Barratt Developments Aktie

Hello, and welcome to the Barratt Redrow plc Third Quarter Trading Update. My name is George. I'll be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I'd like to hand the call over to your host today, Mr. David Thomas, CEO, to begin today's conference. Please go ahead, sir.

Thank you, George. Good morning, everyone, and thank you for joining us on this third quarter trading update call. Mike Roberts and John Messenger are here with me this morning. After some opening comments, we will open up for questions as normal. So I would like to, as usual, start by thanking all of our employees, our subcontractors and our suppliers for their continued commitment and sheer hard work, which underpins the resilient performance that we're going to take you through today.

While the geopolitical environment has become increasingly uncertain, trading on the ground has held up well. Our overall reservation rate was 6.3% higher than last year with an increase in the underlying private reservation rate of 3%, supported by a higher contribution from PRS and multi-unit sales. Sales incentives continue to support reservation activity and were at levels in line with the half year. Our forward order book is 11% higher, so we are on track to deliver housing volumes in line with guidance of between 17,200 and 17,800 homes, and Mike will give you a bit more flavor on that in a moment.

Average sales outlet numbers at 408 were essentially flat on the first half as expected. We were pleased to launch our first 2 synergy sales outlets at Curborough Fields in Lichfield ahead of schedule, and we expect to open a further 6 synergy outlets by the end of June. 22 synergy outlets are scheduled to open in FY '27 and 15 in FY '28. Including organic sales outlet growth, this brings average sales outlets for FY '27 to between 425 and 435, as we highlighted at the interims.

I will now pass over to Mike.

Thanks, David, and good morning, everyone. Our sales and build positions are in line with where we'd expect them to be at this stage of the year. And as of today, we only have a handful of sales required, and all of our year-end private units are now roofed. Our build teams are now focusing on delivering the reserved homes, and we're well set to ensure all units are completed in line with our customer handover requirements and quality controls.

Given our advanced build position and the limited inflationary pressure on the current year build activity, we are maintaining our FY '26 guidance on build cost inflation. You'll recall that at the interims, we said that we expected total build cost inflation would be around 2% for the year. That comprised 1% for the first half and an estimated 3% for the second half. We do recognize that this will be more challenging going forward. But given the strength of the supply chain and the size of our business, we do feel we're well placed to manage these negotiations as they arise. And on that, we'll provide a further update on this in July.

With that, I'll pass back to David.

Thanks very much, Mike. And turning to the Redrow integration progress, this is substantially complete with the final parts of IT integration completing this month. All of the GBP 100 million cost synergies have now been confirmed, and we are on track to achieve an incremental GBP 50 million to our profit and loss account this financial year. There will be a further GBP 30 million from July '26 to get the full GBP 100 million of synergies to the income statement through to the end of December.

Turning to land. We are now updating our guidance on land. We have maintained our disciplined approach with 2,465 plots approved for purchase in the period, bringing year-to-date approvals to just over 4,000 plots. This is lower than last year, partly because we are seeing fewer attractive opportunities in the market. But also, as we outlined in February '25, we are moving towards a model of 3.5 years owned and 1 year of controlled land, which remains our longer-term goal.

And also, in the current environment, as you will understand, we are being even more selective. As a result, we are now guiding to total land approvals of between 7,000 and 9,000 plots for FY '26. So we expect a reduction in land spend to between GBP 700 million and GBP 800 million from the GBP 800 million to GBP 900 million previously guided. And we would expect that the adjustment in approvals, if ongoing, will have a more significant effect on cash flows for land in FY '27.

Our financial position remains strong. We are raising our guidance for the year-end net cash position to between GBP 550 million and GBP 650 million, up from the GBP 400 million to GBP 500 million that we guided in February. This increase reflects both lower cash spend on land as well as the timing of legacy building remediation payments, which are now expected to fall into next year.

Turning to the outlook. With a strong order book and good spring trading, our guidance on completions remains unchanged. However, events in the Middle East will create headwinds for our industry with the potential for a more prolonged higher interest rate environment as well as cost pressures. But our group is in a good place. We have 3 complementary brands, an excellent reputation for quality and service and a strong land bank. We are highly disciplined in our capital allocation, our land investment and our cost control, and we are well placed to deliver attractive returns to shareholders.

With that, we will now be happy to move to questions.

[Operator Instructions] Our very first question this morning is coming from Aynsley Lammin coming from Investec.

Just 2 questions from me, please. First of all, obviously, reservations held up. Just interested to hear whether you pushed incentives more, anything around that area that kind of supported the reservations.

And then, I guess, just on more recent trading, what's the feel and signs on things like inquiries, cancellation rates, footfall? Are you already seeing the kind of high mortgage rates in the market and maybe a -- the dent in confidence impacting anything there?

And then, the second question on build cost inflation. Just interested if energy costs remain where they were and you start to get that coming through. When does that actually impact? I mean, how much of a lag is there given you've presumably got some contracts that you've kind of fixed at the beginning of this year? I'm just interested how you see that coming through.

If I pick up both of those, I mean, I think in terms of reservations, we've just not seen any change in terms of our reservation trends. I mean, as you know, we gave a current trading position when we did the half year results in February, and we provided, I think, around 5 weeks of current trading at that point in time. And if anything, we've just seen a slight strengthening of that position. It's not been noticeably better or worse at the beginning or at the end of that period.

I think in terms of customer sentiment beyond the reservations, which clearly are encouraging, I would say there's more questions being asked about mortgages and mortgage rates. And as has been well documented, there has been a lot of changes in mortgage products and mortgage rates, but it's clearly not to date impacting customer sentiment, inquiries or reservation levels.

I think, in terms of build cost inflation, I know everyone is very eager as we are to understand what the potential impact in relation to build cost inflation. But I think we have got to set it in context that the events in the Middle East have only been going on for a relatively short period of time. There are 3 main areas that we would be affected on in terms of cost. I mean, first of all, just transportation to site. Secondly, that we are a high user of diesel, both ourselves and our supply chain on site.

And thirdly, there are energy costs within the supply chain, particularly for production of certain materials. But we're confident, as Mike touched on in terms of our build cost estimates to June '26, in line with our previous guidance. And we will talk to our supply chain on a case-by-case basis. And we should be able to provide a little more color in July. But clearly, in July, it will not be a certain position in terms of build cost inflation for the year to June '27. So we'll just have to continue to see how things evolve, both in terms of particularly the oil prices and the overall geopolitical position.

Just maybe one follow-up. Have you seen any of the manufacturers yet, whether it's bricks or plasterboard or concrete, actually ask for higher prices? Or is it just more delivery charges at this point?

I would say it's more about delivery charges at this point. But the reality is clearly, the supply chain -- the different suppliers are impacted in different ways. We had our annual supply chain conference last week. So we would have probably representatives from around about 180 of our supply chain. So there's no question that they are seeing cost pressures. But I think we've got to see how prolonged those cost pressures become.

Next question is here from Charlie Campbell of Stifel.

I think Aynsley has like nicked the obvious ones, but just to sort of push you a bit more on pricing and a couple of questions on that really. I mean, just wondering if people -- if your sales guys on the ground are reporting people driving a harder bargain. And as a kind of corollary to that, intrigued that you've sort of seen a strengthening, if anything, of the build-to-rent and the other bulk and you would have thought those would be most price sensitive. So I just wondered if there's anything more to say about that jump in reservations from the bulk side.

Charlie, I mean, maybe if I start just in terms of pricing and incentives, and Mike can maybe just pick that up, the main point I would make on pricing and incentives is that we said on incentives, there's no change from what we saw at the half year. So we're not feeding in a higher level of incentive to maintain reservations, I mean, to be very clear. But then, you've got to remember that we've got a portfolio of more than 400 sites. And inevitably, it is about the geography, and it's site by site within the geography. But Mike can talk a little bit more about that.

In terms of multi-unit, particularly build-to-rent or PRS, we said back in '25 that we felt running somewhere in the order of 5% to 10% of our reservations through channels was good for us. And we -- our commentary since then really has been that we have seen pricing being quite difficult, pricing that we wouldn't necessarily want to pursue. So my sense is that there's probably a little bit more appetite in the market, where people see that the private rental market is an attractive market to operate in. We can provide a portfolio across the country. And so everything that we've done year-to-date has been relatively limited in size, but we do continue to look at opportunities to be able to expand that business within the overall portfolio. So still believing that 5% to 10% of reservations is achievable even in the current market.

Mike, do you want to pick up on pricing generally?

Yes. I probably start with -- to answer your question directly, we're not seeing that people are trying to drive harder bargain in terms of the purchase process. I think it's key to remember that we have a pretty structured sales process, where we're trying to match customers to houses and their requirements. And I guess within that discussion, we talk about their needs and affordability. And as part of that discussion, we feel we control the negotiation around incentives available.

And on a site-by-site basis, we look at the incentives that we offer, and that's relative to individual sales rates from the site and current build stages available plot. So we feel the incentives are very much in our control in terms of what we offer and what we're prepared to provide to facilitate the sale. So it's not really part of a negotiation so to speak from a customer point of view.

We'll now move to Clyde Lewis calling from Peel Hunt.

David, Mike, and John, I'm sure, is there in the background as well. I've got a few, if I may, please, David. Just in terms of, I suppose, the land market, and I understand, you're sort of moving to that 3.5 to 4-year sort of land bank target. But are land prices not changing yet? Are they still sort of remaining stubbornly high and not really taking into account the sort of high levels of incentives and sort of difficult market?

Okay. Clyde, I think the reality is that one of the things that we've shown in our presentations over the last few years has been the Savills land price index. And I think that shows that there's not been any substantial change in pricing. I think there's 2 things, as we look forward. Look, there's the macro event that is very obvious in terms of the Middle East. And then secondly, I think that there is a lot of land that is going to come through planning if you look over the next 18 months, 2 years. We outlined in February that we have more than 100 strategic sites in the planning process. So that is unprecedented levels of land for our business in the planning process.

Clearly, it will take time. It's not all going to arrive in the near term, but that might be against a more normal level of 20 or 30 applications. And I think you'll see that reflected across the industry. So if a large amount of land is going to appear, then you would assume that there's plenty of land supply, and that may play into land prices in the future is the first thing.

The second thing, just in terms of the market, I mean, we are trying to just bring in our land bank over a period of time. We're not doing it in a rushed way, and we've been very clear that we do want to shrink the length of the land bank. If you look at the current market, well, we all know that we need to understand reservation rates, we need to understand selling prices and we need to understand build costs. And that all looks quite tricky at this point. So I think generally, from our point of view, we see that there is a need to just slow down and be ever more selective about land intake.

I suppose as sort of a regular update on Help to Buy chatter, the sort of government making any noises at all about sort of considering it more closely at all?

I mean, I think the short answer, Clyde, would be no, not that the government are talking to the industry about. I mean, we've been very clear, particularly over the last couple of years that we do feel that some support from government is important in the market, particularly for first-time buyers. We've also been very clear that if there is a support program in the market that the housebuilders should pay for the support program, as we did when there was a support product launched in 2012 and the housebuilders paid prior to the launch of Help to Buy.

So I think we're not asking for something for nothing. But I think when you look at affordability, particularly for first-time buyers, and then, you look at certain geographies such as London and the Southeast, it's massively challenging. And hence, you're seeing dramatic reductions in transaction level, again, particularly in the London market.

My last one was really around -- I think I'm certainly surprised you haven't sort of seen any slower levels of activity in terms of sort of new reservations and the interest that was from house purchases. Do you think that's because there is still a sizable cohort that are -- have got their mortgage in principle from before the time that rates started to increase? Or do you think there are other factors going on that people have actually sort of been sitting there waiting to sort of get involved and they're looking at the affordability sort of squeeze that's happening and thinking this is just going to be short term, and therefore, I'm happy to crack on?

Well, Clyde, there's probably a lot of parts to that. But I think the starting point, which you touched on, is that when you look at the affordability equation, the affordability position has improved if you look over the last 12 months. So lower wage inflation, less house price increases, and we have seen reductions in mortgage rates. Secondly, yes, I mean, people who are in market and who have reserved over the last, say, 6, 8 weeks would have likely had a mortgage offer in principle. So they were very much in the market.

And I think also that you can see that people may want to lock into current rates, not being clear about where rates are going to go. So I think all of that plays into it. And I think it really just comes down to us having a longer time to look at how this plays out. I'm sure for lots of different reasons, everyone would hope that the conflict can be resolved, and we can see a bit more stability. But the reality is we've just got to keep monitoring that position and keep monitoring our reservations on a week-to-week basis.

Our next question is coming from Zaim Beekawa of JPMorgan.

The first is just to come back on build cost inflation. I appreciate a lot of uncertainty in the market, but maybe you could speak about kind of what's different this time versus the previous time we saw build cost spike up materially. I think we're coming from different build rates across the industry.

And then secondly, just a follow-up on the bulk sales. Did you say that you're having to do sort of discount a little bit more than usual to get these across the line at the moment?

Yes. I mean, first of all, if I just cover the second point first, no, absolutely not. We're not doing deeper discounts to get bulk sales across the line. I mean, I think we're very, very clear about the economics of it. And there are levels that we're very happy to transact on. And we have done some large deals, if you look over the last 2 or 3 years, across a wide geographic range of our portfolio. But we're very clear about the values that we need to achieve, and we're certainly not taking deeper discounts to achieve that. So I think that's not the case.

The build cost, look, it's kind of -- trying to put a step back, but I would say that we saw a dramatic spike in build costs at really the start of the war in Ukraine. And I think that the first most notable thing, I think, would be, first of all, those spikes were bigger than the spikes we've seen here in terms of oil prices, energy costs, et cetera. And secondly, the industry was much busier than it is now. So in '21-'22, the industry was heading towards 250,000 completions, whereas if you look at commentary maybe we're heading below 200,000 completions. So there is definitely more capacity in the industry. And clearly, that has to be helpful in terms of the way that build costs and build cost inflation evolves.

And again, all of our supply chain is not affected in the same way. So some products have a very high energy content in production. And I think we're very, very familiar with the different components of the production costs for our materials. So we feel that we're well placed to navigate our way through that. We're obviously a very big business. We're buying a lot of building materials from the supply chain. So overall, I would say the starting point, as of now, looks slightly better than the starting point looked at the start of the war in Ukraine because we haven't seen the big spikes and the industry is not as busy as it was.

We'll now move to Rebecca Parker calling from Goldman.

I just wanted to ask on the outlet opening program. If you did see sales rates slow into 2027, how would you be thinking about that?

And then secondly, I just wanted to ask on underlying pricing within the market and how you're seeing that play out across the country? Any geographical differences to call out there? I know you mentioned that London was a bit of a weak market.

Rebecca, sorry, just on the first question, can I just ask you to repeat just what it is you were referring to going into 2027? I just didn't quite catch that.

If sales rates slowed into 2027, if you would be thinking differently about that outlet opening program?

Okay. Yes, I understand. Okay. So Mike will pick up in terms of pricing and what we're seeing across the country and so on. In terms of the outlet opening program, I mean, our lead times are obviously quite substantial in terms of us approving land for purchase on a subject to planning basis and then obtaining planning. So really, when you look at the outlet numbers for FY '27, I think we have a high degree of confidence that those outlet numbers will be delivered. And there isn't a huge amount of optionality around that. Clearly, the vast majority of the sites we're already operating on.

We're coming off an average of 408, and we're saying that we're moving up to a midpoint of around about 430. So the reality is what happens from here isn't going to have a big impact on that outlet count. I think it's much more about the outlet count as we move into FY '28. So we clearly are more cautious about essentially securing further outlets at this point in time. Now, we'll obviously keep that under review, and we'll update the market in July and update the market in September. But what we're referring to is approvals just now where we're backing the approvals down from 10,000 to 12,000 down to 7,000 to 9,000. That is largely what will fuel the FY '28 outlet count. So it really depends on what we approve essentially between now and probably September-October time, which will play into the FY '28 outlet count.

So on the sales rates and any change on pricing, I suppose pricing, as you'd imagine, is pretty flat. So we're not seeing any movement. So we're not seeing any significant changes across the country. So it's just generally flat across the whole country from where we were and with what we reported at H1.

In terms of sales rates, we have seen an increase, as we've noted in Q3, which has probably seen a similar sort of increase to what we normally expect this time of the year. And every region has shown a similar sort of increase and step up from H1 performance. So absolutely no movement between different geographic areas of the business. And so the incentive levels remain pretty constant from H1 through to Q3 across all regions. So pretty much a steady increase across the country in terms of sale rate, but the same across all geographic regions.

[Operator Instructions] We'll now go to Allison Sun calling from Bank of America.

I have a few questions. So first is maybe following Rebecca's question, if the volume is going to, let's say, not be as great as you would expect in '27, are you guys ready to give out more incentives or not?

And second question is on the build cost inflation. I'm curious to know if you have thought what's the worst-case scenario could be? Like how high could those material costs could go up in '27?

And then my last question is, do you think you have a good pricing power when negotiating with those subcontractors? Because what I heard is some key energy-intensive materials, probably the price is already up 15%, 20%. If they do come up with a very high price increase, do you think you have ability to keep it lower?

Okay. Thank you. I mean, I think if I run through them. Look, I think when you go through our portfolio and you look at our 400 sites, I mean, like any business, we are trading volume and price every single week, how is the site selling, to what extent we need to adjust incentives up or down. So we're running incentives, just say, at an overall level of 6%, 6.5%. The reality is some of our sites will be running incentives at 3% and some of them will be running them above 6% or 6%, 6.5%. So it will vary by site.

The second stage is that in some cases, we need to either increase or reduce gross prices, and we'll always be monitoring the gross price position as well. Where a home is sold subject to mortgage, there are rules from the mortgage lenders about levels of incentives. So you can't just keep paying off incentives. You've ultimately got to go to reduce gross pricing. So we'll carry on monitoring that week by week. But I think the good news is that so far, we've not seen anything that's required us to make changes to our incentive program from where we were in the first half of the year.

In terms of material cost, I'm not going to give numbers. I mean, I think there's no point in getting on to that trend. We've given guidance for FY '26. When we're in a position to give guidance for FY '27, we will do that, and we'll be working hard to try to give some outline guidance at least for July. But we've got to sit down and talk to the supply chain. I think you can look back -- I made reference earlier to the Ukraine, the war in Ukraine. And the reality is there's plenty of published data about the way building material costs moved in light of that. And whilst it won't be an exact correlation, it clearly has a strong correlation to oil prices and energy price -- general gas and gas and oil prices.

In terms of the supply chain, we feel we're in a very good position with our supply chain partners. I mean, we believe that we deliver what we say we're going to deliver. And so for our supply chain, I think it's very, very important that we are signaling outlet growth for FY '27. So we're going to be building and selling more from more outlets, which is a positive.

And in terms of our scale, we have more scale than anyone else in the marketplace. So that is helpful if -- as I touched on earlier, if the industry is a long way below capacity, and we were doing 250,000 homes in 2022, so if we're at 200,000 or sub-200,000, there clearly is a lack of demand for the supply chain. And if we are a big part of that demand equation, then that has to be helpful. But equally, we understand that we need a strong supply chain. And so we can't simply say, well, we're absolutely refusing any increases because in that situation, then businesses become nonviable.

I think because of the fact that it's kind of global crisis rather than specific to the U.K., there isn't really going to be the opportunity for imports. That would often be an opportunity for us if capacity was close to peak levels, then most of our materials can be imported, albeit that is clearly more expensive. But that isn't going to avoid the issue. I mean, all manufacturers in Europe are going to be seeing the same cost pressures.

We'll now move to Christopher Millington of Deutsche Bank.

Sorry, you probably thought you were all done, but a few left from me, guys. I hope you're all well. Just love to hear a bit more about how the affordable housing market is faring at the moment. I'd also welcome your thoughts on if we are going to see a slightly lower growth profile on volumes and maybe below where your targets are, do you think there's scope to do more on costs over and above what you've done through the synergy targets?

And the last one, it's maybe not the forum for this, but I'm going to ask it anyway, is capital allocation. We've obviously seen a big, big movement in the share price. You're still quite weighted to dividends versus share buybacks. Do you think that's the appropriate capital allocation policy? And maybe you could weave in there, if we do throw off a bit of extra cash because of lower land spend, would that alter your thinking at all? And sorry for the...

Yes. No, that's fine, Chris. I was just saying Chris hasn't asked the question, I'm sure he's going to come on soon. Just -- if I just touch on capital allocation, I mean, the reality is our capital allocation is always under review from the Board. As you know, Chris, if you look over 10 years, we've shown that we have a lot of flexibility in terms of our capital allocation policies. We absolutely recognize the way that the share price has reduced.

But equally, we recognize that having a strong balance sheet and having cash on the balance sheet is an important position to be in as opposed to not having cash on the balance sheet and having debt. So the Board will continue to look at that. And the next opportunity for any further guidance regarding that will be really in September update. We are running a GBP 100 million share buyback program. We're actively buying in the market on a day-to-day basis. And obviously, we have our published dividend policy. So we'll keep all of that under review.

I think that in relation to cost reduction, of course, clearly, there isn't a business in the world that can say we absolutely can't reduce our costs. Of course, we can reduce our costs. I think that the combination with Redrow has allowed us to take very significant cost synergies out, which have only been accessible through that combination, would not have been accessible easily on a stand-alone basis. So whether it be our central overheads or whether it be looking at our divisional network, we always look at that. But the reality is that this is not the time for making short-term decisions. We've got to see how the market plays out. That's an absolute key thing.

And then what we should be doing is just stepping back and saying, okay, let's look at the amount of land that we're bringing in. As the key example in terms of original guidance, I think at GBP 800 million to GBP 900 million of cash outflow. I mean, that is the big cash outflow number, and we are obviously looking at that.

And then in terms of the affordable housing market, so I'd say generally, the affordable housing market is in a much better position that there's clearly been an above inflation settlement. The position in terms of rent convergence looks as though it's going to be resolved favorably for the housing association. And the funding is in place. Now, there are probably some comments, which I know some of our peers have made that the funding is very back-end loaded in terms of FY '26, FY '27. But the reality is that funding is now coming through, you can apply for the funding. So I think the HA position is materially better than it was, say, 12 months ago.

Do you think, David, there's any scope for higher affordable to offset lower price if we do see that trend happen with this backdrop?

Yes. I mean, certainly, if you look at the government's ambitions in terms of affordable housing, particularly affordable rental, I think there's plenty of scope for there to be more affordable housing delivered into the marketplace. I mean, it will largely depend on what the funding model is and the extent to which there is grant funding available beyond the 106 to deliver more affordable housing. So that's very much a matter for -- in practice, both central and local government.

As we have no further questions, Mr. Thomas, I turn the call back over to you for any additional or closing remarks. Thank you.

Yes, that's great. So I mean, just to say thank you very much, and thank you for the questions. And we will be back on the 15th of July with a pre-close trading update. Thank you.

Thank you, sir. Ladies and gentlemen, that will conclude today's call. We thank for your attendance. You may now disconnect. Have a good day, and goodbye.

So I'm going to make a start. Good morning, everyone. Thanks for coming along to see us this morning, and welcome to Barratt Redrow's Interim Results Presentation for FY '26. This morning, I'm joined by Mike Roberts, our Chief Operating Officer, who will provide an update on our operational performance; John Messenger, our Investor Relations Director, who will update on our financial performance. And after John, I will then update on the market, current trading, synergies and also set out how well positioned we are for the future.

First of all, I would like to take you through some of our key messages. Barratt Redrow's performance over the half was resilient, both operationally and financially. And that is despite what has been a generally subdued market. While the consumer did benefit from 2 interest rate cuts and mortgage availability improved, consumer confidence clearly remained low.

Speculation ahead of the November budget caused many to postpone decision-making. But we have maintained our financially robust position and solid balance sheet. Importantly, the successful integration of Redrow is near completion, and our synergy target remains unchanged. And we are now operating from 3 distinct high-quality brands.

Building on all of this, our focus centers on business as usual for Barratt Redrow around both optimizing our capital employed and fine-tuning our costs to ensure that we drive operational excellence and efficiencies across the enlarged group. So that we are going to be -- we feel well placed for the full year and well positioned for future growth.

If we look in more detail at the operational highlights from the half year, clearly, embedding Redrow into the business was, of course, a highlight. And we have started to see the benefits of this reflected in our performance with good progress on synergies that I'll cover in more detail later.

Our land position is strong at 5.6 years, allowing us to be even more selective around land intake. We delivered 7,444 homes, in line with our plans for the year, which was a good achievement given the market environment. I would also like to highlight some of our externally accredited credentials in the period.

Our repeated success in the HBF ratings and in the NHBC Pride in the Job awards are testament to the dedication of our teams across the business as well as to the quality of training that we provide and the customer-first culture we maintain across the group. This quality is also reflected in our Trustpilot scores given by our customers, which award all 3 of our brands with the highest rating of excellent.

John will cover our financials in more detail, but just to pull out a few highlights. Adjusted PBT before Purchase Price Allocation impacts was lower than last year at GBP 200 million due to higher net interest costs and lower joint venture profits. So return on capital employed, again, pre-PPA adjustments was in line with last year at 9.1%.

We were particularly pleased that nearly all of our GBP 100 million target synergies were confirmed at the end of December. And finally, we finished the year with a solid net cash position after organic investment, which supports our growth plans, also our dividend payments of GBP 172 million and the share buyback of GBP 50 million in the half.

With that, I will hand over to Mike, who will now go through our operational performance in more detail.

Thank you, David, and good morning, everyone. I'd like to take a moment just to introduce myself. I've been in the housebuilding industry for 32 years, and I joined Barratt back in 2004. I've worked closely with Steven Boyes as Managing Director of our Northeast division. And in 2017, I was appointed Regional Managing Director for the Northern region. In July last year, I was appointed Chief Operating Officer on Steven's retirement. And today, I'll be taking you through our operational performance for the first half.

Starting with the private reservation mix on Slide 7. There are a couple of points to highlight. Firstly, PRS. Given the budget uncertainty, the market became harder in the period and potential discounts increased. But we maintained our discipline and were less active. As a result, PRS reservations were a lower proportion of overall reservation volumes at 4% down from 9% in the equivalent period last year.

Secondly, for existing homeowners, we saw a significant increase in the use of Part Exchange at 23% of our private reservations, up from 14% last year. We've introduced our industry-leading Part Exchange skills into the Redrow brand. It offers a stress-free moving option for our customers. And at a time when conveyancing chains were a concern for many potential homebuyers, it has proved a popular incentive.

To be clear, it's offered as an alternative and not additional incentive. And it's worth noting that the combination of Part Exchange and second home movers remain fairly consistent year-on-year. Part Exchange has been an integral part of our business for many years and stock levels are carefully managed. At the end of the half, we had just 180 units unsold.

Turning to completions on Slide 8. We delivered 7,444 homes, an increase of 4.7% on the aggregated performance last year. Both private and affordable completions were ahead, although this is more about timing. So our guidance for FY '26 is unchanged. Underlying private completions were 1.8% ahead and PRS completions were up over 50% to 423 homes. This increase was largely a function of our order book coming into the year. And as I said earlier, the market has subsequently hardened.

Affordable home completions were up 26%, helped by the rebuilding of our order book in the prior year and are now 19.5% of wholly owned completions, which is in line with our expected affordable mix. Joint venture completions were lower than the prior year due to timing, but we are on track to deliver approximately 600 units in the full year.

In terms of pricing, the wholly owned average selling price was up 4.9%. More detail is provided in the appendix, but this was driven by a combination of mix, producing a slightly larger average unit size and geographical volume variances given the spread of average selling prices between the regions. There were some notable variations by region with our Central and East regions seeing the strongest average selling price growth.

Now turning to sales performance here on Slide 9. The underlying private rate remains solid at 0.55 reservations per week ahead of last year, with customers benefiting from an improvement in mortgage availability and affordability. This good performance came despite the uncertainties which overshadowed much of the period.

PRS and other multiunit sales effectively paused in the run-up to the budget. And although we saw a pick up afterwards, this added just 0.02 reservations per week over the period, down on last year. We operated from an average of 405 sales outlets, below last year, but very much in line with our plans. David will cover our view on sales outlet evolution later in the presentation.

Turning to the private forward order book. This was 10% lower at the half year stage. This partly reflected a high starting point coming into the year, but also the reduced reservation rate, lower numbers of sales outlets and increased completions in the first half, all of which contributed to the overall lower number. Given the solid start to the calendar year, we are confident that we can deliver full year completions in line with the guidance.

I'd like to wrap up with our industry-leading credentials around design, build quality and customer service. It's what underpins our brands and is key to our sales success. We achieved a 5-star rating for customer service in the HBF survey for the 16th consecutive year.

And our site managers have secured an industry-leading total of 115 Pride in the Job awards and 45 Seals of Excellence. Reportable items per NHBC inspection have increased slightly following the Redrow acquisition, but with opportunities to share best practice across the divisions, we expect to see this improve.

And finally, I'd like to take this opportunity to congratulate Dane Mumford from our East Midlands division, who is runner up in the large builder category at last month's Pride in the Job Supreme Awards, an excellent achievement.

On that note, I'll hand over to John for an update on our financial performance.

Thanks, Mike, and good morning, everyone. Today, I'll take you through our half year '26 performance, an update on our land bank and also on building safety. Here is an overview of the -- our half year numbers. To be as clear as possible, we have set out here the adjusted pretax profits before PPA adjustments, then the adjusted profit before tax after PPA and finally, the statutory pretax after adjusted items.

The first point to note is that both adjusted measures are now stated prior to the impact of imputed interest charges on legacy property provisions. We believe this measure provides you with the best view of the underlying performance of the business, moves us in line with peer reporting and includes the reclassification of GBP 19.6 million of noncash imputed interest in half year '26 and GBP 18.4 million in half year '25, which has been added back in arriving at the reclassified results you see here.

We also show the comparables and just to flag the aggregated and reported periods have seen minor restatements for the finalization of the purchase price allocation process, which was completed at the end of last year. I will focus on our performance relative to Barratt and Redrow aggregated for the whole of half year '25. And you will remember, we consolidated Redrow actually from the 22nd of August.

So adjusted profit before tax before PPA impacts was down 13.6% in the half year to GBP 200 million, and I'll take you through the key drivers of that in a moment. The good news is that the purchase price allocation impacts largely fall away from next year, which will make all of our lives a lot easier.

Slide 13. This slide looks at the margin performance in more detail, and there are several points to highlight. The increase in home completions, coupled with an increase in ASP, generated revenue growth of 10.5% to GBP 2.6 billion. However, the adjusted gross margin was 200 basis points lower at 15%, giving an adjusted profit of GBP 394.8 million.

There were 3 drivers behind the margin movement. Firstly, while we benefited from growth in completion volumes, underlying pricing was flat. We then saw 2 headwinds on 2 fronts. Our targeted but increased use of noncash sales incentives, particularly extras and upgrades to convert reservations against the challenging backdrop through 2025 was a negative to gross margin. These incentives added directly to cost of goods sold and had a direct impact on the gross margin.

And we also experienced underlying build cost inflation of approximately 1%, including procurement cost synergies. At operating profit through both cost discipline and the benefit of cost synergies, adjusted operating profit before the impact of PPA adjustments was flat at GBP 210.2 million, with the margin down 90 basis points to 8%.

I'll cover margin movements in a moment, but just the final parts in the mix here. Adjusted finance charges at GBP 12.4 million compared to finance income last half at GBP 12.2 million. This reflected reduced average cash balances, utilization of our RCF in the period and the imputed interest rate on new land creditors relative to those being settled. And JV income with lower completions in the period has reduced to GBP 2.1 million.

As a result, adjusted PBT before PPA impact was GBP 200 million, giving an adjusted earnings per share of 10p. And we have proposed an interim dividend of 5p per share with our 2x dividend cover ratio in place for the full year.

In summary, we saw good momentum on home completions and are pleased to see the benefits of Redrow integration coming through. Looking forward, there are clear opportunities to improve our gross margin, which David will cover.

Turning now to our land bank on Slide 14. A steadier pace of land acquisition, growth in completions and the reclassification of some Redrow plots into our strategic land bank has seen the duration of our owned and controlled land bank move to 5.6 years in December. Our land bank is in a strong position and very consistent with our plans to optimize our capital employed, as David will set out.

A key metric here on the slide, which we are increasingly focused on is the average number of detailed consented plots on each of our sales outlets. This is clearly a function of the size of the outlets and the time frame over which it has been actively selling, but we are looking to ensure our land bank is efficient with sales outlets sized to deliver typically sales over a 3- to 4-year period. And with more than 27,500 strategic land bank plots submitted to local planning authorities across 103 applications, we expect to make further progress on strategic land conversions over the coming years, too.

Now looking at our embedded margin in the land bank. Here, you'll see the updated plot distribution of embedded gross margins across our owned land bank plots. There are 3 moving parts to highlight. First, a positive 40 basis point impact, reflecting the plot mix traded out through completions this half at a margin of 14.5% after including the PPA impact. Second, a negative 90 basis point impact from the flow-through of flat pricing, build cost inflation and incremental sales incentives.

And thirdly, a 20 basis point improvement from land acquired in the period at a 23% gross margin. As a result, the embedded gross margin ended the half 30 basis points lower at 18.9%. Improving the embedded gross margin is a clear priority. With little movement on pricing, we will do this best by managing cost base inflation, driving development pace and buying land appropriately.

To Slide 16. Here, we look at our adjusted operating margin and the bridge. On a pre-PPA basis, including Redrow for the full 26 weeks, this was 8.9% for the combined operations in half year '25, first column shaded here on the left. We saw a benefit of 40 basis points due to the gearing effect of higher volumes. The combination of flat pricing, but underlying build cost inflation of 1% and the targeted use of noncash incentives created a negative inflation impact of 90 basis points.

Completed development provisions reflect the local authority delays in adoption of roads and public spaces accounted for a negative 40 basis points. The impact of cost synergies, which I'll set out in a moment, added 90 basis points, and these savings covered off both the underlying inflation in our admin expenses as well as mix and other items. This has resulted in the operating margin before PPA impacts of 8% for the half. And finally, you can see the PPA dropping off to deliver the 7.5% margin on an adjusted basis.

Turning to administrative expenses and adjusted items. We reduced our adjusted admin expenses by 5.4% in the half year to GBP 184.8 million when compared to the aggregated business last year at GBP 195.4 million. We also then show the adjusted items here in arriving at our reported admin expenses at GBP 208.7 million. This included adjusted items charges of GBP 23.9 million with GBP 18 million charged on further restructuring and integration and legal costs on legacy property recoveries at GBP 5.8 million. Whilst not shown here, the net impact of adjusted items in the period was GBP 10.5 million, with significant legacy property-related recoveries from third parties of GBP 13.4 million recognized in gross profit. It's positive to see both cash-based adjusted items falling away as well as receipts coming in with respect to building remediation.

Here is just a quick bridge in terms of the admin expenses. The movement in admin expenses from the aggregated base of GBP 195.4 million to the GBP 184.8 million is set out on this slide and shaded light green. We saw an increase of GBP 4.3 million related to changes in national insurance contributions and a further GBP 8.1 million from cost base inflation.

Cost synergies then delivered a GBP 23.2 million positive impact, which were then coupled with a reduction of GBP 0.2 million in sundry income, which covers JV management fees and ground rents delivered the outturn of GBP 184.8 million. It is positive to see the synergies we identified at acquisition having a meaningful impact on our profit and loss account.

Turning to Building Safety, where I'm pleased to report that there is very little to cover. There were no changes required to our provision position and having spent GBP 77.8 million on works across our Building Safety and reinforced concrete frame portfolios in the half and seeing the unwinding of imputed interest of GBP 19.6 million, our total legacy property provisions just sat at just over GBP 1 billion.

To cash flow. Slide 20 sets out the cash flow bridge for Barratt Redrow from reported operating profit on the left to the net cash outflow on the right. We have just a couple of cash flow numbers to point out. The biggest driver of cash outflow in the period was the seasonal increase in construction work in progress alongside Part Exchange investment, together equating to just over GBP 313 million. 3/4 of this is construction work in progress, very much following our sales cycle and construction seasonality.

Our net investment in land was relatively modest at GBP 68.7 million. And adjusting for the dividend payments of GBP 172 million and GBP 50 million in share buybacks, the net cash outflow was just under GBP 600 million. We would expect an inflow of circa GBP 300 million in the second half and for the year-end cash position to be in line with guidance at between GBP 400 million and GBP 500 million.

Fees, we have included on the slide here, a reminder of some of the other relevant guidance points around cash flow.

Turning to Slide 21. Here is our usual balance sheet breakout. Liberty really to highlight. Over the 26 weeks, we saw a GBP 21 million net investment in our gross land bank and land creditors reduced by just over GBP 42 million, giving a net land position at GBP 4,358 million, with land creditors funding 15% of our land investment.

Land creditors clearly remained below our target range of 20% to 25%, but we are looking to add a larger portion of land purchases on deferred terms to take us towards our target range and also to manage our land bank more efficiently, as I alluded to earlier. The other balance sheet item to mention here, as already discussed by Mike, is our part exchange investment -- sorry, Part Exchange investment, which you can see closed out at GBP 219 million with GBP 74.7 million added in the half year period.

Before I wrap up, I thought it would be helpful to remind you of our capital allocation priorities set out here. Our enhanced scale and balance sheet strength clearly put us in a strong financial position. But we are very mindful of the obligations we have, particularly with respect to building safety, how we are managing this appropriately. The Redrow acquisition has multiplied the opportunities we have to drive growth and value from the business. So we will invest in these, but at the same time, we will look to drive efficiencies in the way we manage both our capital employed and our cost base.

And finally, we recognize the importance to our shareholders -- our shareholders place on capital returns. We have a clear dividend policy, and this is alongside an active GBP 100 million buyback program with GBP 50 million completed in the first half and a further GBP 50 million underway and set to complete in the second half of the year.

So to summarize, our operational performance in the half year has been resilient, and that's despite the macro uncertainties faced. Our balance sheet remains solid, and we are capturing the cost synergies from the Redrow integration with our cost synergies confirmed.

Turning to guidance. You will find a detailed slide in the appendices, but I thought it helpful to cover the main points here. As previously set out, we expect full year '26 total completions to be within the range of 17,200 to 17,800 homes. Underlying pricing is expected to be broadly flat, and we expect build cost inflation to be around 2%, including the benefit of procurement synergies.

Reflecting the reclassification of imputed interest on the legacy property provisions, we anticipate an adjusted finance charge of approximately GBP 30 million with provision-related adjusted item imputed finance at GBP 32 million for FY '26. And our building safety program remains in line with guidance at approximately GBP 250 million of spend in the year. And we expect to finish the year with between GBP 400 million and GBP 500 million of net cash.

Happy to take questions later, but I will now hand back to David. Thank you.

Thanks very much, John. I'd like to start this section with an overview of the housing market. So we've talked before about the fundamentals of the market, which underpin our sector, and these continue to be strong. There is a long-standing imbalance between demand and supply. The challenges for our industry are affordability constraints on the demand side and planning constraints on the supply side.

Housing and planning reforms are clear priorities for the government, and we welcome the steps that they are taking to improve the planning environment. However, it will take some time for these reforms to feed through at a local level and with many local authorities having elections in May, the planning backdrop in those areas could remain challenging until the second half of the year.

Meanwhile, some of the near-term indicators on the demand side are more encouraging. Uncertainty has definitely moderated post budget. Markets are pricing in further interest rate cuts and mortgage availability continues to improve. But consumer confidence remains weak. And despite some slight improvements, affordability remains challenging, particularly for first-time buyers needing to bridge the deposit gap. In this environment, we recognize that self-help measures are very important.

As Mike outlined, we continue to develop our Part Exchange offer, particularly for Redrow. And in the half, we also launched our own shared equity offer alongside our popular first-time buyer and key worker schemes. We continue to believe that the key to a sustained recovery in the housing market and volume increases across the sector is government support for prospective homebuyers of the type which has been in place for many decades until 2 years ago.

Overall, given the market context, recent trading has been resilient. We have seen encouraging consumer activity since the budget, but consumers are still taking their time. So our net private reservation rate over the 5-week period was down slightly on last year. The FY '26 opening order book and slightly improved affordable housing sector backdrop means that year-to-date completions and forward sales are both ahead of the position last year. But there continues to be a lot of political and economic volatility at the macro level, which is clearly unhelpful for consumer confidence.

So given the broader market context, for us to maintain a sharp focus on efficiency and leveraging the benefits of the integration is going to be key for Barratt Redrow. So I'd like to give you an update on our synergy program.

If we start with cost synergies, we have confirmed our target of GBP 100 million of annual cost synergies. In FY '25, we delivered GBP 20 million of cost synergies through the P&L, as you can see on the chart. We expect to deliver a further GBP 50 million through the P&L in the current financial year, having already delivered over GBP 30 million in the half year. So we are very definitely on track for that cost synergy delivery.

Looking at revenue synergies. Our target is to open 45 incremental sales outlets. To date, we have submitted 31 planning applications, of which 16 have already received approval. We are on track to submit the remaining applications in the second half of the financial year, and we expect the first sites to be ready for sales opening at the start of FY '27.

Moving on to outlets. As we've said, the planning reform is positive, but we do have to experience that improvement on the ground. So as we've previously guided, we expect average outlets to be flat in the current year, but we would expect to see a good uptick in FY '27, both through organic growth and with around 15 synergy outlets coming on stream. This should bring average outlets for FY '27 to between 425 and 435. Importantly, given the strength of our land bank, we do not have to make significant future land purchases to drive our outlet opening plan. It is primarily about using the land that we already have.

So as you can see, our integration activity is largely complete. Looking forward, our focus is on 2 key areas: optimizing our capital employed and fine-tuning our cost structure. This half, given the strength of our land bank following the combination and our land approvals in FY '24 and FY '25, we have substantially reduced approvals. But alongside some land swaps and land sales, we will continue to make targeted acquisitions, and we anticipate approval of between 10,000 and 12,000 plots in FY '26. Dual and triple branding our sites means we can reach more customers, which should improve our sales volumes and help our asset turn.

Turning to costs. Given our scale and reach, we see opportunities to drive efficiencies across our supply chains and to make marginal reductions in our overheads. This discipline is business as usual for us. Pulling this together, we remain very confident that Barratt Redrow is best placed to navigate the market for all points of the cycle. Fundamental to this are our 3 high-quality and differentiated brands, and we have the skills and experience to deploy them effectively. These brands allow us to operate in a variety of locations and local markets with the optimal divisional infrastructure to match.

Our customer focus has been established by our numerous third-party credentials over the long term. We are the reliable partner of choice across the private and public sector, allowing us to be flexible and innovative. Our reorganized divisional structure and brand portfolio positions us well for growth over the medium term. And finally, we remain financially strong with a robust balance sheet and a solid net cash position.

So to wrap up, we do have 3 high-quality differentiated brands. We have a strong land bank. We have clear visibility over our outlet opening program, and we are a leading platform for growth. Virtually all of the GBP 100 million of synergies are confirmed, and we expect the integration to complete by April this year. Looking forward, our focus will be on continuing to drive our operational efficiency and using the opportunities we have identified to drive growth and value for all of our stakeholders.

Thank you. Thank you very much for that. And we're now going to open up for Q&A. John is going to facilitate the Q&A, and he is looking forward to the large number of questions that I know you're going to put his way.

If we just -- we'll start in the front row, Chris, and I think you need to pull and press basically. Great. Chris Millington.

So I just want to ask about the pricing experience so far in calendar year '26 and whether or not you've seen any sort of improvement there, obviously, with incentives. And perhaps you can just put a regional overlay on that.

Second one is just around the outlet opening profile. It's a big ramp-up you've got there. Now if I understand what you said correctly, is you're going to be flattish in the second half, but then potentially up at GBP 430 million next year, so roughly about 8% growth. Now if that's linear, it means the opening close is going to have to be 16-ish percent higher. I mean it feels a big number with some of the uncertainties out there, but perhaps you can give me some confidence there.

And the final one is just really about the gross margin in the land bank. It looks like you're taking the lower-margin plots at the front end that makes a little bit of sense because of the new land coming in at higher margins. But how long do you think you get to the average land bank margin. Because you're kind of under-indexing what, 400, 500 bps at the moment versus our average.

Chris, thanks very much. I mean if I take in terms of pricing and incentives to start with. And then I'll say a few words about outlet opening and then John will follow up in terms of outlet opening. And then John will pick up in terms of gross margin. So I think in terms of pricing and incentives, I mean, the first thing that I would just put in context is that if you went back to August '25, we started to see a lot of news flow about what may or may not be in the budget. And at the beginning of October, we made a very conscious decision that we needed to push harder in terms of incentives, not in terms of gross price, so generally keeping gross price as is, but pushing more in terms of incentives.

And I think that's seen a step-up in relation to Part Exchange, a step-up in relation to related incentives. Coming into the new calendar year post the budget, I just think we've seen a higher level of customer interest, and we probably have a bit more confidence in terms of our ability to maybe gear back a little bit on incentives, not in that we're going to move it 1% or something in a short period of time. But there is just more interest out there. And I think all of our divisions feel that, that is a slightly better backdrop with a possible caveat around London, which I would say is pretty much unchanged.

And then just before I pass over to John, in terms of the outlet opening program, I think the really key point is that we have the land under control. In terms of our FY '27 position, we're in the high 90s in terms of having a planning position in relation to that. And we would see some uptick in outlets late in this year, which will not impact reservations. And we overall will see quite a substantial uplift in FY '27. But I think the key point is we don't need lots of planning to deliver that. And bear in mind, a big chunk of it is coming from synergy outlets, which are already under our control.

John, do you want to...

Yes, David had stolen some of my thunder with the synergy points, but there you go. Yes, if you look at where we are broadly at the end of this year to where we'll be at the end of next, a big part of that is effectively 30 synergy outlets in there, which will leave you with a balance of 20 to 25 that need to come through the organic route, Chris. And I guess we are certainly comfortable in terms of that profile coming through.

And when we look at the timing of it, there is quite a significant outlet opening program clearly across '27, but there will be certainly a decent boost in the second quarter, which will obviously lead us into the spring selling season for Q3. So part of it is very much kind of profile across the year, but we actually have a pretty useful program planned for the second quarter, which will obviously give us a January start into that new calendar year.

The other one was around gross margin. Just to be clear, the embedded gross margin at 18.9% is post PPA. So it's all in. So the Redrow plots are in there, including the PPA component. So we expensed at 14.5%, as you saw in the slides. The embedded is 18.9%. So you've got a kind of 440 basis point differential there. I think when you look at the length of the land bank at 5 years, clearly, the average to get there, we're probably talking about 2.5 to 3 years realistically before you're going to hit that point because obviously, it's partly about the timing of when we purchased and when those new sites that are coming in at a higher gross margin start to really feed through in terms of volumes, not just in reservations, but in the completion mix. So I hope that's helpful.

Will Jones at Rothschild Redburn.

Will Jones at Rothschild & Co Redburn. Maybe just 3, please. Perhaps just touching base on build costs. I think your guidance for the second half implies about 3% perhaps including some synergy benefit as well. So just the moving parts within the latest on build costs.

Secondly, perhaps just more of an overview inflection 6 months plus on from the formal integration, just your view of how the Redrow brand and business is performing post acquisition. And then lastly, if we just cover off on building safety. Obviously good to see no movement in the provision, but just your level of confidence as you assess the portfolio and what you may still not know about potentially as we look forward.

Yes. Okay. Will, thank you. So Mike will pick up in terms of build costs, and I'll pick up in terms of Redrow and building safety. So I think in terms of Redrow, we said at the time, we are admirers of the Redrow brand. We think it's an absolutely fantastic brand. And getting Redrow really focused on the heritage brand because inevitably to grow the business, Redrow were doing more than just heritage. And we think Redrow really focused on the heritage brand. It's where they want to be and it's where we want them to be, and it is the premium brand in our portfolio.

In combining with the business, they have a fantastic land bank. And so I think the opportunity for us to be able to take Barratt through the Redrow sites to work together and maybe Barratt deliver more of the affordable housing, for example, alongside the Barratt housing is a really big opportunity. And then where we have sites where perhaps we were already Barratt and David Wilson, and we might have sold land to a third party, we can bring Redrow on to those sites, and we clearly have a number of those sites. And both in terms of the synergy sites, but I mean, the synergy sites are just the start of the story.

I mean, I think all of our land acquisition going forward, where all 3 brands operate in that geography, then we are looking for opportunities for those brands to operate well. So I really feel that in terms of the brand, the consumer proposition and in terms of the build sales teams, it's really done well and really integrated well. So that's all positive. And I know we've touched on the synergies, but I think it's just pleasing to be in a situation that we've effectively banked the GBP 100 million of cost synergies.

We're obviously looking for more, but the reality is that our main focus now is on the delivery of those cost synergies and then ensuring that we get the revenue synergies executed, which I think we're well on with.

In terms of building safety, John said that we are pleased to really be saying nothing. I think that's a nice position for us to be in. I think it's too bold for anyone to say we're absolutely comfortable with all our provisions and so on. I mean, I think everyone has seen that the evolution of this has been challenging. But we feel that we really have our arms around both building safety in terms of the remediation of buildings and also concrete frame. So both parts of it, I think, are moving well, and we'll just continue to update on a 6 monthly basis.

Mike, do you want to pick up build costs?

Yes. So we've guided inflation at around 2% for the full year. We estimate that, that will be split between labor and materials, 1.5% labor, 0.5% materials. Labor generally, we're seeing 2% to 3% price pressures, really around National Insurance and salary reviews as per would be the norm. What we're not seeing is any inflationary pressure around scarcity of labor or labor availability.

So there is no excessive pressure on the inflation for the labor content. The materials, pretty variable. Actually, we've obviously bringing the Redrow business into the Barratt, David Wilson team. We've improved our procurement capabilities. But we've seen bricks and blocks around 3% unengineered timber up at maybe 10%, but lots of materials at flat line or very low digits really. So overall, we're pretty confident that we'll be able to land that at around 2% for the full year.

Emily Biddulph, Emily at Barclays.

Emily Biddulph from Barclays. I've got 2, please. The first one just on how we should think about the margin bridge, I suppose, for the second half of the year. Conscious you've guided build cost inflation higher, but presumably the way that you account for that, you sort of already reflected that in the first half margin. And then the sort of positive things around the potential for incentives to be a touch lower. Is that sort of the way we should think about it? And then on top of that, can you just remind us the sort of the extent to which you benefit from sort of fixed cost of goods and some leverage over that in the second half of the year and potentially that sort of a little bit of land bank evolution. Can you give us a sense of sort of what the magnitude of that might be?

And then secondly, I think David mentioned the sort of evolution of the part exchange offering in Redrow. When we look at that on the balance sheet, is there a number that you sort of -- you're comfortable with it sort of ticking up to be? Or is that the way -- is that what you're sort of trying to tell us that it might actually be a little bit more on the balance sheet towards the end of the year? Or how should we think about it?

Emily, thank you very much. I think that first question you sort of asked and answered it at the same time. So you've given John too much of clue.

Can you give the whole margin bridge?

Yes, yes . Yes. So John will cover the margin bridge. Look in terms of Part Exchange, I mean, I think most of the housebuilders have a Part Exchange offer. It is a fantastic way for us to compete in the marketplace. I mean, bear in mind that the vast majority of customers sell a secondhand home and buy a secondhand home. So where we are able to break into that, we are best to break into it with a part exchange offer. And I think you'll see that part exchange is 2 things for us.

One is we have something that we would call movemaker, where we would effectively give a commitment to buy the property, but we would primarily focus on the property being sold before we get to the point of completion on the new build house. And then we would then have a part exchange offer where either that movemaker doesn't work or we agree to take the property from the beginning. The number of properties and the value of properties is not a huge concern to us.

I mean the operational and the financial risks are similar. And Mike touched on that. We have about 180 properties that are not reserved, which I think when you look at the size of the group across 30 divisions or 32 divisions is a small number of properties. So the more part exchange we can do in the current market, the better.

In terms of Redrow, Redrow did have a movemaker equivalent, and they did have a part exchange offer. But I would say that they were reluctant to use it. And we just see in the market that we need to do more of it. And so the Redrow position in the underlying numbers has grown from what in the FY '25 was around about 2% of their business was using the PX offer to it now being kind of above 10% of their business is using the PX offer. So yes, we're very, very positive about that offer in the market.

And then just to pick up on the margin bridge, Emily. So I think there are probably 4 aspects to this to keep in mind in terms of the bridge from last year to this year. First, plot mix-wise, which was mentioned there, if we look at the delta, I guess that implies with 440 basis points from where we reported in the first half to the average in the land bank, that broadly equates to 80 or 90 bps per annum, thinking of that movement. So that's probably, call it, 50 bps in the half year period, if I was looking to try and work a number through there, Emily.

Second one is then on build cost inflation. And you're correct in terms of given the accounting approach and margins on site-based approach, a lot of that cost inflation is already built into the margin that we're recognizing. But there clearly, we've got to work hard in the second half to control and limit that impact from build cost inflation. But the positive on the other side of that is clearly from an incentive level where we added circa 1% to our incentives in the first half, that was very much driven by the budget and the need to convert people and to give people a call to action effectively to reserve and move through to completion.

Obviously, as we work through the spring and given we've had a pretty encouraging start certainly in the 4 weeks of January post the first week we had, then we'll be working site by site, literally trying to move and make sure that we're optimizing both the balance of volume and value and that around the incentive that's applied. So there will clearly be a push to try and work as we can to get that incentive lower.

And then finally, on the volume gearing aspect, when you look at our volumes, we're broadly 40% more volume in the second half than the first. That mathematically obviously will come through in terms of operational gearing, and that should again help on the second half margin. But those are the 4 ingredients in terms of that movement there. Thanks.

I think over to the other side, Aynsley and then Clyde.

Aynsley Lammin from Investec. Just 2, please. Just picking up on your comment actually around the sales rates. John, just I think you said the last 4 weeks particularly have been good. Just wondering if you had any more color. Has it been progressively improving. And when -- you've maintained your full year kind of completion guidance, but I think you mentioned that also depends on sales activity. How much risk is there? What do you need to see in the spring selling season to kind of meet that full year completion guidance, I guess?

And then second question on the provision, as you say, good to see it kind of stay around the GBP 1 billion level. But could you just remind us how long you expect to work through that and what the kind of annual cash outflow profile looks like during that period?

Okay. Aynsley, so I'll just make sort of comment on the sales rate and the sales risk and pick up on the provisions. I'm just going to answer them both. That's it. Yes. Look, in terms of sales rate, I think that we had quite a bit of debate about this, okay. So the reality is we've always said we're not going to split current trading, whether that's positive or negative because it's such a short period. And then we get into saying, well, the first week was this and the third week was that and so on.

So we're not going to kind of break with that. But I think what we would say is that our business is positive about what we've seen during the month of January. And December is always a tricky month. But when we come into January, we've just seen good consumer interest, good level of appointments and reasonable levels of reservation. Now bear in mind that we're not comparing really to last year. We're presenting the numbers compared to last year because that's the convention. But we're really talking about what was it like in October compared to what is it like in January, and it is substantially better in January than it was in October.

That's the reality, that October, November period. In terms of looking at the risk, I mean, we are sort of really working on the basis that we need to sell at about 0.6, and we feel comfortable in terms of that sale. And we give ranges, you're sort of -- it's a problem if you do and it's a problem if you don't. So I would say that we've got a high level of confidence of hitting the midpoint of the range. And we don't see lots of downside to that and potentially, there's a little bit of upside, but I think we've got to focus on that midpoint of the range.

And then -- sorry, provisions. Yes. So the cash run rate on provisions, well, my sense is that there's another 4 years at least in terms of runoff of the provisions. We would expect expenditure will start to accelerate in '27. So there's a huge amount of setup to be done to get the developments through the building safety regulator because all of these developments have to go through the building safety regulator. We see that, that backdrop with the building safety regulator has improved from where it was 12 months ago, there's much more transparency about what is happening, but they have a huge amount to address in terms of the backlog. So getting stuff through the building safety regulator and therefore, substantial expenditure in '27 and '28. But realistically, on a GBP 250 million run rate cash spend this year, I think we're very unlikely to be above that cash spend, and we'll just run it off over the next 3 or 4 years.

Clyde.

Clyde Lewis at Peel Hunt. Three, if I may as well. Probably following up on Aynsley's question there about sort of recent activity. I mean I'm still a little confused as to where we are because normally, spring is the best selling season for all housebuilders. And obviously, we've had a pretty shocking October, November, December period. So there's a catch-up. And I'm just, again, really trying to get a feel for whether it really does feel better than last spring or spring in '24 or spring in '23 compared to where you would have been in Q4?

I understand clearly, it's better than Q4, which it traditionally is. So just pushing a little bit more on that. On land creditors, I suppose, interested to hear how quickly you think you can get into that range of 20% to 25% that you're talking about. And inevitably, there's a trade-off with chasing a higher gross margin on new land sales. So just interested in, I suppose, probing that a little bit more.

And the last one was obviously, I can't not ask it, was really the government support. And David, you've mentioned it. Others are increasingly mentioning it in their updates. Do you think the government is starting to move to think about this a little bit more? From what I understand, treasury is the bigger blocker rather than maybe the political side, but I'd be interested on your views there.

Yes. Okay. I feel I've sort of had to go at the sales rates and stuff. So I think I'm going to ask maybe Mike to comment on it, looking particularly at where we were October, November compared to where we are now. I think that's really the key thing. But I would say on the sales rates, our forward forecasts are very much thinking, okay, we need to be at this level of 0.6, which we're not far away from.

In terms of land creditors, look, I think probably just 2 comments. I mean, one, us increasing the land creditor position is obviously dependent on land intake. And our land intake in the first half is -- our land approvals is obviously very low, the first point. Second point, I think when you look at the next couple of years, it would seem that there is going to be a huge amount of land coming through planning. So John referenced in his presentation that we have more than 100 strategic sites in for planning.

So what I would see is that the ability to defer land payments will be greater if there is much more land coming into the marketplace, and we're already focused on the deferral of payments. So I think it's very achievable to get into that higher banding of kind of 20% to 25% in terms of land creditors, but it will depend on land intake.

In terms of government support, well, I think really 2 things. I think everyone would agree, I believe that everyone would agree that you have to address the supply side. If you don't address the supply side, then you are just going to create issues by putting in demand side support. So I think that's kind of been well documented. So the government have really got after the supply side. Now I understand it hasn't changed yet.

But from what we can see, the supply side changes are far more powerful than the original conservative government, national planning policy framework, et cetera. And therefore, numbers can go much higher. We're back to top down and there's an obligation on the local authorities of some scale. That is not going to improve the position on affordability in the short term. Even if you believe that there'll be a lot more supply in the future, there won't be a lot more supply to change the affordability equation over the next 12, 18 months. So we do think the affordability equation is key if we want higher volume levels.

So we are doing the self-help. We've got a shared equity offer. We're doing part exchange. We're providing good incentives to our customers. but government stimulus would be a game changer in terms of the demand side. And the industry, it's not only bad at Redrow, but I think the industry have been kind of uniform in saying that they're quite happy to pay. We launched the scheme with government back in 2012, and we paid for that scheme. So the reality is that we are very happy to pay for the scheme, but we think it would be a game changer, and that would be particularly true in terms of London and the Southeast.

John, do you want to -- sorry, Mike, do you want to answer?

Okay. I feel like I might just be repeating on what David said when he answered the question, but just trying to add a bit more color. We certainly saw after the budget a level of interest and leads and web visits and the like from the market. I guess that's because there was no negative news in the budget around housing. I think that carried on through Christmas, and we have seen an uptick since the October, November performance in the trading since Christmas.

I think in the slide, we say that it's very slightly down year-on-year. I think there's a slight anomaly maybe in the first week. But if you look at more recent trading in the last 4 weeks or so, 5 weeks, then that is in line year-on-year and gives us every confidence that we'll hit our full year completions. So really the message is year-on-year, it's the same, and we're confident we'll hit our completions.

Allison, I think in the middle there.

Two questions from my side. So one is on following up on the demand stimulus. Because if you said builders are happy to contribute to the scheme, do you think that it will probably increase the chance for the government want to actually launch something given right now, there's a lot of political noise going on right now as well. And the second is on the outlets. If I can follow up a little bit as well because you said for 2027, you're expecting average outlets around 425 to 435, right? So that's probably an incremental of around 20 to 30 year-over-year. But I mean I might remember it completely wrong, but I think previously, you are probably more guiding around 30 incremental outlets opening. So I don't know if there's any color you can give on maybe the planning environment or maybe why it's not hitting the 30 level instead of 20, you said 30.

Okay. So John will pick up in terms of the outlets. So yes, I mean, look, I think in terms of government, I mean, I do understand that the government position in terms of funding generally has got challenges. So I think the reality is that the housebuilding industry, I mean, mainly through the HBF, our trade body, have been very clear that if there was a new scheme, then the housebuilders would expect to pay for it. And as I say, we launched the scheme in conjunction with government in 2012, pre-Help to Buy, and we paid for that scheme.

So I don't think the idea that the housebuilder is paying for a scheme is unusual. So yes, of course, that will help, but there are clearly other considerations that the government have to take account of.

And then on the outlets, your math is correct, Allison. So probably 20 to 30. I think we were more at the 30 end of the scale. I think we still are, but we just have to be pragmatic in terms of -- I think everyone in the room is aware that planning is taking time, and Mike mentioned it earlier to see the actual on-the-ground benefits of that coming through. So we're shooting to deliver 30. But clearly, setting a banded range there of 20 to 30 outlets just looks a prudent position to be holding. But clearly, all of our divisions and all of our teams are working damn hard to try and pull through outlets and get them opened because ultimately, that's going to drive our top line and drive the volume growth as we look forward.

Zaim next door, and then I'll come forward to...

The first would just be on the PRS market, the view for the remainder of the year and what's in your expectations. And then secondly, I think you mentioned 31 planning applications submitted and 16 approvals -- 16 received back. Sort of any anecdotes on how easy or quicker has those been since all the government changes would be helpful.

Yes, of course. So if I pick up those. So I think in terms of PRS, and again, just in context, that the PRS market was building a lot of momentum pre the budget in 2022. And the reality is that the funding costs for the PRS operators as they did for everyone changed fundamentally. So I think there was less activity in the marketplace, first of all, simply less people looking to buy PRS.

I think we're seeing the return of more interest in terms of PRS. We announced in, I think in '21 and it became effective in '22, our cooperation with Lloyds Bank and Lloyds Living. And we have undertaken 3 groups of transactions with Lloyds Living. We've undertaken transactions without other PRS providers as well. So we felt that setting a range of 5% to 10% of our completions being through PRS was the kind of range that we felt comfortable with, which we set out last year.

So we are definitely still looking to do PRS, but we're only looking to do it at the right price. It's something that can work very, very well for us in terms of return on capital employed, very well in terms of the efficiency of our build teams, but we've got to make sure that we are pricing it properly. I think in terms of planning in relation to the synergy sites, I don't think there's been any particular issues. I mean, bear in mind that these sites have already got a detailed consent. We would probably have expected to have been able to agree more plot substitutions rather than having to go to a full committee.

But I mean that kind of is what it is at a local level. So again, we're very confident we will get the planning and we will get those outlets through as we outlined in FY '27.

Alastair down in the front and then back to Rebecca.

It's Alastair Stewart from Progressive. Three questions based actually on one slide -- on one chart on Slide 7. In terms of the moving parts in the private reservation buyer type, the biggest change was in part exchange going from 14% to 23%. Obviously, Redrow's greater uptake is a big part of that. But was it all? And within part exchange, do you get a sense of how many people using it in the secondhand going into new? Is it they have to use it because they just get stuck in chains elsewhere. And how much is it a nice to have?

Then the next one was first-time buyers going from 31% to 33%. Do you get any sense in there how much is Bank of mom and dad and how much is using your own Part Exchange. And then finally, following on from the previous question, PRS and other going from 9% to 4%. You said you were originally aiming at 5% to 10%. Can you -- is it going to take some time to get to the top of that range? Or are the financial costs for PRS investors just too high at the current moment?

Thanks, Alastair. I've never answered 3 questions on 1 slide. I think we're going to have a bit of a joint go at this one. So if I pick up in terms of PRS and first-time buyers and if Mike picks up in terms of the part exchange element of it. So I mean, I think on first-time buyers, look, unquestionably, the bank of family, as [ Ians ] get referred to, is very, very important. Now I can't say this is the percentage because, as you know, we are separate from the independent financial advisers. So we don't really get into the nuts and bolts of that.

But I think it's well documented that, that has become more and more important post '22 as interest costs have risen substantially. So it's good to see a little bit of a tick up generally in first-time buyers. But as we touched on in some parts of the country, particularly London and the Southeast, I think first-time buyers are largely priced out of the market, even in some cases with Bank of Family, looking at deposit levels that are well in excess of GBP 100,000 for a lot of purchasers because they don't want to be in there on a 95% loan to value. They want to be in on 85%, et cetera. So that's the first thing.

In terms of PRS, we can unquestionably operate in a 5% to 10% range. The deals tend to be quite large. I mean they might not all be delivered in the same year, but I think you would tend to be looking at deals that would be for us historically between 250 and maybe 750 homes. So that might be delivered over 2 financial years, but it can have a significant impact one deal in terms of the percentages. So at the 4% percentage, we're obviously just outside that range. But we are hopeful of closing some PRS deals certainly in calendar '26, which will materially alter those percentages.

Mike, do you want to just talk a bit about PX?

Yes. So we have introduced our PX proposition more heavily into Redrow, and that's seen an increase. So part of that increase is certainly just the extra volume that's coming through Redrow. It's not all of it by any stretch of the imagination. It's a more popular incentive that our customers are utilizing.

I think the reason for their utilization is -- I think there's many factors. A lot of it is around just simplicity in that clearly, we sell their houses eventually. So we don't carry PX for the next 12 months that they can't sell. So we can sell their houses, so they could sell their houses. It's just about simplicity. And there's an element of when somebody visits the site and set the heart on a plot, if they're not in a position ready to go, say if the PX, we can take that reservation and reserve the plot that they want. So a lot of it is around consumer choice rather than necessity. Does that answer the question? I think that's helpful.

Great. Glynis?

John, I'm going to throw some at you actually. So I'm going to -- just a few that hopefully are very short answers. I will reel through them. Given the order book on the affordable, what should we anticipate in terms of the affordable private mix this year and maybe into next year?

Second of all, the gross margin on your acquired land, can you confirm what you're actually buying in at? And thirdly, just in terms of the completed development provision, what was it last year? Is it always around that level? If this year was unusual, why? Next, the third-party payments for the build safety provisions. So that's in the gross profit, but you're taking the legal fees for getting them in the adjusted. Is that correct?

And then 2 that require perhaps a little bit more color. One, the size of the outlets, is that to do with just the fact you're putting 3 ranges on it? Therefore, it's each size of site is 3 outlets? How should we be expecting that average size of outlets to progress? And then lastly, just in terms of the land approvals, there obviously the guidance has changed quite substantially. Can you give us a bit of color about why that's happened and what that might mean 1, 2 years out?

So if we start off, we can't do just one word on each, but we'll try. So order book affordable through the mix. So I think if you look at 10 years for us, you would conclude that somewhere around 20%, 21%, that sort of level is what we would deliver in terms of affordable housing. What we saw last year was really quite an unusually low level of affordable housing, a lot of which was driven from Redrow because Redrow had been very high in the year to June '24. So in terms of the sort of pre-acquisition position, Redrow was very high in that year. So when you look forward, I would think that kind of 20%, 21% is what we should look at.

In terms of gross margin on acquired land, we've said that we're acquiring on a gross margin at 23%. We're very comfortable with that in terms of the forward acquisition position. And once all of our cost and procurement synergies are embedded, we should be acquiring on a gross margin at 24%, which is just in line with what we said last year.

The CDP, I'm going to pass to John because I'm not sure I understood it, so I'm just going to pass it to John. And then Building Safety, I mean, anything relating to building safety should be in adjusted. So the legal fees in respect of recovery are in adjusted and any recovery of costs would be part of our adjusted provisioning and therefore, is in adjusted. So we're not putting the recovery in gross margin and the costs in adjusted. And everything else is over to you.

Right. Yes, yes. So just on that one, gross profit, the ones I quoted here were excluding that GBP 13.4 million gain. So -- and we're obliged to recognize that through income rather than take it as a deduction against our provision as well, just the IFRS rules we operate within.

On the completed development accruals of provision, that does tend to move around a little bit. If you look back at the full year, it was a credit. So it helped us at the last full year sort of results. It does kind of ebb and flow depending on sites and the number of outlets coming to kind of closure basically as well, Glynis.

So when a site closes out, you obviously then have that period, it's waiting for local authorities to adopt is the big issue there. So it does tend to be down, but it's the incremental, that's the change year-over-year. So you can see that impact there, but happy to talk about afterwards. On the third party -- sorry, I'm just looking at third party for building -- sorry, outlet size, coming on to that one. If you look at the outlet size, we're talking -- if we look at -- we think of developments and then we think of outlets. And clearly, as we look at particularly land deals that involve larger sized developments, that's where the opportunity is for us to bring on 2 or 3 brands to optimize those at that kind of 140, 150 per sales outlet, which then gives you the lifetime of 3 to 4 years.

So as we look at land opportunities and how that will be driven by development activity, it's looking at those and thinking, okay, what can we do here that will optimize the brand choices, and that is kind of the differential there. So it's all about trying to optimize the speed at which we're going to be there with the show home with the sales team, building out and completing the sales.

On the other one on approvals, really more a function of just the opportunities in the market, but also a deliberate point for ourselves is that, that pipeline that David mentioned on strategic land conversions, we've got a hopper there of about 27,500 plots. Now those have all gone into planning across 103 applications. The time frame over which they may come through on planning is something we want to be prepared for. And therefore, the focus has been on really optimizing the existing land bank because obviously, we were sitting there in excess of 5.5 years when you look back 6 months ago for the last 6 months, it's been about what can we do across the portfolio, either splicing and dicing the current land, but also looking at that strategic and what's going to come through.

So this will give us flexibility to infill and to look at the strategic stuff as that comes through and then look at elsewhere in the market. So I think that hopefully covers that one there. And I think that covers a lot.

So Glynis, so just on the consented plots number, I mean, you can see that over the last 3 reporting periods, it's recent reporting periods, it's reasonably consistent. But just to illustrate it, when we add in the revenue synergy outlets, what we should do is see an increase in outlets and no increase in plots. And therefore, the revenue synergy outlets will drive that number down. So I do think that when you look at the land bank, that number is very important because I mean that is a kind of measure of the sort of raw efficiency of the land bank, i.e., if you've got one site for 1,000 plots, the answer is 1,000. And if you've got 3 sites on that 1,000 plots, the answer is going to be 330. So I think it's an absolutely key measure in terms of looking at that efficiency ratio.

Rebecca, then we'll have a couple more after that, conscious of time.

Just a couple from me. The first one, just wondering if you can talk to kind of how that net cash balance moves into the year-end, I think you're sitting about 170 at the half, but expecting 400 to 500, just some of the moving parts there, knowing that there's going to be some more volumes coming through, but then I guess, an increase in WIP as you increase your outlet profile.

And then just following on, on the approvals on the land bank question before. So would we expect to see the land bank, I guess, roughly stable here as, I guess, you're doing less approvals, but getting more from your strategic land bank. And then on the outlet opening profile as well, just wondering how many of those 20 to 30, I guess, increase in outlets do you think that you'll be doing dual or triple branded outlets? How many of those outlets?

Okay. So if John picks up in terms of the net cash balance and how that will progress towards the year-end. And then I think I'd ask John to pick up on the outlet opening profile. But what I would say in the outlet opening profile is that which I'm sure John will just restate that position, but we are talking average outlets. So therefore, if we were saying our average outlets are going to move from just above 400 to 425 to 435, we've also got to open a lot more outlets during the course of that year. But John can just outline that in terms of figures.

I think in terms of the land bank and the approvals, we feel that we have a lot of flexibility. We've set out what I think is quite a strong growth agenda in terms of our outlets profile. So to move from where we are now to a sort of net outlet position of around 500. So broadly, we're moving from 400 to 500 over a period of time. I think with our land bank at 5.6 years and the strategic sites that we have in for planning, we see that we have a lot of flexibility. So we've set a target, which we'll obviously keep under review, but we've set a target of between 10,000 and 12,000 for this year.

We'd be happy to be at replacement level. So if in FY '27, we were at replacement level, say. But the reality is we are very happy to shrink the land bank as long as we're delivering the required number of outlets. So I think we see that drive to 500 outlets as being the absolute key thing that we're trying to achieve.

And maybe just before going to cash flow, just finishing off on the outlets point, I guess, certainly, when we think about the 30 synergy outlets that are opening, by default, those are generally going -- they're dual because they're an existing site that's adding Redrow to it or Barratt or David Wilson on to a Redrow. I'll get hold of some numbers, so we can always share with them with you, Rebecca. But primarily, it's dualing, but there will -- there are, I think, a handful of triple sites as well. So within that mix of synergy sites, some of them were already David Wilson and Barratt and are having Redrow added to them. So I think there's half a dozen that will be ultimately broadly triple site opportunities once we get through there.

But then on cash flow, I guess, 3, I think, big ingredients really in terms of cash flow performance in the second half. First is clearly operating profit in terms of driving the initial -- our profit from operations in the second half should start as a significantly higher number. If we look at our working capital and particularly the construction WIP where we had that GBP 313 million outflow, including Part Ex, broadly 3/4, if not more of that should come back in the second half given the seasonality of our working capital cycle in terms of completions in the second half.

The other one in there is then land where we would expect, as David mentioned, we're probably going to actually end up unlocking a bit of value in land in the second half. If you put those together, plus the dividend, obviously, in terms of the interim going out, which is probably GBP 60 million and the buyback of GBP 50 million, those together should get you back to that kind of somewhere between the GBP 400 million and GBP 500 million net cash at the year-end.

Conscious, 2 more, Charlie, and then we'll go to the back. And I think that will probably be our time limit.

Charlie Campbell at Stifel. Just one really. Just on mortgage availability, not something you've talked about today. There are clearly quite a few changes going on there. So just wondering what the banks are telling you in terms of mortgage availability for calendar '26. Any changes there? And I suppose just to help us think about that a bit more, any changes in the customer mix in January versus, I don't know, say, July for the sake of an argument before people started to worry about property taxes in other direction?

Okay, Charlie, if I pick them up. I think the mortgage backdrop is of gradually improving backdrop. I would say from probably 3 particular points. One, from a regulatory point that there has been a free up of the regulatory environment in terms of, as an example, the earnings multiples that is allowed to be lent. So there's no question there's a free up of the regulatory environment, which is a positive, but it's obviously been a relatively slow burn. So that is good.

Secondly, I think generally, there are more and more mortgage offers that are at 95%. Now the reality is that, that isn't necessarily fully addressing affordability because the 95% mortgages can be expensive. And therefore, if somebody is comparing that to renting or staying at home, it isn't necessarily giving them what they need. And then I think the third area, which isn't particularly big for us, but it's certainly big in London is that there has obviously been more of a movement to higher loan to values on apartments.

And we came from a situation, albeit a long time ago where most banks were lending perhaps 10% different as a maximum LTV. So if they were at 90 in houses, they would be at 80 on apartments. So again, we've seen some freeing up in terms of that environment. I would say overall that there's not any big change in customer mix. I mean we -- to some extent, I know it's both product and customer, but we're giving some indication of customer mix on the slide that we went through in the Q&A.

But I think there's 2 customers that can really just sit out the market. So in periods of uncertainty, One is a first-time buyer who I would say generally can sit out. They would normally be living at home or renting and they can sit it out for some period of time. And the other category of customer who can sit it out is the downsizer and the downsizer was a significant part of the Redrow business. So I don't think that those are customers that have gone forever almost by definition, the first-time buyer and the downsizer can come back into the market, but they can certainly sit it out. And Redrow has seen that in terms of maybe where they were on cash sales so circa 40% of their business was cash sales, and they're now around about 30% of the business being cash sales. And that will be primarily first-time buyers sitting out -- sorry, downsizers sitting out.

Peter, did you have a question?

Peter Ajose-Adeogun, Morgan Stanley. It was a similar question really just in terms of the growth going forward, which customer segment do you expect to grow the fastest just because when I look at some of the metrics on first-time buyers, I think 1 in 3 now in terms of purchases in the U.K. will be first-time buyers. There's perhaps a notion that maybe not to disagree with you, but they can't sit it out because maybe they've got family formation or they'll do more to kind of get it done. And so just in terms of where you think the growth will come from if first-time buyers are starting to run too hot in terms of the level of completions they make up in the U.K.?

And also maybe if you can give some color on where -- how down it is from the peak for you first-time buyers in your business?

Okay. Thanks. I mean, that's quite a big question. So I think if you step back for new build and for Barratt Redrow in particular, I think a really big opportunity for us over the next 3 to 5 years is about the efficiency of our homes and the substantially lower running costs of our homes. And therefore, I think from a Barratt Redrow point of view, I would say that we mainly want to take market share from the secondhand market.

So we don't mind if they're first-time buyers, secondtime movers or downsizers, we should be actively seeking share. And we can do that as we talked about through a part exchange offer for existing homeowners, but we can also do that through demonstrating substantially lower running costs. And the running costs are not just about the heating or so on. The running costs are also about you don't have to put in a new bathroom or a new kitchen within the first 2 or 3 years.

So in cash terms, there are big, big benefits of newbuild. And so that's the first area that we should look at. And then really in terms of the mix point, I would say that we should expect to see more growth on first-time buyers and more growth on downsizers across the piece. And I do think for downsizers that there is more we could be doing in terms of part exchange offers with downsizers. And that's something that we've been looking at quite actively because we would tend to say that your house can't be worth more than the house you're buying. And therefore, that precludes a lot of downsizers.

And I think that's something where we need to challenge ourselves in terms of how attractive we can be to downsizers. But I think you see on downsizers that a lot of what they want is low maintenance, low running costs and not having to think about replacing kitchens and bathrooms and so on.

Great. I think consciously, we are 10:00. Any last ones? Otherwise, thank you, everybody. and over to David.

Yes. Thank you very much. I appreciate all the questions. Thank you, and we will be back in April with a trading update. Thanks very much.

Great. Good morning, everybody. Thank you for being with us this morning for the Barratt FY '25 full year results meeting. Just a couple of points of housekeeping. There is no fire alarm expected. So if there is an alarm, follow Mike through that door, because he will be the first off or through this door with myself. We're going to start with David in a moment. So David is going to do a first intro, then pass it over to Mike, and then return to David, and then we'll open it up for Q&A.

But with that, I'll hand over to David. Thanks, David.

Thanks, John, in your comparing role. So good morning, everyone, and welcome to the first full year Barratt Redrow presentation. So as John said, Mike and I are going to take you through our FY '25 performance and current trading as well as updates on sales outlets and also building safety. We'll conclude by looking at the market and the underlying fundamentals and why Barratt Redrow is best place to perform across the cycle.

First of all, I'd like to just take you through some of our key messages for today. In FY '25, the market clearly remained challenging. Affordability was a constraint for many and consumer confidence remained low with political and economic uncertainty persisting. Despite this, the business has produced a very resilient performance, both operationally and financially, alongside completing the majority of the Redrow integration whilst delivering cost synergies well ahead of target.

The business remains financially robust, underpinned by our strong balance sheet. And now through our acquisition of Redrow, we have 3 distinct brands that position us well for future growth.

So looking in a little more detail at the operational highlights from last year. Bringing the Redrow brand into the business was, of course, a particular highlight, allowing us to reach most of the market as well as capitalize on synergy opportunities. We received CME clearance in October 2024 and as mentioned, have already completed the bulk of the integration. This allows us to concentrate on maximizing the benefits of the combination and driving the total business forward.

In the year, we remained active in the land market, enhancing our land position through strong approval levels utilizing our numerous land channels. We delivered 16,500 homes, which is a significant achievement in what is a challenging market. I would also like to take a moment to highlight some of our externally accredited achievements over the past year.

Our repeated success in the HBF ratings and the NHBC Pride in the Job Awards are testament to the dedication of our teams across the business as well as the quality of the training and the customer first culture we maintain across the group. This quality is also reflected in our Trustpilot scores given by our customers, which award all 3 brands with the highest rating of Excellent.

Mike will cover the financials in much more detail, but just to pull out a few highlights. Whilst our completions came in modestly below guidance, our adjusted profit before tax and PPA was in line with market expectations. This reflected our rapid progress on cost synergy delivery with GBP 69 million confirmed in the year and GBP 20 million crystallized in FY '25, double our previous forecast.

Our return on capital employed, excluding PPA, improved to 10.7% from 9.5%. We finished the year with a strong net cash position, supporting our growth and capital allocation plans.

Now looking at reservations. Our growing portfolio of PRS partners helped to increase our overall reservation rate to 0.64. Additionally, some improvement in mortgage competition and availability provided a boost to our net private reservation rate, excluding PRS and other multiunit sales. However, the improvement in the rate was offset by the reduced number of sales outlets and our opening order book.

Turning now to completions. Our total completions were down 8% compared to the aggregated figure for FY '24. This was due to a reduction in affordable completions, reflecting the nature and timing of these types of deals. However, we were pleased that our underlying private completions in the year were up around 3.5%. Our average selling prices saw price inflation of around 1% with customers remaining very sensitive to both increases in headline prices and reductions in incentive levels.

Other increases in underlying private ASP were largely due to increased delivery of larger homes outside of London. For more detail on reservation rates, completions and ASPs, please see the information in the appendices. Our land bank supports our medium-term growth ambitions. Our multiple land pipelines allow us to source high-quality land throughout the cycle. While planning remains a slow process, we are very optimistic about the reforms and the positive changes we will see once the legislation is passed.

Gladman remains an important part of our business and will also benefit from the planning reforms, being the partner of choice continues to benefit us in the land market as well. In the year, we announced the MADE partnership alongside Homes England and Lloyds Banking Group, and also the West London partnership with places for London, giving us access to further high-quality land opportunities.

Moving on to outlets. The proposed planning reforms, as I've said, are extremely positive. However, they have taken longer to come into law than we expected. Therefore, as announced in our July trading update, we expect outlet numbers in FY '26 to be largely flat. From FY '27, we will start to see organic outlet growth plus the benefit of our revenue synergy outlets.

As seen on this graph, the vast majority of our FY '27 outlets are already open or have detailed planning concern. In FY '28, there is still a relatively low proportion of forecast outlets that rely on future planning approvals. This provides us with excellent visibility over the next few years and gives us confidence in our growth forecasts.

On current trading, in July and August, we saw our net private reservation rate, excluding PRS, increased slightly compared to the same period in FY '25. However, we recognize that the market remains subdued. And after speculation about stamp duty, some customers are going to wait to see the impact of the budget in late November. Meanwhile, the lack of PRS reservations in the period simply reflects the timing of deals.

Our year-to-date completions are marginally ahead of last year's and our forward sold position is in line. So we are very pleased with the solid start to the financial year.

So I'm now going to hand over to Mike who will take you through our FY '25 performance and financials.

Thanks, David. Good morning, everyone. So as David said, I'll take you through our FY '25 performance and also spend a few minutes this morning on building safety.

This slide shows FY '25 performance against the reported position for FY '24, which obviously excludes any impact of the Redrow acquisition. I'll touch on the P&L metrics shortly. But you can see here our total home completions of 16,565 homes and strong closing net cash position of GBP 773 million after the payment of GBP 249 million of dividends, GBP 50 million spent on the share buyback and just over GBP 100 million spent on building safety remediation.

So if I move on now to a more meaningful comparison of performance as Barratt Redrow. As we did at the half year, we're focusing on the FY '25 performance stripping out the impact of deal purchase price allocation adjustments, which I'll touch on later. And these are noncash accounting adjustments, which largely fall away from FY '26 onwards. We think this is the best view of underlying trading in the business during the year.

In the comparative for FY '24, we're including Redrow here from the 24th of August 2023, but without any adjustment for accounting policies. And we've put a more detailed slide in the appendices if anyone has the appetite which shows the reconciliation of all of these amounts to ensure you've got full transparency.

So several points to highlight. First of all, total home completions, as David said, were down 7.8% as a result of lower outlet numbers during the year. Despite the lower volume, adjusted gross profit was broadly flat at GBP 970.3 million, and gross margin improved by 30 basis points to 17.4%, which mainly reflected modest sales price inflation and the positive mix effect of more recently acquired land coming into production.

Adjusted operating profit was up 2.9% at GBP 595.4 million, with margin up 50 basis points at 10.7% reflecting the benefit of cost synergy delivery during the year. Adjusted profit before tax was GBP 591.6 million, slightly ahead of guidance in July, and adjusted EPS was 30.8p, which delivers a full year dividend up 8.6% to 17.6p. So overall, we're pleased with the performance of the combined group delivered in the year despite the reduced total home completions and particularly positive to see both gross and operating margins moving in the right direction.

This slide updates on the accounting fair value adjustments that have been finalized since our provisional position at the half year, and 4 changes to draw out here. First of all, the uplift on land and work in progress is now GBP 120.4 million, that's up from GBP 93 million at the half year, and that reflects the final valuation of sites in the opening balance sheet.

Secondly, as I mentioned back in February, the recognition threshold for building safety liabilities is lower than normal for Redrow because we were required to bring contingent liabilities onto the balance sheet by the accounting rules.

As we detailed in the July trading statement, we've increased Redrow's building safety provisions to take into account concrete frame issues in London, and this has increased this adjustment to the GBP 144.5 million shown here. The final changes relate to the tax effect of the fair value adjustments, resulting in a GBP 94 million adjustment to deferred tax. So goodwill recognized on the Redrow transaction is, therefore, GBP 321.9 million and that's up from the provisional estimate of GBP 259 million.

So again, just to note that most of these fair value impacts have actually already unwound in FY '25 with a reduction of GBP 103.3 million in adjusted profit before tax. We're expecting a further GBP 20 million charge in FY '26 before this becomes immaterial to future years.

So moving on to land, and this is the updated position on embedded gross margin in the land bank. And pleasingly, the land bank margin continues to improve, up 90 basis points since half year to 19.2% at the end of June. So with little net inflation impact, roughly 1/3 of the improvement came from the utilization of land in the half and the remaining 2/3 from the new sites that we've added to the land bank. And as you know, we remain focused on improving this position over the medium term to our current gross margin hurdle rate of 23% by optimizing price, managing build cost inflation effectively and bringing new land into production.

So moving on to look at adjusted operating margin in FY '25. And from last year's Barratt only operating margin, we saw a reduction of 120 basis points from reduced volume. That was almost all offset by improved pricing across the year. And as we've said previously, build cost inflation was broadly flat in FY '25.

Looking at our same site, same house type measure of inflation, which covers around 1/3 of our volume, like-for-like sales price inflation was around 1.4% in the year. Last year, we saw a step-up in completed development costs, but these have normalized this year, resulting in a positive margin benefit of 80 basis points. The impact of other mix effects, including Redrow coming into the group, contributed 70 basis points together with a further 30 basis points from the cost synergies we realized during the year.

Our adjusted operating margin before the impact of fair value PPA adjustments was therefore 10.7%. And you can see the impact of those PPA adjustments, which take margin to 9%, flat on the Barratt only margin from last year.

So now just to update on cost synergies. We're making really good progress on realizing the cost synergies target of at least GBP 100 million with GBP 20 million included in the income statement in FY '25. With 9 office closures confirmed, 6 were completed by year-end and 3 are in the final stages of closing at the end of June with GBP 23 million of savings confirmed.

The head office rationalization is also underway, and will complete shortly with GBP 21 million confirmed at the 29th of June. And on procurement, we're making good progress in aligning pricing and terms across key materials categories with GBP 25 million confirmed at the 29th of June.

As we said, our operational leadership was aligned and effective from the 1st of July 2025, and the IT integration is in progress with the migration of 6 remaining divisions expected to complete in FY '26. Having crystalized GBP 20 million of cost synergies in FY '25, we're well on track to deliver an incremental GBP 45 million in FY '26.

So on revenue synergies, just to give you the latest numbers to date, we've now submitted 25 planning applications at the end of August, and we've already received planning permission on 9 of those sites. We expect to submit the remaining applications during the course of FY '26, and we're very much on track to see the first incremental outlets ready to open at the start of FY '27.

So now I'd like to spend a few minutes just updating on building safety. So as you know, our approach from the start of this issue has been to focus on the safety of the buildings we've built and the people who live in them. We've been very engaged with government, and we were the first housebuilder to create a unit dedicated to remediation, and we commit significant time and resources to support it in delivering our program.

We apply a rigorous process in assessing buildings within the scope of our obligations. That includes using reputable fire engineers and seeking peer reviews of all fire risk assessments undertaken on our buildings. We're also making some progress with recoveries from the supply chain, where we have a robust case to pursue them for substandard workmanship or design.

So looking at our building safety provisions, we currently have GBP 886 million on the balance sheet relating to fire and external wall system issues. During the year, we brought the Redrow provision of GBP 184 million onto our balance sheet. And as we announced in July, within the Barratt legacy portfolio, we've provided GBP 109 million across 3 areas.

Firstly, GBP 76 million in relation to developments in our Southern region, which related to a specific build typology we don't think is repeated anywhere else in the group. We've also seen GBP 17 million of incremental costs at an existing remediation project in London. But other than that, the underlying position was relatively stable with a net GBP 16 million movement of costs, which was offset elsewhere in the income statement by supply chain recovery.

Moving on to look at the provision for concrete frame issues. We carry a provision of GBP 187 million at the end of June. During the year, no new buildings came into scope in the Barratt portfolio. As we updated in July, we identified concrete frame issues similar to those identified on legacy Barratt development at up to 4 Redrow developments. And we booked GBP 105 million to the opening balance sheet provision for these issues. But based on the reviews we've carried out today, we don't expect any further buildings to come into scope for these frame related issues going forward.

So on to the balance sheet, and here's our usual balance sheet breakouts. And in the appendices, we've included a slide which reflects the impact of the consolidation of Redrow at fair value and also the movements from underlying trading. So 2 points to highlight here. First of all, the ongoing organic investment in land. And as well as bringing Redrow's land into the balance sheet, we invested an incremental GBP 181 million across FY '25.

The significant increase in land creditors saw an additional GBP 167 million added over and above Redrow's consolidation. So land creditors remained below the target range of 20% to 25%, but moved up to 15.9% this year, and we're looking to ensure that we add land on deferred terms to take us into that 20% to 25% range.

Part exchange has increased by GBP 39 million, which is a reflection of its importance of a selling tool in a tough market, but more than 2/3 of the 549 homes in our portfolio had already been sold by the 29th of June. And as you know, we keep tight control of part exchange stock.

So here's the cash flow bridge for Barratt Redrow from reported operating profit on the left to the net cash outflow on the right and really just a couple of things to point out from this slide. Firstly, a step-up in tax payments was the prime driver of the GBP 101 million outflow in interest and tax. And as I've already noted, building safety spend totaled GBP 101 million.

Our operating cash inflow was GBP 50 million, and we brought Redrow's cash onto the balance sheet and also made some further investment into additional timber frame facilities at our Oregon factory in Scotland. With dividends paid and the share buyback of GBP 50 million, the net cash outflow for the year was GBP 96 million.

So just to update on capital allocation and just reiterating our unchanged capital allocation priorities here. Clearly, our enhanced scale and balance sheet strength with net cash of GBP 772 million and committed lending facilities of GBP 700 million put us in a very strong financial position looking forward.

We're focused on investing in our business to drive our future growth. David detailed our sales outlook profile, and we're focused on delivering land to accelerate development using our 3 brands. We remain committed to innovation and development and we'll continue to invest in opportunities like the timber frame facilities and also our sustainability initiatives.

And finally, we have a clear approach on shareholder returns, including our ordinary dividend at 2x cover and the ongoing share buyback program of at least GBP 100 million per annum.

So turning now to guidance. Most of these points have been covered, but just to highlight, we expect our adjusted administrative costs to be around GBP 400 million. This reflects the additional period of Redrow's overhead base, which will impact FY '26, underlying cost inflation and the benefit of incremental synergies of approximately GBP 30 million. We're anticipating total synergies of GBP 45 million with the balance of GBP 15 million crystalized in cost of sales.

A finance charge of approximately GBP 50 million, which is dominated by noncash charges in relation to land creditors and legacy property provisions as well as modest cash interest income on a reducing cash balance. In relation to land, we expect to operate at broadly replacement levels and spend between GBP 800 million and GBP 900 million on land and land creditors in FY '26.

On building safety spend, we estimate spend will be around GBP 250 million for FY '26. And within this, I'm assuming that around half of our building safety fund costs will be paid during the year, so that's around GBP 70 million.

Looking at net cash at the end of June 2026, we expect to be between GBP 400 million and GBP 500 million. So finally, to summarize, we believe we've delivered a solid financial performance in FY '25 in what was a tough market. Adjusted profit before tax was delivered slightly ahead of expectations for the year. And notwithstanding the tough market backdrop, our balance sheet remains strong. We've delivered cost synergies ahead of schedule whilst also making good progress on revenue synergies and the wider integration program.

Our land bank and strong balance sheet give us a great platform to grow the business. And finally, we've put in place both clear capital allocation plans with an updated dividend policy alongside the annual GBP 100 million buyback program.

And with that, I'll hand back to David.

Thanks very much, Mike. And now just turning to look at the market. So I think whilst I've covered earlier that the current market clearly has its challenges, I think we need to bear in mind that the fundamentals of our industry remain very strong. Housing is clearly a top priority for government and the demand for homeownership remains steadfast. When consumer confidence returns, the policy environment becomes clearer and the planning reforms kick in, we can expect to see a strong uptick in planning approvals, outlet growth and opportunities to increase sales and volumes through our 3 leading brands.

We remain confident that Barratt Redrow is best placed to navigate the market at all points of the cycle. Fundamental to Barratt Redrow are our 3 high-quality differentiated brands, and we have the skills and experience to deploy them effectively. These brands allow us to operate in a variety of locations and local markets with the optimal divisional infrastructure to match. Our customer focus is clearly demonstrated and recognized by our numerous third-party credentials.

We have demonstrated that we are a reliable partner, allowing us to be flexible and innovative. Our reorganized divisional structure and brand portfolio positions us well for growth over the medium term. And finally, we remain financially strong with a solid balance sheet, a robust net cash position and cost synergies, which will increasingly drive higher profit margins.

So in summary, we remain confident in the medium-term guidance that we gave in February. Outlet growth on which we have good visibility will allow us to reach our outlets goal, which will flow through to 22,000 total home completions. Our progress on cost synergies has enabled us to deliver on profit expectations, and we will continue to benefit the business financially as we move forward.

Savings through synergies as well as greater efficiency of our fixed -- on our fixed cost base will help us to drive our operating margin back to 15%. We will be increasing our use of line creditors, which will aid our return on capital employed, recovering back to 20%. Also helping us to improve return on capital employed will be the effect of multi-branding of developments using our 3 high-quality and differentiated brands. And finally, as we've touched on, we remain financially robust and that gives us confidence in our growth aspirations and also providing stable shareholder returns.

Thank you very much. And Mike and I will be happy to take questions, which John is going to host. Thank you.

Thank you, David. We're going to open up for Q&A. [Operator Instructions] We'll start in the front row with Will, if you could, please.

Will Jones at Rothschild & Co Redburn. Try 3, please, if I can. First, just referencing, I think, in the statement, you talked about additional risk given the obvious and understandable around the budget in November. And I think the need for a normal autumn. Could you just expand on what the normal autumn might look like? And perhaps just remind us of the -- roughly the full year sales rate you're assuming?

Second one was actually back to building safety, 2 parts to it. To what extent is there still risk around the building count with respect to inactive buildings maybe coming into scope? And perhaps you can expand on the other side, the recovery process. I think you talked about some steady progress there, but what's the potential for that over time?

And then the last one is maybe just around build cost. I think you've reiterated your guidance for the current year and you've got good visibility, but just wondering what -- how you think things might shape up for the conversations that start to take place at the end of the year, start of calendar of '26 with suppliers, subdued market for you guys? Will it be, I guess, subdued for them in terms of what they end up achieving?

Well, first of all, good morning, Will. Good to see you in the front row. So Mike will pick up in terms of building safety and also on build costs. I mean if I just touch in terms of the budget, I mean, I think really kind of 2 points to make. I mean one is, look, we're pleased with what we've seen through July and August. So that's the first thing. And we've also provided that information in terms of reservations through July and August.

I think it's understandable that we would flag that speculation relating to the budget can affect customer sentiment. And we recognize that, that can be both positive and negative. So what we've got to do is we've just got to concentrate on trading our business, making sure that we're putting attractive offers in front of our customers, and we feel that we're doing that effectively, given the market conditions.

In terms of rates of sale, we would normally see some tick up as we move into the autumn. So we've clearly provided rates of sales through July and August. I think the tick up in the autumn or the tick up in the spring has probably been less substantial than it used to be. Primarily, I think because we've just seen strong trading through, say, January, February or strong trading through July and August, which we haven't necessarily seen previously. And I mean overall time, I think we said earlier in the year that somewhere around about 0.6 is the kind of rate of sale that we're looking at as a group. Mike?

So if I pick up building safety first. So first of all, on the portfolio that's provided, I think we've got increasingly good visibility on costs and progress there. So about 90% of that portfolio has now been through some kind of tender process on costing or we're actually actively remediating it. So I think the visibility we've got on that is really good.

On inactive buildings, I mean they have been through a process, albeit largely desktop in terms of documentation around the status of risk assessments, the build typology, the external wall systems and so on. So there's been an element of process there already. And that's why we don't believe that there's work to do, and they're not in the active bucket.

And then if you look at the flow-through of buildings from that sort of inactive group into the provision over time, actually, it's very, very low in the second half of the year, literally just a couple of buildings that moved across. So I think as we move through time, we are increasingly confident of the position. The problem with it is you can't say that nothing will come out as we get into buildings and time passes. But I think our visibility and confidence is increasing.

On the recovery process, I mean, we're engaged in a number of conversations. Obviously, we can't talk too much about them for commercial reasons, obviously. But I think we are engaged in that process. We recovered GBP 60 million from the supply chain during the year, and we're actively engaged on a program to do that as we go forward.

Moving on to build cost. So I mean, I think we're still comfortable with the 1% to 2% guidance range for the year from everything that we've seen. As we said previously, a little bit more pressure on labor and the subcontractor side than on materials. And I think some of that's now the flow-through of the national insurance increases and the other labor cost increase is coming through. And again, it's the early-stage trades. It's the ground workers and so on that we're seeing a little bit more pressure on.

But we obviously also have the benefit of the cost synergies through our procurement program. And again, we've had really good engagement with the supply chain on that. We're able to get very good forward visibility of the growth of the business, which is helpful. So overall, we're comfortable with 1% to 2% for this year.

Aynsley from room.

Aynsley Lammin from Investec. Just 2 from me, please. One, if you could just provide a bit more color on incentives and pricing and what you're doing going into the autumn selling season in relation to that? And then secondly, just on the planning, obviously slow to come through at the local level. Could you just remind us of the time line of what happens from here when you expect that to actually start to impact positively at a local level when the legislation comes in, et cetera?

Yes. Aynsley, so I mean, first of all, in terms of incentives, I mean, the short answer is no real change in relation to incentives or incentive levels. I think when you look at our incentives, I mean, I won't run through them all, but if I just highlight 2 or 3 of those incentives. So for example, for first-time buyers, we will offer a deposit match. So if the first-time buyer has a 5% deposit, we will effectively match that deposit. It allows the first-time buyer to get on to a 90% loan to value, and that is an attractive proposition.

Secondly, we have, for a period of time, accelerated post COVID, run a key worker discount. So primarily aimed at blue light workers, but a broader range has been brought in of key workers. I don't think analysts are in that range. But we can expand it, and that is a really attractive proposition. So we're typically offering a 5% discount subject to ceiling. So it probably blends at about 3.5%, 4%.

And then the third offer is part exchange. So part exchange is probably our most expensive offer. We don't look to make profit on the part exchange offer, but it is a very attractive offer for consumers. So if you were a second or a third time buyer, then clearly taking all of the pain out of the move process is attractive. And I think we tend to see that when the second hand market, the existing home market is a bit slower than part exchange becomes much more attractive. But we're still seeing overall incentive levels as we've set out sort of 6% plus in terms of overall incentive levels and quite a bit of that is driven by part exchange.

In terms of planning and infrastructure, we've said very consistently that the government coming in, in July '24, have really tried to take a transformational approach to planning. We have to remember that if you go back to March, April '24, we were going backwards very, very rapidly from a planning point of view. And I think the government has set out what I see as being a very bold and ambitious agenda in terms of planning, not just for residential development, but for commercial development, for infrastructure and so on.

Most of that is contained within the planning and infrastructure bill. I think it has taken a bit longer than we would have thought back in July, August '24. And our understanding of the time lines presently is it's going through the review within the House of Lords. And we'd expect that perhaps November, December, it will come into legislation. And then all local authorities will need to comply with the requirements of the planning and infrastructure bill. So we should start to see that taking effect during 2026.

Chris?

Chris Millington, Deutsche. First one, I just wanted just to kind of gauge your steel behind the outlet opening profile. Obviously, we had a delay last time. They're still obviously subject to third parties kind of moving in line just how front or back-end loaded in those periods, do those outlets come through. So that's just the first one.

Second one is looking more at the longer-term shape of the balance sheet. There's obviously quite a lot of demands on cash over the next few years. Where would you start getting uncomfortable with regard to adjusted leverage? It does look like the net cash balance is probably going to be eliminated in the next couple of years?

And the next -- the last one, I thought a really helpful slide on the land bank margin really good to help us build it up. Perhaps you can give us some sort of guide as to the evolution of that maybe something like when do the sub-15% gross margin categories get eliminated or something to that effect?

Thanks very much, Chris. If I pick up on outlets and then Mike will pick up in terms of the sort of shape of the balance sheet and cash and land bank margin. So think in terms of outlook, so we recognize that we had a revision of guidance for outlets for FY '26, which we updated the market with that in July. I mean I think our confidence regarding outlet delivery is twofold. One, we're putting it up on a slide, we've broken it down in detail, and I'm presenting the slide. So I think that demonstrates a strong level of confidence. We wouldn't normally give that level of detail.

I think the second point I would say is that this is unusual. I mean I've been here 16 years, and I think at any point over the last 16 years, if we had put up an outlet profile, we would have had much less with detailed consent or much less with planning submitted. And that's just a byproduct of 2 things.

One is that since we've gone back into the land market post 2022, we have acquired sites that can be single, dual or triple branded. So that gives us good outlet delivery. And secondly, through the combination with Redrow, we've identified that 45 sites can be delivered. And obviously, we see that there are more than 45 potential. So we take a reasonably conservative view and say we can deliver 45. And that's also entirely in our control, and Redrow are already on those sites or Barratt are already on those sites, and we're effectively either doing a plot substitutional or we're doing a replan.

So yes, we have a high level of confidence regarding delivery. As I touched on a moment ago, I think everyone in the industry is very positive about the government's approach in relation to planning. I mean why would you not be? But I think it has been more protracted than anyone would have expected because we're now 14 months later, and we still don't have the legislation. So -- but we are where we are. The legislation will come, and it should be effective from the beginning of '26.

If I just pick up on the balance sheet first. So I guess the first point to make is we're starting from a really strong place. GBP 770 million of cash at the end of last year. We flagged in February that there would be a couple of years of investment in web and infrastructure to get the new outlets open and get us up to the 500 outlet target in a few years' time. So we do expect to be in that phase. We expect to use that net cash over the next couple of years, but then we start to generate cash at the end of the plan as those outlooks come into production and we sort of stabilize outlet numbers.

I think when you step back from it, the shape of the balance sheet over the last 3 or 4 years has probably been the outlier in a sense with the level of net cash that we've been holding. If you look over a longer period of time, we'd normally have targeted very small level of net cash at year-end. And that's probably where we'll end up getting back to trust. But I think we're starting from a very strong place. We've got good line of sight to those investments and work in progress and infrastructure to get the new outlooks open. And we've said many times that the strength of the balance sheet is a real priority for us and the board as we go forward.

On the land bank margin, I mean it's difficult to predict exactly when those sites will roll off, but average site length is sort of 3.5 years. So you think over the next 2 or 3 years, you'll see those lower site margins roll off. We've given the medium-term target of getting to the hurdle rate of gross margin of 23 and then 24 when the procurement synergies have kicked in. So you'd expect to see that evolution continue over the next few years, 90 basis points up in the year this year with the land we've added. We're carrying on adding land hurdle rates that will blend up over time. So again, it will take a few years to get there, but we're confident that that's directional travel.

Great. Ami?

Ami Galla from Citi. A couple of questions for me. One was on the gross margin in the land bank. Can I clarify, is the synergies on top of that, the procurement synergies associated with the gross margin, will that be on top of that? Or is that included in the land bank gross margin that we see?

The second question was really on the WIP investments linked to outlets. You've talked about this previously, but can you remind us how should we think about that investment profile over the medium term?

And the last one was on the ASP in the land bank. That's also marginally higher, and I presume that's mix as well. Can you give us some color as to how is that -- how is the shape of that mix adjustment over the next 3 years?

Sounds like 3 for me. So gross margin in the land bank does include procurement synergies. So that's fairly straightforward. On work in progress, so I think we're guiding this year that we'll have GBP 200 to GBP 250 million of incremental with investment as we go through this year. And again, that's investing in outlet openings that we'll see coming through both at the end of this year and into FY '27.

And then we're not guiding for '27, but we've been at that level of GBP 200 million to GBP 250 million for the last couple of years. And on ASPs in the land bank, it is largely reflective of mix. And clearly, in the land bank now we're reporting Redrow as well, which operates at a slightly higher ASP than Barratt and David Wilson did previously. We're not seeing any particular sales price inflation at the moment. Our sort of like-for-like measure is broadly flat on selling prices. So the increase in ASPs that you're seeing is coming through the mix of sites rather than inflation.

Clyde?

Clyde Lewis at Peel Hunt. 3, if I may as well. Firstly, on the desire to grow the deferred terms around the land buying, how easy do you think that's going to be? And do you think that's going to limit your choice in any way in terms of what you can buy?

Second was around the sort of bulk sales mix in terms of the volume guidance this year, what sort of contribution are you expecting to see from bulk sales?

And the third one probably was going back to your comment, David, about being up at the company with 16 years, pretty much in every one of those years, you will have seen some sort of demand incentive from the government, whether it's stamp-duty holidays or specific first-time buyer help. Do you think this government actually understands that it's probably going to need some of that to try and get the overall housing market back to where it wants to be, despite all the extra money they put into the affordable housing sector?

Yes. Okay, Clyde. Thank you. I think if I just pick up on the deferred terms and Mike will pick up in terms of multi-unit bulk sales, and then we'll just talk -- I'll about the demand side. So I think on deferred terms, I mean -- I think it obviously depends on the position of the land owner, but I would say as a generalization, we are buying sites that are larger than average and the ability to secure deferred terms is greater.

So I don't see anything that will change that because we see that when we're bidding maybe on a site that might be 150 to 200 plots, there can be a huge amount of interest in those sites, whereas if we're looking at sites that are maybe 750 plots and above, there's just a limited number of buyers, probably ourselves, Vistry, maybe a couple of the other majors might be in that market. And so I think there is an ability to structure deals, which is -- it's got to work for both sides, but securing deferred terms for us has always been important, and we're just going to place a little bit more emphasis on it going forward. So that's the kind of deferred terms.

I think on the demand side, and you've seen everything unfold in terms of the way that the markets evolve. So all the 16 years I've been here apart from the last 2 years, there has been a government-backed program in the market. So since 2009 without interruption. The programs have changed in their nature. And as you know, in the early days, the house builders either participated by providing 50% of the shared equity loan or the house builders paid to access the scheme.

And with Help to Buy, the house builders were not asked to pay to access the scheme. And we've said Barratt Redrow, and I know many other house builders said that we would happily pay to access the scheme. We see that when you look at affordability in areas such as London or London in the Southeast, affordability for first-time buyers is at record levels of challenge. We've not seen the kind of metrics on affordability previously.

And therefore, you can see that particularly in London, as you know, London for us is a relatively small part, 5% to 7% of our completions in London. But the reality is that affordability challenges in London are acute. And you can see that coming through in terms of the numbers. So our message to government has been the house builders are happy to contribute towards a scheme. It should be targeted at first-time buyers and there should be a particular focus on areas of acute affordability.

And then just on multiunit sales and so on. I think on the affordable side, we are seeing slightly more appetite from the registered providers to do additionality. Again, that was probably backed off a little bit over the last 12 or 18 months, and we're seeing good levels of grant funding come through into some of those deals that we're doing. So I think they'll definitely be a feature for us this year.

And then on PRS, as you know, we sort of focused on 2 or 3 key relationships on PRS, the most significant of which is Lloyds Living. And we've talked about the framework we've got in place with them, want to do about 1,000 units a year over time. And in general, as we grow the business to 22,000 homes per year, we think PRS will be about 2,000 of that 22,000.

So I think for this year, we'd probably expect multiunit sales in PRS to be just over 1,000 units in the completion mix again. But we're seeing -- we're still engaged in good conversations with the PRS providers. I think that there are still deals there, pricing that we're comfortable to do the deal. And it will just be part of our mix going forward, I think.

Charlie?

Charlie Campbell at Stifel. Just a couple of questions, please. Just firstly, on mortgages, some changes in stress tests and loan to income. Just wonder if that's had any impact yet and whether we should expect that to have some impact going forward?

And then secondly, on Section 106 and HAs, affordable housing, has that appetite return back to normal after the hiatus or do we need to wait for things like the prospectus to come out for the affordable homes program?

Charlie, okay. If I pick up both of them. And first of all, I think that everyone is conscious of the fact that there was very substantial tightening of the mortgage lending rules post the financial crisis. And I think we recognize that there is some concerns about a rapid relaxation of those rules. But we would welcome the relaxation that has taken place, and we think that the scope for further relaxation, particularly around multiples of joint income multiples.

So I think it's very difficult to disaggregate that from exactly what is the impact. But clearly, it is a positive impact in terms of allowing more lending to take place in the market. And there has been quite a lot of documentation published around the way in which it improves affordability. So that has to be a positive.

In terms of the Section 106, I mean, look, at a headline level post the announcement by government, I would say, at June '25, we found the closure of Section 106 agreements in aggregate to be much easier than at June '24. I'm not saying it was easy, but it was much easier.

And I think beyond that, it is an assessment on an HA by HA basis. And I think where housing associations have got challenges regarding cladding and cladding remediation, and the government have done something to alleviate that by allowing the housing associations to access the building safety fund. And also where housing associations have got particular challenges around the remediation of existing housing stock, i.e., it needs to be brought up the standard under Awaab's Law. I think the reality is that housing associations have got some cash and funding challenges.

So I think it is the housing association specific. And the industry is very definitely flagging that it is not a resolved issue for government. And there's a consultation in terms of the effectively, the equalization of rentals. But that consultation is not closed. And so the equalization of rentals is another very important thing for the HAs in terms of the financial impact it has on the HAs.

Allison?

Allison from Bank of America. 3 questions from my side. The first one on the ASP for next year, I don't know what's your expectation is overall. Do you think it's going to still be positive, stable? Or you just still a lot of uncertainties there given the budget impact? Number one.

And number two is on the PRS because we also saw the news like the government might impose some landlord tax or the national insurance on the investors. Do you see it's going to be a negative impact for the future investment demand for the PRS?

And thirdly is on this future home standard, which I understand we still haven't got full details yet. And I heard there are some builders saying, if there is a mandatory requirement on the solar panel installation, there could potentially be a negative or the downside risk to the earnings for that particular builder. But I wonder if you heard anything on the regulation and what's the progress for the Barratt portfolio?

Yes. Certainly. Mike, can you take the ASP one? So if I just pick up on PRS initially. I mean I think this just falls into a category of the sort of budget speculation. And clearly, we don't know whether there is any intention to put national insurance on rental income. So we just have to wait and see. I would think that if you're an institutional investor, then you're going to want to look at that fairly carefully, I would assume. But we'll find out in November about directionally where that is going to go.

In terms of the Future Homes standard, so I chair the Future Homes hub. So I'm sort of very close to the Future Homes standard of what's happening with the Future Homes standard. So I think the first thing is that the Future Homes standard has been delayed. It depends on at what point you're measuring, but the Future Homes standard is probably 12 months to 18 months behind when it was originally anticipated to be.

And that is giving all participants in the industry more time to adjust. And when the standard comes into effect, we expect the standard to be published prior to Christmas. There will be a transition plan, and that transition plan will run through certainly '26, '27, '28, but the transition plan will be published.

And then thirdly, there is a subconsultation about the number of -- the amount of solar panels that will be required on properties. And certainly, from the Future Homes point of view, we've just effectively said that there has to be a balance to that. We shouldn't be in a situation that we're mandating very large quantities of solar panels because the standards can be achieved in different ways, not simply through the provision of solar panels. But when the standard is published in December, we will see the outcome from that. But again, I would emphasize it will be over quite a long transition period.

And then on ASP. So on pricing, generally, we said that using our like-for-like measure last year, pricing was up 1.4%. So that's the sort of underlying pricing position. Year-to-date, that's been flat. So clearly, the pricing position has been more challenging in recent months.

And so looking forward into FY '26, we're not expecting any benefit from sales price inflation in the numbers. There will be a small increase in ASPs just coming through the mix effect. We'll be blending in Redrow. And that will be slightly offset by a higher proportion of affordable housing in the year, but I'd expect it to be very slightly ahead year-on-year. I don't think there will be significant movements in the ASPs.

Alastair?

Yes. Alastair Stewart from Progressive Equity Research. A bit of a niche series of questions all based in Scotland, no vested interest there, of course. Yes. Just a bit of color on Scotland. First of all, you did a couple of deals with Springfield. Any further organic opportunities north of the Borden? Also, the Scottish government seemed to have changed tack quite a lot on -- especially build to rent, but just generally seem to be a bit more pragmatic, let's say. Any color on that? I suppose it's a question for you, David.

Yes. I feel well qualified to answer. Yes. Look, we have a big business in Scotland. So we're based in Glasgow, Edinburgh and Aberdeen. And we've had a big business in Scotland over a long period of time. I think that the Springfield deal that you touched on is reflecting two things. One is we have a very positive view of the market in Scotland. It is a market that operates under different regulations and different policy from England. So for example, Scotland never had a government support program, not in the same way.

And policies in Scotland have probably been a little more slanted towards affordable housing generally. But we see it as being a positive environment. And therefore, we acquired the sites from Springfield, and they've obviously gone through a restructure of their activities to be more focused in terms of the north of Scotland. So we're positive about that opportunity.

Again, I would say that the rent controls in Scotland adversely impacted the buy-to-rent market. And the institutional investor, I think, was less enthusiastic. But that position seems to be altering and therefore, we should see the opportunity for more private rental, particularly for Edinburgh. I think Edinburgh is a very, very strong market or a very strong potential in terms of private rental. And then the other area, which Mike, maybe just touch on, is just on building safety because, again, I think that -- do you want to just touch on building safety?

Yes. I mean, I guess, it's been an open conversation for a while in terms of where the standard for remediation would end up compared to the standard in England and Wales. I think that has moved during -- this year has moved towards the England and Wales position, which clearly for us is positive because that's the basis that we've approached building safety in Scotland, but still not concluded, but I think closer to conclusion and in a more positive sort of state.

Marcus?

Marcus Cole from UBS. Just one question on timber frame. Obviously, you all went up to the factory earlier this year. I'm just thinking about how that's progressing. Any learnings you have there? And how do you think about more about vertical integration on the back of those learnings?

Yes, we're very positive about timber frame. I mean, if you -- just to go back to Scotland very briefly, when I came into the business, we were almost entirely brick and block in Scotland. And we're now almost entirely timber frame. So 95% plus in terms of what we're doing in Scotland is timber frame. It would only really be on higher apartments where we would move away from that.

So I think that the use of timber frame is going to become more and more prevalent in England. And you can see that through the majors that most people have either got agreed sourcing arrangements or they have their own factories. I mean -- and that's the reality. It's very much the direction of travel. So we are very positive about it.

The factory -- the new factory in Derby is progressing well and we see volumes rising. Ultimately, we see capacity between the 2 factories up to 9,000 frames. But I think the opportunity goes beyond that in terms of being able to do more and more within the factories.

So having closed panels, being able to put services into the panels, whether it's windows, doors, plumbing, et cetera. There's a lot of stuff that can be done within the factory. So we see that -- what we have in Scotland and what we have in Derby is very much a platform for us to grow from over the next few years.

In terms of vertical integration, I mean, I would say our starting position is that we would prefer not to vertically integrate. You'll find that many of the products that we buy we are a relatively small part of the manufacturers business. And what we don't really want to be doing is running a business where because of the economics of the business, we're having to provide a lot of product to other companies. We want to be able to like with timber frame, bring something into our portfolio where it can provide exclusively to Barratt Redrow. And therefore, when you look at the sort of volumes that are involved in certain production areas, that just wouldn't be possible. You wouldn't be able to run the sort of economies on our volumes alone.

So I think we're very, very selective about what we would vertically integrate on, but where we see an opportunity like our acquisition of Oregon or for example, we run our own in-house wardrobe factory, then we're certainly happy to further integrate those types of businesses.

Any more questions? Hope we exhausted everyone. Thank you, everyone. One more? Yes, of course. Chris?

Sorry, Chris Millington, Deutsche. It's just about what your thinking is about the proportion of affordable going forward. Do you think it can keep pace with the private growth within the business on volumes? Or is there an assumption that will lag slightly because of the funding issues we've seen historically?

I think if you look at a policy level, then I think you would expect the proportion of affordable to increase slightly going forward on the basis that for greenfield sites under the planning and infrastructure build, there will be a higher assumption in terms of affordable for example. So I think you would say that the general trend would be an upward trend on affordable.

I think the funding question is we've touched on that, that's a kind of separate question. And the funding challenge is real. I mean the government obviously announced a huge funding program over a 10-year period, but short term, the funding challenge is real.

And I think the final point, and we -- this has been well documented in London is that 35% or 40% or 50% of nothing isn't benefiting anyone. And I think we've consistently seen this over 20 or 30 years is that as there is an attempt to take more value from the land, the landowners have an opportunity to say, actually, we won't participate or sites get bogged down in viability arguments. And that clearly is what's playing out in London presently.

Great. Thank you, everyone, for coming along. If there are any follow-up questions, don't hesitate to get in touch with myself. But thank you, and we'll close proceedings.

Thank you.

Thanks very much. Thanks, everyone.

Hello, and welcome to the Barratt Redrow plc Full Year Trading Update Conference Call. Today's call is being recorded. [Operator Instructions] I will now hand you over to David Thomas, Group Chief Executive Officer, to begin today's conference. Please go ahead, sir.

Good morning, everyone, and thank you for joining us on our full year trading update call. Here with me this morning, as usual, I have Mike, our CFO. And first of all, I'd like to start by thanking all of our employees, our subcontractors and our suppliers for their continued commitment and hard work. In February, at our Capital Markets Day, we set out our medium-term guidance and our strategy for getting there.

As a reminder, using the strength of our 3 leading brands, our land pipeline and our operational experience and expertise, we are targeting the delivery of 22,000 homes a year from 32 divisions and around 500 outlets. Whilst we have experienced some temporary delays on completions and planning in recent months, we have delivered adjusted profit before tax in line with consensus, and we remain confident in our medium-term targets and in the long-term demand for our high-quality homes.

So starting with trading. On private reservation rate, we were comfortably ahead of last year on both a reported and aggregated basis. As guided, we operated from an average of 405 active sales outlets across the year. While the government's national planning reforms are positive, they are yet to come into law, and we have continued to see some planning delays at a local level. As a result, several outlets forecast to open in the fourth quarter of FY '26 have been pushed into the first half of FY '27. So we expect a broadly flat outlet position in FY '26 compared to FY '25. However, these are temporary delays, and we remain confident in our medium-term target of completing 22,000 homes per year across around 500 active sales outlets.

We delivered 16,565 homes across the year. 235 homes below our guidance range. This is a short-term timing issue, which does not impact our medium-term guidance and broadly was due to 300 fewer completions than expected of PRS and multiunit sales in London. These homes will be delivered in FY '26. Meanwhile, we are pleased that we have delivered adjusted profit before tax in line with consensus, which is testament to our team's commitment to drive efficiencies and cost synergies.

We expect completions in FY '26 will be between 17,200 and 17,800, helped by our order book, which is up over 4% on last year, but tempered by the challenges that I've mentioned in the planning system and the broadly flat sales outlet position. The Redrow integration is progressing well with more than 2/3 of the GBP 100 million cost synergies target already confirmed. Progress is also being made on revenue synergy sites. We have already submitted 16 of the 45 identified incremental outlets for planning approval, 5 of which have already been granted. As demonstrated by these positive outcomes on both cost and revenue synergies, our teams are making rapid and meaningful progress towards our targets.

In line with our previous guidance, we expect build cost inflation to be around 1% to 2% in FY '26, inclusive of procurement synergy savings. In FY '25, our charge in relation to adjusted items will be approximately GBP 229 million. Around GBP 102 million of these costs relate to the Redrow transaction itself and the subsequent reorganization and restructuring taking place to unlock cost synergies. We are also recognizing our CMA commitments charge of GBP 29 million. And the remaining GBP 98 million is related to legacy property provision charges, of which there are really 2 key points to draw out. The majority of the provision charge is centered on 2 developments. The first is in our Southern region, where a fire safety issue has been identified in 4 buildings, accounting for GBP 80 million of the provision uplift.

The second is related to a large site in London, where action is already being taken and where an uplift in the provision of GBP 18 million is required to complete the remediation. In addition, as we flagged at the half year, we have been reviewing the design of concrete frames at Redrow's legacy properties given our previous experience in this area. This review has resulted in the identification of 5 developments, which are now in scope for investigation.

And we have made an adjustment of GBP 106 million net of deferred tax, which under IFRS 3 creates a fair value adjustment at the acquisition date. We are tackling these problems head on. And as ever, our building safety unit is working hard to ensure all effective buildings are assessed and remediated diligently and effectively. We are also very focused on recovering costs from third parties in respect of issues around fire safety and reinforced concrete frames. Our successful Supreme Court case in May this year has clarified the responsibility of companies in the supply chain, and we will seek to recover costs wherever possible.

We finished the year with a strong balance sheet and net cash of GBP 772 million. As announced in February, the next tranche of our share buyback program of at least GBP 100 million per annum will commence shortly. Our commitment to industry-leading quality and service has remained at the heart of what we do and is vital with a more challenging market backdrop. Once again, our site managers won more Pride in the Job awards for the highest standards in homebuilding and build quality than any other housebuilder for the 21st consecutive year with 115 awards across the business. And for a 16th year, we have been recognized as a 5-star housebuilder, further extending our unmatched record.

So to conclude, despite the shortfall in completion numbers, the financial performance of the business has remained solid, and we start FY '26 in a strong position. We are already seeing benefits from the Redrow acquisition with cost synergies being delivered ahead of schedule, a new divisional structure in place and revenue synergies progressing well. We look forward to the new planning legislation, unlocking permissions at a local level, and we continue to drive growth over the medium term. We lead the industry on customer service and build quality, delivering high-quality developments across our 3 leading brands, which in turn put us in a unique position to rapidly accelerate volume in the medium term. Thank you, and we will now be very happy to take questions.

[Operator Instructions] And first, we have a question from Aynsley Lammin from Investec.

Just 2 questions from me, please. First of all, on the planning, just a bit more color, if you could, on what's actually kind of been frustrating there, where the visibility was? Obviously, you targeted getting back to kind of FY '24 sites. And looking forward, when would you expect some of those kind of frustrations and obstacles to lift? Is it legislation being passed? I mean when should we expect the planning to really start to ease on the ground?

And then the second question, just on -- I think you say in the statement, you think there's some need for demand side support to ease the constraints of the private homebuyers. Just wondered what you meant by that explicitly? Obviously, you've had the mortgage guarantee scheme be announced recently this week. Any views on that? Do you think that's sufficient? Or do you think the market needs more on the demand side? Just interested to hear your views there.

Aynsley, I'll just cover both of those. So I think in terms of planning, really, the positive thing is, and we've said previously that we see that the planning changes that the government are proposing are very positive through the national planning policy framework and through the planning and infrastructure bill. So these are very, very positive changes. But the reality is that the planning and infrastructure bill is not yet in law and won't be in law until the autumn of this year. So we would then expect there to be a fairly rapid improvement. And I think if you go from a July start in 2024, the autumn is probably a little later than we would have anticipated as we came through 2024.

But generally, the direction of travel is positive. For local authorities beyond those legislative changes, they have no real reason to make changes at this point in time. And therefore, we have seen delays in terms of where we expected to receive planning approvals to allow us to then get on site. And as we outlined in the statement this morning, we see that impacting FY '26 in terms of delivery. But clearly, it's a delayed effect into FY '27. In terms of demand side support, look, we've said that there is a case for a government-backed demand side support. But we recognize that, that is the decision of the government. And therefore, two things.

First of all, that is largely around affordability. And therefore, there are challenges for the consumer, particularly in areas like London and the Southeast. I think for ourselves, we recognize that there's got to be self-help from the industry, and we previously outlined the offers that we're putting in place for consumers. So for example, deposit match, we continue to look at whether we can do anything from a shared equity point of view, and we push hard for second and subsequent time buyers in terms of our part exchange offer. So we recognize that those offers and incentives are very, very important for us to have for our potential customers.

And we're moving on to a question from Peter Ajose-Adeogun from Morgan Stanley.

I just have 2 questions. The first is just around in terms of the building blocks for FY '26. So you're guiding to roughly flat volumes in FY '26, and then we see house price and build cost inflation offsetting each other. There are puts and takes on earnings into next year. Synergies are positive, but then some costs on national insurance. So can you just help us with the building blocks for FY '26 profit before tax? Is there scope to grow this modestly year-on-year?

And then the second question is just around the building safety provisions. So if you could just help to talk in detail about these provision increases and help us to understand if there are other potential costs we need to think about? Maybe in other words, is this a precursor of more to come perhaps? Or what underpins your confidence that this is very discrete to these sites you've identified?

And I think Michael will take both of those questions.

Peter, thanks for those. I mean I think on the first point on FY '26, you've actually done quite a good job of outlining the building blocks there. So if we think about volumes, clearly, we've delivered just over 16,500 homes this year. And our guidance for next year is between 17,200 and 17,800. So at the midpoint, that would be an uplift of about 1,000 homes. And really, when you think about that, given flat outlet numbers, and we're not really expecting any change in sales rates in terms of market demand, really that uplift will come partly from the units that we've rolled over that David talked about earlier from FY '25 into FY '26.

And we also have the benefit of 12 months of Redrow in our numbers in FY '26 compared to 10 months for the current year. So again, that gives us a bit of an uplift there. So that's the volume side. As you say, on house price inflation, where we've been seeing in the spring underlying house price inflation running at about 1%. I think that has softened slightly as we've come into the end of the year, so probably running slightly below 1% now. And in terms of build cost inflation, our guidance at 1% to 2% is sort of still in place. That's still how we see it coming through. That does include some modest benefits from procurement synergies in the build cost inflation numbers. But to be honest, in FY '26, that is very modest. It's only a few basis points really.

But we would expect that, that will broadly play a draw. And then as you rightly say, we expect an incremental GBP 45 million of cost synergies coming through. That will be offset. Obviously, we'll have a full year of Redrow overhead. We'll have the national insurance annualization in that number as well. So you can sort of put those building blocks in place, coming down from volume and take a view on what the profit before tax number will be.

And so then moving on to provisions. There are really, I guess, 3 moving parts in what we've announced this morning. But the first point I'd make is that in the overall portfolio that we've previously been provided for, actually, the cost position on that portfolio has been stable through the year. So we haven't seen material movements in that portfolio. And of the sort of 408 buildings that we have within that active portfolio, about 1/3 of those buildings are in the process of closing down the remediation where we've actually been through the process and we're coming out the other end. So I think on the core, we're actually -- we're making good progress, and we have a good handle on the costs there. There are 3 things that have happened in the year that we're discussing this morning.

So the first is the development down on the South Coast, where we've had a fire risk assessment done by the building owner during the second half. And that showed us that some remediation work is required at that development of 4 buildings. Now we estimate the cost of that work to be about GBP 80 million. And from the work we've done, we've looked at the build typology, the designers, the contractors and that kind of thing. And we think that the particular characteristics of that development means that there's no wider issue in the portfolio. This is contained in that one development.

The second movement is GBP 18 million, which is in relation to a development in South London, where we were already doing remedial work, both for fire safety and reinforced concrete frame. And really, the scope and cost of that development has increased during the half as we progress through the work. So again, I don't think that signals any wider issue in the portfolio that is specific to that development and those buildings that we're working on there. And then the third movement is the reinforced concrete frame provision that we've taken in relation to the Redrow portfolio. Now that's the GBP 150 million provided in the opening balance sheet.

And what's happened there is since we acquired the business in October, we've been able to do some very detailed engineering analysis of Redrow buildings that were designed by the same design firm that we know we've had issues with in our portfolio. So we've been doing that work since October. We flagged at the half year that, that was ongoing, and we were doing some investigation. But the nature of the investigation is actually some quite detailed computer modeling and engineering analysis that does take several months to complete. So we've formed a view of that as we've come through the second half.

There are 5 developments where we think there is remediation work to be done. And our estimate is based on the initial work that we've been able to do and also our experience on other developments in our own concrete frame portfolio. And we estimate the cost of the works to be GBP 150 million. So we've provided that into the opening balance sheet. So hopefully, that helps you understand the different moving parts in the portfolio and also why we don't believe there is any wider issue on costs in the underlying portfolio. These are specific issues that we think are contained.

And from Citi, we now have Ami Galla with our next question.

Just 2 questions from me as well. First one was a follow-up on planning. Can you give us some color as to how many sites or outlets are currently pending planning permissions or are in that sort of bucket where you have seen meaningful delays so we can understand the magnitude of this?

The second question was on -- as a follow-up on the outlet point. On the revised assumptions, how many outlets do we plan to now open in FY '26? And the last one was just on the legacy cladding work. Do we have a more clearer time line as to when do we plan to -- when do we complete bulk of the works? Is it in the next 3 years? Or is it a longer tail that we now need to kind of factor in, in terms of the overall completion of this legacy cladding work?

I mean, I think in terms of planning, I mean, I'll pick it up generally in terms of planning outlets. And I'm sure that John can talk to you offline in terms of any more specific numbers. And I'll also just talk briefly about legacy cladding and Mike will pick up in terms of FY '26. So I think in terms of planning outlets, as you know, we've always disclosed our planning approvals over a 6-month or a 12-month period. And if we're running on 400 outlets, we're expecting outlet numbers to rotate on, let's say, roughly a 4-year basis. And therefore, I think it's reasonable to be thinking somewhere in the order of 80 to 100 outlets are in planning at every given point in time.

And that may vary in terms of the amount of strategic land that we have coming through. And as you know, over the last few years, we've increased the size of our strategic land portfolio. And therefore, we will probably have a slightly higher weighting of numbers in the planning system at this point in time in terms of outlets. And that is part of the issue that's playing out, as we touched on towards the end of '26, is that there is just a lot of stuff coming through planning, not just for Barratt Redrow, but for the industry generally, there is a lot of stuff coming through planning.

In terms of cladding, I mean, Mike's talked about the way we're progressing through the portfolio. And our sense is that a lot of this will play out in terms of getting on to sites, getting work undertaken and cash flows over the next 2 or 3 years. So I think that's the way I would tend to look at it from a cash perspective.

Yes. And just picking up on outlet openings, I mean, I think we're expecting something in the region of [ 130 ] to open during the course of FY '26.

And our next question now comes from Christopher Millington from Deutsche Bank.

First one, I'd just like to ask is just following up on the provision point and just kind of where we are now with regard to provisions for concrete frames. And would all those provisions relate to the one party AECOM, which obviously got notified on that court case, and therefore, you're pursuing recovery. So I'd just like to know kind of how much potential you can recover there. Next one is just about admin costs and the sort of inflationary pressures you're seeing there. And then I'd love to hear a little bit more about London, which you obviously pulled out in the statement as being a little bit weaker than the other markets.

Chris, so if Mike picks up in terms of concrete frames, AECOM and such like and also in terms of the admin costs, and I'll just start off in terms of London. So I think just by way of overview, Chris, I mean, our London business, if you went back 4 or 5 years ago, we were up at around 2,000 completions in London. Our London business is very substantially smaller. And we obviously give the completion numbers on a half year and a full year basis. But the business is substantially smaller than it was previously. So that's kind of the first point.

The second point is that London has got challenges around affordability. And we've talked about this previously. That is playing out in terms of substantially reduced first-time buyer numbers within the London business. And that has been the case since the final quarter of 2022 when we saw the sort of short-term change in interest rates. That does not look to be a particularly improving position in terms of that affordability equation in London. So we recognize, as I touched on earlier, that we've got to continue to try to put offers in front of the consumer that make that more attractive. So deposit matching, we've looked a little bit and we launched the product last year of rent before you buy. As I mentioned, we're looking at, is it possible to launch our own shared equity product. So all of these things we are looking at.

And then I think the second part of it is that the private rental market, build-to-rent, private rental, while that continues to be a reasonable market in the regional marketplace, again, over the last couple of years in London, that has been a much more challenging market in terms of securing deals and securing deals at sensible prices. And we flagged this time, which I think was just unusual in that we had quite a bit of difficulty closing down international sales. So nothing specific, spread over a large number of buyers, but it was quite a difficult close. But we do expect that the majority of those will come through in first half of FY '26.

So Chris, let me pick up the other 2 parts of the question. So on concrete frame, I mean, we're making good progress through the rest of the portfolio there. And as I said earlier, in terms of what we previously provided, we're confident in those costs. I think the nature of the concrete framework is that it does take a little bit of time to work through the actual remediation. But in terms of the cost and the scope of work that we're doing, we're confident in the numbers that we have. In terms of AECOM, you'll remember that last year, we announced there was a couple of developments in London that had been designed by a different design engineer where we had work to do.

And actually, it's in relation to that engineering firm that we've been investigating the Redrow portfolio. So overall, I think we are comfortable with the position that we currently are in. In terms of overhead inflation, I mean, look, as you say, there is some upward pressure on costs. We've had the national insurance increase come through. We'll annualize that in FY '26. And obviously, we've got the usual levels of salary inflation and so on coming through. We do have the benefit of GBP 45 million of cost synergy benefits coming through as well in FY '26. So overall, we're not expecting the overhead number to significantly increase. And obviously, we're doing everything we can to manage that as we go through the year.

And up next, we have Allison Sun from Bank of America.

Two questions from my side. So can you remind us how big is your presence in the London for the overall portfolio? And the second, I think you just mentioned that you are looking to a possibility of launching your own share equity product. Any more color on that front?

So if I pick those up. So first of all, in terms of how big is London, well, we -- I touched on it before. The largest our London business has ever been has been around 2,000 completions per annum. So we've gone from a position of it being in excess of 10% of our overall completion volumes to being more in a range of kind of 5% to 7%. So substantial reductions in terms of the London business over a period of time.

And as I said, I mean, clearly, London, in particular, because of affordability has been a more challenging market. And we made a decision going back probably now 6 or 7 years ago that we would develop primarily in Zone 3 to 6. So in some ways, trying to address that more affordable product in the marketplace. But nonetheless, for a lot of first-time buyers, it's still a challenging backdrop. In terms of shared equity, so we've seen shared equity products launch in the market. One of our peers launched the shared equity product going back 2 or 3 months ago. We're keen if we do it, to try and do something where it's not on our balance sheet.

So we're working in conjunction with third parties, which I think is more likely to be the delivery mechanism. And I think it just comes back to that broad category of self-help. I mean we've been clear that we do think that there could be support, particularly in markets where affordability is a greater challenge that there could be a government program of support beyond the mortgage indemnity guarantee. But the reality is we've also got to ensure that we are putting forward everything we can to attract consumers into the market. So therefore, shared equity for first-time buyers, rent before you buy, which is something that we trialed last year, deposit match and then for second-time movers pushing hard on programs like part exchange has all got to be part of the consumer offer.

And we now move on to our next question, which comes from Marcus Cole from UBS.

I've got 2 questions as well. The first one is just on how should we think about the cash flow moving parts in FY '26? And the second one is where do you expect total provisions to close at the end of FY '25?

Yes, let me pick both of those up. So in terms of cash flows, I think we have talked about our land spend this year being something in the order of GBP 850 million, GBP 860 million. I'd expect to see that step up next year to probably about GBP 1 billion or a touch over GBP 1 billion. And in terms of legacy property spend, which is obviously one of the other big moving parts, this year, we will spent probably around GBP 130 million on building safety, and we do expect to spend probably another GBP 100 million on building safety as we come through the year next year.

We will be investing money in the ground in terms of infrastructure and WIP as we work towards those outlet openings into FY '27. And so on a net basis, we'd expect something like closing cash of GBP 300 million to GBP 400 million as we come through to the end of next year. And then in terms of the provisions lift, I think we'll give you the number slightly later. The key moving parts on that are, as I say, that we spent GBP 130 million during the course of this year, and you'll see that we're increasing provisions by GBP 229 million in relation to the additional costs that we've announced this morning.

From JPMorgan, we now have Zaim Beekawa with our next question.

Just 2 on my side. One would be on incentives. Can you just remind us where we are now? And what would you need to see in the market to reduce this from current levels? And then secondly, on landfill taxes, there's been some news flow on this recently. Kind of any view that you have or preliminary impacts that could mean for the business?

Yes, fine. I mean I think if -- I'll pick up both of those. I mean I think in terms of incentives, we've said before that we're running at a level probably a little above 6% in terms of incentives levels. I mean there are restrictions on incentive levels in terms of the council and mortgage lender guidelines. So therefore, generally, 5% is the restriction in terms of cash incentives, 1% to 2% on noncash incentives. So beyond 6% on any particular development, then though we tend to need to be a movement in headline prices and a sort of reset either up or down in relation to headline prices. I would say that incentive backdrop has been fairly stable.

But against that, first quarter was a little better than second quarter in terms of the calendar year, but reasonably stable in terms of incentives. In terms of landfill taxes, I know that there's been a lot of publicity about that over the last couple of days. So I think we've said before, and I'm sure everyone understands that sending things to landfill is not seem to be a good thing. And we've published previously that around 3% of all of our waste will go to landfill.

I think the government are looking to try to effectively penalize people for sending things to landfill. There's a consultation out presently. And I think the implementation plan is as we move towards sort of 2030 and beyond. So we'll obviously respond to that consultation. But the overall point being that we do understand that sending less to landfills seem to be a positive thing. And therefore, in certain cases, industries need to change practices, and we'll just keep that position under review.

[Operator Instructions] And we now take a question from Charlie Campbell from Stifel.

A couple of questions left for me, if I can. So the first one is on mortgages. Clearly some of the rules around availability are changing. Just wondering if you've seen any effects of that yet or whether that's sort of too early. And then land availability, I just sort of wondered what is the situation for buying land at the moment, seeing good availability and how is pricing evolving on that land?

Yes, if I put those up, I mean, I would say that mortgages and the sort of different rules around mortgages that we have seen a gradual change or gradual relaxing to rules. I don't think any of these rule changes individually are significant. But the reality is that collectively, they are freeing up mortgage availability and whether it be on higher loan-to-value levels or freeing up another lending criteria, clearly, we see it as being positive. Now we obviously recognize there's got to be a balance.

We don't want mortgage lending. Nobody wants mortgage lending to get to the position where there aren't controls in place. So I think it's got to be a balance. But all of those changes are positive and will clearly help the overall market backdrop. In the same way, the government program in terms of the mortgage indemnity program, I mean, clearly, that helps. But I think you can see from the numbers that, that's not a game changer. That is just a very mild positive in terms of the way it contributes to the marketplace, primarily because of pricing and affordability.

It's -- to have a game changer, you've got to have something that's very different from a pricing and an affordability perspective. In terms of land availability, I would just describe it as good. You've seen our approval numbers. We published them again this morning. So we've got strong approval numbers in FY '25. And in FY '24, we weren't in the market for the whole year. So the reality is across what is effectively an 18-month period, we're very, very pleased with our land intake.

I think that the only thing that I would call out in our land intake has been that we are more focused on larger sites, so particularly sites where we can triple brand and therefore, bringing in sites that are 750,000 units. We've undertaken a number of those transactions during the year, firstly. And then secondly, as we previously announced, we did a deal in Scotland to buy a block of land in Scotland, which we think positions our business in Scotland very well, but that has obviously enhanced numbers during the year.

And as there are currently no further questions in the queue, I would now like to hand the call back to you, Mr. Thomas, for any additional or closing remarks.

Yes. Thank you very much. Thank you, everyone, for dialing in, and we will be back with full year results on the 17th of September. And we will also see you around during the course of today if anyone's got any follow-up questions. Thank you very much.

Thank you for joining today's call. Ladies and gentlemen, you may now disconnect.