish. I guess I don't understand what changed or if it's sort of just around the edges, perhaps. The second question is, I suppose you spent a long in your answers so far sort of talking about margin-focused. I guess I want to explore a little bit now that we've got perhaps a better view on things like work in progress intensity and so on, what you think the return profile of the business should be on a, I don't know, return on capital basis rather than purely margins.
The third question is just, can you remind us what your view on M&A is and potentially larger M&A? Obviously, we've seen some transactions in the industry. Then a final question again, sort of obviously, you kind of disclosed that you're doing bulk sales, and I guess you've always done bulk sales. To what extent do you think there's a case to be had to sort of go for more bulk? Perhaps, obviously, that would come with lower margins, but at least get the sort of revenue and overhead coverage up to drive higher returns. What's your view on that kind of business model? Thank you.
Okay. Well, I'll have a go. If you want to chip in, Mike, feel free.
Look, what we said was margin at least in line with last year, and it is reflecting what we're seeing with ASPs and inflation pull through. It's just too early to say where we're going to be for the full year. It's 10 weeks in. So we expect to be at least in line with last year. Who knows? We might do better than that. Obviously, ROCE will grow as volumes grow. I think, personally, without a demand intervention, I don't think from government, I don't think that this business or the industry will get back to the very elevated sales rates that we saw post-COVID with Help to Buy of 1, 1+ per outlet per week.
Obviously, we've got some of those outlets floating around out there, but consistently across the business, I don't see that. Whether we ever get back to the giddy heights that we once had, I don't know. I doubt. But I think we will obviously grow margin through time as volume ROCE as volume improves. And as market conditions improve, as I said, when you open outlets now, you have to invest more WIP to get a more built environment for a customer to want to buy. It's just a fact of life. It's a fact of the market we're in. Turning to M&A, we believe we've got a very good organic growth story ahead of us. And given the returns we can make off of our own organic growth, that inevitably sets a very high bar for any M&A we would look at. Never say never.
I would need to see a very compelling argument both in terms of true economic value creation and/or strategic reasons for doing it. I'm also personally very wary of exposing my shareholders to unfunded, perhaps unfunded, cladding remediation bills out there. So we will be very cautious. In terms of bulk sales, it's market absorption, isn't it? It's surrendering margin today for margin profit tomorrow. So we keep a very close eye on that, and we'll do what we think optimizes the position for the business without undervaluing the tremendous land bank we've got. Anything? I think just on the margin point, we're just very cautious. We're only 10 weeks into the year. In reality, there's another 30 weeks of sales to do before we get to the end of the year. So if you've got a crystal ball you can give us, then I'm happy to borrow it.
I will go up. Promise.
Thanks, Jefferies. Got the mic a little bit earlier, so I have a few more than I anticipated. Just in terms of that margin bridge, if you could help me out a little bit. The incentives, you say were 4%, but the impact on the margin was 2.2%. Is that about timing? Is that that some of those incentives were actually extras that were thrown in rather than discounts? Second one, in terms of the savings, you talk about GBP 23 million of savings year-on-year, headcount reduction. Is that included within your sort of volume element of what helps the margin into 2024, or is that somewhere else in there? Thirdly, just in terms of your guidance, in terms of cash, the difference between your guidance or the range in your cash looked very similar to your range in your land creditors as GBP 200 million.
Is that the land for this year is mostly already agreed, and it's just about the cash outs to come through and whether or not they're deferred or not? Or is it about the scale of land that you'll be picking up? And then finally, just in terms of your partnership business, you talked about how you've managed to focusing on that, driving up the ASPs. Can you just talk a little bit about actually what you mean on that? Is it about being more selective? Is it about being more southern? What is it about what you're doing that's driving that partnership ASP, and potentially anything else that it's driving in it?
Do you want to do the first three, and I'll do the fourth?
I'll try. I think, yeah, in terms of the incentives, it's been on average 4% across our private against the gross price. Obviously, the 2.2 in there has got a few other things in there, not just our incentives, but also the whole of our sales and marketing department and costs in there. The GBP 23 million is a cash saving. It's not something that's going to go direct into the income statement this year. Some of those headcount reductions and freezes have been across site personnel. So obviously, their costs going to work in progress, and then we'll feed through the income statement as the plots are consumed. In terms of then the land, yes, we've got very good visibility of the land that we are looking to buy this year. There's no one-off huge pieces of land.
It's spread across the nation and will vary something between maybe 100 plots and 400 plots. But there's no one-off where we're going to go and buy 2,000 plots in one go.
Apart from one?
Apart from one?
Yeah. Maybe one.
Maybe one, then. On partnerships, I think it's look, it's a combination of things on partnerships. A couple of years ago, we brought a great team in, and that has helped drive consistency and build relationships. We were very poor at this. It was the poor relation of the business, and I'm not sure we treated our partnership customers as we should have done. And I think that was borne out in the quality of what we offered and what they were willing to pay for it. So along with the investment we have made in improving the quality of the private product, likewise, we've improved the quality of the partnership affordable product and tried to provide our partners with a service that they deserve. And I think that has been reflective in the value increase we've seen through this part of the business.
If I just pick up on that incentives point, please. It's the movement between the 2% last year and the 4% in 2023 drives the 2.2. So it's the 4%. It's coming off our gross sales price.
Sorry. The land spend, is it that if you're the lower end of cash for the year-end, you'll be at the higher end of the land creditors?
Yeah. Yeah, yeah. And the land spend, yeah. Do you want to go up just to show non-victimisation?
Thank you. Ami Galla from Citi, just a couple of from me. One was when I look at your land bank slide, the plot cost to revenue ratio of land with DPP and the ones proceeding to planning are significantly different. One is 12.8%, the other is 9.9%. I just want to understand, is there a difference in the build cost profile between those two buckets, or is that a mixed margin improvement that we should expect on the plots potentially coming into planning? The second one was a clarification on the sort of embedded gross margin in the land bank, which is 29%. What is the normalized level of incentives and marketing costs that you kind of budget in to compute that margin?
And the third one is I was interested in your comments on exploring the sort of TopHat owned land and kind of using the modular route there. Would you kind of consider once you're sort of new Space4 factories up and running, would you consider essentially going down the modular route on, say, council-owned land with council authorities, etc.?
Trying to.
Yeah.
First take.
Yeah. So the plots owned proceeding to planning, there'll be a large element of a strategic owned site in there. So they're owned at a low land value and will obviously generate a lower cost to revenue percentage. The embedded 29%, it's based on current costs that we're seeing, normalized output being somewhere around 14,000-15,000 plots and TopHat. TopHat.
Thanks, Mike. From our factory, our focus is going to be panelization. But obviously, we're a part investor in TopHat. And one of the problems TopHat has experienced is effectively go-to-market. So we can assist them in going to market. So we will assist them with that in certain of their schemes where they effectively are looking for a principal contractor. So we can assist them to get that product into the market.
But through a new factory, our approach is primarily panelization with their brick slips effectively attached. Having said that, I think certainly within parts of the public sector, there is a growing interest and a growing excitement with modular. This is a public sector, so it won't happen overnight. But I think it's clear that it is dawning on some local authorities and some big beasts like the MOD, for instance, that own their own land and have learned their own planning authority. Maybe they should take over, but. The speed at which modular can deliver solutions to them where they have real needs. So obviously, with MOD, where they've got quite a big regeneration problem, aged stock that is in pretty poor nick that needs fixing quickly, that's of interest. But also likewise, local authorities similarly. Was it Southampton?
Southampton was personally interested.
Yeah. Yeah. So Southampton, again, where they've got urban land, they've got to regenerate. They've got to house people. Modular, again, in the interim, they've got to house people in the interim. Modular, again, is a very interesting, quick solution for them. So look, we're doing everything we can to help promote that business. I think their brick slips are fantastic and offer us a real opportunity. And I think modular is definitely part of the mix. It will be of growing importance over the coming years, and we'll see more of that, I think.
Okay. There was one behind.
Thanks. Will Jones, Redburn Atlantic, three if I can, please. First, Dean, I think you mentioned that you could have presented to us a 0.6, 0.7 sales rate year to date. But for definitional issues, I didn't quite understand that. But perhaps you could just explain it. Second was coming back to land bank gross margin as the bridge, if you like, from 20%-29%, how much of that do you think would be volume normalization versus other factors, and what are those other factors? And the last was just if you could give us an update on Charles Church, please, how the brand's performing and prospects there. Thanks.
Shall I do 1 and 3 and 2?
Yeah. Two, yeah.
Simply, anything that's in agreement and in legals is what you've got in the numbers. Anything that we've been approached on the books, we may well do, but it's not in legals. It's as simple as that. So we're not taking anything that's not already in the legals. Do you want to do?
Yeah. I think principally, well, it's the overhead recovery efficiency of more volume will move you significantly from the 20.5 to the 29. Everything else is based on current costs. It's just that recovery of overhead.
I just think Persimmon undervalues, understates Charles Church, and I think there's real opportunity for us to go out there. It'll never set the world on fire. I'm not talking about it'll double overnight. But I think we're crap at policing the brand. And I think we allow regional chairs and others, dare I say, stick a Charles Church outlet on where they just want another outlet where it might not be the right place, or they could put it somewhere else to get better value. And I think there's an opportunity for us to go further up the value chain. But I think it's our inbuilt nervousness around brand reputation and quality. So it's about being braver for us, I think, really. I mean, the really interesting one for me last year was Lichfield, where we're not over GBP 1 million a home, but we're pretty close.
We're getting real value for it. And it's prime Persimmon stuff, that is. It's adjacent to an existing Persimmon outlet. But it's an excellent Charles Church product. It looks visually different. And we've invested in the spec in the interior. And it's really popular, and it's selling really well. I think there's more to go here. I mean, if any of you know Banbury, I was at Wykham Park Thursday last week. And there, as I drove up, I thought, "Blimey, this is a Charles Church product. It's not Persimmon. It just looks so good." And again, I think we just got to get that right within the business. So there's more work to go over the coming years. But I really do think there's potential in the business there at the margin.
Morning. Chris Millington at Numis. First one, I just wanted to explore the net debt point you talked about, Mike. Just wondering if you could touch on what you think the average will be in 2024, and does that reverse in 2025, or should we think average net debt stays for a few years? Next one is just relating to that sales rate point you made, Dean. Have we seen quite a big move into March then, if we're talking about sales rates potentially 0.6, 0.7 if they've not transferred to legals? And the final one's then really just about longer-term sales rates. You mentioned that sales rates are unlikely to get back to pre-COVID levels. Help to Buy is not there. Affordability is more stretched.
Now, if I look at sales rates in the first 10 weeks of the year, they're probably a third below what they were kind of pre-COVID time. If we say they normalised 15% below kind of 0.6-ish, at 300 outlets, we're still doing 11,500 homes. So curious about what you would do in that situation. Is it you cut costs? Do you grow your outlets further? Just curious about what the firm would do if sales rates do persist at this lower level.
Yeah. And so in terms of the net debt position for 2024, I think we're looking at it'll be somewhere around GBP 150 million. In terms of then flowing through into 2025, I think the expectation is it will, but it will start to slowly decline as we hope volumes grow and you can generate the cash to reinvest back in the business. But it's all down to the ambition to grow outlets, to buy the land, to put it into work in progress.
On sales rates, yeah, I expect they will tick up in March partly as a result of the deals I referred to flowing through. But we may not do all of those deals because, again, we're just very focused on the margin. It's quite good to talk about sales rates beyond the next three weeks. That's quite a strategic question. I think the reality is that it's important. I don't want to chuck a bucket of cold water over us, but the market is still pretty challenging out there. And as I alluded to, affordability is better. We've seen an improvement in qualification rates compared to this time last year. Interestingly, inquiries are down, but the quality of the conversion is much better. So we've seen an improvement in qualification. We've seen an improvement in affordability.
But we are still in a very challenging trading environment, which is why we've been at pains to say we think we will grow in 2024, but it's going to be a very tough year. But we do think that inflation is falling. Interest rates will fall. And as they fall, mortgage rates will improve. As I referred to earlier, they haven't really changed much since this time last year. If you've got cash in the market at the moment, then we are seeing pretty good demand for 3 and 4 beds. But 1 and 2 beds for the first-time buyer is challenged. And where there's an affordability gap, the gap's quite big. So there's not a lot of discounting that you can you just wipe out your margin to do it. And that's not the game we're in. But we do think longer-term, we will see sales rates improve.
So because of better economic environment, we will see a more benign, lower mortgage rate environment. I think we will see there is certainly the potential for more shared equity products coming into the market. It's interesting that the private sector hasn't really stepped into that yet. But we're seeing prospects emerging, which I think will strengthen over time. So I think all of those factors will see an improved sales rate over the coming years, but we don't expect it in 2024. Could you pass it, please?
Behind you, Chris. Yeah.
Thank you. Clyde Lewis, Peel Hunt. I think I've still got three. It'd be really useful to get an update on the land market in terms of sort of where it is in terms of pricing and volumes and particularly, obviously, in an election year, are you keen to get as much done as you can ahead of an autumn date, possibly? Second one was coming back to partnerships. Again, given your advantage in terms of build cost, timber frame in particular, and the buildup that you've got there, are you thinking on a three to five-year view that you would see that team there actually sort of become more formal and have a sort of more structured target so you would put a little bit of capital behind that and go after some bigger volumes there?
The last one was really around part exchange usage, I suppose, in terms of sort of how you would expect that to move this year.
Okay. Shall I do first two and you do the last?
Yeah.
All right.
I thought the Savills research at the start of the year was really quite interesting that showed that greenfield did drop 7% last year. That would probably be our experience, that we have seen an easing in the land market. Competition has fallen away. It's obviously heavily negotiated and still very tough out there. Yeah, we are seeing it's not a bad time to be in the land market at the moment. Not sure we're seeing whether the election year is impacting it very much yet. It may well do at some point. Landowners, yeah, they're tough, aren't they? Partnership, I think affordable housing of all types have just got to be an increasingly important part of the political agenda over the next five to 10 years because of the housing need in the country. I really do believe that.
Clearly, if we get a Labour government, then social rent's very important to Angela Rayner. I imagine that will get a big boost. Even if we get some form of coalition or a Conservative government, who knows? I think affordable will be more important just because I think the need is there in the country. And we think that with the combination of what we can deliver through the panelization with the brick slips, we can make quite a big impact on that. So yes, we are thinking of looking at that more closely over the next few years because do we just think it is the direction of travel? PX?
Yeah. Part Exchange. It's a key sales tool for home movers. I think we said we used 18% of our private completions in 2023, used PX. I can't see it being much different, or certainly won't be any lower than that in 2024. The key is that we buy in the right properties so we can turn it and realize the cash as quick as we can.
Any more for anyone? Okay. Thank you all.