Persimmon Plc (PSN) Earnings Call Transcript & Summary

Hello, and welcome to the Persimmon first half trading update. [Operator Instructions] Just to remind you, this conference call is being recorded. I'll now hand the floor to Dave Jenkinson, Chief Executive of Persimmon. Please begin the meeting.

Hello and good morning, everyone. We'll follow the normal format we've historically done, I'll give a quick opening, pick up 1 or 2 items. We'll then go straight into question and answers, and then I'll jump on to the final summary. So just today's opening is, in these difficult times, we believe it's never been more important to be gated by our clear purpose of delivering long-term sustainable returns in the best interest of all stakeholders while managing the risks for the housing cycle. I am delighted how the company has responded to the challenge of balancing the needs of all stakeholders, while ensuring the safety of our colleagues, customers and suppliers. In particular, I would like to draw your fact to the -- attention to the fact, one, the role we've been able to play our part in wider society. And this is being primarily led by not making any use of any form of government support, either the government Corona Job Retention Scheme, not accessing any money under the government COVID finance proposals, and importantly and sometimes forgotten, we've paid all our taxes promptly and on time. Secondly, during this period, we supported all our staff through a challenging time by not only paying them full salary, but also paying bonus and pay increases recently. We've also continued to support our lower communities. And in the first 6 months, we supported a number of charities and donated about GBP 370,000 and supported the NHS through the donation of PPE equipment. And I'm delighted that this has been recognized by the COVID-19 Business Pledge. Operationally, we have benefited from this approach. Not furloughing our staff enabled us to be much more responsive and agile to the COVID issues. We've been able to get back on-site much earlier. We were able to continue to sell houses during lockdown. We're able to plan for new sites opening and provide all the technical information to support the sites. And we've been able to assess the landmark and progress appropriate opportunities. We believe this has produced a dynamic response for the situation, which places in a good position for half 2. Also, we believe this has manifested itself into a strong half 1 performance in the context of the COVID challenges. We've produced 4,900 completions, revenues of GBP 1.19 billion, strong cash generation and over the last 6 weeks, private reservations have been 30% ahead of this time last year. And then during the 9-week lockdown period, we were able to produce 900 gross reservations. This gives us a great platform for the future. We have an excellent forward sales position and a very strong WIP position with 14% more AUs than this time last year, and that was from a position of strength, with strong outlet numbers firmly established, and we have good product availability to meet the anticipated increased demand as Help to Buy comes to an end. So as we enter half 2, the business is in robust health, which gives me confidence to deal with any future economic scenarios, which may come along and produce a strong performance in half 2. Now as normal, I'll open up for questions.

[Operator Instructions] Our first question comes from the line of Gregor Kuglitsch of UBS.

So maybe 3, if I may? The first one is just on sort of the volume outlook. And obviously, you're up, I think in the statement, you say your productivity is almost back to normal, sales was up 30%, your order book is pretty good. So can you give us some feel as to the directionality of volumes in the second half? Do you think it could stabilize? Or is that too aggressive, is that kind of too progressively positive, I guess? Then second question is on the margins. So I think we've had a lot of people talk about sort of some loss of margin in the first half. And I'm sure you suffered some of that yourself. What I'm more interested is, going forward, is there any reason to think to sort of ship off the last gross margin that you said, I think it was 33%, 34% in your land bank. So anything we need to think about to kind of deduct from that, obviously, absent -- assuming prices are stable, of course. And then finally, can you just maybe give us a view on what you're doing in the land market? So you bought almost no land, I think, 800-odd plots in the first half. What's the strategy going forward?

Okay. I'll deal with questions 1 and 3, and then I'll pass the question 2 to Mike. Volume outlook, obviously, you've seen the moving parts. We end the half 2 with a very strong forward sales position. We've got WIP in the ground, which we're really pleased with, because that was part of our strategy entering into the year. We anticipate there'll be increased demand, as Help to Buy comes to the end. So we speculate more builds. And we have 14% more AUs in the growth than what we did this time last year, which is a relative position from strength, which gives us confidence that we can produce a decent number for half 2. Obviously, this has still be in the context of what economic scenarios come along. We plan for all economic scenarios, we plan for the upside, stability and on the downside. All things being equal, we don't see another lock down. We will be disappointed if we didn't see a number similar to what we did in half 2 '19. So now all things being equal, I think that's probably reasonable guidance to take for now. Well, obviously, that's heavily caveated by what may happen in the future. In terms of the land market, it hasn't really changed. We've had all our land people fully employed. None of them were furloughed. So we've been out in the marketplace. We've been actively engaging in opportunities and looking at opportunities. And this isn't the right time to call the bottom of the land market. There isn't the deals out there, which would be compelling enough in any scale to suddenly go up and speculate in a big way. However, as always, we continue to be agile. Every deal is looked at in its own merits. Every deal comes across my desk personally. There is 1 or 2 deals we may be able to pick off when we take the risk versus reward into context, but we have a highly strict and disciplined control and the criteria we apply to, and we'll continue to use that criteria. At the moment, the number of opportunities meeting that criteria aren't that large, but we'll obviously keep our fingers and our ear to the ground, and we'll be responsive very quickly if that was to change. Mike, do you want to pick up on margins?

Yes. I think, Gregor, as you say, given the lower volume delivery in the first half, we mentioned in the statement that, therefore, we'd expect some margin depletion because our costs are our costs, as Dave's already said, we've continued to invest in our HR capability. We've not taken any self-help measures in terms of cutting staff or salaries, et cetera, in the view, again, it was part of the strategy that we thought the -- after careful thought that activity would bounce back. So the -- obviously, all our teams have been employed through lockdown, as Dave's already outlined, and have continued to support the increased activity that we've seen and indicated today. So I think the cost are the costs, and therefore, the fact that the necessary reduction in volume delivery in the first half, because of the COVID constraints and readjust working practices, et cetera, in terms of build for short period, that will lead to some margin depletion, if you will, sort of lower overhead recovery efficiency. But as Dave has already indicated, if we get a similar volume outturn to the second half of last year, then we'd expect that to achieve some normalization as we go through the second half. So when you put those pieces of the jigsaw together, I think we will see some depletion for the full year. That will be more accentuated in the first half. But in the second half, I think we'll -- our judgment at the moment will be approaching a more normal level of overhead efficiency. In terms of margin, gross margin, there is an interesting dynamic there in terms of -- obviously, the site shutdown has lengthened development period. And I think there's 2 aspects to that. This one which is an impairment issue. Does that additional cost burden on each and every site raise the issue of impairment? With our margins, we're very positive that, that is not the case. And then secondly, there's a sort of a loss of productivity issue for the first half and that's more of a presentational issue. I'm aware that 1 or 2 were thinking of perhaps presenting it in an exceptional way, on the face of the income statement. We'll continue to assess that moving forward, and we'll provide a bit more detail on that in August. At this point in time, as I've already said, the costs were the cost. So there's no exceptional costs on cost, additional costs, if you will, particularly, that are material. But I guess, in August, we'll be talking a bit more about the efficiency and loss of productivity and impact on the margin in a bit more detail. So I think we'll put meat on the bones in August on that one.

And the great thing for us, Gregor, is if we look at our headline gross margin, sales revenues have been incredibly robust. In fact, it will take a little bit of benefit. So our headline gross margin has held strong. It's obviously that inefficiencies from not producing the volume in the overhead is not quite as efficient.

Because what we -- I mean we've lost volume and revenue. The cost base is the cost base. I've said that 3 times now. And what -- as Dave said, we've lost the volume and the revenue. That's the issue for the first half. And we'll see, as I say -- as Dave said, see what we can do in the second half to get back to a normal volume run rate. Is that all right, Gregor?

That makes sense. It's helpful. Good luck.

And our next question comes from the line of Arnaud Lehmann of Bank of America.

Three questions on my side as well, please. Maybe starting with a follow-up on your comments. The surge in private reservations in June, that's quite encouraging. I understand that you're taking market share to competitors. And I also assume there was some pent-up demand that is coming back. So to which extent do you see that as a short-term bounce? And could we see the surge in demand and reservation fade in the coming months? That's my first question. My second question is any comments on the stamp duty reduction? I mean, first-time buyers on your side probably wouldn't have paid anything anyway. So do you think that's an incremental support on the demand side for the next 6, 9 months? And lastly, on the dividend. You're hinting that you could declare something in the second half. Is it still technically possible to declare dividend for 2019? Or would it be part of a kind of interim H1 dividend?

Okay, yes, just to pick up on the 3 points. The first one in terms of private reservations. Obviously, what we've seen has been extremely encouraging. And it will be fair to say we've been a little bit surprised on the upside. Both the number of reservations, we were able to take during the 9-week period and during the 6-week period. Personally, I think there's 2 moving parts to this. Obviously, it's the market share element and is also our quantifiable numbers. I think it's inevitable that our market share will get eroded a little bit, but I think there's the opportunity for a bit more demand to come back into the market and sustain these numbers. The truth is we don't really know. And as always, we have options, and we plan for 3 scenarios. We have a business model that plans for, one, an upside; two, that stays the same in creating a downside. Whatever -- whichever one plays out, we have a business model prepared for it. What I will say is, as a couple of push factors that do make a difference for half 2, the first one is which you touched on with stamp duty, which I'll come back to. And the second one is Help to Buy coming to an end. As I said previously, we anticipated back as early -- back as probably in the beginning and middle of '19 that there will be a push for demand as Help to Buy came to an end. That's why we wanted to get so much WIP in the ground, and we continue to build. And we've continued to build very aggressively even now to get the numbers up. So customers who want to take advantage of Help to Buy are able to reserve our houses before it comes to an end in March, but more importantly, having practical completion by December. Now we believe we're in a great position to take advantage of that. We believe we will know what number of stock properties we can still offer, and we believe none of our customers have been put in a vulnerable position where they may lose it as we sit at the moment. So we believe that could make a difference to demand. The truth is, we'll all have to wait and see what happens with unemployment because that will make another argument to say why demand wouldn't increase. So yes, we are pleased with what we see, but we wait and see and keep an eye on it and we'll respond to whatever comes along. In terms of stamp duty, your observation is quite right. 50% of our purchase are first-time buyers. So in some respect, it may not have quite the same impact, but what anything that gives confidence to the market and give short-term impetus. And I think what it will do, it will help carry on the momentum of the marketplace, specifically people who were sitting on the fence, who were thinking, well, I'm not sure whether to buy or not. It will give them the encouragement to buy. What I don't think it will do is encourage people who are sitting in the house and don't want to move to just suddenly buy. So I think it's a positive. And I think it will provide a bit of momentum, and I think it will support the activity, which is taking place in the market at the moment. So in terms of the divi, I'll pass on to Mike.

Arnaud, yes, in terms of divi, obviously, we canceled the surplus capital return that we scheduled for the 2nd of April on reassessing business need effectively. That was obviously necessary. But as you can see, the cash position of the business is very strong on the back of the incremental sales that we've taken through these challenging times and managing the cost base, as we've indicated. But I think that, as we've already said, the decision and judgment that the Board takes around distributions will be based on the continued performance of the business, looking at the market in terms of indications of overall activity, together with obviously judgment around the macro. That's particularly foggy with, obviously, the pandemic issues and Brexit, et cetera. So it's quite a complex and challenging assessment to do there on a continual basis. But I think that, as Dave has already said, the strategy that we've had over 10 years now puts the business in a really strong position with a clear focus on the risks of the cycle. And as we said before, that really, the pandemic accelerated probably -- it's the start of the end of the current cycle, the recession, the ensuing recession, because technically, we're already in recession. I think everybody would probably agree with that. And the recession will see the end of the current cycle and then the new cycle will emerge. And what we need to make sure is that the business is in a very strong position to take advantage of the reinvestment opportunities that emerge over the next 12 to 24 months probably, if not a little bit further out. So as always, we're going to assess this continually and make sure the business is in -- on the front foot in terms of its ability to reinvest the right time in the cycle to set up the next period of outperformance with a view on the sustainable returns that Dave pointed to at the top of the meeting.

I think the great thing about that is we've got options. If there was a lot of compelling land opportunities suddenly became available, although I don't expect it. And obviously, we'll look to take advantage of that. Obviously, if we've got a lot of cash on the balance sheet, we continue to perform and the market looks robust. And obviously, that will be more favorable for a dividend. What we'd want to try and do is get a bit more trading on the raw belt and see where we are in the middle of the year, and discuss it in a bit more detail when we have a bit more information and it becomes a bit clearer.

And our next question comes from the line of Rajesh Patki of JPMorgan.

I've got 2 questions for each. First one is on the piece. For H1, seem to be driven in large part by a change in mix between private and affordable? Can you help us understand the completion mix for the first half? And would you expect that to normalize in the second half? And the second question is in terms of the delivery profile of the forward order book. Can you help us better understand how that differs on private and affordable as well?

Well, you've done well there. I think they're both for Mike. So I'm really thanking you.

Dave's taking a rest now. Yes. On half 1 sales, yes, I mean, we've seen, and looking at price, the headline movement year-on-year is flattered, if you will, or accentuated by the fact that we've got a lower content of affordable homes being completed in the first half just under 18% of the mix. But in the 4,900 we've got about 4,000 PD, the rest being HA. So when you split that out, when you look at the PD, the private sales, the price is around 1.3%, 1.4% up on the previous year. There's a bit of mix in there. As Dave said, a little bit of underlying improvement, but -- so the usual sort of drivers there. So that relates to the completions. In terms of the forward orders, it's a pretty similar picture. We give the detail in the statement where ASP on private sales is about 1.7% ahead of the previous year. So it's a pretty similar picture in our forward order book. So -- and the mix, which was your second question, moving forward, we would expect that in the second half, we'd see a greater or more normalized HA mix. So that may increase. I mean if you pick up -- if you look back at last year, that probably provides a reasonable guide to the mix that we'd expect for the second half of this year on the basis that Dave's already painted in terms of our ability to deliver that sort of overall volume. Because the delivery of the HA in the first half has been held back because of the build slowdown, whereas, obviously, we're now back up and running. So we'd expect a normalization of that delivery, if you will, in the mix. So is that all right, Rajesh?

Yes. That's great.

And our next question comes from the line of Emily Biddulph of Credit Suisse.

I've got 2 questions, please. The first one, just an update on build cost would be great. Are you sort of seeing those soften into the second half? And sort of what's your expectation there? And then secondly, I appreciate the risk position is obviously considerably better than it was sort of this time last year. But at the same time, if you look at the sort of strength of sales rate and think, kind of, we need to see it sort of come off at some point because otherwise, we kind of risk getting into the same situation again where potentially we're selling sort of too far ahead and maybe we face customer service issues again. So is that potentially a limitation on sales rates at some point?

There's 2 questions there. I'll take the first one, and then Mike can do the build position one. I'll maybe just push a bit on it as well. But the first one in terms of build costs, as we've said before, most of our materials are fixed for this year. We have done 1 or 2 good deals to give our suppliers certainly in a longer period, which we're pleased with, which are producing quality improvement. We have open spec more than costs. So we took that advantage to get a better product for our customers. And in terms of labor, what we're really pleased with is the more labor available. What we haven't done is taken out as an opportunity to try and reduce our labor cost base at this stage by reducing unilateral labor reduction prices. But it's really good that we're getting extra labor because it means we can get to the build to meet the demand, what we're seeing at the moment. However, what we are seeing on new sites where we are tendering that the new -- the build cost element of it is coming in very competitive. So if this was to continue at these sort of numbers, then we would see some cost reduction as we move into '21. But a lot will depend upon what the market looks like. We have a strong demand out there and everyone's after all the subcontractors. And I imagine, it is normal. If it carries on at the moment that we are selling relatively better a lot of people I suppose would probably get a bit more advantage of that. So in real terms, there's no real change to build costs at the moment. Mike, on...

Yes, on the work in progress, I think it's that dynamic in terms of the interplay between our ability to sell and our ability to build, Emily. And I think that, yes, the sales rates are positive at this point. But as Dave says, there's a lot of uncertainty out there. I think other things could happen to change that rate of sale. And as always, what we do is we review this in each of our business, 31 house building businesses, every week. So we're reviewing our rate of build, we're reviewing our progress on-site and new releases, our sales rates, our pricing. We do it plot by plot, as you know, every week, on every site, in every business. So we'll continue to do that, and that will allow us to manage our build programs in tune with the sales activity that we're seeing. And given that we've got ourselves in such a strong position, I think we'll continue -- as we've always said, we'll continue to build through this period. And as Dave has already said, that's put us in a super strong position to meet demand as Help to Buy runs off without any complications to support our customers in the right way, but it also provides us with a great platform to continue to deliver those build programs. And again, going back to the lockdown period, the fact that our procurement teams and our technical commercial teams were still beavering away and securing materials and lining up subcontractors for the restart and beyond, the fact that we've got great continuity and strong activity is very attractive for the supply chain. So we've got great support, and I think we'll benefit from that moving forward.

And I think it's important. I think it's a point well made to be fair. But as a business, customer care is really important to us. And the key moving part in customer care is making sure the product is available to give reliable move-in dates and to give us time to finish into the quality the customer expect. No, for me, that's been a big moving part in our customer care improvement plan. And what that may means is that we do carry a bit more WIP in the ground, but I personally think that's a cost well worth paying. It wanes very, very quickly. We have a really strong balance sheet. And personally carrying a bit more WIP to ensure our customers get a product on time and to the quality to what they want is a cost worth paying. And if you take a step back, it's not really WIP that causes a problem for your balance sheet, it's land acquisitions at the wrong time and making too big a land acquisitions at the wrong time because they are with you for a long time, and they take a long time to unwind, which is why we are not calling the bottom of the land market at the moment, but I'm more than happy to continue to produce the WIP to support our customers. Does that make sense?

Yes. Absolutely.

Our next question comes from the line of Chris Millington of Numis.

A few quick ones for me, please, if I could. Can you just comment on what your outlook is for the site number profile? Just in light of that slightly more cautious land spend over the last 18 months or so? Second one is just really if there's been any regional variance. I presume Scotland's probably lagged in the numbers because of the later opening, but perhaps more on a run rate, I'm interested in. And then the final one is just around mortgage availability and down valuations and whether or not you're seeing any change there?

Okay. I'll pick up the first 2 and touch on the first one as well, then I'll let Mike pick it up. In terms of mortgage availability and down valuations, no, we've not seen a material problem. We've not experienced any real issues to get in mortgages for our customers. We're very aware of what's happening in the market with high loan-to-value mortgages, but it hasn't really manifested itself as a problem for the company yet. And we're not really seeing any down valuations. In terms of regional variances, now the whole market has been pretty uniform, even Scotland, where we've been able to sell remotely. We're doing well. Obviously, we haven't been able to build the same there because we're only just getting back. But in terms of regional variance, the market is very, very strong. And in terms of outlook, I think we've benefited in terms of what our people been aware, as Mike said earlier. So our site profile, we believe we're in a decent position for outlets. And we are being careful what we've bought and what we are buying and what our criteria is aimed at ensuring that we do have a decent site profile for half 2 this year and which is already secured, and for half 1 '21, obviously, we've done the work and looked at that, and we feel in a comfortable position. But Mike, do you want to provide a bit more color?

Yes. I think that's a decent summary. I think that -- Chris, as you know, it's a dynamic situation insofar as how long do your sites last, it's subject to the rate of sale. So we've got a very strong pipeline of sites coming towards us that are conditional, subject to contract, outstanding conditions of various sorts. We manage those very carefully, as you know, and construct our contracts to purchase in a way that we do maximize our flexibility to manage changing conditions. So as Dave's indicated, we've got a very strong base at the moment. We've got a lot of flexibility and choices in terms of managing the cycle and our commitments, future commitments to buy. And as I think Dave has already said, we don't need to do a bad deal because we've got a very strong network at the moment. We've got an excellent high-quality land bank that puts us in a great position as a product of our -- the work that's been done over the last 10 years or so. So we're fortunate in that regard. But it's about managing the cycle and making sure that we've got this flexibility to make sure that we -- when we do press the button to acquire a site, we see -- we've got the proper risk-adjusted returns, as Dave's already said. And at this point, as you expected to say, we'd want a higher level of return for commitment because, obviously, there's a lot of uncertainty, particularly on price. That's the elephant in the room, I guess. In the pricing, yes, it continues to be firm in our experience. But who knows? As Dave's already said, we don't know what's around the corner. So we do need to be quite cautious. But we'll stick to our playbook if...

And our criteria obviously looks to mitigate that risk you described, Chris, that is a point well made. However, without causing us a long-term problem, it's not hard to work on what that solution is. But that's in our criteria. And that's what some of the states we're looking at. So we're very aware of that issue that we need to protect our outlet numbers, and we have a strategy and a criteria that deals with that. Is that all right, Chris?

Yes. Just to push you a little bit further. If we do see the rate normalize back to previous levels, can -- your outlook partly to stay flat over the foreseeable future?

Yes, I think so. I mean we've got to -- through the first half of this year, we had average outlets of around 340 as a number. And I think that, as Dave has already said, we've got good visibility in terms of the near -- next 12, 18 months, which gives us a lot of flexibility. So we'd expect -- we ended that period about 335. So it may tickle back a little bit. But again, it's dependent on sales rates.

It's in our gift-in effect. It depends which contracts we want to buy. We've given ourselves that optionality. And it is important to point out as well, in the event that the market was much stronger and our company network is the largest in the industry, we have 31 operating companies across the whole of the country. That gives us the opportunity in a scenario where there is an upside to take more advantage of it than anybody else and increase our volume on the upside. Obviously, if it's -- if the market remains stable, then we'll pick and choose which bits of land we want to buy according to our criteria. And if the market drops, then we'll be a lot more selective again which contracts we want to buy. It's really in our gift, and that's well positioned the business to give ourselves the options, and we're not going to press the button until it becomes clearer where we look come the autumn, and January becomes clearer. The key is to give yourself options and never back yourself in a corner where you have to do something that you don't want to do.

And our next question comes from the line of Will Jones at Redburn.

Three from me, please, if I could? The first was just -- or I guess, around Help to Buy, you've mentioned it a few times on the call. Just wondering, I guess, in that last 6-week period, has the percentage of your reservations from Help to Buy changed dramatically given the impending changes, I guess, at the end of the year? And with that in mind, obviously, we heard about stamp duty yesterday, but we didn't hear anything specifically on Help to Buy. Is there any message kind of circulating around the industry from government around any adjustment or not to that suggested change next year in terms of home business being able to use the scheme? You sound quite categoric in your thinking of planning, but it will definitely change at the start to next year. So any additional thoughts there would be great. Second one was around net cash. I guess, pretty similar half year position to the full year position when we look back, no dividends in the first half, so free cash basically pretty neutral for the 6-month period, which is a good outcome, clearly in the circumstances. But I guess, when we think in the second half, higher volume coming through, it doesn't sound like you're going to be out there spending a huge amount on land. So would it be fair to say all else equal on the dividends, that actually that cash balance should rise fairly sharply between here and December? And then the last one maybe is just since we got the last voting formally, we have had the announcement of Dave's successor over the next Chief Executive coming in from the end of the year. Is there anything additional you can help us with on learning about that sort of process to hand over, any engagement that may have happened between yourselves and Dean, I guess, beyond what I assume is a Chairman-led process. Any flavor there would be fantastic.

Well, I'll deal with the first 2. I'll deal with the elephant in the room one very quickly in terms of my successor. We haven't got a firm date for when Dean is going to start yet. I've made myself available to the business consistently, which is why I gave early notice back in February. I've made myself available to the business as long as they need. The announcement was quite clear that's potentially to the end of the year. If something changes on that, we'll keep you informed, if Dean becomes available earlier. I haven't probably got anything to add else -- to add on that. In terms of Help to Buy, I think maybe I haven't been clear because I've never categorically said that I think the government will change Help to Buy. I've been slightly more reticent, and we've never advocated at all ever that Help to Buy should be extended because we believe where we've a bit of self-help in this. And as I said, we anticipated that this was going to happen as we came to the end with customers, which is why we put so much WIP in the ground at the start of the year, even earlier than that, to make sure we had the WIP ready for this anticipated increase in demand. And we're not aware of any customers who have got a material problem who will not be able to move in and hit the completion at a say an early date for December and with a completion by March. So I'm not advocating at all Help to Buy extension. And I think the government is doing exactly the right thing, wait and see what happens in the momentum in the market, wait and see what happens in coming Autumn period. If there's a bit of -- if it needs a bit of stimulus, they've still got that in the armory to use moving forward. In the meantime, we'll continue to build. We'll continue to make sure our customers are not put in a vulnerable position. We'll make sure as many houses are complete as possible to make sure that Help to Buy can be used by our customers. In the 6-week period, it's taken off a little bit, but not materially. There's a bit more there, but the market has been strong across the board. As you can see in the numbers, a 30% increase in the sales is really pleasantly surprising on the upside. So in terms of Help to Buy, that's clear. In terms of net cash, I think it's a really good observation. I think that's a point well made. And a good summary of the situation. Mike might add a bit color.

Yes. I think, well, your expectation is correct in that if we do get a similar position to the second half of last year, well, you can see the numbers because they're being reported to the second half of last year. So that gives you a good template to think about with the additional dynamic around the land side. We're not completely out of the market, as David has already mentioned, in terms of the -- a lot of potential to do 1 or 2 deals. So I don't think you should assume no un-spend. I think that would be wrong. But I think it's going to be highly selective on a proper risk-adjusted return basis according to our criteria. But I think your observation is right in that you would see a strengthening cash hold position in through the end of the year. Indeed, I think -- well, Dave and I think that July and August nearer term, it's going to be quite strong as well because, obviously, we have suffered delay in terms of legally completing a certain amount of volume, which out of necessity is being tipped into July and August. So I think that we're going to see a different cash profile. If you're to map it week by week, you're going to see a bit more of a bulge in summer in terms of cash return in -- back into the business because of that delayed completion. And given that we've got a strong base of GBP 830 million at June, that puts us in a -- the cash book is going to be, if you will, in a stronger position earlier through the second half because of that slight change to the normal profile. Is -- am I answering your question there, Will?

Absolutely. Yes. No, that's great.

And our next question comes from the line of Aynsley Lammin of Canaccord.

Just a couple of questions. First of all, on the reservations, up 30% last 6 weeks. I wonder if you could give a bit more color. Has that been progressively increased and improving week by week, though, obviously, as it has last week, would that be significantly higher than the 30%? Have you been doing anything in terms of changes in census, more part-exchange or anything to boost that number? And then second question, just on the cancellation rate, you say it's been in line with historical trends. Just interested in a bit of color there again, what's the pattern being like over, I guess, since the end of March? Has it been consistently in-line or has it kind of improved recently having spiked a bit post the lockdown?

Well, that's great, Ayn because I think they're both for Mike and so thanks for that.