Persimmon Plc (PSN) Earnings Call Transcript & Summary

Right. Good morning, everybody. It's 9:00, so I'll make a start. Thank you for joining us today. Thank you for joining Andrew and I've also got Liam here. As you know, Liam has taken over from Ian along with Chris. Unfortunately, Chris is on holiday. Well, fortunately, Chris is on the holiday for Chris. So he's a happy boy, but you can catch up with Liam and the rest of us later. So I'm pleased to be presenting a strong first half performance. These results again confirm that Persimmon is delivering growth today while building a larger, stronger and higher return business for the future. We've increased volumes, grown market share and strengthened our operational platform. And we've done that whilst also continuing to invest in land, outlets and capabilities that will support long-term value creation. Although the market remains challenging, we're responding from a position of strength, including with our typical self-help, and we remain confident in our medium-term ambitions. So let me start with the strategic context and highlights from the first half before handing over to Andrew. You've seen this slide before. Our strategy remains consistent, and it's clearly delivering. At its core, this is about building a business -- a differentiated business that can grow sustainably through the cycle. We have a high-quality land bank and a growing outlet platform, giving us the visibility and the ability to increase volumes over time. We have 3 strong and growing brands, each serving distinct customer segments and giving us more routes to more markets. And we made significant progress on build quality and customer service, strengthening our reputation and supporting sales. We continue to invest in innovation and our vertical integration that improves efficiency, resilience and cost control. Importantly, we're doing all of this with a strong balance sheet. That allows us to invest where and when returns are attractive while continuing to support sustainable shareholder returns. These strategic priorities are increasingly powerful in combination. They're driving performance today and they position us well for further growth. Indeed, they're designed to produce a 20% operating margin and ROCE in the medium term and underpin our focus on progressively improving returns over time. Now I'll turn to our first half performance, which has been strong in what has been a challenging market. The first half has shown clear operational progress. Our underlying PBT was up 3% to GBP 170 million, reflecting a margin impact from housing association mix, build cost inflation and an interest charge from our investment in growth. Average outlets in the period were 273, up from 272 last year, and I'll say more on this later. Net private weekly sales were 205, up 7%, with the net private sales rate, including bulk improving to 0.75. I'm really pleased that growth in outlets and sales rate have driven completions to 5,189, up 13%. As we say more about later, an increase in first-time buyers demonstrates the strength of our affordability. Importantly, we've maintained our 5-star status for 5 years. We secured detailed planning permission on over 6,100 plots, 118% of completions, which further strengthens our outlet pipeline. The Persimmon land bank remains a key asset. We have nearly 81,000 owned and controlled plots. In addition, our strategic land bank stands at around 82,000 plots. Our forward order book is GBP 1.9 billion with our private forward order book up 5%. I think that taken together, this is a very strong relative performance in the period. I'll now hand over to Andrew to take you through the numbers in detail and which are delivering growth.

Thank you, Dean. Good morning, everyone. So my key message for the first half year is simple. We've delivered volume-led profit growth in a challenging market while maintaining balance sheet discipline and making appropriate investments to support future returns. We've delivered strong growth in both volumes and operating profit, building on the period-on-period growth we've delivered since the beginning of 2024. New home completions are up 13% and up 22% over the last 3 years. Housing revenue is up to nearly GBP 1.5 billion and gross profit is up to GBP 267 million. Gross margin was lower at 18%, and that reflects the product mix, including a higher proportion of affordable homes, some higher incentives and cost pressures. And I expect continued margin pressure in the second half year and 2027, but the medium-term opportunities remain clear. Underlying operating profit increased 10% to GBP 189 million, driven by higher volumes and overhead discipline with operating margin at 12.8%. Underlying PBT is up 3%. And as we flagged in March, this includes increased interest costs because of lower cash balances and higher land creditors. And underlying EPS has increased 3% to 38p. Overall, this growth is driven by our strategy. Higher volumes, cost disciplines are supporting profit growth despite increased build costs and mix effects. Return on capital has also increased, up 10% to 11.3% with net assets per share up 3%. So I'll now explain the sales mix and the pricing that sit behind this performance. Really pleasingly, all 3 of our brands grew in the first half year. And this reflects a strong sales rate and an increased average number of outlets. Our total sales per week, including bulk, increased to 205. Of the new homes delivered, 4,261 were private, about 7% higher than last year. The split between Persimmon and Charles Church is shown on the slide, and there was particularly strong growth in Charles Church. Private completions included 548 bulk sales. That's fewer than in the first half of last year. We said previously that reservations in the build-to-rent market slowed in Q4 last year, and you can see the effect of that flowing through into first half year completions. But today, the build-to-rent market is open. We remain very engaged with it, and I expect home completions to increase in H2, assuming that, that market remains stable. 36% of private sales were to first-time buyers, and that actually becomes 41% of open market private sales. This is a really important market for us. Our homes are well positioned for first-time buyers because they are designed to be affordable. And I think it's particularly interesting, our sales to first-time buyers have grown 14% compared to H1 2025 at a time that Connell's research suggests the overall first-time buyer market has only grown by 1%. Finally, partnerships output to registered providers grew very strongly by 50% to 928 units, and that is 18% of total completions, and that's within the typical range. It was a bit lower in the first half last year. So as I said at the start, all 3 brands grew their volume in the first half and the fact that the brands are all at affordable prices is a strength in the current market. The blended ASP on completions in the period was up 1% and private ASP increased 3%. Pricing has been robust, particularly in the North of England and in Scotland, and we've increased average prices in both Persimmon and Charles Church. Our brands are deliberately focused at the value end of their respective markets with our Consumer Homes average selling price still well below the new build national average and over half of completions below GBP 300,000. Incentives on completions are around the 5% mark, similar to the second half of last year and a bit higher than the 4.5% we had in H1 2025. So let me show you now how our volume increase has driven up operating profit. You'll be aware that in the current market, margins have been coming under pressure across the industry, and we flagged this in March. Our strategy has driven volume growth and has increased operating profit. On a margin basis, the reduction from 13.1% to 12.8% includes the effect of more HA units in the mix, which diluted margin by about 40 bps. Beyond that, the benefits of volume leverage have helped offset cost pressures and increased incentives. Net operating expenses improved by GBP 12.5 million, and that includes lower admin costs despite the increased volume and some additional land sale profits. So our volume growth, tight overhead control has helped to mitigate the impact of cost increases in the period and has enabled us to report an increase in operating profit. And this also provides confidence for the future that we can deliver our medium-term margin and return ambitions. And we'll do this by continuing to drive volume leverage while progressing our other operational priorities, trading out of older, lower-margin sites, acquiring quality land to improve gross margin, improving the mix of delivery across our brands and strengthening vertical integration. As well as volume, another key driver of growth is our balance sheet. Our balance sheet continues to provide a strong platform to invest in growth. As we announced in March, we now have GBP 1 billion of committed bank facilities, very important in providing both resilience and growth opportunities. We had gearing at the end of June due to the payment of land creditors and investment in WIP for delivery in H2. Adjusted gearing, including land creditors, is 18%, and that's in the range that we indicated earlier in the year. We held GBP 168 million of PX stock at the end of June. That is lower than at the start of the year and almost exactly the same as this time last year. Net debt is GBP 165 million, and I expect our year-end net cash to be in line with our previous guidance. Net assets are up 4% since this time last year and net assets per share of 37p higher than this time last year. And I'm pleased that return on capital is also higher than this time last year. Our net assets are up partly, as I say, because of the repayment of our land creditors. So I'll now cover our investment in land in a bit more detail. There's 2 key points. Firstly, our strong balance sheet and our clear strategy is allowing us to continue to pursue land opportunities in a disciplined way. And secondly, our land bank will provide the opportunity for us to continue to grow outlets and grow the business. In the period, the owned and controlled land bank reduced by 4,000 units with fewer new sites acquired in Q2. But taken together with the increased plots in the strategic land bank, we've gone forward in the period overall. Land cost to anticipated revenue stayed similar to last year. The embedded site margin is slightly down due to the increased build costs that we're factoring in. But as Dean will come on to, we are working hard to mitigate this. We're on site at most of the schemes in the lower-margin categories and over 60% of our sites are above the 27% embedded margin, which is why our margin will begin to recover as we trade through the older lower-margin sites. I'll now cover our progress on building remediation. This work is important, and we're continuing to make progress. At 30th of June, we were on site or completed 79% of known developments. We've assessed all our known developments and 95% of these are now tendered. We continue to make progress. We've completed about GBP 24 million worth of work in the period, bringing total work to date to over GBP 200 million. We'll spend as close to GBP 100 million as we can this year, and we're continuing to actively pursue recoveries from the supply chain. Our closing provision is GBP 206 million, and that's GBP 20 million lower than at the start of the year. But this remains complex works. And as I've always said, there remains cost risk on all of these sites until they are completed. But as this work concludes, we'll generate more free cash for the business and capital allocations for the group, and you can see that on our cash flow bridge. Net debt at 30th of June was GBP 165 million. We're continuing to invest where we see attractive returns while maintaining a strong balance sheet and significant liquidity. The movement in cash since December reflects disciplined investment to support growth in 2026 and in 2027, including investment in WIP for H2 delivery. Land creditors have reduced GBP 132 million, that reflects the deferred payment terms that we entered into over the last year or so. And interest costs have increased, as I've already referred to. And to the right-hand side is our capital allocation choice, and we spent GBP 24 million on building remediation, as I've just said. And in H1, our new land commitment was actually lower than our land utilization, partly reflecting that extra discipline in the second quarter. I expect us to continue to invest in new land through the second half year, and I expect year-end cash to be in line with previous guidance. Our capital allocation policy is designed to create shareholder value. We generate returns greater than our cost of capital, and we are typically trading at a premium to or around net asset value. This creates an opportunity to drive value by investing for growth. The structure of our capital allocation policy is largely unchanged. Firstly, we're maintaining a strong balance sheet while prioritizing dealing with building safety remediation. Secondly, we're investing in the business to deliver our growth objectives, and we assume disciplined replenishment of land with additional land investment where market conditions support it. Thirdly, we're paying a sustainable dividend, well covered by profits. Today, we've declared an interim dividend of 20p, and we set our annual capital returns at a minimum of 60p, which is currently all paid as dividends. And fourthly, we think that in the medium term, as growth is delivered and remediation spend reduces, we will generate excess cash, and we retain the flexibility to deploy this excess cash depending on market conditions at the time by investing into more growth where returns are attractive or into additional shareholder returns or a combination of both. And those additional shareholder returns might be a share buyback rather than as dividend. We've delivered a strong first half performance in challenging market conditions with volume growth, profit growth and disciplined investment. Assuming that conditions remain stable, our full year guidance is similar to what we have said previously. We now expect to deliver growth in the full year to around 12,500 units. That's the top end of our previous guidance. Inflation, of course, remains embedded in build costs on older sites. And because average sites last 4 or 5 years, this will continue to influence margins until those sites unwind from the portfolio. And that cost pressure is now also affected by the Middle East conflict. And as Dean will come to, we are taking action to mitigate that impact. Assuming that we achieve our volume guidance, I expect underlying profit before tax to be in line with current expectations. And I'm reiterating our previous guidance on net cash, which means that adjusted gearing at year-end could still be around 20%. The rest of the guidance on the slide is similar to what we gave in March. So to summarize, Persimmon is growing volumes and profits. We're mitigating near-term margin headwinds. We're maintaining balance sheet discipline, and we are investing in land that supports medium-term returns. Thank you. I'll hand back to Dean.

Thank you, Andrew. The financial performance Andrew has taken you through reinforces the core investment message. Growth is being delivered now and the drivers of future value creation are becoming increasingly visible. This slide brings our story together, and it will show why we're confident in the medium-term growth opportunity for Persimmon. As you can see, our strategy is delivering growth with completions up 13% in the first half. Having significantly invested in our strategy over recent years, our focus is increasingly on converting those investments into improved returns. Our land and planning pipeline gives us visibility of outlet growth and margin improvement. Our 3 brands are giving us more routes to market and better use of land, thereby improving returns. Our quality and customer service improvements support sustainable sales momentum. And our vertical integration and innovation continues to give us a structural advantage on efficiency and cost control, again, underpinning margins. Plus a carefully managed balance sheet enables this disciplined investment whilst also supporting returns to shareholders. Taken together, these 5 value drivers support our confidence in Persimmon's ability to grow volumes and improve both margins and returns. Our land investment and planning performance are clear examples of this platform delivering, so I'll turn to them now. Inevitably, market conditions have affected industry-wide land investment in the period, but we've pursued attractive opportunities by focusing on value, cost discipline and improved payment terms. The strength of our land position remains the most important driver of future growth. We continue to replenish and improve the quality of our pipeline, supporting our visibility of outlet growth and margins and capital returns for years ahead. Our strategy has been working as we've driven growth in both completions and outlets in recent years. When combined with our improving sales rates, this has helped us gain market share. Our expanding outlet network continues. We're on track to open 100 outlets this year, and we remain on course to achieve our short-term target of at least 300 outlets. Our planning performance continues to support this growth and improved outlet visibility. In the period, we secured detailed planning on 6,123 plots, 118% of completions, which is 21% more than last year. As the graph shows, detailed planning permissions have consistently outpaced completions over the last 3 years. Our strategic land bank remains a crucial asset because it provides optionality, supports future outlet growth and typically delivers higher margins. So I'm really pleased that we've added around 6,000 potential plots in the period right across the country. We've also strengthened our capabilities, including through the acquisition of the promoter Endurance Estates in June. Focused in the East of England, this complements our previous Lone Star acquisition. Including these 2 promoters, our strategic land bank has around 93,000 plots. I'll now turn to our 3 brand strategy, which is an increasingly important driver of growth and resilience. I want to show how our 3 brand strategy strengthens returns by giving us broader market reach, better use of land and more resilience through the cycle. Each brand has a clear market position. Persimmon remains our core growth engine, efficient to build and affordable to own. Charles Church gives us a premium proposition, supporting margin expansion. And Westbury adds a capital-efficient route to driving volume and returns growth. These complementary market positions are translating into market share gains with completions growing across all 3 brands. Persimmon is up 7%, Charles Church up 26% and Westbury up 22% in the period. The key point is that this isn't just about having more brands. It's about using complementary brands to access more routes to market. Charles Church is building momentum through more operating and dual brand sites, whilst Westbury expands our reach into additional RP and BTR partnerships. Collectively, the 3 brands increase land efficiency, broaden customer reach, improve sales resilience and support stronger returns, which is why they're central to our medium-term ambitions for margin increase, ROCE improvement and sustainable value creation. The same discipline applies to quality and service. As you'll see, sustained standards are essential to customer trust, pricing resilience and the delivery of our growth ambitions. Quality and service are now firmly embedded in the group and have seen sustained improvement. We made a commitment to this, and we've delivered. We maintained our 5-star HBF rating for the fifth year running, and both Persimmon Homes and Charles Church remain rated excellent on Trustpilot at 4.6 stars. Our construction quality review score has improved further. As the slide shows, our Trustpilot CQR and reported item scores have all improved significantly over recent years. The really important point is that we are growing volumes whilst also maintaining high standards. We're investing to embed this further. The Charles Church Way and the Westbury Way have been developed to embed our excellence processes. They're tailored to the specific needs of the relevant segments and build on the clear success of the Persimmon Way. Sales and customer care training alongside frequent mystery shopping is also driving up standards. Quality and service are central to the customer proposition. And as I've consistently said, they also support efficiency to build right first time every time. That brings me to build efficiency. Vertical integration remains a key differentiator for Persimmon. As you can see from the chart, it supports our leading build cost efficiency as highlighted in the recent Phoenix analysis. Our deepening vertical integration provides supply and margin resilience, all particularly important in the current market. In the first half, Brickworks delivered 31 million bricks, up 13% on the year. Tileworks delivered 5.6 million tiles. And Space4 delivered a 30% increase in timber frame products with roof trust delivery now commenced. We are prioritizing AI investment where we -- where it can make the biggest difference to operational efficiency and performance. Early areas of focus are land appraisal, a new CRM system and commercial cost controls. Persimmon has always been an early adopter of innovation, and this is another example of that. Innovation and vertical integration are helping us build faster, improve consistency, reduce cost and strengthen resilience. That combination is central to protecting margins while we grow volumes, and it provides a platform for sustained competitive advantage, as does, I believe, our self-help strategy. You'll be very familiar with the principal market challenges the industry is facing. I want to take you through how we're managing them proactively, taking very positive actions to protect margins and cash and continue our growth. As ever, our self-help strategy. The first action is on cost inflation. As we've highlighted today, we estimate a cost wind of approximately GBP 40 million to GBP 50 million over the next 18 months, principally from the Middle East conflict, but we're not standing still. We have comprehensive reviews underway across house types, procurement, overheads, value engineering and build programs. And we're leveraging our scale and vertical integration to offset these pressures wherever possible. We estimate we've already identified savings to mitigate at least half of the impact with further work ongoing. By 2028, we believe we can offset the costs, enhancing Persimmon's relative affordability and cost efficiency. Whilst mortgage affordability remains a challenge for some customers, demand for well-priced, high-quality homes remains resilient. Our affordable price points, sales and marketing investment, disciplined incentive use and innovative first-time buyer support has helped drive demand. A 14% growth in first-time buyer sales in the period shows the strength of our approach. Our strong land position and nationwide footprint, diversified customer base through our 3 brand strategy and flexible operating model means we're able to respond nimbly to ongoing market constraints. Our strong forward order book is evidence of that. As is the fact we delivered a 22% increase in completions and a 24% growth in underlying operating profit over the last 3 years. Our strategy is working. Maintaining our momentum in planning and outlet growth expands our nationwide platform. Our sustained planning approval success helps underpin future outlet growth, overcoming planning barriers. We've increased outlets by 6% over the last 2.5 years against an industry-wide decline and whilst we've been increasing completions. The strength of our land bank, strategic land holdings and planning performance provides us with confidence in the long-term growth trajectory of the business. Building safety remains a priority. As Andrew has shown, we've continued to make good progress with the vast majority of known developments now tendered and a significant proportion either on-site or completed. At the same time, we continue to pursue opportunities to recover costs. Finally, as we grow, maintaining quality and customer service standards is nonnegotiable. The improvements we've made over recent years are now embedded within the business, and we remain committed to ensuring that growth, efficiency and value creation are delivered without compromising customer experience. Whilst these risks are real and require active management, we're responding to them from a position of strength. We have a strong balance sheet, a high-quality land pipeline, growing outlets, 3 complementary brands and increasingly differentiated operational capabilities. Whilst external factors may influence the pace of progress from time to time, they do not change our confidence in the strategy or our medium-term ambitions of 20% operating margin and ROCE. Once again, Persimmon is recognizing a problem and proactively addressing it. Our self-help strategy positions us well to both mitigate risk and capture opportunities. And this is reflected in our current trading position. Our total forward order book is strong at GBP 1.9 billion, up 3% by value. Our private sales rate, including bulk in the last 5 weeks is up 6% to 0.72. Reflecting a slight softening in the market, the private sales rate, excluding bulk over the last 5 weeks is down to 0.59. But we responded to this, both through our recently launched summer marketing campaign and with an uptick in BTR sales. Taken together, this means our private forward order book is up 5% by value to GBP 1.3 billion. ASP in the private order book is up 3%. The private book is now around 8% sold for the year. And our affordable order book is GBP 600 million, fully secured for the year. This strong position means that assuming no material change in market conditions, we expect to deliver 12,500 homes this year. This is the top end of our previous guidance. Turning now to the conclusion. Today's results demonstrate that we're delivering growth in a challenging market while continuing to strengthen our differentiated platform, and that's really encouraging. We've improved volumes, grown market share and increased profit whilst continuing to invest in the foundations of future value creation. Assuming no material changes to market conditions, we expect to deliver an underlying profit before tax in line with consensus. We're clear-eyed about the challenges ahead, working through embedded land bank inflation, affordability pressures, industry cost inflation and regulatory demands will continue to require disciplined management. But as I've said, we're responding proactively and from a position of strength. Our sustained focus on self-help and medium-term strategic drivers of growth is delivery. Replenishing our land pipeline at higher margins, planning momentum, growing outlet base, 3 complementary brands and differentiated vertical integration capabilities provide us with competitive advantages that are difficult to replicate. Our efficiency program, including our review of house types, will help mitigate the current cost pressures as much as possible in the short term while extending our affordability and efficiency advantages in the medium term. While the pace of progress may vary, our direction of travel is unchanged. We remain focused on disciplined execution, sustainable growth, improving returns and delivering on our medium-term ambition of 20% operating margin and ROCE. Our identifiable and improving operational drivers underpin our confidence, better gross margins, increasing scale and faster asset turns, volume growth and overhead leverage, better sales mix, capital-efficient growth and vertical integration strengthening cost competitiveness. In short, we're managing today's risks, investing in tomorrow's growth platform and remaining disciplined on returns. That combination underpins our confidence in creating a strong framework for medium-term value creation. So you'll be pleased to hear that's the end of the formal script. But I thought before I hand over to Q&A, I'll just offer some of my unscripted personal reflections on the results for the half year. So I'm really pleased we've contained 210 bps of hit to gross margin caused by mix, incentives and build cost inflation to less than the impact of the HA mix because of operational leverage. Our strat land, coupled with our promoters now stands at 93,000 high-quality blocks. We explicitly acknowledge our cost hit from the Middle East in 2027, but we're looking to solve it. Our route to higher margins and returns isn't about improving market assumptions alone. It's a combination of outlet growth, stronger mix, planning conversions, capital efficiency and structural cost advantages, all of which I believe we've delivered on in H1. We cannot control the market, but we can control the quality of the platform we're building, and that gives us confidence in the direction of travel. So I think we're delivering today as a result of the decisions we have taken in recent years. We're about self-help, not help to buy. And I think the strategy is working. Thank you.

Allison from Bank of America. Just one question from my side. So I think you mentioned there are some weaker inquiries in July and the sales rate softened a little bit. Is it mostly due to seasonality or something else? Should we be concerned about that?

So I think there's a combination of things going on in July, some of which for us are macro, some of which are a bit micro. So was it the heat? Was it the football? Is it mortgage rates? Was sentiment impacted by politics? I think maybe all of the above. The micro point for us is that we're in transition in outlets at the moment. If you sell at the pace we've been selling, inevitably some are closing and some are opening. So that slows sales rates a bit. But I think the July slowdown was small. I don't think it's anything to get rattled about. And as you can see from the results, actually, the forward book is up at the end of it. So I wouldn't read too much into it at this point in time.

Zaim Beekawa, JPMorgan. I've got 3. The first is just on the build cost inflation expectations. I presume a lot of the price increases that have come through have been in the form of fuel surcharges. So if we are to paint a bit of a more optimistic picture on the conflict and that falls away, what do you think that number falls down to? Secondly, on AI, I think you mentioned the use cases there. Would you have a number in mind in terms of the financial impact you could see or expect to see? And then thirdly, just on the Charles Church gross margins. I think we can see in Appendix 3, it's come down about 340 bps. Maybe just some explanation as to why that is.

Okay. Thank you. The action we're taking on embedded inflation, I mean, look, there is already a degree of embedded inflation in build stock, right? So that is happening. That is coming through. But as I said in the presentation, we're taking a lot of action to deal with it. If it all goes away, happy days, right? Because we're in the best possible place. I think necessity is the mother of all inventions, and it's caused us to take a really hard look at what we're doing. And there's a lot of work going on, and I'm excited by the opportunity. My point about it being not -- as it currently stands, we don't know whether it's going to be fully offset in -- with the work we're doing yet in 2027. But the reason why we point to 2028 is because we're working on a new house type range for Persimmon, which is really driving optimal performance. Inevitably, that won't be fully implemented by next year because we've got to work it through the cycle, the planning cycle. But I think there's opportunity there. So could it be beaten? Yes. You tell me whether the war is over or not. I think there's one man who certainly doesn't know. He's not sat on this side of the Atlantic. But look, we're recognizing it, and we're dealing with it. And I think what it does do because you're right, we are dealing with it like others, I think, as surcharges. We're just getting ahead of it. So if it does -- if and when it does fall away, I think we'll be in an even stronger position. I think that's really important for our brands because it is so much about affordability at our price point. I don't see that changing anytime soon. So ultimately, in a perverse way, I think I can see Persimmon benefiting from this unforeseen set of consequences this year. So I am quite excited by that. It's too early to call the AI impact yet. What I suppose I really do think -- I mean, there's obviously the back office stuff that finance will be doing, but I think it will improve the quality of our performance, whether that's in production, in land buying, in marketing, there will be efficiencies there. I think we already employ some of those efficiencies, certainly on the marketing side. I can't quantify it yet. But as I said in my presentation, we do want to be leaders in that area. We do want to be early adopters. On Charles Church mix, I wouldn't read -- it's mixed. I wouldn't read too much into it. And also, it's a game of small numbers, isn't it? So I just wouldn't read too much into it. The point remains it's a better margin than. One at the front here.

Will Jones from Rothschild & Co Redburn. Three, if I can, please. First, just around price. I think you mentioned incentives up 50 bps year-on-year in the first half. Could you help us understand within the plus 3 of the private ASP in the order book, whether there's a net gain for overall pricing within that? And just your thoughts on how you might need to approach pricing -- the thoughts on how you might need to approach pricing into autumn just as you see the market? The second was just if you could help us understand overheads maybe I think even ex the land sale gains, they look like they were down quite a bit year-on-year in H1. How should we think about the full year? And then you did, I think, reference the potential for overhead savings and yet you're still looking to grow quite strongly. So how we marry that up? And perhaps the last one for '27, you have talked about potential for some margin pressure understandable, but can we still assume your base case would be for volume growth off this higher level you exit '26 with?

Will, can you just repeat the third one again, sorry, on the volume.

Volume thoughts for next year.

Next year. Okay. So pricing and incentives. So yes, so look, in 2025, we saw a tick up of incentives. As I said, it was 4.5% in the first half year, and I think we were about 4.8% across the year as a whole. So you can see that ticked up. And then we've seen that 5% come through in the first half. That is all reflected in the order book. So the order book ASPs that you see, that is net of incentives. So you can see the -- that we are seeing good overall robust pricing, I think, across the piece. But incentives are an important part of the market at the moment. It's a market, as Dean has said a few times, which is governed by affordability. It's a market where we're having to work to drive sales, and we are -- that's part and parcel. But yes, I don't think there's anything particularly unusual, particularly significant in that. In terms of overheads, you're right. So our admin costs have come down. If you're looking at on the face of the P&L, don't forget the prior year includes the exceptional costs and the CMA settlement. But even if you strip that out, just the underlying overheads have also come down by a couple of million pounds in H1 compared to H1 last year. And we're very focused on keeping that as flat as we can as we go through this -- the full year compared to last year as well. So I think it comes again back to the strategy of driving volume, but driving that operating leverage is a really important part of what we're trying to do. We haven't given volume guidance yet for 2027. It's a little bit early. We'll see where the -- how the market is and coming out of the summer. I suppose what I would say is though that our strategy is one of driving outlet growth, driving volume growth through the 3 brands, and that is designed to drive the growth and the growth dropping through to profits and to returns. So that is what we're focused on, but we haven't given any explicit guidance yet for '27.

Aynsley Lammin from Investec. Just 2 for me actually on the land market. Just wondered if you could give us an update on how much easier the planning and land kind of start to become. Obviously, planning bill has been...

Can you repeat that?

On the planning, has it become easy? You've had the planning bill pass, local elections out of the way. Just interested to hear your view on that side of things. And then secondly, again, on the land market, are you more active? Have you increased your hurdle rates? Obviously, lots of peers have backed off in the land market. Just your view on that.

So look, I mean, what we would say for sure is that what the government has done at national planning level is incredibly helpful. However, the system on the ground is still gummed up for a host of reasons. What I would say is I think that the penny has dropped in government, and that is a good thing. The creation of the accelerator sites now looking at smaller sites is going to help the whole industry. And it's very much focused on the here and now. I think when the government a few years back, embarked on this, it was very focused on thinking in terms of a 10-year horizon. So they create policy now and we'll be happy that maybe in the next parliament, it would deliver benefits in the next parliament. I don't think they think that now. And as a result of that, the creation of these new task force, these focus groups on accelerator sites, I believe, will begin to build momentum. And it's quite amusing for us to watch, to be honest with you, because with MLC really for the first time themselves having to deal with local planning committees, I think they're finding that a revelation. So we can only gain from that experience. So I think that's a good thing. As I said in my speech, inevitably, the land market slowed in the first half. We absolutely were focused on getting costs right and where we bought, I believe we have. So that's margin enhancing. So we've been very disciplined. We've negotiated hard. Some we won, some we haven't won yet. So where we said no, we've seen some landowners say, well, goodbye or au revoir. And some have said, goodbye and come back the next day. So let's see. We will continue to engage in the land market. It is quiet, but there's still plenty of interesting opportunities out there. Shall we turn over to this side now?

Charlie Campbell at Stifel. Just a couple of questions. On the other income line, which is land sales, clearly move half-to-half. Should we expect to move year-to-year as well or not? And then secondly, offsetting sort of half the build cost inflation, how should we think of that splitting out between savings in cost of goods and overheads? Are you doing -- is that evenly split? Or is it more on one than the other? Just to help us think about kind of margin structure?

Yes. So on the other income line, yes, that increased GBP 10 million from GBP 6 million to GBP 16 million. I think last full year, it was GBP 21 million, GBP 22 million in total. I'd expect it to be in the GBP 20 million to GBP 30 million for the full year again. So I think we have the opportunity because we've been active in the land market to trade pieces of land where it's the right thing and it's the right deal to do. And we've been doing that, and that's very helpful that we can do that. But ultimately, the numbers are not that significant to the overall result. In terms of the mitigations, I think it's probably a bit early to tell you exactly where they'll come. I mean, clearly, there's a lot of it, Charlie, will come through gross margin through the cost, whether that's around design, house type specifications and so on. Clearly, we're looking hard, as Dean said, across the whole business. And that's quite right, we should do. So we will see savings and efficiencies, I think, across the piece. But we'll come back with more detail on that later in the year and obviously the full year when we've done that work. But I think for me, the key thing, as Dean said, is it's almost irrespective of what happens to the inflation, these are the right things to do. So either they are helping to protect margin or they help to give us opportunity if cost pressures reduce. So these are good kind of no-regret actions that we'll be looking to take.

Glynis?

Glynis Johnson, Jefferies. 4 quite big picture ones actually probably. Firstly, the new housing type, can you give us any sort of granularity how much more profitable they could be? Or even just color, are they smaller? Are they more designed for what might be come in any future government program? Is it about the pallet of raw materials? What makes them more profitable? Second of all, you termed your 300 outlook for next year is short term. What's the medium term? Point 3 -- question 3, outgrowing the first-time buyer market, quite a big percentage outperformance. Why? Are you underpricing? Throw that one in just to get you railed up and answering the question. And lastly, your very first slide said pro housing government. Why do you view that to be the case at this point?

I'm not sure I caught all of your first question about house types, but I'm not going to give you much away because it's -- you'll see it when it comes, and I'm certainly not telling the competition. But I do think it will give -- it will reinforce Persimmon's edge, which I guess I think also explains your third question on first-time buyers. I don't think we're underpricing. I think we have got a highly attractive position point in that market. You can see we're earning increase in ASPs, and we're commanding good margins. So I don't think we are underpricing. I think that it's a highly attractive proposition for a first-time buyer and Persimmon has got that dead right. In terms of your second point, I'll answer that by saying our target is probably in a couple of years to try and get to 300. That's where we're aiming for. That -- as Andrew said to me the other day, that depends when you measure it because we might hit it one day and the next day we sold out on something else. So the multiple measurement points on outlets will determine all sorts of things. But the trajectory of travel is up, and we'd like to get there within the space of a couple of years. So I think that answers the short-term question. I do believe -- on the supply side, the government remains committed to its policy. And we do, as I said earlier, see MHCLG continuing to drive the supply side and improving planning. And with Matthew Pennycook now given a seat cabinet, I think that reinforces that point of view. I guess what lies behind your question is what about the demand side? Who knows? We're not, as I said, focused on Help to Buy. We're focused on self-help. Sam Cullen.