Barratt Redrow plc (BTRW) Earnings Call Transcript & Summary

Hello, and welcome to the Barratt Developments 2021 Full Year Results Call. My name is Jess, and I'll be your coordinator for today's event. [Operator Instructions] I will now hand you over to your host, David Thomas, Group Chief Executive, to begin today's call. Thank you.

Thank you, Jess, and good morning, everyone, and welcome to our full year results presentation. I have with me as ever, Steven and also John Messenger. John is going to be covering our financial presentations until Mike Scott joins us. So I will start with an overview of our performance, revisit our medium-term targets and then look at our progress in the year. Steven will then take you through our operational performance. John will cover our financial performance, and I will then return to review the industry fundamentals, sustainability and finally, current trading and outlook. Turning first to Slide 3. Clearly, our priority through this period has been the health and safety of our employees, subcontractors and customers. Given the strength of the sales market, our results this year have been governed by our ability to build and is, therefore, very pleasing to report a 37% increase in our completions. Just as importantly, we have done this whilst also further improving our industry-leading position in terms of build quality and customer service. The housing market has clearly been strong throughout the year, but our operational and financial delivery is testament to the resilience, determination and the excellence of our team. I would like to just take time to express my thanks to our team and also our subcontractors and suppliers who have helped us to generate such a great performance in FY '21. Our disciplined operating framework and the decisive actions that we've taken over the past year have maintained the group's resilience and created a platform that allowed us to rebuild following the initial walk down, and you can see all of this in today's results. Careful management of both build and sales activities have helped us to deliver a gross margin above our medium-term target, which, coupled with our control of capital employed, has resulted in a recovery in royalty back above our medium-term target. I'm also delighted to announce the final dividend of 21.9p, which results in a full year dividend of 29.4p. This dividend is in line with our revised dividend policy and restores our ordinary full year dividend back to a level just ahead of the 29.1p declared in FY '19. Clearly, the housing market fundamentals remains strong, and we are focused on growth. Looking now at Slide 4, which details our progress in the year and areas of focus for FY '22. Firstly, looking at home completions. We exceeded our expectations on home completions for the year. Our focus in FY '22 remains anchored on further completion volume growth to at least the level achieved in FY '19. As you're all aware, we have maintained our infrastructure and capacity to allow us to deliver up to 20,000 completions. Beyond FY '22, our medium-term target is centered on disciplined growth towards this capacity. Our adjusted gross margin improved by 470 basis points to 23.2% and exceeded our 23% gross margin land acquisition hurdle rate. In FY '22, our focus will be on managing more building material supplies and build cost inflation, and also delivering the additional step-up in build activity required to deliver our completions guidance. Our medium-term target remains unchanged and center on securing land at a minimum 23% gross margin. We are delighted that through all our actions, coupled with a positive market backdrop, we unlocked a significant rebound in ROCE to 28.3%. In FY '22, we will be striking a careful balance between investing in our land bank and working capital to ensure that we support our medium-term growth whilst ensuring we deliver the growth in profitability to deliver our minimum 25% ROCE target. I will now hand over to Steven, who will take you through more details around our operational performance.

Thank you, David, and good morning, everyone. I'd now like to take you through the operational aspects of the business. Starting with our sales performance on Slide 6. We have produced an excellent performance, delivering a sales rate for the year of 0.78 reservations per outlet per week, some 30% ahead of the performance in FY '20, but also 11.4% ahead of the 0.7 rate in FY '19, a more normal comparator and a year when our sales rate already showed significant strength. Our sales rate was also consistent through the 2 halves, registering 0.77 in the first half and 0.78 in the second half, notwithstanding the impacts of the changes to Help to Buy and the tapering of the stamp duty holiday. Looking at our wholly owned outlook position. As expected, with the disruption created by our land buy in pause through to August last year, our average sales outlets in the year declined 6.2% from 357 in FY '20 to 335 in FY '21. We expect to operate with approximately 3% more average sales outlets in FY '22. Turning now to completions on Slide 7. For the year, we achieved 17,243 completions, including joint ventures. This 36.8% recovery on the prior year reflected 3 factors at play. Firstly, the benefits of the elevated level of work in progress carried into the year, along with the forward sales position, both created by the initial national lockdown. Secondly, the strength of underlying market demand for our homes. And thirdly, the way our site employees, subcontractors and suppliers have delivered an excellent recovery in our construction activity. We built an average of 311 construction equivalents each week through FY '21, improving from 298 in the first half to 324 in the second half. Completions in the first half particularly benefited from the elevated working capital carried into the start of the year, but our build performance in the second half helped deliver second half completions ahead of both original budget as well as our revised guidance back in May. Our build performance also benefited from increased use of modern methods of construction. In FY '21, 25% of our completions were constructed using MMC ahead of the 21% in FY '20, and we met our FY '25 target far years early. We are now targeting 30% of completions using MMC in 2025, and we see timber frame, in particular, continuing to help grow our construction activity in FY '22. The increase in JV completions followed a similar path. Given the qualification changes made to Help to Buy and the sub duty holiday tapering, our commitment to customers around completion timing have been particularly important this year through disciplined control of and communication between both build and sales. We have delivered to these commitments with the quality and service standards we demand and our customers expect. Now looking at pricing. Our wholly owned average sales price improved by 3% to GBP 288,800. Our private average selling price improved by 4.8% to GBP 325,500, a reflection of house price inflation seen across the country and a slightly higher proportion of completions from London. The 10.1% decline in the affordable average selling price reflected a lower proportion of affordable London homes in the mix, a repeat of the same dynamic seen in the first half. The affordable average selling price in FY '21 at GBP 146,500 is also a good guide for FY '22, reflecting a similar geographic mix of anticipated completions in the coming year. Now taking a look at our home buyer mix on Slide 8. Part exchange-related completion shrank to 5% of completions when compared to 11% in FY '20. This, a function of the strength in the secondhand market, making it so much easier for our buyers to complete their existing home sales. The changes in Help to Buy reflected the sales reservations from mid-December 2020. So Help to Buy related completions increased to 38% of total completions in FY '21 from 35% in FY '20. 33% of completions were delivered under the original Help to Buy scheme with 5% from Help to Buy 2, where completions began from first of April. It is worth flagging too that the changes in the Help to Buy scheme have seen a smooth transition into the market. We are currently seeing around 20% of weekly reservation using the revised Help to Buy scheme. While significantly lower than the prior year, our overall sales rate has seen minimal impact from this shift. Those no longer qualifying for Help to Buy appear to be either adjusting their expectations in favor of smaller or less expensive homes. Accessing additional savings to support their purchase are taken on more traditional mortgages at higher loan-to-value terms in what has become a more competitive mortgage market to the benefit of homebuyers. Now taking a look at our land bank on Slide 9. Our land bank in plot terms has, as anticipated, reduced on the same point last year, but has begun to move ahead of the position at the half year, reflecting the rebuild of momentum as we recommenced land bank from early August last year. Over 79% of our owned land bank or 52,775 plots have detailed consent compared with 52,641 and 77% at the end of FY '20. Reflected in the site-by-site land bank optimization and our reposing and replanning success discussed at the half year, we are particularly pleased to have held and slightly grown the owned land bank plots with detailed planning consent. Our land bank remains strong with just over 77,600 owned and controlled plots, equating to 4.7 years of supply. Notwithstanding the disruption created by the national lockdown, our suspension of land buying through to August and an under resource planning system getting to grips with digital planning committees, our land approvals rapidly accelerated from 5,635 plots across 35 sites approved in the first half to 12,432 plots across 62 sites in the second half from January to June, all whilst remaining disciplined and selective in our land purchasing. Looking forward, the availability of land and limited land price inflation continue to support our shorter land bank model, to which we remain committed as we seek to maximize return on capital employed. Reflecting our increased completions in FY '21 and the modest reduction in our owned and controlled land bank, we are now much closer to our targeted operating framework of 3.5 years of owned and 1 year of controlled land. We continue to see a very good range of land buying opportunities coming to the market and have a good pipeline of offers accepted. With this backdrop, we expect our owned and controlled land bank to grow, reflecting the flow-through to legal completion of accelerating land approvals secured in FY '21 with further growth in land approvals planned in FY '22 to between 18,000 and 20,000 plots. We expect to invest around GBP 1 billion in land in FY '22. This reflects around GBP 105 million of land spend, which, through timing, was delayed into FY '22, payments due on land creditors and the cash component of new land purchases in the year ahead. Turning to Slide 10. It is well understood that the housebuilding sector has that supply chain challenges in recent months. So far, it would be helpful to set out our approach. Thanks to a concerted focus and significant investments over the past few years in our supply chain, we've been able to deliver a smooth and expanding flow of construction activity with minimal disruption from industry supply issues. Our approach to ensuring security of supply has many elements to it, but the foundation rests with the skills and focus brought to procurement by our centralized procurement team, which manages 95% of our build requirements from foundation through to kitchen units and appliances. The team's starting point is their supply selection with a review of supply capabilities and control. Several years ago, we began to conduct supplier capability audit, and we continue to use this as an assessment tool for our key suppliers. We look into a lot of detail at areas like capacity planning, manufacturing process controls, quality controls, IT resilience and back-office processing controls at each of our key suppliers. We work hard with our suppliers to mutual benefits, and 2-way communication is key. We have regular feedback meetings with our divisions, subcontractors and suppliers to understand issues and maintain an open dialogue. We also regularly review and assess our risk exposure relating to single sources of supply. But as a general rule, we mitigate single point supply risk by at least dual sourcing. The second strand is providing forward visibility of our build material needs to our supplier base. This puts a greater responsibility back on ourselves, but our supply chain partners can only plan capacity and production effectively if they have visibility of demand over both the short and longer term. To communicate our longer-term build material demand needs, we rely on group and individual supplier engagement. The most prominent is our annual supplier conference. During this event, we share information with all our group control supply chain partners regarding future business plans, including volume aspirations as well as other objectives. This seeks to encourage suppliers to align their businesses with our future requirements and provide support for their own investment plans. So to summarize on build cost on Slide 11, I've covered a lot of detail around materials but took that on our pricing position today. We have fixed price agreements in place at 96% of our materials to December 2021 and 71% for the full year to June '22. The 6-month forward position is very much in line with where we were a year ago, but our fixed price agreements cover in the next 12 months through to June 22 at 71% are usually ahead of the equivalent 62% price fixed last year. Timber remains one area where there is limited ability to secure price for any more than 3 months, but this reflects the unique situation since the onset of COVID-19, with our suppliers reluctant to commit given the volatility in their input costs and from our perspective, a desire not to lock in at pricing levels, which may represent a peak after the steep price in timber-related costs, which we anticipate will ultimately prove cyclical. Labor cost inflation remains more muted at present, with the subcontractor base came to secure work from developers who offer good visibility of consistent and growing work, have relative certainty of build material supply to keep their people working and can be relied upon to pair promptly. These all play to our advantage in the current market. We also put an increased emphasis on recruitment. We 426 apprentices, graduates and trainees at the 30th of June '21. And we see apprenticeships as a vital route to develop skilled tradespeople for our industry. As a result, we have doubled the recruitment of apprentices in FY '21 for our FY '22 year intake. Putting this all together, we now expect build cost inflation of between 4% and 5% in FY '22. The 1% movement since our last trading update in mid-July reflects the additional inflationary impact of logistics and haulage. We saw significant in terms of delivered building material costs in which I'm sure everyone on this call has been following in the news over the last few weeks. So summarizing on Slide 12, we have delivered an excellent operational performance in the year. Our sales rate has shown a strong recovery with consistency through both halves of FY '21. Our construction activity improved through the year, and we are confident in our ability to build our completion guidance. Additional sites and increased use of MMC will both help drive construction activity in FY '22 where, year-to-date, we are 15.5% or 45 construction equivalent homes per average week, ahead of the position this time last year. Above everything is our continued focus on the health and safety of our employees, subcontractors and customers. Here, we saw an increase in minor incidents as our sites recommenced production in mid-2020, which created a disappointing increase in our injury incidence rate in FY '21. Action plans for improvement have been underway for several months, and we've seen a much improved performance in both July and August of the new financial year. To conclude, we remain committed to delivering industry-leading build quality and customer service. And FY '22, we'll see an increasing focus on sustainability, an area on which David will outline more in a moment or two. With that, thank you. And I'll now hand over to John.

Thank you, Steven, and good morning, everyone. I will now take you through the key aspects of our financial performance. First, a look at our headline numbers on Slide 14, where we have included FY '19 and FY '20 comparatives. Our revenue was GBP 4.8 billion, almost 41% ahead of last year and 1% ahead of FY '19. The adjusted gross profit was GBP 1.115 billion and the adjusted gross margin at 23.2%. The adjusted gross margin benefited from strong completion recovery and net inflation, moving 470 basis points higher when compared with FY '20 and 40 basis points ahead of our FY '19 results. Adjusted operating profit was GBP 919 million, 81.2% ahead of the GBP 507 million reported in FY '20 and 1.6% ahead of the FY '19 results with the adjusted operating margin at 19.1%. Our full year results have been impacted by adjusted items. More in a moment. But at the operating profit level, these costs totaled GBP 107.9 million. As a result, we delivered an operating profit of GBP 811.1 million at a margin of 16.9%. Profit before tax was GBP 812.2 million, GBP 320 million ahead of last year. Adjusted earnings per share was 73.5p, an 81.5% advance on the 40.5p in FY '20 and just under 1% behind the adjusted earnings per share in FY '19. We closed the year with a very strong net cash position at GBP 1.3 billion. Finally, return on capital employed rebounded sharply to 28.3% from 15.6% in FY '20. Now revisiting our cost structure on Slide 15. This chart shows our contribution per completion over the past 3 years. You will see that the contribution margin in blue has been very consistent over this period, accepting the impact of the initial national lockdown in H2 FY '20, and the contribution margin remained stable at around 32% through FY '21. The adjusted gross margin in green has been impacted by the operating leverage around our fixed operating costs carried within cost of sales. After the negative impact in H2 FY '20, we had a particularly positive impact in H1 FY '21. And the lower level of H2 FY '21 completions resulted in a modest reversal of this cost efficiency. The cost structure highlights how important completion recovery has been in our drive to optimize activity relative to our capacity and deliver our minimum 23% gross margin hurdle rate. The chart on Slide 16 breaks down the components of our operating margin improvement. In FY '20 before the impact of legacy property costs and furlough grant income, our adjusted operating margin was 14.8%. The chart lays out all the detail, but I would highlight, firstly, the impact of completion volumes, which, through fixed cost efficiency gains, delivered a 310 basis point improvement. Second, inflation relative to build costs where house price inflation ahead of build cost inflation benefited margin by 90 basis points. Thirdly, our ongoing margin initiatives continue to drive underlying improvement with a 60 basis points benefit unlocked from our regional business where new sites, the continued rollout of our standard house types and refinement of our house type designs all contributed to margin gain. Finally, administrative expenses reduced margin by 150 basis points, primarily reflecting the resumption of performance incentive schemes. With these and other small movements, we delivered the full year adjusted operating margin of 19.1%. Adjusted items then reduced the operating margin by 220 basis points to 16.9%. Turning to adjusted items on Slide 17. First here is the reversal of furlough grant income received during the first national lockdown. This was shown as an adjusted income last year. And this year, the repayment is shown as an adjusted cost. We also incurred GBP 81.5 million of net costs in relation to legacy properties in the year. This consisted of GBP 81.9 million of operating costs with a GBP 0.4 million provision release in relation to joint ventures. The operating charge of GBP 81.9 million included GBP 49.4 million in relation to cityscape and the associated review. We're reflecting our commitment to put our customers first. We have covered all the costs of remedial works. With evolving government advice on external wall systems and fire safety for multi-story buildings, we are working with building owners and management companies. There was an adjusting charge of GBP 32.5 million in the year for a small number of developments, with respect to external wall systems and associated reviews. In total, adjusted items for the year were GBP 107.5 million. Our clear and disciplined operating framework is detailed in Slide 18. This framework, its evolution over a number of years and the discipline it has instilled have served us well and have been fundamental to both the resilience and the speed of our recovery over the last 18 months. The operating framework is unchanged over the last year, but we have included FY '19 as well as FY '20 comparative to provide a useful summary. With our land bank moving back towards our target length, land credit is now funding 22.3% of our land bank inside the revised range set last September and average net cash, year-end net cash and total indebtedness all showing year-on-year improvement. Turning to our balance sheet on Slide 19. Our gross land bank has decreased by GBP 166 million and land creditors by GBP 134 million, a result of the pause in land buying and the inevitable time delay between restarting and land deal completion. WIP was GBP 176.5 million lower than last year. This reduction reflects the conversion of the elevated working capital carried over at the last year-end into completions, particularly those in the first half. Net assets at 30th of June 2021 were GBP 5.45 billion, an advance of 12.6% and almost GBP 612 million over the year. Moving on to our cash flow on Slide 20. This chart clearly shows the strength of our cash generation, and I will take you through some of the details. We made net cash interest and tax payments of GBP 152.5 million. This is down GBP 43 million on last year's cash outflow despite the step-up in profitability. This is because we paid 4 quarterly installments in the first half of FY '20 with respect to the government's changes to quarterly corporation tax payments. The GBP 175.4 million inflow on other noncash and working capital reflects 2 major items: the adjusting item charges in the year yet to translate into cash outflows as well as the payments relating to our employee incentive costs, which will be paid later this month, and where there were no equivalent payments made in FY '20. The cash released from WIP and the reduction in part exchange properties together created a cash inflow of GBP 216 million. Land spend for the year was down GBP 35 million on the prior year at GBP 745 million, reflecting the dislocation created by the lockdown and the land buying pause as well as around GBP 105 million of land purchases, which shifted into FY '22. We expect land spend in FY '22 to be around GBP 1 billion. The operating cash inflow for the year as a result of these items and the other details was GBP 1.103 billion relative to a GBP 52.3 million outflow in FY '20. After deducting the interim dividend paid on the 10th of May 2021 and other items, the net cash inflow for the year was GBP 1.009 billion. Now to cover some guidance points for FY '22, not covered previously, which are detailed in Slide 21. With respect to wholly owned completions, we expect a 1% increase in affordable mix to 21%. And with the elevated working capital position from 30th of June 2020 removed, our completion profile will return to the more normal phasing of first half, second half completions in FY '22. With respect to administrative expenses, we anticipate a charge of around GBP 230 million in the coming year. The increase on FY '21 of circa GBP 29 million reflects the absence of one-off sundry income receipts in FY '21, equating to approximately half of the anticipated increase as well as inflationary pay increases and the impact of disciplined investment in IT systems and headcount, following a freeze on recruitment during much of FY '21. We have included a slide in the appendices to help with the movements in administrative expenses seen across FY '20 and FY '21. Our interest guidance is GBP 30 million, with GBP 10 million of cash interest and GBP 20 million of noncash charges around land creditors. The noncash charge very much dependent on the timing and terms of land acquired in the coming year. With respect to adjusted items, we estimate the charges of between GBP 40 million, and GBP 50 million will be incurred in FY '22 in dealing with legacy property issues around external wall systems and fire safety. And our year-end net cash position is anticipated to be between GBP 1 billion and GBP 1.1 billion, depending on land buying and our ability to invest in working capital up and above completions in the year ahead. And finally, to flag, whilst we don't yet have line of sight as to the rate which will be applied, the new residential property developer tax is scheduled to impact on the 1st of April 2022, and will, as such, have a final quarter impact on our tax rate in the coming year. Now to summarize on Slide 22. We delivered an excellent financial performance in the year with a sharp recovery in adjusted gross and operating margins and a materially stronger balance sheet. Our balance sheet strength and the recovery in both our operational and financial performance are firmly underpinned the resumption of our dividend. We are in an excellent position to invest for future disciplined growth whilst also delivering sustainable dividend returns to our shareholders. Thank you. And with that, I will now hand over to David.

Thank you, John. All very clear. As Steven and John have highlighted, we have a strong investment proposition, and I will highlight some of these differentiators on Slide 24. As you know, we aim to operate with one of the shortest land banks in the industry. This improves our return on capital employed and reduces our risk profile. We have a very operational ready-to-use land bank and a good ratio between the size of land bank and the number of outlets. We have a strong and highly experienced build and sales team, which operate to exacting standards and have a relentless focus on the detail to drive both efficiency and improvement. Finally, we lead the industry on sustainability. We understand how important this is, both for our business and also for our stakeholders. These differentiators put us in a very strong position to grow volumes, deliver margin improvement and generate strong returns for our shareholders through both capital growth and dividends. Now turning to the market on Slide 25. 2021 has demonstrated the strong fundamentals of the market with strong demand for new homes across the country. The government has a target of 300,000 new build homes per annum to address years of undersupply, and the government housing policy remains very supportive. I will give a little more detail in a moment. But as Steven outlined, the land market remains attractive with a great range of land buying opportunities coming to the market. We have also seen a smooth transition with the changes to Help to Buy since December '20. Mortgage interest rates are clearly attractive and affordable in a longer-term context. The average mortgage rate on a standard 85% loan-to-value mortgage has moved materially lower to below 2% from close to 3% just 6 months ago. Looking at planning and the land market. Slide 26 charts the development of planning consents as well as net new build additions in England comparing to the Savills land price index. New planning consents have continued to run ahead of new build additions, a situation that we have seen since 2010 and there still remains a healthy spread between new planning consents and new home additions. This is despite the challenges and the resource limitations faced by planning departments across the country in light of both funding challenges and COVID. Development land values have dipped only marginally through 2020 and continue to show relative stability and only modest inflation. Looking at the mortgage environment in more detail on Slide 27. This is a chart that I've shown you before, looking at the proportion of average income spent on monthly mortgage interest and repayments. Clearly, the affordability of mortgages still remains good. And on average, the proportion, mortgage costs as a proportion of earnings still remains usefully below the long-run trend. This is a reflection of ongoing low interest rates, increasing wage inflation, which has been offset by recent house price inflation. There remains an absence of any return to 95% lending on newbuild homes by any of the mainstream lenders. And there has been no significant take-up of the government's mortgage guarantee scheme from mortgage lenders for new build lending. Some lenders, however, have now moved their LTV limits back to 90% for new build. We are also now piloting across the group a new mortgage product with the Newcastle Building Society. Deposit unlock is a brand-new scheme that enables both first-time buyers and the home movers to purchase a new build home with a 5% deposit up to a value of GBP 330,000 without the assistance of Help to Buy. Turning now to Slide 28. We've said before that our ambition is to be the leading national sustainable house builder. Here, we outlined our carbon footprint. Reducing emissions and consumer use offers the greatest near-term opportunity, and we are developing and testing home designs to deliver zero carbon in use. We have committed to all new standard house-type designs being zero carbon in use from 2030. This will remove almost 40% of our value chain emissions. Our other scope-free emissions are in our supply chain, and we will work with our supply chain partners to drive these emission reductions. We have a science-based target to reduce scope-free emissions like 24% per square meter of build by 2030. Our own Scope 1 and 2 emissions are those over which we have the greatest near-term ability to reduce emissions. As a result, we have a science-based target to reduce emissions by 29% from 2018 levels and to achieve this by 2025. Our carbon reduction targets based on Scope 1 and 2 emissions will be included in our group long-term performance plan awards, which will be granted later this year. We are committed to having zero emissions from our operations by 2040. Now turning to 3 specific areas on Slide 29. Our waste intensity increased from 6.53 tonnes per 100 square meters of legally completed build in FY '19 to 7.7 tonnes in FY '20. Albeit, clearly, FY '20 was a very unusual year in many ways. I'm pleased to say that our action plans to address this deterioration have begun to deliver, with waste intensity reducing by 24% to 5.89 in FY '21. We've recognized the fundamental importance of waste intensity reduction. And as a result, it is incorporated into our annual bonus scheme for FY '22. This will ensure we remain on target to deliver a 20% reduction in waste intensity by 2025 from 2015 levels. The future home standard will require an emissions reduction of 31% from existing standards, effective from the -- from June '22 for new developments and June 23 for sites that are already in production. Our technical and design teams through our fabric first approach are developing specific solutions for our house types to meet these new standards, and we are clearly adapting all of our house type designs to meet the new standards. We also have plans and technical solutions in development to meet the next emission target reduction of between 75% and 80% in 2025. Finally, on biodiversity net gain. All of our sites now going through outline planning are required to deliver biodiversity net gain. Looking forward, in line with the environment built, we have now also set our divisions a target to ensure that all developments going through planning by 2023 achieve a biodiversity net gain of at least 10%. We recognize that we have a responsibility to ensure that every development's biodiversity is left in a measurably better position than if our development have not taken place. Now to break you up to date on current trading, summarized on Slide 30. We have started well. Our private sales rate per outlet per week through until the 22nd of August has been 0.83. This is 11.7% below the equivalent period last year. But you will remember that last year was an unusual period, reflecting pent-up demand after the initial national lockdown as well as increased Help to Buy activity ahead of the scheme tapering. Coupled with similar outlet numbers, this resulted in a net private reservation rate per week of 277, 11.8% below the prior year, but 10.8% ahead of the FY '20 trading period. And our forward sales position, including joint ventures, remains strong at over GBP 3.9 billion, 6.3% ahead of what was a particularly elevated order book at this point last year and 30% ahead of the equivalent position in FY '20. As Steven touched on earlier, we are very confident in our ability to deliver our planned output growth. To conclude on Slide 31. Thanks to the efforts of our teams across the country, we have delivered an excellent performance in FY '21. We will continue to manage the risks around COVID, with health and safety remaining #1 priority. Looking ahead, we recognize that there are economic uncertainties, but the attractive housing market fundamentals, which have clearly been evidenced over the past year, remain unchanged. We are in a strong financial position with substantial net cash and a strong forward sales position. This helps to underpin our plans to grow our build activity and deliver completion role in the year ahead. And also, as we work towards our medium-term target of growing completions to 20,000 homes a year. Thank you. And I will now hand back to the conference coordinator, and we will be very happy to open up for questions.

[Operator Instructions] And the first question comes from the line of Will Jones from Redburn.

If I could please start. The first is really just touching on build and construction. You mentioned a few times how that was key to last year's volumes and going to be key again. So really just a big picture when you think about the obstacles you faced and generally overcome, but things like material shortages, absenteeism. Would your best judgment be that you're at the worst or through the worst on that and through the balance of the year, that becomes probably slightly easier? I think it was just around -- just kind of the land bank, actually, you've reiterated today around the target of, I think, a 3.5-year owned land bank length. I think it's 4 years at the moment. And if I look back the last time you were at that length was, I think, 2017, and you're still guiding to plots rising from here. I'm just wondering the extent to which you're happy that is consistent with extra strategic land in the business, the higher site numbers, your sort of the biggest site numbers you've got today. And just when you think your trend towards that 3.5%, I suppose, and maybe you sit above it for a little while yet. And the last one is just exploring the comment you made around mortgages and the product you've been developing with, I think, Newcastle Building Society. Could you just expand on exactly how that works? And whether you're making a contribution to the equity within that? That would be interesting to hear.

Well, I think in terms of just walk through the question, I mean I'll start in terms of build and then pass it over to Steven, and then I'll pick up on land bank and also pick up in terms of deposit unlock. I'm very, very disappointed that I can't put one of your questions to John. I would very much like that interrelationship. I can't do that. So sorry, Will. So if I start in build. Look, I mean in terms of big picture, I mean, no, I wouldn't say that we're taking the view that we're past the worst of it or we're trying to measure how far through we are. I would say that we're very much alert to the challenges regarding material availability. I think we're more relaxed about material pricing because we can understand some of the dynamics in the market. So I think it's very much that we are on alert, and we're doing everything that we can to manage it. And I think our numbers in FY '21 demonstrate that, and the fact that we're putting guidance into the market for FY '22 on completion volumes I think underlines our confidence. But Steven, do you want to talk about -- a little more about the moving parts?

Yes, yes. That's fine, David. Will, in terms of building productivity, yes, we're very pleased with the progress over the last year. We recovered well from a flat staff last May, June time. We saw a very strong build performance in the second half, which clearly helps us deliver our second half completions and -- which were ahead of budget and guidance we gave in May. And last year, just to put into context, we achieved 311 equivalent units throughout the year. We're currently on track to deliver our plans for FY '22, and we're in sort of week 8 at the moment. And so far, we've seen an improvement over the same period last year of about 15.5% or 45 equivalent units per week ahead of the same period last year. So that means we're sort of currently producing around about 335 equivalent units per week. And we need to be building at 341 to deliver the plans, and we're pretty confident we'll be able to achieve this. So that boils down to production of about 0.87 equivalent units per construction outlook per week. Certainly, we find equivalent units a good way of measuring our build performance. We split every unit into 9 stages, and we chase every unit every week to make sure we're moving stages. So we're typically producing something like 3,000 to 3,250 construction stages each week, that's a foundation or a superstructure roof, et cetera. In terms of the sort of moving parts, we've got sufficient trades at the moment. Clearly, the trade that you saw coming back from their summer holidays, which need more trades this year. So the take is summer holiday. And we started just moving into the peak construction period, September, October, one of our peak periods for construction in the year, then March, April, May and June, of course, with a better weather. So we've got no real shortage of labor. We're regularly achieving something like 20,000 trades on our sites. We've got over 3,000 booklets, which is what we need to deliver our requirements. And clearly, we're finding the trades are attracted to well-organized, well-resourced sites. And what's important currently is that they can see a good flow of materials to give them continuity of work ahead. So in terms of summary, we've got the resource in place, the materials are coming through and we're on track to deliver our planned output growth.

Thanks, Steven. Well, just in terms of the land bank, yes, I mean, we think 3.5 years, I mean, is reasonable guidance. I mean, we're not totally caught up in landing on that number on a year-on-year basis. But I think if you look at the medium term, if we're trying to grow the business up to 20,000 completions, I think we're pretty confident that we can land that the land bank, no pun intended, in that 3.5-year range. And that the 3.5 years a sufficient one for us to operate the business. A really key part of that is the efficiency of the land bank. So that's something that we're always striving for us to try to create more outlets from the same land bank. And Steven touched on this, and we touched on this back in February that we did a lot of work last year to split sites and to have more sites that were dual-branded. And I think the industry generally is trying to do more in terms of swapping sites and, therefore, improving the efficiency of land banks for individual house builders and for the industry. On deposit unlock, I mean, deposit unlock is an industry initiative led by many of the major house builders and a number of the medium-sized house builders. It's similar to a product that was launched back in 2012. I mean we recognize as an industry that there has to be an element of self-help. And therefore, we launched a 95% product back in 2012, which was largely eclipsed by the launch of Help to Buy. But we feel that deposit unlock is an attractive product for the consumer, offering 95% lending. And it's now gone into trial, and we would expect it to roll out nationally during 2022. Yes, there is a contribution from the builder, but I think that's to be expected, and that's the same as the contribution in terms of the original scheme that was launched in 2012. And final contributions have not been agreed. But again, I would expect that they are similar to contributions that we would have seen under new buy in 2012.

The next question comes from the line of Charlie Campbell from Liberum.

Just sort of three in no particular order and some are quite short, I think. So just wondering sort of the math of the land bank. It looked to me as if the plot cost intake this year -- plot cost bought this year, maybe about 5% lower than last year within the maths right. Now I guess that's mix around London. But I just wanted to sort of be clear on that and just make sure I understand the message is on land. As I understand land is increasing in price, but not necessarily as much as you would think given house price inflation. Then second question was just a clarification around kind of the underlying inflation you've seen in FY '21. I think I might have missed that. And I just wondered whether that inflation is continuing in July and August. And the last question, quite a big picture question, I suppose. But as we think about the 20,000 number and we look back in history, compared to when you did 20,000 last, you'll be doing probably quite a lot less high-rise in a city and less London. So I just wonder kind of what that means you're doing more of and how you make sure that those sites are kind of adequately spaced out across the country as well to get to that 20,000?

Charlie, if I just walk our way through that. But just in terms of question 2, underlying inflation in terms of build cost inflation.

Sorry, selling prices, I meant, sorry, yes.

Okay. Okay, fine Well, I mean if I kick off in terms of land and just headlines, and then I'll pass over to Steven in terms of what we're doing in relation to land buying around the country, but -- and then I'll pick up the question regarding inflation and also the mix of business at 20,000. So just in terms of land bank, I mean, I used the slide in the presentation. We presented that slide many times over the last few years. And I think that's just been a key point of the market is that, of course, the land market is always competitive. I mean, we're always competing with other house builders and other purchasers of residential land. The reality is that the land price index shows that land prices have not risen proportionately to house price inflation. And this is a byproduct of the dramatic increase in planning consents that we saw in the run-up to 2020, so pre-pandemic. In terms of the pricing in the land bank for FY '21, yes, absolutely less intake in terms of London, but we have got very good pipeline coming through for London. So therefore, we'd expect to see a pickup in terms of that for London. I mean Steven, do you want to give a little bit more color on land...

Yes. Yes, in terms of the land market generally, Charlie, we've seen a good level of landing coming through, certainly on the back of the high level of content in the last few years, planning come through. We've seen a lot more off-market deals than we've seen for the last few years, and we're putting that down to the fact that during the lockdown period, our land teams are very active in terms of site searches and contacts. So we've continued to progress in those deals, which has meant we've done some pretty good off-market deals, which we're pleased about. We see more cash-based deals rather than deferred terms, certainly less opportunities on deferred terms that has been in the last few years. The market is very competitive in the sort of 150-unit site category or size up to that size. And in fact, on those sort of sites, we have actually seen something coming in from some sort of the smaller medium-sized builders on the sites, but less sort of -- to a certain degree, we're out of those other 150-unit size. We're tending to see a greater number of large sites, so the 500-unit size category, which is ideal from a David Wilson point of view, where we're able to dual brand the site and certainly less competition in the market for those sort of things, which is helping us. We've got a very strong bid pipeline. We've got something like 35,000 plots, where we've got bids to prepare for 120 locations. So no shortage of land, good consistent opportunities generally around the country.

Thanks, Steven. Charlie, just in terms of underlying house price inflation. So clearly, house price inflation across the country, more muted in the Southeast, but positive house price inflation across the country. I would say, overall terms, 4% to 5%, if you're looking at it on a year-on-year basis. Clearly, some of it is going to be above that, some of it is going to be below that. The house price inflation over the 12-month period, I think, for everyone has been surprising. And you can see that it's likely that will become more muted as we move forward over the next 12 months. In terms of 20,000 completions, look, this is an absolutely key point, Charlie, just fundamental. Because if you go back to 2007, I mean I think our pro forma completion volumes when we acquired David Wilson would have been above 20,000 for that year. And as you said, a fundamental difference in terms of the mix between houses and apartments. And it's an absolute key point when you start looking at labor supply because the industry shortage of labor is in areas like bricklayers and also roof tilers. Clearly, bricklayers and roof tilers would be much less required on apartments than own houses. So the fact that the mix for the industry is probably moving to something more like 80% houses, 20% apartments compared to something that was maybe more like 65-35 is a fundamental point. In terms of our 20,000 completions, we expect to grow volumes in London. We're going to see a substantial step-up in volumes in London this year and next year compared to FY '21. So getting back towards 1,700, 1,800 completions coming out of our London business, all of that, as you know, in Zone 3 to 6. And then around the country, we have 25 divisions around the country. We're trying to target divisions at taking between 700 and 750 units. And we see that as being very achievable. And clearly, those divisions are predominantly building houses. But as you say, it will be very much more a house lag 20,000 than it was before.

The next question comes from the line of Gregor Kuglitsch from UBS.

Thanks for the slide, especially the one on CO2, which is sort of value chain CO2 emissions. So the first question, maybe a point of clarification. So the home and use statistics there, is that an annual CO2 emission? Or is it sort of the life cycle of the house? I'm guessing it's the former. And obviously, you've said that's the part that you're going to attack, but at the same time, that's probably also, I think, the part that's being basically regulated anyway. So I think the 31% that you referred to applies to that part of the pie, so the 39% in that sort of pie chart, I guess. So just maybe some clarification around that. And then obviously, I think the government is essentially forcing you to be net neutral on that anyway. So just maybe if you could clarify that. And then as a sort of secondary question to that, I was surprised to see ground preparation being such a high proportion. It's the second biggest element of 28%. Why is that? And what can you do specifically to reduce that? I'm guessing raw mat is sort of out of your control. That's basically the manufacturers, but ground preparation and I guess build is where you can do a little bit more perhaps yourself. So that's sort of the first question. The second question is just sort of thinking about the normalization of the business in terms of sales. I mean I noticed things, for instance, part exchange, your balance is nearly not quite nil, but it's extremely low. So just maybe your thoughts as to how the business normalizes over time by channel. So thinking about Help to Buy, Part Exchange and other types of channel and maybe related to that, the capital intensity. And then maybe the third question is on margin. So you've now, I think, produced a record margin at least as far as my spreadsheet goes back. So I want to explore what the opportunities are to expand that from here or whether you think you're kind of at the end of the road? And I guess I'm more focused on the EBIT margin than in the other kind of metrics.

Thanks very much, Gregor. Yes, well, I'm just going to have [indiscernible] okay. I hesitate to ever say that I'm at the end of the road. But if I just walk through those, Gregor, I mean, look, first of all, you're absolutely right, in terms of customer in use is a lifetime measure. Now there is a formula that sits behind it. But that 40% is effectively the in-use carbon generated over the house's life cycle. And yes, the government are going to regulate on that, but the timing of that regulation through to zero is not clear. We've asked for that time line to be set out. But presently, we only have a plan through to 2025, but that is not getting in our way. And we are making sure that we are pressing ahead in terms of the development of homes that will be generating zero carbon in use over their life cycle. In terms of ground workers, yes, I mean, look, a huge amount of heavy equipment used in relation to groundworks, ground preparation, remediation and so on. Clearly, a lot of that coming through in terms of diesel and 2 really schools of thought with regard to that and plenty of information available on the internet, but 2 schools of thought. One is battery in long term. The battery will eliminate the use of diesel and the other is hydrogen will eliminate the use of diesel. If you look at JCB, who clearly will produce a very high proportion of machinery, they are very much looking at hydrogen solution. And the challenges around battery are about getting sufficient power on the machines relative to the weight to give you the talk that is required for a lot of this machinery. So very much solvable, but there is no clear time scales as to when that will be solved. And that obviously sits within our supply chain, as I touched on. In terms of the business mix and the sort of normalization, well, I think you call out PX as an example. I think it's an important example. I mean we need to recognize always that our biggest competitor is the secondhand market, and part exchange is a very, very important part of the mix normally for the house builder. So in a normal -- a more normal market you might expect Part Exchange to be in a range of 15% to 20% of completions. Help to Buy and Part Exchange cannot be combined and, therefore, to some extent, the Help to Buy program has shutdown Part Exchange. I also think when you move to market where there is not Help to Buy, then you look for a more balanced profiles or probably less first-time bars. We're going to tend to over-index presently on first-time bars because of the availability of 95% owned values through the Help to Buy program. So we see as we move beyond 2024, but that balanced mix of product, 1 bedroom through to 5 bedroom and more part exchange will definitely be features in the market. And we've always made an assumption that in a nonhealthy environment, we will see more part exchange and we will see slightly higher levels of incentive. In terms of margin, yes, I mean, we're obviously very pleased with margin. We set out a story regarding margin in terms of self-help and improvement going back to 2016, and we think we've executed well on that. But it's not a never-ending story. We can't continue to improve margin forever. So I think we're very clearly saying that we expect there could be some improvement in margin, but it will be quite limited. And we see that the principal lever for us to pull over the next few years will be about growth, and our different routes to growth, first of all, to get back to FY '19 levels and then to start moving towards 20,000 completions is what we're very focused on.

The next question comes from the line of Emily Biddulph from Crédit Suisse.

I've got 3 as well, I think. The first one, I just wanted to understand the ASP in the order book. Obviously, it looks relatively strong. I think it's up sort of 4% or so, but a mix effect in there that we need to bear in mind when we're sort of thinking about sort of ASP for the coming year or sort of anything we shouldn't extrapolate. Just coming back to sort of this -- or secondly, just going back on this mortgage scheme you're trialing with Newcastle Building Society. Just to be completely clear, sort of following up on David's last comment. The costs that you're likely to incur here, presumably this is completely consistent. When you've been buying land that are sort of at least a 23% gross margin and buying land for sort of post 2023, the kind of costs you're likely to incur here are presumably consistent with exactly what you're going to seeing and factoring in. So we shouldn't be sort of viewing this as being margin dilutive. And then thirdly, just on the order book. Obviously, it's still very strong with 2,000 private units ahead of where you were at the start of 2019. How should we think about that? Is there a temptation at some point to sort of stop selling quite so far ahead and sort of trying to maximize price? Or sort of how should we think about if completions this year are in line with what guidance is today? How should we think about the order book and sort of sales rates trending through this year?

So John, I'll take the question in terms of ASP and looking at the order book, and I'll pick up in terms of the mortgage scheme deposit unlock. And then I'll give a few comments in terms of forward sales general and then pass across to Steven, who can talk more about that. So John, would you like to just pick up in terms of the ASP and the order book?

Emily, John here. Yes, just in terms of -- when we look at the order book at the end of week 8, the private ASP in there is around the 340,000 mark. It's probably just worth bearing in mind that there is some mix impact in there in terms of completions that will flow through in FY '23, not just in FY '22. So probably, I think what we would look to highlight to people is, look, if we look at the embedded ASP in the land bank, that's around the 289,000 mark. That was mark-to-market at the end of June. Looking at that and moving that on inflation and your assumption is probably the best guide in terms of looking at the average selling price for FY '22. And obviously, we've mentioned 146,500 as a good steer in terms of the affordable price. And you can see that we were at 325,500. So making an assumption on that in terms of inflation. Putting the mix together in terms of that increase to 21% affordable should get you to a pretty close view on where that price should be for the year ahead. I hope that's a help.

Thank you. Thanks, John. Just in terms of deposit unlock. So as I touched on earlier, Emily, it's an industry initiative, and we're involved in the trial with the Newcastle Building Society. And yes, absolutely, when we looked at post-Help to Buy environment and the acquisition of land, we have assumed that there will be higher transaction or higher incentive costs. And part of that will be about schemes like the deposit unlock, part of it, as I just touched on, would be things like part exchange. So there's going to be a whole mix of things that come in, but we would start to flag a higher incentive environment. In terms of the order group, when we recognized that it's been a pretty unusual 15-month-plus period, we've unquestionably become far more forward sold than we would normally be. My sense is that it will naturally settle over the next 12 to 18 months. But Steven, do you want to just talk about it too?

Yes, yes. I think you just started a few extra bits in there, David. In terms of in-forward selling, what's important to us is we protect the customer journey. So for example, we're not selling houses or anything unless we've got the foundations in. So we're not sort of selling graph or anything like that. And you have to also bear in mind, we've got new sites starting where there aren't any sales. So we've got a lot of sales to achieve on new sites and existing cases, which we're opening up. We went through a process last year, which David took on earlier, where we sort of created some extra outlets out of dual branding where it was previously single-branded Barratt, and we've now sort of dual-branded it, David Wilson or vice versa. So again, that sort of created additional sales opportunities for us. And -- but as I say, I think the key thing is we're not selling in advance where we haven't got foundations already installed and key to us is protecting the customer journey.

Thanks, Steven, Thank you, Emily.

The next question comes from the line of Clyde Lewis from Peel Hunt.

Okay, and I'll stick to the format of having 3, if I may. The first one, I suppose, is around the balance sheet and the lack of any sort of news on special dividends or a commitment to pay a bigger dividend going forward. I mean, I think you've guided to GBP 1 billion to GBP 1.1 billion in net cash this year, but the operating framework is obviously set at a lower level. We've got a bit of cash outflow probably in terms of the exceptionals, the working cap rebuild, probably land credit just creep up a bit this year. So I can understand why it's not going to jump forward, but when do we get to a point where having GBP 1 billion of net cash at the year-end gets too big, I suppose, is the question around the dividend. The second one I had, I suppose, going back to sort of margins and I suppose, just trying to find out whether there is still very much of a sort of COVID drag factor in terms of sort of costs. Steven obviously made the comment about sort of build rates climbing back up. So I suspect there's very little there, but I just wanted to sort of confirm on that. And then I suppose the last one was around the latest news in terms of sort of the government's commitment to getting affordable homes built in a bigger number. Does that change any of your thinking in terms of the sort of sites that you're likely to be tackling over the next 2, 3, 4 years?

Okay, Clyde. If I start on just the balance sheet position, and then John will pick up on the COVID and any potential drag. And then I'll just touch briefly in terms of our thoughts in relation to sites going forward in terms of any comments from government about affordable housing. So I mean, first of all, just in terms of balance sheet, we've obviously reinstated the dividend. Clearly, it's been an unusual period of time, and we ran for 12 months effectively with no dividend. So we reinstated the dividend at 2.5x cover. We have said that we're very focused on growth, and we want to be out in the market buying land. And that is the principal area, the over and above the ordinary dividend, we want to deploy cash. Obviously, the Board are going to keep this position under review. So as we move into calendar '22, we'll keep looking at what we're buying and what our growth targets are, but then if it is appropriate to do so that the Board will consider any further distribution. So that's just going to be an ongoing review and discussion. In terms of sites, I mean, I would say generally that we -- in looking at routes to grow, we're not going to go down a route in terms of affordable only. There is an opportunity to do affordable-only development, but we don't necessarily see that that's an opportunity that's best suited to us. We have -- it was announced that we had signed an agreement with Lloyds through their new subsidiary, Citra, to look at to redevelop more PRS, particularly PRS within the regional marketplace. But that's very early stages, but that's something that we will be exploring over the next 12 months. And then the government's own land risk program led by Homes England, we feel, gives opportunity. We've always been a big participator in the Homes England land release program. Technically, they are tending to have a high proportion of affordable delivery through their land release program. And that's something that we will continue to participate in. So those would be the 2 main areas over and above what we're already using. Bear in mind that we are delivering more affordable housing than anyone else in the marketplace. John?

Clyde, just coming back on COVID drug effects. Two things really. I guess, first look from a side-by-side basis, given the investment we made during the period of lockdown to then come back with our sites active. No material impact going forward in terms of any incremental drag, in terms of just site-by-site costs. One thing to flag is that site extension factor. That was 0.3% of a margin drag in the full year that we just saw finish that will gradually fall away over the next 2 to 3 years to sites that are still in the mix get worked through to completion. So no real material impact from on COVID drag as we look forward over the next 2 to 3 years.

And just thanks very much, Clyde. And just to say that we're probably a time just to take 2 more questions. So if we can work on that basis. Thank you.

The next question comes from the line of Andy Murphy from Edison Research.

I've got 3, if I may. Just looking at Slide 26, you've put an interesting start-up around net new home additions and planning consents. So I was wondering if you could just give us a little bit of color on the gap between the 2 as to where those consents have disappeared to. It looks like between sort of 50,000 and 100,000 a year. So it's quite a pile of consent that have not been active on this. So that's the first point. The second 2 questions were around sustainability. I thought those slides you put up about what you're doing around the carbon footprint, and waste were really very interesting. So the first question was about the zero emissions on the houses in use. I was wondering to what extent that's going to add to your own costs if you're talking about putting in solar panels or ground source heat pumps. And allied to that, does that therefore mean that those houses have lower costs in use and, therefore, there is some value to be gained in that from Barratt's point of view? And then secondly, around the biodiversity net gains that you also talked about. I was just wondering what the industry practice is here because just on a personal level, looking around and watching what I see going on around me, I see sites being developed. But before they develop, I see a lot of sort of trees being chopped down and that sort of stuff going on. So I was wondering whether you could give me some color around whether there's any sort of industry gaming going on around that biodiversity and when the sort of the starting point is sort of net gains and the endpoint where that net gain is then measured.

Okay. Andy, thanks. I think I'll just walk through those, Andy. So first of all, in terms of planning consent. So yes, a change in terms of the way that the data is gathered, the reality of -- I think, trying to eliminate sites that have not been developed and also trying to eliminate any duplication between sites on outline and sites on detailed consent. So we've picked up the revised data, and we're now reporting on that revised basis. I think that the numbers, I would certainly just add an additional flavor that over the last 12 to 15 months, the local authorities have found the planning process to be very challenging with a covered backdrop initially because they were not meeting, then they were meeting online and now they're not allowed to meet online, they don't have legal permission for online meetings. So they're having to have physical meetings. So that has unquestionably reduced the numbers over the last 12 to 15 months. But once that position normalizes, we would expect to see a higher level of consents coming through. In terms of homes in use, the -- I think the short answer is that there are higher costs associated with building homes to a zero carbon standard. I think the detail around it is, first of all, those costs will reduce. So clearly, we have seen this, for example, with solar panels. If you look at the cost of solar panels 10 years ago compared to now, dramatic reductions as more volume has come into the marketplace. And we would expect to see that with technology such as, for example, heat pumps. Secondly, the consumer is prepared to pay and the consumer is seeing more costs as a result because their heating bills are clearly lower. But the reality is a very key part of that is the emergence of green mortgages, and we're starting to see some movement in terms of green mortgages. The banks clearly want to have more sustainability credentials in terms of their mortgage lending book, and therefore, being able to demonstrate that they are lending to EPC energy performance, particularly like ratings A or B is increasingly important to the banks. All of our homes would be compliant with B or better. And therefore, the banks will offer some reduction in respect to green mortgages. We've seen that being piloted, for example, by Barclays. And that will be a key part of the proposition for the consumer. In terms of the biodiversity net gain and the environmental, I mean, I think you're right to flag that. I mean, part of the reason why this is coming into legislation is to eliminate any potential gaming of the system. And therefore, the site has got to be assessed, and it has to be assessed pre and post. So the environmental act when it comes in is not going to be a position where you can go in and cut down the trees and then assess it, it's going to have to be assessed in a precondition. And we see it as being very, very important that there is that framework. But we would also say that if you look at the way we've developed our sites over a number of years, I think we've been very, very conscious of biodiversity credentials. And to be frank, it's a very, very powerful part of the sales tool to be able to demonstrate to consumers that you are putting in ponds, that you are putting in trees, that you are putting in things that are biodiversity positive. We see that as being very positive from a sales perspective. But thanks, Andy. And I think we can do one more and then we need to cut.

We have no further questions in the queue. So I'll hand the call back to your host to conclude today's call.

Okay. Well, I'm pleased that we were able to pick up all the calls. So thanks very much, everyone, for dialing in, and we will be back again at our AGM in October. Thank you.

Thank you for joining today's call. You may now disconnect your lines.