Vistry Group PLC (VTY) Earnings Call Transcript & Summary

Good. Hope you enjoyed that little video. So welcome to our half year results. Before I get cracking on that, just a little story. I've struggled during the summer, as I've just been reminded by one analyst in the room, I won't say who he is, but he's Welsh, I turned 60, and it's been -- I've actually struggled with it. It's been quite difficult, including the moment 3 weeks ago, my PA, Tracy, with a big smile on her face gave me my senior railcard. But I had a break yesterday on the train up for this roadshow. 10 minutes onto the train, conductor came along, can I see your ticket, please, which I've moved into the 21st century, I showed in my phone. He put his little clicker on to it, and that's fine. And I looked at him smiling and he said that, I will need to see your railcard, sir. And I said, "Why is that?" And he said, "Well, I don't think you look 60." So anyway, it made my day. So agenda. Introduction, which is me, financial review will be done by Tim, of course, Partnerships update, Stephen, operational, Earl, and then I'll wrap things up with a little bit of blue-sky thinking at the end and then, of course, we'll take Q&A. And one other reminder is, if you could turn your phones off, and this is all being done on a video link. So you can not only enjoy it today, you can watch it again tomorrow and the next day if you are that way inclined. So highlights. We would say, hopefully, you all agree, a strong first half performance with the partnerships model significantly outperforming the traditional housebuilding market. Completions were up, that's U-P, because I'm sure you've been more used to writing down, by 9% to 7,792 units and the adjusted operating margin has been broadly maintained at 11.5%. Now that's pretty good against what the other housebuilders are saying. But when you look at it, that the numbers in the half year are probably 76% Partner Funded, 24% private, compared to the corresponding period in 2023 when we had a separate Housebuilding business and Partnerships business where the completions were 34% from private housing, that's an incredible performance. We've been very active in the land market and have got some very good opportunities in the pipeline at the moment, and we've basically replaced what we've completed. Having been incredibly successful in the last quarter of 2023, driving down our cost base with our supply chain with our new partnerships model, we've managed to hold on to pretty much all of those gains so far through 2024, and would see build inflation this year at 0. We've had an encouraging -- we're in a downturn, but we've had an encouraging sales performance through the typically quieter summer period. So by that, I mean, our sales are 10% up on what we achieved in April and May, two of the busier sales months, and they're 20% up on July and August 2023. So early days, but some encouraging signs that there is a little bit of life coming back into the housing market. We're on track to deliver in excess of 18,000 units this year, making us by far and away, not just slightly, the biggest house builder in the country with full year profits -- as the half year, profits were ahead of last year. And I'm delighted to say that we are announcing today the first of our special distributions of GBP 75 million via a share buyback in addition to a further ordinary distribution of GBP 55 million. So there's a further GBP 130 million worth of share buybacks announced today. So what have we been doing? This is pretty much a year on since we announced our new strategy. And let's be clear, since we announced the new strategy, we've been in the housing -- private housing downturn. We've actually been in a downturn in the Partnerships market. And why have we been in the downturn in the Partnerships market, no surprises. One, you're coming to the end of the current housing program, which finishes in 2026. Two, housing associations, particularly, and local authorities have been struggling from -- for two reasons: a management bandwidth issue in relation to building safety and decent homes as well as the cash constraints that come from that with higher borrowing. I think all of that is going to -- and all the vibes we're getting from the government is going to come to an end as we lead up to Christmas, particularly on October 30 with the budget. So what we've achieved has been in a downturn in both of our markets. Through all of that transition, which has been enormous through the organization, we've managed to maintain or improve all of our KPIs, whether they relate to customer, build quality or health and safety. Our employee engagement score done independently by Peakon, it went down to 7.6, when we did it just after announcing the strategy. And why wouldn't it? We were closing offices, we were making people redundant, we were asking people to go around doing things different. Very, very difficult for our team and people, which I thank them for constantly. Just done the latest one, and people could start seeing the light at the end of the tunnel, and it's back to 8.1, which is in the upper quartile. And we are just turning the corner now from integration into business improvement. The supply chain partnerships relationships have been strengthened, having done some serious negotiations with them last year. And I'm happy to look at anyone in the eye and say that our subcontract chain -- supply chain particularly look at Vistry as the mortgage. We will pay your mortgage. We give them the visibility and the certainty of work others can't. The transitioning of the former housebuilding land bank is going well, and we would say we're about 2/3 of the way through, particularly with two big deals with Blackstone-backed Sage and Leaf Living. And overall, worth noting, of the GBP 1 billion we've promised to shareholders over the next 3 years in special -- in distributions, we've today, paid or announced GBP 285 million of that. Vistry Works, which we took on with Countryside, is now absolutely at the core of the business. And more on that later as we go forward. And as you can see, great picture there of our East Midlands factory. And as you can see, there's no problems with parking there. So we are very, very much focused on delivery, and we're incredibly encouraged by the government's ambitious housing policy. So Labour in the run-up to the election talked a lot about housing. They could have said that they after winning the election, only joking, it's business as usual. What they haven't done is they have absolutely -- and I've never seen, and I've been doing this for 43 years, nothing like it, whether it's meetings, letters to local authorities, to housing associations, to us, they mean business. And you can all be skeptical, and there's an element and I'm a skeptical person. But the fact is, I think they mean business and I think they're going to do it. And there's only so many times you can kick the can down the road. There is a housing disaster in the country, and it has to be sorted and I think Labour are going to do it. So very impressed with what they've done so far. Lots to do still since coming into power. That was -- yes, the other thing you've seen with the government since they come into power is I have a constant live feed to the clubs in Ibiza, and you've definitely seen that I would say that Angela Rayner is definitely a better mover than Theresa May. Operationally, we have the capacity, and don't underestimate the word momentum, to deliver the strong growth. Momentum is a wonderful thing when it's good. And it's really, really difficult to turn an oil tank around when you're going backwards, and we have very positive momentum in this business. We continue to invest in our future capability. Land, we've replaced what we've sold basically in the half year. Very strong pipeline coming through now. We've got our academies up and down the country with regards to skilled labor. And our timber frame, we currently will be looking at about 3,500 units from our timber frame -- three timber frame factories this year, going up to 7,500 next year and we'll be looking at 12,000 units coming from them as we go into 2026. And we're well on with, nearly there, locating our four factory, which will be in the south of the country to help with logistics. So we continue to be very confident of delivering on our medium-term targets of 40% return on capital and GBP 800 million adjusted operating profit, as well as returning GBP 1 billion of capital to our shareholders over the next 3 years and we're already getting close to 1/3 of that through already. So on that, I'll hand you over to Tim, and that's probably the end of the jokes.

Yes, I was instructed no gags, so I will stick to that. Good morning, everybody. It's worth just taking a second to reflect that in September, 2 years ago, we were announcing the Vistry-Countryside combination. In September last year, we were announcing a big strategic pivot. And so today, in September, with reassuringly, no dramatic news, no dramatic change. Instead, three really positive themes, I think, I'd pick up. Number one, really strong progress and momentum, which Greg has just articulated. The second is that there was really clear differentiation against the housebuilding sector. And I won't talk about other people's results, but you'll have seen the announcements in the last few weeks, and I think the numbers and the presentation that we'll give today is markedly different from what you heard elsewhere. And I think the third, and again, following up from Greg's comments, is a really increased optimism about what lies ahead, particularly after the developments over the summer. So let's get into the numbers. First of all, revenue and operating profit, double-digit growth on both counts against '23 last year despite the market. So that reflects the strong performance, particularly in our Partner Funded area of the business. And pleasingly, the operating margin hasn't been significantly impacted by the strategic shift in the first half of the year. And that's because, although there have been hits to the gross margin, which you'd expect as we move from a higher-margin Housebuilding business to a slightly lower margin Partnerships business, we've been able to make savings in overheads that have almost fully compensated for that in the first half of the year. So PBT, up 7% year-on-year. The finance costs have gone up year-on-year. We have a higher average net debt in the first half of the year than we had last year, GBP 489 million in the first half of the year versus GBP 360 million last year. And EPS is up, but not up as much, and that's because of the tax rate change. Last year, the effective tax rate was 24.1% in the first half of the year and it's 28.8% for the full year and the half year this year. In terms of net debt, an improvement on last year. A lower level of net debt than this time last year, but that masks an underlying improvement in the cash performance of the business. So we started the year with a debt position, GBP 200 million adverse to the previous years. So we've caught that up and overtaken it and in the year, as I'll show you later on, we've got some reduction in land creditors during the first half of the year as well. So actually, our cash position has improved markedly year-on-year. In terms of the return on capital employed, we're quoting a number there of 17.8%. Now that 17.8% is based on the 6 months only in order to give us comparability against last year. We would normally do return on capital employed on a 12-month rolling basis. But because last year had the Countryside acquisition midway through the year, we don't have a true comparative. So we compared 6 months against 6 months, and we'll return back to a 12-month rolling at the end of the year. So working up on last year, which is encouraging progress. The half year numbers are always lower than our full year number because in the first half of the year, we have lower profits. We've got more completions skewed to the second half of the year. And connected to that, we have more capital employed buildup in the first half of the year prior to selling more homes in the second half of the year. So you'd always expect that. In terms of the full year ROCE position, last year, we were at 21.3%. We'd expect to return to that sort of level by the end of this year. So a bit more detail in terms of the split of the revenue. So the Partner Funded was 74 -- 76% in the first half of the year. We've still got a medium-term target of 65-35, but we'll always be agile and respond to the market. And what we've seen in the first half of the year is an active PRS market, and the PRS share of our sales has gone up significantly from last year, with a corresponding reduction in the open market proportion since the first half of last year. And we'd expect that split, the 74-26 split, to be similar in the second half of the year. A few more numbers on revenue. Specifics there on the unit numbers, the JVs represent 18% of our business. JVs are a good model, particularly for some of our public procurements and our partnerships with local authorities. So while we'd expect 18%, 19% for the year as a whole, it may tick up, it may go slightly above 20% over time as we invest in more joint ventures. The average selling price, perhaps surprisingly, has held against last year despite that strategic shift. And that largely comes down to the higher proportion of PRS. So PRS' average selling price is higher than the average selling price of the affordable homes within Partner Funded. And the other point in ASP, there's lots of geographic mix movements within there. But encouraging to see ASP holding as a whole at the same level as last year. Let's get to margin then. So gross margin, we would expect the gross margin comes down as we have migrated from a business last year, particularly in the first half of the year, had more pure housebuilding sites. So we're moving away from having pure housebuilding sites and all of our sites will be mixed tenure. So margin should stabilize. So that was impacted by the strategic change. It was slightly offset by the positive movements we made with controlling our build costs. So we've -- at the end of last year as we reported earlier in the year, the subcontractor negotiations meant that we were able to secure a reduction in subcontractor costs. And we've also been successful in our discussions with our material suppliers and holding materials costs, broadly neutral year-on-year. So that's provided some offset in the gross margin. And then the operating margin, slightly down year-on-year, but only marginally, and that is -- has the benefit of reduced overheads. So in particular, from the strategic change, we went from 32 business units down to 26 business units, so a significant reduction in the overhead. In terms of the operating profits and net earnings, so just talking about finance costs briefly. Net bank interest, as you can see on the screen, has gone up GBP 10 million year-on-year. That's for a mix of two things. One is the higher average net debt levels, which I talked about earlier in the year, and the higher average net debt is largely attributable to just the timing of the deals in the year. So some of the deals in the first half slipped back. So average net debt at GBP 489 million was slightly higher than we had expected at the start of the year. We'd expect it to drop again in the second half of the year, and I think the full year average net debt will be similar to last year's, just above GBP 450 million. We've also got higher other net finance costs from higher discount rates from land creditors, and that higher interest rate is the other contributor to net bank interest going up. But with luck, we'll see some rate cuts in the -- further rate cuts this year that will be to our benefit. On tax, the tax charge I mentioned before, up from 24.1% last year to 28.8%. So that includes, as I'm sure you'll know, nearly 4% charge for RPDT, the Residential Property Developers Tax, as well as the impact of the higher corporation tax at 25%. Moving to fire safety, which is clearly an important topic at the moment. And before I say anything else, I should say, look, we're watching the -- monitoring the Grenfell Report as closely as anybody. We are also mindful of the recent fires, and we remain absolutely committed to the pledge that we made to remediate and rectify all the buildings that we have constructed. And there will be no complacency around build quality as we accelerate our growth of units over the years ahead. In terms of the remediation work, we have made good progress in the first half of the year. The outstanding buildings has reduced from 237 to 213. We are working actively on 34 buildings at the moment, and we've got 179 where we're in early stages. Of course, our progress isn't entirely in our own hands. We are reliant on the building safety regulator needs to sign off work before we start it. And at the moment, that's progressing well. But with the volume of activity, there is some concern about any backlog in the system there and whether they've got sufficient resources to push through the sign-offs to enable us to crack on with this electrification work. In the first half of the year, we benefited from GBP 16.8 million of cash recoveries, including one large one-off settlement. We continue to expect some recoveries going forward. Some of these recoveries relate to additional work that we do on site while doing the rectification. And we'd expect though the net cash outflow in the second half of the year to be greater, so somewhere in the region of GBP 30 million net cash outflow in the second half of the year. In terms of our overall provision, we are comfortable with the level of provision we've got. As I said, we are monitoring external developments closely. We're also learning from the rectification work we're doing about the costs of rectification. But at this stage, we're confident in the level of provision. Thought I might spend a little bit of time talking about land. One of the questions we get asked a lot is how much land do you need and are you going to be able to secure it to deliver your medium-term growth targets. So I'd walk through that in stages. First stage is around how much we need as a Partnerships business. So we can get away with a lower land bank than a traditional Housebuilding business for a couple of reasons. One is that we can build faster. We have greater certainty on site because of our presale model. We have an opportunity for greater standardization. And with the fixed nature of we knowing what we can build, we can build multiple units rather than step by step. So our build rate will be faster. Also the way we account for our land bank is slightly different because we are selling -- effectively selling the land as we go. So the partners pay us as we go, and we're effectively selling the land to them. So we're selling the land faster and turning through that land bank faster. So that's the first thing that we can have a shorter land bank. The second thing is that the constitution of the land bank is slightly different, that we can have more controlled land rather than owned land in our land bank. So what that means is controlled land is off our balance sheet, it's still owned by somebody else but we have either some form of exchange contracts, either unconditional or subject to planning, or we have a development agreement for long-term land sites where we can draw down over time. So we only have to take ownership of the land at the point that we're ready to start building, which enables us to run with a more capital-light business. In terms of targets, what that then means is that the medium-term target for the land bank isn't too far away from where we are at the moment. So we've got 75,000 plots now. We expect we need about 80,000 plots in our land bank in 2028 for our medium-term targets, and our land bank years will reduce to below 4. So where is the land coming from is the next question. So if we need an 80,000 land bank in 2028, and we've got to deliver 100,000 completions between now and 2028, that means we need 180,000. I can do the math on that. The land bank that we have is 75,000, some of those completions will come from 100% Partner Funded units. In other words, we don't take the land, the land is provided or flipped straight in and out of our land bank. So that's not relevant in terms of land acquisition, which leaves us 90,000 plots to acquire over a 4.5-year period. In terms of the split of that, the three sources. One is purchasing from private landowners, which is a bit above 50% in the first half of the year. We expect it to be about 45% over time. About 35% will come from public procurement and about 20% from our strategic land bank, where we draw down as we get planning consents. So how do we compete with the others? Again, one of the initial challenges was, well, how do you compete with higher-margin house builders? We've got a bunch of financial and nonfinancial advantages that enables us to win land. The first is that we've got the lower build and overhead costs that I've talked about already. The other thing is that we go in with a lower operating margin hurdle, which means that we can effectively take up more of a hit on the land. Then there's also the benefit in terms of financial around grant income, which, of course, enables our partners to fund and be competitive. And then there are the nonfinancial elements. So we've got a close relationship with partners and with Homes England and local authorities that particularly gives us an advantage when it comes to public procurement, and also for some of the longer-term strat land work. We've got a strong track record and credibility in the market. In the first half of the year, for example, there was a plot where we know that we were third on price, but we were awarded the land on the basis of they trusted us to actually execute and deliver and turn that land into proper build-out. So that counts for a lot when dealing with landowners. And then finally, we're able to develop larger sites with our strategic land expertise and working with public procurements. Our mixed tenure model allows us to build larger and to spread the risk more broadly. So lots of reasons why we can win in the land market. How did it play out in the first half of the year? Well, effectively, we replenished the land that we needed. So the land that we completed on, broadly, we replenished that with further land bank additions, and you will see about 1/3 of those were controlled. In addition to the land bank, we've also secured 100% Partner Funded work for 1,300 plots on 9 sites, and we've added almost 5,000 plots to our strategic land bank. So at the end of the half, we had about 75,000 plots in our land bank and about 75,000 in strat land. All right. Back to some financials then. The cash flow. So as I said before, the cash outflow in the first half of the year was significantly down on last year, GBP 200 million less cash outflow in the first half of this year compared to last year. What were the constituent parts? Well, there was net investment in land and WIP, again, largely a timing issue, GBP 200 million less investment in land and WIP or the net movement compared to last year. So that's where the year-on-year cash flow improvement has come, lower net investment in land and particularly WIP. We've also reduced our land creditors. That's just down to the timing of the land creditor profile. And actually, you'll see in the pack we lay out the land creditor profile for future years in the appendix, and the land creditor spend required over the next 12 to 18 months is significantly down on where we were last year. So that frees up over GBP 100 million more cash with lower land creditor payments over the course of the next 12 to 18 months. And one more thing to bring out here. In terms of the other working capital, we did have a single receivable on a deal that we did towards the end of the half, which was worth GBP 40 million, where we got the cash in, in August. So there's some timing element there, which was unusual. But we might see a bit more of receivables movements now that we are more of a B2B business and less of a B2C business. Okay. Capital employed, not much more to say on here. You can see the WIP buildup. Other assets and other liabilities, both up due to short-term timing points. But I think nothing to add beyond what I have already said. And then in terms of capital allocation. So Greg has talked about this already. No change to our policy. We are distributing an ordinary buyback of GBP 55 million, and that's directly linked to our expectation of full year net earnings and distributing half of that, roughly 1/3, 2/3 split for half year, full year. And then in terms of the special distribution, we're starting on our journey towards the full GBP 1 billion. So that GBP full 1 billion of distributions we've talked about it being roughly 2/3 from ordinary, 1/3 from special, starting the special with the first announcement today. So why are we announcing it today? Well, first of all, we've made significant strategic progress. We've done two large land bank deals, which we've announced with Sage and Leaf. We're making progress with a lot of other capital release initiatives. And the cash movements, the underlying cash position is enhanced from where we were before. So a lot of progress made and a lot of progress ongoing. So further capital release initiatives in the second half of the year, and we are confident in our cash generation in the second half. So we would still guide to say we're going to be in a net cash position at the end of the year regardless of what the timing is of our buybacks. In terms of the timing there, what we're saying with that GBP 130 million in total that we're going to pay that all out by the time of our AGM. The precise timing we'll work on a more regular basis to update, but we're expecting it all to be paid by the time of the AGM in May. And that brings us to a total announced to date of GBP 285 million. That's it from me. Stephen?

Thanks, Tim. Good morning, everyone. As Greg has highlighted already, it's the strength of our Partnerships model that has really delivered the numbers during the first half. And that Partnerships model puts us in a great position as we respond to the opportunities that the government is creating as it looks to lift volumes. So during that first period, we've seen continued appetite amongst those traditional registered providers with the balance sheet capacity and the business plan to continue to invest. And we've also seen increased PRS activity. That's allowed us to convert 136 deals with a spread across 45 partners. Those partners has included some new partners. So there's three new for-profit registered providers there, including one that is owned by a council, and I expect we'll see more of that, and in addition, a further PRS provider. And if you look at the pie chart on the slide there, you can see the proportionality based on value between our partners. And you can see over 50% by value is with traditional registered providers, which shows, despite the headwinds that Greg has mentioned, we're still able to transact by being selective with those partners. But one in four of our homes has gone into the PRS market. We're continuing to work and be the largest counterparty with Homes England. That puts us in good stead and has allowed us to capture grant funding, which has supported our forward sold position of 24,000 homes. So looking at partner and customer market sentiment. What do we see in terms of market trends? With that strong appetite from PRS providers, which reflects the growth in rents and also the scarcity of supply, and that's delivering yields that is supporting the appetite amongst PRS providers. As I've mentioned, growing for-profit registered provider interest as capital flows into there. We are being selective and working with partners on longer-term programs. So working with those partners with that deeper balance sheet strength. And the important point here, our model enables Section 106 delivery. You will have heard about obstacles to Section 106 delivery. By virtue of engaging with partners earlier, by virtue of using grant funding to provide additionality and focusing critically on the quality of product that our partners want, we're able to deliver Section 106s across the country. And we're seeing increased interest from local authorities, and we've stepped up our engagement with local authorities in response to that. On the open market side, sentiment is continuing to be driven by mortgage affordability, and we're using incentives in order to secure sales and picking up, as Greg has mentioned, the positivity that flowed from the interest rate cut earlier this year. We are, though, investing in continuous improvement. We have an excellent continuous improvement program led by Mike within the team and we are investing in our digital sales platforms and in a customer call center. So we're continuing to look to be best-in-class in our sales as well, and that's a continuous improvement strategy that we have. So government's ambition. We all know about that. We can all see that driven by concerns about affordability, the government is looking to increase volumes and actually setting standards at the top end of what Kate Barker's report had said 20 years ago. But who would have thought that within 72 hours of taking office, we'd see a Chancellor standing in Downing Street placing housing center to a growth strategy. Not a Housing Minister, the Chancellor. That's a key change in our operational environment, and that's a change that our model is absolutely well placed to respond to. And we've seen the beginnings of that rhetoric converting to implementation. So it requires both the supply side and demand side initiatives. So on the supply side, we've already seen investment in the key areas. So we're seeing a focus on a functional -- functioning planning system, a focus on land release, and you will have seen the announcement last week around the New Homes Accelerator initiative, trying to bring forward large sites, one of those letters that Greg mentioned that has come out across the industry, a focus on recognition that the infrastructure needs to be there for us to deliver, but also affordable and mixed tenure being a priority within the planning system. Again, that is perfectly placed for our model that allows us to deliver across those mixed tenures and we look for more of that. And the government that recognizes we need to do things a bit differently, we need to bring labor into the industry, but we also need to innovate. And as you will hear in a moment, we are involved in that as well. But those supply side initiatives, incredibly welcome, but there is also a need for demand side initiatives, and those are key. So what would we like to see? What will really drive impact over the next 5 years as the government seeks to deliver that 1.5 million homes? Long-term funding plans for housing associations and local authorities. A near-term stimulus using the existing grant funding program would really help to deliver homes early. And the government will receive payback. There's been all sorts of analysis that shows that investment in housing delivers payback later. So the earlier that that's underway, the better. But we'd like a stimulus package to be followed by a quick of response to a successor program to the existing Affordable Homes Programme that Homes England manages. That would really help. That needs to be coupled with a 10-year rent settlement for housing associations. That will attract funding into housing associations, help restore their balance sheets. But we mustn't forget local authorities in that equation. Local authorities equally need long-term planning in order for them to invest, and that needs to be part of that rent settlement. An introduction of a single regeneration route of funding would be very helpful rather than multi-strand, all supporting funding. We are in a great place in terms of the regeneration market, largely through our work in London, and that's an area that we'd like to see more of. And that right balance between the evolution and managed central administration of programs is important. And as I mentioned, additional resources and borrowing freedoms for local authorities to commission housings direct. Support for first-time buyers. We are absolutely seeing demand for shared ownership at our outlets. Where we work with our partners to offer shared ownership, it's extremely popular. It could be mainstreamed as a route for first-time buyers, and that could be matched by additional private investment initiatives that capture private investment coming in to support shared ownership delivery, would be very helpful. So we'd like to see those demand side initiatives come through, and let's hope that we see some of those announced on the 30th of October. So in summary, where does that put us as a business? Absolutely, well placed in order to respond to the government's agenda. And we've got some key strategic assets. Tim has mentioned our strategic land position. We've got great people and great long-term relationships with our partners. And our partners trust us. They know what we can deliver and they know that we are always looking to improve the service that we give them. Our engagement with MHCLG and with Homes England can support further work and at pace. And key to this pace is one of our unique assets. This alignment, the vertical integration we can offer through using our factories, our timber frame factories, in order to deliver a presold product, that hasn't existed in the U.K. previously. It's a completely unique ecosystem. And that is the way that we believe that you can deliver MMC at pace and really revolutionize the delivery of new homes. And that focus, with our continuous improvement, will help deliver the numbers that the government wants. Now Earl is going to provide an example now of where we're using that at Drakelow, and also how we are going about delivering growth and efficiency. Over to you, Earl.

Okay. Thanks, Stephen, good morning, and we're trying to pack a lot into this presentation. So I will go at speed and talk about the pace in which Vistry is going. Looking back a year, I would say, operationally the absolute key thing for the group is that we now have a workforce that is all aligned looking in one direction working together. So we can focus on the external challenges that my colleagues have been talking about, rather than those internal challenges of integration and change that we are now well through. In terms of operationally, Tim has already talked about the land approach for us and how we're going to secure the land. Stephen, there on sales and clients. So we're also very focused on people. And as the sector takes off, that is going to be an ever more precious resource. And I'm going to give you an update on our operational model and how we are looking for growth and efficiency. So the slide just gives you the key attributes of Vistry in terms of how we are driving that high growth, faster pace of build, lower-cost production, how we are different from others in the sector. I'll come back to most of the points in the next couple of slides. But I would say that scale, having put all the bits of Vistry together and now a wholly partnerships model really is driving internal efficiency and we really are important to our supply chain partners. The minimum 50% presold is driving capacity through our manufacturing, through Vistry Works. It is giving our construction teams what they want. And yes, quite frankly, our build teams simply want to build, and so it is really driving forward as well for our supply chain. So in a bit more detail, we do have significant existing capacity. So 26 regions, all capable of doing 900 homes a year. Where are we today? Well, we've already got nine of those business units looking to do more than 800 homes this year. And looking forward to next year, 14 of those business units looking to do over 800. And if you've got 26 doing 900, that could be 23,400 homes. And you compare that to the 18,000 roughly that we're looking at this year, that is 30% growth possible from our existing structure. We are also investing heavily in the management that is leading those 26 businesses. So our investment at Cranfield on leadership courses, development plans, succession planning and as well as already mentioned, our nationwide investment in academies so we can create the workforce the sector needs in the future. We are a truly build rate-led organization now. So that's 76%, 77% presold Partner Funded delivery. The larger sites that we're talking about, we can have multiple build outlets, multiple build teams on site. We estimate that, typically, our Partnerships setup can deliver about 150% of what a traditional housing outlet would do. So build rate led with that guaranteed delivery, we can see a build team delivering between 70 and 90 homes a year compared to if you're building to a sales rate, we would more typically see 40 to 60 homes each year. So really driving the pace. Our centralized procurement really is driving mutual benefit for us and our supply chain, particularly our materials suppliers. So we can commit to large volumes. And in return, we do get great value from our material suppliers. And yes, we would acknowledge there is build cost inflation in the marketplace, but we are able to mitigate that. And as Greg said, we see our cost base as broadly neutral in the year-to-date. Standardization, absolutely key to growth and the pace of build. That includes what we build. So we've launched our new house type range this year. I'll come back to that in a moment. We've also launched our consistent life of site process. We've taken the best bits of all those businesses, we've put together with Vistry, rolled that out across the whole group. We've got the whole group on common systems. That's largely being led by our functional business improvement groups, and they have been headed by our operational or divisional chairs, and they will continue as we drive for continuous improvement and further efficiency going forward. And that commitment to quality already been mentioned, absolutely getting things right first time is absolutely key in terms of the pace we can go and the low cost that we deliver, and therefore, delivering on our expectations in terms of our customers and clients' expectations that is. Greg mentioned all the KPIs moving in the right direction, and they are all given on the slide there. So an update on our manufacturing. Vistry Works, absolutely critical to our strategy. And certainly, as production in the sector takes off, labor will get more constrained. So the more we can do offsite in a factory, the less dependency we will have on that scarce site-based labor. We can go quicker with timber frame. So we reckon we can build three timber frame homes in the time it would normally take to build two traditional homes. And of course, significant sustainability gains for all stakeholders. We're investing in the factories, so new production lines going in, so we can build more timber components of a home. And I know one of our newest lines, we can now produce a roof truss every 2 minutes. The video is good apparently, so we may show that in the future. We've been mandating timber frame on all our land acquisitions for the last 18 months. Hence, we are targeting in excess of 30% of next year's production to be timber frame. And we're growing the capacity. So by 2026, we will have the capacity to do 12,000 homes in timber frame, and that will include a start-up factory in the south. Overall, increasing that throughput, focus on standardization, great manufacturing management, we've been able to bring the cost of our frames down by 4% this year. So really not a lot of difference between the cost of the frames and traditional build. And then when you add in the fact that we can go faster and the saving in prelim costs, really no real difference in terms of those costs. So the new Vistry collection, this is our new house type range, so 49 house types. They are designed to meet current as well as anticipated future regulations, future home standard. They are designed with timber frame in mind, but can be built traditionally as well. You'll just see from the images on the screen, a few nuances on the external design that can include the doors, the windows, the canopies. And the style can really respond to what planning authorities across the country are looking for. And there is further standardization within the homes, so there are only five designs of staircases, four different bathroom layouts, three ensuites, two cloak rooms, so really driving standardization and simplicity of build, so we can go at pace. And we are already doing this. So as you came in and sat down and listened to the music, you were also looking at Drakelow, so a development that's on the former site of a power station. It is 77% Partner Funded. It's bought on great deferred terms. So yes, it has a good return on capital, and it is going at pace and growing. So 259 homes last year, looking for 322 homes this year, all in standard timber frame out of our factories. And yes, it's a large site. So we've got multiple build teams doing over 90 homes each. And I should add, this was a site that did not, by planning, need any affordable homes on it, and we are delivering 450 affordable homes, all additionality, all absolutely in line with our model and our strategy and also a great quality. So it is a site that's 5-star in terms of satisfaction surveys, is at 86% on its 9 month, which is well above the industry benchmark. Its CQR score with the NHBC is over 4. And in terms of its reportable items, that's RI, in terms of quality, it's well below our own benchmark and which is already below the sector benchmark, it's down at 0.11. So great quality. The site, of course, is also delivering great things for the community. There's a school. We're putting a new bridge in that goes over the river in terms of connectivity. So a fabulous scheme. And this is not the only one we've got. We've got other schemes around. Some of you would have been to North Whiteley, down in Southampton. And that competitive advantage to secure larger sites, our ability to go at pace is what is going to support the growth going forward. Greg, back to you.

Great. Thanks very much, Earl, Tim and Stephen. So outlook then. So very encouraging sales performance through a typically quite summer months, encouraging, but still, I would say, a challenging housing market. We're on track to deliver 18,000 units this year and full year profits, as we've said a few times in his presentation, ahead of last year. And that's all underpinned by some incredible numbers. So our forward sales position is now GBP 5.1 billion, and that's 19% up on last year and 91% -- and going back to Tim's point, why now on the extra or the first special distribution, we're 91% secured for the full year. So we're in a confident place for the year and a pretty confident place for 2025. Ordinary distribution of GBP 55 million. First of many, hopefully. GBP 75 million of a special distribution, so GBP 130 million distribution, making GBP 285 million paid or announced to date of the GBP 1 billion we promised over the next 3 years. And we remain incredibly confident, more confident than we were when we announced the strategy, and I'm going to come on to that, with our medium-term targets of 5% to 8% annual growth, 40% return on capital, GBP 800 million worth of operating profit and 12% plus operating profit margin. So that's all good and it's jolly-good, and I'm sure we'll all agree that's good stuff. But what are we going to be saying over this next week and going forward in the U.K. and when we go over to America to get new investors interested in Vistry? So first of all, let's say that we have -- and we're the only housebuilding business out there that has got a strategy completely aligned with the government. Now forget everything else Tim said and Stephen just said there about our numbers, Vistry will never stand still. And we have a strategy meeting on the 27th of September with all the divisional chairmen to talk about a few things. But it's based on this. In the last 6 weeks, the most influential person in the affordable housing market met with one of our largest shareholders. All very good. The shareholder obviously wanted to hear what Homes England thought about Vistry for himself. All good stuff. But just as the shareholder was leaving the room, 1.5 hour meeting with him, he said, "By the way, one other thing you can pass on to Vistry, what's all this about 22,000, 23,000 units by 2028? How are they going to do?" Be in no doubt, Mr. Shareholder, if the government are going to get anywhere near where they want to get to, we need and we'll be pushing very, very hard for Vistry to be doing 30,000 to 40,000 units per annum, not by 2028, a lot quicker than that. And I believe this government, and I've seen a number of different governments come in, will be -- will achieve that. So can you please go away? 22,000, 23,000 ain't good enough, it's just not there. And it makes sense. The next thing. This government, as I said earlier, talked about it a lot in the run-up, they've talked about it an incredible amount since and have already got some actions. We've already seen a couple of upsides on planning through our strategic land bank they've come through that we weren't expecting. Times is a-changing. You can only kick the can down the road so many times, and there is a housing disaster out there, and we are uniquely placed to take full advantage and to help the government and the country meet that challenge. So the other thing I would say about this government is they're treating the housebuilding sector, including Vistry, as part of the solution. I would put to you that the Conservatives treated as a part of the problem, and that does make a difference as well. When have you heard Labour in the run-up to or since talk about land banking, you haven't. They know that's not -- this has just nothing to do with it. We build as quick as we absolutely can. So three things. What do the government need to do to really push on? And I'm being provocative here. On land and planning, every time there's a large planning application, the government needs to have a street party at Downing Street. It's brilliant news, it's pushing on, let's get going. Stephen articulated incredibly well what needs to happen with regards to funding to make local authorities and housing associations, particularly, really increase their appetite to get cracking. And particularly around, and I think the big one is going to be a 10-year rent review, which will basically say to them, what would make you, Mr. Large Housing Association, want to build and build quickly everywhere. You're currently charging GBP 10 a week, whatever it might be, for a 3-bedroom house, what do you need to make it really attractive so that you can go out and get some private finance and really push on? And I think they'll go with that figure. How will that be paid for? Well, don't forget we're currently paying, all of us out of our own pockets, nearly GBP 3 billion a year now, with local authorities paying for people to live in Holiday Inn 1 week and a Premier Inn the following week. So forget the moral issues around that. And Stephen said, there's some major paybacks. That is where that payback is going to come. So that's what the government kind of need to do, and I think they're going to do it. What do Vistry need to do? And we are going to be looking at it, so we're never going to stand still. All these numbers we've given you are based on the strategy which was back in a Conservative government back in September 2023. We are going to be looking to see if it's possible to get to 30,000 to 40,000 houses very, very quickly, standard house types. Vistry Works, we're going to be opening up a full factory much quicker than we thought. So we're already going to be making that leap of faith very quickly. But let me tell you now, I think there will be a stimulus announced in October. As I've told the government themselves, if you don't do some stuff quite early here, to do 1.5 million, it won't be 370,000 in years 3, 4 and 5, it will be over 400,000 homes per year, they ain't enough. So when people say to me, well, what will happen to brick lane and plumbing prices, they ain't enough. It's irrelevant. That is why if you've been, and a lot of you have, to the VIC, as we call it, the Vistry Innovation Centre at the East Midlands timber frame factory, when I went there in February, March, really good. I thought -- I can see this, and I'm one of the dinosaurs of the industry. I can see this coming through in 4 or 5 years' time, I'm going to be saying on September 7, I need that to be coming through tomorrow. So we are going to become much more manufacturing in a factory and then taking it to site, and things are going to have to change as we go forward there. And I think we've got a great opportunity to increase quality again and drive down our input cost. So that's what we'll be doing. You, as the analyst community, I don't know, you might have to look at your models because I don't think they probably work with regards to unit numbers if you believe, and you're all at liberty to say, of course, you think the government are going to do anything like what they need to do. But if you don't, that's absolutely fine. But being I am cynical, and I think will they get to 1.5 billion -- sorry, 1 million, we shall see. I think they'll get close to it, but I think they'll go into the next term or into the next 5 years well on track to be doing that as a norm because that's what the country needs. So there you go. That's the gospel according to Greg there. So let's move on to Q&A, and thanks for listening.

Clyde? Sorry, yes, wait for the mic. And if you can say your name, Clyde, and where in Wales you're actually from, that would be great.

Clyde Lewis, Peel Hunt, Swansea. I've got a follow-up on your final comments there about the 30,000 to 40,000. That'd be great, obviously, in terms of numbers. But does that have obviously implications for the capital return, the GBP 1 billion? Is that -- does that become a bit mutually exclusive? If you do have to crack on and deliver more volume, you've got to invest more. Clearly, the land bank numbers that Tim put up are going to look too small, et cetera, et cetera, et cetera. So that was the first one.

So on that, I would say, from buying the land, we will continue to buy land as we have been over the last 12 months, predominantly on deferred terms and predominantly using our partners' money. But what I think will happen, and this is early stages, that's all I'm going to say. 30,000 to 40,000 houses would mean that we would amend our model from, hopefully, 65%, 35%, 65 Partner Funding, which were -- we're well down on that in the first 6 months. 65-35 to probably something like 80-20 in our model. So we would do less private units, but it would still be more than we're doing now by far 20%, 35,000 is still an awful lot. It will be more Partner Funded than private.

And also following up on that, I mean, obviously, the partner...

Sorry. And one other thing I will say, we wouldn't let that get in the way of -- a promise is a promise. And we've promised to return GBP 1 billion. So we will do those numbers. I think we can, and we're going to look at it and build in a completely different way without interfering with that return.

And following up, I mean, if the government is really serious to drive volumes, do they need to dial back a little bit in terms of the sort of Part L, Part F, Part O sort of regs, and obviously, that brings an extra cost to the whole industry. Obviously, puts lots of other different pressures on the business as well. Do they need to dial that back to get those volumes up?

I probably don't think so. I know we've done at least one deal where we've agreed a price with, in this particular instance, a PRS provider. And that PRS provider has then come back to us and said, "Actually, I want you to put everything in now for these new regulations." And I believe, don't quote me, for an average 3-bedroom house, the price which we gave him was GBP 12,000 more per unit. And they were happy to take on that cost because they would be saying to their tenants, you won't have any energy bills, and they would pass on a higher rent off the back of that higher cost with the tenant being no worse off.

The last one I had, probably, I'm looking at Stephen. And the traditional housing associations, the RPs, obviously, you flagged the pressures that they're under to upgrade their existing stock. Where are we in that cycle of them having to spend more money there rather than looking at sort of increasing new stock and obviously doing more with you?

Two things. Housing associations are much better -- or the traditional housing associations with large amounts of stock are now in a much more advanced position in terms of modeling the cost of their reinvestment in that stock and the costs of decarbonizing that stock. So there's been a huge amount of work done over the last 3 years by those registered providers looking at that investment, and there's been some analysis published that explains that, that is definitely the case. But RPs absolutely need the things that I mentioned on that demand side slide. So that 10-year rent settlement, that commitment to forward visibility of funding is extremely important. Housing associations will also be looking to get some assistance from government in that stock readdressment. And there are a number of things that government could do to help councils and housing associations tweaks, whether it's in VAT, whether it's in borrowing freedoms, whether it's in the way that the housing revenue account is used within local authorities, in order to make that more affordable. So I'm hoping the government will respond to those. But those are the two things I would say. There's much greater clarity of that investment, but that doesn't remove the need for a strengthening of those housing association balance sheets going forward.

Aynsley Lammin from Investec. Just two -- or actually three. First of all, just on the pricing and in the open market, I guess, particularly, you're kind of with incentives going in towards selling season, how quickly do you think those incentives could be reduced if confidence and sales rates continue to improve?

So on that, I would say that we have seen asking prices hold up, and we're probably about 4% on average with incentives, and that's easing a little bit as we go through the summer. We are -- at the early stages, we're looking at a price increase across the board as we go into October, and that's -- and we'll see how we go through in September and the first part of October with sales on that. But we are seeing units that we're selling for next year, price is actually up about 2.5% in certain areas. The worst market in the country at the moment that we're finding is London from a selling perspective.

Great. And then just on the -- obviously, reiterating the GBP 1 billion capital return medium-term target. Could you just remind us what was your target, was it to deleverage, having 0 average debt over the next 3 years? Is that still the target? And if you kind of grow the business to your 30,000, 40,000, was that -- are you more comfortable to operate with higher leverage now given the visibility and everything else?

So our targets remain unchanged. So we repeat that we're going for a year-end net cash this year, and we're still targeting the elimination of average net debt. I think what we would do is that is second tier in terms of our targets. And when we put that together at the time, there was probably more concern of the weight of leverage on stock price and concerns about the business. I think now as we're proving out the partnerships model and proving that the growth is there, then we might start looking at being more open to maintaining some level of debt. There's always going to be some debt during the course of the year. So the elimination of the average month end net debt is close to sort of breakeven for the full year anyway. I think the main focus when we think about debt internally though is about trying to smooth the profile during the course of the year. And that's probably where we spend more time. So it's less about the average per se, it's more about smoothing, and that's what will take out the finance costs. And in particular, on that, it's around reducing the weighting of completions to June and December and trying to spread them more evenly during the course of the year.

And then just, I guess, for you as well, Tim, just to follow on for that. I think you said average debt at GBP 450 million for the second half. Any guidance for net interest cost for the full year?

Yes. So we're about GBP 41 million in the first -- total finance cost for the first half year, we're probably about the same in the second half year.

Chris and then...

Chris Millington at Deutsche. Can you just talk quickly about London exposure and high-rise exposure? A lot of the hospitals have moved out of there, I presume you still got quite a decent operation there. Do you want to take them one at a time?

Yes. Do you want to take that one, Earl?

Yes, I can do. So yes, we are a huge developer in London, very important to us, and I think we're about one in 17 of the new homes in London. That said, the level of private market exposure is limited. So in terms of the model and what we are doing, working with our partners. So that exposure to the open market is limited, and we continue to look at additionality deals across London. And we are, in terms of our setup of a new development, that's where it's most important in terms of we got those partners on board before we even start. But as we've said, London is the toughest market at the moment.

But I think going forward on that, some of the stuff I was just talking about, I think it might very well become one of our most important markets as well.

Overhead recovery, you're one of the few who have actually managed to get admin cost down. Obviously, it's a combination there. I mean what should we think about overhead recovery as we look forward and volumes grow?

So I think -- so what we've seen is the synergies being realized. We said when we did the Countryside acquisition, we get GBP 60 million of run rate savings from that, that's delivered. It's in the numbers for this year. We said we get a further GBP 25 million from the strategic change last year. Most of that is in '24 as well. So we actually not only we deliver the synergies, we deliver them faster than expected, and that's the primary driver. In terms of overheads as a proportion of revenue, we're about 5% in the first half year, 5% to 5.5% going forward. I mean there's a little bit of timing movement in the first half year as well. So 5% to 5.5% is sort of broad range.

Thanks, Tim. Last one is just about how substantial this extra government funding needs to be. I know it's a difficult one to put your finger on, but perhaps you can just remind us as to what the funding framework is now and where the pressures are.

So it's GBP 14 billion over the life of the program currently. So some further investment -- so I mentioned the need for a near-term stimulus. So there's currently a program that runs to March 2026 that is available for both strategic partners and we're the only private sector developer, who is a strategic partner with Homes England, and through a process called continuous market engagement. And those pots are being used up. We've committed the majority of our -- all but a few pounds of our GBP 185 million of grant funding is committed. So -- as we look forward. So what we would like to see is a near-term stimulus that would allow housing associations to replenish those programs and accelerate within the '26 program. The scale of that is a matter for Rachel Reeves, but that will certainly help in order to deliver immediate additional homes. Then a successor program that was probably going to be developed during the first half of 2025, which would flow on from the '26 program and would really give an uptick and could overlap it as well. It needn't necessarily be and following on from March '26, that's a spending review decision. But that could make a real difference as well. And earlier we have the siting of that program, the more confident people will be in sitting down and negotiating longer-term delivery programs. Because in order to get to the numbers that Greg has just challenged us to achieve, we need to be talking to partners. As we've just agreed and we announced this period of 5,000 homes over 5 years with Sigma, we need similar framework agreements with registered providers so that we can get the consistency and the economies of scale that we've talked about in our manufacturing flowing through all of those transactions, but it does need significant amounts of funding in order for that to happen, and you see it in the context of GBP 14 billion program.

And have you put the proposals to government?

We have conversations with government on a regular basis and with MHCLG and Homes England. And there is an invitation out for the whole sector to make representations to government, and we'll be making representations very much in alignment with what we've discussed today.

Alastair and then Will.

Alastair Stewart from Progressive Equity Research. A couple of questions. First of all, you've reiterated the full year guidance for completions, 18,000 plus. Should we be thinking about a range at this time, what's the maximum, 18,000 to 18,500? And if you've been quietly thinking of your range, has that changed since July? So that's the first question. Second question, following on from Chris, probably for Stephen. The 10-year rent settlement you're pushing for and the short-term stimulus, how much of that is personal sort of wishful thinking from Vistry? Or are you actually lobbying in concert with others? And to what degree are you pushing at an open door, do you think?

Do you want to take the first one, Tim, and then Stephen, second?

Okay. Well, the answer to the first one is that it could be as high as 18,500. I think the reason why we wouldn't want to necessarily go out with that range though more formally is that there is some lumpiness still in our units. And some of the -- with Partner Funded work, there was some lumpy as that goes into November and December. So there's some chance that there's some timing delays. I think we are very confident for our full year. One of the points of uncertainty that's still between us and 31st of December is the October budget for example. And we don't really know what they're going to say there, but a lot of our partners will be looking very closely at that, and that may have impact on timing. So 18,500 is possible, but behold to just say 18,000 plus.

I presume the caveats also applied in July, are you more -- on balance more optimistic in that range now than you were in July?

I think we are. Because as Greg said, the rhetoric seems to be translating into action. We've seen a pretty good summer relatively on private sales. It's still not quite where we want it to be, but it's moved forward. But we're hearing the right sort of things who I'm planning, we're hearing more positivity from our partners. So it's definitely feeling better, but there's still a timing risk.

And yes, in terms of the rent settlement, I mean, there's some intelligent and very data rational minds in MHCLG and Homes England and in government who can absolutely see the importance in strengthening the purchasing sector and that being fundamental in order to get the numbers. So we push on an open door in that respect. Yes. Is there a recognition that giving a long-term rent settlement is important and the damage that has been done when the rent settlement hasn't been consistently applied, everybody appreciates that. Are we lobbying in a concerted way? Yes. I think NHF, the housing forum, CIH, there are lots of conversations going on with government, which are saying this -- and the LGA, all saying long-term rent settlements are absolutely essential, a, to attract finance into the sector, because finance wants to be sure that they're not going to have a change in rent settlement, and for obvious reasons. And that also because they need to have business plans that work over 30 or 40 years and have a degree of stability in the decade ahead.

Okay. Pass it to Will.

Will Jones, Redburn Atlantic. I've three as well, please. The first, lots of detail today around all the build and construction initiatives. But just wondering what you think your production capability is running at on an annualized basis or what it could potentially be in '25?

Do you want to take that?

Well, so I mean if you take our build outlets, we're about 370 build outlets, that's seen growth of about 20, so about 8% in growth year-on-year. We are absolutely bringing in more and more of the larger sites that Tim talked about in terms of our competitive advantage coming through. So we are looking to go at a pace multiple outlets on each of those. We can definitely do the 90-plus per build team and construction outlets. So look, we've put out numbers of growth kind of 8% to 10%. Those are well within our grasp and all the existing capacity of the business. And that's before you start thinking about what Greg started putting out there as to the opportunity. We clearly need the land with planning to come through in order to deliver, but we are not governed by the private sales market. But we could be governed by the funding that Stephen is talking about. But to be honest, the capacity to grow from a construction point of view is absolutely there.

Yes, I think in the short term, we can -- with our business units, building as we are at the present moment in time with a bit more coming through in timber frame helped by standardization, '25 isn't going to be constrained by the business and construction is going to be constrained by planning. And as I said, there's some good signs of that being eased.

Second was just to clarify around build cost. I think earlier in the year, you talked about build cost potentially being down, up to 5% maybe in the P&L in '24 and I think today, the message is flat. Is that a change? Or am I confusing?

I think -- no, there's no chat think we have seen -- we saw tremendous deflation in '23. We saw a little bit more deflation in the first bit of 2024. We're just forecasting and being prudent that we think that will level itself out and be neutral for the whole year. If you just took the first 6 months, we've seen a little bit more deflation.

And the last one is just around the controlled-owned split within the land bank, that roughly 30% that it's running at currently. Do you think as the model progresses that 30% of control could rise somewhat? Or is it about the right level?

It feels like about the right level, 1/3 -- 1/3, 2/3 by the way in the first half year.

Next one, okay.

Sam Cullen from Peel Hunt. I've just got one follow-up really on your manufacturing capacity. If you did get up to 30,000, 40,000 units, would you want to add more factories? Are you kind of agnostic, would you own it or take it from a third party?

We've already -- we were always going to open a fourth factory. But Michael is -- we're pretty much down to three places now. And by the way, the Labour MPs in all those three places are basically very, very happy with that, and are really going to make that and push that to make it happen just as an aside. But we would -- we look -- we're already committed to opening, up and running a fourth factory at the start of January 2026, which means we probably have to have it located and bought or leased, more likely, in the first half of next year, very early first half, and then we will be ordering all of the kit. So I think it could be a fifth one as well. But for the minute, a fourth one will take us up to the numbers we require.

But they'd all be Vistry-owned, you wouldn't take stuff from third party?

Yes, we have partnerships with -- yes, there will always be some third-party, and Donaldson is a company we use at the present moment in time, for instance, and hopefully, that will continue. But yes, already, I think we're the only house builder that produces timber-frame panels, floor cassettes, floor joist and roof trusses. And when you think about roof trusses, 30% market on roof trusses, and we're doing -- we're starting to do that ourselves. But that's how it's going to be. And I keep -- and I'm just looking at your body language there, there's a lot of cynicism. But if you take -- for the government to do what they need to do, as this guy said, it just makes complete sense. Vistry will have to do those kind of numbers because this growth isn't going to be done on the back of private housing market. The private housing market will get better, but it won't get that much better whereby that's driving the growth with 20%, 25% affordable. What's going to happen is the growth is going to come from the affordable partnerships bit being the driver, with the private bit being the secondary part, and that's where we come in. But it's got to happen or the country is going to have major, major issues, which it already has got in housing. Maybe one more, but mindful of time.

Joe Spooner from HSBC. Just back to the medium-term targets. I think in order to achieve them, the capital employed needs to come down to the GBP 2 billion kind of level. I think it looks like it's gone up to GBP 2.7 billion in this period. Can you just give some context around the growth you've seen there and particularly the journey forward from this point?

What we saw in the first half year was a seasonal buildup and with higher WIP in particular driving the capital employed up in the first half of the year. Still targeting GBP 2 billion in 2028. What we expect to see is the land comes down before it starts to go back up again, particularly as we work through the housebuilding -- the former housebuilding land bank. So you should see land come down, the land bank years come down. And we will see greater control of WIP, particularly as the private market picks up and we have less stock unless invested in private. Then the other thing we're doing on top of that is we're looking at the capital release initiatives. So there are still some slow-moving sites within our portfolio who are underperforming. They won't get back to 40% ROCE by 2028, those individual sites, but we would as a whole. So what we're looking to do is to release some of those early, perhaps even do some more land sales in order to release some of the capital. So our expectation is to get to the GBP 2 billion in 2028, we actually need to get below GBP 2 billion probably in 2026, 2027 in order to then start ramping up again after that.

Good question. Okay. I think I'll wrap it up there. And so, not bad, 1 hour and 20 minutes. Thanks for listening. And don't forget, you can watch it all again on the video tomorrow if you want to. Thank you.