Vistry Group PLC (VTY) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Vistry Group's full year results for 2021. Delighted to be joined today by Earl Sibley, our Chief Financial Officer; and Graham Prothero, the Chief Operating Officer. So the agenda, I'll run through our performance through the year and the strategy going forward. Earl will then step in, as you would expect with the financial review, hand over to Graham with an operational review, and then I'll finish things off with an outlook. And then at 10:00 this morning, we will take your questions. And that will be after, of course, [indiscernible] I have had a good grilling by you all, hopefully, at 8:30. So we had an excellent performance during 2021 with great progress across all areas of the business. The private sales rate increased by an incredible 43% to 0.76, reflecting a sustainable sales rate driven by our land strategy, which we put in place 4 or 5 years ago. Housebuilding completions had a great year. Completions up to 6,551, well up on last year with gross margin increasing to 22.3%, again, well up on last year. Partnerships continues to deliver rapid growth from their mixed tenure business, with revenues up 66%, and their operating margin increasing to 9.2%, all as we said at the time of the acquisition. We've been very successful in the land market and ended the year with a greater land bank than we started having bought 11,798 plots at least at our hurdle rate of 25% and our 25% return on capital rate. Our strategic land team continues to impress and they also acquired 7,721 plots during the year. Net cash was at GBP 234 million, and that's way up on initial expectations, and that's after taking into account an increase in the land bank. Return on capital increased to 25.5%, well up on 2020 with the Partnerships' return on capital remaining well in excess of their 40% medium-term target. Taking all of that into consideration, it wasn't a difficult decision for the group to accelerate our dividend to 2x cover for this year, reflecting the Board's confidence in our future prospects. So moving on to some of the softer issues, which underpin those great financial results. From an NHBC perspective, our reportable items are under the benchmark of our peer group. We won just under 10% of the Pride in the Job sales awards last year with 12 from just under 150 awarded around the country. We won the equivalent of another 2 sales from Premier Guarantee. Really, really pleased. And I don't think it should be underestimated with a company that's gone through a huge integration over the last couple of years that our Peakon score, which is an independent company, which surveys our staff, gave an overall satisfaction rate of 8.5, which is in the top 10% of all manufacturing companies that they survey. Also great to see that our company charity, Mind, got the benefit of GBP 215,000 raised in the main by our great employees. From an HBF customer satisfaction perspective, I'll eat my hat if we don't get announced in the next few weeks as retaining our 5-star status for the year 2021. And behind that, it's even better than just being a 5-star because all 13 of our housing business units were 5-star as well as Partnerships. They're not one off late the other, which is really pleasing. And we've started the 2021-22 year in great fashion with the score up again at 93.6%. So great stuff. And Graham will update you all later on our science-based targets, which we've made great progress as well. So One Vistry, we're uniquely positioned for sector-leading returns. And let's be clear. When we bought the Galliford Try housing businesses, I think we got it right. We didn't underestimate what the combined housing business would do or the Partnerships business would do, and they're both performing at least in line with what we expected. What we did underestimate was the power of Partnerships and the enlarged housing business working together and working together well. That has been underestimated, and it's starting to show some real serious dividends, whether it be on land acquisitions, which I'll talk about in a minute as well as generating quicker returns from our huge strategic land bank. All in all, bringing the 2 together, we are targeting sector-leading return on capital employed in the medium term. And I think the 25.5% that I've just stated is nearly there already. So making history, I talked about working together Partnerships and housing working together. Let's talk about a case study called Kenilworth. So it's a development of 620 new homes, which we're doing in a joint venture with a subsidiary of Warwick District Council called Milverton Homes. It was a rare opportunity to acquire such a site. So Kenilworth is a great area to sell houses. And this site is a prime site within Kenilworth. So every single house builder in the country was looking to buy the site, but we bought it. Our existing relationship came from Partnerships' relationship with Warwick District Council on their great scheme, zero carbon homes at Europa Way in the Midlands. And Milverton Homes is fully funding the scheme to the tune of in excess of GBP 60 million, which gives us an infinity return on capital. So that's an infinity and beyond return on capital. So that's my impersonation there of Buzz Lightyear for those who follow that sort of thing. Both Bovis and Linden will be on site. Vistry Homes will sell all the Bovis units, and our Partnerships business will do all of the PRS affordable and the Linden Homes sales. And it's a 50-50 split. So open market is 50%, presold is 50%. But it's a great, great opportunity there. And you can see the margin -- adjusted margin is 24%. Infinity return on capital, a great example of Partnerships and Housebuilding working together. Looking at our strategy going forward. On Housebuilding, it slips off a turn very, very straightforward, 25% gross margin, 25% return on capital by the year 2025, with 8,000 completions expected. And on Partnerships, we call it Project Pace, and we're looking for revenues to grow to GBP 1.6 billion, operating margin of plus 12% and a return on capital of plus 40%. And that's medium-term targets, which you could interpret to be 2026. So the outlook. We started the year in incredible fashion. So we've still got the pandemic. And over the last 4 or 5 weeks, of course, we've got talk of an invasion and then the actual invasion of Ukraine by Russia. So we've seen the sales rate in the -- so far this year, up 20% to 0.79, and that's risen to an incredible 0.92 over the last 5 weeks when Ukraine has been very much in the headlines. We continue to see price increases. We are increasing our prices every time pretty much we release units on any particular scheme. And about 4 weeks ago, we increased our prices across the board by at least 2.5%; in some places, more. I'm pleased to say that after all the trials and tribulations of last year, our sites are operating well in a much calmer environment with materials being much less of an issue than they were during the course of 2021. although we still see labor inflation this year, and we expect to see, as I'll talk about later, a 6% inflation on build costs, but that will be labor as opposed to materials. Housebuilding and Partnerships mixed tenure forward sales are up 23% to GBP 2.2 billion, and we've already secured 64% of this year's sales. Partner delivery forward order booking Partnerships totals GBP 860 million. That's a very healthy number, and that's 85% of this year's revenue already secured. Housebuilding are well on track to deliver at least a 23% gross margin for the year, which is what we said at the time of the acquisition. Vistry Partnerships are on track to deliver at least GBP 1 billion of revenues with a margin of at least 10% for this year, again, as we said at the time of the acquisition. So the group is in absolutely great shape to deliver significant step-up in profits for the year. We're absolutely finishing before we move on, support the comprehensive solution to cladding, fire safety. What I would say is Graham and Earl will talk about it in more detail. But from where I sat and at a chief exec's level, this is not the end of the world from a Vistry perspective. The monies that we're talking about here after taking tax will not impact in any way our dividend policy going forward nor our growth strategy in Housebuilding nor our aggressive growth strategy in Partnerships. So all very, very controllable. With that, I'll pass over to Earl.

Thank you, Greg. I can now take you through those great results Greg highlighted. As normal, the results are presented on both an adjusted and reported basis. The adjusted basis means we're including our share of the results of our joint ventures down to the operating profit level on a proportional basis. The group result was driven by our strong operating performance across both Housebuilding and Partnerships, supported by a good housing market, whilst at the same time, proactively managing materials constraints in our supply chain. It is good to see the results reflect the real potential of the Vistry Group. You can see all metrics moving strongly ahead, and we've given a lot of guidance throughout 2021 in terms of profit, margins in both Housebuilding and Partnerships as well as on cash. And you will see as we go through that we've delivered ahead of this guidance on all those measures. In terms of overall scale of the business, the revenue at GBP 2.694 billion is 32% up on 2020 and importantly, 7% up on the pro forma turnover from 2019, showing just how well the enlarged group has come together and how well it has been dealing with the pandemic. Gross profit delivered was GBP 543 million, and this translated to an operating profit of GBP 368 million. Profit before tax, excluding the exceptional costs and amortization was GBP 346 million, up 140% and slightly ahead of the previous guidance we set having moved expectations forward a few times during 2021. The exceptional items of GBP 12.2 million, this includes GBP 6.5 million as expected for the final cost of integration, taking the total integration costs to around GBP 30 million which is GBP 5 million lower than the GBP 35 million expectation at the time of the deal. And there will be no further exceptional costs relating to integration. In addition, we have recognized a further GBP 5.7 million of costs in respect of legacy fire safety, meaning we hold a provision of GBP 25.2 million at the end of December, and Graham will comment more on this in a moment. Amortization in the period was GBP 14 million, and we expect a similar level in 2023. And therefore, overall, the adjusted earnings per share for the period was 125.5p, well ahead of 2020 and 20% ahead of 2019 when we were just Bovis. The slide also shows the strong position of net cash at the end of December, GBP 234 million ahead of guidance, and I'll come back to this in a few slides time. The combination of strong profit delivery and capital management means our return on capital has moved forward 11 percentage points to 25.5% for the year. So turning to the Housebuilding financials, and these show the first true combination of Bovis and Linden, gross profit and notably, the gross profit margin have moved forward significantly, with the Housebuilding gross margin at 22.3%, ahead of our target of 22%. And if you look at the pattern of 6 months on 6 months, our gross margin has been moving forward for a number of periods, with the second half of 2021 showing a housing gross margin of 22.7%, giving us confidence on the guidance we have provided of being over 23% for the current year when the focus will continue to be on that margin growth with controlled volume growth. Factors impacting margin include the strength of the margin embedded in the land bank now at the targeted 25%, a continued contribution from higher-margin strategic land, the quality of delivery and operations on site as well as house price improvements alongside dealing with increasing costs in our materials. The TNAV, whilst lower than 2020, reflects a good position, although our work-in-progress level was a little lower than planned following supply constraints during the year. So we expect a reversal of that investment during this year and an increase in TNAV. The return on capital for the business was 22.2%, and we can see this progressing along with the margin to 25% in the medium term. Key metrics-for Housebuilding, just pick out a few. Whilst we continue to follow a strategy reducing the average size of our completions, the private ASP has moved forward 4%, reflecting the strong demand across all geographies and all product mix. PX at 4%, very low and not really a selling tool that we're using. The Affordable at 25% is as expected and a good guide still going forward. And whilst Help to Buy at 21% remains an important tool for us, it is significantly lower than in previous periods following the changes to the scheme and much lower usage than others in the sector. Average outlets were as expected in 2021 with a nice problem to have occasionally of selling out slightly earlier than we expected. The FY '20 number actually was slightly high with a number of sites remaining open for longer than expected due to the pandemic and therefore, 2022, we'll see a similar level to '21, growing towards the end of the year. Our Partnerships business also ahead of the target set. The focus on mixed tenure coming through with volume up 41% and reflecting 46% now of total Partnerships revenue. And this increase in proportion has really driven that revenue up to GBP 864 million, up 19% as we continue to look at 12% compound growth each year. Operating profit, up 64% year-on-year. And as with Housebuilding, a focus on margin coming through with the second half operating margin being 9.3%, a period where we also recognize a higher proportion of incentive costs for the year. The margin improvement was supported by higher-margin land-led contracting making up a higher proportion of partner delivery than in 2021. In fact, it was nearly twice as much as it was in the previous year, and we expect a bigger proportion of land let in 2022 to help those margins. However, of course, the biggest impact on margin comes from the increasing level of mixed tenure. And overall, operating margin up 2.5 percentage points in the year, again, meaning we are confident of achieving the 10% margin for 2022 as we continue to grow that mixed tenure business. With the investment in that mixed tenure, the TNAV has moved around GBP 100 million from investment as planned, and we are planning a similar level of investment in the current year. And whilst the return on capital might come down a little bit in the next couple of years as we invest in mixed tenure, it will remain well ahead of the targeted 40% as we continue to improve mixed tenure schemes at a hurdle rate of 40% and still have that ongoing benefit from partner delivery of somewhere between GBP 50 million and GBP 70 million of cash in the business at any point in time. Partnership metrics, each of these shown with its share of JV really does show the growth in mixed tenure and also the growth in outlets during the year. So as we move into '22, we expect to see that go up to around 40 outlets per year for '22. And as planned, partners delivery remains an important part of the Partnerships business, delivering a stable contribution in 2021 and similar expected for '22. So a specific mention for our procurement and supply chain, most importantly, a big thank you to all our supply chain partners for their contribution last year in the face of numerous challenges in the market following the step-up in demand. We managed this really effectively with 90% of our materials procured centrally, complemented by our local teams, ducking and diving to make things happen. We're currently operating in a much calmer environment with teams that are even better equipped and ready to deal with any challenge that arises. Many of the agreements we put in place at the beginning of 2020 that gave us some protection from cost increases in '21 were renegotiated at the beginning of this year. And these increases will impact at various dates during the first half, but they're all accounted for in our forecast and guidance. We've also taken the opportunity from that renegotiation to bring in additional suppliers for certain materials to give a greater surety over the supply and ensure that negotiation was truly competitive. So overall, last year, we saw build cost inflation around 5%. And whilst the material supply has improved, there will be some further cost increases driven by energy prices. However, we see the cost of living wage inflation being the key driver of cost increases and overall expect to see build inflation for '22 around 6%. The map here shows another active year in the land market. Dots on the map show all the acquisitions during the year. So the purple being the Housebuilding; the green, the Partnerships; and the new red ones are strategic land options. It really does show our nationwide coverage, as Greg said, with over 11,700 plots secured, which has ensured we've added to our controlled land bank in the period. And we are still seeing good opportunities to buy land, and we have a real competitive advantage on those larger sites. We have seen the land market get a bit more competitive in recent months, which is impacting the level of deferred terms we can achieve in the open market. But importantly, we continue to buy those Housebuilding plots at an average gross margin and return on capital in excess of 25% on average. A little bit more on our land bank. As at the end of December here, the controlled land bank, Housebuilding, including joint ventures, over 31,000 plots for Housebuilding where we are trying to maintain a 3.5- to 4-year land bank. Also aligned with strategy, you can see the number of plots per site going up, reflecting that competitive advantage on larger sites with dual branding or even 3 brands as well as the ability for Housebuilding and Partnerships to work together, as Greg described. Land cost per plot and as a proportion of ASP remaining consistent indicating we are still buying land very well and the average future gross margin now at that target level of 25%. In terms of Partnerships, including joint ventures, we have over 11,700 plots, which will support the aggressive growth plans for mixed tenure development towards 300 homes per annum. And again, the embedded land bank margin has moved forward as expected and will support the future margins for Partnerships to beyond 10%. Our strategic land has grown again with exactly 40,000 potential plots, and I have challenged that number a few times. But apparently, it really is exactly 40,000 potential plots. I'm pleased to confirm in this area, we further strengthened our excellent strategic land team, both recruiting externally, but also promoting from within the team. We are able to deliver a comprehensive planning strategy for local authorities, which is helping pull this land portfolio through in a difficult period for planning. Our strategic land is now feeding all parts of the business on a multi-brand basis, and we can see how we can get 4,000 plots per year to come from our strategic land and, in turn, deliver 30% of our total completions each year, which is good news when I can confirm that the vast majority of our highest margin sites in Housebuilding have come historically from that strategic land bank. The summary of the balance sheet reflects a really strong position, in fact, stronger than any of the scenarios we ran at the time of the acquisition. As a reminder, that investment in joint ventures and amounts due from joint ventures really reflects further work in progress and land, which has increased over the year, although we would have liked it slightly more at the end of '21. It represents a really good position for the current year. As I mentioned earlier, land bank in total is growing. And as expected, land creditors represent a higher proportion of land. So that's 36% this year, and we're happy at this level, not least around 70 million of those land creditors are not due anytime in the next 2 years. And given the overall balance sheet strength, we're happy at that level. Other assets and liabilities in there really reflect the increased activity in the business during the year as well as an increase in our pension surplus on our 3 defined benefit schemes. Overall, GBP 1.7 billion of tangible net assets, GBP 2.4 billion of total assets. So cash flows better than expected ahead of our already improved expectations in the year. And overall net gearing was -- including our land creditors was 10.5% driven by that great operating performance, good cash conversion and good management of working capital. And if anything, a little less work in progress. So finally, just a reminder of our capital allocation strategy, strong balance sheet, and we are targeting slightly improved month-end net debt this year, around GBP 100 million. And we expect to invest during the year, GBP 100 million in Partnerships, as I mentioned earlier, as we drive the mixed tenure element of the business as we did in 2021. In addition, we expect to invest in Housebuilding to ensure we have the right level of work in progress and land to deliver growth into '23 and onwards. And that the Partnerships, we continue to see that compound growth of around 12% per annum, and the investment will be required to support this and in Housebuilding, whilst 2022 will be focused again on driving the margin up with controlled growth. We will be looking for more growth beyond that. We accelerated our dividend strategy during 2021 and we'll maintain a 2x cover going forward. And we have achieved the total gearing close to 10% at the end of '21, a little earlier than expected. So we do expect a modest cash outflow during '22, and I would expect that gearing to go up a little as a result. And as I noted, all that investment is to deliver the 25% and 40% targeted returns in Housebuilding and Partnerships, respectively. And in the longer term, it does remain our clear intention to return surplus capital in the future, and we will update you further on this later in the year. With that, I will hand you over to Graham.

Many thanks, Earl, and good morning, everybody. As Greg said, we're really pleased not only with some excellent results in a good market but with the strength of the business and operations. In Vistry Housebuilding, the sales rate of 0.69 is a stepped increase from where both Bovis and Linden used to be, which reflects the deliberate shift of -- to a higher proportion of midrange housing, successful deployment of the 2 brands, the quality of both of those ranges, a rigorous focus on brand promotion and discipline and the excellent progress on digital selling and on our hub approach. We regard 5-star quality as a prerequisite and I'm pleased to be at this level in every one of our Housebuilding businesses. and we're now focusing hard on improving the important 9-month score. We were delighted with our Peakon score in February, which I'll come on to in a moment. And we have an excellent land bank in strong locations and are focusing on increasing the contribution from strategic land and improving the regional coverage of that team. Partnerships continues to make excellent progress against this strategy. We're really pleased that we've covered Stuart Munro's retirement as a Divisional Managing Director with internal promotions with Sean Egan, who very successfully led our Northeast business now stepping into a DMD role. The 3 nascent businesses are thriving with Thames Valley and Southeast being relatively new areas of operation for Partnerships and North Midlands an expansion of our existing West and East Midlands businesses just to keep control as we respond to that burgeoning demand in that region. We're focusing hard on procuring the land we need to support this growth and expect to operate an average of 40 mixed tenure sites during 2022. Greg has talked about the excellent project at Kenilworth, and we have a number of these large sites in the pipeline where our integrated model really flies, optimizing our competitiveness, profitability and returns. The Partnerships model continues to grow a rich portfolio of strong partners with huge appetite for product across multiple tenures. We have regular programs with some 25 registered providers and individual projects with many more, and we're working with more than 20 local authorities. Now turning to the current issue of fire safety. It goes without saying that we believe that leaseholders should not bear the cost of making buildings safe and shouldn't be faced with the anxiety of that uncertainty. And hence, we're fully supportive of the government's attempt to find a better solution than the previous proposals for buildings between 11 and 18 meters. In order to achieve that, we do need government to deliver on its commitments to a proportional solution. We can't be in a situation where necessary fire safety works are extended to include building refurbishments. We also need other market participants to align their requirements so that people can readily secure mortgages on buildings which are demonstrably safe in accordance with agreed standards. We've actively engaged with the department on the issue and of course, with the HBF, which has done a great job of leading and articulating a highly constructive industry response to the aggressive demands from the Secretary of States. As Earl said, we've increased our provision in the period, in line with our known obligations as they stand today. That includes engaging with our partners in Partnerships where we were the contractor. The recommendations from the HBF would increase that liability, but hopefully also start to bring some clarity to the commitments that we're making. And hence, we've also given an indication of our estimates of the additional costs, which might arise depending on the uncertain outcome of these negotiations with government, and we assess that to be in a range of GBP 35 million to GBP 50 million. Now those of you who joined our Capital Markets Day in the autumn, hopefully got some excellent insight into the way we're structuring and measuring our approach to sustainability in our operations, which we group in these 3 areas: our people, our operations and our homes and communities. We've been really proactive in addressing the perennial challenge of attracting and retaining the bright people that we need. And we have a wide range of ideas and initiatives to differentiate Vistry as a great employer. And I'd pick out, in particular, our agile working policy, which is working brilliantly for our people and the business and several key actions around coaching and training our people for their personal development and for the enrichment of the group's talent and succession. I'm also really proud of the expansion of our Skills Academies program, which offers the opportunity of training and qualification to local unemployed people on our larger sites and the group-wide commitment to foster and support this fantastic initiative. And reflecting our progress on all of this, as I said earlier, we are delighted with our group Peakon score of 8.5, which puts us in the top 10% of our industry grouping. Our framework of communications and feedback with our people seems to be working really well. Health and safety, of course, is a critical priority, and we were pleased with an improvement in our accident incident rate remaining below the industry benchmark. Of course, even one accident is one too many, and we continue to focus on improving our culture and our process, including deployment of new technology in respect of safety around moving plant. We're rolling out a new data platform to improve our data around waste and carbon so that we can better calibrate our performance and measure improvements. We're pleased to sign up to the business ambition for 1.5 degrees, and we're in the process of verifying our carbon reduction targets through the Science-based Targets initiative. And importantly, we've introduced some targets around sustainability measures into the group's bonus system. As you know, the supply of affordable housing is a key focus for Vistry and a core metric, in particular, for our Partnerships business. And we're committing to deliver year-on-year increases in affordable home delivery over and above our Section 106 requirements. Our social value proposition is increasingly a key element of major land bids and regeneration opportunities, and we're enhancing the way we can capture and demonstrate this by subscribing to independent verification through the social value portal. We're also well on with understanding and addressing the challenge of biodiversity net gain, which is another significant planning and development hurdle to be negotiated and in some local authorities already and nationally from next year. During the year, we finalized and rolled out our new standard customer journey, which is a key element of enhancing our customer experience and our readiness for the demands of the New Homes Quality Board and the Ombudsman service. We have registered to join the Board with our first business units commencing participation in the next couple of months. We're continuing to enhance our digital sales capabilities, all aimed at making the decision to buy a Vistry home easier and more compelling for today's customer. And we're making great progress towards the future home standards and the interim changes on Part L, electric vehicle charging, space standards and accessibility. We're redesigning our Linden and Bovis ranges and bringing forward the new third brand to accommodate these and ensure we remain as efficient as we can in that complex transition. All of this work is greatly assisted, of course, by our learnings from several partner delivery projects in Partnerships where the forward-looking mindset of some registered provider and local authority partners require us to test new technology and designs as they seek to future-proof their stock. And with that, I'll hand you back to Greg for the outlook.

So moving on to the market review. We continue to see strong consumer demand across all areas of our business, whether it be prospect levels, pricing or in actual fact sales rates. And we're selling now well into quarter 3, quarter 4 of this year. As Earl said earlier, we expect to see build inflation of around 6% this year, and that will predominantly become -- come from, sorry, labor. The material situation is much better than it was in 2021. And our building sites are performing much better than it did in '21 because the availability of materials is much better. On the bigger picture, planning remains good on a historical basis, but at a local level, we continue to see delays because of 2 things: the political climate on planning and labor resource within planning departments within local authorities is just not good enough. Interest rate rises will continue, but we haven't seen that impact sales as yet. And we, of course, are fully expecting more interest rate rises as we go through the year. Help to Buy levels, 17% in the last quarter of 2021 remain at sensible levels, and I really do feel we and for that matter, the rest of the industry, are pretty well equipped now when Help to Buy finishes during the early part of 2021. The market for affordable housing and PRS continues unabated. And we continue to see, as we did at the time of the acquisition, very, very strong growth opportunities for our Partnerships business. And finally, the solution to fire safety really does need to be sorted sooner rather than later. So in outlook then, as I said earlier, excellent start to the year with the sales rate up 20% to 0.79 and in actual fact 0.92 in the last 5 weeks. Who would have thought Bovis, let alone Linden, would have been saying having a sales rate of 0.92. That's completely new territory for us. And that's against the background of a month ago where we put our prices across the board of about 2.5% minimum, but we continue to nudge at prices every time we release houses at present moment in time. Sites are running very, very well, although we do expect to see some build inflation. Housebuilding and Partnerships mixed tenure forward sales were up 23% to a very healthy GBP 2.2 billion, and that's 64% of this year's forecast already in the bag. Our partner delivery forward order book is around GBP 860 million. That's a solid number. And that again represents 85% of this year's revenue already secured. Housebuilding well on track to deliver in excess of a 23% gross margin. Partnerships well on track to deliver at least GBP 1 billion of revenue and a 10%-plus operating margin for the year. As Graham and Earl have both touched on, we fully support the comprehensive solution to fire safety that the HBF has just put forward. And again, I would reiterate, the cost of that will no way impact our dividend and in fact, our growth aspirations for both housing and the aggressive asset growth aspirations for partnerships. So all in all, the group is in fantastic shape and is in a great place to deliver another step-up in profits for this year. And it would be wrong of me not to finish, of course, on the Housebuilder Awards last year's. So less than 2 years after the formation of Vistry, delighted there to pick up the award for Large Housebuilder of the Year. Very, very proud night for all of us and great for me to get a picture of a guy wearing a skirt.

I'm joined by Greg Fitzgerald, Graham Prothero and Earl Sibley. I'd like to pass over to Greg for opening remarks. Greg, over to you.

Good morning, everyone. I hope you're all well. So hopefully, you all had a chance to see the announcement presentation, which was released just after 7 this morning, along with our statement. So on that basis, we are delighted to take any questions that you have.

Thank you, Greg. As most must be aware, we'll be inviting people to ask questions over a video today. [Operator Instructions] And we're going to take our first question from Will Jones.

I'll kick off with 3, if I could, please. The first is just around, I guess, just generally reflecting on sales rates, the 0.76 you did for last year, perhaps some indication of how that's split between Housebuilding and Partnerships. Clearly, you hit 0.9 recently. Just wondering to what extent you think that higher level versus the history of the group is the new normal or not to the extent to which you can build to match that going forward? Second was just around the order book actually, and I think I'm right saying the mixed tenure value is something like 80% higher year-over-year, and the increase continues to advance compared to what we've seen before. How much of that is long dated? How much of that can we infer for the year ahead or not? Just to have some help around what looks like a big number there. And then sorry, the last one was slightly technical, but just trying to understand the land bank slide. If I look back at the half year, I think your Housebuilding land cost was GBP 51,000. It's now GBP 47,000 which seems like a big change in 6 months for the whole land bank. By contrast, the Partnerships business, I think was 23 and is now 40. I don't know if there's any definitional change there, particularly in the Partnership side of it, but just any help around understanding the land bank that's obviously changed the land cost of sales as well. It might just be a technical thing.

Okay, Will. So if we start with the sales rate, as you say, it was 0.76 last year, that definitely reflects the land buying strategy of both Bovis and Linden and Partnerships that was put in place 4 or 5 years ago, which in the case of Bovis was to buy less sites on the outskirts of a village, which is very, very pretty and building less 5- and 6-bedroom houses. So bringing it back to the mainstream. That is certainly working exceptionally well, something we said at the start of the -- as part of our strategic rationale of the acquisition of the Galliford Try Housing businesses was dual branding and how well Bovis and Linden sell against each other. The dual branding has been -- we underestimated how well that was going to go. It's gone incredibly well. The strategy that both Linden and Partnerships and Bovis put in place 4 or 5 years ago is going well. So the 0.76 is most definitely the norm. If you then move on to the in excess of 0.9 that we've achieved in the last 5 weeks, the market all the way from January 1 has been incredibly strong. So against that continuing background, particularly in January of the pandemic potential lockdowns and over the last 5 weeks, it's been against the background of a potential invasion of Ukraine, followed up by the invasion of Ukraine itself. So what's not in those figures is over the weekend, we took 70 reservations, which is one of the best weekends we've had while the bombs are flying all over the place over in Ukraine, which is obviously tragic. But it doesn't seem to be impacting the market. Everybody knows interest rates are going to go up. Will they go up as much as we thought a month ago with the invasion of Ukraine? Who knows? But people are buying houses against the pandemic, Ukraine, war and interest rate rises and inflation running at plus 5%. My own view on that is particularly from the pandemic, and you could say too early to say on an invasion, I honestly think there has been a sea change in people's attitude lives for living. One of the things about life is getting on with things and maybe a new house is one of the things at the top of that list, but we are definitely noticing a huge sales rate. We're selling now into the third, fourth quarter. The last 5 weeks of sales at 0.92 is on the back of a minimum of a 2.5% increase across the board so on sales. In some places, it's more the West division in Housebuilding, for instance, was 3% minimum across the board. So -- and in some places, in particular sites, we've increased prices by 4% or 5%. Every sales release now is smaller than it used to be. Rather than being 10 units, it might be 5. And pretty much every time we release houses, we are nudging up prices. We don't anticipate having another 2.5%, 3%, 4% increase across the board. We just told all of our sales teams and managing directors that we have to nudge up prices every time. To give you some further comfort over the last -- since Christmas, our price is over and above forecast, which now include a 2.5% minimum increase or over GBP 2 million -- well over GBP 2 million up against forecast showing that there's still more to come on the pricing. And that is more than dwarfing any labor and material price increases, which we were up to date on the 1st of January that we are seeing. Now sales, our product, The Phoenix Collection for Bovis, Linden Collection is -- they're good products, good specifications, sell well against each other. And we are, to coin a phrase, we are flying at this precise moment in time. And the sites are -- we've had a very good January and February from a weather perspective. It's a far calmer outlook on the sites than it was for the majority of 2021, where every day, what am I going to do now? I didn't get those blocks. I didn't get those doors. That's happening, but it's happening as an exceptional now. Most of our sites are getting what they've ordered when they've ordered it. We particularly think that the -- or we think that the inflation we will see this year, which there's going to be inflation without any shadow of doubt. But I would remind everyone, particularly if you've been around as long as me, inflation's never done a housebuilder any harm because, of course, we put the inflation on the sales figure and the cost figure is dramatically less. So we would expect to see 6% build inflation, cost inflation this year. But as last year, most of it was materials not on labor. This year, we think the majority of that will be on labor. So hopefully, that gives you some background or some comfort on them. Do I think 0.92 is there to stay, I think somewhere between 0.7 and 0.85 is going to be the new norm, which is, if you like, from a Bovis perspective, kind of 50%, 60% up on where Bovis were back in the day. So we've definitely moved on from that. The second question was?

Second question was on forward sales. Well, so we've given a bit of an indication of where we are for the current year in terms of...

[indiscernible]

I was going to anyway, Greg. On Housebuilding, mixed tenure is looking at 64% sold, which is actually a very strong number in terms of the growth we've got coming through this year on that mixed tenure in particular. So we expect to see it become more than 50% of Partnerships this year for the first time. And so well forward sold in that respect. There is one large London scheme that is contributing to the number, which has got some more long dated in there. So that is in the number in terms of the presale. And obviously, on partner delivery, 85% sold for the year, which again is a good number we'd expect to come into the year about 80%. And we're already at 85% for the year in terms of this year's contribution from those forward sales. And...

Since been a CEO since 2003, I've never been in a strong position with the set of results we've just had, plus the first 2 and a bit months of the year. I mean we're not a million miles off. We're selling now into the third and fourth quarter. So to be honest with you, we could actually look at pricing again, if we wanted to. And if we didn't sell any houses for the next month, I'm not sure it would cause too many issues for our year-end. Incredibly strong position, and we'll see where we go with that when we come out with our AGM statement in May, but, yes carry forward strong.

Yes. And then your third question was on the land bank. So I think actually, looking at the full year on full year that was in the presentation is the right way to do it. And I think that is how we've done it in terms of the aggregate, including all the joint ventures rather than trying to do a share. So there is a difference between the 2. You'll see a fair consistency year-on-year and in terms of the percentage of plot cost per ASP as well.

Which is less than 20%. [indiscernible]

Yes, fairly sensible as well. So indicating we're still buying land on a very sensible basis.

But the land bank is going to increase more in Partnerships as per our strategy and growth aspirations in Partnerships with the mixed tenure growth, which is coming through and in Housebuilding where we're very happy with the land bank. In fact, the land bank could go back a little bit, yet that won't really matter. There's much more modest growth in Housebuilding than there is in Partnerships.

Thank you very much for your question. We're going to go now to Clyde Lewis from Peel Hunt.

I think I've got 3, if I may, maybe 4. Very good to see that you put up that sort of 9-month customer satisfaction sort of number. I suppose what I'm intrigued to learn a little bit more about, I suppose, is why isn't it higher? Everybody wants to move higher, but what are the reasons for sort of customers not to be satisfied after 9 months? And how would you go about correcting that? Obviously, you've got the immediate one sort of pretty much nailed down now. So how do you sort of go about improving the 9-month survey.

I'll just add answer that because we won't remember or I won't remember all the questions. So the biggest single thing is it's part of my and everybody else through the organization's bonus criteria this year to get back to a number of 80%. So at 75.9%, which we were yesterday, it's already moved up a fair bit in the last couple of months. We're happy with the projection, and we want to get it to 80%. The benchmark across the top 20 largest housebuilders is within 2% of that number. So we're there or thereabouts, we were further behind than that. And the way we're going to get it is complete and utter total focus on it. So as of pretty much now, every day, the customer satisfaction scores come out on a business unit by business unit basis. We have led up till now on the 8-week, and that's got us in a position where we're now at in excess of 93%, and we're ahead of benchmark for the first time ever. And our results for last year, let alone this year are the best in the last 14 years, including when Bovis was a 5-star housebuilder back in 2008, '09, '10 as it were. So the scores are great. As of now, we are moving the first thing that [ peak ] managing directors will see, which basically dictates whether they're going to have a good day or not is going to be the 9-month scores on an individual basis. So also, it is not acceptable -- that's the language I'm using -- for us not to be a 5-star housebuilder on a business unit basis, let alone on a group basis, and less than 75%, which will move slowly to 80% over the next month on an individual business unit basis. And each MD has to attend the ELT meeting to explain why they're not, which is a monthly meeting going forward. And the first one of those meetings was last month. And hopefully, it was a very uncomfortable meeting for 1 or 2 managing directors around the group.

Okay. Perfect. The second one I had really was around, I suppose, product mix in the third brand, and I suppose how your thoughts are evolving on that? Can you suppose update us with your plans for that third brand? And within that, probably the best part of the market over the last 6 to 12 months have been the bigger family units. But you, like the rest of the industry, obviously, sort of focused probably a bit more into the smaller units. Is it time to shift back a bit more into bigger units right now?

You take that?

Yes, happy to do that. Yes. I mean, Clyde, as Greg said, we're absolutely delighted with the strategy we took on the dual branding. So kind of rigorous focus on brand discipline and dual branding on sites wherever we can do that. We're finding that it's holding, it's working for us, and that's indeed significant part of that improved sales rate, as Greg said. So we've looked at that. We've made a success of it. Not everyone has made a success of it in the past. We think it's working really well for us. And what we've identified in a sort of stepping back a moment from the trend post COVID, which you're alluding to, is that we've actually got an opportunity in a more entry-level brand. So still the same quality, all of that customer proposition is there, but there's more entry-level brand for us. And so we're working hard on that. Now your point is a good one. The -- we've seen a great benefit from our shift towards more mid-range housing. The COVID effect, if I can call it that, has certainly increased that demand for the larger units. Now we, of course, do build 4- and 5-bed homes, and we're taking note of that trend. But overall, we're very happy with that underlying strategy, which we're still continuing with towards the midrange housing. We still see that opportunity for that entry-level brand, and we will quite confidently deploy all 3 brands plus the Partnerships brand for registered providers and for other -- for investors and what have you -- so you could see on the larger sites, and Greg talked about Kenilworth in the presentation, where we'll happily deploy 4 brands on the site and make that work.

But I think also, Clyde, whereas we would have been rigid on land acquisitions a couple of years ago that we don't -- with regards to the numbers of 2-, 3-, 4- and 5-bedroom houses making up or constituting the makeup of the site, we're being less rigorous. And if there's a few more 4- and 5-bedroom, which there are, we're letting that go. So we still have our strategy, but maybe not quite as rigid as we were.

Okay. The last one I had really was around geography and looking at the land acquisition map, in particular on sort of Page 16. Obviously, it shows that you're pretty active up to the wash, but north of there, there's obviously not a huge amount coming in, obviously, more on the Partnerships business. But given how things -- how well things are going at the moment, are you tempted to start pushing a bit further north given the current market backdrop?

Yes. We have our business in the Northwest, our Partnerships business. And also, we have our [indiscernible] business. So yes, we are putting -- and looking at some large acquisitions actually at the moment in [indiscernible]. So absolutely. And we have Newcastle as well as our Yorkshire businesses. So we are funding and pushing those business units to maybe catch up a little bit with the south and start buying more land. And as a principle, probably more than happy to spend it there than in the South, if it comes down to that. But as with all things on land, land is opportunity-led. And you do try and then you go where you can get the land and the land market has become -- historically, it's still a good land market, but it is definitely more competitive than it was a couple of years ago. And that's why we're looking to buy, one, larger sites, which we couldn't as Bovis or Linden. And we are absolutely looking to leverage Housebuilding and Partnerships working together to buy bigger sites again because we could always make it work on a margin, but we struggled with regards to return on capital on large payments of land. So -- but that's working well as Kenilworth [indiscernible] has a number of them of those areas -- sites where we bought. I think we have a real USP with Partnerships and Housebuilding working together, but it only is a USP if they actually -- and it's easier said than done sometimes -- work together and work together openly and properly, which we've still got a little bit of work to do, but definitely big progress in the last 12 months.

Our next question is from Aynsley Lammin from Investec. [Operator Instructions].

Great. Just 2 questions for me. Just first of all, you've hopefully given the GBP 35 million to GBP 50 million number that you see, you may have to pay the HBF proposals. My understanding, honestly, is that they've been rejected by government. I just wondered if you'd looked at or calculated a kind of worst-case number, where you think that could get to a bit more color around that, the range of possibilities?

Just on that, I'll take them one at a time. And Graham, chip in here. But yes, the GBP 35 million to GBP 50 million is going back to 2000. So that's kind of 20 years that the government stipulated they were looking to go back 30. From our perspective, we don't think we have looked out there, there are not many units of buildings that would come in between industry from 20 to 30. From an industry perspective, that might be different. But from our perspective, we don't think that would be -- that would make a huge difference from our individual perspective. And as I say, I'm sure it is clear, but GBP 35 million to GBP 50 million exceptional. I'm sure the majority of that, no matter what happens, wouldn't get spent until 2023. So you would be taking off, from a cash perspective, 29%, which would be the tax that housebuilders would be paying. So even at GBP 50 million, you're looking at a GBP 36 million, GBP 37 million cash outlay over a couple of year period. And I can assure everyone listening that, that will not, in any way, impact our growth ambitions for Partnerships or indeed on 2x dividend cover. So it's something that we're looking at. We -- the government are flexing their muscles. We're trying to be as helpful as we can through the HBF, who we think are doing a very, very good job. But at the end of the day, GBP 35 million to GBP 50 million. We have looked at it. We have looked at it in some detail. We think that's accurate to take the tax off, and it certainly doesn't impact on where we are going, going forward. Do you want to add anything, Graham?

Yes. I was just going to say, Aynsley, I think the focus of the -- and we say it's been rejected, but we haven't had a -- I don't believe there's been a formal response on that. And the focus there, of course, is because the other leg of what [indiscernible] or the Secretary of State had requested was some form of additional contribution to a fund, i.e., over and above go back 30 years and everything you've been developed or provide for any remediation. But the other piece of the ask was a contribution or I suppose a form of tax or however they framed it, that's the piece that has not been volunteered in the HBF proposal. I won't bore you with all the reasoning around that. But I think that was the focus of the -- it's not gone far enough rather than something else on the buildings themselves, Aynsley.

But at the end of the day, so the government have an offer there. The government needs to think about that. And I'm sure the government are also thinking about, wouldn't it be terrible if what they put on the housebuilding industry constrained the production of new build housing for private sale, where there was a huge shortage in this country, hence, the market we're seeing at the present moment in time and even more important than that, the chronic shortage of affordable housing in this country. So at some point, they will have to think and have a balance and go, is this right? Or will this impact on them the production of a much-needed housing in this country? But I'm sure they're absolutely thinking about that. Sorry, and the next one.

Very clear. And just very briefly on the next one, you mentioned in the statement, I think, about [ use of capital ] in the future potentially being returned, the share buybacks or special dividends. Just wonder if you could remind us how you kind of define surplus capital, given where the share price is at the moment, are you getting increasing tempted the share buyback could be a good idea?

Yes. Obviously, like probably all the listeners at the moment tempted to buy the shares at this kind of price anyway because it's obviously incredibly low, and we are flying as an organization. So for once in my lifetime, normally, the share price constitutes how the business is performing, and this is completely 180 degrees separate from what I can see. But do you want to take the actual -- that's just an outburst from me. The formal answer, Earl.

So Aynsley, in terms of looking at surplus capital, we said previously, we would be looking at a 10% total gearing in the medium term. Now reality is we got to 10.5% total gearing at the end of last year, but we've actually got there a lot faster than we expected. The balance sheet at the end of the last year is very strong. It's stronger than any scenario we had with the acquisition, which shows the performance from last year, et cetera. So looking really at cash over the next year. So we invested GBP 100 million in Partnerships last year, as we said we would. We're looking to do the same again this year. We're actually looking to invest in the Housebuilding business as well. So you'll see our TNAV in Housebuilding went down a little last year. We probably would have liked a little bit more work in progress at the end of last year. So we're looking to reverse that. This year, you may see a similar number invested in Housebuilding this year. And therefore, you have simple numbers, if you take a consensus of about GBP 400 million profit, take the tax off and then have that kind of level in investment across the businesses, we will have a modest cash outflow this year. Therefore, I expect that total gearing to go up a little during the course of this year as we invest in 25%, 40% returns. Still absolutely, the medium-term ambition is to return surplus capital in due course, and we'll look at how we do that. I think also within your question is, are we considering how we make our returns generally based on where the share price is going? Well, then, of course, is the answer. Look, we definitely, in our view, promised the 2x dividend cover this year. But depending on where our share price goes, it would be absolutely right and proper to review that in due course, but that's where we're at the minute.

And at these levels, it is coming more and more to the top of the list.

Thanks, Aynsley. We now have the next question from Gregor Kuglitsch from UBS. [Operator Instructions]

Maybe the first question is sort of around your volume and gross margin outlook. And obviously, as far as I can judge, it hasn't really changed from what you were sort of saying previously. I think you're obviously flagging super strong markets, pricing, demand, et cetera. So I guess the question is what's holding you back from kind of upping your expectations, I guess, particularly in gross margins and perhaps also on volumes?

On volumes, I think what's holding us back is the ability to build quicker. So we are flat out. On margin and actual profit, we're still just over 2 months into the year, I am feeling very bullish. I think I kind of touched a minute ago. Maybe when we get to May, we will look at those numbers. At the moment, you should take it from this call that we're not. But I am extremely comfortable with the current consensus and yes, and we have a very, very strong position in every single aspect of the business.

And then back to cladding. So I think all of us basically just came off a call with one of your competitors who basically said, well, it's likely you'll just get a sort of building safety levy that would apply to basically all future build. That's unclear whether it be on future or existing planning consent, so to essentially fund the sort of orphan building. So I guess, is that also your view that, that ultimately will happen so the form of tax will not be a voluntary contribution of some sort, but rather just the sort of building stages of basically a planning tax or roof tax, what you want to call it, to fund the residual?

So one, I'm not sure that's overly helpful. So we have made an offer through the HBF to the government. The government have already imposed a -- on the larger housebuilders a tax levy, meaning our tax from next year will go from 25% as per all other companies up to 29%, which will claw some money back. If there is a levy roof tax stamp duty, whatever there is going forward, we will see, and we will comment on it, but I would have thought in any case, if there was the windfall tax that the land owner receives would certainly come into play with that, i.e., it will probably end up being a cost that we would look into within our land appraisals.

We have our next question from John Fraser-Andrews, who is from HSBC. [Operator Instructions]

Three for me, please. First one on Partnerships, are you seeing the competitive landscape opportunities increase with your leading competitor analyzing its own sites rather than pushing on with growth plans and also in that area your customers, the housing associations, are you seeing their ability to undertake their own developments receipt as a result of what's going on in cladding. So that's the first one.

So from a competition perspective on Partnerships, it's neutral, no different, I would say, than it was 12 months ago. The opportunity levels that are coming through from Homes England -- and I was actually on a call with our London business yesterday from Housing Association providers having seen a bit of a lull maybe over the last 12 months have come rushing back in. So we are dealing with as many opportunities, and it's a huge market, a huge untapped market because of the shortage in this country are really, really starting to come through on all avenues. So competition, no different, I would suggest than it was 12 months ago, 2 years ago, a very good space to be in. And the opportunity levels that are coming through, as we speak, are getting towards too much to actually deal with, which must mean that housing associations have analyzed and looked at and are now putting their head above the parapet on where they were with the planning issues that they face as well as we faced.

Second question is on the embedded gross margin in the land bank. It's almost at your hurdle rate. I'm assuming, therefore, there's a bit more to come on land to come through, particularly as you push the strategic land pull-through towards your target. So any gains there to come? And also cost efficiencies, are you done now on the merger synergy? And are there any ongoing efficiencies over and above that land buying that can come through into the P&L?

No, I think the synergies we've now, over a 2-year period, done well, and we've embedded them into all of our forecasts. The housing market -- sorry, the land bank in housing is 25%, which is right on our hurdle rate. In the strategic land, where we have 40,000 plots, we have a brilliant strategic land team and a strategic land bank. There's over about 8,400-odd plots, I think there is where we have some form of planning, which will come through. And undoubtedly, that will have a greater margin than 25%. Somewhere between 27% and 30% would be the norm that will come through. So that will help. But as I said earlier, the land market is a little bit more tighter than it was 2 years ago. So maybe that will be needed to offset that. But we are confident that on average, we will be able to at least deliver on the 25% hurdle rate across the board that we have stated on numerous occasions. And I'm delighted now to see the land bank margin, embedded land bank moved again last year and is now actually at the 25%. But included in that, there are still some legacy sites which are obviously less than 25%, offset by some of the strategic land -- that's difficult to say -- that was put through during the course of last year, but it's all moving in the right direction, John.

The only thing I'll add to that, so continued focus on that gross margin in Housebuilding in due course. We've obviously got a Housebuilding business with 13 business units that can increase its volume within existing structure. So there'll be some betterment in terms of the spread of overhead in due course, but still the focus on the gross margin first and then growth coming after, but there is that efficiency to come.

Modest growth in housing, aggressive growth in Partnerships.

And the cost efficiencies, are you done there in terms of initiatives? I appreciate on the merger you are, but now you've bedded in the businesses any more due to the squeeze there?

The only -- I don't think there's too much to go, but where we are looking for efficiencies and looking to ways of saving money will be on the new regulations that are coming through. So you've got Part L and F during the course of next year and then sustainable homes or homes for the future from 2025, where we've got numbers that we're working to at the present moment in time, but we would hope -- and my experience is as you get closer to actual implementation, they come back. So we've got a lot of them, clever people within the organization working at different ways to actually reduce the costs that we've included within land acquisitions and forecast for the forthcoming building regulations.

And finally, on cladding, the GBP 4 billion, have you sort of got any sense out of government where that number comes from and where it's heading?

You want to take that, Graham?

Short answer, John, is no. I mean the HBF is trying to rationalize that number and is discussing the number with the department. And beyond that, I would say, at the moment there -- I mean, let's be clear, it's a difficult number with the records available for anybody to get at. But I would say the industry has quite serious doubts that, that is the right number. We think it's too high.

And let's be clear, like everything else, if we put something right, it will be put right to actually comply with the regulations so that we can -- or the leaseholder who we are in total agreement with the government shouldn't be borne to pay for this and can get an EWS1 form and sell the house and the person can get a mortgage as it were. So that's what we're looking to do. It's the bells and whistles that the government might be looking at behind that. So go play to taps now, we will put back what it is to actually make sure you can sell or buy that flat in that building over 11 meters high. No more, no less.

Clearly, the housebuilders are cracking on with their own buildings, which seems they don't have a legal liability to do that, but they are doing that yet anyway, in terms of legal liability. But how do you see the timing of this planning playing out in terms of mopping up the other buildings and the issue being resolved?

I think it's a hugely complex issue, and we've not even made any agreement with the government yet, but I see this playing out over a 2- to 3-year period. I mean, obviously, the more serious ones, we'll get done as quick as we can. But...

At least 2 to 3 years, John. And the point you touched on that, I mean it is vital that we get clarity on what does remediation constitute, what does it look like? And what is -- and that we achieve a standard that is agreed as acceptable not only by government and by housebuilders and other developers but by banks and insurers and indeed the [ regs ] and so on and so forth. So there's some complexity to resolve. We're just keen to crack on and get it resolved as quickly as we can, mainly -- well, so the leaseholders are freed up from that burden.

But current share prices with us and within the house builders would -- what we've done, we tried to put a number out there. And as I've said a couple of times now, by the time you take the tax off, and this will be spent over a 2- or 3-year period of time at GBP 50 million, it's GBP 36 million, GBP 37 million over a 2- or 3-year period, that in no way, if I was being brutally honest, we're not that clever enough to be accurate enough with our cash forecast to those kind of numbers. So that is no way going to in fact have impact on anything we are going to do with Partnerships, Housebuilding or dividend or share buybacks going forward. So we're just trying to put some sort of scale to bring some sort of order to the panic that seems to be in housebuilder share prices over this issue.

So we have no further questions at the moment, so I'd like to pass back to you, Greg for any closing remarks.

Very good questions. Thank you very much, guys. Lots of questions there around cladding. Just to reassure you all that it's pretty much top of our agenda. We think we've been open and transparent with the numbers that we've put out. Please take off the tax. Please bear in mind what I've said it will not impact on anything we are doing going forward. And one other thing I would say is the number being where the number is, there's only 2 buildings out of the 64 that we're looking at that are Bovis and they're clear. So the reason why the number might be relatively low is this is an issue that is a Linden Homes issue, not Bovis, and maybe a little bit in Partnerships. So we're confident with where we're at, but we'll see where we go. And the other thing I would say is that finish off with the integration 2 years has gone incredibly well. Those results last year are fantastic. So a big thank you to all of our people, which is what this business is based on. And we have started the year incredibly well and are in a great position wherever I look across the organization, which is a great place to be. So incredibly proud to be Chief Exec of this group, which is absolutely flying at the moment. On that, thank you very much.