Vistry Group PLC (BVHMY) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Vistry's Half Year Results for 2025. So I'm joined today by Tim Lawlor, Chief Financial Officer; and Stephen Teagle, Chief Executive, Partnerships and Regeneration. So the agenda, very quick introduction from myself. Over to Tim for the financials. The highlight of the day is going to be Stephen going through where we are with the markets. So hopefully, Stephen hasn't used all his energy chasing down the one taxi outside Paddington Station this morning, knocking out of the way all lots of old people, but we had to get here on time. So hopefully, Stephen is okay for that. I'll give an operational update and then an outlook. And of course, we'll take questions at the end. But we won't be just taking questions from the floor for the first time. We will also be taking questions from people watching on the TV for want of a better word. So the headlines. Delighted to say that the half year performance was very much in line with expectations. We are very confident, as you'll see as we go through the presentation that we are on track to deliver increasing profits for 2025 over and above 2024. And a good testament to that is the serious share buying I've done in the first 6 months of the year. Half year debt was down to GBP 293 million. We say significantly lower than expectations and putting that into some numbers, that's over GBP 100 million less than we were expecting. So a fantastic performance on that. We successfully completed refinancing on exactly the same terms with our 8 banks. Tim and the team did incredibly well there. And not to be underestimated, the banks, of course, did extensive due diligence on the company to do that. And that takes us out to April 2028. Excellent partnership and open market customer satisfaction. And as Stephen always reminds us, we're the only company -- well, we're the only national company anyway in the partnership space, but we're the only company that gets feedback from our housing association and local authority partners and both the private HBF scores 5 star, but we're also 5 star with our partners. The government's unprecedented GBP 39 billion affordable housing program provides a long-term level of funding and visibility. But just as importantly, the 10-year rent settlement, rent convergence and equal access to the building safety fund add to this funding capacity, and Stephen will be talking a lot about that during his section. So Vistry, as you all know, is uniquely positioned to maximize on this huge opportunity and play a key role in delivering the step-up to the much-needed affordable housing that this country so desperately needs. Tim?

Thanks, Greg. Good morning, everybody. So I've been encouraged by a number of people to speed through the finance slides, so we can get to the more exciting slides that Stephen is going to be presenting later. But as Pink Floyd once said, you can't have your pudding if you don't eat your meat. So on with the meat. So headlines of the group results. A lot of this is relatively old news. We reported a fairly detailed trading update at the start of July, and I'm very conscious that it's been 2 months since then. Next year, we're going to aim to get our reporting done in early August. So prepare your summer holiday schedules next year for an earlier announcement so we can crack on with the second half of the year without the distraction of a later results announcement. So the headlines in terms of the group results. As Greg said, it was a slower first half than we've had in prior years, but it was as expected. We've stabilized the business, and we've created the foundations for H2 delivery. So we retain the confidence in the delivery of the full year numbers after H1. Within the numbers, we've restated H1 '24 to reflect the South Division issues from last year. So the impact of that is a GBP 65 million impact to gross profit and to PBT from the numbers that we reported at this time last year. Revenue down 6% year-on-year, largely driven by Partner Funded volumes, which was impacted by the just expected uncertainties ahead of the spending review. Stephen will talk a bit more about that later. And our margins for the first half of the year were the same as the gross margins for the second half of last year at 6.7%, partly impacted -- the operating margin partly impacted by the lower volumes, so lower operating leverage, but also we had a higher proportion of low-margin sites in the first half of this year, and we expect in the second half, part of our margin recovery story will be that the proportion of higher-margin sites will increase as new margins come on stream and some of the older legacy sites starts to disappear. Point out the EPS position relative to the profit after tax position. So we're starting to see some of the benefit coming through from the buyback program. Since the start of January last year, we've spent over GBP 220 million on share buybacks. So that's starting to create a differential between year-on-year EPS movements and year-on-year profit movements of about 3% so far. And the final point I'll bring out from this slide is the net debt position. So as Greg mentioned, significantly ahead of where we expected to be at the half year and ahead of last year despite the fact that we opened with a significantly higher opening net debt position. So turning to revenue. Year-on-year volumes down 12%. As you can see from the table on the left that the biggest drop was in Partner Funded, again, due to the market uncertainty, but we're expecting that to recover back in the second half of the year. In terms of Open Market units, the market was pretty similar to last year. The drop in units year-on-year is more attributable to having a lower number of sales outlets in the first half than last year, and the sales outlets numbers are increasing again in the second half. Although the average selling price was up 3.7% year-on-year, that was largely due to mix factors. I don't think there was an underlying price movement in the Open Market. What we saw in Partner Funded was that ASP went up as a result of a higher proportion of southern-based delivery where prices are slightly higher in the South and the North. And in the Open Market, the mix change was more due to product mix. So slightly more larger houses being sold in the first half than the prior period. But I wouldn't read too much into that. That's probably a temporary fluctuation. The other thing to say on pricing is that the discounting and incentive levels were similar in the first half to the previous year of up to 5%. In terms of the mix within the business, Partner Funded was 73% of the units in the first half of the year. We expect that, that will change to be above 75% in the second half of the year. Within Partner Funded, there was a mix shift. So there was a lower proportion of PRS sales in the first half of the year than the previous half, and that was partly due to the large transaction that we did -- the large portfolio deal that we did in 2024, which didn't repeat in 2025. But having said that, going forward, we do think that there will be a slight shift in emphasis from PRS towards additional over the course of the next few months and maybe the next couple of years even because of the relative attractiveness of the additionality market, the affordable market compared to the PRS market. And again, Stephen will touch on that later. Working our way down through operating profit. As I said before, the H1 gross margin was consistent with H2 of last year. Build cost inflation is, as we previously reported it, low single digit, slightly higher on labor than on materials, but low single digit overall. We're not seeing any significant change there. Overheads is up in absolute terms from last year. There was some additional investment in assurance resources as part of enhancing our control environment. And there's also a slight increase from pay rises and national insurance contributions. So that margin increase from H1 to H2, which supports our higher growth in the second half of the year or higher profitability in the second half of the year, 3 main things that comes from: Number one, the new developments that were starting in the second half of the year that we'd expect to be at higher margins. Second, the affordable housing market is becoming more attractive, and we should expect to get better terms and more competition for our support. And the third is the operating leverage that comes from those higher volumes. Working our way all the way down to reported profits. So finance costs, we saw the benefit of lower interest rates. Average net debt went up slightly year-on-year, up to GBP 695 million from GBP 659 million last year. We expect the average net debt in the second half of the year to be slightly higher than the average net debt in the first half of the year because we're building in the third quarter and our income is more skewed towards the fourth quarter. But the average cost of debt fell as the interest rate cuts came through. That was offset by an unwind on discount of land creditors. So you know about this accounting funny, but we're still seeing the impact of the higher discounting as interest rates went up a couple of years ago, working its way through the land creditor system. So that should plateau soon, but that was a GBP 3.8 million impact for the half year. In terms of tax, we report an adjusted effective tax rate of 27.9%, but a reported tax rate of closer to 23%. The adjusted effective tax rate is effectively the corporation tax plus the RPDT, but we don't get hit with all of the RPDT because it doesn't apply to all of our business, in particular, the 100% Partner Funded stuff doesn't attract any RPDT. The exceptionals were up. The prime driver on that was the voluntary contribution we made to the CMA, which we reported back in July. Our contribution there was GBP 12.8 million of the GBP 100 million total across the 7 housebuilders. And so we're recording that as an exceptional item that is expected to be paid and settled in the second half of the year. And we've also got an incremental building safety cost of GBP 3.5 million, which I will come to now. So building safety, pretty as you were, we had a significant increase at the end of last year. In the first half of this year, there were a few buildings that were added, 7 buildings added in the first half of the year, more than offset by a good level of recoveries that we had from insurers and others in the first half of the year. So GBP 6.7 million of recoveries in the first half of the year, GBP 4.9 million of additions. We're making good progress working through the provision with 20 buildings completed and cash outflow in the first half of the year was GBP 18.3 million. We'd expect that in the second half, as we get on to more sites and really get momentum that the cash outflow will be up to GBP 40 million in the second half of the year. And that sort of run rate will probably continue into next year. In terms of the cash flow, so year-on-year performance, significant improvement year-on-year. So last year, we had a net cash outflow of GBP 233 million. And despite having GBP 40 million lower profit in the first half of the year, our net cash flow actually improved by GBP 120 million year-on-year. And you can see the constituent parts of the cash flow here. So first of all, WIP. Now we -- during the course of the year, we've implemented much tighter WIP controls, much to the chagrin of some of our site managers, but we are managing WIP extremely tightly. You'd always expect a seasonal increase in the first half of the year, probably more so than ever this year given the weighting of our second half delivery. So the GBP 99 million of WIP increase is largely driven by that seasonal trend. However, that masks some improvements made in the finished stock levels. So we've been targeting reducing our finished stock levels outside London, where it's a slightly different market and London is more constrained, more challenging sales environment. Outside London, our finished stock levels are down by GBP 46 million, which is more than half from where we were at the end of last year. So good progress there in releasing cash from stock. Land, Greg will cover land in more detail later. We're running down our land bank a little bit. There's a net GBP 20 million cash release from land. So land down by GBP 40 million, but we have reduced our land creditor balance by GBP 20 million as well in the first half of the year. In terms of payables and receivables, both payables and receivables are down. So we're collecting our cash faster in terms of the receivables. Payables is down partly due to lower levels of deferred income. The net investments in JVs causes a lot of head scratching when people start trying to reconcile to reported and statutory numbers. Statutory numbers are hugely confused by all of the technicalities of the form with which money moves between us and the joint ventures. But the substance of the cash movements for the joint ventures is this, that we put GBP 33 million of net cash into joint ventures, largely to fund WIP in the first half of the year. The form of that investment can take the form of operating, investing or financing flows, so it appears in different parts of the statutory cash flow, which causes, frankly, unnecessary headaches for everybody. I covered building safety, and the restructuring costs are as expected and net tax payments were GBP 10 million. Capital employed is very similar to this point last year, driven by the same sort of dynamics that we just looked at on the cash flow, so up on the year-end position, continuing to buy land selectively and increases will support the increases in WIP and JVs will support our second half delivery. As Greg mentioned, we had a very smooth process. We've got a high quality of banking teams that support us, some in the room today. We're very grateful for their support in running a very smooth process during the course of the second quarter to get the refinancing complete by the start of July. Everything on the same terms with the same banking group and the same shares. But the maturity has moved out, as you can see from the table here, out to April 28, which gives us a little bit more time to stabilize and to capture the opportunities that lie ahead in the affordable space. We've also got a couple of uncommitted facilities, the trade cycle loan and the money market line, which add GBP 125 million of facility. We tend to use those -- as I've explained before, we tend to use those to manage short-term cash fluctuations. You can ensure that we're not sitting with too much money effectively on deposits by using these facilities. And then finally, on this, the headroom against the covenants. So we've got significant levels of headroom against our covenants at the half year. The 3 covenants there are reported and explained in the RNS if you want more details. And last for me, capital allocation. So no change to the capital allocation policy. We're making good progress with our share buyback program, which we announced this time last year, the GBP 130 million, GBP 71 million of that has been spent. We expect to complete that program at some point in Q2 next year. We remain committed to shareholder distributions. It's a core part of our strategy. At the time of our results next year, we'll provide an update on our expectations for distributions in 2026. And that's it for me. Over to Stephen.

Good morning, everyone. Good to see you all, and thanks, Tim. I've never been introduced as a pudding before. It's very good. So right, an awful lot has happened since our last statement in our operating environment and our market. And I'm going to cover 4 key aspects, and I want to give you 4 key messages that demonstrate what a unique and compelling opportunity there is in the partnership space to contribute towards the government's delivery of housing and contribute to the value within the business. So I'm going to cover our market-leading position and how that's contributed to momentum in the first half despite the fact that it's been a subdued market. We're going to focus on those unprecedented, as Greg said, government commitments to housing investment and then look at an interpretation of how that will contribute and build capacity within the sector and allow us to deliver an increase in affordable housing and then finally, look at the impacts for Vistry, both in the near and the medium term. So looking at how our scale, which is the key thing here, has contributed towards delivery momentum. So you can see there, we are working with 156 partners. No one else is working with that range of partners in this space. And during that half year, we've transacted with 36 partners, more than one transaction with some of them, but 36 different partners, and that included 6 new partners, new partners who were PRS providers, new partners as housing associations and new partners who were local authorities. And Greg will be particularly pleased because one of them is from Wales. So that's good. That has helped us contribute towards having a forward sold position of 89% for the full year. But one of the real things that has helped us maintain momentum is our proximity to our partners, and our proximity to Homes England as a strategic partner within their program of delivery. We're the only listed housebuilder who is a strategic partner. We're 1 of 32, and that gives us proximity to partners, proximity to partners' capacity to be selective and continue to work and deliver. And when you look at all of our contracted position today, and this does include those schemes that are in the defects period, we're actually in contract on nearly 58,000 homes. That's a very, very significant number. And that scale is important. And as you can see from that map, we have managed to transact across all regions. So we're not having any regions where we are not very busy. And this graphic here gives some sense of that scale and our market position in the partnership space. And you can see there that we are 5x -- we're the only scalable national partnerships business, 5x the size of Keepmoat's output. This is affordable homes in a 12-month period. And you can see the relative market position. And that's really important because that allows us to work with our partners in an effective way in planning future developments. But it also has allowed us to quickly deploy funding as we receive it from the government. So we've already received an allocation from the government following the autumn statement last year, GBP 20 million, and that's been immediately deployed, immediately put on to site, immediately into contract with partners, generating new homes, generating employment and achieving exactly what the government wanted to achieve. And what we find is that early engagement with partners has helped us avoid having Section 106 problems. So unlike others, we are not going through clearing to place our Section 106s. We are able to work with our partners, put our Section 106 homes that are required under the planning system alongside the additionality that comes by applying grant, and that allows us to deliver and continue to deliver as a result of working with partners. So those assets of having framework relationships with our partners of an unrivaled position in terms of proximity to grant and our knowledge of the right product in the right place and having upstream conversations allows us to have the sort of testimonials that you can see on the right-hand side of that slide, which again is a circular contributes to our position. So despite the headwinds in the market, we're managing to maintain that momentum. But as a mixed tenure partnerships business, Open Market sales are obviously a key part of our business, absolutely fundamental. And we've been focusing on self-help during this period, how can we improve our sales activity. And so we've invested in a number of ways. You'll remember last time I talked about us introducing a contact center. This is the first point of contact for our customers. So they leave a digital signature. They are contacted within 24 hours, many of them within 4 hours to have a discussion about what sort of home they're looking for. We've got an internal in-house contact center now and that is now operational across the business. We've introduced training programs across the whole business, and that is now actively supporting the level of inquiries and the level of work that we're doing with our partners. And we've reviewed our customers, and we've reviewed our enablers. So we already sell a good number of shared equity homes. We already use all of the enablers that you'll see on our web page, but we've also introduced a key worker enabler, and we are in negotiations on a further shared equity product that we hope to bring to market over the next few months as well, really helpful in us engaging with customers during a period where affordability is difficult. And we've seen more mixed tenure sites coming through that have been designed as partnership site, and that's important in terms of the product mix and ensuring that we have that differentiation. And importantly, I hope within the next few months, some of you will be able to get out to our sites to have a look at our brand refresh. There's some excellent work that has taken place in looking at creating more brand definition between Bovis, Linden and Countryside. So we've got Countryside Homes. So we've got more brand differentiation, but also that will allow us to have incremental pricing points across a whole range of homes, and that will certainly support us in our future sales. So as Greg said, this is an unprecedented environment for us to be working in. We've seen an unprecedented government commitment to delivering homes. Yes, somebody said, it's a bazooka. It's an absolute huge impact on the marketplace. So why is it unprecedented? Let's deal with those 2 boxes on the outside for a moment. Firstly, never before has the government provided bridge finance. We asked for it as a sector. We said you're moving from one affordable homes program to another. We need some form of bridge finance. And the government on an unprecedented basis brought forward the Chancellor announced GBP 2 billion to bridge that gap. Never before have we seen that level of funding into affordable housing, GBP 39 billion over 10 years. That's a 69% increase year-on-year. But most importantly, it's a 10-year commitment. That is unprecedented. We've only seen 5-year commitments previously. So what we've now got is a view for a sensible, sustainable delivery program that we can engage our partners with and deliver, and that supports a whole range of aspects for our business. Also unprecedented is the announcement of the housing bank and the creation of the public financial institution. Now Homes England already offer and have a very successful investment team and investment division that is contributing and provides a range of products, guarantees and loans and equity placed into the market. But what the National Housing Bank will do is it will devolve powers to Homes England so that they are able to implement those initiatives, engage with the sector and support further leverage coming into the sector to deliver the homes. And it's expected that, that will deliver significantly 60,000 homes over the course of this parliament. So those are the 2 significant demand side elements. Why is it transformational? Well, that's where the central box here comes into play. It's transformational in terms of its impact on the capacity of partners. That combination of a 10-year rent settlement, so partners can put their rents up by CPI plus 1 over the next 10 years, together with rent convergence being implemented is really important. And I'll just explain what we mean by rent convergence. It's quite possible for 3 homes to be sat next to one another. Imagine a terrace of 3 homes. The home on the left is vacant. It's about to be let. It will be let at GBP 105. Next to that is a home which is currently let has been let for, say, 5 years at GBP 100. And on the right-hand side is a home that is let has been occupied for 15 years, that might be at GBP 80 rent. What rent convergence allows housing associations and local authorities to do is incrementally by charging either an extra GBP 1, an extra GBP 2 or an extra GBP 3, the government is out for consultation on that, increase the rents each week or increase the rents each year, but obviously, the impact is each week so that they reach this common level. Now the impact of that, if you were to take that over a 10-year period, at GBP 2, the expectation is that 87% of homes will have reached convergence within that period. So it puts back into the sector a considerable amount of capacity. That then contributes towards the ability of restoring capacity amongst our local authority and housing association partners, incrementally reinforcing their spending power. So a key measure for housing associations particularly, but also local authorities, is interest rate cover. It's a key measure, a key metric for the regulator, and it's a key measure for the credit agencies and to some extent, their lenders. And therefore, it is the thing that drives a lot of capacity within the sector. Now the combined impact of the rent settlement, rent convergence and access to building safety fund supports a growth in that from a median of 102% today over that period to 137% on a basis of a GBP 2 a week rent convergence. So it's a bit technical. This is a great work that's been done by Savills and the Chartered Institute of Housing, but it demonstrates how there is an improving position across the sector. And it's important to recognize this is sectoral. I know some of you like to look at the sector as a whole. From a Vistry perspective, of course, this is not a homogenous group of partners. Some of the partners we work with currently have interest rate cover 70%, 80%. Some of our partners have interest rate covers north of 150%. So it is very different across the country in different parts. It's particularly difficult in London. And that's why in London, rent convergence will disproportionately have a significant impact and will really put additional power into London Housing Associations. In fact, one of the CEOs of the London Housing Association came up with that phrase there saying it was an absolute game changer. The GBP 39 billion is great. CPI plus 1 for 10 years is great, but rent convergence when you've got really significant historically different rents makes a huge difference. So that is a key element of that contributing towards capacity. So how does that capacity get converted? And again, I'm thankful to Savills and Chartered Institute of Housing for doing some analysis here. This graphic combines housing associations and local authorities. And you can see quickly visually there the difference between increasing rents at the rate of GBP 1 a week to GBP 2 to GBP 3. So let's take that middle assumption of GBP 2. That could contribute depending upon your assumptions of how that is deployed between 43,000 and 60,000 additional homes. And when I say depending upon your assumptions, it depends upon the extent to which that additional capacity is spent on new build supply rather than investing in your existing stock. Savills and CIH understandably have taken a reasonably sensible and conservative view in terms of how much of that would contribute to new supply, but that's the sort of range that you get. And here's the rub of this. That has a disproportionate impact in the near term. So that's a 7-year graphic. So if you're increasing your rents and you know you're going to increase your rents, you have the ability to borrow against that, you have the ability to translate into new delivery. And that's why we can see that, that will start to come through fairly quickly during that first 7-year period. And for local authorities, some, not all, it will be a game changer for them because they will move from business plans that are in deficit to business plans that are in surplus. And we've got 2 or 3 situations across the country now where local authorities are saying to us, "We would like to talk to you about us giving you an offer for your affordable housing. You were going to go down that route with a registered provider, we'd like to talk to you directly and see if you'd work with us." So there is clearly a sense in which that is coming through already. And that capacity conversion is really importantly on top of the current spend for housing associations. So the current spend, despite the headwinds, the regulator reported GBP 14 billion being spent this year on new supply by registered providers. GBP 14 billion. A lot of that is committed. I think just over GBP 4 billion of it is not or wasn't at the end of June. So a significant amount of that is committed, but that gives you a sense of the scale. So this is on top of that current expenditure. So then how does that follow through to an overview of the market? What can we expect? So translating that policy to funding and what's importantly the time line. So if you take into account that additional grant program, if you take into account the additional capacity that I've just explained and you take into account political expectation, which is not listed on that slide, but is incredibly important, and you take into account the additional homes that are almost inevitably going to come through Section 106, I think you can see our market space grow from an average across the country of 55,000 affordable homes a year, if you look at the long-term run rate, that's about what it is, to 70,000 to 75,000 affordable homes delivered each year. Still nowhere near enough, still nowhere near enough to satisfy demand. You can look at the requirements for 90,000 social rented homes needed a year, let alone affordable homes as a whole. So that unfortunately does not tap into the full demand, but that gives a sense of a growing market and the opportunity that sits behind it. Now it needs all of those levers to be working, but that will start to deliver an increased market size. Now the time line set out there, the bit on the left, you don't need to concentrate out the rearview mirror. The important thing here is looking forward. So we would have hoped -- we haven't got it today, but we would hope that we'll know the outcome this month, possibly this week for a further bid that we put into Homes England for part of that -- the first allocations under that GBP 2 billion bridge. We're very hopeful that we will get that. We will be able to deploy that very quickly to start working with partners during the second half of the year. And that will really allow us to also have that conversation with partners about program delivery as we go into the prospectus. So we expect the prospectus to be issued by Homes England in October. That's not just important for us bidding for our own program. That's important for our partners who are bidding. Because don't forget, whilst it's great, we're a strategic partner and we gain grant directly, we work with partners who have their own grant to deploy. So there's the ability for us to deploy both and to be working with partners on delivery on both. And that prospectus, we expect to come out in October with bids submitted by the end of year with allocations in March '26. So that will really give us a burst as we go into '26. We're already talking about funding frameworks, which I'll come on to again in a moment with partners, but this will certainly support us in lifting what we're doing in '26 even further, which is great news. So what's the impact for Vistry? So in the near term, as I've said there, we're already seeing increased partner appetite in expectation of stepping up to deliver the government's agenda and in the response to the additional capacity that they can see coming down the line. It isn't uniform. It's absolutely key that you are working with partners who have that capacity. And we expect to be able to continue to deploy grant very quickly. We have a considerable number of plots that we've identified that have consent and will deliver starts before March '26. So we're very keen to be deploying grant on those and working with our partners. And we are very well-cited because of our performance as a strategic partner on our expectations of being successful in a future bid for the prospectus over the next 10 years. That's really important. If we have a 10-year program, and I don't yet know what's in the prospectus, but if there's an opportunity for us to not only receive funding during a 5-year period, but to have some confidence over a 10-year period, that will really support longer-term regeneration projects. It will really support what's happening in London with the long-term gestation working with the GLA as well. So we would hope through our delivery program in the medium term that we'll be able to secure even more funds and put our strategic assets into play. So a key element there is it gives us certainty, it gives us forward visibility for our manufacturing facility. It gives us the ability to be cost efficient in our transactions with partners by working within frameworks. And it also allows us to continue over the medium term, we would expect to work even more with government on placemaking and delivering at pace. And a great example of that, we were able to announce this week, which is the formation of Hestia, an investment joint venture with Homes England, where we're jointly committing GBP 150 million of equity in a structure that allows for that to be leveraged. So don't take GBP 150 million and divide it by plot values. That is a leveraged vehicle. And that will allow us to support delivery fairly quickly. It will allow us because of the scale of it to work with SMEs. We want to use it as a platform for diversifying the sector. And in fact, I think Adam said to me since we made the announcement, we've had a number of contacts, I don't know where Adam is -- we've had a number of contacts asking us if we would -- they would like to introduce themselves to us to work with us. Great. The rationale for us is relatively straightforward. It's set out there. But key to this is if you're the largest, leading partner in this sector, you not only have an opportunity, you have a responsibility. And it's that fusion of opportunity and responsibility, which will drive what we want to achieve with Hestia working with Homes England as our joint venture partner. And we already expect to submit to the Board for consideration opportunities that will deliver starts and some completions in 2026. And it's not our only joint venture. We're working with others already on frameworks. We're in advanced stages of negotiations on a number of frameworks, multisite deals that will allow us to work on a successive basis, investing in supply. And one of those, importantly, is institutional finance, and we expect that to be able to drive delivery of thousands of homes within London. And that will be really important, and we hope that we'll be able to announce that before too long. So in summary then, a unique and compelling opportunity for a Partnerships business in this space. We have never had an environment that is as positive as it is now since our pivot to a full Partnerships business, we have not had the best conditions to thrive as a Partnerships business, but we've been successful. Going forward, using our strategic assets, our relationship with our partners, our manufacturing capacity, our proximity to Homes England and our commitment to deliver responsibly puts us in an absolute fantastic position to generate more homes and support earnings growth going forward. Over to Greg.

Thanks, Stephen. Incredibly compelling. That's how I would summarize that. So operational update then. So the group's strategy is ideally placed to maximize the significant affordable housing strategy and the near-term market for the Open Market sales remains constrained. We don't see any particular catalyst that's going to make that better. So if you just take those 2 points and you go back to September '23 when we announced our new strategy, if somebody would have said the new government is going to come in and announce GBP 39 billion, bring forward GBP 2 billion, you're going to be signing a joint venture with Homes England, basically the government, I would have said, no, I'm not that bullish. What thing to come through following on from that strategy? It's absolutely fundamental and it underlines the move we've made, whether it's from the private housing side or where the market is going, which is very much Partnerships. So we expect to see, and this is important, we are seeing already, as Stephen said, stronger growth in the affordable delivery in the near term, resulting in a higher percentage of Partner Funded going forward. So we originally said in the strategy 65-35, 65% Partner, 35% Open Market. We haven't achieved that in '23 nor '24, nor were we in '25. So we think going forward, it probably will stay. We'll amend our strategy to be more like 75-25, even potentially 80-20. And importantly, of that Partner Funded area, we are expecting to see a drop-off in the PRS. So we'll still do PRS, but it will be less because the affordable market and the amount of funding coming through and the activity levels we're already seeing are getting stronger. So the Partner Funded will come more from affordable than from PRS going forward. The group's current land buying and development pipeline reflects these near-term expectations and completely underpin our robust statement on 40% return on capital and a 12% operating margin with our focus on land values, which we're seeing, higher affordable ASPs, build cost efficiency and capital release. So first of all, I'm not sure that's the best photograph of me, but you can tell it's a recent one because, as you can imagine, October, November, December, January, February, March, April this year, there wasn't too much smiling going on. There's been an enormous amount of work done in this organization. And I'm pleased to say we're through that. There's smiles back on people's faces, and we can all now see the opportunity, and we're looking forward rather than looking back, an important point to say. The senior management team now, which has completely changed, are all Partnerships people. There is no housebuilding people at that level. The executive chairs all sit on the individual -- on the ELT, sorry. Individual reviews with me and other members of the ELT are taking place on a quarterly basis with every business unit Board. And the South Division, sorry, is completely now restructured. Tim talked about the increase in overhead. So tighter controls and assurance is now bedded in. We have an investment committee, which looks at all land opportunities in a much more organized way than before. All financing, pleased to say, reports through to Tim. A new group assurance commercial team has been established, which reviews all of our CVR monthly reporting. And we've got a system enhancement, which tracks what we call life of sight, all in place. So an enormous amount of work has been done over the last 12 months. Talking about land. So activity levels in the land market have stepped up over the last couple of months. So as you would have seen from the statement, 3,000 or just over 3,000 plots secured in the first half. We've secured 3,000 plots in the first 2 months of the second half. And would you believe we've got 20,000 plots at the moment with terms agreed. Securing larger mixed tenure sites, which form the backbone of our delivery is going to be where we are going forward, particularly, and there's a good example on the right-hand side there, which we announced the Rugeley Power Station or previous Rugeley Power Station. Land acquisitions with 100% presale are increasingly attractive given the market backdrop. So that's where we buy the land and flip it immediately to a local authority or a housing association for a decent margin, not using any cash. In fact, it's generating cash all the way through. The framework deal that Stephen has just talked about, Hestia, we won't make a more important individual announcement on for the next 5 years. That is absolutely huge, a joint venture with the government, government putting its trust in Vistry. And of course, we're already getting lots of phone calls, not just from SMEs, as Stephen said, from local authorities and housing associations, should we be doing the same. And the framework that Stephen made note to at the end of his presentation regarding London and the framework, that deal was actually signed last night. So that should be bringing thousands of homes into the capital. So we've got London, which is the GLA, of course, and Homes England pretty much covered. Vistry Works. Now this is fundamentally important to us. So our investment capacity from our 3 factories has the ability to construct 10,000 units per year. In addition, we're already manufacturing a good number of floor joists, cassettes and roof trusses. We're on track to deliver 4,500 timber frame units this year. We expect that to rise to over 6,000 next year. We've just launched in the last month a New Timber Frame Installer apprenticeship program because there is a lot of work going to be coming out from this. And frankly, there isn't enough people to do it at the present moment in time. So that's important. And one of the most important bits of this entire presentation is the Mauer brick cladding solution, which you can see there. This is at our East Midlands factory. So first thing to say is that is 3D computer-generated brick cladding. That whole thing was built there, those 2 semi-detached houses to water tight shell in 2 weeks. And because we are a Partnerships business, 50% less carbon than brick. Now if Mr. or Mrs. Smith buying an individual home, don't really go into that. Housing associations, Homes England, grant funding, et cetera, et cetera. This is a huge, huge player for us going forward. So much so, we're going to be the first of any of the other housebuilders that are actually going to be starting on site within the next month in Yorkshire, building 4 of these homes with this computer-generated brick for a very, very large housing association, having now just got LABC warranty approval. So this is huge for us again in this particular sector and will massively reduce our reliance on subcontractors, particularly bricklayers. And we expect to launch 10 more sites using this system during the course of 2026. And of course, timber frame, this sort of thing only works if you've got certainty. So if you're a pure housebuilder, it's all very good and you've got a big scheme of 1,000 homes. But if you don't know if you're going to sell them all and you don't know what the rate of sale is going to be, that factory is still going to be there and it's still going to be producing and still costing you. If you're Vistry and you've got 1,000 units and we're just going to build them, it really does come into itself because we've got the certainty of it. So therefore, we can actually get the benefits of those prelim savings through. So current trading. So as I've said, we're very confident of delivering a year-on-year increase in profits for full year '25 as we've been throughout the year. Of this, 89% of the Partner Funded sales for 2025 are forward sold. We've got a strong pipeline of Partner Funded H2 deals to be completed, which more than covers the balance. So we're currently looking at more than we actually need, and we're actually looking at which ones we want to do as opposed to last year trying to find and feather our way through to the period end. So we're in a pretty comfortable position on that front. The injection of grant funding for affordable homes, particularly the likes of Hestia and joint ventures will also support this delivery in the second half of the year. Sales and marketing, it's a tough and challenging market. I wouldn't say it's a disaster. It's at the bottom end of satisfactory, but we're doing all we can to generate sales and sales through the summer held up relatively well from a relatively low level, I must say. And the group's focus on cash performance, including the management of work in progress, has been transformed, and we are expecting a dramatic reduction in debt at the year-end. So I'm going to just finish and put it into my own words, the same slide that Stephen went through. Without doubt, we have a clear market-leading position. We're 5x bigger than any of our competitors and can scale up on that with, for instance, our timber frame Mauer brick capability. Unprecedented government commitments to housing funding. Stephen and I have been around for over 40 years in this industry, and we've never seen anything like it. And don't underestimate the pressure the government are putting on housing associations saying, "We've given you what you want with your rent settlement, your convergence, your access to the building safety fund, you best be getting on with giving us what we want," and that is getting on with building homes, particularly for affordable rent, which is actually happening in front of us. That step change in partner capacity, I don't think can be -- and I think it has been maybe by you guys, underestimated in the -- it's not just the GBP 39 billion, it's all about this 10-year rent settlement access to the building safety and convergence. Convergence is huge. I've had it a number of times from Chief Executive of Housing Associations. That's just as important to them as the GBP 39 billion. So please do not underestimate that. And that will, of course, add all that together, drive our earnings going forward. So we've got our numbers for '25. Consensus for '26 sees us going up by over 20%. The real step-up after that will come in 2027 as we start seeing this funding program starting to materialize, which it is in front of our eyes at the moment. So on that bullish front, we will take any questions. So we'll do from the floor first, and then we'll go on to the actual television as it were. Do you want to start as the nearest one -- with Will?

Will Jones from Rothschild & Co. Redburn. Just a few, I think, reasonably high level. But first one, just around that change in mix of sales, potentially the 35% Open Market becoming 25%. How do we square that, I suppose, with an unchanged longer-term operating margin view? I think the Open Market elements were at least on the gross margin doing a slightly higher.

We're starting to see an uptick in the Partner Funded margin, particularly with the greater amount we're doing in the affordable space as opposed to the PRS space. And all I can say on that is the land we've been buying pretty much since the start of this year throws off that margin. So a reduction, better prelims because you're building out quicker and less reliance on the Open Market, better subcontract prices as well.

And on that move as well from more additional and therefore, less PRS. Is that really about the positivity of the additional? Or do you think that the PRS market in its own right might become tougher in terms of terms?

No, I think the PRS market is there. It's needed. It's still operating. We're working with more PRS providers this year than we did last year, but a lot of them are going through their own funding, trying to get increases in funding. Their existing funding has finished to speak. But I think it's more to do with the amount of activity we're seeing from housing associations and local authorities at this precise moment in time. They're all being pushed by the government. They've all got these benefits, rent settlements that keep going on about, and they're all looking to get ahead of the game with regards to the GBP 37 billion program for the next 10 years. And as Stephen said, the GBP 2 billion, we're expecting a very good grant, which we should hear in the next few days as with our partners. They are already looking to spend that money and they'll spend that money in the second half of this year going into next year. So the activity levels from September 2023 when we announced our strategy, we knew -- absolutely knew that we pretty much come to the end of the '21-'26 affordable housing program. Pretty much all the money was spent. We knew that. We were happy with that. The change in strategy was for labor getting into power and hopefully, them coming up with something along the lines of we never thought it would be GBP 39 billion. So we have, for the last 18 months, been scrambling around trying to use our relationships and find money with housing associations pretty much where they've already spent it. And we've done incredibly well with that. '24 was very, very strong with PRS. '25 is less strong with PRS. We think it will be less strong going forward. And now our land teams and our affordable housing teams are now back to normal insofar as they're dealing with a new program. And I would very much hope that we will spend the biggest part of the GBP 39 billion or whatever it relates to the first 5 years of that in the next 3 years as it always has been with the '21-'26 and the program before that. So it's the uptick in affordable housing providers' appetite, which is making it harder for PRS at the same time as PRS have got their own issues with funding as well.

The last one, you mentioned the importance of political expectations. I just wondered in your conversations with Homes England and government, what are you saying to them you can do medium term around growth? And are their expectations of you realistic in the context of delivering that comfortably from your side?

Okay. So I'll pass that to Stephen because I used to be -- Stephen is seeing Steve Reed tomorrow to talk about all of that. So maybe you do that. I used to be called in, but I'm yesterday's man now. Stephen is the face of the business now. Go on, Stephen.

So we've been very open with Homes England about what we can provide and how quickly we can provide, which I think is the substance of your question. So we've shared with Homes England the quantity that we can provide over the next 6 to 9 months in terms of site starts. We're able to annotate that between schemes that we would do with partners directly. So they've already got their own funding and those that we would be seeking funding for to deliver ourselves. But as you can imagine, we're talking thousands of homes that we're able to -- consented sites -- consented plots -- consented sites that we are able to put into delivery by March '26 and throughout '26 as well. We've got that forward visibility of a program to deliver. Our program currently with Homes England is in excess of 3,000 homes. So that's what we've been delivering previously. What we're hopeful of is that when the prospectus is issued in October that this longer-term 5- and 10-year position will become clearer, not just for us, but for all bidders so that we can be looking at a longer-term delivery, which will really support that. But we're very open and Homes England are very aware of what we can deliver as are many of our partners.

Chris Millington at Deutsche. First one, Stephen, I wonder if you can help us on how the GBP 37 billion is going to land in timing. I think we've all struggled to understand the ramp-up of that. So that's the first one and perhaps when you think the cash will start flowing there. Next one, I think, maybe for Tim, is the phasing of these low-margin sites. Perhaps you could just put some numbers around that so we can understand the roll-off of that. And the last one is really about WIP release. You mentioned, Greg, that you expect a decent amount of WIP release by year-end. Perhaps you can give some detail. I'm going to throw in one last cheeky one. You mentioned about labor being in power about the sort of genesis for the change. They're not polling particularly well now. If we look forward 3 years, would that necessitate a change? Or do you think we're kind of on a road to affordable delivery regardless of government now?

I think we're -- the numbers -- we're nearly spending GBP 3 billion a year of taxpayers' money on temporary housing. So I think the numbers -- this isn't labor going down the road because they feel like it. This is labor going down the road, we've got an affordable housing crisis. So I think once it's in place, you never know, and I completely agree with regards to the polling and everything else. And some of the WhatsApps I'm getting at the moment, you couldn't possibly forward. But I would say that, yes, I think a new government would find it, if that was to happen, incredibly difficult looking at the numbers and the need to change things around, particularly once it's in place. Stephen, do you want to -- the GBP 37 billion...

Yes. And on that point, I would just say that you don't -- if you look back historically, there has been as many affordable homes being delivered under a conservative government as under labor government in actual fact. So the GBP 39 billion and when it's deployed, I wish I could give you the exact answer. But it's a judgment, isn't it, for all of us. And I've seen analysis where people have said, well, the Chancellor said GBP 4 billion in '29. So if you cast forward with inflation and eat up the GBP 39 billion and then cast back to next year, it's going to have a 2 in front of it. I don't buy that. I just simply do not agree with that. And that doesn't resonate with any of the discussions that I've had with government or civil service either. You would be more accurate in drawing a straight line across GBP 39 billion over 10 years. Again, that won't be right, of course. But my view is that there is absolutely no way that the government is going to see a dip in capital funding and grant funding to which would then moderate the market. They're going to want to grow from the position. So I would work on an extrapolation from a figure of GBP 3.3 billion and cascade the GBP 39 billion over 10 years from that point. That's what I would do. That's my assumption. But there's 2 other things to say. The first is we are dealing with something that is very opaque because what's happening in terms of the output, output and funding do not exactly marry and it's opaque because some of the output this year is coming from a program from '15 to '21. Some of the output this year is not just in the '21-'26 program. So what you've got is layered programs contributing to output in individual years. So it's very difficult to take that simple exercise and extrapolate that across. And I think that's the bit that we tend -- it's tempting to do that, but I think that isn't the true position. The true position is people are committing to an uptick in delivery, and you'll see that cascade across.

And Tim?

Yes. So we've done some analysis just on the low-margin sites in the first half of the year. Roughly, roughly, I would expect about 20% of those sites that were low margin in the first half of the year to complete in the second half of this year. Then something like 30% of them will go during the course of the following year. And the remaining 50% will be skewed more towards the front end of '27 and '28, but will disappear over time. But there will be some tail going out to sort of '29 and '30.

What proportion of the total are those low margin?

I would say it's something around 1/3 of the first half year, yes.

Aynsley?

I've just got 3 actually. Just interested, obviously, just coming out of summer, but your thoughts on the autumn selling season, a bit more color around kind of Open Market sales and how you expect that to trend into the autumn? And then second question, just obviously still got quite a lot to do in terms of build and output in the second half, how that feeds through to average net debt? Any guidance there, Tim, on reported end of year net debt and average net debt for the full year? And then just on planning, again, interested hear your thoughts how that's easy and are you seeing that better on the ground yet? I mean lots of the other housebuilders talk about frustration, it's slow to come through. Is it just easier for affordable homes, how that kind of dynamic plays out?

Okay. Do you want to take the question for you, Tim?

Yes. So in terms of the debt, our reported position at the end of the year is as it was. We expect it to be high double digits, that sort of level of net debt, so a significant reduction year-on-year at year-end. The profile within the second half of the year means that the income is slightly more -- Greg's getting a call coming through...

No. It's Stephen himself. He's making sure he's being recorded for all the good stuff he's saying.

So back to average debt. So the average debt in the second half will be dependent on the profile, particularly the timing of the partner deals, which tend to be more year-end loaded or Q4 loaded. We always see the second half average net debt slightly higher than the average in the first half because of the work in progress buildup during Q3 with the income in Q4. So I'd expect the second half average to be slightly higher than the first half average. Putting some numbers around that. So first half average was GBP 695 million. We probably see the second half the other side of GBP 700 million. So full year maybe slightly above GBP 700 million.

Okay. With the planning bit. Strategic land, getting strategic land through is just far more straightforward fact than it's probably ever been in my time. When you actually then get down into the local planning environment, some local authorities are listening to what the government is saying, we want a presumption to build as opposed to presumption not to build, but not all. And funnily enough, not all of the ones that don't are conservative. Some of them are still labor councils. But definitely, there is a trend that we're getting planning through even at local level quicker than before, but it's still not easy. There's still more work to do on it. And we can never put a number on it, but turning up for a meeting with the planners and leaders of councils with the housing association or even Homes England next year saying this is much needed with their own housing offices in the room. It's got to be more straightforward than just turning up as a pure housebuilder. So I think it's more straightforward, but still difficult for us at a local level. At a high level from a strategic land, it is definitely more straightforward, and we're seeing more land allocated. And let's not forget, we do have circa 70,000 plots in our strategic land bank still to come through. Stephen, do you want to just talk about the sales through the summer and what we're expecting?

Yes. Okay. So in terms of sales, I think you described the market as the sort of lower end of satisfactory, wouldn't you, in terms of it being constrained by affordability, interest rates coming down has helped. But affordability remains a real constraint on the market. The use of enablers is really important to us. So about 22% of our sales involve a form of enabler. So that includes shared ownership, includes deposit assist. As I said earlier, hopefully, that will be supported by key workers. So there's a range of things that we're using in order to propel those sales. But the market remains constrained, constrained by affordability, and it's very similar as you will have heard from the other housebuilders in terms of what we need as an injection into the marketplace. Particularly, I favor a form of do-it-yourself shared ownership as a product that could be used across the whole industry to support sales for first-time buyers, particularly. I think if we saw that, that would be a really positive step.

But our forecast for the year, I mean, we've just continued what we did in July and August, even though September and first half of October -- because we'll be pulling up stumps on private sales middle of October, week 42. We've assumed pretty much the same run as we've had during the summer period. So we went into the summer period with below satisfactory. And funnily enough, in my experience, when you haven't got a very good market, you don't get those seasonal variances because people are buying because they need to buy. So whether it's July or whether it's April, doesn't really matter. So I'm pleased to say for what it's worth that July and August, we didn't really see a drop-off that you would normally see in a more stronger market. So it was okay. But we're assuming -- we're not assuming the next 6 weeks are a huge uptick within our year-end forecast, anything but.

Lewis Roxburgh, Goodbody. Two questions, please. Just on the pickup in the Partnerships activity coming through in the second half. Just interested as to whether you're starting to see that now with the June spending review ahead of us? Or are you expecting more in the last quarter with the budget and top of affordable coming through? Maybe some color on the other drivers there and whether the sort of H2 swing is a one-off in Partnerships or more structural? And then the second question is a little bit long term and philosophical. Just your view on your long-term outlook of your place in the affordable market. At the moment, you're obviously a clear leader. But given the supply stimulus, the grant funding, the rent settlement and conversion, the other pieces you mentioned, do you expect the bidding environment to become more aggressive? And I guess, how do you aim to keep that position and match that scale? I guess, it amounts to how do you balance growth with maintaining those sort of quality margins and risk frameworks.

I'll take the latter one, but Stephen will obviously take the -- where we are with affordable. But if you read a lot of the analyst notes out there, despite what Stephen has just said, this isn't a compelling opportunity. So why would other housebuilders want to come into this as far as I'm concerned, no-brainer of a sector. So the facts are we fully expect and they are other housebuilders have bid to be a strategic partner. We're 100% aware of it. They haven't got there yet, but that doesn't mean they won't going forward. We'll be very happy maintaining our market share as opposed to growing it going forward. That's what our numbers assume and we couldn't possibly do it all. So there will have to be some other national entries into the space, and we would welcome that. We do feel a little bit alienated in the housebuilding market at the moment, whereby models are all based on housebuilding. And we're not housebuilding, we're partnerships. It's very, very difficult. So the more housebuilders that come into this, and I think 1 or 2 probably will at the end of the day, it will make it more compelling that you guys, if I can use that expression, maybe have to change your modeling and outlook a little bit. Stephen, on the first point?

Yes. I think your question was about affordable activity over the next 6 months. So there are 2 or 3 things that are driving that. The first is the commitments that housing associations, registered providers and some local authorities have already made to delivery. So we have a pipeline of over 100 deals where we have partners identified and we are moving forward with heads of terms ready to bring those forward to conclusion to convert. In addition to that, partners are receiving top-up funding. So I mentioned our top-up funding. It's not just us. So partners, not all of them are strategic partners. As I said, only 30 or so are strategic partners. Some of them have to bid for funds on a scheme-by-scheme basis. So they'll be putting up an opportunity in Swindon or Middlesbrough, and they will be seeking grant funding confirmation within a 4- or 6-week period to then proceed. So there's top-up funding being deployed in that way in this second half. There is also an element in that partners still have funds that they haven't deployed within the existing program. Now some of that may be taken from them and redeployed where it can be delivered. That goes to the earlier question, we've got opportunities to deliver it. But some of it may just be that those partners need to have only just got planning and they're able to go forward. And then the third thing that we're seeing, which is very positive for next year is we're seeing partners wanting to, as Greg said, commit now with a view that it's going to give them a head start in delivery into the new program. So we're discussing a number of schemes with partners, and we have converted a number of schemes with partners, which are designed for delivery over the next year. So all of that is giving us impetus in the second half. Will there be even more momentum in '26, Q1 and Q2? Absolutely, but we're seeing considerable momentum now in terms of moving towards the end of this year as people want to get ahead and also spend that money.

And we've also seen since probably June -- before June, the program is -- I'm not sure what that's about. The program is spent, and we spent all of our grant. Since June, we're absolutely noticing what I would call the local authority roadworks when you get to February and March, an awful lot of roadworks seems to take place as they're out there spending that money. Local authority -- sorry, housing associations are in the same place. Actually, we haven't spent it all or actually, we've just been let down on this particular scheme over there. So we are benefiting a little bit now, which we can see for our year-end with housing associations realizing for whatever reason, they've got some money to spend because nobody, including Vistry, wants to not spend their '21-'26 program because that will impact -- they will give the housing -- Homes England will give the money to the best performers, particularly with this government where they're absolutely focused on delivery, delivery, delivery. So if -- where are we, Stephen, in the 32 strategic partners? So the money will go to those that perform and less will go to those that don't. So everyone is desperate to make sure they're in a good position to get the benefit of this GBP 37 billion. Clyde?

Clyde Lewis at Peel Hunt. I think I've got 4, apologies. Vistry Works, you have talked about a further plant in the past. What are your thoughts around that at the moment?

We're probably -- we've got 10,000 capacity. We're looking at just over 6,000 -- between 6,000 and 7,000 for next year. So I would say we're going to go into probably '27, but we will still need a full factory, but '27.

London, a couple of times has come up has been the worst market. It's a fairly consistent message across the whole sector. Do you think the GLA and the Mayor are doing enough at the moment to sort things out here? I mean, obviously, the building safety regulators probably caused more of a bottleneck here, but interested to hear your comments as to how quickly do you think London may get back to a more normal rate?

Do you want to take that, Stephen? We've signed a big framework last night, which will help the council.

Yes. So I think it's not just the Mayor. I think there's a sector-wide and government and the Mayoral responsibility for delivery weighs on us all. I mean we absolutely have a disastrous problem in London in terms of supply. I think in '23, '24, I did some analysis that showed that Vistry was responsible for something like 46% of all the affordable housing starts in that year, but that come down from 20-odd thousand down to about 3,000. So it was a huge fall, but it just shows the scale of the challenge that exists in London for supply. The GLA will be allocated some of that GBP 39 billion, and you know how that will play out. So we'll start to see what that allocation is as part of the prospectus when it's issued in October. Homes England only operate outside London. GLA are responsible within London. We are actively talking to the GLA about initiatives to bring future grant to bear. But the problem that has been in London, as I mentioned in the slides, has been the capacity of partners. So there has not been a number of housing associations available to transact even if the grant had been there because of the headwinds they've got in investing in their stock. So what I'd expect to happen is that registered providers as they grow that capacity will now be able to step up. So I think you will see a change over the next 12 months. Most schemes in London have a longer gestation period, and they're not going to deliver completions in the lifetime of this government as quickly as the government will want. So if I was the government spending GBP 1 and wanting a completion, you're going to get it more quickly outside London than in London generally. So that needs to be factored in, in how that's deployed. But we've developed the initiative that Greg has mentioned that will allow us to work with essentially a for-profit registered provider and institutional finance to deliver capacity into London, and that will help us deliver. A lot of our work in London recently has been with local authorities and some PRS providers, but a lot of it has been with local authorities. So I think it's got to change. It's not going to change immediately, but I think over the next 12 months, you will see that capacity start to return.

But we got 3 business units in London. We had 3 business units 18 months ago. We did the restructure. There's still 3 business units, not because of what was going to happen in the last 18 months. Without doubt, London has got the acutest affordable housing issue in the country. At some point, that has got to change. It is pretty much a breaking point. Am I not right, Stephen, that local authorities in London are spending GBP 4 million a day on hotels. I mean it's huge sums of money. So it's got to change. And we've deliberately kept 3 strong businesses in London to capitalize on that.

Third one was on the housing association on the RP sort of interest cover chart that you put up, which is fascinating to see. And obviously, the rent conversion is driving the revenue. What's happening on their funding costs because it's hard for us to see, but that's the other side of that equation.

That is another headwind, absolutely. I mean I think housing associations are faced with an increase in their borrowing costs as well, and that factors into their viabilities. So that has also been a constraint on capacity. It's not just been spending it on stock. But that has been taken into account those projections that Savills did and CIH have done, they've taken into assumptions on a mix of affordable housing, so social rent as well as affordable and shared ownership on the mix that we expect in the prospectus. They factored in the cost of funds into housing associations. 55%, I think, of the housing association debt is long term. So it's already there at the historic interest rates. And there's uncommitted facilities that housing associations have as well. Yes, they're very strong. They've got strong liquidity at the moment. But they have factored in that extra cost of borrowing in those assumptions that we've seen in the interest rate projections.

The last one, I suppose, was around the guidance for the full year and the unchanged view on it. And you've talked about, again, a big pipeline. What -- if there's a best and a worst-case outcome, how wide could that be for this year, I suppose, in particular? And what are the -- if everything drops, clearly, you're going to get to the top. But if you don't get to the top, what are the reasons, why, I suppose, for not getting there?

As I said in the presentation, we've got more offers and more opportunities than we are forecasting for the year. So a disaster can always happen. We absolutely can't see that happening. And I feel much happier that these offers are from housing associations who are -- these are people we've been working with for years and years and years. And once they basically say they'll do it, they will. A PRS provider is not averse to a little chip or something at the end of the day, a housing association, pretty straight. That's the offer. That's what we're going to do, and that's what the time lines we'll do it in. So I think the quality of the offers that we've got on more than enough for the year-end are important. With regards to the gulf, I don't see the benefit of making too much more than guidance. I would rather go into the following year. So I'm very confident, sat here, we all are, including Tim, of getting to the numbers that are out there for this year when we look at the facts as are our '25 business units. So we're confident that, yes, you would want a small beat, but I don't think we would be looking for a big beat. We'd be looking for more of a great start to 2026.

Yes. Maybe just -- [indiscernible] speaking for me. But I reiterate it's not just Greg. We remain confident. The single biggest risk is timing. So it's not a question of if, it's more a question of when and there will be some things outside our control. But at the moment, we're managing it very closely. We have much greater visibility on what needs to happen between now and the end of the year than we had at the same time last year. We're managing it extremely tightly. So that's what gives us the confidence that we're going to deliver those numbers by the end of the year.

I thought we were going to get away with nothing from Glynis, but there we go.

Glynis Johnson, Jefferies. I'm not even going to send them to you, Greg. Tim -- actually, they're really target ones. You talked about the mix influence on price. I wasn't quite sure, are you guiding that mix upside comes back next year? Or are you guiding that that's the new norm, so to speak? And then you talked about finished stock in London. You sort of excluded it from your stock. What is the finished stock in London? And more importantly, I guess, where do you anticipate it going? Is it still going to rise through the second half?

Okay. So 3 things. In terms of the ASP, I think it will return pretty much to where it was before. I mean the move is relatively small. It's only 3%. So is it going to go up 1% or 2%? We don't know. I've said before, the ASP is a fairly meaningless number internally because we look at each individual site. It's only when we go under this sort of forum, we aggregate it all up and look at average selling prices. The fundamentals are that the underlying pricing is about the same. In terms of the finished stock in London, the reason why we look at that differently is because they're more apartment-based buildings. So you end up with lumpier type stock available. And I'm not going to give an absolute quantum, partly because I might not get the number right, but also because I don't really want to get into breaking down all of our stock by divisions. We're not expecting that number to go up in the second half. We've got some prospects actually for some deals to sell some of those in the portfolio deals in the second half of the year. So we would expect the London stock to be coming down in the second half of the year. And actually, we probably could have brought it down in the first half of the year, but the deals that we offered at the start of the year just weren't on attractive enough terms. So we thought we'd hold our nerve and sell them in the second half.

If you can tell from the tone now, we are not where we were at the end of last year. We're in a -- that doesn't work, let's not do it. Confident mode.

Two for Stephen. Again, more sort of tied up. You've talked about shared equity products and do-it-yourself homeownership that seems to be capital heavy. So I'm just wondering if you can just talk a little bit about what you are willing to do in order to get sales and how much risk there is in terms of that you have to hold capital on the balance sheet? And then the second one was about the -- you talked about the 100% forward sold sites and they're a bit more interesting. I think we used to call them partnership delivery. What proportion of Vistry going forward do you think might be that sort of partnership delivery? And kind of going back to Will's question, how does that impact the margin? Because that's very high return on capital employed, but tends to be a lower margin.

Should I do the first part?

No, you can do all of that.

Okay. So in terms of shared equity in DIYSO, so I see them entirely as enablers. So we've got Open Market stock. There was -- Help to Buy was a shared equity product. And what exists in the market, what is being developed in the market, not just for us, but with others. So I think others have announced that they're looking at it as well, is a shared equity product that is a private sector shared equity product, which obviously has some cost to it. It mean you would -- you're not going to apply it to displace your affordable delivery, you're applying it to assist with your Open Market sales, and that's how that would work. On DIYSO, I'm seeing that as exactly the same. Now this is an idea that hasn't -- I'm just promoting if I'm being honest. So no -- looking around the room, nobody here is old enough to remember Norman Lamont other than me, unfortunately. So Norman Lamont with the housing market package. Thank you very -- who looks like it -- anyway, there was -- at that time, one of the interventions from the government was do-it-yourself shared ownership, which was a product that allows the consumer to go to a housing association and qualify as a shared ownership purchaser. And they would then receive endorsement from -- they qualify. They've received the endorsement from the housing association who would have grant funding, and they would then be able to go out into the marketplace, find if they qualified for it, a 3-bed home and then the housing association would buy it, and then they would own part of it. So it never comes on balance sheet. It's a straightforward shared ownership product. But instead of shared ownership all being built together on an estate, you had dispersed shared ownership. It was hugely problematic for housing associations. They ended up with lots of street level secondhand properties. The EPC would have been horrendous, the cost of management -- sorry, of maintenance really problematic. What I think would really help the sector is a do-it-yourself shared ownership that's only focused on new build. So that would allow housing associations to acquire assets that have good EPC, B or A outcomes, very good quality product like they do now, new build, and it would allow the consumer, the purchaser to go to any site from to a Vistry site, Barratt site, Simons site, anywhere to look for a shared ownership and be able to support. That's the product that I would like to see more evidence of in the marketplace. And your second -- I've forgotten your second question now, Glynis.

The 100% forward sold sites.

Yes. 100% forward. I'd expect us to still be involved in 100% forward sold sites at decent margins, but most of those will be subject to us negotiating with the partners. It's not something that we competitively bid for those schemes. That tends to be not our position. What we tend to do is we find partners who are interested in 100% schemes, and we will work with them and have a sensible margin on that basis.

The margin -- you're right, Glynis. If we were to just buy the land and flip it, the margin would be less than a 12% operating margin because that would mean it would need to be a gross margin of 17%. So it would be less, but it will be in the mix. So we're seeing -- so obviously very, very good for return on capital, and it would generate cash. So what we're saying is going forward, we will be flexible in certain parts of the country. We might buy the odd site that's pure housebuilding to compensate for that move because we're doing 4 sites over here that are completely generating cash, et cetera, et cetera. So we'll be flexible. But we've definitely looked at it in and around. So that in itself would be a lower margin, infinite return on capital, but that would enable us to do 1 or 2 other things in different parts of the group, particularly maybe in the Southeast where it's harder to be a Partnerships business in the Midlands and the North at the moment. Good. So on that, we've no time, I'm afraid for -- yes, we are running short of time. No time for any questions from the phone. So I'll just say thank you very much. Hopefully, you enjoyed that. And hopefully, you got the tone of what we are saying. So thank you very much, and have a good trip back in a taxi, no doubt. Thank you.