Persimmon Aktie

Good morning, everyone. Shall we, as it's 9:00, should we make a start. Thank you for joining Andrew and me today. I've had the positivity of the support from my Chairman, which was it's a good start. Share price is up 10%. Don't say anything anymore. Thank you, Roger.

2025 delivered double-digit growth across the business, building on and accelerating the recovery that began in 2024, and we're building a stronger business for further growth. More customers are choosing our well-built, affordably priced and attractively located homes. We've again grown completions, ASP, sales rate, excluding bulk, returns and profit. Our forward order book and land bank are both up year-on-year and while our exposure to cladding is reduced. Our strategy of carefully choosing where to build, what to build and how to build is being successfully executed across the business. And as you can see, is delivering strong results. I want to thank my brilliant colleagues at Persimmon for these results, especially so recognizing that the market remains challenging. When I stood up in front of you last year, the concern was Trump's tariffs. Now it's the uncertainty from the conflict in Iran, and I'll say more on this later, but we are getting used to managing uncertainty.

Now let me return to our strategy. Self-help is driving growth and disciplined investment is reinforcing our growth trajectory. This growth is now translating into tangible returns and is giving us confidence in our medium-term targets, which you'll see is a very clear theme of today's results.

I'll now talk some more about our disciplined investment in our clear five-point strategy, which in turn will drive further growth in the future. This is a slide you've seen before. It summarizes where we're allocating our capital across the business whilst also striving to maintain a robust and well-supported balance sheet. Since I joined Persimmon, we've taken some tough decisions to reposition the business that has allowed us to invest in our land, our brand, our factories and our quality in order to drive a new phase of growth, and this strategy is delivering. Once again, thanks to disciplined investment, we've grown both our high-quality land bank and our outlet base.

We've continued to invest in our brands, sharpening their position in their respective markets, and this is delivering some impressive results. We delivered a step change in completions without compromising on our hard won quality and service improvements. We've also delivered a step change in the output from our factories as a result of focused investment in innovation and our production capabilities.

Our investment program and shareholder returns are supported by a disciplined capital structure. We remain prudently geared after land creditors with a balance sheet that provides strength and flexibility through the cycle. In the coming years, as the group works through the fire safety remediation program, cash generation will improve, giving us more options in terms of investment and returns to shareholders. So the combination of a clear strategy and a relentless focus on its delivery and execution by our excellent teams is securing our growth and returns.

Let me turn now to the key growth fundamentals in 2025. As you can see, we delivered a strong performance last year. Our underlying PBT was up 13% to GBP 446 million. And our underlying EPS is up by 9% to 100.7p. Outlets at 31st of December were 277, up by 3%. Our sales rate was up 0.7 and excluding bulk was 0.59, up 4%. The growth in outlets and our sales rate drove completions up 12% to 11,905. And within that, we delivered 1,758 bulk completions, up 21% year-on-year. And I'm delighted we retained our 5-star status for the fourth consecutive year. Our owned and controlled land bank grew by 3% to almost 85,000 plots. Our total forward order book is up 6% to GBP 1.8 billion with our private book up 9%.

Andrew will now take you through the results in more detail.

Okay. Thank you, Dean. Good morning, everyone. I'm really pleased to report excellent results for 2025. We've delivered strong growth in both volumes and profits against a challenging market backdrop, and this builds on the growth that we delivered in 2024. New home completions were up 12%. Our blended average selling price increased 4%, and this drove housing revenue up 16% to over GBP 3.3 billion and gross profit up 13% to GBP 656 million. Gross margin was lower at 19.8%. This reflects the mix of product, and that included more affordable and build-to-rent as well as the impact of historical embedded inflation. Underlying operating profit increased 17% to GBP 472 million, and I'm particularly pleased to say that's a 20 bps increase in margin to 14.3%. This demonstrates our overhead control and efficiency and why we are so focused on volume growth as one lever to deliver increasing margins. Underlying PBT is up 13%, and that's after an increase in interest costs because of lower cash balances and higher land creditors. Overall, this is strong quality earnings growth driven by our strategy.

And remember that 2025 was our second year of growth. So across the last two years, we've added 20% to our volumes and 24% to PBT. I think that is really excellent. Our tax rate of 28% is close to the statutory 29%. 2024 did have a lower tax rate because of some one-off items, and that boosted last year's underlying EPS. So, putting all this together, underlying EPS this year increased 9% to 100.7p. We generated strong cash from operations. And really importantly, our return on capital employed increased 60 basis points to 11.7%. And again, that reflects improved profitability and continued balance sheet discipline. So.

I'll now come to the detail of the sales mix and ASP. Of the total new homes delivered, 9,830 were private, that's 8% higher than last year. This reflects our strong sales rates and increased number of outlets. Our total sales per week, including bulk, increased to 188 units. Private completions included 1,758 bulk sales, and that's 21% higher than last year as we continue to engage strategically with this sector. Reservations in the build-to-rent sector did slow in Q4, as you know, and we said this will make further growth in 2026 more difficult, and that is reflected in the current order book. Open market sales grew in both the Persimmon and the Charles Church brands. 32% of private sales were to first-time buyers, an important market for us and particularly important for our core Persimmon brand. As you know, we're very proud of our relaunched Charles Church product, and Charles Church increased 16% in 2025, in line with our plans to double it over time. And Partnerships output grew very strongly by 31% to over 2,000 units or 17% of total completions. Most of our affordable delivery is already signed up for 2026, and I'd expect a similar volume again this year.

So, let me reiterate, all elements of the business grew their volume in 2025, helping us to drive asset turn and drive return on equity. The blended ASP on completions was up 4%, with private ASP increased 5%, even allowing for the increase in bulk sales. And there's three key factors. First, pricing has been robust, particularly in the North of England and Scotland. Second, we increased the proportion of Charles Church delivery, although the Persimmon ASP also increased even without Charles Church. And third, the pricing on our bulk sales has also been robust, reflecting our more strategic approach to this sector. Our brands are deliberately focused on the value end of their respective markets with our Persimmon Homes average selling price still well below the new build national average and over half of completions below GBP 300,000.

So let me now show you how that volume increase has driven up operating profit. Underlying operating profit is up 17%, which I'm very pleased with. You can see the positive effect of increased volumes and increased average selling prices. Although as I mentioned earlier, the increase in affordable and BTR products has lowered gross margin on a like-for-like basis. The movement in the cost line is small, and we're very focused on commercial discipline and managing our costs closely. Net operating expenses increased by GBP 7 million, and that increased our overhead leverage even with the ongoing investment into our capabilities for the future. We incurred net exceptional charges of GBP 45 million. And these exceptional charges are all items that you're already aware of. Changes to our building remediation costs, the settlement with the CMA and the profit on disposal of FibreNest. I talked about FibreNest in detail in August. It was noncore and its disposal increased choice for our customers and has freed up capital for us to reinvest into the business.

So I'll now cover the remediation in more detail. Progress on building remediation work remains important. And at the end of last year, we were the first housebuilder to sign up for the new Scottish remediation contract. At 31st of December, we were on site or completed at 77% of known developments. We've assessed all the known developments and 79% or over 90% of these are fully tendered. We expect to be on site at all the developments by the end of the year, and we continue to track ahead of the overall industry position.

We continue to make progress, as you'd expect. And last year, we performed about GBP 61 million worth of work, bringing our total work to date to around GBP 180 million. But this remains complex work, and there remains some cost risk on all these sites until they're completed. And that's why I've always said that the provision might be a bit lumpy as it comes down, and that's what we've seen. So there were four new developments added to the total number in the period. The four new ones, each relatively small and they relate to some reassessment of whether they are in or out of scope, for example, based on the 11-meter threshold. And including the new developments, we added GBP 40 million to the provision. So the closing provision of GBP 226 million is GBP 9 million lower than this time last year. We'll spend close to GBP 100 million in 2026, and the bulk of the remaining spend will be made over this year and next. And of course, we continue to pursue recoveries from the supply chain, and we had some success on this in 2025.

As we said before, progressing this work over the next two years will then create capital allocation opportunities for us, especially given our strong balance sheet. Our balance sheet is a platform that allows us to invest in future growth. And to add further to our growth opportunity, we've today announced an increase in our banking facilities with a two-year GBP 250 million term loan and a GBP 50 million increase to our RCF, taking that to GBP 750 million. And thank you to our lending banks for their support. This extra facility will allow us to take full advantage of the land market at what we consider to be the right point in the cycle and to invest in the work in progress needed to grow our outlet base and to drive more volume. As a result of choosing to invest at this point in the cycle, we may have some gearing at the end of 2026. And of course, we will continue to manage the balance sheet prudently, keeping ample headroom at all times.

In the table, you can see land and WIP has increased GBP 535 million. We've invested in more land than we've utilized, and we've also increased our work in progress to give us a stronger opening position coming into 2026. We held GBP 200 million of PX stock at the end of the year. This is an important sales tool for us, and we are really focused on recycling this back into cash quickly. Land creditors are up GBP 200 million, reflecting the increased investment in land and showing that we can agree appropriate payment terms in the market. Net cash is GBP 117 million. And together with land creditors, our adjusted gearing is about 14%. And I would expect this adjusted gearing to be higher next year up to around 20%. Our building safety provision stands at GBP 226 million, down in the period given the progress that we have made. Net assets are up 3% in the year with net assets per share 31p higher than this time last year. And as I said earlier, I'm pleased that return on average capital employed is 60 basis points higher than this time last year.

So this brings me on to our cash flow. So this is the normal cash bridge, but it demonstrates some really important points about the quality of our business. You can see our cash flow from operations was GBP 488 million, 16% more than last year. To grow the business and drive quality, we've invested GBP 208 million more in work in progress. That's infrastructure and build on new and existing sites. Other working capital movements of GBP 58 million includes the increase in PX that I referred to earlier. We spent GBP 109 million on interest and tax, GBP 38 million on capital expenditure, including on IT improvements and on our automated Space4 line. And we had net inflow of GBP 65 million from acquisitions and disposals. So free cash generation before capital returns, remediation and net investment into land was GBP 250 million.

To the right-hand side of this is our capital allocation choice. So we prioritize our building remediation program, and we're paying a sustainable dividend. As we look to complete the remediation work over the next couple of years, that element of spending comes back into free cash flow. After remediation and dividends, we were pretty well cash neutral. And this shows that we are operating a sustainable business model. If we adopted a replenishment-only strategy on land, we'd have essentially maintained our cash position in the year at GBP 256 million. But given the return on capital we can achieve, we're looking to generate value through investing in more land. So our net investment into land was GBP 139 million, and we ended the year with a positive cash balance of GBP 117 million.

So I will now spend some time talking about our investment into land. So this chart shows you how our land activity has evolved in the last five years. We were very active in 2021, refilling the hopper after a period of underinvestment. The excess black line over the blue line on the graph shows how our build cost inflation took hold and our land activity reduced from mid-2022 until 2024 as a result. And since inflation has stabilized, we've reentered the land market to drive future growth. And it's important, though, to remember that the high net inflation is still embedded in build costs and in margins on sites acquired in 2023 and before. And bear in mind that our average sites last four or five years from acquisition. And as we've said before, this embedded inflation will slow our margin progression until those sites unwind from the portfolio, and I'll come back to that in a moment.

First, I'll go through what this investment means for our current land bank. Total plots owned and under control at nearly 85,000 is up nearly 3,000 in the year, and there are more proceeding to contract. The land bank is well spread across the country, and it provides confidence that we will achieve our ambition of growing to at least 300 outlets. The land cost to assumed revenue ratio remains low, but it has ticked up in the year. This is driven by more southern sites, fewer strategic land sites pulled through this year and the acquisition of more serviced sites, which means we pay for the infrastructure in the land price rather than having to build it ourselves. And of course, that actually gives more certainty over future costs and margin. The most important point is that the land bank is high quality.

Within the land bank, 78% of plots have a site margin in excess of 25% and the overall embedded site margin is 28%. This is slightly down on last year due to timing and the mix of strategic sites in the book. Importantly, the land bank supports our medium-term operating margin growth objectives, particularly as we start to reduce the effect of embedded inflation and further increase overhead leverage by growing volumes. You can see that about 75% of 2026 delivery is on site encumbered with the inflation that I spoke about a moment ago and still over 50% of delivery in 2027. But this effect begins to reduce progressively from 2027, as you can see on the graph, and that underpins our confidence in our medium-term margin targets. The structure of our capital allocation policy is unchanged and it's proving successful. We're maintaining a strong balance sheet while prioritizing dealing with our building safety remediation this year and next.

Secondly, we're continuing to invest in the business to drive and deliver our organic growth objectives. There continues to be opportunity to drive shareholder value by investing in future growth and by doing so in a disciplined way that is allowing us to also increase asset turn and drive return on equity. And we are paying a sustainable dividend well covered by profits. Today, we've declared a final dividend at 40p in line with last year's, bringing the full year dividend to 60p. And we'll review this policy again, as we've said, as we deliver our growth plans and as we progress our building remediation works.

So, to summarize, we are really proud of our performance in 2025. Assuming that conditions remain stable, we expect to deliver growth again in 2026 to volumes of 12,000 to 12,500 ahead of previous guidance and with the H1-H2 split similar to 2025. Remember, 2025's completions included particularly strong growth in affordable and bulk sales. So our 2026 growth will be more dependent on open market sales, and so it does need a stable market environment. We talked about margin progression a lot in the summer, and the position remains the same. We're growing the margin, but the pace of progression will continue to be impacted by embedded inflation, as I've just shown, and potentially by external events, especially if the current conflict is prolonged.

Overall, assuming we achieve the increase to volume guidance, I think that operating profit will be towards the upper end of current expectations. We're also investing in future growth and in our land bank. As a result, we will have higher financing costs in 2026, but for the right reasons. So, overall, I'm comfortable with how the range of 2026 PBT sits currently. And I'm guiding to lower net cash, as covered earlier, which means that adjusted gearing could be up to around 20%. The key message is that we will be delivering further PBT growth in 2026 on top of the 24% growth that we've already delivered in the last two years.

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

Thanks, Andrew. Over the last three years, we've sought to navigate cyclical downturns and growing regulatory challenges, whilst at the same time, positioning Persimmon for growth. I believe we've emerged from this period a stronger, more agile business that's well positioned to seize future opportunities. And I think these results clearly demonstrate that.

So let me firstly take you through how we've invested our capital to create a stronger business. Our disciplined investment in quality land is increasing our short-term and strategic land banks with good embedded margins. When combined with our planning success, we're converting our land into more active sites. We're on track for 300 outlets over the course of the next couple of years, and with good visibility on sites that are going to drive growth and margin improvement into the medium term. We've all -- we've enhanced all three of our brands. Each has a clear market position, a distinct customer proposition and an efficient model of delivery. And all three brands grew in 2025.

As diversified and complementary brands, they'll drive further growth, unlocking new markets and serving new customers. And I'm really pleased that we've not compromised our quality and service experience while delivering a step change in completions. This represents a real break from the past. The significant investment we've made in our factories is making a real difference to our delivery in terms of the increased output, efficiency and quality. Our rollout of digital management systems across the group is also enhancing our control of build programs and cost efficiencies.

As ever, our carefully managed balance sheet has allowed us to maintain disciplined investment at the right point in the cycle, whilst also supporting returns to shareholders. And as Andrew has said, we've taken steps to ensure our balance sheet will continue to support future growth and shareholder returns with those opportunities accelerating as we complete our building safety program. In short, our disciplined investment and self-help is building more routes to more markets to build more homes and drive returns.

So how and why is that going to happen? Firstly, our land bank and outlets are clear examples of how our strategy to combine investment and self-help are delivering results. We added over 16,000 plots to our land bank in 2025, and it now stands at nearly 85,000. We remain disciplined, and I'm pleased with the pricing we achieved as it will drive medium-term margin improvement. There was a noticeable increase in land opportunities in the year, and our improved reputation and balance sheet resilience allowed us to respond to opportunities nimbly. A great site in Thetford became available because our improved reputation reassured a promoter who had previously been skeptical about working with us. Tamworth is a large site in a great location that's going to allow multi-branded outlets for years to come. Rugeley is a service site bought from a competitor looking to sell. The opportunities are there. And alongside our focused approach to planning, we're converting land into active sites.

We grew outlets against industry decline, and we plan to open more than 100 this year and remain on track to achieve 300 outlets over the course of the next two years. Nearly 13,000 plots received detailed approval, 108% of our completions. I said at the half year that we treat an application like a political campaign. Hull Road, York, is a good example of this. First submitted in 2025 -- 2015, excuse me, the scheme stalled for many years. Anticipating the change in administration in York, we built a relationship with the incoming labor leadership two years ago to understand their priorities. We then navigated the active local plan process with excellent planning and design, achieving detailed consent last year. It's a good site with views of York Minster that we've already started on.

We've also nimbly responded to government policy. We've identified 68 potential accelerator sites and prioritized 43 for detailed work. We expect to submit 25 of these by the end of the month. We also submitted two sites to the government's revised New Homes Accelerator to unblock sites that have stalled. This is a relentless task for us, group and local teams working together to get excellent applications in and then drive them through the system, navigating the politics where necessary to get started on site. It's helping drive growth now and build a stronger business.

Our investment in our strategic land bank is an important part of a stronger business, and I want to spend a little time on this. Clearly, our strategic land bank remains a key source of strength in terms of value and volume. 47% of last year's completions came from strategic land. And with margins typically 300 to 500 basis points higher than open market land, investing in strategic land is another example of the strengthening our business for future growth. By adding around 10,000 plots across 30 sites during the year, we now have some 77,000 plots. And as the pie chart shows, our strategic land bank is well spread geographically.

I'm also pleased with the pricing we secured. It supports our medium-term margin ambitions. And we're working on progressing the land bank. We expect to achieve planning on half of it within five years. Because of our improved reputation, the increasing number of landowners and promoters who work with us is now undoubtedly unlocking some excellent land opportunities. We acquired a Midlands-based land promoter. This has brought further talent and relationships into the business, complementing our growing existing team. It also presented some great new land opportunities that we're actively exploring. This includes large sites, which will support our three-brand strategy, allowing multi-outlet developments, delivering more homes in complementary markets and securing returns faster.

And it's to our three brands, I'll now turn. All three grew in 2025, and I'm delighted by that. But I'm also excited by the opportunity for future growth they present. All three brands have clear, compelling and distinctive positions in the market, and we've enhanced each brand's customer proposition and the efficiency of their delivery. Persimmon remains our core brand and will always deliver the majority of our homes. It's renowned for its affordability and good value. We've enhanced its customer appeal with improved design, placemaking and marketing. And we've enhanced its already strong build efficiency with further standardization, build program improvements and increased use of our own battery-made products. Charles Church has been particularly strong. Our relaunch of this value-oriented premium product has really resonated with customers. Our new house types and bespoke marketing are really appealing to an aspirational market and it's broadening our access to new markets, whether customers or land opportunities.

By dual-flagging sight, we're seeing improved sales as each brand serves a complementary market. We're also seeing a halo effect in some cases where customers are attracted to us by one brand and end up buying the other another multi-brand benefit. Westbury also took a giant leap forward last year as the figures show. This is a B2B brand and is an increasingly trusted partner in this growing segment. Our improved reputation and national footprint makes us an increasingly attractive partner and our core Persimmon product is obviously well suited to BTR and RP needs. We've tailored some of our Persimmon house types to enhance the homes we offer these B2B customers further. This improves pricing and returns. And like Charles Church, we're delivering this through existing teams, further enhancing efficiency. With these three brands complementing each other and opening new opportunities, we're building more routes to more markets to deliver more homes and growing returns.

Just to bring this alive, I'd like to use an example next. Towcester, Northamptonshire is a cracking dual flag site. Earlier phases sold really well. The new phases look set to do better with a step change in the new Charles Church offering. The pictures here demonstrate the appeal and quality of both Persimmon and Charles Church homes. The prices also show they're targeting distinct and complementary markets. The combination of the brands on the right side is delivering more customer interest and a halo effect. The recent launch at Toaster was one of the most successful we've had. The Charles Church phase also demonstrates how we're pushing ASPs, including through upgraded specification. What's pleasing is that we're more than seeing the cost of additional spec back in the margin.

There are other sites that have chosen. I visited Camden a few weeks ago where we're seeing the same dynamics. The new Charles Church site launched at the end of January. In the first weekend, we took three early birds and two exchanges. We also believe it helps sell four Persimmon Homes down the hill. So I'm really excited by this as Charles Church is clearly being taken to a new level of quality and service. And quality and service is absolutely embedded across the company.

So I'll now turn to it in more detail. While delivering a significant increase in volume in 2025, there is no compromising the highest standards we've secured in recent years. Our progress on the construction quality review score has been really pleasing and important. We saw a 3.5% improvement last year, and we've improved 31% since 2021. As I said, quality and customer service are now embedded in how we do business. We reset our build programs, and that is improving both the quality of build and reducing our cost of reworks. And with more regions moving to timber frame, we're building faster. We've expanded our team of independent quality controllers with more posts being added this year. And we now use a suite of granular plot and site level data analytical tools to drive these efficiencies and improvements.

I'm absolutely delighted we remain a 5-star builder, and we ended the year on 4.3 under the new methodology. We continue to achieve our best-ever Trustpilot scores for both Persimmon and Charles Church. We recently launched the Customer Care Academy with the Institute of Customer Service to develop our customer service teams further. As I said before, a reputation for consistent quality and service is crucial to winning more customers, new partners and new land opportunities. It's yet another platform for growth and getting it right first time clearly costs us less.

Our factories are a key asset in achieving this, and it's to them and our vertical integration, I'll now cover. Our factories and vertical integration are a real strength in ensuring quality and efficiency. Indeed, they're becoming a growing strength and I think essential to our future growth. All three factories significantly increased output last year. Even with the installation of our state-of-the-art automated line. Automated line, Space4 still delivered a 36% more output last year. With its new robotic roof truss line now operational, we're further expanding the range of quality products it's producing. Our Brickworks line is operating 24/7 and delivered a 23% increase in output last year. To meet the growing demand, we're building a new line at the factory, which will be operational from next year. And Tileworks saw a significant increase of 54% in its output. Again, there's growing demand and a third shift will be added this year.

Our quality own-made products are now the preferred choice across the group. Just as we're embracing technology in our factories and using granular data analysis across the group, we're actively exploring the role of AI in the priority focused areas. The faster build times, enhanced site efficiency and fewer reworks could save around GBP 10,000 a plot by the end of the decade. My vision remains that within a few years for a large proportion of our houses, we'll be able to provide all of the main components of the superstructure from our own factories, timber frame, roof truss, joist, brick or brick facade and tile, all Persimmon manufactured. The output and cost efficiency opportunities could deliver a step change in performance.

Before concluding, we'll turn to current trading. As of the 1st of March, our forward order book is up 6% to GBP 1.8 billion, and our private forward order book is up 9% to GBP 1.25 billion. In the first nine weeks of the year, we sold an average of 199 houses per week, up 11% on 2025, with a net sales per outlet per week of GBP 0.73, which is 9% up on last year. Excluding bulk, we've sold on average 167 houses per week, up 6% on last year with a net sales rate of 0.61. Pricing is robust with ASP up 5% overall and up 6% in the private forward order book. Incentives are running at around 5%. I think this represents a very good start to the year.

To finish, I'll now turn to our outlook. We've taken some difficult decisions since I joined Persimmon, but I think the business has been well positioned and is now firing on all cylinders. As I said at the beginning of my presentation, self-help is driving growth and disciplined investment is reinforcing our growth trajectory. There are, of course, uncertainties. Even before the events in the Middle East, the macro picture was mixed.

While planning reform is supportive and should support further outlet openings, the reform's full impact is still yet to be felt. Mortgage availability has been improving and real wage growth alongside higher LTV lending has been improving affordability. Our mortgage qualification rates have improved despite wider mortgage approvals remaining subdued.

Geopolitical uncertainty is clearly adding more risk. In the short term, the most important risk is any change to customer sentiment. But so far this year, sales have been strong. And the longer the tension and conflict persists, the greater the risk to increased build cost inflation. But on both sales and build costs, we have helpful mitigations in place for 2026.

Our plans for growth in private sales are not dependent on lower mortgage rates or a scheme like a new Help to Buy. Customers still want to get on with their lives and buy houses. And we offer a range of very attractive products that are competitively priced, offering excellent value. Sales in the first weeks of the year have been strong, including in the last two weeks. Our HA and BTR partners have largely secured their funding for this year's planned delivery.

We entered this year with improved forward build and a significant proportion of this year's build program is already contracted. Alongside the significant proportion of key products provided by our own factories, this provides some assurance on cost. We've contacted all our main suppliers to understand how they are mitigating risk with fuel hedging, alternative shipping routes and high stock levels already in place, there is short-term resilience. The risk clearly increased the longer the conflict goes on. We'll, of course, continue to closely monitor for any impacts and reduce risks where we can. As of today, current trading remains positive. Our book of investor sales is building, and we have good visibility for 2026. Our forward order book is up with the value of private sales up 9% so far this year.

Taking this together, if the impact of the conflict with Iran is short, we anticipate further growth this year to between 12,000 and 12,500 units and margin progression should be similar to last year's. The growth we're delivering is now translating into tangible returns and is giving us confidence in our medium-term targets.

We undoubtedly have more opportunity ahead of us. We're building more routes to more markets to deliver more homes and growing returns. Those are opportunities I'm excited by. Above all, I think Persimmon is in great shape and is a high-quality business.

And on that note, I'm happy to take any questions. Thank you.

Will Jones from Rothschild & Co Redburn. Three, please. First, just around margin, tying up on '25. I think the gross margin dipped 50 bps. The other operating income was up 40 bps year-over-year. Just on margin for last year, gross margin dipped. I think the other operating income was up broadly by the same magnitude to offset. So just how you think about those two elements of the P&L this year within the guidance that margins going up slightly.

Second, just around build costs, if you can explore, I think you talked about muted so far this year, a bit more on that and also the cover you do have, particularly on building materials through the year at this stage.

And the last, just around growth where clearly, you continue to step up. It is the element of the medium-term target that's missing. Perhaps you could just talk about what you think the business is capable of on volume growth over time. And I suppose the extent to which you can kick on from 300 outlets is perhaps key to that.

You'll take the first. I'll do the second.

Yes, that's fine. So, yes, the gross margin, it dipped a little bit. And as I said, that was partly -- we had more BTR, more affordable. And probably between those two, that's probably 20 to 30 bps of the change is just because of the -- just when you play that through directly. So it will depend on mix, of course, as we go into 2026. But I'd expect, as I said earlier, that more of the growth in '26 will be on open market sales.

Other income, I think last year, we had GBP 21 million, the year before it was GBP 9 million, bubbles around that GBP 10 million, GBP 20 million sort of -- that would just -- and that's just bits and pieces of small bits of land sales and bits and pieces of other things, but nothing significant.

So overall, I guess the key for me, Will, is that operating margin grew in '25, and we're looking to continue to progress operating margin, and we expect that to grow, as we said, at a similar rate in '26.

Just coming on to what our thoughts are on build costs this year. I think that was your second question, right? Yes. If I can just broaden it out slightly to income as well. This was a point I was trying to make just a moment ago. If we just run through the various categories of income first, I think our fees are in a good place. We've got Ian and Liam with us this morning. So I may bring those in as well. They're certainly around for you to speak to afterwards.

But you've seen the strong growth we've seen in RPs this year. I certainly think that Ian has done tremendous work for us this year in building relationships and improving our reputation as we build our -- improve our build quality as well. And I certainly think that's helping us in the RP market and visibility for this year is pretty good.

Likewise, on investors, we don't have many investors who are PE funded. A lot of them are pension funded and they take a longer-term view. And again, we think we've got good visibility with four out of our five major customers having their funds secured for this year. So that's also in a good place. And then finally, on private, clearly, sentiment is key. Last week was our strongest week of the year so far. So just an interesting point of note. Clearly, none of us know what's going to happen.

But in terms of cost, I mean, we did a detailed exercise with all of our suppliers last week, and we found out some really quite interesting points. Clearly, the market, I think, has learned from its cost shocks and supply shocks in years gone by, and there's much more stock holding than there was maybe two or three years ago.

Hedging is in place. Some of our larger suppliers maybe have 70% of their book already hedged for this year. And the other interesting thing for me at least was how many now are already avoiding the Red Sea, and that was driven by Gaza actually. So a lot of them avoid that area anyway. But clearly, the situation changes and changes rapidly. But this is helped by our build position. So as we stand as of today, we've got near enough 12,000 foundations dug, 9,500 slabs in place and 5,000 to 5,500 rooms on. So that's an awful lot of fuel and energy cost for this year already spent.

We've done an exercise to -- so really, this is an H2 issue. And we've done an exercise to consider what -- how much of the book cost is driven by fuel and energy costs, and we are estimating it's around about 13%. And because of our build position for this year, we're thinking that's maybe around 5,000 EUs in the second half that will be impacted by cost inflation. So that's a total cost for the remainder of the year to build of less than GBP 100 million. And so that's the amount that is exposed to for this year for build cost inflation. So then you get to the question, well, how long do you think this is going to last? And if the impact is, say, two or three months, then the cost base that's exposed to it is maybe GBP 20 million to GBP 30 million. So it's the volatility on that, that would impact profitability in our view this year.

So, I mean, clearly, unhelpful, but it's something we've got our arms around, and that's before we do anything to mitigate cost increases. We came into the year with low build cost inflation of around 2%. It's hard to say when that might grow. Obviously, it will increase during the course of the year. But as I said, I think we're in a really good place, relatively speaking.

And then in terms of growth, I think there's demand and supply to this. I think our market positioning is good. And I think particularly, there's more opportunity across all of our brands. Our reputation is building, but we're not there yet. Our delivery of Charles Church, I think it did achieve a step change last year, and it's continuing into this year. But by no means is all of our business yet realizing the full potential from that market segment. And I think there's a real opportunity for there to go along with the Westbury brand. So I think there's a really good opportunity to see continuing growth, and we've got ambitions to see continuing growth. And that's also why we're investing in the factory because to achieve another step change in growth over future years, we'll have to deliver more off-site manufacture. So we're giving you a cautious outlook for this year, but I think the medium-term opportunity is really good.

And I think the most -- probably the most important slide for me is Andrew's bit where we've shown that bar chart of margin progression effectively as land comes off. I mean, I think that really is a very visible indication of what the future looks like, other things being equal.

Shall we move to the lady here, please.

Allison from Bank of America. Two questions from my side. So first, can you comment a little bit on the sentiment in January and into February? Because we know some of the peers are saying they have seen a sales improvement in the February, and we don't know if you see the same thing as well. And the second is...

Sorry, could you just repeat that. I must be aging. I can't hear. Sentiment is what?

Sentiment has improved in the February according to some of your peers. So I wonder if you see a similar pattern as well.

And the second is, I don't know if you can disclose what's the average outlet number as of now or in early March?

Well, look, as you can see from the numbers, the position in the new year has been good and it's been building. So we're really pleased by that. When I looked at it yesterday, our operational outlet number was up year-on-year by about 15% compared to this time last year. That's how I look at it. So that -- trust me, that will change when I go back to the office this afternoon because that's just life. But we have an awful lot of outlets opening this year.

Clearly, it's key to get them open by the end of April. Otherwise, you're going to miss the build year. But as we said in the deck somewhere, we plans to continue to open another 100-odd outlets this year, which will drive growth into next. So I think we're in a pretty good place in terms of outlets.

Ami Galla from Citi. A few questions from me. The first one was on underlying house prices. Can you comment on what you're seeing in the market today? One of your -- underlying house prices. price One of your peers commented on giving out discounts. Is there any impact at a site level that you are seeing from that dynamic?

Connected to that, maybe on the mix side of house prices, your order book private ASP is up significantly. Is that largely a reflection of lesser bulks in the order book? Or should we take that as a view of how mix shifts steps up in 2026?

And the last one is on Charles Church and the investment that you've been doing in the spec there. In 2025, the gross margin was down. Is that largely a good baseline to consider of all the investment that you've done on the Charles Church brand?

Well, we're not finding we've got a discount hard at the moment to get sales away. So ASPs are...

ASPs are pretty robust.

Pretty robust. I mean, clearly, we are trading, but we're trading in line with what we saw last year, but we're driving growth. So net-net, we're seeing an upward tick.

In terms of bulk, well, we're also -- I think we're also seeing a narrowing in discounts there as well at the moment.

The bulk ASP is actually up. So I think -- and I think it's about early engagement is driving better value because we're driving the right price the right products in the right places drives the value.

I think margins on Charles Church is just mix, isn't it?

Yes, it's mix. I mean you have to remember, it's a relatively small population, 1,100 houses. So there's mix of geography mix and just working through. So that -- because it's a relatively small pool, that by definition will be a little bit more lumpy just because individual sites will have an individual -- make more of an impact to the overall margin.

Chris?

Chris Millington at Deutsche. The first one is about your medium-term plans and the 20% ROCE. Good target relative to where you are today. But if I break down the components of that and look at 20% margin, it implies no improvement really within your capital term from here, which does look somewhat cautious. I just wonder if you can comment on whether that is prudent or the level of investment. Do you want to go one at a time, given that was quite a worthy one?

Do you want to take that? Yes. So, look, the margin improvement target is key. We've talked about the components in there before, whether it's mix with Charles Church, the vertical integration coming through. But importantly, as we set out in the slide deck, volume growth and leverage and the embedded inflation starting to come through and if you like the build cost normalizing in the book.

So that's going to drive that margin progression. And that's also, of course, with the inflation point, that's why we've always said the margin growth is more back-end loaded because that has to unwind its way through the book. So then you're right, effectively to get to 20% return on capital is a 1x asset. Is that cautious? Well, my view, and you probably know me long enough, we'll get to 20%, and then we'll see where we go. So let's get to 20% first.

Next one is just bridging between the site margin and the gross margin. Can you just remind us how we get there? And I'll do my third while I'm here. And that's about where you are on capacity utilization within the manufacturing operations. And perhaps you can comment about that after you've made these investments, which are planned for '26.

Yes. Yes. So site gross margin. So key thing is that is consistent. The site margin is consistent year-on-year, the way we talk about it. And then below there, there's various things, whether that be sort of the central sales and marketing, some of the central commercial functions, of course, things like some of the maintenance and customer care and warranty costs and so on. So there's a whole series of costs which sit below that site margin, but that is consistent year-on-year, which is the key thing.

Could you remind me of the quantum of the differential usually, Andrew?

Well, it will -- I mean, it varies, but typically, you're probably looking at something -- I mean, about the sort of 5 percentage points is kind of where we're at.

Just in terms of capacity, well, I mean, the investment we've already made in the timber frame factories, we'll see a considerable step-up in that. And we imagine in the long term, we'll probably get to about 10,000 of frame delivery. So that's a ways to go yet. And the new line in the brick factory will again deliver a very considerable step change in performance. And that will see us through, we think, in terms of demand this decade. So it's quite low cost. It's GBP 10 million to GBP 15 million worth of cost, and it's using the existing manufacturer that we have installed in there already. So -- and it shouldn't interrupt deliveries this year. So we'll be with that next year.

Zaim Beekawa, JPMorgan. The first is just on completions growth for this year. I think you said driven by the open market. Do we still expect Charles Church to maintain that impressive growth?

And then secondly, Dean, I think you touched upon it a bit, but in terms of the Lone Star Land acquisition, a bit more flavor in terms of what that adds for you guys.

Sorry. What was that? Was that...

The Lone Star acquisition. And then finally, on the operating expenses, I think that nudged down as a percentage of sales kind of an area where you think that gets to in the coming years?

Yes. So I mean there's a number of Charles Church outlets opening up again, again this year.

Liam, is it your baby? Do you want -- does somebody want to give Liam a mic and he can wax lyrically about Charles Church?

Can you hear me?

Yes.

Yes, in terms of this year, yes, so we're really pleased to actually. So we started the year really strongly with additional outlets already opening. So some of the ones that Dean referenced earlier, actually, it's great to get sort of three or four sites away in January. So yes, we do expect another year of solid growth actually. So too early to call some sort of exact numbers on that, but really pleased that we're sort of very, very well on track for our medium-term prospect, which Andrew outlined was to double the brand over the medium-term target. So yes, really pleased.

I think it is also -- it's interesting to connected to your question about Lone Star as well because actually, there are some sites that without an upgraded Charles Church, we would not be able to really be in a shout with. And Lone Star has got a couple of those, particularly, for instance, in the Cotswolds, where we're developing a new heritage range. And Persimmon would not have been -- would not have made the planning bar for that. So it is reinforcing that. And Lone Star, really pleased with the business. I mean Ian's got the mic.

Liam, you give Ian the mic and he can talk about Lone Star, if he likes.

Thanks, Dean. Yes. So I think kind of Dean kind of hit the nail on the head there. We are looking at maximizing the addressable markets that we're in. Lone Star gives us the ability to do that to operate in areas where we don't currently operate. So areas of the home counties through the Cotswolds and into higher-value areas that otherwise the existing business model as we operated previously wouldn't have been as successful.

So introducing Charles Church there enables us not only to grow, but to deliver higher value and higher ASPs and just increase our addressable market. And I think that's the benefit that Lone Star land has, and it also enables us to think about how we can bring new high-quality land into the order book.

Thanks, Ian. And just on the margin.

Yes. So, on the margin point, yes, so operating overheads reduced 6.2% last year. I expect that to start to track down, and we'll get that below 6%. And then you've got to think there's opportunity for that to continue to fall from there because we're still delivering fewer houses than we did in 2022, albeit our cost base to deliver the quality and the customer service and so on is clearly higher than it was previously, but I would expect that to continue to fall this year and next year as well.

I think there's a question at the back, which there's probably going to be growing frustration if we don't go and answer.

Lovely. Thank you. Harry Goad, Berenberg. Can you talk a little bit about the land market, what you're seeing in terms of supply-demand dynamics? Are you seeing more land come available basically as a result of planning changes? And then what the implications for that are in terms of pricing? I appreciate you're going to say you're hitting your hurdle rates, but are there opportunities out there where you're acquiring land now in excess of your hurdle rates as well?

Yes, we are continuing to buy land and that's achieving returns better than our hurdle rate. Is more land coming to market? I don't know whether more land is coming to market because of planning reforms. There's more land available to us because of, I think, inactivity in -- with other developers. So it's very hard, I would say, for us to see through whether that is -- is there more land coming to market. And as we tried to be at pains to point out in the presentation, another factor that's going on is that we've just got more access to more partners than we previously would have done because our placemaking framework has improved.

So I can think of two or three land promoters that we dealt with last year that we would have never dealt with in the past or we have not dealt with for many, many, many years because we didn't like what we built. And it is an interesting feature, particularly amongst private landowners. Of course, the money they make from a sale is really, really important to them, but so is the legacy. And landowners will be really careful about that legacy because they very often are continuing to live in the community where they owned and sold the land. So I think that is helping us as well.

I'm afraid I can't give you a clear answer direct line between is planning reform increasing the supply of available land. I mean I think we've yet to see that really come through. It will be interesting to see -- we mentioned in the presentation that we're submitting -- we're working on 68 potential sites, 25 are going in this month. It will be really interesting to see if that's pulling opportunity through.

I would say we haven't -- despite there being a lot of talk, we haven't really seen the benefit of that come through yet, but that is clearly an opportunity in the future. So, I think, there's a whole host of reasons as to why we have stepped up land activity, and we're achieving the right returns and sometimes in excess of what we need and that is also helping us drive growth. So we can move forward. Yes, here, and the lady there.

Carlos Caburrasi from Kepler. Just tow questions. I'll stick to planning. Last week, one of your peers said that they've seen a meaningful improvement in planning with A meaningful improvement in planning. One of your peers last week, yes, and said that around 50% of applications were now positive. And I wonder if you're seeing the same trend?

And second question, around 32% of private completions, I've seen that they were sold to first-time buyers. And I wonder if affordability improves, if you are expecting that percentage to change meaningfully.

Just on the last point, I don't think that -- look, we've certainly seen over the course of the year, qualification rates go up. So that has been very helpful for first-time buyers. So if we go back two or three years, I could go into the Southeast business and maybe less than 1 in 4 of the customers coming through the door will qualify for a mortgage. I would say that sort of really doubled, if not more, over the course of last year. So qualifications improved, and that is clearly helping first-time buyers.

Clearly, it depends on rates. I think what we're seeing is a gradual improvement for first-time buyers, not a step change absent a stimulus of Help to Buy or something like that. I'm seeing a gradual change rather than a step change. But clearly, Clearly, more lending is helping lending at higher LTVs up until very recently, we've seen a substantial increase in mortgage availability and at higher LTVs. That's all helping first-time buyers. So, again, a whole host of things is going on.

On planning, I mean, we achieved detailed consent on more units than we completed on last year. So we've seen it improved. The planning and infrastructure bill is clearly going to be helpful. It's more developer friendly. It's more rules-based. So that can only help the future.

Has the system materially improved in our view over the last year? No. I don't think we haven't necessarily seen a material improvement in cut through on the ground. But our approach to it is cutting through and is getting results. So I think over the last 12 months, it's self-help that's driving planning success. There's still, I think, a bit of a disconnect between what central government wants to achieve and the myriad of councils that you're dealing with on the ground. But if you get your relationships right and you get your placemaking right, then you will cut through and you will eventually get -- you will get the ticket. And I think as the planning bill becomes an act, that will also help us. So, the future is looking positive, too.

Should we go to the lady here.

Rebecca Parker from Goldman Sachs. Just given your comments on land and the opportunities that you're seeing there, how can we be thinking about, I guess, the right level of land to support growth? Are you expecting to again replace that over the replacement rate going into 2026?

And then secondly, I guess, further to first-time buyers, there have been like press reports of a new -- potentially new Help to Buy scheme coming into place. Just wanted your thoughts on that and any discussions you're having with government?

Do you want to do land, and I'll do Help to Buy?

Yes. So you can see that we've grown the land bank. I think this is -- this part of the cycle, that's important. It's giving us the opportunity to grow our outlets and to grow our volumes. You've seen and you can see on the slide there, more routes to more markets for more homes. And actually, I think in the market, which is improving, I think, as Dean said, but having those outlets is really healthy to drive volume. So that's why we think investing in land is the right thing to do.

Clearly, if the Planning and Infrastructure Act has the desired effect, then in due course, then that will make things come through the planning system quicker. But I think as Dean has just outlined, we're not seeing that on the ground yet. And so we're still making sure that we've got enough in the hopper to drive that growth ourselves. So that's clearly something that we look at all the time in terms of making sure we've got the right land in the right places, getting in at the right hurdle rates and so on and so on.

Just on Help to Buy, I mean, there has been a considerable step-up in engagement on the subject of Help to Buy, particularly from # 10 this year so far, whether that translates into a scheme, I don't think any of us can say at the moment. As we've said, though, we are -- it's not our base case. We're not dependent on it. And we're growing nicely without it. If it comes, we'll be in a good place to take full advantage of it. Glynis?

Glynis Johnson, Jefferies. Three, if I may. Firstly, in operational leverage, you very kindly break out how you get to your margin. The volume contribution is actually more substantial than I necessarily was expecting. We've tended to be given a rule of thumb, every 100 units is about 10 basis points of margin. But maybe you can give us your view on how we should be thinking about your operational leverage.

The second question is on your build work in progress. Again, how should we think about where that can go? Should we be thinking about it as work in progress to sales, work in progress per site? How much of that work in progress is on sites that aren't yet open for sale at this point?

And then lastly, another good chart. I'm going to talk about one that you didn't necessarily reference, but Page 13, the land plots by site gross margin. If I look at it, the number of plots making over 30% in your land bank has come down quite markedly. The number of plots making less than 20% hasn't changed. In fact, it actually looks like it's gone up slightly. It either means you were delivering from that 30% plus through the second half of the year or it means there's cost inflation or maybe it's about bulk sales. Can you just talk us through why those different columns have moved at different rates?

Okay. So I think the rule of thumb on the volume growth, is probably I think it's difficult to apply that base rule of thumb at the moment because of the embedded inflation and therefore, the margin that we're still taking through on some of the sites that's still impacting that. So if you like, I think that rule of thumb is probably a more -- if you like a more normalized scenario, where as you can see, I mean, this year, we're doing 75% of our delivery is on sites with high inflation.

So I don't think that read-through is quite there yet because of the inflation piece. But notwithstanding that, volume and driving volume and then driving overhead leverage is clearly a key part of driving our operating margin through again. And you can see that on the overhead leverage that we talked about. The build which is interesting...

In mix. I'm assuming mix comes into site mix as well. So it's really just the volume that I'm interested in.

Yes, yes. So what I'm saying is I think -- so the volume comes through from -- we've grown 12% on volume, and that's driving so like-for-like, so the same mix, same ASP that would drive that through. Within the ASP and mix, that includes then the movement into more build-to-rent and more HA. So don't forget within that -- within the overall volume, you have 31% increase in affordable product, 21% increase in build-to-rent. So that's all mopped up within the mix and the ASP bar.

In terms of build WIP, so we came into the year with more EUs built than we did come into 2025. So in other words, we were building more in 2025 ready for 2026 is delivery. That puts us in a better place. And Dean has outlined that we've got virtually all the foundations, that we've got half of our rooms already on. So that is ahead of where we would normally be. And it's important -- yes, it means I've got more WIP on the balance sheet, but it's important from a quality perspective. It's important for driving sales. I think particularly in Charles Church, actually customers having product to see helps us drive sales and get value through sales.

And I think when you look at our WIP turn, it's still pretty good in terms of -- I think we're still probably turning it twice through. So I think I'm comfortable that we're building and we're investing in WIP to drive growth, and that's the right thing to do. So -- and some of that is on new sites. Of course, I don't have that number to hand. But I think typically, what we're finding is probably within some of the sites we've got with, whether it be infrastructure spend or whether it be Section 106 contributions, the cost to open new outlets is it is cash consumptive. And so that is part of that growing outlets is utilizing working capital is part of the reason that we've increased our facilities to give us that extra firepower to make sure that we can continue to grow the business.

And then -- yes, so -- and then the graph on Slide 13, so that clearly is looking prospectively, and it's looking based on anticipated revenues and anticipated cost base. So the revenues then include, as you say, mix as to whether there's different build-to-rent mix and so on in there. So it's a -- that is a bottom-up analysis done based on the assumptions site by site is the way that we pull that analysis together. But I think the key thing for me is that the number on the left-hand side there that nearly 80% of that is above 25%. So if I was to split that third bar from the left, so the tallest bar that is more biased to over 25% than it is to under 25%.

Sam Cullen from Peel Hunt. I've got two2 also. The first one is back on that chart, unfortunately, on Slide 13. Just there's a note in there that says it's based on normalized output levels. Can you remind us what you mean by that? Is that an outlet number for the group? Is that a sales rate assumption for those sites and therefore, for the group? And when you're buying new land, are you buying the hurdle rates based on those normalized levels or on the sales rate that you're currently seeing.

Yes. So yes, so that you can see in the note, it talks about the assumed revenues, which clearly is part of that and the mix comes into that as well. So then that's the assumed and the normalized output on those sites. So what we'd expect to be driving through. So that's not it's not doing some heavy discount to try to drive -- reducing revenues to try to drive additional. It's just based on our normal sales run rates. That's all that's referring to..

And when we look to buy sites, when we look at our financial metrics, we look at -- we're looking at hurdle rates, we're looking at return on capital, and we're looking at sales rates as part of that. And we would test those sales rates based on what we're achieving in the locality, and we look at those compared to what we see in the local market. So it's all done on a kind of local site-by-site basis. But clearly, those sales rates are based on what we expect that we can achieve.

And the second one is on -- I think, Dean, in your bit, you mentioned a couple of times routes to market and -- you've mentioned routes to market and how you've expanded those over the last couple of years. do you have ambitions to go further on that, either above or below where your current route to market sit?

I think that the three segments that we've got and the four types of customer we've got within those segments give us plenty of scope. So I think the brands are right. I think for now, certainly, the job we have to do is fully exploit each niche because I don't think we fully exploited that yet. And so I think we're in a good place to further expand in each of those market segments as we build more relationships within the existing group. And as the group's skill, the collective skill across the group steps up because as I hinted at earlier, not all companies in the group yet are building like a toaster or a command. In fact, the majority aren't.

And so I think that's an exciting opportunity. Clearly, you've got to get the market right. Clearly, you've got to get them. There's no point building a toaster in Leominster. But there's still plenty of opportunity to get it right, and that gives us opportunity.

Peter Ajose-Adeogun from Morgan Stanley. Just two questions. The first was just around build cost inflation. So you talked about the material side and what you're doing with suppliers to keep that down. Maybe if you could just give a bit more color on the labor side, what the trades look like. I know the average age for a bricklayer is still over 55. So just kind of long term, just in terms of how that looks today and then going forward?

And then also the second question was just around -- you talked about the profile of how land was acquired and what that means for build cost inflation. Maybe just on the other side, I don't know if this is a benefit, if you could clarify, but around delays to certain regulations like future home standards, where the land was acquired with those standards in mind, is there any sort of benefit to that? And if not, why doesn't that benefit flow through in the same way?

You want to?

Well, let me take the second one first, Peter. So you're right, on sites where we have assumed a building regulation, which is delayed, then there may be some benefit. But you've got to also remember, there are lots of sites where we have seen regulations early adopted. I mean we have -- we've got a site where the local authority -- I'm going back now probably a couple of years. In fact, it was the first site I went to my first day in Persimmon. The local authority declared a climate crisis and early adopted future home standards in a way which was not anticipated when that site was acquired. So you've kind of got to take the rough with the smooth. So -- and there are examples of councils early adopting as well as there are examples where some regulations have moved backwards. And then there is other regulatory costs. I mean just in November, landfill tax doubled. As you know, that's going to increase significantly year-on-year going forward. So I think I would just be careful to hang too much on regulatory costs coming down because I think probably across the piece in the sector, that's probably not what we have seen. So -- but of course, there's a whole myriad of moving parts.

In terms of build cost inflation, so what we've seen -- I mean, it's a little bit -- if you kind of go back 10 days, so pre the Middle East change, I think what we're saying and what we've seen is stable inflation. So that's the low single digit that we saw last year, and that was really across materials and the supply chain, so subcontractors as well. At the moment, we've not seen any impact, as Dean has talked to in some detail from the Middle East conflict. But of course, we monitor that very carefully. I think then you raised a good point around aging workforce. I mean it's not a 2026 issue.

It's a -- but into the longer term, it's an important point. And I suppose a couple of things that come to mind from Persimmon's perspective. First, we are investing more into apprenticeships ourselves and into training and development. So clearly, that takes some time to come through, but that's one important aspect.

I also think that the vertical integration and looking at modern methods of construction, more timber frame, panelized systems in due course doing facade products, all of these are options to reduce the amount of skilled labor on site because you're taking some of that manufacturing back into a factory environment and then doing the on-site assembly. So it means that you can all things being equal, deliver more houses with the same number of people on site or the same number of houses with fewer people. So, into the medium term, I think these investments in more domestic construction are an important part of the solution as is investing in early careers and bringing people through the apprenticeship level. I don't know anything else or.

No, I think. Well, I think if that's all our questions, thank you for listening to us today. If I can leave you with a final thought, I think Persimmon is in a really good shape. I think the brands have really come on, and I think they've got great potential. I think their positioning is in each of their markets really good.

And I think with the improvement in placemaking and the appearance and the quality that we're delivering, then that helps us grow. Our land banks are strong. Our strat land is growing. And you've seen that when you buy land at the right price, then that will drive margin improvement. And then, of course, with cladding 90% secure in terms of what we know today, that does and will give us capital allocation opportunities going forward. So I think we're in a really good place. and we look forward to telling you more about it in the future. Thank you.

Good day, and thank you for standing by. Welcome to the Persimmon Plc Trading Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to our first speaker today, Dean Finch, CEO. Please go ahead.

Good morning, and thank you for joining Andrew and I today. As usual, I'll say a few words by way of overview and then hand over for the Q&A.

As you can see from our statement, we have delivered a strong end to the year with 12% growth in completions. This means that we expect to be reporting an underlying profit before tax at the upper end of expectations. This also being double-digit growth as well as growth in margins. We believe that this organic growth in completions is one of our strongest on record. I would like to thank my brilliant colleagues at Persimmon as well as our supportive subcontractor base and supply chain for this fantastic result.

Our people went above and beyond in the final quarter of last year, and I want to place on the record my grateful appreciation of this. This growth in completions is made up of 30% growth in affordable, 20% growth in PRS and 6% growth in private, with the private growth largely driven by growth in outlets. We also saw 5% growth in private ASP and 4% growth in affordable ASP, giving us a blended growth in ASP overall of 4%. We also made good progress in opening outlets over the year, ending at 277.

Forward sales are up in value terms by 2% with the value of private forward sales up by 4%, but the value of PRS forward sales down as we saw a quieter Q4, clearly impacted by budget uncertainties. As we look ahead to 2026, whilst we are only a few days into the new year, we expect, other things being equal, another year of growth as a result of another year of growth in outlet numbers, albeit we expect the overall level of growth to pare back from what we have just delivered as a result of slower growth in affordable and PRS sales.

We have an excellent pipeline of land opportunities ahead of us that will convert into growing outlet numbers towards the end of 2026 and into 2027. But obviously, we should be carrying the cost of opening these outlets and the finance costs of buying the land and progressing the WIP in 2026. Taking all this together at this stage means that we expect, other things being equal, that 2026 will be another year of good profit growth, but that profit will lie in the current consensus range.

We also update on cladding. During the year, we were notified of 3 more buildings that require remediation. So we'll need to make a modest adjustment to the provision accordingly. Overall, we expect the provision at the end of 2025 will be less than at the start of the year. To give some reassurance, we are now completed, contracted or have an agreed tender price for 90% of known developments.

So in conclusion, we do have some headwinds in 2026. Landfill tax comes in from April, and that sees our cash cost rise this year from GBP 10 million to GBP 20 million. Thereafter, and mitigated, it continues to rise. And just to remind you, we think it goes from GBP 4 a tonne to GBP 25 a tonne by the end of the decade. And of course, the Building Safety Levy comes in from October. But overall, I think the business is in great shape. As I've just said, on remediation, we have 90% of known buildings completed, contracted or costs agreed.

We have a fantastic pipeline of land opportunities that will convert into outlets towards the end of 2026 and into 2027. We have a great range of products from the affordable end right the way through to Charles Church. But throughout, we design our build costs to keep our cost low -- build to keep our costs low, by giving us more routes to market, which I think is incredibly important in this environment.

All our house types are supported both by New Build Boost and Rezide and of course, by our brick and tile and timber frame factories. And finally, I am supported by a fantastic team of individuals at Persimmon. We are looking forward to another year of solid growth in profit.

And with that, thank you for listening to me. I'll turn it over to Q&A.

[Operator Instructions] And now we're going to take our first question and it comes from the line of Aynsley Lammin from Investec.

Just 2 questions from me, please. On the -- you kind of alluded to the fact the site openings will be more end of this year into '27. Just wondered how you see kind of obviously planned infrastructure bill was passed before Christmas. Do you think that has a meaningful impact? Will we start to see that this year? And just a bit more color, I guess, around the planning backdrop, how easy that might become from here?

And then secondly, on the completions, I think you've kind of given a guidance target of around 12,000 for FY '26. Is that still in place? Obviously, you had a good end to the year. Affordable was very high. Does that kind of bring you forward some of those completions and therefore, 12,000 is still what you're saying for FY '26 at this stage?

Aynsley, so Happy New Year to you, too. Maybe if I start with planning, and then I'll ask Andrew to pick up on guidance for '26. So I think the government policy and progress thereof and the paying an infrastructure bill is enormously welcome and is probably the most positive developments that we've seen in -- I haven't had the benefit of a long career in housebuilding, but all my colleagues are telling me best environment they have seen probably all of their working careers.

However, my word of caution around it is that whilst I think that it is incredibly positive, and I'm hugely grateful to the government, policy, as ever, takes some years to break through and cut through on the ground. And I think that remains the case. So whilst we've had really good progress in developing our land opportunities into outlets, it's really hard work still. And that's because beyond the policy framework, it's the detail on the ground.

So if, for instance, you take an example of ours up in the Northeast, we've had the ticket for 2 years for a particular site, but the drainage consultants can't agree, so we can't get the discharge conditions. Also in the Northeast, we've got a site where not quite 2 years, but nearly, I've got highways consultants that are arguing the task, and we can't get on site.

In Kent, we have 2 local authorities who are preventing us from all signing the Section 106, even though we were ready to go over a year ago because they can't agree on the division of the education contributions. And in Wales, Wales have just discovered nutrients, and so that is also giving us a problem. Am I frustrated? Enormously so.

What we need to see is cut through, cut through from the great but very lofty policy statements and ambitions to cut through. If the government needs to focus on delivery in this parliament, the policy is going to enable them to deliver into the next parliament. We need to live for the here and now. So I'm hugely grateful and welcoming of the progress that's being made in planning, but I'd like to see some real cut through on the ground and get us moving.

And over to you, Andrew. Now I've served up my -- served on planning to consensus.

Yes. Aynsley, so just briefly on consensus volumes. So as you say, we previously guided to 12,000, and I'm comfortable at this stage, 1 week into the year, that is still where we're at. I mean just to put a little bit of color on it, and we can talk more in March, obviously, we did have a very strong end to 2025, particularly you can see on the affordable delivery, you can only deliver that -- those units once.

So there's -- we delivered strongly there. And we know that the affordable market is still challenging. And as Dean mentioned in his opening remarks, the order book is a little bit lighter on the bulk sales than it was this time last year. So hopefully, that market will come back post-budget, but it will mean that we're just a little bit behind the curve compared to where we might have been otherwise.

And so given those 2 things, I think volume growth then starts to be driven again by outlet growth in the business. And as we said, we will be growing outlets this year, but probably more towards the latter half of the year rather than the start. So putting all of that together, I think I'm comfortable with where the number is for now. And obviously, when we come out in March, we'll give a bit more color on the trading in the opening few weeks and see what that means.

Now we're going to take our next question, and the question comes from the line of Will Jones from Rothschild & Co Redburn.

Three, if I can, please. First, just around the Boxing Day campaign where you talked about encouraging signs. Just -- I guess, any further color around that in terms of how it's translating through to website hits, I guess, at this stage and maybe inquiries as we go forward.

Second, maybe just on pricing. I think you talked about similar incentives. So I assume that there's not a huge amount new to say around pricing, but I think the growth in the order book is quite good, but again, perhaps influenced by bulk and other mix. But yes, any thoughts on underlying pricing net-net would be great.

And then just a couple of taxation points you raised around landfill and Building Safety Levy. Any thoughts you've got on potential mitigation measures, landfill, potentially delaying the impact of the Building Safety Levy by getting your controls through early? And just in that backdrop, whether you still think there's scope to kind of nudge ahead the margin potentially in '26?

Thanks, Will. Let me pick those up. So yes, in terms of Boxing Day, I guess it's encouraging. Website visitors have been good, higher this year than last year. I guess my caveat on that, of course, it's a single data point, and it's very hard to take a trend from a single data point, Will. So we have to see how that manifests itself, how that runs through as we go forward. But certainly, in terms of website traffic off the back of the Boxing Day campaign has been very good.

Pricing, as you say, incentives, I mean incentives stayed at that 4%, 5% probably the last 18 months, actually since I've been in the business has been similar. And we have been -- probably had slightly more robust pricing, certainly, I think, in the North Midlands and so on a further away from the Southeast.

You are right that the ASP growth in the order book is not -- that's not illustrative of what I see ASP growth going into 2026 will be. That's really about the mix in the order book. As you say, there's more open market sales in there. There are fewer bulk sales and so on. So there is a mix effect in the order book. So I wouldn't try to read too much into the 6% uplift, albeit it is good that pricing, yes, I think it has been pretty robust through '24 -- 2025.

And then just on the 2 tax points. So you're right. So landfill tax, as well as doubling, obviously, they introduced -- that increases a year earlier than they originally consulting on. So -- and of course, that limits the immediate chance to mitigate. The most obvious mitigation would have been to try to do some of that groundwork before the tax increase. Of course, that opportunity is reduced by time. We've only got 3 months to do that.

Clearly, we are looking at designer sites to see where we can mitigate in terms of reducing -- taking spoil away to landfill. That's clearly the most obvious case. We've just signed an agreement externally to help -- with a third party to help us manage our spoil and landfill as well. So we are looking to mitigate that. But clearly, as we grow outlets, as we open new outlets, a lot of the infrastructure work is done early, and that will be subject to the new taxes if we can't find alternative ways to deal with the spoil.

And then on Building Safety Levy, I think you covered off the key point, which is actually getting our start on site and our building controls signed off and agreed early is clearly what we'll be looking to do to try to make sure that where we can, we can mitigate Building Safety Levy to the extent that's not already been factored into land acquisitions, of course. So there's a timing opportunity there for us to work that through.

And the overall view on margin possibilities in '26, still as you were before?

Yes. So what we said was that we saw the margin progression in '26 to be at a similar rate of progression as we have seen in '25. And I think that's probably still the case, Will, because there are some of those headwinds. And as we talked about in the summer, that embedded inflation from 2022 and 2023 takes time to work its way through the system, absent any significant house price inflation to offset it.

Now we're going to take our next question, and it comes from the line of Zaim Beekawa from JPMorgan.

The first is just on the PRS. So any expectations to when you think this will come back post-budget? And does it still remain sort of a core part of your strategy there or still part of a key strategic market?

And then secondly, on the fire safety, kind of just maybe an updated view on when you may be finished with these and how that will inform your approach to capital allocation?

Okay. Zaim, let me take those. So first on the PRS. So we saw -- and there's some specific examples that we had deals which were almost ready to agree, which were then paused in the run-up to the budget. Those customers, those investors obviously are very alive to things like gilt rates and they -- [ clearly ] all of the speculation in advance of the budget, that was weighing heavily. So I'd like to think that market will come back. It's still an important market for us. We still think strategically, it's important.

As Dean mentioned in his opening comments, what we're trying to do is to sell into different markets to give ourselves maximum opportunities, whether that's Charles Church, whether it's core Persimmon, whether it's build-to-rent. So it's a key part of the strategy still. And I think hopefully, we'll see some progress there in the first half year. So obviously, post-budget, you were straight into the Christmas running. So it was a little bit too shorter period to really see that come back in December. But I'd like to think that market will come back and stays important for us.

In terms of fire safety, Dean talked to that. It's a small adjustment. We've always said that the important thing is that we are on the front foot. We're dealing with the fire remediation work. We've always said that the provision will come down. It might come down a little bit lumpy as it comes because these are complicated projects as we work forward. But we still are looking to do the bulk of that work this year and next year. Of course, there will be a long tail, but that tail will be kind of business as usual, if you like, in terms of quantum. So this year and next year are still the key areas or the key time for getting through the bulk of that work.

Sorry, just to pick up in terms of impact on capital allocation. So we said in the summer that what we wanted to do is to see our way towards the end of that work. So not we don't have to be finished, full stop, but we want to be closer to the end point. So I still think that's the case. And as we get through '26 and into '27, that gives us opportunity to update on the capital allocation policy.

Now we're going to take our next question, and it comes from the line of Ami Galla from Goldman Sachs -- my apologies, Ami Galla from Citi.

Two questions from me as well. The first one was just a follow-up on the ASP point. You've seen a significant positive mix effect on the affordable ASP in '25. Do we expect that to reverse?

And the second question is on build cost inflation, we are targeting a similar level in '26. The first one is, could you update us what the '25 build cost inflation eventually stacked up to be? And into '26, where are the pressures on build costs really coming from?

Okay. So Ami, let me pick those up. So in terms of the ASP, so you're right, there was some mix effect. But actually, what we saw in delivery in 2025, we saw ASP growth across Persimmon and the Charles Church and affordable. So I think in terms of the affordable, of course, it's always linked to the geography because as you would expect.

So I think in terms of what we're seeing in terms of underlying ASP growth, I think we see, as I said earlier, its pricing is robust around the country. It's more of an acute issue in the South and Southeast because headline prices are higher, and therefore, affordability is more of a challenge more broadly for our customers. But I think we saw some good ASP growth overall, 4% up year-on-year. And you'd like to think that ASP growth will continue, but it will be -- I wouldn't expect it to be at the level that we see in the forward order book because that is driven by mix effects. So -- and it will be driven by mix and by geography again as we go into 2026.

On build cost inflation, we talked all the way through '25 of low single digits. So you're kind of in that sort of 2% to 4% inflation. I don't really see any reason why that will be different in -- as we go into 2026, where the pressure and that sort of level of inflation really will be across materials, it will be across the supply chain as well. So because -- and if you like, that's relatively normalized levels of inflation.

But the key thing, I think that you -- just to remember, it goes back to the margin progression point I made to Will is, of course, that build cost inflation on already elevated build costs. So it's not a question of costs coming down. It's a question of costs going up, but that's probably a similar level to 2025.

Now we're going to proceed with our next question. And the question comes from the line of Glynis Johnson from Jefferies.

I'm going to go with 3 as well, if I may. The first one is just a clarification in terms of the outlet count. You talked about growth towards the end of 2026, but should we be anticipating that outlets might dip a little bit through the middle of the year and then pick up? Or is it just going to be steady and then climbing?

The second one, just in terms of Charles Church. Can you just give us a little update in terms of how Charles Church did for the 2025 as a whole? And what we should maybe be thinking about for 2026 just in terms of proportion of completions?

And then lastly, just in terms of some of the measures, you referenced them earlier, Rezide. If you can just talk through the measures, what the uptake has been, whether or not they're making any kind of difference to your sales rate?

Glynis, let me pick those up. So in terms of the outlet count, I would expect it to be through the year, relatively steady. The tickle up will be towards the back end, as Dean mentioned. I mean of course, there's always -- if we sell faster, then we will -- then we have them falling off the belt a little bit quicker. And sometimes we see that at the end of the first half year.

But generally speaking, I think it will be relatively steady, but then -- and then that push up in the -- towards the latter part, which will then drive additional growth, hopefully into 2027. So I wouldn't be necessarily modeling for a dip in outlets. But say, as your sales rates pick up, there always -- there is always that -- there's always a chance that you end up with some falling off the belt a little bit earlier than you expected.

Charles Church, really pleased with the progress. So we relaunched it in March of 2025, as you know, and that was a -- in terms of the product, in terms of specification, in terms of the branding, the route to market. And that's done really well. So the volume growth in Charles Church was strong in 2025. We had the volume growth in Charles Church outstripped the volume growth in Persimmon, but really importantly, both products grew. So it's not that we're growing Charles Church at the expense of Persimmon. They both grew. And the Charles Church had a slight tick up, therefore, in terms of its relative share compared to 2024.

And that's good because what we said is that we want to -- in 2024, Charles Church was just shy of 1,000 units. We're looking to get that to 2,000 over the next 2 or 3 years. So we'd expect that growth in Charles Church to be quicker and to continue to grow faster in 2026. So we're really pleased with how that relaunch has gone. And again, in the current market, I think having more strings to our bow, more routes to market, more routes to different customers has proved really beneficial.

And similarly, as well as looking at Charles Church at one end of the market, obviously, we've also launched New Build Boost and Rezide in terms of -- again, it's about trying to bring people to site and offer something different to different customers. So Rezide, very little impact in 2025. We only launched it in Q4. So you wouldn't expect significant impact. New Build Boost, we launched in Q2. That has had some impact in terms of driving people to site.

Interestingly, quite a lot of people who have come in and qualified on New Build Boost have ultimately then reserved on traditional products. So it has driven footfall and driven regular sales as well as New Build Boost sales. So I think neither of the products are, if you like, transformational, but they are both incrementally helpful in driving people to site and therefore, driving additional sales.

Now we're going to take our next question, and it comes from the line of Charlie Campbell from Stifel.

Just a couple for me, really. One was on mortgages. And I'm just wondering if there's anything to say on mortgage availability, quite a bit of noise around that, but wondering if you've seen any changes on the ground or else if people are telling you to expect changes in this year ahead?

And then secondly, on affordable, just so I can sort of understand the path of that a bit. Should we expect a lower percentage of affordable in '26? And also just on the timing, just wondering when the sort of affordable homes program money start to kind of kick in. I understand people are going to apply by February, but just understand kind of when that kind of you would expect housing associations to have more appetite for buying affordable housing with those funds?

Charlie, so let me just pick those up. In terms of mortgage availability, mortgage market, I mean, look, helpful that interest rates are lowering. That's obviously useful. It's helpful that there was some additional or higher loan salary kind of mortgages coming out towards the end of last year, lower deposits. So incrementally, I think the mortgage market was probably more helpful at the end of '25 than it was at the start.

But I think it's -- again, it's incrementally helpful as opposed to being transformative. And certainly, affordability and access to a mortgage or to sufficient mortgage remains a key constraint for many of our customers. So I think there have been some, if you like, some helpful signs, but they're certainly not -- they're not transformative, if you like. And so -- and that's why the industry, of course, has been calling for something similar to a Help to Buy for exactly that reason. I mean what we've been doing with New Build Boost, with Rezide, with Charles Church is not waiting for those kind of policy interventions. We've been trying to get after the market. But I think mortgage availability and affordability more generally for our customers remains a key issue going into 2026.

In terms of the affordable percentage, it was a little bit higher in 2025. Obviously, that's where we saw a significant growth, 30% growth in affordable units in 2025. Clearly, I wouldn't expect 30% growth year-on-year. So there is a likelihood that, that percentage will come back a little bit in 2026. And so I think we're about 17% of total volume was affordable in 2025. Typically, I think it's probably somewhere in that 15% to 18% range, something like that. So it might be a little bit shy or a little bit lower percentage in 2026.

And then in terms of the new funding, I mean what we see is there are continue to be funding challenges for our housing association partners. Clearly, they have a lot of pressures on their businesses. And I'm not sure that, that new money, which is likely to come in imminently in terms of those settlements. I mean clearly, the GBP 39 billion the government talks about is separate to the Section 106 as well. So that's -- this is about really for the Section 106 funding.

So just if I may come in there. I was talking to the Chief Executive of Homes England yesterday. I mean, I suppose the point impressed on me yesterday is the government desire to press on with the program is clearly strongly there. I think them getting organized to move into delivery is more towards the end of the year rather than being materially helpful to this year. There is that pipeline of money there, and it will step up. But I think I'd be expecting more of that impacting '27 than '26, just from what the Chief Executive is saying to me yesterday.

Now we're going to take our next question, and we go to line of Chris Millington from Deutsche Bank.

A few quick ones for me. Apologies, I joined a couple of minutes late, so I don't know if you touched on this, but I'd love your thoughts around the potential for any government support, whether there's any conversations you're having there. There seems to be a little bit of conversation about it in the sector.

Next one, I'd just love to know that the key moving parts on net cash for '26. Is there any danger you move into small net debt, not that I see that as a big issue. And then I'd just love a little bit of detail around why these buildings have kind of come out of the woodwork with regard to fire safety. I know everyone's had additions, but just some of the detail behind yours because it did feel you were a little bit further through your progress than -- well, you are further through the progress than peers, but I'd love a bit more detail on that, if possible.

Chris, again, based on my conversation from yesterday, what I would say is that it's firmly off the agenda at the moment. Will it be firmly off the agenda after May? Will there be opportunities looked at from a stimulus perspective later in the year? I certainly wouldn't rule it out. It is clearly being actively discussed. Treasury do regard this as inflationary. And I think it is the job of us as developers. It's the job of MHCLG. It's the job of Homes England to persuade the treasury that in the context overall that the inflationary element, frankly, isn't a big deal.

And I can just about see how it can be inflationary, but I think it's pretty marginal. So don't hold your breath for now. But would I rule it out? No, definitely not. Is it core to our strategy? Absolutely not. If it comes, it will be a benefit to our strategy. If it doesn't, we can happily cope without it as our strong performance in 2025 demonstrates.

I'll also pick up on fire safety. Yes, it's a bummer, isn't it? Unfortunately, I'm afraid. And why is that? Well, because the tail is very long. It's 30 years. That's the contract we all signed up to. It's incredible that these buildings are still popping out at us. And it's frustrating, but there you have it. It is, and we're dealing with it. We're in a really good shape. You perhaps didn't hear me say this at the start, but I'll repeat it again. Everybody else will be tired of me saying it. But in terms of our known buildings, we are 90% either complete, contracted or agreed price. So at least that variable of escalating cost is being controlled.

And the other progress we made in Q3 and Q4 last year is that we began to achieve recoveries, which is really good news, high time. I think it is high time, as David said in the article in The Times this morning, the whole burden of this has fallen on the developers. It needs to be expanded to the supply chain.

And certainly, we are rigorously going after recoveries, and that will assist. So can I rule out and guarantee to investors, there will be no new buildings pop out at me in 2026 that I have no idea we ever built. No. But do I think that it is manageable, is a direction of travel down. Will we be out of the bulk of this in '26 and '27? Absolutely, I do, and that will enable us to look at our capital allocation.

The adjustment we're proposing for this period has obviously got to be approved by the Board. It's got to go through Audit Committee. But I think in the context of everything, it's pretty modest. So unfortunately, Chris, I think it's a fact of life. There will be bumps on the road. We never promised it would be linear. But year-on-year, the provision is coming down.

Chris, I'll just pick up on the net cash for 2026. I mean the reality is we'll give full guidance on it when we come out in March, Chris. But the point I would make, and again, apologies, I don't know when you joined the call. But obviously, we are looking to grow outlets again in 2026. And growing outlets does take cash because you have to invest in the outlets -- in infrastructure and getting the site set up and open.

So there is upfront cash requirement to do that. We've obviously been active in the land market as well. So there are -- there is investment that we're making quite deliberately so and quite rightly so, but we'll give some more guidance on where we then expect our 2026 cash to be when we come out in March.

And the question comes from the line of Rebecca Parker from Goldman Sachs.

Just one for me on the land market. Just wondering if you could provide some color on land opportunities and where you're seeing there and maybe the pricing in the market at the moment?

Well, we're seeing more opportunities than we can cope with at the moment. I was glad at the Christmas break, to be honest, in case there was another land coming to inserted into it somewhere. So yes, look, land, we -- it was extraordinary last year for us. Yes, and it certainly escalated towards the end.

So I think there's a combination of things going on there. I think certainly, the other thing that's happening as well as the sort of real dynamics of the market, I mean obviously, we've got cash and -- but I think as well, we're becoming a much better partner to do business with. So people who would never have spoken to Persimmon when I first joined 5 years ago now do speak to us. They do pick up the phone to me and others in the business. And land promoters come and knock on our door.

So I think as well as us being in a position to participate in the land market through the rehabilitation of the brand and the efforts of our people to demonstrate the improvement in customer service and build quality. And actually, the design improvement of our developments is stepping up.

So a key thing for landowners is they want to feel proud of -- if they're selling a piece of land, which can be a big piece, a big thing, a big legacy in the community, they want to be proud of the development that they're leaving after them. And so that's been a big turnaround for us and demonstrating that and burnishing our credentials. So the dynamics of it for us are very good. We can afford to be selective. But we're always keen and eager and grateful for a new opportunity.

And now we'll go and take our final question for today, and it comes from the line of Clyde Lewis from Peel Hunt.

Probably one going back on the cash and sort of talking about or thinking about build rates for [indiscernible]. As you sit here today, are you sort of thinking about changing, I suppose, the pace of build versus the pace of sales? Or are you very happy with how that was going last year? That's the first one.

I suppose attached to that, when you sort of look ahead and you look at labor availability and I suppose the overhead structure of the business, how easy would it be for the group to respond and deliver a 10% or 15% increase in volumes if a new mechanism from the government was announced or we did see an improvement in mortgage rates and demand profile?

So I suppose we're positioning ourselves to do exactly that should that happen. Timber frame being rolled out across the business. We're getting used to it. We're probably putting in a new line into the brick factory this year. We stepped up capacity in the tile factory last year. And of course, we're also looking -- we automated the robotic line in Space4 last year. That was a big step-up for us. We had some learnings from that. But now -- that is now an efficient level of production and will step up again this year. So we're trying to get ourselves into a position to exactly cope with that step-up in capacity. And of course, we just delivered a 12% growth in completions and a bigger step-up in EU build.

So I think overall, we're in a good place. And then we'll keep pushing on with build-out rates this year, so we can get ahead of the market. I want to be in the glorious position. And as I know that all of my MDs will be listening into this. I want to get into the glorious position when we get to the end of November, I have no CMLs off of existing sites into December. So that will be a real achievement. I don't know if you got anything to add to that, Andrew.

No. I mean obviously, Clyde, we look -- on the build rates and sales, of course, we keep looking at those. But as Dean says, we try to get ahead on build. It helps with quality. It helps with predictability. And I think certainly as well in parts of the market, particularly Charles Church, it helps with sales actually. So we are getting after the build, which is important.

So I think that's it. Thank you very much for listening to us today. Look, 2025 was a very strong year of organic growth for Persimmon, and I think the business performed brilliantly, and I'm very grateful to the teams for that.

We expect 2026 to be another year of really solid growth. It is going to be driven by our strong pipeline of land opportunities as well as the strength and I think the diversity of our brands and our products and an unrelenting focus on operational excellence. So we're looking forward very much to another year of growth and another year ahead, and we shall update in March.

Thank you very much for listening to us this morning.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good day, and thank you for standing by. Welcome to Persimmon's Plc Q3 Trading Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to turn the call over to your host today, Mr. Dean Finch, CEO. Thank you. Please go ahead.

Thank you very much. Good morning, everybody. I'm joining you today from our Newcastle office, where alongside colleagues I'll later be attending the funeral of our Founder, Duncan Davidson. Of course, our thoughts are with Duncan's family and friends, but it is also a sad and poignant day for us at Persimmon as we remember a man who taught us a lot about business and life.

First and foremost, Duncan inspired many, many people. What quickly struck me at Persimmon was the genuine [indiscernible] Duncan's held in by those who knew him and worked with him. I often hear a great man and a great boss. Duncan was a visionary and an entrepreneur. I have the great honor to lead this company inheriting Duncan's great legacy while trying to build on his great insights and strong foundations. Fundamentally, Duncan knew that a great value home built by great people, trusted to deliver excellence consistently would deliver for customers and for shareholders alike. I, we try to maintain these values, his drive and vision in all we do, as I hope today's results demonstrate.

We're pleased with today's results as they show we performed well in a challenging market. Across the key metrics, we can see the benefit of our investment in the business and our self-help initiatives. We've maintained a good sales rate despite a clear softening for the industry over the summer and in the run-up to the budget. Customer sentiment is more fragile. So I'm delighted we've also so far maintained a sales rate ahead of last year. Initiatives such as New Build Boost, our shared equity product have helped alongside the broader investment in sales and marketing.

Forward sales are up, both our total forward sales and the private forward sales element are up both around 15%. Pricing is robust, and we remain disciplined on incentive use running around 4% to 5%. Our build position is good. We're clearly focused on securing the year-end completions, and we remain on track to deliver our guidance.

Our proactive approach has helped drive further planning success. This is reflected in our growing outlet base. We continue to invest in the business to drive growth and returns. We're being presented with good land opportunities and are maintaining our discipline while growing our overall land holdings.

As we look ahead, the budget is clearly a crucial moment. How any measures impact customer sentiment, including amongst institutional investors will be crucial. Nonetheless, we're on track to deliver this year's guidance and are determined to continue to drive further growth to meet our medium-term growth ambitions.

Thank you very much, and I'll now open it up to any questions you might have.

[Operator Instructions] Our first question comes from the line of Aynsley Lammin from Investec.

Two questions from me, please. Just wondered if you could give maybe a bit more color just on pricing and incentives, how they've kind of evolved through the autumn selling season. I think ASP private is up 1.5%. Is that mix? Is there any HPI in there? And have you ticked up incentives more recently?

And then second question, just on -- obviously, you did a good job increasing site numbers. Just as you look into next year, what's the visibility like for kind of site openings, your expectation of planning for next year?

Aynsley, as we said, pricing has been good so far over the course of the year. I mean, we did see a softening -- well, let me rephrase that. We saw a very strong actually July and August. But then that tailed off towards the end of August as speculation mounted as to what's in or not in the budget. Although what I would say is actually over the course of the last couple of 3 weeks, we've seen sentiment improve again as numbers seem to be rebounding.

So we did see a softening [indiscernible] 2 halves, very strong first part of the summer, softening in the middle, coming back a bit now. Pricing is robust, good PD performance. The area, I suppose we've seen a bit of softening is in terms of institutional demand as well. But overall, pleased with performance. It's still up, but pleased -- a bit of softening, but overall pleased with performance and incentives have held in the 4% to 5% range. So we've maintained our discipline there.

In terms of site numbers, you're right, we've had excellent progress with opening outlets this year. We expect to do a similar number next year, looking to around -- open around 100 outlets subject to planning and looking to drive forward again next year by around 10 to 15 in terms of net. But obviously, that is subject to planning and subject to getting all the various other parties such as Highways, Natural England and all the other good people across the line.

The next question comes from the line of Allison Sun from Bank of America.

Dean, just one question from my side. It's probably more question for Andrew. Is the sales price in the order book, I see it's up by around 1.5% year-over-year. Can I ask it's mostly driven by a mix impact or it's more like underlying increase?

Andrew, do you want to take that up?

Yes, I'll take that. Yes. So as ever, Allison, there is the whole mix effect in terms of geographies and sites and size of products and so on. But I think fundamentally, the point comes back to the point Dean made a moment ago around pricing has been robust. I think particularly the further north that you move, the more robust pricing has been.

And so I think there is -- there will always be a mix effect in there, but it's not that it's a question of the mix is driving up and house pricing is coming off. I think pricing has been robust on a like-for-like basis as well. So I think we're pleased with the pricing we've achieved actually across all of our regions. So it's a combination, but pricing has been robust and that is shown through in the forward order book, Allison.

The next question we have the line from Ami Galla from Citi.

Two questions from me. The first one was on the investments that you've talked about in the release. One was on -- in the recent news flow, you had announced that you've acquired a planning promotion company. Can you talk a bit more about the land market? And how do you see that as an opportunity ahead? And the second one is on the new Rezide product. Can you talk about how the initial interest has been and what's the take-up of that product in the market?

Yes. Okay. Thank you. I mean, the land market is certainly very busy for us at the moment. I'm in a happy position of -- we are in a happy position of having choice. We have a lot of opportunities available to us. So that is enabling us to be choosy. So the immediate land bank is in great shape.

Strat land is also in a good position, and we have looked to strengthen that in places with, for instance, this acquisition of Lone Star. It's a small company, but it fits where we've got some gaps. So we're very pleased with that. So yes, look, overall, land market is very healthy for us at the moment, and we're feeling good about the future.

Rezide only launched last week. I think we've taken one sale so far. But it's -- I think the key point about this with New Build Boost and other products that we either have or we're developing is it gives our customers a range of choice. Clearly, affordability is the main issue still facing the market. So anything you can do to help with that helps boost our numbers.

As I said, we've now got Rezide as well as new Build Boost, so it enables us to give customers more options. The key thing actually really is not so much the numbers we sell through these things, but the opportunities they bring us, we often find that the headline attracts people into the door, but then they may not end up taking that product for whatever reason, but it's extremely helpful to have these tools in the toolbox.

Our next question comes from the line of Will Jones from Rothschild & Co Redburn.

Three, if I can, please. First, maybe just covering off on second half completions. I don't know if you're willing to give us a view on how Q3 looked compared to the roughly [indiscernible], I think you had last year that you gave back then. And just what risks or otherwise you see the delivery into year-end, just noting the 83% exchanged or complete compared to 85% last year. Are you reasonably comfortable around the Q4 delivery?

Second, build costs. I think this time last year, you talked about some rising costs looking into this year and a couple of issues on sites with some regulatory costs. But just anything you could give us on the equivalent this time around as we look to '26.

And apologies if it was covered right at the start of your intro, I just did miss it, but the comments you gave back in the summer around 2026 volume and margin aspirations, do they still apply an equal measure?

Andrew, do you want to pick those up, please?

Yes, I'll take those Dean. Will, so yes, in terms of the second half delivery, I mean, we're ahead in terms of absolute numbers on exchanges and completions year-on-year, as you'd expect. I think the 83% versus 85% is in the sort of margin in the round, isn't it? So pleased with where we are and continuing to progress well for the year-end, which is why we're able to reconfirm in line with market guidance. So pleased with that.

In terms of build cost and inflation, so we said coming into the year, we expected low single-digit inflation, so 2%, 3%. And I think that's around about what we have seen. And obviously, we'll talk more in January and as we go forward and coming off the back of the budget. And of course, this time last year, we just come out of a budget, which has increased national insurance and so on. So that was one of the things we were talking about this time last year, our segment was just after the budget rather than just before.

But I think all other things being equal, I'd expect to continue to see that level of some inflation, but not -- certainly not where we were a couple of years ago. So -- but this year, we have seen that 2% or 3% as we said that we would do.

And then just casting forward, obviously, we talked and gave some early guidance for 2026 in the summer. And obviously, that was all predicated on relatively stable market conditions. And I think we haven't explicitly given any update to that today. I think I'm reasonably comfortable with where the consensus is for volume for next year, also back in line with the guidance we gave on both volume and the trajectory of the speed of margin growth that we talked to in the summer.

The one thing which I have put into the statement today, I do think interest costs next year will be just a tad higher than this year. So probably we guided this year to kind of up to GBP 20 million, next year might be closer to GBP 25 million as we continue to invest in the business. I'm talking about land investment. I'm talking about the investment into work in progress to open new outlets. I'm talking about investment into vertical integration and working through the fire safety remediation work and so on.

So that's really the only sort of tap on the tiller, if you like, that I've just called out in today's statement. But otherwise, I think the guidance that we talked to in the summer is still there in terms of volume and speed of margin progression.

[Operator Instructions] Our next question comes from the line of Zaim Beekawa from JPMorgan.

Firstly, my thoughts go to Duncan's family. I hope today goes well. And then on the questions. The first would be just on Charles Church. You mentioned performing well. I was wondering if maybe you could provide some details or figure on this. And then secondly, Dean, I think you mentioned some softening in institutional demand. Is this just the nature of uncertainty around the budget or anything else going on there?

Should I take the second one first, Andrew, and then ask you to talk about Charles Church.

Sure.

Yes. Look, I mean, it is -- and we have seen 1 or 2 of our PRS customers take the decision to pause investments until they know what's in the budget. I mean, I think it's entirely understandable. So they are taking a wait-and-see approach. I don't think it is lost business, but I think it is perhaps deferred business, and we just need to wait and see like everybody else, what comes out of the budget. Not big numbers yet, but I'll just put it out there for you to be aware of.

Yes. Thanks, Dean. Zaim, so just on Charles Church. So we obviously relaunched Charles Church earlier this year in the spring. And we're pleased with how that's progressing. We've opened 7 new Charles Church sites in the period. And we're looking, as we've said before, to double the volume from Charles Church. It was around about 1,000 units in 2024, and we're looking to double that over the next few years. And I think we're making good progress.

I think there's a couple of things I would call out, particularly. So one is having that extra product at a different price, it gives us an opportunity to sell more products to different customers, different customer base. That's helpful. It gives another string to our bow, which is particularly helpful. It allows us to drive increased outlets. So we're seeing that is of value.

Clearly, it's not for every site, everywhere and some of our sites will just be Persimmon, some will just be Charles Church. In some locations, we can use Persimmon and Charles Church. So I think the extra brand and the extra outlets is giving us opportunity to play choose in a market where you're actually having alternatives and different approaches is very helpful.

So we'll give more detail on the actual numbers in terms of completions and so on, obviously, in the new year. But I'm pleased that we've been able to open more outlets and start to drive that growth in Charles Church that we talked about in the spring.

As we appear to have no further questions at this time. I would like to hand the call back to management for closing.

Okay. Thank you. Well, look, thank you all for listening in this morning. I believe we're in -- I think we're in a robust position as we enter the last few weeks of the year. I'll just repeat really what I said in the summer, which is Persimmon is building a differentiated base for itself through its investment in its land, in its brand, in its products, in its factories and its people. That's enabling us to build on our core strengths, as I see it, which is we choose what to build, where to build and how to build. And that does give us an edge, I believe.

Our products are more affordable on average than our peers. We're working hard to support those with a range of accessible ownership routes and products. We continue to invest in land and target our approach to planning, which is clearly driving growth. And production is accelerating as we drive more from our factories, both through what we're using and through timber frame. So thank you very much for listening in, and have a good day all.

This concludes today's conference call. Thank you for your participating. You may now disconnect your lines.

Good morning all. Thanks for joining us today. I'm joined by Andrew, I and other members of the team, are around as well if you want to catch them later.

So the theme of these half year results is that we've continued to grow the business and, at the same time, enhanced our capabilities for the future. As I pointed out in our statement, our focus on self-help has continued to deliver.

We've grown in several key areas: completions, ASPs, sales rates, ex bulk, outlets, consents and profits, and all whilst reducing our exposure to cladding. This differentiated performance is a product of our strategy and execution, and that's been brought about by the skill and expertise of my colleagues at Persimmon, whom I want to thank for this great performance.

Persimmon's strategy involves choosing where to build, what to build and how to build. And that approach enables us to provide exceptional homes at attractive prices to our target customer base. We continue to double down on our clear strategy through our investment in land, in our brands, in our build quality and customer service, and our factories. We're doing this whilst continuing to maintain a secure and strong balance sheet. Our strategy and our execution are enabling us to deliver profitable growth in contrast to a challenging market. And I believe it will enable us to continue to grow in the coming years.

So our strategy is consistent and is clearly delivering as the next slide, which I presented to you in March shows. These five enablers: land, brands, quality and service, innovation and vertical integration, and balance sheet support and enable the delivery of our strategy.

Our high-quality land bank and industry-leading planning success combined are driving outlet growth. Our three strong and distinct brands are well positioned as attractive and very good value products in their respective markets. This brand diversification is undoubtedly driving sales and growth. Our significant and sustained progress on build quality and customer service is enabling us to better compete for customers, and that improved sales rates in a challenging market.

Our investment in innovation and vertical integration is enhancing our build efficiency and our delivery now with much more opportunities to come.

Finally, our balance sheet remains a key strength. Our strategy and these enablers, coupled with our experienced teams, are both helping us to outperform now as well as give us the confidence we will continue to do so in the future as we build our differentiated platform.

So now I'll turn to what we've achieved in the first half. As you can see, we had a good first half. Our underlying PBT is up 11%. I think that's a great performance, and it reflects our strong pricing and rigorous cost controls. Outlets are up 4% against industry trends. Our weekly sales are up year-on-year and together with more outlets that's driving more completions.

We continue to invest in our excellent and growing land bank. And we've maintained our HBF 5-star and are now rated Excellent on Trustpilot for both Persimmon and Charles Church. Our underlying EPS is also up 3%. As Andrew will explain later, the reason EPS is up more is because 2024 benefited from a prior year tax credit.

What I'm really pleased about is that our current total forward order book is up 9%, with private up 11%, giving us excellent visibility. So it's been a strong performance despite the continued challenges in the market.

Andrew will now take you through the results in more detail, and then I'll say more on how our strategy has delivered and gives us confidence for the future.

Thank you, Dean. Good morning, everyone. So I'm really pleased that we have delivered further growth in volumes and in profits in the first half of 2025, which is an excellent performance in the context of a very challenging market backdrop.

New home completions were up 4%, our blended average selling price increased 8% to GBP 284,000, and I'll come to the detail of this in a moment.

The combination of volume and pricing drove housing revenue up 12% to over GBP 1.3 billion, and gross profit up 11% to GBP 262 million. Gross margin was maintained at 20.1%, which is a good performance given the change in cost base over the last few years.

Underlying operating profit increased 13% to GBP 172 million, and I'm pleased to report a 10 bps increase in our margin to 13.1%. Underlying PBT is up 11%, and this is after a GBP 4 million increase in interest costs, because of our lower cash balances as expected. And although not on the slide, statutory PBT is flat after allowing for a GBP 16 million exceptional charge in relation to the CMA commitments that you're aware of.

Our tax rate is close to statutory 29%. And if you remember, the first half in 2024 had a lower tax rate, because of some one-off items, and that boosted last year's underlying EPS. And putting all this together, underlying EPS this year has increased 3% to 36.8p. We generated cash of GBP 183 million before movements in working capital and our return on capital employed has increased to 11.2%, reflecting the improved profitability and our continued balance sheet discipline. And I think this is a particularly good metric in the period.

So I'll now come back to sales mix and ASP in a bit more detail. Of the total new homes delivered, 3,987 were private. That's 7% higher than last year. And this increase reflects our strong sales rate and an increased number of outlets, which has meant that our total sales per week, including bulk sales, has increased to 191 a week.

Private completions includes 590 book sales, which is 13% or 66 houses higher than last year as we continue to engage strategically with this sector. 34% of private sales were to first-time buyers, and this has always been and it remains a very important market for us.

And Charles Church increased in line with our planned growth to 11% of private sales or 10% of total completions. Partnerships output fell to 13% of total completions, and this continues to reflect the acceleration of delivery in 2023. Importantly, all of our affordable delivery is signed up for this year. The blended ASP on completions in the period was up 8%, and private ASP increased strongly, even allowing for the increase in bulk sales.

And there's a couple of things to just draw out. Firstly, pricing has been robust, particularly in the north of England and in Scotland, and we pushed it on where we can do. And secondly, the pricing on our bulk units has also been strong, reflecting our more strategic approach. Overall, our product remains affordable with our Persimmon Homes' average selling price well below the new build national average and with over half of completions below GBP 300,000. And across the period, average incentives on completions were around 4.5%, which is similar to 2024, but of course, of higher pricing. So putting this all together, the combination of increased volume and increased ASP drove revenue up 12%.

This slide provides the normal bridge showing underlying operating profit movement. And you can see the positive effect of increased volumes, increased average selling prices and the mix of more private units. The movement in the cost line is small, and we remain focused on commercial disciplines and managing our costs closely.

Net operating expenses have increased by GBP 7 million, which is a 9% increase, less than the 12% housing revenue increase despite our ongoing investment in capabilities for the future. This bridge is on an underlying basis. The only exceptional item in the period is GBP 16.2 million in relation to our proposed contribution and the cost to date of the CMA investigation. And this is shown within administration expenses in the income statement.

So I'll now turn to the balance sheet. Our strong balance sheet is a platform that allows us to invest in the future growth of the business. Land and WIP has increased GBP 292 million since the turn of the year. We've invested in more land than we've utilized, and we've also increased our work in progress.

And there's three things to mention on WIP. Firstly, the seasonality. We have more WIP at June than in December because we'll deliver more units in H2. Secondly, as we are opening new sites, there is increased WIP in relation to infrastructure spend. And of the increase in WIP, about half is related to external infrastructure, including on new sites. And thirdly, we held GBP 164 million of PX stock at the end of June. And this is an important sales tool for us, and we're focused on recycling these units back into cash quickly.

Land creditors are a little bit lower than the start of the year, but the key thing is that we're still able to agree appropriate payment terms in the market. We reported net cash at June of GBP 123 million. And taken together with land creditors, that means our gearing is about 8%. Our building safety provision stands at GBP 208 million, which is down in the period, and I'll come back to this in a moment.

Net assets are up 2.4% since last June, and assets per share are 22p higher than this time last year. And return on average capital employed is 120 bps higher than this time last year. These are all showing good progress.

So this is the normal cash bridge with the reduction in cash reflecting our investment in land and WIP as we grow the business. And this is an important point to grow the business, we need to invest cash. And we've chosen to make this investment and we can make that choice partly because our fire safety obligations are relatively smaller than for others.

So on the graphic, you can see cash inflow from operations was GBP 183 million. That's 11% more than in H1 2024. WIP and other working capital movements of GBP 163 million include the investment in new outlets and in H2 delivery that I referred to earlier.

We spent GBP 46 million on interest and tax, and GBP 25 million on capital expenditure, including on our new Space4 line. So before building safety remediation and investment into land, we had net cash of GBP 204 million. We have net investment of GBP 50 million into new land, and that's the net of land spend and land utilization in the period. And we spent GBP 31 million on our safety remediation program. So I expect net cash at the year-end to be between GBP 0 and GBP 200 million, which is in line with previous guidance, depending, of course, on the speed of investment into new land.

Before I get to land, I'll just cover two other capital allocation matters, the building safety remediation and our FibreNest disposal.

So building safety provisions and the progress of remediation work is a very important topic, and we are making good progress as we expected to do, and that is the right thing to do for everyone involved.

We're on-site or completed at 77% of known developments or 80% of buildings, and there's no change to the total number of developments in the period. We've assessed all known developments, and we expect to be on site at all of these developments by the end of the year. That is well ahead of the overall industry position.

You can see that there's 19 sites still to start. And of course, there is some cost risk on these sites until they're completed, both cost inflation and scope changes. And that's another reason that we've been pushing on to complete our work.

So far this year, we've spent GBP 31 million, and that brings our total spend to date to around GBP 150 million, and we'll spend close to GBP 100 million across the whole of 2025. The provision at 30th of June was GBP 208 million, with the reduction being the GBP 31 million spent, offset by some imputed interest. The bulk of the remaining spend will be made over the next 18 to 24 months with a tail of spend beyond them. But importantly, completing this work quickly will create capital allocation opportunities for us.

In May, we announced an agreement to dispose of FibreNest, which was a non-core operation for us, and I'm pleased to say that this sale completed last week. So congratulations to everybody involved. This will provide our customers with a larger choice of Internet service providers, and it will free up significant cash for redeployment into our business, both the consideration received and the annual saving on capital expenditure. We'll reinvest this money into the growth of the business, including new land opportunities. And in doing so, we'll create better returns than would have been generated through the FibreNest business.

And so I'll move on to land. Our disciplined investment into land has allowed us to grow our outlet base again this year and to grow our business. Dean will cover this in more detail in a moment. So I'll just draw out some key metrics.

Total plots owned and under control at 82,500 is up 420 since the start of the year, and owned plots with planning are 7% higher than this time last year. The land bank continues to be well proportioned across the country, as you can see. And this provides confidence that we'll achieve our ambition of growing to at least 300 outlets.

The cost to assumed revenue in the land bank is about 12%, a very good indicator of future margin potential. These landholdings are high quality. And building on the point from the previous slide, you can see that land cost to assumed revenue has remained very stable over the last few years, and that's really pleasing.

The average embedded site margin within our owned land holdings is still around 29%. And within this, nearly 80% of plots will deliver a slight margin in excess of 25%. This is site margin. So there are some other costs within statutory gross margins such as maintenance spend and some of the fixed selling and construction cost base. But the important thing is this is shown on a consistent basis to previous years. And taken together provides the confidence that we've got the land in place for our growth ambitions.

The structure of our capital allocation policy is unchanged, and it's proving successful. We're maintaining a strong balance sheet whilst prioritizing dealing with our building safety remediation through this year and next. Secondly, we're continuing to invest in the business to deliver our growth objectives. And this has allowed us to return to growth ahead of the sector. And we're paying a sustainable dividend well covered by profits. And today, we've declared an interim dividend of 20p in line with last year. And we'll look to review this policy again as we derive growth plans and as we progress through our fire remediation works.

So to summarize, these are very good first half year results that are showing good growth. Assuming that conditions remain stable, we're on track to deliver growth in 2025 to a volume of 11,000 to 11,500 as previously guided.

I said in March that our medium-term margin growth wouldn't be straight line. It would be back-ended, and that's still the case. So this year, I expect some margin growth on the 14.1% that we achieved last year, which is probably near the lower end of the range shown depending on market conditions in the next few months, but I'm comfortable with our 2025 consensus, operating profit and PBT are currently.

2025 will be our second year of growth since the downturn. And although not expecting any significant improvement in market conditions, we're looking to grow again into 2026, and this shows the strength of our operating model and our ability to address the challenges in the market.

So looking to 2026, the pace of margin growth will be impacted by various factors, including embedded inflation and customer affordability. And none of these points will be new to you.

Embedded inflation is still an important feature. As you would expect, over half of our delivery in 2026 will be on sites acquired before inflation normalized. And of course, average build costs were up 30% in that period.

We now have relatively normal inflation, but on a higher total cost base. And so that will restrict margin progression before the effect of embedded inflation begins to diminish. On sales, there's likely to be some uncertainty ahead of the budget, and that could affect consumer confidence during our autumn selling season and could also affect build-to-rent sales for next year. And real income increases are uncertain with persistent affordability challenges, and this makes driving further ASP growth more difficult.

And the cost of doing business are increasing across the industry. For example, regulatory costs, dealing with nutrient neutrality, the cost of discharging planning conditions in order to open new outlets and so on. And these are all points that I know you're well aware of. But taken together, it means, I expect the margin progression in 2026 will be perhaps 50 bps lower than the current consensus, although that's probably about GBP 15 million before interest costs.

So as an early indication, building on our growth in 2024 and growth in 2025, I expect further volume growth to around 12,000 units in 2026 and further margin progression a similar rate to this year, which will bring us within the lower end of the range of current estimates for 2026. And you can work out, that will mean further mid-single-digit percentage profit growth again next year. And that will make 2026 our third successive year of profitable growth.

So with that, I'll hand back to Dean.

Thank you, Andrew. I said in March that I was pleased we achieved a rapid return to growth in 2024, and I'm very pleased that we're sustaining that in 2025. Our strategy to focus on self-help is securing results. On all of our five enablers, we've made real progress, and they continue to support Persimmon's growth. I'll now describe this in more detail.

Our investment in land, coupled with industry-leading planning success is driving out that growth. We've also strengthened our strategic land bank. With private sales in all three brands growing, our diversification is selling more homes. Our sustained reputational improvement is seen on our HBF and Trustpilot scores. And that reputational rise is improving inquiries, sales, and partner relationships.

Our state-of-the-art Space4 line and brick and tile factories are delivering more products. Automation and digitalization are securing further operational and cost efficiencies. Unsurprisingly, we're resolute in maintaining a strong balance sheet.

As Andrew said, we expect our progress on building safety to provide capital allocation opportunities from 2027. As I said earlier, we're delivering growth despite a challenging market. I'll now say more on how and why.

We've continued to invest in our land bank. We added more plots and completions. Our own plots with detailed planning increased by 7%, and we're outperforming the industry on planning because we do it differently.

We treat an application like a political campaign. We engage early and understand local priorities. Ultimately, we aim to provide the local politicians a reason to say yes to our plans. Too often, planning applications rely on telling politicians why they can't say no. As the graph shows, we're outperforming our peers. The industry-wide data looks similar.

Our 22% increase in full or reserve matter applications over the last 12 months compares to a 3% decline in the industry. Our investment in land, combined with our planning success means we have more outlets and have good momentum. And I think that's reflected by a 4% growth in outlets compared to a 3% decline in the industry, and we're confident there's more to come.

The government planning reforms are presenting opportunities for acceleration of applications. We've now identified 50 potential sites in our land bank up from 38 in March, 31 of these are already proceeding with an application. So we have a good pipeline of outlet openings this year and remain on track to deliver 300 outlets within 18 months. That's a good platform for future growth.

If I turn now to our strategic land bank, you'll see how we're strengthening it further. Persimmon's high-quality strategic land bank is a real source of strength. That's reflected by the fact that 41% of completions in the first half came from strat land. Building on that, we've been investing in our teams to grow our strategic land bank yet further. Adding over 6,000 plots in the first half, means our strat land bank is now 8% larger this year. Plus it's really well spread geographically as the pie chart shows.

That larger land bank supports our three brand strategy as examples, such as Cheltenham show. It's a great piece of land that I've referred to before. We bought it after many, many years of delay, ahead of last November's budget.

Since I mentioned this last time, we've secured outline planning on over 1,000 plots. That's a great site for many years to come. With margins typically 300 to 500 basis points higher than open market land, our strategic land bank is really adding excellent opportunities to our growth platform. But it's not just about great land bank, our improved reputation means we're better able to capitalize on it.

We've sustained our progress on build quality and customer service. We retained our HBF 5-star for the fourth consecutive year. As the graph shows, our consistent progress on persimmon and Charles Church, Trustpilot scores means both are rated excellent. And our NHBC, CQR score has improved further this year, and this is being noticed. Customer trust in our brand is up 17% since December '22. More BTR partners are working with us. And we've grown our affordable forward order book despite the well-publicized challenges in the sector. The combination of more outlets and active and expanding pipeline of opportunities and an enhanced reputation is driving growth, and it provides a platform for continued growth into the future, supported by our on-site mantra, "Build Right, First Time, Every Time."

Our continued investment in sales and marketing has helped us convert the opportunities in our markets. More potential customers now consider buying from us up 26% since December '22. And we've been innovative to make it easier for our customers to buy our homes. For example, our exclusive partnership with Generation Home is the first shared equity products since Help to Buy.

As well as securing additional sales is also bringing customers to our sites. So far this year, our website visitors are up 20% and website inquiries are up 12%. As you can see from the graph, recent weeks have seen a further uptick. And I'd emphasize that the strong growth has also been across the country. As the graphs show, we've shown consistent growth in recent years. We're investing in our teams.

Our mystery shopping scores have shown a notable 7% improvement, helping drive performance and sales conversions. And as a result, we've grown our market share in the first half of the year. And a new customer website and a marketing platform to accelerate this progress are in development. Our improved reputation and investment in enhanced sales and marketing with new programs means there is undoubtedly more opportunity to come.

So if I turn to our brands, I'm really pleased with our brand diversity and we've grown private completions in all three of them.

And the next slide shows the breadth of progress we've made and the size of the opportunity we have. All three brands are well placed as a good value products in their respective markets. Persimmon's traditional strength, of course, has been price, but we're now also great value. Our quality and service improvements mean we build homes our customers can trust at a price they can afford. Indeed, as I tour our sites, I'm struck by how good they now look in comparison to their major competitor, the local secondhand market. With our growing outlets and stronger sales and marketing, core Persimmon has a real opportunity for further growth in the years to come.

Turning now to Charles Church. I'm excited by the difference we're already seeing. We've relaunched the brand earlier this year, and we're investing in our teams to drive its growth.

Of the 53 Charles Church sites we now operate from, 35 are dual branded. This demonstrates the opportunity to drive returns through a diverse market offering. We think there's a real opportunity now to grow Charles Church across the country. And we've identified many local markets where this affordable premium product is highly attractive. Our ambition remains to double Charles Church's output, a 20% increase in completions and a 30% increase in revenue in the first half, I think, is a good start.

Turning now to Westbury. We've also improved our reputation with our BTR and affordable partners. Build-to-rent is a growing feature of the market. Recent Savills data shows investment grew in the first half of 2025 compared to 2024. We delivered 13% more completions in the first half compared to last year. And we're securing targeted deals, employing clear discipline to improve returns. We're working with more partners and are targeting further growth.

Turning to our affordable housing. We've already managed to fully secure our order book for the year. While challenges persist for RP financing, we'll build on our improved reputation to strengthen our relationship in the years to come. These three stronger brands with better reputations should provide more resilience and underpin growth into the future.

I believe this growth will only be supported and secured with more off-site manufacture, innovation and vertical integration. And it's to our factories where we significantly invested, that I'll now turn.

Our factories are already supporting our growth by contributing more of their high-quality, cost-efficient products to our business. Indeed, I think they're essential to our future growth. That's why we're investing so they'll contribute even more. A state-of-the-art automated line is now operational our timber frame factory. You can see the photos on the slide.

We've also expanded our product range to include roof trusses. This investment is providing a broader range of industry-leading quality products consistently and cost efficiently. All regions have plans to use the product with seven new regions starting this year.

Our second factory in Loughborough will help meet this growing demand and expand the products we can offer even further. We're starting an on-site trial of the Mauer brick facade combined with our timber frame this month. I've spoken before about the significant benefits here and we've identified additional sites to roll this out further.

Our brick and tiles use continues to grow. The brick factory is now operating 24/7 and we're also investing in an additional line next year to meet demand. In a similar vein, the tile factory is planning a third shift next year to meet its own growing demand.

As well as getting more from our factories, our use of on-site digitalization is really driving cost efficiency. Granular management of materials is reducing lost tolling and damage costs as well as daywork costs, with the results dropping straight to the bottom line.

My vision is that within a few years for a large proportion of our houses, we'll be able to provide all the main components of the superstructure from our own factories: timber frame, roof truss, joist, brick or brick facade and tile, all Persimmon manufactured. The output opportunities as well as the cost efficiency benefits are really exciting.

So if I turn to what's been a good start to the second half. I'm really pleased with our sales this year. Our current forward order book is up 9% on last year. Within this, our private forward order book is up 11% and affordable, up 4%.

In the last 5 weeks, our sales have been encouraging, with total sales up 3% and ex bulk sales up 17% year-on-year. Pricing is robust, private ASPs in the forward order book are up 1% compared to a year ago. In the last 5 weeks, ASP on private reservations are up 5%. We continue to remain disciplined with incentives currently around 4.5%. It's a good performance and gives us good visibility for the rest of the year. And it's to that future that I'll now turn.

Our strategy is delivering growth. It's done so in a market that continues to be get constrained by affordability. I'm pleased to say that we're on track to deliver our guidance of 11,000 to 11,500 completions, reflecting a second year of strong outlet volume and profit growth.

As we look ahead, we're not expecting a demand stimulus from the government or a significant improvement in affordability, other than through real terms, wage growth and modest reductions to interest rates. So growth remains dependent on our own self-help measures.

I've set out today that there's more investment and innovation to come to build on the success and progress we've already seen. An enhanced reputation together with improving sales and marketing are crucial to selling more of our attractively priced good value homes. And our expanding factories and vertical integration are crucial to meeting demand in an efficient way.

We're creating a growing platform with diversified brands selling more homes and then building them more efficiently. We expect to see further growth in 2026 as we keep opening outlets and increasing sales across all our brands, building volume, key drivers of growth in this market. As Andrew originally set out in March, the pace of margin improvement will be gradual, uneven and back-end loaded.

Historical build cost inflation is still working through our sites, albeit as we look ahead, it's a diminishing headwind. That, coupled with constrained affordability and the challenges and increasing costs of opening sites, including, in particular, between outline and reserve matters means there will be a drag on margins.

Nevertheless, I'm confident we'll still grow volumes, profits and margins next year. As we expect -- we expect volumes to grow broadly in line with outlet openings, and we anticipate margins to grow at a similar pace to this year. Assuming a stable market, the combined effect of increasing volumes and margin expansion will produce robust profitable growth in 2026.

Looking beyond 2026, our ambitions remain to grow our operating margin and return on capital employed to 20%. With the bulk of our building safety works completed by the end of 2027, we'll have a flexibility to deploy the capital, how we choose.

As you saw on Andrew's slide, work has started or finished on over 80% of our buildings compared to the industry, which is at 48%. This is a real competitive advantage. As a result of the decisions we've taken, we have a growing company with growing prospects and growing ambitions. And we're seeking to build a structural competitive advantage for the business. The business is in a really good place and we're really looking forward to the growth to come.

So on that positive note, I'll take some questions.

Will Jones from Rothschild & Co. Redburn. First, if you could help us just put some numbers around your price and build cost experience at the moment, I think you mentioned 5% on the private ASP second half to date. What would you estimate of that is organic and similar for build costs, please?

And then the second was really just exploring the point around land mix, quite active in the first half on new land buying. Do you think you're achieving margins akin to the embedded land bank you currently got? And when we think about the feed-through of that, I think you mentioned next year, over 50% of the outlets with embedded build cost inflation, is that a lower number than in 2025? And any thoughts on the pace of that reduction, I suppose, as you go beyond '26?

Okay. So yes, so look, ASP, we are pushing -- I mean, clearly, there's a whole raft of things in there, whether it's about the mix of product, Charles Church and so on. But as I said earlier, we're seeing opportunity to push on prices, particularly in the North and in Scotland, more than in the South. Affordability is just a more acute challenge in the South. But we are -- we don't forecast that kind of ASP inflation or ASP growth, but you can see in the order book that the ASP has continued to be robust, so which encouraging.

And build cost inflation in the current year is where we said it would be. We said it would be low single digits, and that's really still what we're seeing.

So just coming to your third question, just whilst we're on inflation. So yes, of course, that will diminish, but it diminishes over time. So as we get through into '27, '28, that will continue to diminish as a feature. What you have to remember and the reason -- I'm kind of telling you what you all know, but it's just useful sort of articulate out loud, I suppose.

When you buy a large site or you might buy a site on outline with detailed planning for Phase 1, but then Phase 2 and Phase 3 will come through in due course. So that's why when you see inflation a couple of years ago, it does take time for that to wind its way through the system. So it's just a kind of mathematical factor of that. But yes, that will reduce beyond '26 and it will gradually taper off.

And land buying, I think the key thing is there is a lot of opportunities. There's lots of opportunities to buy land, lots of opportunities to buy land at the right hurdle rates with the right cash profiles. And there is a lot of opportunity that we're seeing and it comes across our desk. So we are making sure that we're trying to buy the right sites for the future. So absolutely pleased with what we've been able to do in the land market.

Aynsley Lammin from Investec. Two questions, please. I was interested a bit more color on recent trading kind of into the second half. It doesn't seem to be as incrementally negative as maybe some others have said, just what you're seeing there, pricing, sales rates?

And second question, I guess on the FY '26 outlook, it seems quite early to be speaking about FY '26. Is that just a reflection -- you just stating the facts of what you see in the land bank and the cost embedded there, as you said? Or when you look at the macro outlook and the U.K. backdrop, are you just incrementally less hopeful of any HPI coming through it? And what's driving the timing of that comment for today?

I'll have a go, you can correct me if I get it wrong. The trading is good at the moment. We did see, as others have commented on for about 3 weeks in May, a bit of a decline, but then it bounced back. And it's continued to be pretty good. I mean, we always see a decline in sales at this time of year. It's just seasonal. But relative to last year, our performance is good. A few weeks ago, I thought pricing was maybe going a little bit softer. That seems to have bounced back.

So I think as well, it's important to remember, when you're growing a business, you've got more choice. So you can afford to take different decisions. And we haven't quite got that pressure to sell from a constrained and declining base. So I guess we've got more opportunities.

And look, the product is really good. We're also seeing a kind of renaissance of Charles Church, which the whole business is incredibly excited about. But actually, I -- much as I love what we're doing in Charles Church, I just think what we're doing in Persimmon gets better and better. I think we're building -- as I roam around the business, causing Mayhem, I see we're building fantastic products in locations where the real competitor is the secondhand market.

And what we're building actually is in those niche markets actually aspirational for people in those markets. So I'm just delighted with the progress we're making, and we're seeing that strength come through. So I think that's really important.

On '26, do you want to cover that? I think, we just wanted to get across the point about this embedded inflation that it's just going to tip over. Actually, it becomes over time, it will go from a tailwind -- headwind to a tailwind as it drops off, which gives us the confidence to reiterate our margin opportunities. But we just thought this was the right moment to set our views, and we depend on self-help, don't we?

Yes, we do. So I think to the point of your question, Aynsley, we're not expecting the market to change. We're not trying to make a call on the market. So we're looking in the current market and what we're doing around self-help around outlets, what we see as the opportunity in the business. But I think it's also just a little bit of tidy up on the margin progression. It's just the pace. I mean, it's just a nudge on that, which I think is just to try to give you an early line of sight. It's just to try and be straightforward on it really is what we're trying to do.

I'll come to that side in a moment.

It's Allison Sun from Bank of America. I have two questions from my side. So first on this cost inflation, which you mentioned was quite high a couple of years ago, I guess, since COVID. Can you remind us what's the driver of that? Is that raw material, labor, maybe land cost perhaps? And the second is on this capital allocation opportunities you mentioned. I mean, after we've done this building safety work, what kind of capital allocation are you thinking? Could share buyback be an option?

Okay. No problem. Well, if you -- I mean, if you cast your mind back, Allison, in 2022, you had energy spikes going into material pricing, you had inflation running in double digits for a prolonged period of time. And of course, where you have bought a piece of land, that the feature of that period was that, that inflation was not mirrored in house price inflation. And hence, that cost inflation became a margin squeeze at that period of time. So that's all -- that's all sort of the matter of fact as it was at the time.

The point that we're just flagging is that, those land is a -- clearly, it takes a long period of time between agreeing terms and buying a piece of land until you have finished trading out on those sites. And so that's the point that we're flagging, that impact will continue to be felt this year, next year and then it starts to diminish.

I think on the capital allocation point, I mean, I'm not going to give you the answer to what we'll do with the policy review. The point is, I'm spending GBP 100 million a year in ransom, at the moment. So that's 30p a share, cash cost. So clearly, once I'm through my fire safety work in a couple of years' time, that gives me GBP 100 million of opportunity, if you like, to think about how I deploy that money, whether that be around growing the business, whether that be about shareholder returns, there's a whole raft of pieces.

But the point is it's a -- at that point, it becomes an opportunity for us to make that decision positively as opposed to just having to deal with the remediation work. So it's good that we're dealing with. It's the right thing to do. And what we're doing is pointing out this is a cash opportunity for us in due course.

Mark Howson from Dowgate. Just a few questions. Just obviously, the bulk of the story -- the first question, the bulk of the story is obviously about Persimmon the product, getting that land right, et cetera. But can you just shed a bit more light on Charles Church, why that's a better margin product going forward? How you positioned it? That's the first question.

Okay. So in each of our segments, we're very much focused on the affordable end of it. So it's an uptick from Persimmon. It's bigger, but it's still very much premium economy. But we're finding -- I mean, we're building bigger products. So naturally, there's a bigger ASP associated with it.

But what we're finding is that if you pick your markets well and there's some good markets out there, there's real demand. So I can think of one of our sites in Bristol, for instance, where it's a really good development. We're building it well. We're continuing to improve what we're building, the appearance of what we're building and the demand gets stronger and stronger, because it's really -- again, it's competition. It's not really the new build around it. It's competition, is secondhand houses up the hill in Westbury-on-Trym. And it's doing really well.

So we're getting downsizes coming to it. It's the right size for people, and they're willing to pay a premium for that product. And we're seeing that in other locations that I can talk to others at Lichfield and elsewhere. If you choose your markets well, and we've got plenty of opportunities, the demand is really strong.

Just a second question for me. Just on the Mauer, the product up in Castle Bromwich, you can get that water type within 5 days as opposed to 8 to 10 weeks. Can you just say how -- what the early feedback is on how the construction teams are finding that product on site? That's the second question.

Well, so why don't I cover -- so there's two bits. So the Mauer product itself, Mark, is still early. So we're doing a trial on that product in sit with a customer this half year, but that is still -- that's still very early days in terms of taking it into production on site.

But it is exciting, because it gives us an opportunity for both speed and delivery with fewer resources required. So that particular piece is early still, but is showing the continued progress that we're making in terms of innovation around vertical integration.

But the timber frame product itself, I think the important thing is that we are using that now more widely around the country. So it's -- for whatever reason, it's always been used in some regions extensively and in some regions have just stuck to traditional build. So what we're looking to do, particularly with the new line in Castle Bromwich with the new factory that we're looking to develop is to make sure that our take-up of timber frame is more consistent across the country. And so we're now trialing and using timber frame in those regions that haven't had the experience previously. And that's actually working well.

And some really good examples, when you talk to the teams, actually, they've been really pleased with how that's worked. I think probably the timber frame products more generally in the industry is better now than it used to be. And so some of those legacy concerns actually have proved not to be the case anymore. So I'm really pleased with how our local construction teams and managing directors have lent into that and taken that on board as they look to extend the use of timber frame.

Kind of perversely as well, actually, where the market is strongest for us at the moment is where we're slowest to build. So if we can get the adoption of timber frame through the business, and it is a particular skill which teams have got to learn to get used to, then you've got the compounding benefit of there's a really strong market out there. So we can sell them as fast as we can build them, so.

Adrian Kearsey, Panmure Liberum. A couple of questions, if I may. One on dual branded sites, 35 of the 53 Charles Church sites are dual branded sites. Is that a similar kind of proportion you'd expect going forward as you grow the business? And related to that, when you look at a dual branded site, are the sales rates for Charles Church similar to single brand sites?

And then a third question, if I may. You're increasing outlets or plan to increase outlets by 5% in '26. You talked about the changing WIP dynamics coming through from the investment in infrastructure. How should we think of the evolution of WIP in relation to that infrastructure investment sort of going into '26?

It really -- there's plenty of opportunities for us to continue to roll out dual-branded sites across the business, and we'll continue to do that. So over time, I would hope that we increase that proposition. But of course, it really does depend on every single individual market and other opportunities of land that come through. So it's -- as well as the strategy, there's also opportunism in there. It depends just where the land is.

Charles Church being a bigger product inevitably has a slower sales rate than Persimmon, but what it is doing is overall accelerating the sales rate and therefore, the asset turn on a dual-branded site. So it's doing the job. It's -- we're asking it to do really.

Yes. And then, Adrian, on the outlets, and -- I mean, obviously, it depends site-by-site, because they're all different. But I'm probably thinking you're at GBP 10 million, GBP 20 million of WIP to get a new outlet open. Clearly, it depends on off-site works. It depends on access. It on a whole raft of features. But clearly, there is investment.

And I think what we're probably also finding is that -- and probably particularly on Charles Church, actually customers want to see the product. So again, as you open the site, there's probably a bit more WIP, because you want to be a bit further through on the build so that the customers can see the products. And that maybe is a different feature to a decade ago when you probably sold more than plan. So I think -- and particularly, I think at a higher price point, we're seeing that is undoubtedly a feature.

Chris Millington, Deutsche Numis. First one, I just wanted to ask about is the shape of the balance sheet. Obviously, you're looking forward to the end of the fire safety. What would you like to see adjusted gearing in this business? Obviously, land creditors are potentially quite a big moving part. And I'll go one at a time, it's probably better.

So Chris, so we haven't set a target for adjusted gearing. I think what we have said is at this point of the market, then we're happy that we are using the balance sheet strength more, which is why our gearing has increased a shade. So 8% adjusted gearing is still -- I think it's still entirely fine.

And I think then as we progress, probably not in '26, but certainly through '27, '28 as the fire safety piece comes back and as the business is growing, then I think you'll see that starting to come back the other way. But I'm happy that at this part of the cycle, investing for growth is the right thing to do. So I think that adjusted gearing just increase a little bit is fine.

That's very helpful. Next one I've got really is the 20% target margin plays the 14.5% at the moment. What are the components together? I presume it's a land mix and overhead recovery. I'm not asking for specifics, just the general sort of build there.

Yes. So it's after pieces in there, Chris. So overhead recovery. So clearly, as we continue to grow volumes, and that will be a big piece of there. We've already talked through the Q&A on Charles Church, which clearly we've said we will grow faster, and that's delivering a higher margin. Clearly, the land mix and in particular, within that, the embedded inflation as that starts to come off, that will also feed in there.

And then as we deliver more volume with that vertical integration piece and that speed of build that we just talked through, with Mark's question. So those are the key pieces. But we set out in March, as we said at the -- during the presentation, it will be back-ended and it will be bumpy, and there will be pieces coming towards us, whether say on regulatory costs and so on, which we will need to deal with as we go through that. So I think it's not -- we always said it wouldn't -- it's not just a kind of straight-line trajectory up there. But those are the key building blocks.

If I may just come in, I think when you think to the consequences of us suffering 33% build cost inflation and flat to modest ASP growth, that's a hell of a thing to absorb. And inevitably, we are working through sites that we bought that suffered -- we bought ahead of that, that suffered that build cost inflation and nobody prices that sort of level into the market.

So for instance, last week, we got a ticket on a piece of land up in Teesside. That was one of the first bits of land I was asked to sign off when I joined the business 5 years ago.

So two things in that. You can see what's happened there, and you can see how long it's taken us to get planning through. But that is still, nevertheless, a good piece of land that I wouldn't turn away. Is it as high as our historical margins? No, it's not. But is that going to create shareholder value going forward? Yes, it is. So we're going to transact and buy that piece of land. So you can see that impact. But that is actually quite a beefy piece of drag on the margin, which will impact us for the next few years.

But when that comes off and writes itself, then it has a really positive impact. So I think going -- going forward, as we're buying land adjusted to new cost, it really does help our margin story. And also, I think the benefits of vertical integration will help us as well. There's a margin uptick coming from that as we build faster.

Final one, and it's about whether the government are likely to give us anything in this sector rather than take away at the moment. Are you hearing anything on demand side stimulus? Yes, I could go on about the government.

So it's not our central case that we think that there's -- everybody can see that fiscal pressures are really tight. I think, we've seen real positivity on planning and getting consent. So that's a really good piece of news. I think though, we need to see a focus brought further down, if you like, the pipeline of bringing a site from consent into production.

So the log jams that were there on providing consent have now gone, but we're now seeing it can be quite challenging to go from where you've got the ticket, well to getting on to it, because you've got discharge conditions or you've got water problems you've got to deal with, nutrients problems you've got to deal with and so on. So there is still blockages there.

As you can see, we're knocking them over, because we're growing. So if there was a plea from me to the government, it would be please unlock -- as you've unlocked planning, can you unlock our discharge conditions as well, so we could move faster. So our strategy, though, is about self-help, and that's what we're really focused on. And you can see in these results, I think, that it's working. We've grown ASPs. We've grown completions. We've grown consent. We've grown outlets. We've grown profits. So it's working.

Ami Galla from Citi. A few questions from me. The first one, a follow-up on the margin evolution next year. Can you give us some color as to the sales and marketing investments that you've been making. Has that spend normalized now? Or you touched upon a new marketing platform next year. So is there sort of an incremental OpEx investment on that bucket?

The second question was on planning. You've given some helpful color on your approach to planning. On the successes that you've had so far into this year, is there a regional bias? Or has it been broad-based?

And the last question was just on the CapEx spend, your ambitions on investment in space for across the brick tile facility -- a brick facility as well. I mean, can you give us some sort of guiding post as to how to think about CapEx in the business over the sort of next 2 to 3 years?

Do you want to do the planning one, Dean?

Yes. No,, planning across the countries is pretty consistent. So there's no regional bias.

So then, yes, sales and marketing, Ami, there is, I guess, a couple of things. So we've invested in the teams more generally. So whether that's training, we've talked about mystery shopping on the slides. So just -- and that is a, if you like, a permanent investment. So I think if you compare the cost of sales and marketing now in this cycle to the cost of sales and marketing 5, 10 years ago in the previous cycle, there is a step change up because it is more competitive. It's harder to sell houses.

Customer expectations are higher the requirements on to our sales and marketing teams are higher. So there is a step change there. And then, we are spending at the moment on, as Dean said, a couple of things, we have the new website, which will come through and then more broadly, our new kind of CRM platform, I suppose. So that -- and that will be spent through this year and next year.

And then in terms of CapEx, so we obviously spent some money on the Space4 line that you could see on the photographs. We will be spending a little bit of money on the new line in the brick factory up in Doncaster. And then, I guess the bigger piece of CapEx will be as we start to build our second timber frame factory. But the important thing is, this is a good use of capital because the returns that we get, both in terms -- because of the volumes that we get off there, the cost of delivery and the speed of build that we get from the timber frame. So these are good capital investments for us.

Okay. Next one?

Zaim Beekawa, JPMorgan. A couple here. One on the BTR market, you mentioned 14 new partners. What's exactly driving that? And why they -- what are you doing to attract them? Then secondly, I think you mentioned the land market seeing good opportunities. How does it differ in terms of size to see some appetite for larger land? And maybe if I could squeeze one in -- on the land market, are you seeing sort of opportunities for larger plots of land versus smaller ones? And then maybe squeezing one on the Brickworks factory, just how much the new line in terms of capacity will give you?

Well, why don't I start and you can jump in, Dean, if that's fine. So in terms of BTR partners, I think this is a -- this goes back to the work that the company has been doing over the last 3, 4, 5 years around the whole piece on quality, on customer service, on the product. And so, if you go to our sites, and it's not just Charles Church sites, it's Persimmon sites, they look good. The sites look good. They stand well. The environment they're in is good. So the customer journey is, I think, is -- I wasn't here, so I wasn't as closely involved in them, but I think it's a step change in terms of that quality journey and the quality of the product.

And that's why we've been able to now start to work with more partners as well as then the way that we try to do business. I think we are straightforward. I think we try to deliver what we say we're going to deliver and so on. So we are a business. And because we're growing, we've got new sites, there's opportunity. So all of these things kind of come together.

And I suppose if you put the question the other way around, if you were a build-to-rent provider, actually, Persimmon is now looking like a pretty attractive partner for you. So I think it's a whole raft of these features and the improvement in the business and the platform is now allowing us to work with that broader range of partners.

In terms of land opportunities, I mean, I would say it's across the pieces. So some large schemes, small schemes. And of course, and again, now that we have the Charles Church opportunity, it doesn't, of course, work in every single locality, but in some localities, that gives us opportunities to look at different size pieces of land as well.

So I think we're seeing, I would say, good opportunities across the country and across the whole breadth of size of pieces. So I think the land market is open to us at the moment. And again, it comes back to capital allocation, having a balance sheet to be able to play in that market. And I think that's an important piece and something again that Persimmon is able to do.

I don't know, Dean, whether you want to say anything else on that?

I'll just say one more thing on land. We talked about a lot of impact of better service and quality on customers, but actually, it's really important to the land market as well. So I've sat this year in front of a number of new groups of landowners to us for whom actually reputation for them is really important. And as they can see our product improving, they want to talk to us. They wouldn't have talked to us in the past.

And we -- the developments in Charles Church are really, really important. And I can think of one site that we've just exchanged on in East Anglia, where showing that our build quality and service was much improved, it was absolutely vital. But even more important was the appearance of the sites that we're now building. And in a competitive market, we didn't bid the highest price, but we won that land. Because we were seen as a good partner and now they could trust us to build. So I think the work we're doing there is not to be overlooked and it is opening up opportunities for us.

And then just mopping up on the Brickworks. So I mean, last year, we were -- the exact percentage, sort of 60% or so of our delivery was with our own bricks. The factory there is working 24/7. Now we're obviously growing outlets. I want to continue to be able to deliver that volume, mid-60% of bricks. So that's why we're putting the extra capacity, and that capacity will come online. We'll build that through next year, and that will be online later next year.

I'd better go a bit towards the back, I think, and then we'll come back.

Alastair Stewart from Progressive. A couple of related questions on New Build Boost. Can you give a bit more, sort of, detail on what that will entail and how many of your buyers could end up using it? And also, Dean, I was interested to hear you prompted in your closing remarks saying you don't expect a demand stimulus from government. You seem to have broken ranks a bit with your peers in that they're still banging on about that. Is this a viewpoint you've had for a while? Or have you had the heads up from any civil servants have laid?

Shall I answer that New Build Boost?

If you like, yes.

I mean, look, obviously, if there was a demand stimulus, we certainly wouldn't turn it away. It's just that we're not expecting it. And it's not our -- it's not -- I don't think hope is a strategy. So hoping that there's going to be a demand stimulus tomorrow when it seems to me, given the fiscal constraints the government are under, it seems a pretty low probability. So we're not waiting for that. That's why our strategy has all been about self-help.

Look, if we do get a demand stimulus, then that doesn't negate what we're doing. Actually, it will give us a tailwind. So happy days. But our central assumption is that there's not going to be a demand stimulus anytime soon, happy to be proven wrong, I think.

And so segueing beautifully into New Build Boost is an example where we're not waiting for someone else to do it for us. So actually, we're looking at what can we do to try to get that incremental assistance ourselves. So new Build Boost is a good example of the self-help strategy in action. And it's incrementally helpful.

By the way, so is the fact that interest rates are a little bit lower. So is the fact that the banks are lending at slightly higher multiples of income. So these are all incrementally helpful. I don't think any of them individually are an absolute silver bullet, but I think it's all helpful.

And what New Build Boost is doing? I mean, so clearly, we're funding the 15% element of New Build Boost. But what it's doing, as Dean said earlier is, it's driving more people to sites who's driving interest. And some people who are coming to site, I think, through the New Build Boost and through the marketing from that are then finding actually there's a traditional mortgage product, which suits them, and that's entirely fine.

So -- but actually driving customers to site and then driving interest is what it's all about. And New Build Boost is helpful for those people who actually their salary multiples just can't allow them to borrow enough to purchase the house, and that's where the New Build Boost with a 15% interest-free element is really helpful. So -- but it's a good example of, as we say, not waiting for a government demand stimulus. And then, if we get one, then that's great.

Do you have any indication, whether some of your peers are thinking along similar lines?

Well, there are -- yes, so we're looking at other similar products as well. So I don't know, if [indiscernible] referenced something in that statement in July. So -- but I think it's good that we were first to market. Again, I think that says something about the platform that we're building that we're first to market again with these products.

I think, if I may just come in, there's no one silver bullet. There just isn't. It's a whole raft of things, I think. And whilst I think New Build Boost has been good for us, and it has helped drive people to sites, is not what's underpinning the growth we're seeing here.

There's one up front, sorry.

It's Marcus Cole, UBS. I've got two questions as well. Just thinking about Charles Church, how should we think about the mix impact to ASP at a group level for 2026? And the second one is just on vertical integration. Sorry, you've spoken about the margin benefit on multiple locations, could you quantify this?

Yes. Why don't I pick both of those. So I mean, Marcus, it's quite hard to give you that sort of ASP mix for 2026 already. So clearly, we're looking to grow Charles Church and grow for Charles Church faster than the rest of the business. So clearly, that is helpful to the overall blended ASP.

I think what's helpful perhaps just by background is that, in our private ASP growth in the first half year, which was up 7%, both Persimmon Homes and Charles Church ASP grew. So we saw growth in both. So the ASP growth in the first half year wasn't purely because of mix of Charles Church and Persimmon being flat. Actually, we saw growth in both markets, which is helpful, and we continue to look at that.

But I think, as we grow Charles Church, clearly, all the things being equal, it will act as a slight drag to ASP. On the flip side, of course, build-to-rent is still going to be 10% to 15% of our business. And arguably that goes the other way. So there's kind of various moving parts.

In terms of vertical integration, there is -- I think we talked about this earlier in the year that across the whole piece, so if you use our own tiles and our own bricks, we know there is cost saving there, which is in the order of GBP 2,000, GBP 2,500 per plot compared to the open market.

And then if you put the timber frame in and if you include the speed of build, the overhead saving, the prelim saving because of the speed of build, then you're moving a cost saving per plot up into somewhere between GBP 5,000 and GBP 6,000 probably all in. So it could be significant.

I mean, clearly, there's some work for us to do there in terms of making sure that we drive the take-up of that, as we said earlier to Mark's question. But there is real opportunity.

But I think the other piece which is, cost is clearly important. But I think the other piece which we should also just reference is that it gives us security of our own supply chain. So it gives us control. So if you think about on bricks or tiles, 80% of our products use our own roof tiles. So that means that we're in control of our own destiny there. And again, with timber frame, you need fewer people. So again, as you're growing the business and as the sector grows, actually, if we can deliver the same volume or more volume with fewer people on site, then that is, again, is very helpful. So it's a cost benefit, but there's a whole range of wider benefits, I think, as well.

Glynis Johnson, Jefferies. Just a few sort of almost just following up. One, just in terms of cost controls, you mentioned it, sort of, almost in your first statement about the commercial control of costs. A bit more elaboration, what are you doing? Why is it maybe different land intake? Can you split it between strategic land conversions, actually what's been bought in the open market, your 300 outlet count? Can you remind us how much of that is coming from Charles Church? Are dual branded sites counted as two? Are they counted as one, just so we can understand the numbers.

Previously, you referenced bringing forward some of those longer sites with it's partnerships. You've talked about in terms of completions. But maybe you can talk about in terms of sites, how many of those sites have you actually done that on? And can you remind us the difference between the site gross and the reported gross? You referenced the site costs, but what actually should be there?

And lastly, you referenced it just a couple of questions ago in terms of changes in lending criteria. Are you seeing that actually at the call phase right now? Or is that something you're anticipating to come through?

Well, that's a lot of questions. Just a few. So we try and divvy those up between us. So look, Simon has taken over group commercial is having a real impact. And at the same time, to both his expertise and frankly, sheer force of personality, he is driving a consistency in the business, which is absolutely fantastic. There is an opportunity for us there. Possible blendable losses are running in the business at about between GBP 40 million and GBP 50 million as we would measure them.

And I am confident that some will make a real inroad into that over the course of the coming years. And he's doing that at the same time as driving digitalization in the business. So he's now playing around with AI in that space.

And as you can imagine, I think that area is actually quite perfect for AI. And I'm quite excited about the benefits. I can't give you a timeline. I can't tell you where and how much, but kind of watch this space, because I think there's real benefits, both in terms of its expertise, its standardization, and what AI might bring us. So I am actually quite really, really excited about that.

So if I dotted about a bit, if that's all right with you, Andrew. I think in terms of changing, I think we have seen some benefit from the relaxation of from 4.5% to 5.5%, 6% lending during the course of the year. And I think that has clearly helped us, helped by our customer base. Very hard to put a precise number on it. We frankly just don't know. But I think, as Andrew said earlier, it's one of the things that is in the mix that has helped us achieve the results that we are now achieving.

And look, you can see quite clearly in our results. We are pleased with the progress we've made on pricing. And that's really been the strategy this year to help us deal with embedded cost inflation and helping to drive the margin forward. So I think that's really important.

On partnerships, I think we probably got across the group at the moment, two or three. And it's at that level at this stage. That may grow, but it's very much on a case-by-case basis. It's useful where it works and where we have a large site.

And just your dual branding bit, that's probably contributed about two or three outlets. Net, I mean, we talked about 53, I think, in terms of Charles Church now. That was at 49 at the start of the year. So that sort of level. But it's also valid. They are -- that opens up a new market for us in the same place. Those are the easy questions.

I think the other -- so I think there's two others. So strat land, still about 40% or so of our delivery is from sites that were sourced from start land. In terms of the pull-through in any one period, of course, it's lumpy just because of the nature of them coming through, but we have pulled through from strat land in the first half as well. I'll have to come back to you with the exact number of plots.

But the completion percentages stayed pretty stable in that 40%, 40-odd percent. And then in terms of the margins, so yes, I say, it's consistent with where we've been before. So between site margin and gross margins, also our gross margins in the half year about 20%. And there's probably somewhere between 400 and 800 bps of difference. It depends because some of those costs are fixed costs, some of those costs are variable, but not related to delivery. So things like in terms of care and maintenance, it's -- that's why there's quite a wide range. I guess, it's also why I draw attention to the chart of the land cost to revenue.

So because, I guess, different -- you might have different companies who will put different things in different buckets as they go down the P&L, but the land to revenue is very comparable across different companies. So I think that is a useful measure as well. But those -- the differences are between site margin and gross margin, as I said, things like maintenance costs, your fixed construction base, your fixed sales and marketing cost teams as well as the variable elements of those as well.

Just to be clear. So there's -- some sites have double the costs as a percentage points impact between sites and direct-site and embedded. So going from your embedded margin that you talk about to actually your growth, what you're saying is some sites have 400 basis points, some have 800 basis points of costs.

No, no, I'm saying that's across the group depending on what -- because some of those differences are fixed costs. So as we move through, as the volumes change, then the leverage of that difference will reduce through leverage. So things like the fixed cost of my sales and marketing team, so not related to individual sites. Clearly, I'm absorbing that at the moment over fewer units than I absorb it over as we grow. So that's why I'm saying there's a range. It's not based on individual sites. It's based on through the cycle.

What are you buying sites for? What is -- when you're putting -- what is the long-term assumption in terms of the difference between the sites and the reported tariffs?

I heard all right. Which is why we have an industry-leading margin. Right? These two here.

Sam Cullen from Peel Hunt. I've got two. They're both related to vertical integration piece. You mentioned that you want to improve the take-up. What is the take-up now? And at what point does it really start to make a difference on the cost saving? What's the tipping point?

And then secondly, related to the cost savings, you've articulated those, but is it truly margin accretive from where we stand if we forget the unwind of the build cost inflation over the last few years, net-net, is this -- will this actually improve margin? Or is it a relative advantage that counter factual HPL grow at 1% or 2% and build cost inflation might grow at 3% or 4%. So it's just going to offset that negative spread medium term?

So I'll let me divide your first question in two parts between brick and tile and between timber frame. So when I started 5 years ago, actually, the take-up of our brick was less than 10% within the business, because there were -- it was an unpopular product within the company.

Now it's well over 50%, and it's growing. And two things have happened there. We've invested in the brick itself to improve its quality. So that's dealt with concerns. But also, we've improved its aesthetics, which means now that when you go to planning authorities, it's a more attractive product and has taken up. And frankly, I think for many of our developments, it's now -- is really pretty good, and it sits very well and it's as good as many clay products. So I'm very happy with what we've done with bricks.

And the problem we've got at the moment is we've got an excess of demand over production capabilities, which is why we've moved to 24/7 and while we're going to have to put a new line in. It does give us cost savings, and they do contribute to our margin, and I think they will continue to do so in the future. It's not just about security of supply, although I think that's really important. It shields us from cost increases and contributes to the cost advantage, I think we have.

In terms of timber frame, we've got at the moment, just over half the business takes up our timber frame. As we said in the presentation, another seven are within the business, another seven regions are taking it up this year and another seven, I think, will take up the next year, which means it will be across the business then.

And there, I think it will contribute to not -- it will do both of what you said. It will shield us from cost, but I believe it will contribute to a real accretion to margin as well, because of asset turn, you can build faster by about 10 weeks.

And yes, there's an incremental cost. Although actually very interesting, if you do it right, that incremental cost is pretty marginal now. And I think we can bear down on that further. So I am really excited about the opportunity that will bring. And as I said to you earlier, it's -- we've got this problem at the moment within the business is actually where we can sell fastest, we build slowest. So if we can pivot into that, which is what we're doing, I think that's really, really, really good.

Just one here.

Charlie Campbell at Stifel. Just two quick ones. I think, of your 277 sites, how many could take Charles Church outlet? Just give us an idea on that. And then just could you say something about part exchange that's gone up in the first half. Just wondering kind of what trends look like on that side?

It ticked up a little bit, but I mean it's not huge the PX. I think it's about 24% of what we do now.

Yes, it is. And the important thing, by the way, Charlie, that most of those units that were on the balance sheet as at 30th of June were already reserved at the 30th of June. So they're working through. So we are turning it quickly. And it is an important tool. And yes, so it's moved a little bit, but I think it will bubble around that sort of 20%, low 20%, that's one.

We sort of break even on it or make a modest cover our costs. So it consumes cash, but you have to do it, it's where it is. I guess, on Charles Church, it's not so much on what we've got at the moment. It's what are the opportunities, because I think they're probably pretty well established. It's what are the opportunities for what's in the land bank and new land opportunities that come to us on the market as well. And that's what is underpinning our ambitions to double it over the course of the next few years to go from 10% of the business to 20% of the business.

No more hands up. So thank you very much for your time and interest this morning. If I can just say a few words to sum up. Look, I think the business is in really, really good shape, and it's good fun. We are pushing on with our plans, and we're not waiting around for events. We're looking to build structural benefits for ourselves. Some of the benefits, I think you can see coming through in these results.

We're -- other things being equal, we're good for guidance in '25. We'll see good profit growth in '25 and good profit growth again in '26. And finally, our cladding position, I think, is really important. As you start ripping these buildings apart, it's not pretty, and there's lots of costs. So getting through it is really, really important as quickly as possible. And I think we're in a good place. Thank you very much.