Persimmon Plc (PSN) Earnings Call Transcript & Summary

Hello, and welcome to the Persimmon 2021 Half Year Results Presentation. 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, Dean Finch, Chief Executive, to begin today's call. Thank you.

Thanks, Jess. Good morning, everybody. As usual, I'm joined by Mike, and I'm also joined by Martyn Clark. So hopefully, we're prepared for anything you're going to ask us. Can I just say, I'm sorry if you had difficulty accessing the webcast first thing this morning. We're still looking into the reasons why. Hopefully, you now have had a chance to have a look at it. However, maybe if I just start by picking out 1 or 2 key highlights, and then we can sort of open as usual to questions. So with that, I mean, what I would point to is, I think, look, it was a good first half. We are pleased with the performance. We have delivered, I think, a robust performance against the backdrop of COVID and Brexit. We saw completions of 7,406. But within that, we saw private completions of 6,104, which is about 2%, 2.5% up on 2019. The order book is strong. Again, we'll reference back to 2019 given all the toings and froings of 2020, which makes it a difficult year to compare to. But order book up 9% on 2019. Sales rates up 20% on 2019 as real strengths in the market we saw in the first half of the year. And I would point to the fact we're continuing to see that strength in the market. Obviously, we're beginning to see a more -- a return to a more normal season pattern, but nevertheless, I think we would all say that we're seeing maybe a stronger August in terms of sales rates than we would normally expect to see, which is obviously very pleasing. And I think it reflects that there is still strength in the demand, even though we're seeing some government stimulus coming out of the market. Particularly pleased to see the quality of the build in the first half, and I think we'll rightly expect that these are hiding factors, but we are now delivering these. And I'm really pleased and grateful to the team for their hard work and delivering what I believe is a good quality product. We've made very good progress in terms of additions to our land holdings in the first half of the year. And this really is across the breadth of the country from Scotland down to the south, east to west, strategic and spot, where Persimmon is able to continue to buy land well. We have a great team now strengthened by a group land team, and those disciplines remain very focused within Persimmon. As you maybe have picked up from Mike's presentation this morning, we've now got nearly 90,000 plots at cost to revenue of 11.9% compared to 12.4% at December '20. So really strong embedded margins there in the business, which continues to improve, and we're obviously delighted with that. And on top of that, look, we've got 25,500 plots under option and proceeding through planning and a further 13,700 plots controlled and allocated in local plans. So we're in very good shape. This -- the strength of demand has seen that we're something of a, I think, a victim of our own success. And so outlet numbers are a bit below average at the moment. In the first half, we saw outlet numbers of about 285. But as you've seen from the press release, we're opening 85 new outlets subject to planning in the second half of this year, and a further 85 new outlets are planned to be opened in the first half of next year. So that will take our average up. We'll be getting a bit ahead of 300 in the first half of next year, maybe 310, and that will continue to proceed during the course of next year on a fairly gentle growth path and then continuing into 2023. So there's really good momentum, I think, in the business. Much talk, of course, about build cost inflation, and of course, we're seeing that, but I think we're managing that very well. Pricing is positive -- net positive to the business. And on top of that, we're seeing that we're continuing to buy land well. And indeed, we've done some great deals in the first half, which puts us in a really good shape. In terms of completions, for the full year, we're expecting broadly a second half that will be similar, maybe slightly better, to the first half. And then next year, we're looking towards -- targeting back towards 2019 levels of performance, again, subject to planning. But the strength of the market is there for us, and we just need to get after the build and deliver it. Pleased to see an improvement in gross margin from H2 of last year at 30.8% to 30.9% in the first half of this year and continue to see improvements there as we look ahead. So overall, I think the business is in very solid shape. So with that, I'll open up to any questions for Mike and I. Thank you.

[Operator Instructions] And the first question comes from the line of Rajesh Patki from JPMorgan.

Dean, Mike, three for me, if you don't mind. The first one is on the outlets. You'd mentioned the H1 average was at 285. Can you help us with the exit rate for the first half on the outlets? Also, the 170 new additions, 85 in the second half of this year and 85 next, do you expect this is sufficient to get you towards what you'd set out as 350 target by next year? Or would you need further beyond this? The second question is on build cost inflation. If you can provide some more color on whether you've started to see any early signs of moderation on the material side and if there are any differences in trends by geography? And lastly, one on the land bank. The cost-to-revenue ratio has decreased while the gross margin remains unchanged. Is this just a rounding difference? Or are you looking at slightly more complex sites with a relatively higher proportion of build in there?

So I think the last point is just timing difference, isn't it? Because they're not delivered into production yet.

Yes. I mean I think on the cost to revenue, it's down to the mix of sites. And as Dean said, the timing, obviously, we're selling through sites all the time, bringing new outlets through. So there's always a different balance of land value to build cost -- development cost. So there's -- I think the key thing is that the analysis we provide of our own land in terms of the embedded margin. If you do the blended calc on that, Rajesh, you'll see that it's -- the gross margins are round about 33%, which is pretty much the same where it was in December and a year or 2 before that. So as Dean referenced in his opening comments, I think that we're in a really strong position in terms of the embedded quality of returns that we've got in that forward land bank, which obviously provides great visibility. Is that okay? So I've looked to the blended margin indication that we've provided in the slide deck rather than the cost of revenue percentage on the land bank. That's a little bit one dimensional, but it's still important, but -- and it's nice to see that continue to trend downwards.

I think on inflation, I mean, look, it's still pretty tight. We're dealing with material issues all of the time, but we are dealing with it. I think we're all expecting -- we're beginning to see some moderation of the pressure, but that's moderation of inflation. That doesn't mean prices are coming down, obviously. But maybe we could see our way to some potential calling off in the second half. But then we'll just have to see. And on outlets, we'll be picking up numbers during the course of the year. The average will be increasing towards maybe an exit rate of 300, 305 by the end of the year. Of course, it all depends on the strength of demand, doesn't it, as we see strong demand. Well, that consumes more of the outlets. But the point we're trying to emphasize is that we see really, really good visibility of good land opportunities. Disciplines remain in the business. Business is really focused on it. And we're able to, I think, compete in the markets that Persimmon are rightly interested in, and we'll see growth in those numbers during '22 and beyond. So it's kind of building momentum, really.

The next question comes from the line of Will Jones from Redburn.

Three as well for me, if you will, please. The first was just understanding the build cost ratio, I guess, within the first half, March, if that's okay, I think about a 40 bps slip in the recovery there compared to last year. And I guess all else equal, given the lift in revenues, you might have expected some help to that ratio because of the fixed cost component. So presumably, the balance that the other way is price versus cost on a 12-month view or is there anything else, I guess, in the mix just to be aware of? Appreciate we're talking small numbers there, though. Second one was just around, I guess, land buying needs, land buying intentions. 10,000 approved in the first half. And just as you, I guess, deliver on your growth agenda over the next kind of couple of years, is that a decent proxy, you think, for the run rate of around 10 per half? Or maybe you have a view on the land bank loan? How do you want to, I guess, answer that? And then the last one is really around -- I guess, around -- a question for Dean, just around management, if that's okay, because, I guess, since the July update, we've had news of Mike's retirement, I think, early next year. And I guess, at that point, that will complete some fairly big changes in senior -- in the senior management lineup over the last few years of the group. So I guess just wondering, a, any insights on the, I guess, succession program for Mike? And I guess, b, just I guess that personnel just below the top run, perhaps you could just give us some insights into how you see that get stability and continuity amongst those kind of key individuals?

Will, can I do that -- the build cost question first, if it's okay, in the order that you've asked the question? Yes. I mean, obviously, there's been a tickle up in recoveries there. Again, it comes down to the site mix to a degree. But I think we would point to the continued strong performance of the business in terms of achieving a consistent feedback from customer. But obviously, they are increasingly happy with the service and quality that's being delivered as characterized in the 8-week survey ratings that we're getting, which we referenced in the announcement. And obviously, that does require support. So we're continuing to invest in that area. But as we've said before, it's not a massive investment. This is incremental improvement. I think The Persimmon Way that, obviously, featured in the slide deck and in the announcement is at the heart of that. And it's really interesting to see how the benefits of the investment that we're making as part of implementing The Persimmon Way, for example, the quality inspection teams, how that starts to feed through, not just in the customer appreciation of the strength and control there, but actually, the payback in terms of cost improvement as we move forward over the next 2 or 3 years because we do firmly believe there is a return to be had from that investment that we're making in strength in site supervision, quality control and the improved tools that we're providing to the team. So I think all of that -- it's a bit of a longer answer, too. But just to bring life to the numbers, that little tickle up in build cost recovery does reflect that investment that is being made in the business. As I say, it's not a major issue in terms of turning the dial on the numbers, but I think the key thing to take away is that we do anticipate a return on that investment and continued focus in terms of reduced perhaps reworking on site and the need for levels of aftercare service. Dean, I don't know if you want to add anything?

Yes. I think Mike is spot on there. I mean, Mike -- and I now agree with him completely. I mean we are investing in the product, and we're seeing the benefit of that investment coming already. I think we -- I pointed to an improvement in gross margin from H2 of last year into H1 of this year, and we might see further progress. I also completely agree with Mike in terms of we will, in time, get a dividend back from building right first time as we improve the quality of the work we're doing. It really is helping on the ground, and it will lower cost of duplication. It will lower cost of remediation through time. And also, I think the value of the product will always be pricing a level, which makes our homes as affordable as possible to as many people as possible, but we'll also be recognizing there's a value in that. So long run, I'm optimistic. In terms of land buying, look, we remain disciplined. We want to grow the business. But first and foremost, relating back to what we've just said, it's about the quality of the profit, and we are very focused on the quality of the land we're buying and the margin of that land. And so first and foremost, that's what we focused on, but we do see an opportunity to return to strength. I think as we continue to develop our products, they're ideally suited to the market we see ourselves in now. There's a great deal of demand there. Persimmon is building a quality product, and we'll expand our capabilities to build 5-star homes, and that will enable us to grow more. So we'll be buying as we see those opportunities, and we've got ambitions for disciplined growth. In terms of management, well, obviously, look, all great things must come to an end. And Mike has given fantastically great and loyal service over many, many years. He's given a lifetime of service to Persimmon. And your share of price and the performance of the company really reflects that. So it's -- we're incredibly sorry to see him retiring, but I think...

I need a rest, Will.

We can entirely understand why he's doing that. And look, he's not gone yet. And we'll have a picture of him up in the boardroom. He will be staring down at us whenever we cock-up.

And look, I've got a hotline into the boardroom, Will.

Mike has drilled us all incredibly well and schooled us and the team around him incredibly well. There is great strength within Persimmon. We're not without diminishing in any way Mike's great and fantastic service to Persimmon and the strength of what he brings. The business is more than one man or one woman indeed. And we have a very strong finance function, and we have a very, very strong regional management function throughout the business. And you will see the benefits of that strength for years and years to come.

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

Dean, Mike, a couple of questions on my side. Firstly, on the recent demand trends because on the one hand, you seem to imply that the last few weeks have been as good as the spring. At the same time, you're talking of a more kind of normalized demand pattern more similar to 2019. So are you -- have you actually seen a softer summer, let's say? Or are things still going strong on the demand side? That's my first question. And the second question is on the capital return. I think your net cash position is as high as it's ever been at the end of June -- in the last few years. And it's great that you've already committed to the 235p, at least the regular payment plus the top-up, depending on market conditions. But we could start to make a case that the top-up payment could have upside relative to the 110p if you continue to operate in a strong environment like you are today and considering you seem to give a good message on the 2022 outlook. So any color there would be helpful.

Okay. Well, look, let me have a go at that, Arnaud, to begin with. I think, look, we saw eye-popping strength in the early spring, quite frankly. And as some of our sales rates, they softened a little bit towards end of June, early July. They're strengthening again now. For instance, we just had a very strong week. And I think it's -- this is much about availability and build as about anything else. There's nobody in the regional team that is saying anything to me about anything other than very strong demand. I mean, Martyn, do you want to...

No. It is very positive. And we're just trying to make sure that we don't sell too far ahead so that we go back to the problems that we've experienced before.

Yes. We're very focused on build quality. That's a strong control in the business. So look, the market is still very good. And I think -- I mean, obviously, there's this -- the external stimulus out there, but I think Persimmon has brilliantly positioned itself to be in an absolutely right place in the market for the times we're currently in, and we're taking full advantage of it. I think our net cash flow -- I mean I couldn't have guessed that this question might be coming our way today. And I've got to say, look, for me, I mean, I recognize the point entirely. But first and foremost, what I see in the balance sheet is we -- Persimmon has got -- and again, to give Mike his credit, a brilliant, I think, capital return policy and brilliant placing of the management -- of the business in terms of its financial strength. And we have a ferociously strong balance sheet. I completely recognize that. We want to grow in a disciplined way. We want to invest in work-in-progress. And the strength of the balance sheet for me says that first and foremost, with the promise we have at the moment, I think that underscores the dividend for the foreseeable future in almost any scenario. So what a strong place to be. I don't particularly want to meddle with that at the moment. Let's see what the future holds as opportunities present themselves to invest in more land, to give us great returns and to build more within the business. So wait and see, I think, is the answer on that one.

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

Gentlemen, I will continue with this. Can I just first ask about absenteeism? Whether it'd be the pandemic or holidays, just how is that impacting you at the moment? And how do you expect that to trend over the year. Next one, I just wanted to ask really was around the 9 months HBF score. And I know some people don't like looking at this for lots of different reasons, but perhaps you can give us a feel as to how that's trending because you've done a great job on the 8-week, but clearly that's a number we don't get officials on. And then the last one I just wanted to ask was about the general competitiveness of the land market. We've had quite a few of your peers talk about how it stepped up more recently. I mean is that proving to be a constraint for you on intake? Is that the thing which is stopping you growing the outlet number harder or the intake harder? Is it just getting the land at the right margins for you? So that are the three questions, please, gentlemen.

I think -- look, I mean, we've suffered from the pandemic like everybody else has done. And at times, it's been a bit sticky. And we have suffered from absenteeism. And to some extent, that has reflected in build performance. I mean, certainly, in the first couple of months of the year, when I recall speaking to you back in January, I mean, it was tough. It was very tough back then. We've got the situation right again March, April time, and build started to get ahead of sales. We have seen the pandemic affecting us in the summer months' holidays also. I think that's more of a general cycle, I would say, at the moment. Labor is tight at the moment. I do think we feel generally as a business that not quite sure why construction has been furloughed and maybe that should have come to an end sooner. However, we are where we are. And we anticipate that when furlough comes off later in the year, maybe some of the labor situations will ease in a bit. So yes, we're affected by all of those things. But as you can see, we are managing through it. On the 9 months, we made progress. We're about -- we're up over 10% year-on-year. And we've got ambitions to get ourselves back up to where we need to be on that. We do look at it on a regular basis. We're making really good progress. And obviously, there's a lag effect with the 9 months. So as you improve the 8 week, it necessarily over time improves the 9 months. And that is something we're seeing in the business. And look, we obviously have the new homes quality code coming in that we are going to register with and comply with. Standards are rising in the industry, and Persimmon will aim to be at the forefront of those standards as it is and as it needs to be. So we're going after it. In terms of competitiveness, I think, yes, people are right, although I read in the paper a whole raft of views about when is the right and wrong time to buy land. Persimmon has got a good strategy and is very disciplined. I know that sounds boring, but it's entirely right. And it's why it's got the margins it's got, which will continue for the foreseeable future. I think Persimmon's strength is, look, it can occupy parts of the market that others find harder to compete in just because of its scale, and that definitely helps Persimmon. And I think the outlet situation at the moment -- I mean we're not chasing volume. We're protecting the margin, protecting value. That's not going to change. And though we do see opportunities to continue to grow, and you'll see that growth coming through over the coming years. So hopefully, that answers your questions.

It does. Dean, are you willing to give a number on the 9-month HBF score?

We're just about 70 at the moment, around that at the moment. And we expect that will -- I'm pleased -- I'm very pleased with the progress we're making there. It's not where we wanted to be. We've still got much progress to make, but we're making that progress. And I'm confident in somebody asking that question in 6 months and 12 months' time, you will see continued progress.

The next question comes from the line of Glynis Johnson from Jefferies.

Gentlemen, I have three. I think they're all for Mike. So Dean, I think you can get to take a rest. And in terms of average selling price -- given the average selling price you put it in the half year, given what's in the order book, is there any guidance you can give us in terms of what we should be thinking about for the full year and into next year? So I'm particularly looking in terms of if the mix effect in terms of HA versus PD and how that might translate through? The second one is in terms of margins. I just wonder if you can maybe sort of give us a bit of tone on moving parts in terms of that plot cost to ASP in the land bank and also the gross margin in your -- embedded in your land that's owned? What has been the influence of house price inflation over build cost? And what has been the influence of the new land incoming? And then lastly, just in terms of the WIP buildup. You talked -- that's been talked about build is now ahead of sales, looking to invest in the WIP on sites. I wonder if you can talk about maybe how we should think about build equivalent units for the end of the year and what position you need in order to give you the completions for 2022 that you might be targeting? And also, just to be clear, when we're talking outlet, are we talking selling outlets? And does that differ substantially to sites which might be under construction but not yet selling?

Yes. Okay, Glynis. In the order that you asked, I can't give a guarantee on price. I wish I could. I think the -- as Dean referenced earlier, we've positioned the business what -- in what we think is very attractive locations at very attractive pricing. That's not to say that we don't expect some improvement because, obviously, the market at the moment is pretty supportive of achieving better value for the homes that we're delivering. And indeed, as you know, the improvement in activity in the secondhand market helps enormously in terms of generating greater confidence in terms of the clearing value of residential property, which obviously, in turn, helps the new build market in terms of its pricing and confidence around pricing, particularly in the eyes of the mortgage lenders. So I think that, that sets an environment that is supportive and continues to be supportive. Obviously, we've all seen the lenders coming in with higher LTV product. Obviously, the government has stepped into support market with stamp duty window, which has particularly supported the secondhand market, doesn't make a huge difference for ourselves but is beneficial overall. So I think the industry, and particularly, ourselves, we have been able to move our pricing forward. And we don't see, at this point in time, a reason to believe that, that trend is going to change anytime soon. So I think that it's a positive prognosis in terms of pricing. I can't guarantee obviously which units we're going to sell of which sites, which, as you know, every 6, 12 months, the sales mix dictates the average, but I think it is a positive prognosis. I think in terms of the overall mix PD, HA, I think that is an important point you touched on. We expect to return to a more normal mix of maybe 81%, 82% PD, the remainder HA. And just to remind you, last year, we did have a bit more HA in the mix. We got up to about 84% -- sorry, PD in the mix, which was a bit higher than normal. So when you're looking forward in terms of the overall pricing for the group, you just need to recount the 2020 base year on a normal sort of 82%, 18% mix to give you that overall average, which if you do, it's about just over 228,000 for the group as a whole. So that's the 2020 normalized sales mix base ASP that I would suggest you need to be thinking about in terms of your future years forecasting. I'm not going to give you the answer. I'll give you the moving parts, and you can obviously come up with your own answers. In terms of margins, it's great to see the continuing trend of reducing cost of revenue percentage, as Dean referenced earlier, down at 11.9%. Now that's as low as it's ever been for the group, which is fantastic. It's an indicator. That's not necessarily a proof perfect in terms of future margin expectation because, as we all know, the bigger the -- for example, if you've got a brownfield site with a lot of remediation, the land value can be very, very low. And it doesn't mean necessarily that the margin will be higher because you've got obviously all the extra costs of remediation, et cetera, to deal with. So it's a bit of a one-dimensional view of quality, but I think that it is important given that we're continuing to source our land from multiple sources as we usually do. So that trend is important. In terms of the margin, we do provide the overall analysis of what's embedded in our own plots in terms of the blob graph in the slide deck, as it's known, and that is as strong as ever, which is -- provides us with a great deal of confidence in terms of future delivery and reassurance around future returns. Yes, land recoveries have been a bit higher and through the income statement around the 14% mark, but that's just the sites in production at this point in time, which has been price consistent with the last sort of 12 months as sites continue through that sort of time frame. And incoming land margins, well, that -- you can see the embedded margins have been highly consistent. So that implies that our incoming margins are very, very similar to what we've seen over the last 2 or 3 years, which is fantastic. In terms of build, yes, having cramped -- the number of active outlets that we have has been a little bit cramped over the last 12 months given our management of market risk. We would continue to argue that we're not out of the woods yet. Yes, we've gone through a bit of a mini boom for the various reasons that, I think, are reasonably well understood. But obviously, there are challenges in front of us. So caution is the watch word. As Dean has already said, we continue to be selective. We have brought a lot of excellent land through -- into the business in the half year, a varying parcel size. But overall, slightly larger than perhaps would be the historical norm, which reflects the competitive landscape in land market that being touched on earlier. And the build, in terms of WIP, we hope to invest more in build, getting the outlets open. 85 for the next 6 months and another 85 for the first half of next year gives us a lot of confidence we'll be able to do that. We've got around about 40 sites under construction that have yet to go for sales release, which again bolsters that confidence. And indeed, we've got about a dozen sites where we're holding back further sales release so that construction can catch up a little with an eye on service levels, delivery dates and quality. So that active management of construction program is continuing, but we see great support there in terms of our build. And we expect to deliver strengthening EU numbers moving forward from the end of June this year as these outlets come through and as we continue to invest in the work. We expect -- obviously, Dean suggested that labor may become a little bit easier with the end of furlough. And hopefully, vaccine becomes -- or wins the day against the virus. So we're positive. I think it has been a difficult time for everybody in the industry, but we hope that, that's in the rearview mirror. We've got a lot of confidence about the future of the business over the next sort of 2 or 3 years given the visibility we have today. So I think we're pleased to be in the position we are.

Can I just clarify, the embedded margin in your owned land, the moving part of that to when you've last given the update, is that only the incoming land coming in and the completions going out? Or have you revised the underlying assumptions in terms of selling price and build cost on all of the sites that go into that market?

Yes. I mean what we do with our pro forma calculation is we try and keep it current. So what we try and do is provide -- if we were to deliver all those new homes -- 67,000 new homes or so today in one go, that's the sort of gross margin you would get out of it. But it's still stated on a reasonably cautious view. So it includes -- it's informed by our bimonthly valuation processes that, as you know, Glynis, is updated for current build cost issues in terms of cost pressures, but also some price growth in terms of the sites that we've currently got active that are part of that valuation process. But it does reflect a cautious view on pricing. It doesn't take us up to our current price points because we don't want to get in front of ourselves. So I think that we don't need to do that. We're very confident about the quality. And if we see a continuing -- or continuation in the market conditions we have, we're confident that over time, those margins will be delivered in a 6-month trading period or a 12-month trading period. So it's a cautious view of where we are, but we do try and keep it current in view of the challenges that the industry is wrestling with.

But in terms of that margin being relatively flat in the last update, is there a difference between the revision of the land that you owned previously and what margins have been there versus the incoming land? So is the incoming land being at the same margin as the underlying land bank?

Well, I think the balance of inflation, we are managing that well. And I think that's a very important point to touch on in the -- we're not just covering the on cost of the build cost inflation on a per unit basis. We're not just pound for pound in covering that build cost increase in terms of price increase because that would lead to margin dilution, yes? So what we're doing is we're saying that we're being successful in maintaining our margin rate by controlling our build cost in relation to the selling prices we're achieving. So we're very mindful that we want to protect the value that we deliver, as Dean mentioned earlier. And all the management teams are evaluating -- on the back of the bimonthly valuation routines what needs to be done, both in terms of cost management and pricing in the market. So there's a lot of intensity around that as you can imagine. And obviously, that reflects it through into the sites that are currently in production and delivering new homes within that margin outlook but also the sites that are currently under construction that aren't on first sales release within the owned land bank. And I think it's important to remember that every parcel of land where we've got a detailed planning consent is under construction. We don't sit on land, twiddling our thumbs. We crack on and get after the build. Time is money, and we're very keen to deliver the growth in new home output to meet the needs in the market.

I think, Glynis, investors should take great comfort and great heart from the policy of the land, first of all, that's in the land -- is in the land bank and the quality of the land we bought in the last 6 months because it's been really good. And the heart that I take from it is that, yes, half of that is strategic and half of that's the guys have been able to buy it on the open market. And you can -- there's great entertainment when we buy a land because the great battle there is internally between what we see as cost as we see as revenues that we can achieve at current pricing, and you can imagine the tension there is between those 2 forces. But we remain ruthlessly disciplined, and we think the quality of the business is as high as it's ever been.

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

I've got a couple of questions here. So first of all, I just wondered, you've given us guidance for build cost inflation between 4.5% and 5%. Just wondering if you could split that out between labor and materials? And whether labor is something we should be worrying about more? Obviously, you've made some comments about materials. And then secondly, just on first-time buyers. Clearly, first-time buyers of -- a lot of them have been helped by the kind of the pandemic and have been able to save faster than they have in the past and maybe get onto the housing ladder quicker. How are you seeing first-time buyers on the ground now? Is that still a very strong area? Any signs of that slowing at all just to get an idea of the strength of that side of the market?