Barratt Developments Stock

Good morning, everyone. I think we're ready to start. So first of all, as usual, I'm joined by Mike Roberts, our Chief Operating Officer. And Mike is going to cover our operational performance. Also John Messenger, our Investor Relations Director, and John will update you with regard to our financial performance. And then I'll update you in terms of the market, current trading and synergies and just set out how I feel that we're well positioned for the future.

Many of you will be aware that Dean Banks, our incoming Chief Executive, has joined us this morning and also Rebecca Napier, our CFO, and Rebecca started with us at the beginning of August. So welcome to Dean and Rebecca. So I think, first of all, I'd just like to take you through some of our key messages. The market conditions have clearly been challenging. I think we've all seen that play out, particularly since the end of February. Barratt Redrow has delivered a very solid performance over the year, both operationally and financially. I think that performance reflects the strength of our brands, but it also reflects our strategy and the sheer hard work and determination of our teams and our supply chain. The customer is understandably subdued, so we've made tactical decisions to drive sales and proactively manage our cost base so the overall performance has been in line with expectations. The early signs from our retro dual and triple branded sites are encouraging reinforcing our conviction regarding the multi-branded approach. And our balance sheet remains robust, facilitating an enhanced capital return, which I will talk about shortly.

Our focus is now on disciplined execution to deliver the potential we have created through the combination with Redrow and navigate the market as it evolves in FY '27. Here are some of the operational highlights from the year. First, the integration of Redrow is now complete. We are already seeing the benefits of that reflected in our performance with a good progress on cost synergies and the future benefits from revenue synergy outlets. We have maintained a strong land bank position with 5.2 years of supply. This is a key advantage. This has enabled us to tactically reduce land investment given the increased market uncertainty, but without impacting our near-term growth plans. And we completed 17,667 homes, which was towards the top end of our September '25 guidance range. I would also like to, as ever highlight some of our externally accredited awards in the period. Our unique record with 17 years as a 5-star housebuilder and 122 NHBC Pride in the Job Awards, which is a testament to the dedication of our teams across the business as well as the quality of the training that we provide them and the customer-first culture we maintain across the group. The quality is also reflected in our Trustpilot scores given by our customers which award all 3 of our brands, the highest rating of Excellent. John is going to cover our financial performance in more detail, but just to pull out a few highlights. The adjusted PBT was lower than last year at GBP 572.8 million, due to higher net interest costs and lower joint venture profits. So return on capital employed was lower than last year at 9.2%. All of the GBP 100 million cost synergy target was confirmed in the second half with a GBP 73 million benefit in the profit loss in FY '26.

And finally, we finished the year with a solid net surplus position of GBP 61.4 million which is net cash adjusted for line creditors. This compares to a net indebtedness position of GBP 37 million last year. Before I hand over to John, I'd like to talk you through our capital allocation framework. We have 3 clear priorities: maintaining a strong balance sheet investing in our business and delivering sustainable returns to shareholders. The Board regularly reviews the balance between these to ensure that we are well placed to deliver our strategy. So when we look at our balance sheet, we consider not just the year-end position, but the seasonal nature of our business, where average net cash is typically much lower than the year-end. We target minimal year-end net indebtedness, which takes account of net cash and line creditors. And we are mindful of our building safety obligations which represents a further significant liability for the business. We also recognize that continuing to invest in the business is critical. That's why leveraging our multi-brand opportunities, which enables us to grow outlet numbers but requires less incremental capital investment is an important focus for us. and we continue to be very selective on land opportunities.

Our updated shareholder return program is also set out here, and I'll now take you through the background to that. When it comes to shareholder returns, we have a strong track record of evolving our position, reflecting the macro environment and the views of our shareholders. Over the last 10 years, we have returned nearly GBP 3.5 billion to shareholders, with GBP 1 billion return through share buyback or special dividends. As we set out in July with our shares trading at a significant discount to tangible net asset value, we saw an opportunity to increase shareholder returns with a larger buyback. As a result, except for a GBP 0.01 nominal dividend, our ordinary distribution, which is equivalent to 50% of adjusted net earnings will now be delivered by way of a share buyback starting with the FY '26 final distribution. This will be supplemented by an additional buyback of at least GBP 100 million. For FY '27, the total capital return will be GBP 400 million, with GBP 386 million delivered through a share buyback. I'm going to pause there and hand over to Mike, who's going to take you through the operational performance.

Thanks, David, and good morning, everyone. Today, as David said, I'll be taking through our operational performance for the year. Starting here with the private reservation mix on Slide 9. As you can see, 88% of our private reservations were generated by individual homebuyers with 12% coming from PRS and other multiunit sales. Our first-time buyer share of reservations remained stable at 30% and home movers including those choosing to use our part exchange service accounted to 48% of reservations, marginally lower than 5% in FY '25. As you remember from the half year, we've seen a significant increase in the customers using Part Exchange at 21% of all nonaffordable reservations in FY '26, up 14% in the prior year. This part reflected a slower market ahead of the November budget when Part Exchange provided customers greater certainty at a time when buyers had real concerns over conveyancing chains. And we've also introduced our part exchange capabilities into Redrow in the year. Part Exchange has been a highly effective sales tool and what we've used for 55 years.

Importantly, it's an alternative, not an additional incentive and our part exchange stock is very well managed. Of the GBP 228 million value of part exchange properties held on the balance sheet at the year-end or but GBP 22 million have now been sold on. PRS and other multi sales were at a similar level to last year. This follows a strengthening the sector of the market in the second half. And finally, the percentage of customers relying on a mortgage remained unchanged at 75%. Turning to completions. We delivered 17,667 homes, an increase of 5% on the performance in FY '25. Private completions were flat but affordable completions were up 27%, reflecting the timing of delivery. And overall, they accounted for 22% of the total wholly owned completions. We expect affordable volumes will return to our more normal levels of around 20% of completions in FY '27. PRS completions were 20% ahead, reflecting the order book strength entering into the year and joint venture completions were 566, 5.2% ahead of last year. We anticipate this will increase slightly to around 600 units in the current year. And in terms of pricing, the wholly owned average selling price was up 2.2% to 351,700. More detail on that is provided in the appendix, but this increase was driven by a combination of product and geographic mix with a slightly larger average unit size and a greater contribution from regions with higher average selling prices.

Based on our matching plots analysis, the majority of our regions saw only minimal underlying price increases or less than about 1%. Prices in our London division were notably down, consistent with the broader commentary on the London market. And our Southern division also experienced some deflation. But overall, we estimate the underlying selling pricing deflation was just under 1% for the year. Turning to sales performance on Slide 11. The underlying private reservation rate was slightly ahead of the aggregated position in FY '25 at 0.56 reservations per outlet per week. This good performance was supported by a targeted use of sales incentives to maintain sales momentum in what was a very uncertain macro environment. John will provide more details on this shortly. And customers also benefited from an improvement in mortgage product availability. We are seeing greater competition by mortgage vendors and an increase in higher loan-to-value mortgages, which have helped in what remains an affordability challenge market. PRS and other multiunit sales had an improved second half, and our strong relationships with PRS providers, such as Lloyd's Living supported our good reservation rate overall.

Across the year, we operated from an average of 405 sales outlets, very much in line with our plans and our guidance. And the private forward order book at the end of June was lower than last year at 4,570, has provided a solid start to FY '27. David will cover our view on future sales evolution later in the presentation. Based on our revised average sales outlook guidance at 405 and the encouraging trading performance we've seen in the first 10 weeks of the year, we are confident with the guidance for total completions of between 17,500 and 17,900 in the current year. I wanted to give you a bit more flavor on how our home brands are distributed and our newest multi-brand developments are performing. Here you can see that the multi-branded outlets account for 44% of the total at the end of the financial year. We're seeing more and more opportunities to create dual-branded combinations, and we now have 3 triple branded developments. The trading performance from these has been really encouraging. Over the first 10 weeks of the year, the blended sales rate across our triple branded developments has been in line with the underlying rate for the whole group. Each development is selling more than 1.5 homes per week compared to around 0.5 prior to the triple branding. This performance reinforces our conviction in the strength of the multi-brand approach, which enables us to optimize land opportunities. Each development is unique and maximizing value is driven by pricing in the location, the careful plotting of our homes by brand and house type to deliver value and choice for each customer, whilst maximizing our returns, both around margin and return on capital. Of course, it's early days and this is just a small sample.

We've previously talked about potential for reservation rates to moderate slightly with the addition of further brand outlets, but it has not been an experience to date. I wanted to say a few words on build cost inflation. This is a challenge for the whole industry, and we've not been immune. As you'd expect, we continue to see inflationary pressure on the more energy and oil-dependent products such as plastics. But even here, we've been able to negotiate some improvement where suppliers have held their price on the back of volume. Where required, we're intending to agree surcharges with suppliers, which will flex as energy costs move. Other materials worthy of note, our timber, which is seeing above average inflation across both engineered and unengineered elements and blocks and plasterboard, both of which are slightly above the overall average. Importantly, our size and scale are real benefits here as are the strong relationships we've built up with suppliers over many years. We've guided to 3% to 4% inflation for the year. And as you can see on the slide, this is weighted towards materials, which is the greater component of our costs.

We do expect labor to be lower compared to given the spare capacity in the industry in a more subdued market as well as subcontractors desire to lock in future workload. But we can only give guidance on what we are seeing today. Clearly, the macroeconomic backdrop is highly unpredictable. So we'll continue to evolve our expectations. And finally, as you're aware, we're really proud of our industry-leading credentials around design, build quality and customer service. These continue to underpin our brands and contribute to our sales resilience in a more challenging market. As David said, we've achieved a 5-star rating for customer service in HBF survey for the 17th consecutive year and our site managers secured an industry-leading total of 122 Pride in the Job awards this year. So on that note, I'll pass it over to John for an update on the financials. Thank you.

Thank you, Mike, and good morning, everyone. Today, I'll take you through our FY '26 performance and update to on our land bank and on building safety. Here is the overview of our FY '26 performance. we've set out the 3 profit measures, adjusted PBT before PPA impact, the adjusted PBT after and then finally, the statutory reported pretax profit after adjusted items. Consistent with the approach adopted at the half year, both adjusted measures are now stated prior to the impact of the noncash interest charges on legacy property provisions. We also showed both the aggregated comparable, which includes Redrow in the 7.5 weeks prior to the acquisition on the 21st of August back in 2024, and the reported comparables. I'll focus on our performance relative to the aggregated performance in FY '25. I'll now take you through the P&L on the next slide.

Here on Slide 17, we detailed profitability and margin performance in more detail. There are several points to highlight. Firstly, the increase in home completions coupled with an increase in our average selling price, increased revenues to more than GBP 6 billion. However, the adjusted gross margin was lower at 15.3% giving an adjusted -- adjusted gross profit of GBP 926.6 million. There were 3 drivers behind the movement. First, we benefited from the growth in completion volumes and higher average selling prices, although we did experience softer underlying pricing, as Mike mentioned. Second, the targeted use of incentives, with financial incentives impacting the top line and nonfinancial incentives such as customer upgrades impacting cost of sales, but both having a negative impact on the gross margin. Third, we experienced underlying build cost inflation across the year of 2%, net of procurement synergies. Note this was closer to 3% in the second half, and this effectively offset the usual benefit of second half completion volume gearing. Adjusted operating profit was slightly ahead at GBP 598.1 million. Revenue growth, the benefit of integration cost synergies and business as usual cost discipline, moderated the year-on-year margin impact to 60 basis points, giving an operating margin of 9.9%.

Adjusted finance charges of GBP 31.5 million compared to finance income last year at GBP 4.9 million. This change encompassed lower cash balances the utilization of our RCF for part of the year and higher interest rates applied to new land creditors relative to the rates on those that were being settled in the year. Including JV income, PBT before the impact of PPA adjustments was the GBP 572.8 million, David mentioned at the start. In summary, we saw good momentum on home completions and the cost synergy benefits of the Redrow integration,, as well as our own cost reduction actions coming through to the bottom line. Looking now at the movements in our adjusted operating margin. aggregated on a pre-PPA basis, this was 10.5% in FY '25. In FY '26, we then saw a benefit of 20 basis points due to the gearing of effective higher volume. Then the combination of softer pricing, underlying build cost inflation and targeted use of additional nonfinancial incentives created a negative net impact of 200 basis points. Acquisition-related cost synergies added 90 basis points, and our business as usual, cost reduction actions, including our recruitment freeze as well as reduced performance-related pay and one-offs, delivered a further 60 basis point benefit.

The resulting operating margin before PPA impacts was 9.9% and 9.1% after PPA. The movement in our administrative expenses from GBP 398.5 million last year to the GBP 329.8 million is set out on this slide. You can see the various drivers but I would highlight, firstly, the positive impact of acquisition-related cost synergies at GBP 37 million there. Below target employee performance pay, reduced expenses by GBP 15.3 million and business as usual cost savings mentioned earlier, contributed another GBP 14.3 million. We then had GBP 17.3 million of one-off positive items. GBP 10.1 million related to the remeasurement of cost accruals and GBP 7.2 million, reflecting a year-on-year decline in internal project activity where internal project teams redeployed on completing the Redrow integration and these internal resources have been deployed back into the operations in FY '27. In the current year, we expect administrative expenses will move to approximately GBP 360 million, taking account of the absence of the one-off items, underlying cost inflation, residual synergy savings and assuming a return to on target levels of performance pay.

Now to look at our Land bank. A slower pace of land acquisition has seen the duration of our owned and controlled land bank moved down to 5.2 years at the year-end. This remains a strong position and is very consistent with our plans to optimize our capital employed, as David will cover later and will remain above our medium-term target of 4.5 years and our detailed consented plot to sales outlet ratio set at 135 at the end of the year. And we are looking to ensure our land bank is efficient with sales outlets, sized to drive sales over a typical 3- to 4-year period. Finally, with 118 strategic land applications covering more than 31,000 plots submitted to local planning authorities, we expect to see significant conversions and drawdowns from our strategic land bank portfolio into our current land bank over the coming years. Now to look at our Land bank gross margin and how that's moved over the 6 months since December. There are 3 moving parts to flag in terms of the movement. First, we've seen a positive 50 basis point impact, reflecting the plot mix traded out through completions in the second half of the year at a 14.5% gross margin after PPA impacts.

Second, we had a negative impact of 220 basis points from the flow-through of softer pricing, build cost inflation, and incremental sales incentives. And thirdly, a 10 basis point improvement from the most amount of land plots acquired in the half at a 23% gross margin. These plots were just over 2,800. In combination, the embedded gross margin ended the year at 160 basis points lower at 17.3% and relative to the 18.9% reported at the end of December. Improving the embedded gross margin is a clear priority. With little movement on pricing, we have to focus on self-help, which David will come back to later. Turning to Building Safety, where we've seen little change to the net provision position, but there are some moving parts to flag. Here tabled at the movements on the 2 portfolios, where we recorded a net adjusted item charge of GBP 96.8 million there. In our building safety provision, we've taken a charge of GBP 105 million. covering cost inflation and scope revisions at 2 active developments. In our reinforced concrete frame provision, we saw a net release of GBP 8.2 million. This included, firstly, the release of a provision on several developments where further investigation concluded remediation works were not required and an additional provision on 1 building where additional remediation works were identified.

Completing the picture is the unwind of imputed cash interest -- noncash interest of GBP 4.5 million. and the provision utilization of GBP 153.8 million. We ended FY '26 and with a total provision of GBP 1.05 billion, and we expect to spend approximately GBP 300 million in FY '27 and GBP 450 million in FY '28 on our direct remediation-related works as well as payments to the Building Safety Fund. Now to cash flow. Here, we set out the cash flow bridge and a few points to highlight. First, cash outflows included payments around tax an interest of GBP 84 million, outflows on trade receivables and payables totaling GBP 90 million and the building safety expenditure, which we've seen already. Second, we saw the reversal of all of our first half construction WIP outflow. So a disciplined performance and an underlying improvement up and above the typical sales cycle and construction seasonality that you expect from Barrett Redrow. Thirdly, our reduced investment in land unlocked GBP 328 million of cash.

Fourth, we increased our investment in JVs at a net GBP 102 million. This encompassed our building investment in the made partnership and our new JV with places for people at Gilston in East Hertfordshire. Finally, after a dividend payment of GBP 242 million and share buybacks of GBP 101 million, including taxes, the net movement in cash was broadly flat. We currently anticipate that FY '27 year-end cash will be between GBP 400 million and GBP 500 million, subject, of course, 20 changes in land activity and guidance on that as the year develops. Here is our usual balance sheet breakout. Just a couple of points on this one. You can see our gross land investment reduced by GBP 464 million. And then with land creditors, GBP 98 million lower, our net land investment position reduced by GBP 366 million and stood at GBP 3.93 billion. Land creditors funded 15.3% of our Land bank. This is below our target range of 20% to 25%, and we expect this to remain the case over the coming year as we limit our investment in land.

Longer term, it remains a clear intention to manage our land bank more efficiently including land cost deferral using land creditors. But this will depend on the scale of land buying and the deferral terms available in the land market as we move forward. Finally, I am really pleased that we have been able to announce that we have amended and extended our revolving credit facility with our existing providers. We have increased the RCF from GBP 700 million to GBP 900 million and if you remember, Redrow's old facility of GBP 350 million was canceled at acquisition. We've also now extended this facility to July 2031, and with 2 potential extensions, subject to lender approval, which would take the facility through to July 2033. So to summarize, our financial performance in the year has been resilient, and that's despite the macro uncertainties faced. Our balance sheet remains strong, and the cost synergies from the Redrow acquisition are making a positive impact on performance.

Turning to guidance. You will see -- find a detailed slide in the appendices, but I thought it's helpful to have the key points here. And then finally, on the key movements around cash, up and above the seasonal cash flow movements in our housebuilding operations, we do expect to spend approximately GBP 300 million on legacy property remediation and GBP 340 million settling line creditors, and to finish the year with between GBP 400 million and GBP 500 million of net cash, subject to the land market and opportunities. Happy to take questions later, but I'll now hand back to David. Thank you.

Thanks, John, and thanks to Mike as well. So I'd like to start this section with an overview of the housing market. I think everyone recognizes that the fundamentals that underpin our market are strong. There is a desperate need for housing across all tenures on a nationwide basis. This should be driving an active and efficient industry, creating value for all shareholders. However, this year, the macro backdrop has clearly been very challenging with consumers cautious and interest rates at best expected to remain stable. Home bars, particularly first-time bars, face severe affordability challenges. And the industry remains constrained by an under-resourced and unresponsive planning system combined with excessive red tape, regulation and taxation.

We do welcome the steps that the government has taken to improve the planning policy environment as a whole. In time, we believe that these reforms will enable the industry to operate more efficiently with shorter overall land banks and an ability to accelerate growth. But the pace of delivery so far on the ground has been frustratingly slow. On the demand side, we're doing what we can to support our customers. Mike and John have both touched on how we deliberately stepped up our incentive levels in the face of increased hurdles for people who are taking out mortgages. We continue to tailor incentives, particularly for first-time buyers and also for key workers. While we believe that more decisive action from government is required to deliver a strong and sustained recovery in the market, this is not how we are planning or operating the business.

In the current environment, proactively managing our business is critical. This means delivering cost efficiencies. On the slide, I've set out 3 key areas of focus: the first is overheads. And here, as you know, we've made good progress. Our administrative expenses for the year came in lower than our original guidance, and it represents a GBP 90 million saving compared to the stand-alone business businesses back in FY '24. We have also just completed a significant project to streamline our house types. The number of house types over the last few years has proliferated as new policies at both a national and regional level have required multiple variations of our core ranges, taking the total number of house types just for the Barratt and David Wilson brands to more than 500. This streamlining project will reduce Barratt and David Wilson to under 100 house types, all of which are future home standard compliant and deliver significant economies in terms of procurement and build time, without materially reducing house price choice for customers.

As Mike has already set out, we're also benefiting from our size and scale to generate efficiencies throughout our supply chain. Build cost inflation is a challenge for the whole industry but scale is a clear advantage in purchasing, and our streamlined house type range will deliver benefits for our subcontractors through greater standardization and repeatability and ultimately should benefit our build costs. In respect of today's challenges, these actions will drive plotting and build efficiency, ensuring our build operations are best placed to perform over the long term. Turning to capital employed. As you know, we have been disciplined in terms of our land investment with just over 3,000 plots approved for purposes in FY '26. This is net of nearly 5,000 plots, which we canceled. We are guiding towards higher levels of approvals in the current year at between 6,000 and 8,000 plots but only if we see sufficiently attractive opportunities.

We have assembled a strong land bank, which gives us the flexibility to manage our investments in more challenging time. At the same time, we're continuing to evaluate our existing land bank for opportunities to rightsize our holdings, driving an improvement in capital employed. We've already made some targeted land sales in FY '26, which will continue in FY '27, with potentially some additional land swaps. And finally, we are leveraging opportunities we have across the portfolio to drive multi-branding. This enables us to open new outlets without investing so much capital, which John has already touched on. As we've set out on previous occasions, by working through developments quicker, we can improve our return on capital employed. To give a brief update on our synergy sales outlets. Our target, as you know, is to open 45 incremental sales outlets following the Redrow acquisition. 12 of these were launched in FY '26, a further 18 on June FY '27 and the balance of 15 will become active in FY '28. Identifying opportunities for dual or triple branding is now business as usual for us. And we can look at how large developments can be optimized around both margin and speed of development to improve ROCE.

Wrapping this into the broader position in outlets. On this slide, you will see that we have held steady in FY '26. We now anticipate that average outlets will be stable at approximately 405 again in FY '27. When we last updated in July, we would expect an average outlets for FY '27 to be around 415. Our divisional teams are still working hard to get these outlets open. But the pace of planning approvals has slowed. Looking forward, these sales outlets will be open in FY '28, and we will benefit from a strong strategic land position with 118 planning applications pending. So the next 2 years, are primarily about using the land we already have, either under our ownership or under our control. To complete the picture on synergies, all GBP 100 million cost synergies were confirmed in the second half and the cumulative profit and loss impact through to the end of FY '26 was GBP 73 million, of which GBP 53 million was delivered through administrative expense savings. We would expect most of the outstanding synergies to be delivered in FY '27 taking the annual profit loss contribution to approximately GBP 95 million.

In summary, the Redrow acquisition has more than delivered on the cost synergies identified at the time of the acquisition. The focus going forward will be on driving our business as usual discipline on costs to ensure that as the cycle evolves, our cost base is optimized around the market in which we operate. Looking at trading since the start of FY '27, our net private reservation rate is strong given the market backdrop and has benefited from PRS and other multiunit sales. The underlying private reservation rate was notably resilient. Year-to-date completions were behind last year, but FY '26 did benefit from some completions delayed from FY '25 that we outlined at the time. And encouragingly, our forward sales position is up 6%, giving us confidence in our guidance volume for FY '27. But obviously, the market will remain sensitive to macro uncertainties, as we've talked about.

So pulling this all together, we operate in a market with strong fundamentals. Housing is clearly cyclical, but we remain confident that Barratt Redrow is well placed to navigate the current market and capitalize on underlying demand. Fundamentals to this are our 3 high-quality and differentiated brands, providing the widest customer reach and allowing us to develop land more effectively and efficiently. Our customer focus has been established by our numerous third-party credentials over the long term. We are the reliable partner of choice across the private and public sector, allowing us to lead and innovate. And finally, we remain financially strong with a robust balance sheet, plenty of liquidity, and that is a key strength in this market, and it will underpin our current shareholder return program. So to wrap up, as Barratt Redrow, we are stronger, more efficient and an agile business that is well placed for the future.

Just to pause at that point, I think as some of you know, I am retiring as Chief Executive of Barratt Redrow next week. Yes, I was a bit uncertain about actually saying anything about it at all, but I just thought I would say a few words. I mean, look, it's been a huge privilege for me to be CFO for Barratt Redrow for 6 years and then Chief Executive for Barrett Redrow for 11 years. It is an absolutely fabulous business. And we've always sought to lead the future of the homebuilding industry. We build fantastic homes. We have amazing people who are really committed, hard-working and tremendously talented. I think you just need to go out and visit our sites to really get that feel. We also have amazing support from our subcontractors and from our supply chain. So I have really wonderful memories of my career in homebuilding. It has been eventful. And in my time I've had 7 Prime Ministers of which I've only met 5, but a couple of them weren't there very long.

And we've had Brexit, and I understand everyone's had these things. It's not unique to me. So we've heard Brexit, COVID, with the war in Ukraine, the conflict in the Middle East. And of course, Scotland qualified for the World Cup. Thank you. And yes, we did a placing and rights issue within about 3 months when we starting and we've made 3 acquisitions, Oregon, Gladman and Redrow. But I'm hugely proud of everything that the team has achieved over the 17 years. So over 17 years as a 5-star housebuilder. Somebody asked me yesterday that was connected to the fact that I've been here 17 years, but just to be clear, that's not connected to the fact that it would be near 17 years. 22 years with more NHBC Pride in the Job awards. I think sometimes we're modest about our achievements as a business. CDPA-rated on carbon ranked globally in terms of our CDP ranking. And as you know, something very close to my heart, we've donated more than GBP 25 million to charity in the last 6 years. We have said -- I know it's hard to believe, given the current backdrop, but we have set a few annual records for both profit and cash returns. And I think we've always understood our place in the community and our place in society.

This is my 25th year as a plc Director and today's presentation, just coincidentally, it wasn't planned this way, it's my 50th either half year or full year presentation. When I said that to the team yesterday, and they said, well, why are you not better at it. I thought it was harsh. A very long time ago when I started as a plc director somebody said to me, which is probably one of the best bits of advice I've ever had is don't spin things to the analysts and the investors because you're going to come across them again time and again in your career. So I've always sought to be transparent, straightforward, consistent. And I think we company at Barratt Redrow always strive to be very clear in terms of our guidance. I count many of you in this room, and I'm sure dialed in as friends. Even the ones that have published sell notes or have sold shares, and we've had some really great times together. But things move on. So I'm going to spend more time with Janet, my wife, which she is very worried about, and also my children and my 4 grandsons and those of you that play off know that I'm going to play a lot more golf.

I would just like to wish the very best to the Board of Barratt Redrow to Dean, our incoming CEO and Rebecca, our CFO; and to all of the team. So we're now going to move to questions. And I'm going to chair and John is going to compare. Thank you.

Will Jones from Rothschild & Co Redburn. Congratulations, David and best of luck. Three questions if I could, please. First is, I guess, around trading in the year-to-date. It looks a fairly resilient ex bulk sales rate, but maybe you could give us some color on how months have trended, and particularly with that first couple of weeks of September under your belt? Second was around margin. Clearly, no firm guidance for the year ahead as normal. But if there's any of the moving parts, perhaps you could comment on, we've got the build cost for you. Is there anything on mix to be aware of and presumably the balance for us all to think around is just where we land on price?

And the last one was just around policy. Yesterday, we had the port out on the Help to Buy scheme as was, which concluded fairly favorably. Just wondered what your opinion was on that and whether you think it changes any of the potential for demand side support from the new leadership.

Okay. Thanks, Will. So I'll pick up in terms of current trading and a pickup in terms of policy, and then John will talk through in terms of margin guidance. And I think we'll pick up inflation probably at a later question in terms of topic. So just in terms of trading, I think we've always been pretty strict about not starting to disaggregate the current trading period because 10 weeks, it's a relatively short period. But what I would say is we are very pleased in that period. And the 1 thing I would say is that we haven't seen any weakening as we progress through that 10-week period. So I think from that point of view, that is a positive is the first point.

The second point is, I think the regional variations are quite similar. And therefore, where affordability is most challenged, so particularly in London and the Southeast, the market is difficult and that remains to be the case. But we're very comfortable that when we look at the way that we're trading in terms of private and the way that we've supplemented that with multiunit sales, then we're comfortable with our full year guidance position. And I think we have good visibility on that. In terms of policy, I mean, I think 2 sides to it. But I know that we've adjusted our outlet numbers today, and we've adjusted them previously. So that seems slightly contradictory to be positive about the government position on the supply side.

But I think if you step back and look at the changes in terms of planning and infrastructure bill and the national planning policy changes, the framework changes that have been made, they are creating a fundamentally different environment from a planning perspective, whether you're looking for planning on residential commercial, retail, whatever. It's a fundamentally different environment. So I think our frustration has been more about the speed of change because the act didn't go live until December '25, and the second deterioration of the planning policy framework was not until 2 weeks ago, 3 weeks ago. But that is going to bring benefits. The only thing that government really do need to address is resourcing at a local authority level. So 320 local authorities, you can get your planning ticket, but then you've got to get the 106 agreed and you've got to get your pre-commencement conditions cleared, and there's a finite resource at a local authority level.

On the demand side, we've covered it a little bit in the presentation and the announcement, but we strongly believe that the government should put demand side to support in place. We were very pleased to see the publication of the government report in relation to Help to Buy, which I think was hugely supportive of the Help to Buy program, despite criticism from various quarters that it allowed nearly 400,000 people to buy a home. 300,000 first-time buyers buy a home. Total benefit to the economy, we've estimated at GBP 25 billion. I benefited -- I know I'm older than all of you in the room, but I benefited from a government support program when I bought my first house to Myers program. The Myers program was a massive support program across both new build and secondhand.

But if the government want growth, they need us to be building more homes. So I'm sure the government are looking at on the basis that they have a stated growth agenda. And also, I think a growth agenda that isn't just going to be about a particular part of the country, that the whole country can benefit from more house building. John, do you want to talk a bit more?

Yes. Thanks, David. I guess 2 or 3 things. One, on the selling price, a couple of things to flag. First is, we obviously had some benefits of mix that we've highlighted in this year. There's a little bit of that still to flow through. So a couple of percent is around mix and geography in terms of the ASP, and that's a positive on the selling price. Second thing to bear in mind on pricing is the affordable where we're expecting that to move back down towards 20%. So that has an effect in terms of the overall ASP that you'll see. Those are the 2 things I'd flag on the selling price movement.

And obviously, we flagged previously that the underlying pricing in the order book is of the order of 1.4% lower back in July, and that hasn't really changed. Turning then to think about the margin movements over the year ahead. I'm going to [indiscernible] too close. Basically, the big item would clearly be build cost inflation, so around the gross margin. And that's for, I guess, everyone in the room to take a view. Obviously, we've guided to the 3% to 4% but think you build cost in total being 60% of revenue should help people think about how that will kind of break through. And obviously, we've guided on the admin expenses when you think about what that does down at the operating level. I think those are the key components there just to bear through, I think that covers it.

Aynsley Lammin from Investec. Just 2 questions from me. Just on the guidance, obviously, very minimal change. It looks like it's more related to site numbers. What's the underlying assumption for underlying sales rates for this year? Is it flat at 0.55. And just given what we're seeing with swap rates and confidence going into the autumn kind of where is your confidence around that guidance, I guess, or the risk to it?

And then second question relates to just on swap rates. How sensitive do you think the underlying sales rate would ease to interest rate moves? Is it more confidence if we were to get mortgage rates 25 bps higher, is that a big impact? And are you seeing any interest rate hike -- mortgage rate hikes at the moment?

John will pick up in terms of sales rate and outlook on that. I mean I think in terms of the interest rate, I think the issue we've seen over a long period of time. If you look over 2, 3 decades, I don't think that the issue is about the interest rate parse, I think the issue in consumer confidence is about the certainty of what is going to happen. And so we came from a position in February where I think a base rate cut at the end of March was 80% likely to happen. And because of the conflict in the Middle East, it didn't happen. And I think that dense consumer confidence hugely.

Now there are interest rate increases priced in, and that's clearly pricing into the 2-year or 5-year effects. And as I said, I think we've been very encouraged about the reservation levels over the last 10 weeks. So it's more about does it play out in the way that people expect it to play out. I think that is what we'll solidify confidence or will impact confidence. So we would also prefer that there was no rate increases. But from where we are today, that looks tough, and that's not the way the market is pricing in. And we have definitely seen movements. If you look over the last 6 months, there's been substantial movements in terms of the 2-year and the 5-year mortgage rates.

And just picking up on the reservation rate for the balance of the year, Aynsley. If we look, obviously, the 0.53 underlying for the 10 weeks. If we look at where we will be the remainder, we need a sales rate of about 63% to 0.64 to meet the midpoint of our guidance range. Clearly, that is an all-in sales rate, including multi-unit sales as well as the underlying and we would expect the seasonal kind of movement in the year to occur with the stronger spring selling season.

Ami Galla from UBS. Three questions from me. One was on current trading, given what swap rates currently said, are you seeing any behavioral shifts from institutional investors on the multiyear unit sales and the mortgage lenders in terms of how they are looking at potential buyers and assessing the affordability metrics. The second question was on WIP. If you could give us some directional color on how we should think about WIP investment in '27 and '28, especially given the sort of outlet guide that you're giving? And the last one was just on availability and pricing. How are you seeing that end of the market shift?

Okay. Thanks, Ami. So John will pick up on WIP, and Mike will pick up in terms of land availability and what we're seeing in pricing. So I think in terms of multiunit sales, we need to go back really to the budget in '25. And bear in mind that in the run-off of the budget in million there was a huge amount of speculation about what was going to happen, ranging from rent controls to stamp duty to mention tax and so on. And it was all a bit of a mess to be honest. And I think what that meant was that the institutional investors backed away from the market, particularly London, but I think generally, their appetites often than where they were doing deals in the second half of '25 they were tending to be deals that were at quite substantial discounts.

So what we've seen in '26 is, I think, a renewed interest from institutional investors in the market mainly looking at single family, but I would say there's a higher level of interest in London than we've seen probably over the last 2 or 3 years. So we work with a number of partners. We've been very public about the fact that we work with Lloyd's Living. And they have a big appetite to grow their portfolio, and we see them as being a great partner, and we obviously have a lot of partners as well. We said last year that we want to do about 5% to 10% and I think that still is our aspiration. We don't really want to be above 10%. We prefer not to be below 5% in terms of completions. In terms of mortgage lenders, I would say that generally, the mortgage lending environment is continually improving. So the regulator has allowed more lending to take place I think the banks and the lending banks are keen to lend, but the affordability, particularly for first-time buyers is the main challenge. So people who are able to afford. And therefore, for first-time buyers, our lead offer is deposit match.

So if you have a deposit of 5%, we will match that deposit -- and I think that is quite a powerful offer because in a lot of cases, it's allowing first-time buyers to access a 90% loan to value and therefore, better affordability than accessing a 95% loan to value. John?

And on work in progress, obviously, with the adjusted guidance, when you think about the profile we're expecting a pretty tight control of it this year because there isn't really step up now towards the back end of the year, clearly, we are looking for our that growth. So there will be investment going in to get those sites ready to be up and running. But I think the whole effort inside the group is to really keep a tight lid and control on WIP. So I don't see any significant step up. And clearly, there's a big focus internally on driving efficiency and moving out with lower if we possibly can.

So and, obviously, our sort of -- our intake profile of land is changing in that we're looking more at our strategic portfolio and trying to make use of that through the planning opportunities that we've got. So as David noted, we've got 118 strategic applications notes that are going through. And that will give us better visibility of land going forward. What it does give us a bit of flexibility in terms of where we where we look to buy instant land in the market in a more competitive environment. That land is still coming to the market.

We see prices pretty flat in terms of land coming through. I think there's less peers. There's more opportunity or more bidders on smaller sites as you'd expect. But I think where we've got larger sites, our 3 brand sort of USP gives us that opportunity to really tackle those and be competitive and economic on those beds.

Rebecca Parker from Goldman. I just wanted to ask a question on build cost inflation. What conversations are you having with suppliers given the more recent spike in energy costs and what are you assuming in your build cost inflation guidance? And then secondly, on the planning challenges that you've cited in terms of that outlet guidance. Could you provide more color on those and confidence of growing your outlets into '28 and '29,?

Thanks, Rebecca. So I'll pick up on planning and outlets and Michael cover in terms of build cost inflation and what we're seeing generally. So I think in terms of outlets, I think the key point is that we have really good visibility. So across our 32 divisions. We got visibility. is becoming a less common thing given the planning backdrop we either get planning or we'll get planning on appeal. So I think what it has more to do with is can we get a planning committee convened? Can we get the 106 signed? And can we then get our pre-commencement conditions agreed? And that is more about, I would say, admin rather than points of planning principle.

So in looking at the portfolio, we feel we are going to see some slippage as we move through FY '27. And hence, we've adjusted the guidance slightly on that basis. But it's not about -- we don't have the outlets. We've got to go out and secure the outlets, we absolutely have the outlets.

Yes. So on Bill cost, probably it's worth recognizing for the current year, we're already 20% through the year. So we're getting a clearer picture on it on a monthly basis. As we said in the presentation, we have really strong ongoing partnerships, and we engage with the supply chain on a regular basis. Our deals aren't done the first of January for every material. So they're done through the year. So there's regular touch points where we see and we're talking to the supply chain about how that's working and how they see the picture evolving. I think the current assessment takes account of the size of the business.

We talk a lot about buying power that we've got and the relationship. So it takes all that into account. I think really positive. We have a really strong group procurement team. We have set individual sector managers that are regularly talking to the various supply partners. And we're getting regular updates, as I say, from them from a holistic basis about what inflation is looking like. So we're really confident on the guidance that we've given. I think it's worth noting -- I was with the supplier last night and we're talking about sort of innovation and how we can manage potential inflation measures around installed cost rather than just PO supply costs. So we're working together as a team as a broader team to try and manage those processes. And we've also got, as we always have got sort of cost initiatives and whatever you through the business that will try and offset any inflation pressure. So overall, we get in regular updates. We're 20% through the year, and we're really confident with the forecast that we've got in the [indiscernible] .

Zaim Beekawa, JPMorgan. The first, maybe to John, I think on Slide 21, you presented the land bank gross margin. Just curious to think -- to get your thoughts as to the sub 10%, when do you think could fall off? And maybe just to come back on build cost inflation. I think in the presentation, you referenced the fuel surcharges. Any indication as to what the contribution is at? And if we were to paint a scenario where maybe those were to come offline, where do you think that 3% to 4% build cost deflation falls to [indiscernible]

Okay. So John, if you pick up in terms of the land bank might you pick up on a charges?

Yes. So just looking at the land bank, when you look at the part sub-10 -- are you here thinking about impairments or are you just looking at this from the profile? Because obviously, that is coming through -- it's partly geographic. It's partly about the time when the land was acquired. So those are the kind of the 2 big drivers as well as obviously the way the market has moved since. But from the point of view of those plots coming through, we're expecting those to come through pretty much the more mature plots are coming quicker in the process. So they will work through the next 2.5 to 3 years. But from the point of view of the 10% gross margin, obviously, there's a mix in there. I don't -- I probably wouldn't go any further in terms of giving more detail, but we expect those to pretty much burn through in the next 3 years because they tend to be the auto plants. Does that help?

Okay. On the surcharge, I guess it's worth noting again that it's only one of the areas that we -- it's only one of tactics that we're employed in terms of trying to manage our overall inflation pressures. We put it in -- we put that into place really so that we can be agile around moving prices back down when prices normalize a little bit more. I think what we're seeing, it's difficult to do the 3% to 4%. We've taken that view, and that's all rolled into the 3% to 4% that we've guided on. We are seeing our supply chain, both labor and material actually sort of take and absorb some of the price increases that are out there really to secure workload for the future. And that comes back to our sort of volume and ability to engage and guarantee volume going forward for them. So it's -- there's a number of items that we're looking at in terms of blending that. So it's difficult to ascertain the surcharge, but we forecast that sort of all that's baked into the as best we can, knowing what we know today.

Glynis Johnson, Jefferies. Two, but there's a few bits in the first one. Standard housing types. Three questions. One, the -- what have you done to the bare range? Are you moving at lower pricing given the speculation that any Help to Buy would be perhaps tied to size of home or number of bedrooms, David Wilson versus Redrow, are you increasing the differentiation between those with the change in the David Wilson housing type. Three, the proliferation, the GBP 500 million was a little bit of a higher number than I would anticipate. I remember the conversation when there was proliferation again, how do you stop the proliferation? How are you trying to put in controls to stop that creep that seems to be a 4-year [indiscernible] .

And then the second question, the rightsizing of the land bank. Can you talk us a little bit through what actually you're trying to do? Is it that you're trying to reduce the sites that are bigger than 750 units down to speed through? Is it geographical -- is it about product type that it needs to be fitting the 3 brand or it's not interesting? Just a little bit of color about that.

Thanks. I'm disappointed, Glynis, that it wasn't questions to sign off. Yes. So I was talking briefly about this the other day. I mean, one of the first things that we did when I became Chief Exec was to slim down the hostage range. And published information at that time, which was back in 2016. So I think 2 slightly different things. We have very strong controls over the creation and implementation of house types. So the divisions can't just create house types. But the reality is that the national standards and the local standards will require iteration of individual house types. They've got to have perhaps different room sizes, different requirements at a local level. So what we've done is we've consolidated all of that to -- and we've had to adapt to how size slightly to ensure that rather than having maybe 5 iterations that addresses the same point that we have won an iteration that addresses everything on a national basis. So that's the first point.

Second, I would say, we're not consciously trying to reduce how size is. When we've seen demand side support previously, it's tended to be focused on number of bedrooms. I mean that's been the main restriction. So first by going back a number of years ago as a demand-side mechanism. You could only have 1 more bedroom than your need, and that was the rules under the scheme. So if you a couple with 1 child, you could only buy a 3-bedroom home. And with Help to Buy, that was removed, and therefore, took away that restriction. I think it's very unlikely that there would be a square footage restriction I think, more a bedroom restriction. David Wilson and Redrow, I mean, we published information historically in terms of the difference in the house size is. I think we're comfortable the Angela, if you want to comment on that in a moment, Mike.

But I think we're comfortable with the differential in the range. I think they're very different homes, both externally and internally. So I think we're very comfortable with and just talk a bit more about that, Mike?

Yes. I just a bit of clarity on the 500 units. The 500 units , 15 versions of each because of local standards. So it's not 500 different iterations of. So we've either grown in size for bedroom size or somebody wants larger downstairs tools, whatever it is. So the work that we've done really is to look at those 5 houses for any particular house type and bring that back to 1 solution fits all. So we now have 1 house type that fits NDS lifetime homes and also accommodates the future on standards. So that proliferation will undoubtedly stop for at least 4 to 5 years until new regulations come through and what have you. So that clarifies that. I think what we've seen in the difference between the barrel, and it was focusing about and David Wilson.

What we've seen in the Red Road product is because it's generally larger, it accommodates all of those requirements without much change -- so we've not had to look at the Redrow product in the same way. I think David is absolutely right. If you look at the 3 brands actually, they are very different street teams. They are very different solutions in terms of what the customer choice is providing. So we see an absolute brand differential between Redrow and David Wilson as it stands at the minute, and similarly with Barratt and David Wilson. So all 3 different brands. And what we have done is both on the new states, whilst we've got types, we've got 3 alternatives, alternative elevations for each type. So again, that will that will play to local requirements around variations. So there'll be standard variations that will control rather than divisional-specific renovations that are planning driven. So we're confident that we'll drive efficiencies around that in terms of not having the number of different house types that we've got to build. And we also, just a final point, we're also sort of ready with the new house types. So there's a bit more standardization in terms of bathroom layouts and the like. So that as and when that comes through in the next 2, 3, 4 years, we'll be able to drop that in really efficiently.

Yes. I mean aggressing slightly, but I'm allowed to digress. I did once made a point to a government minister some time ago that if it was BMW or they don't say, well, actually, we want this type of BMW in Birmingham, but we'll have this type of Manchester. And they just kind of smiled and sort of said, we'll just get on with it. So the reality is the iteration of standards at a local level is one of the biggest hurdles that we face. And we -- and that's not just about sizing, that's also increasingly about the sustainability agenda and decarbonization and so on, whether you need solar panels, et cetera, et cetera. I mean -- so the government are trying to get more control around that, but it is a big, big challenge.

So whilst we're a standard manufacturing operation, it is at a local level. It's not at a national level. In terms of the land bank, I think when we look at capital allocation, the land bank is the big, big challenge for all housebuilders. We can buy bricks. If we want to buy 73 million bricks, we can buy exactly 73 million bricks. But if we want to buy sites that are say, 300 plots being optimal, well, we're not going to buy very many sites if we say we're only going to buy between 275 and 325. So what we have to do is we have to get the right utilization of the land. And you can approach that in different ways. Clearly, some of our peers would approach that in the way of having a single brand and bringing other housebuilders onto the site or selling part of the site, so they would do swaps or sales.

We've taken the approach over a long period of time that we would rather do brand and dual branding with Barratt and David Wilson, I think, has been successful. Bringing Redrow for triple branding, Redrow is at a more premium price point. So I would say as a general guide, if we're not at about GBP 400 a square foot, Redrow won't work in that marketplace. It needs to have that premium price point. But there are plenty of markets in the U.K. where we can get to GBP 400 a square foot. As Redrow have demonstrated over a long period of time. But you can see from their original footprint that there were certain markets where they were more difficult for them to operate. So triple branding is a real thing. I mean we are on triple branded sites with other housebuilders or quadruple branded sites with other housebuilders. So we think we can get some good optimal mixes there. And John highlighted, which we've highlighted before is looking at that ratio in terms of looking at the way that the land bank is utilized. The efficiency of the land bank ultimately will drive the return on capital employed. So we've got to keep pushing for that land bank efficiency.

Sizing Quebec reducing single branded the right sizes are reducing how to buy bigger sites on site?

I think generally buying bigger sites because it's much more difficult to buy sites where you're looking at sites that are, say, less than 150 plots because you bring in all of the market subject to the fact that you would have regional house builders in the marketplace. So clearly, if you're looking at larger sites, and that could be 500 plots or 1,000 plots through the made partnership. There's obviously a limited number of house builders that are prepared to deal with it with land in that scale.

Christopher Millington at Deutsche. I've kind of got a 2-part question on land, first of all. And it really relates to what you think land prices have done over the last couple of years. I see you're talking about intake margins of 23% gross on new land. But obviously, the intake price is roughly about 5% less than what you've been putting through the P&L at the moment. And just looking back at history, 23% has been quite a tall order for Barrett to hit. So just really wondering about the regular and really the confidence there on.

Next one, sorry to kind of return to current trading. But it does feel as we're approaching autumn, we should probably start seeing a bit of a ramp-up in inquiry levels to levels as people kind of ready themselves from that seasonal uptick. Has there been any evidence of that at the moment? And just wondering about your thoughts on those lead indicators.

Yes. Okay. Well, if I just pick up on both of those, but I'm going to parcel on pricing it to John as well because John's got a few stats. I know [indiscernible] leave somewhere. I think on current trading, first of all, I mean I said earlier, Chris, we're not going to sort of start disaggregating it. But what I did see is it's not been in a position that's got worse. So if you look at the 10 weeks, we've seen a position that's been stable or better rather than has been worse. And I think that's very encouraging going into the autumn season.

Now we're obviously measuring it on a year-on-year basis in terms of our performance. And we know that last year, it really went south because we got closer and closer to the budget, which I think was late November, and the market just growing to a whole. So our comps are weakening and therefore, we would expect to see year-on-year improvements arise. But let's see what happens. We haven't actually seen a lot of budget speculation this year. I think the government have kept that pretty tight. We've learned the lesson. And the only 2 things that they have said publicly is one, there will be no rent control and two, there will be no stamp duty changes. Now the reality is they could do either of them, but at least they said it's not going to happen, and therefore, it's dampened down the speculation. There's been no chat about mansion taxes or all sorts of stuff as there were -- so I think current trading, we're fine with what we're seeing in September.

In terms of land prices, well, land prices are falling. I mean that is factual. I think that land prices never fall as fast as we would like. And typically, there's probably about an 18-month lag because the land owner doesn't want to sell because they believe it should be million acre or whatever they believe. And we don't want to buy because we don't believe it's 1 million an acre, so there will be a lag. And the only other point before I pass over to John to say that we know that we have a lot of land in planning. All the housebuilders have a lot of land and planning. All the land traders have a lot of land and planning. So as we move through 27 and 28, there will be a lot of land coming to the market and that should help from a pricing point of view.

And just, Chris, I think you've got some of the data anyway. But if we look at saves, and you can see it in the back of the deck. So we obviously give you the land index there. It's down about 11% on the national index. Behind it, there are some quite significant moving parts in the Scotland with very different planning regime. Land values have hardly dropped at all. But if we look at the south of the country, they own about 17% or 18% cumulatively from the peak, which was back in September 2022. So different moving parts in there.

But I think David's point in particular about supply-demand and how things will look over the next couple of years will be key as well landowners views about where the government and where policy is going to go over the longer term, which if the government talks about more affordable, ultimately, that will be a tax on land -- so landowners should, in theory, look at that and think, well, maybe more sensible to sell today rather than waiting and then finding there's a bigger affordable content in that mix because it ultimately will come through on one value. Charlie?

Charlie Campbell from Stifel. Two very quick questions. Just a clarification. On Slide 21, the gross margin plots. Does that include anything at all for new house types -- and then Slide 19 on the admin costs, the GBP 330 million moving up to $360 million, is that just basically the absence of one-off benefits in '26.

In terms of -- on Slide 21, apologies, can you just remind me, sorry?

So that's the Yes. Does it get the does include [indiscernible]

In terms of no, at the moment, obviously, the land is coming through sites that are going into planning effectively with the new highs tabs on them or if they go in for a revisitation on planning that would start to feed through. But in terms of the current land bank, the new house types are really flowing through in the next 6 months, and we'll go into sites then. There is going to be some replotting, -- so we're going to try and introduce these into sites that are already there. The issue will be in terms of phasing to think about, look, in terms of the sales rate on that side, can we take some of those plots back to get them replotted with new house types.

But as a general rule, this is going to be rolled out and will be coming through over the next couple of years in terms of making an impact. When we look at the second one on the admin side, obviously, 330, we're flagging that pre the one-off of the base starting on 347 Charlie. We then have basically an assumption that we're going to have 15 million or thereabouts in terms of the reversal of the bonus kind of cut back that benefited in FY '26. Inflation will be coming through of the order of GBP 7 million or GBP 8 million. We expect synergies of 7 or 8 in the other direction. And when you put the various pieces together, we should go from around 347 million, including the one-off back to around GBP 360 million.

[indiscernible] Roxboro. My question is just on biotype. Have you seen any change in behavior there, I think, on Slide 9, you see a slight pickup in mix in terms of part exchange. I think that's quite interesting. So any comments there would be helpful. And how does biotype generally just fit into the context of your dual triple branded approach. First-timers always go for the Barratt product? Or I imagine it's more nuanced than that. So just any comments on that would be great.

Yes, yes. So I suppose to [indiscernible] type, the part exchange piece really is around people's ability and confidence in their convenience chain. So that is a reason. It's a really good incentive for us because if somebody comes along and says, "Actually, I want your house, if they're not in a position to proceed, we can put them in a position to proceed and they can reserve the way they got to go away and try and sell their products.

So I think that's the slowness in the market generally secondhand as well. is driving that PX sort of increase and the sort of popularity of pick through the buyers -- biotype is interesting. I think between Barratt and David Wilson because -- both brands have product through the ranges David Wilson slightly larger book Davos product that is first-time buyer as well, then the bio type is very similar across that. I think Red Rail is certainly different. That doesn't really get into the first-time buyer. And actually, we'll see less of that going forward, I think, because now we've got the 3 brands, Redrow, won't need to comply with housing mixes and the like because we'll put a or David Wilson in to that from the dual brand -- so Redrow will naturally go a bit bigger going forward. SP-7 Just to add on that,.

Downsizers are -- I think everyone would like downsizers to be a bigger part of the market. But a little bit like first-time buyers that when the market is challenging, consumer confidence isn't high, the downsizers can just sit it out. So Redrow historically, if you went back to '21, '22, Redrow was doing about 40% cash sales primarily to downsizers. So I think a lot of those downsides are sitting tight just now to see what happens. And likewise, first-time buyers can carry on living at all more can continue to rent. So those 2 parts sit out, which is why I think you end up with some tick-up in second-time movers and part exchange becomes more important.

Just one final thing we were doing it. But actually, the other point when we look at our triple branding sites, the interesting feature there is that there is almost, I think, a benefit back, for example, to Redrow where more people are then visiting the site because there are 2 alternative products there as well. So we're actually finding it. It actually does actually benefit back on to the Redrow brand, maybe because people didn't feel there was a product that would suit them. And then with the extra product they go along and think actually they go and look at all 3 and I think they're planned for the retro.

Great. conscious I think we're about to finish, but I'll hand over to Emily, are you -- is it a question or are you picking up on other things?

Lot on safety or Yes. I actually asked Clyde to say a few words as well because I was conscious that I was only around for sort of 75% of David's tenure and Clyde actually remembers Barrett Pre David Thomas, so he might be able to provide a bit more context. But before I hand over to Clyde, I just really wanted to say thank you from all of us. I had a go at working out yesterday. And I think that if you include all the pre-close calls and all the quarterly calls, you've actually spoken to the analyst community about 100, which I think also means you probably face something in the sort of mid-single digit thousands.

I'm not when it comes to the number of questions, I think about probably about only 1/3 of those have been about current trading. So I just wanted to say thank you, and thank you for patients that you've shown us and your openness and you said that you wanted to be straightforward when you spoke earlier, and I definitely think you'll leave with that reputation. Yes, thank you for all of us. Yes, I'll hand over to Clyde.

Yes. As the old man in the sector, I get to do these sort of things. But I mean, I first remember the meeting you back in 2009 -- think for a coffee around the corner from the head office in Oxford Turkish. And I'm thinking, he's come out of counting Xbox sales Nintendo Wes and Donkey consoles and God knows what, and I'm thinking, how is he going to handle the hostile Exactly. To be fair, you joined at a very interesting time. Your predecessor had, I think, politely tapped out after sort of 2006, '07, I think, pretty challenging period for Mark.

But I think all of us in this room, I think, would sort of echo Emily's comments about how you've grown into the role. You clearly one of the most influential and leading people in the sector, it'll become a master, a Jedi master handling these meetings, the confidence, the calmness of how you've dealt with all the difficult questions even the [indiscernible] ones, you've sort of -- you've managed to make the Asker look sort of good with the question despite asking maybe the most obvious question on the planet, but the other scale has been your ability to DUC very deftly those really, really tricky ones where we all were desperately hear the answer, and you slipped sort of quietly side of that. But I think when we look at your commitment to the business, I think it's been [indiscernible] most no doubt that you've given it 100% anybody who sleeps under canvass the number of times that you've done for the charities, the number of labor party conferences that you've attended to, I mean, deserves a real badge, I think, in my sense.

But I think the -- probably the most impressive thing is the fact that you've been in the industry so long, you've created so much impression that you've now got your own work compete your page. You're up there with the industry great, whether it's Steve Morgan, Tony Pidgley, Lawrie Barrett and of course, Greg Fitzgerald. I'd like to wish you all the best for your retirement. I'm finally hopefully going to get a game of golf with you after nagging you for so long and maybe in some of your other spare time, you might get a chance to go on to that Wikipedia page and embellish it like somebody else has done as well. But David, all the best retirement, and I'm sure you'll enjoy it. So thank you very much.

Thank you very much, everyone. Thanks, everyone.

Hello, and welcome to Barratt Redrow plc FY '26 Trading Update. My name is Laura, and I will be your operator for today's event. Please note, this call is being recorded. [Operator Instructions]

I will now hand you over to your host, David Thomas, Chief Executive Officer, to begin today's conference. Thank you.

Good morning, everyone, and thank you for joining us on our FY '26 trading update call. Mike Roberts and John Messenger are with me this morning. As ever, I'd like to start off by thanking all of our employees, our subcontractors and our suppliers for their continued commitment and sheer hard work which has driven this performance.

Last month, we achieved 122 NHBC Pride in the Job Awards, more than any other housebuilder, for the 22nd consecutive year, and it is our best result ever. It is this commitment, operational excellence and focus on our build quality and our customers that has underpinned this solid performance.

Clearly, the operating environment is challenging, but we've responded proactively to these challenges. We've used [ incentives ] carefully to maintain sales momentum. As a result, we delivered total home completions, 5% ahead of last year, at 17,667, and adjusted PBT in line with market expectations.

We have applied rigorous cost control to our cost base, partially offsetting some of the gross margin pressure, and we have reduced our investment in land. This decision around land investment and our actions across the business have delivered a very strong balance sheet position. with year-end net cash of GBP 772 million. As many on the call will be aware, we have consistently evolved our capital allocation policy and returned almost GBP 3.5 billion to shareholders over the last 10 years.

Our capital allocation policy is based around maintaining that strong balance sheet while keeping the financial flexibility needed to both invest in growth and meet significant cash commitments over the next few years. The GBP 400 million return announced today is entirely consistent with that flexible but disciplined approach. Like others in the sector, and particularly since the outbreak of the conflict in the Middle East, our shares are trading at a significant discount to tangible net asset value.

As a result, our FY '27 capital return of GBP 400 million will be delivered predominantly through share buybacks with a nominal dividend. And looking ahead, we remain committed to returning to shareholders 50% of our earnings, complemented by a minimum GBP 100 million annual share buyback.

On that note, I will now hand over to Mike to discuss the operational performance of the business.

Thanks, David, and good morning, everyone. I want to start with reservations. Our overall private reservation rate was GBP 0.64, which compares to GBP 0.63 on an aggregated basis last year. This includes a GBP 0.01 contribution from PRS and multiunit sales, in line with last year. Although following budget uncertainty, we saw significant PRS reservations shift towards the end of the year. Sales incentives to support reservation activity remained at the elevated levels we saw in the second quarter given the outbreak of the conflict in the Middle East. We would expect incentives to stay at this level until consumer sentiment and affordability improves.

As David outlined, we delivered 17,667 total home completions in the area, 5% ahead of the aggregated figure in FY '26. Performance was weighted towards the second half consistent with our usual trading patterns and in line with our build scheduling and reservations generated in the second and third quarters. The average selling price for the year was GBP 352,000, an increase of 2.3%. This was driven by increased home size and a higher contribution from our regions with higher average selling prices. We estimate that underlying sales pricing was around 1% lower across the year and our order book at the air and is carrying an underlying ASP decline of 1.4%. This reflects a market where our customers face affordability challenges, political and macroeconomic uncertainty and they are, as a result, cautious and price conscious.

In this context, we are pleased that the forward order book is solid with forward sales of GBP 2.8 billion, only slightly down on last year. An average sales outlet numbers at 405 were flat versus the first half and in line with our guidance at the start of the year. We have launched a total of 136 new sales outlets in the year. including our first 12 synergy sales outlets, where performance has been really encouraging, reinforcing our confidence in the benefits of our multi-brand approach. 18 further synergy sites are scheduled to open this year. and we are targeting a further 15 in FY '28.

In April, we guided to average sales outlets for FY '20 of between 425 and 435. However, the frustration is slow pace of planning approvals, but coupled with good progress on outlet closures, means we're now expecting average sales outlets of around 415 in FY '27. Turning now to build cost inflation. In April, we guided to build cost inflation for the year of 2% and 3% in the second half. That has played out as expected. And we are likely to experience further build cost pressure in this financial year, particularly on the material side.

The scale of our business, enhanced by the Redrow acquisition is helping to mitigate some of the impact. Through our ongoing negotiations with our supply chain partners, we are mitigating increases or building in flexibility for prices to reduce as and when supply and input costs reverse. So against this backdrop, our current assumption is that we could see total build cost inflation of 3% to 4% in FY '27, slightly higher on materials, which could be 4% to 5% but more muted on labor which we expect to be between 2% and 3%. We'll hopefully have a clearer picture and be able to update further information in September.

With that, I'll pass back to David.

Thanks very much, Mike. And now to touch briefly on the Redrow integration. We're pleased that operationally, all elements of the Redrow integration have completed all of the GBP 100 million cost synergies have been confirmed. And at GBP 73 million, the benefit to the P&L in FY '26 was slightly ahead of that expected at the interims. There is a further GBP 27 million benefit to come before the end of December 2027 to complete the GBP 100 million per annum synergy. In FY '26, both synergy delivery and the rigorous management of our cost base, something that we highlighted at the interim stage delivered a very positive reduction in our administrative expenses.

Turning to adjusted items. We have given details in the statement, but charges are expected to total around GBP 160 million. And the most significant element relates to legacy property provision charges of around GBP 95 million, mainly reflecting additional remediation costs on 2 developments that were already under review as well as recognizing the impact of build cost inflation.

Turning to land. We approved just over 3,000 plots for purchase in FY '26. That's well below the 7,000 to 9,000 plots guided to in April. This reflects a very deliberate decision to be even more selective in our land acquisition and also to cancel some prior approvals given the uncertain environment. Land cash spend in the year was also more modest at GBP 625 million compared to guidance of between GBP 700 million and GBP 800 million. This has driven an increase in our year-end cash balances, which at GBP GGB 772 million with some GBP 170 million better than our April guidance.

Finally, turning to the outlook. We have navigated difficult markets before, and we see that we are well positioned. Our business model is resilient and flexible. Our balance sheet is strong. We have 3 high-quality and complementary brands, which are performing well, and we expect to deliver total home completions of between 17,700 and 18,200 in FY '27. As we demonstrated this year and with today's announcement, we have a clear focus on optimizing our capital to enhance returns for shareholders.

Thank you. And with that, we'll be very happy to take questions.

[Operator Instructions] We'll now take our first Will Jones of Rothschild & Co Redburn.

Three, please, if I could. The first is around trading in your fiscal Q4, whether you could just talk us through how it evolved through the period just given all the various headlines we've had internationally and at home and whether you'd call out anything interesting around buyer types or the regions?

Second was just around build cost, good clarity given there for the year ahead, but just hoping to explore the degree of visibility you've got on that, particularly with regard to materials and the extent to which you've been able to agree any increases as energy surcharges as opposed to fixed price increases?

And then the last one was just tying up on cash outflows for the year ahead, obviously, lots of detail given, but I just wondered if you had a view on what the land approval number you've guided to plot-wise, might mean for the cash to spend. And therefore, if there's any high-level thinking on the net cash or net debt position a year from now?

Well, thank you very much. And so if I start off, and I'll talk about trading, and then pass to Mike and Mike will pick up in terms of just build costs and some things that we're seeing on build costs and Mike -- sorry, John will pick up in terms of cash into land and other areas.

So look, well, on Q4, I'd say there's nothing unusual to report in terms of regions or particular brands or product types. I think it's an ongoing trend where affordability is most challenged in London and the Southeast. And therefore, if we compare London to Scotland or the north of England, unquestionably, London and the Southeast is seeing it more difficult. But that was the same position that we saw up to Q3.

The only other point which Mike touched on in the overview is that we did secure multiunit sales in Q4, primarily because I think most people backed away from the market, given all the uncertainty and the run-up to the to the budget towards the end of '25. So we kind of recover that position. And ended up with pretty much the same overall position from [ a ] unit sales and private rental albeit it was a late delivery in Q4. Mike?

Yes. So raw materials, as I said, we've guided to 3% to 4%. We think the material content will be slightly higher than that and less so on the labor. In terms of visibility, you'll be aware, we have sort of ongoing all year round negotiations and conversations with our supply chain and supply chain partners. The deals that we strike are not all at one point.

So those sort of revised prices and fixed-term breads revolve through the year. We do feel that there's some headroom in the supply chain. So we're not seeing price increases because of scarcity actually quite the reverse that people are talking to us, particularly with our sort of key differentiator being the size of the combined business in terms of securing their future supply. So we've been able to mitigate some price increases as a result where we've seen sort of exceptionally or not exceptional, but higher levels of inflation due to Middle East conflict and price of oil been fluctuating. We've generally agreed surcharges and we've agreed mechanisms where those will reduce as and when the price of oil drops, and we've done that both with our material supply partners, but also our subcontract supply chain as well where they're heavy users of the likes of diesel and the like.

We review the prices by sector. So we're seeing higher pressure on plastics and [ basmati ] products, as you'd expect, [ bolt ] materials less so in many instances that the suppliers have hedged their fuel prices. So I guess that might change if the conflict escalates again put them or we're relatively confident with the forecast that we've got and we keep on going with the conversations we're having with the supply chain.

And then just yes, coming back, Will, on the question around land and commitments around the approvals. Two things to [ flag ], one you've seen already that GBP 330 million is our estimate in terms of land credits, the outflows for the year and that is effectively backed on a locked in. On top of that, when we look at what is in the approvals hopper, effectively, those broadly between GBP 220 million and GBP 250 million is the kind of broad feel in terms of that number. Obviously, as the year evolves, that may change. But certainly, as we sit here today in terms of committed spend, we're in that kind of scale, that order of GBP 220 million to GBP 250 million.

We'll now take our next question from Harry Goad of Berenberg.

Can you just talk a little bit about the landmark [ appreciate ] the sort of need to [indiscernible] to invest is lower.

Harry, sorry. Sorry, you're not coming through clearly so..

Can you this any better?

That's a little bit better. So go slow.

Okay. Just on the land [ arkit ] please notwithstanding that you need or the to invest that. Can you talk about what you're seeing in terms of opportunities and particularly pricing in our very interesting deals out there if you did want to do it...

Yes. So, thank you very much. So yes, I think if we go back to February, one of the things that we were seeing in February is that we have an enormous amount of our own applications in for planning. I think the whole industry anticipates that the changes coming from the legislation that was passed in December, and the revised National Planning Policy Framework, which has not yet been published, but has been scheduled to be published this week would result in a big change in the planning backdrop.

And I think we've said previously that the legislation was delayed. The first half of the year was definitely impacted at a local level where there was local elections. And the planning policy framework has not yet been published. But nonetheless, applications have gone in. So we would expect that the availability of land will alter substantially as we move through the second half of '26 and into '27. So we don't see any shortage of opportunity in terms of land with planning. I think it's more about the uncertainty of rates of sale. And also, as Mike just talked about the uncertainty of build costs in terms of us building up the viability position.

And we'll now take our next question from Zaim Beekawa of JPMorgan.

The first is just on the incentives. I think you mentioned that it sort of moved higher due to the budget related uncertainty but it feels like we could be in that scenario. Again, we have some statin help to buy [ rumors ] you worried about incentives potentially going higher again? Second one is just a bit of help reconciling land approvals going from around [ 22,500 ] to 3,000, but land spend just moving down from GBP 860 million to around EUR 600 million. And then finally, on build cost inflation, sorry to come back on this, but any view on how that's split between calendar year '26 and '27. So are you expecting a big step-up in H2 versus that 3% to 4% average?

Thanks very much for those questions. So I think if I just pick up in terms of the incentive position and John will then talk about the cash land spend [ Vitaland ] approvals and also John can pick up in terms of the phasing of the headline on build cost inflation. I think it's important to build cost inflation just to talk about the split in terms of labor and materials, which John will do.

So look, I think it was well documented last year that the way information about the budget linked into the market from probably July, August time was enormously unhelpful, particularly regarding stamp duty potential changes to stamp duty. As you touched on the possibility of demand side support and also discussions about taxation around property. So we would just reinforce the fact that, that kind of leakage and speculation is enormously unhelpful for the market. But we'll just need to see how that plays out. There is already a discussion in the media about the potential of there being demand-side support introduced, which clearly net-net, we would see as being the right thing to do and a big positive for the market, but the speculation around it is not going to encourage people to be transacting. So we've got to recognize there is potentially a delay effect in relation to those discussions.

Yes. Zaim, just on the first one in terms of the land spend and the profile, the key thing to flag here is that we have, obviously, in the process, we approved land but then it sits there effectively as a -- in a holding [ open ]. And then we will go through to subject to planning -- the planning consents, and that would typically then trigger the purchase of the land. We'll obviously break out in September, how many plots were actually purchased in the year, but the approval process is in advance of that.

So effectively, as our approval slow down, that will ultimately then flow through into the land spend that you actually see going through the cash flow statement and hitting our balance sheet. So it's purely around the timing of that. And obviously, we have the 3,029 plots. They are sitting there as approvals they will create that slower land spend. And as I mentioned earlier on the question, we're talking about GBP 220 million to GBP 250 million of committed land spend on top of the land creditors. So there will likely be a sharp slowdown as we move through into FY '27 from FY '26.

In terms of build cost inflation, to David's point, a couple of things to flag we look, clearly, we're flagging within build costs, which are about 60% of sales. You have broadly 60% materials, 40% is labor. So when we look at the labor content, we're flagging 2% to 3% inflation. And given the backdrop of capacity in the industry and a likely slowing particularly on the smaller developers, then we think actually that labor cost inflation has probably gotten ability to be a little lower. If we look at the material side between 4% and 5% again, a lot of the supply chain is running at less capacity utilization than they would like. And that's why we've had success in terms of building in deflators as well as escalators based around energy and input costs. because I think the supply chain is keen to drive volume at some point, at least particularly conscious of how much cost inflation in the industry is born over the last 5 years.

So those are the ingredients in there. I think from the point of view of how that build cost will evolve through into our numbers in FY '27, A lot of this will depend on when we actually agree terms through September, October, but we would probably like to see more of that inflation feeding in the second half but pretty much in the way we value our land and looking at our land bank embedded margins, once we know about a cost increase, we reflect that in our valuations, and that starts to come through in the margins as we report on the same.

So overall, putting slightly more build cost inflation in the second half, but it won't be that significant because we recognize it as we move forward and as we agreed terms with suppliers.

We will now take our next question from Chris Millington of Deutsche Bank.

A few again, as we'll keep the theme going. First one then is about the sustainability of shareholder returns, really, guys. The GBP 400 million is probably going to be more than 100% of net income next year. And I appreciate lower land spend helps. But if you do have to move back into the land market at a more replacement rate, do you think you can continue paying that?

Number 2 is really just about the outlets impact of this lower land spend as we move beyond '27. Is it likely to be a little bit more severe than the reduction you put through today for FY '27.

And the final one, it relates to something you just talked about there, David, about how to buy and I just wanted to know whether or not you've had any discussions with the government and kind of what you feel the probability of a return of the scheme would be?

Chris, thank you. If I pick up on shareholder returns and on help to buy. So I think on shareholder returns. I said in the overview that over the last 10 years, we've returned around GBP 3.5 billion in terms of shareholder returns. So I understand that there's been clearly variable levels of profitability during that period of time. But clearly, that's a significant average annual run rate in terms of shareholder returns.

So the GBP 400 million that we've announced this morning, I mean, we're very clearly saying that, that GBP 400 million is in excess of how we're guiding on a go-forward basis. We're guiding on a go-forward basis on returning on a 2x cover basis for earnings plus GBP 100 million, which is where we were previously. So we see that there is an additional return of GBP 100 million to GBP 120 million within that GBP 400 million. And I think that's kind of clearly set out within the statement. We're very conscious, as John has touched on already about the other cash flow outflows that we have.

So land credit is clearly is a trading liability, but it's unquestionably a liability. And then we also have the building safety liabilities. So we're very conscious that these are significant outflows, and we're managing that in terms of the way that we're looking at shareholder returns. In terms of Help to Buy, I mean, I think, Chris, the short answer is, of course, we've talked to government. We've talked to the previous government. We've talked to this government we'll talk to the new government that forms shortly. And we've been very clear that it is unusual in the market for there to be no demand-side support.

If you go back over the last 30 years, the vast majority of years, there has been demand side support, particularly focused on first-time buyers and recognizing that property prices, generally, property prices are high, and there are particular challenges around affordability for first-time buyers. So we will, obviously, again, make that point to the new government, as we have done previously.

I think the old point that's key is that the industry has always said that we would pay for a scheme. We have previously paid in relation to government demand side support schemes. So we've never had a problem with paying, but we believe that the existence of a scheme is fundamentally important. If we are going to collectively deliver the homes that the country needs.

So in terms of outlets, Chris, obviously, for the current year, the guidance there to GBP 405 million. If we look at '27 moving into we would still expect to make progress on sales outlets. If you think about the time frame from land approvals through to opening a sales outlet, you're talking typically 24 months.

So any slowdown partly, we'll be looking at clearly what we can do to drive additional sales out of the existing portfolio. And then it will be the impact will be more about FY '29 if there is a more extended period where we're not purchasing sites for additional sales outlets. But other things stand '27 and '28, we still expect to 18 progress.

We will now take our next question from Rebecca Parker of Goldman Sachs.

Rebecca's line just got disconnected. It dropped off. We will now move on to our next question while waiting for Rebecca to queue in back.

Take our next question from Allison Sun of Bank of America.

I have 2 questions. The first one is the easy one. Do you have seen any impact from the heat wave that we see some contractors are flagging this on the demand and also the construction progress?

And the second question is on the land bank. So can you tell us what do you expect the land bank years to be at the end of 2027, should we still be expecting around 4.5 year target. And after that, are we -- should we presume your land plots acquired will be roughly equivalent to completions?

Okay. Sorry, thank you, yes. So just pick on that. In terms of heat wave. I mean clearly, it presents challenges for our build teams. But I think we have very clear protocols in place. And I think also to some extent, our build scheduling because of our financial year-end in June, I think that it's not been any challenge for us. I think it's more a challenge around customers and customers' appetite to come out to sites, firstly. But we're also balancing in terms of people watching football as well.

So there's plenty of challenges, but I think we're navigating our way through it okay. And then in terms of the land bank, the reality is, no, we're not going to be at a 4.5-year land bank at the end of FY '27. But we have been very clear that we are managing the land bank down to a 4.5-year position. And I think that's a key point when we look at cash flows.

I mean, John touched on the creation of synergy sites, and we believe that, that will help to free up both land and work in progress as those synergy sites really start to move and deliver completions as they will do through '27, '28 and '29, but it will take a bit more time to manage land bank down to 4.5 years.

And we will now take our next question from Rebecca Parker of Goldman Sachs. Please go ahead.

Sorry about before. I was just wondering, given step down in those plot approvals. Just wondering how you're viewing that selective land buying strategy versus your medium-term volume growth aspirations? I'll pause there and then I'll ask my other question later.

Yes. Okay. So Rebecca, if I pick that up. I mean I think when you look at the growth plans that we set out in February '25, those really 3 parts to that. One was new land that we had coming into the business that we had already approved.

The second part of it was the synergy sites, and we are creating outlets from existing land, therefore, no need to go out into the market, and that was delivering 45 sites over a period as we've outlined this morning. And then the third part of it would be new land approvals. So the reality is the first 2 parts are secure. The land is under our control, and we can deliver the sites from that land. The third part of it clearly is more variable.

So I mean at an extreme, if we weren't to approve any more land, then clearly, we would see outlet numbers come in lower than expected. But that isn't the backdrop that we expect. I mean we've had multiple instances over the last 10 years, covered, for example, the war in Ukraine, where we have initially stepped away from the land market taken time to assess as to how the market has settled. And then we've gone back into the market. So we wouldn't expect that to be any different this time.

Okay. And the adjusted admin expense came in significantly below your previous guidance. Just wondering if you could unpack the key drivers behind that GBP 70-odd million outperformance.

Rebecca. Yes, coming back. So obviously, we guided to [ 400 ], we're delivering circa [ 330 ]. Two things really. One is synergies were obviously expected, although we did rather better so circa GBP 3 million better there, which is a small movement, clearly, we did back in February really highlight the -- a big focus internally within the group in terms of looking to optimize and really control our cost base.

So I think we're really pleased with the fact that across the business, both in the center and in the divisions, there's been a real focus on controlling costs and ensuring that we're matching that level of spend with where activity was moving. So that's the big there are a couple of minor credits in there. So there are some small movers because you'll see in the back, we're guiding to admin expenses of around GBP 360 million for the current year. So that's quite a step-up.

But effectively within FY '26, there were some one-offs of the order of GBP 18 million to GBP 20 million. So we're really starting with a cost base of, call it, 348 to 350, which we expect to move to 360 in the year ahead. but it was really down to good housekeeping and the kind of discipline that you'd expect from Barrett, Redrow in terms of controlling our costs, looking at discretionary spending and making sure we kept a tight lid on everything we were doing.

And last question, just given that you've had additional legacy property provision charges here, just wondering what the risk is of additional remediation costs going forward and what you're currently assuming on build cost inflation within that permission?

Yes. Rebecca. I mean so in terms of build cost inflation within the provisioning, we're looking at sort of 4% to 5% in relation to build cost inflation. I mean, clearly, that is negotiated and set on a project-by-project basis. As you would imagine, there is a lot of demand in terms of building remediation scales. So we're putting in that sort of level in relation to inflation.

I think the second point, I mean, clearly, it's disappointing that there are further costs to take. But I think looking at the nature of those costs, they are primarily arising from buildings that we were already aware of where we had made estimates in relation to the costs. And either when we've started the process of remediation or we've started the investigation in relation to the buildings in terms of looking at the structure we have identified additional issues. So I think the positive is that it's not about an expansion of the number of buildings within the portfolio. Rebecca.

We'll now take a question from Charlie Campbell of Stifel.

Just a couple from me. Just on the fire safety provision, clearly, the timing of the cash outflows is moving around quite a bit. So just wonder kind of why it was a bit lower in FY '26. And therefore, the confidence of that quite high number in FY '27. And then also a question on mortgage availability, just wondering how that's shaping up, obviously, last few months since kind of energy prices went up, would be really helpful.

Yes, certainly. Thanks, Charlie. I mean so in terms of cash outflows, I mean, we've updated guidance in terms of our expected outflows across building safety and land creditors for FY '27 and FY '28 the reality is in FY '26, there's 2 main drivers of that, which we broadly refer to as kind of regulatory.

First of all, all projects for remediation on buildings at 18 meters and above has to go through the building safety regulator. It's been well documented that whilst the building safety regulator speed and performance has improved dramatically, there was a long period of time where it could be taking 9 to 12 months to put buildings, not just remediation also new build through the regulator, and that's been well documented.

The building safety regulator has accelerated time skills very substantially in respect of new build. So they're not necessarily meeting all of their targets, but they're much closer to meeting the targets on new build but there is still a significant lag in terms of projects for remediation.

So that is delay, number one. And then delay number two is a significant part of the spend for the group is about the repayment to the Building Safety fund and we had made assumptions regarding the timing of those repayments and we've simply moved those assumptions back from FY '26 into FY '27 and beyond. So we're starting capturing both of those under the subject of regulator. In relation to our mortgage availability, I mean, I think if you look at mortgage availability in the round, it is much improved.

So changes that have been made to the regulatory backdrop regarding mortgages, more competition in terms of the banks wanting to lend to new build, et cetera. I think there isn't an issue part on mortgage availability. I think it's more about pricing and the way that, that feeds into the affordability calculations. Thanks very much, Charlie.

[Operator Instructions] We will now take our next question from Lewis Roxburgh of Goodbody.

Just 2 for me. Just coming back to the order of it points to around a 1.4% reduction in the ASP. Could you just help us unpack how much of that is underlying versus mix? And you're assuming some recovery given light at an HPI for FY '27. And then secondly, you highlighted the difference between average net cost and the previous period-end position. That's just to clarify whether your intention to remain net cash applies to both metrics and if that's a primary focus operationally for the business.

Lewis, John here. Just coming back on the first one. So the GBP 1.4 billion is effectively when we do our matching players. So when we look across our sites that we're operating in the order book a year ago or operating this year and look at house types and then look at the blended impact of pricing, that GBP 1.4 million is effectively what we call the like-for-like. So the crisis the GBP 1.4 million and obviously then, there is product mix, and there is a geography that plays around with the overall reported average that you see that in some of the average selling price in the order book spot this year versus last year.

So hopefully, that clears that up. But obviously, that 1.4 million, clearly, we're going to work hard to try and shift certainly the nominal price before we think about incentives. So trying to move that forward, but it's clearly a tough market to do that in right now where customers do prices as they are. So we'll be working hard to do that where we can.

On the incentive level as we kind of flagged, look, we expect that to stay broadly where it is. But 1 thing we are certainly doing internally and across all of our divisions is trying to focus our sales teams, particularly on where is that customer on their journey. So what type of customer, what time frame are they working to? Because we need to look at our sites and think, well, where is the build stage. Are we allowing a reservation with a high incentive pretty much at the point of foundation or are we looking at a finished unit because it's obviously much more important to target incentives where we've tied up for capital where we've got a completed unit and to move that through the system and secure a purchaser.

So time frame of development. The actual performance of each sales or is involved in there as well. And then ultimately, what kind of customer are we dealing with, what is their time frame and what are they looking for. So those all playing out, but certainly trying to target and become ever more efficient in terms of using incentives where they matter most. In terms of the average net cash, as you flagged, we were 122 average net cash in the year just finished.

Certainly, we flagged in the statement that we want to operate over the medium term at year-end we added a large deficit in terms of the total net position of debt or cash, less line creditors, we want to be broadly neutral in the medium term. If we look at the position on average across the year, if you think about the impact of the buyback, that David mentioned in terms of the incremental GBP 120 million, GBP 130 million, that would imply we'll operate we lower our average net cash and potentially a bit of debt on average across FY '27. But certainly, at the end of the year, we'd expect to be back pretty close to that position in terms of limited net indebtedness when we take account of land creditors.

Does that covered all?

Yes, that's great.

I'll take our next question from Peter of Morgan Stanley.

Peter Ajose-Adeogun from Morgan Stanley. I just have 2 questions. The first is just around the different buyer segments. Maybe versus a year ago, could you talk about by segments are potentially weakest now between first-time buyers, second steppers, downsizes.

And I ask that from the context of if we were to see some sort of improvement in the, I guess, which by segment almost has the most room for growth or improvement from where we are today? And then the second question was just around the synergy side. I noticed in the commentary you mentioned you've launched the first 12 synergy sellers.

Could you just give some context just in terms of how that's going, how you're avoiding things like cannibalization between brands and just the kind of first anything you can report just around how that's gone so far, I guess.

Yes, of course. Thank you very much. So I'll pick up in terms of buyer segments and then Mike will pick up in terms of the synergy side and what we're seeing there. So just in terms of buyer segments, I mean, I would say that to generalize, when there is uncertainty in the market for most first-time buyers, they can pause they're either renting and they can carry on renting or they're living at home and they can carry on living at home.

So I think for most first-time buyers, it is a relatively easy decision to pause Second steppers, I think there is generally a driver for second steppers without running through them all, but for example, maybe larger family need to move home. So there tends to be more of a real driver. And then downsides, I think it's been well documented with downsize if there's market uncertainty, then for a downsize, it's very easy just to sit tight. They're very often sitting with no mortgage and they are, therefore, a cash buyer.

So I think those are the 2 areas that we would see most challenged about we talked about on the call about our strong feeling that there should be demand side support for first-time buyers. And I think for downsizers Redrow would historically have seen a lot of downsizers. So cash bars into Redrow, if you went back a few years ago, could have been around 40% of private customers. And that will be very substantially reduced well below 30%. So I think those are the 2 main areas that we see the impact.

Peter. On the synergy side, yes, as we said, we've got 12 open and selling. The initial results are exactly as we expected, and we've seen enhanced sales rates across both the brands as an example, we've got 3 synergy outlets in Yorkshire. 2 of those have doubled the rate that we were selling out previously from a single brand and 1 has retained a rate of 0.6% for both funds as we put the additional biotrend on. So it's still early days relatively but really encouraging in terms of the delivery.

I think it's important to note that when we put the synergy sites on and we put the additional brands on, we've differentiated the products offering and that's proving really popular with purchases. And in some instances, we're seeing that the new brand that drops onto the site is actually stripping the existing brand without reducing the existing brand, it's just selling more as a new outlet. So again, that's really positive.

We are seeing instances where the additional brand is increasing footfall to the existing one. So actually, rather than cannibalizing it's enhancing sort of delivery from the existing outlet. And we -- as I said, we've got 18 targeted for this financial year, which we've got good line of sight on and 15, again, we've got good line of sight on next year, 11, we've got planning, 15 new flights. So we're well positioned to deal with those additional outlets.

Probably worth noting that once we've done the synergies for the sites that would identify that combination. It becomes BAU for us really. So that triple brand strategy really allows us to enhance the land bank enhance new land purchases and make and more efficient for us. So we'll drive delivery of a lower capital outlay. So it just becomes BAU for the swine delivered through these 45 or so that we're targeting.

And we will now take a final question from Sam Cullen of Peel Hunt.

I've just got 1 really and it's more of an industry-wide question, I think you've been pretty clear in your statement that you think the sector needs some sort of buy support, especially for first-time buyers. We think right here wrongly, that remains politically possible and we have the current trading conditions continue for the next couple of years.

My question is really, where is the business and the sector go from here and how sustainable is it to operate with the current return to product card before we need to see more fundamental changes to either the operating model or operating structure going forward?

Yes. Sam, thank you. I mean so I would say that if you consider a period of time, 6 month period of time, looking historically, the industry has operated in the last 10 years. with rates of sale that have ranged between 0.8, 0.85 and 0.3, 0.35. So I think the industry has operated effectively through some very different rates of sale.

So I think the first thing is that we've got to adapt to the market that exists in front of us, and that's adapting both in terms of the offers that we're putting in front of the customers, and it's also adapting in terms of our cost base. I mean whilst we strongly believe that demand site support for first-time bars is an important ingredient for the market given that the country needs to deliver more homes. But we are not planning our business on the basis that, that is what is going to happen.

And therefore, you've seen over the last 12 months that we've increased the level of incentives from the combination with Redrow in part and from our own self-help measures, we've driven a huge amount of cost out of the business. But the reality of it is that the industry will contract. So the industry will not continue to grow we are probably 1 of the few house builders that is setting out a growth strategy. And the reality is if people start to take cost out, and closed divisions, inevitably, the industry will contract, and you're seeing that from a number of our peers within the industry. But we recognize that we have to adapt to the market as it exists.

Thanks very much. So I think that's it in terms of all the questions. So first of all, thank you for dialing in. Thank you for the questions. And we will be back with our full year results on the 16th of September.

So we'll talk to you then, and thank you very much.

Hello, and welcome to the Barratt Redrow plc Third Quarter Trading Update. My name is George. I'll be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I'd like to hand the call over to your host today, Mr. David Thomas, CEO, to begin today's conference. Please go ahead, sir.

Thank you, George. Good morning, everyone, and thank you for joining us on this third quarter trading update call. Mike Roberts and John Messenger are here with me this morning. After some opening comments, we will open up for questions as normal. So I would like to, as usual, start by thanking all of our employees, our subcontractors and our suppliers for their continued commitment and sheer hard work, which underpins the resilient performance that we're going to take you through today.

While the geopolitical environment has become increasingly uncertain, trading on the ground has held up well. Our overall reservation rate was 6.3% higher than last year with an increase in the underlying private reservation rate of 3%, supported by a higher contribution from PRS and multi-unit sales. Sales incentives continue to support reservation activity and were at levels in line with the half year. Our forward order book is 11% higher, so we are on track to deliver housing volumes in line with guidance of between 17,200 and 17,800 homes, and Mike will give you a bit more flavor on that in a moment.

Average sales outlet numbers at 408 were essentially flat on the first half as expected. We were pleased to launch our first 2 synergy sales outlets at Curborough Fields in Lichfield ahead of schedule, and we expect to open a further 6 synergy outlets by the end of June. 22 synergy outlets are scheduled to open in FY '27 and 15 in FY '28. Including organic sales outlet growth, this brings average sales outlets for FY '27 to between 425 and 435, as we highlighted at the interims.

I will now pass over to Mike.

Thanks, David, and good morning, everyone. Our sales and build positions are in line with where we'd expect them to be at this stage of the year. And as of today, we only have a handful of sales required, and all of our year-end private units are now roofed. Our build teams are now focusing on delivering the reserved homes, and we're well set to ensure all units are completed in line with our customer handover requirements and quality controls.

Given our advanced build position and the limited inflationary pressure on the current year build activity, we are maintaining our FY '26 guidance on build cost inflation. You'll recall that at the interims, we said that we expected total build cost inflation would be around 2% for the year. That comprised 1% for the first half and an estimated 3% for the second half. We do recognize that this will be more challenging going forward. But given the strength of the supply chain and the size of our business, we do feel we're well placed to manage these negotiations as they arise. And on that, we'll provide a further update on this in July.

With that, I'll pass back to David.

Thanks very much, Mike. And turning to the Redrow integration progress, this is substantially complete with the final parts of IT integration completing this month. All of the GBP 100 million cost synergies have now been confirmed, and we are on track to achieve an incremental GBP 50 million to our profit and loss account this financial year. There will be a further GBP 30 million from July '26 to get the full GBP 100 million of synergies to the income statement through to the end of December.

Turning to land. We are now updating our guidance on land. We have maintained our disciplined approach with 2,465 plots approved for purchase in the period, bringing year-to-date approvals to just over 4,000 plots. This is lower than last year, partly because we are seeing fewer attractive opportunities in the market. But also, as we outlined in February '25, we are moving towards a model of 3.5 years owned and 1 year of controlled land, which remains our longer-term goal.

And also, in the current environment, as you will understand, we are being even more selective. As a result, we are now guiding to total land approvals of between 7,000 and 9,000 plots for FY '26. So we expect a reduction in land spend to between GBP 700 million and GBP 800 million from the GBP 800 million to GBP 900 million previously guided. And we would expect that the adjustment in approvals, if ongoing, will have a more significant effect on cash flows for land in FY '27.

Our financial position remains strong. We are raising our guidance for the year-end net cash position to between GBP 550 million and GBP 650 million, up from the GBP 400 million to GBP 500 million that we guided in February. This increase reflects both lower cash spend on land as well as the timing of legacy building remediation payments, which are now expected to fall into next year.

Turning to the outlook. With a strong order book and good spring trading, our guidance on completions remains unchanged. However, events in the Middle East will create headwinds for our industry with the potential for a more prolonged higher interest rate environment as well as cost pressures. But our group is in a good place. We have 3 complementary brands, an excellent reputation for quality and service and a strong land bank. We are highly disciplined in our capital allocation, our land investment and our cost control, and we are well placed to deliver attractive returns to shareholders.

With that, we will now be happy to move to questions.

[Operator Instructions] Our very first question this morning is coming from Aynsley Lammin coming from Investec.

Just 2 questions from me, please. First of all, obviously, reservations held up. Just interested to hear whether you pushed incentives more, anything around that area that kind of supported the reservations.

And then, I guess, just on more recent trading, what's the feel and signs on things like inquiries, cancellation rates, footfall? Are you already seeing the kind of high mortgage rates in the market and maybe a -- the dent in confidence impacting anything there?

And then, the second question on build cost inflation. Just interested if energy costs remain where they were and you start to get that coming through. When does that actually impact? I mean, how much of a lag is there given you've presumably got some contracts that you've kind of fixed at the beginning of this year? I'm just interested how you see that coming through.

If I pick up both of those, I mean, I think in terms of reservations, we've just not seen any change in terms of our reservation trends. I mean, as you know, we gave a current trading position when we did the half year results in February, and we provided, I think, around 5 weeks of current trading at that point in time. And if anything, we've just seen a slight strengthening of that position. It's not been noticeably better or worse at the beginning or at the end of that period.

I think in terms of customer sentiment beyond the reservations, which clearly are encouraging, I would say there's more questions being asked about mortgages and mortgage rates. And as has been well documented, there has been a lot of changes in mortgage products and mortgage rates, but it's clearly not to date impacting customer sentiment, inquiries or reservation levels.

I think, in terms of build cost inflation, I know everyone is very eager as we are to understand what the potential impact in relation to build cost inflation. But I think we have got to set it in context that the events in the Middle East have only been going on for a relatively short period of time. There are 3 main areas that we would be affected on in terms of cost. I mean, first of all, just transportation to site. Secondly, that we are a high user of diesel, both ourselves and our supply chain on site.

And thirdly, there are energy costs within the supply chain, particularly for production of certain materials. But we're confident, as Mike touched on in terms of our build cost estimates to June '26, in line with our previous guidance. And we will talk to our supply chain on a case-by-case basis. And we should be able to provide a little more color in July. But clearly, in July, it will not be a certain position in terms of build cost inflation for the year to June '27. So we'll just have to continue to see how things evolve, both in terms of particularly the oil prices and the overall geopolitical position.

Just maybe one follow-up. Have you seen any of the manufacturers yet, whether it's bricks or plasterboard or concrete, actually ask for higher prices? Or is it just more delivery charges at this point?

I would say it's more about delivery charges at this point. But the reality is clearly, the supply chain -- the different suppliers are impacted in different ways. We had our annual supply chain conference last week. So we would have probably representatives from around about 180 of our supply chain. So there's no question that they are seeing cost pressures. But I think we've got to see how prolonged those cost pressures become.

Next question is here from Charlie Campbell of Stifel.

I think Aynsley has like nicked the obvious ones, but just to sort of push you a bit more on pricing and a couple of questions on that really. I mean, just wondering if people -- if your sales guys on the ground are reporting people driving a harder bargain. And as a kind of corollary to that, intrigued that you've sort of seen a strengthening, if anything, of the build-to-rent and the other bulk and you would have thought those would be most price sensitive. So I just wondered if there's anything more to say about that jump in reservations from the bulk side.

Charlie, I mean, maybe if I start just in terms of pricing and incentives, and Mike can maybe just pick that up, the main point I would make on pricing and incentives is that we said on incentives, there's no change from what we saw at the half year. So we're not feeding in a higher level of incentive to maintain reservations, I mean, to be very clear. But then, you've got to remember that we've got a portfolio of more than 400 sites. And inevitably, it is about the geography, and it's site by site within the geography. But Mike can talk a little bit more about that.

In terms of multi-unit, particularly build-to-rent or PRS, we said back in '25 that we felt running somewhere in the order of 5% to 10% of our reservations through channels was good for us. And we -- our commentary since then really has been that we have seen pricing being quite difficult, pricing that we wouldn't necessarily want to pursue. So my sense is that there's probably a little bit more appetite in the market, where people see that the private rental market is an attractive market to operate in. We can provide a portfolio across the country. And so everything that we've done year-to-date has been relatively limited in size, but we do continue to look at opportunities to be able to expand that business within the overall portfolio. So still believing that 5% to 10% of reservations is achievable even in the current market.

Mike, do you want to pick up on pricing generally?

Yes. I probably start with -- to answer your question directly, we're not seeing that people are trying to drive harder bargain in terms of the purchase process. I think it's key to remember that we have a pretty structured sales process, where we're trying to match customers to houses and their requirements. And I guess within that discussion, we talk about their needs and affordability. And as part of that discussion, we feel we control the negotiation around incentives available.

And on a site-by-site basis, we look at the incentives that we offer, and that's relative to individual sales rates from the site and current build stages available plot. So we feel the incentives are very much in our control in terms of what we offer and what we're prepared to provide to facilitate the sale. So it's not really part of a negotiation so to speak from a customer point of view.

We'll now move to Clyde Lewis calling from Peel Hunt.

David, Mike, and John, I'm sure, is there in the background as well. I've got a few, if I may, please, David. Just in terms of, I suppose, the land market, and I understand, you're sort of moving to that 3.5 to 4-year sort of land bank target. But are land prices not changing yet? Are they still sort of remaining stubbornly high and not really taking into account the sort of high levels of incentives and sort of difficult market?

Okay. Clyde, I think the reality is that one of the things that we've shown in our presentations over the last few years has been the Savills land price index. And I think that shows that there's not been any substantial change in pricing. I think there's 2 things, as we look forward. Look, there's the macro event that is very obvious in terms of the Middle East. And then secondly, I think that there is a lot of land that is going to come through planning if you look over the next 18 months, 2 years. We outlined in February that we have more than 100 strategic sites in the planning process. So that is unprecedented levels of land for our business in the planning process.

Clearly, it will take time. It's not all going to arrive in the near term, but that might be against a more normal level of 20 or 30 applications. And I think you'll see that reflected across the industry. So if a large amount of land is going to appear, then you would assume that there's plenty of land supply, and that may play into land prices in the future is the first thing.

The second thing, just in terms of the market, I mean, we are trying to just bring in our land bank over a period of time. We're not doing it in a rushed way, and we've been very clear that we do want to shrink the length of the land bank. If you look at the current market, well, we all know that we need to understand reservation rates, we need to understand selling prices and we need to understand build costs. And that all looks quite tricky at this point. So I think generally, from our point of view, we see that there is a need to just slow down and be ever more selective about land intake.

I suppose as sort of a regular update on Help to Buy chatter, the sort of government making any noises at all about sort of considering it more closely at all?

I mean, I think the short answer, Clyde, would be no, not that the government are talking to the industry about. I mean, we've been very clear, particularly over the last couple of years that we do feel that some support from government is important in the market, particularly for first-time buyers. We've also been very clear that if there is a support program in the market that the housebuilders should pay for the support program, as we did when there was a support product launched in 2012 and the housebuilders paid prior to the launch of Help to Buy.

So I think we're not asking for something for nothing. But I think when you look at affordability, particularly for first-time buyers, and then, you look at certain geographies such as London and the Southeast, it's massively challenging. And hence, you're seeing dramatic reductions in transaction level, again, particularly in the London market.

My last one was really around -- I think I'm certainly surprised you haven't sort of seen any slower levels of activity in terms of sort of new reservations and the interest that was from house purchases. Do you think that's because there is still a sizable cohort that are -- have got their mortgage in principle from before the time that rates started to increase? Or do you think there are other factors going on that people have actually sort of been sitting there waiting to sort of get involved and they're looking at the affordability sort of squeeze that's happening and thinking this is just going to be short term, and therefore, I'm happy to crack on?

Well, Clyde, there's probably a lot of parts to that. But I think the starting point, which you touched on, is that when you look at the affordability equation, the affordability position has improved if you look over the last 12 months. So lower wage inflation, less house price increases, and we have seen reductions in mortgage rates. Secondly, yes, I mean, people who are in market and who have reserved over the last, say, 6, 8 weeks would have likely had a mortgage offer in principle. So they were very much in the market.

And I think also that you can see that people may want to lock into current rates, not being clear about where rates are going to go. So I think all of that plays into it. And I think it really just comes down to us having a longer time to look at how this plays out. I'm sure for lots of different reasons, everyone would hope that the conflict can be resolved, and we can see a bit more stability. But the reality is we've just got to keep monitoring that position and keep monitoring our reservations on a week-to-week basis.

Our next question is coming from Zaim Beekawa of JPMorgan.

The first is just to come back on build cost inflation. I appreciate a lot of uncertainty in the market, but maybe you could speak about kind of what's different this time versus the previous time we saw build cost spike up materially. I think we're coming from different build rates across the industry.

And then secondly, just a follow-up on the bulk sales. Did you say that you're having to do sort of discount a little bit more than usual to get these across the line at the moment?

Yes. I mean, first of all, if I just cover the second point first, no, absolutely not. We're not doing deeper discounts to get bulk sales across the line. I mean, I think we're very, very clear about the economics of it. And there are levels that we're very happy to transact on. And we have done some large deals, if you look over the last 2 or 3 years, across a wide geographic range of our portfolio. But we're very clear about the values that we need to achieve, and we're certainly not taking deeper discounts to achieve that. So I think that's not the case.

The build cost, look, it's kind of -- trying to put a step back, but I would say that we saw a dramatic spike in build costs at really the start of the war in Ukraine. And I think that the first most notable thing, I think, would be, first of all, those spikes were bigger than the spikes we've seen here in terms of oil prices, energy costs, et cetera. And secondly, the industry was much busier than it is now. So in '21-'22, the industry was heading towards 250,000 completions, whereas if you look at commentary maybe we're heading below 200,000 completions. So there is definitely more capacity in the industry. And clearly, that has to be helpful in terms of the way that build costs and build cost inflation evolves.

And again, all of our supply chain is not affected in the same way. So some products have a very high energy content in production. And I think we're very, very familiar with the different components of the production costs for our materials. So we feel that we're well placed to navigate our way through that. We're obviously a very big business. We're buying a lot of building materials from the supply chain. So overall, I would say the starting point, as of now, looks slightly better than the starting point looked at the start of the war in Ukraine because we haven't seen the big spikes and the industry is not as busy as it was.

We'll now move to Rebecca Parker calling from Goldman.

I just wanted to ask on the outlet opening program. If you did see sales rates slow into 2027, how would you be thinking about that?

And then secondly, I just wanted to ask on underlying pricing within the market and how you're seeing that play out across the country? Any geographical differences to call out there? I know you mentioned that London was a bit of a weak market.

Rebecca, sorry, just on the first question, can I just ask you to repeat just what it is you were referring to going into 2027? I just didn't quite catch that.

If sales rates slowed into 2027, if you would be thinking differently about that outlet opening program?

Okay. Yes, I understand. Okay. So Mike will pick up in terms of pricing and what we're seeing across the country and so on. In terms of the outlet opening program, I mean, our lead times are obviously quite substantial in terms of us approving land for purchase on a subject to planning basis and then obtaining planning. So really, when you look at the outlet numbers for FY '27, I think we have a high degree of confidence that those outlet numbers will be delivered. And there isn't a huge amount of optionality around that. Clearly, the vast majority of the sites we're already operating on.

We're coming off an average of 408, and we're saying that we're moving up to a midpoint of around about 430. So the reality is what happens from here isn't going to have a big impact on that outlet count. I think it's much more about the outlet count as we move into FY '28. So we clearly are more cautious about essentially securing further outlets at this point in time. Now, we'll obviously keep that under review, and we'll update the market in July and update the market in September. But what we're referring to is approvals just now where we're backing the approvals down from 10,000 to 12,000 down to 7,000 to 9,000. That is largely what will fuel the FY '28 outlet count. So it really depends on what we approve essentially between now and probably September-October time, which will play into the FY '28 outlet count.

So on the sales rates and any change on pricing, I suppose pricing, as you'd imagine, is pretty flat. So we're not seeing any movement. So we're not seeing any significant changes across the country. So it's just generally flat across the whole country from where we were and with what we reported at H1.

In terms of sales rates, we have seen an increase, as we've noted in Q3, which has probably seen a similar sort of increase to what we normally expect this time of the year. And every region has shown a similar sort of increase and step up from H1 performance. So absolutely no movement between different geographic areas of the business. And so the incentive levels remain pretty constant from H1 through to Q3 across all regions. So pretty much a steady increase across the country in terms of sale rate, but the same across all geographic regions.

[Operator Instructions] We'll now go to Allison Sun calling from Bank of America.

I have a few questions. So first is maybe following Rebecca's question, if the volume is going to, let's say, not be as great as you would expect in '27, are you guys ready to give out more incentives or not?

And second question is on the build cost inflation. I'm curious to know if you have thought what's the worst-case scenario could be? Like how high could those material costs could go up in '27?

And then my last question is, do you think you have a good pricing power when negotiating with those subcontractors? Because what I heard is some key energy-intensive materials, probably the price is already up 15%, 20%. If they do come up with a very high price increase, do you think you have ability to keep it lower?

Okay. Thank you. I mean, I think if I run through them. Look, I think when you go through our portfolio and you look at our 400 sites, I mean, like any business, we are trading volume and price every single week, how is the site selling, to what extent we need to adjust incentives up or down. So we're running incentives, just say, at an overall level of 6%, 6.5%. The reality is some of our sites will be running incentives at 3% and some of them will be running them above 6% or 6%, 6.5%. So it will vary by site.

The second stage is that in some cases, we need to either increase or reduce gross prices, and we'll always be monitoring the gross price position as well. Where a home is sold subject to mortgage, there are rules from the mortgage lenders about levels of incentives. So you can't just keep paying off incentives. You've ultimately got to go to reduce gross pricing. So we'll carry on monitoring that week by week. But I think the good news is that so far, we've not seen anything that's required us to make changes to our incentive program from where we were in the first half of the year.

In terms of material cost, I'm not going to give numbers. I mean, I think there's no point in getting on to that trend. We've given guidance for FY '26. When we're in a position to give guidance for FY '27, we will do that, and we'll be working hard to try to give some outline guidance at least for July. But we've got to sit down and talk to the supply chain. I think you can look back -- I made reference earlier to the Ukraine, the war in Ukraine. And the reality is there's plenty of published data about the way building material costs moved in light of that. And whilst it won't be an exact correlation, it clearly has a strong correlation to oil prices and energy price -- general gas and gas and oil prices.

In terms of the supply chain, we feel we're in a very good position with our supply chain partners. I mean, we believe that we deliver what we say we're going to deliver. And so for our supply chain, I think it's very, very important that we are signaling outlet growth for FY '27. So we're going to be building and selling more from more outlets, which is a positive.

And in terms of our scale, we have more scale than anyone else in the marketplace. So that is helpful if -- as I touched on earlier, if the industry is a long way below capacity, and we were doing 250,000 homes in 2022, so if we're at 200,000 or sub-200,000, there clearly is a lack of demand for the supply chain. And if we are a big part of that demand equation, then that has to be helpful. But equally, we understand that we need a strong supply chain. And so we can't simply say, well, we're absolutely refusing any increases because in that situation, then businesses become nonviable.

I think because of the fact that it's kind of global crisis rather than specific to the U.K., there isn't really going to be the opportunity for imports. That would often be an opportunity for us if capacity was close to peak levels, then most of our materials can be imported, albeit that is clearly more expensive. But that isn't going to avoid the issue. I mean, all manufacturers in Europe are going to be seeing the same cost pressures.

We'll now move to Christopher Millington of Deutsche Bank.

Sorry, you probably thought you were all done, but a few left from me, guys. I hope you're all well. Just love to hear a bit more about how the affordable housing market is faring at the moment. I'd also welcome your thoughts on if we are going to see a slightly lower growth profile on volumes and maybe below where your targets are, do you think there's scope to do more on costs over and above what you've done through the synergy targets?

And the last one, it's maybe not the forum for this, but I'm going to ask it anyway, is capital allocation. We've obviously seen a big, big movement in the share price. You're still quite weighted to dividends versus share buybacks. Do you think that's the appropriate capital allocation policy? And maybe you could weave in there, if we do throw off a bit of extra cash because of lower land spend, would that alter your thinking at all? And sorry for the...

Yes. No, that's fine, Chris. I was just saying Chris hasn't asked the question, I'm sure he's going to come on soon. Just -- if I just touch on capital allocation, I mean, the reality is our capital allocation is always under review from the Board. As you know, Chris, if you look over 10 years, we've shown that we have a lot of flexibility in terms of our capital allocation policies. We absolutely recognize the way that the share price has reduced.

But equally, we recognize that having a strong balance sheet and having cash on the balance sheet is an important position to be in as opposed to not having cash on the balance sheet and having debt. So the Board will continue to look at that. And the next opportunity for any further guidance regarding that will be really in September update. We are running a GBP 100 million share buyback program. We're actively buying in the market on a day-to-day basis. And obviously, we have our published dividend policy. So we'll keep all of that under review.

I think that in relation to cost reduction, of course, clearly, there isn't a business in the world that can say we absolutely can't reduce our costs. Of course, we can reduce our costs. I think that the combination with Redrow has allowed us to take very significant cost synergies out, which have only been accessible through that combination, would not have been accessible easily on a stand-alone basis. So whether it be our central overheads or whether it be looking at our divisional network, we always look at that. But the reality is that this is not the time for making short-term decisions. We've got to see how the market plays out. That's an absolute key thing.

And then what we should be doing is just stepping back and saying, okay, let's look at the amount of land that we're bringing in. As the key example in terms of original guidance, I think at GBP 800 million to GBP 900 million of cash outflow. I mean, that is the big cash outflow number, and we are obviously looking at that.

And then in terms of the affordable housing market, so I'd say generally, the affordable housing market is in a much better position that there's clearly been an above inflation settlement. The position in terms of rent convergence looks as though it's going to be resolved favorably for the housing association. And the funding is in place. Now, there are probably some comments, which I know some of our peers have made that the funding is very back-end loaded in terms of FY '26, FY '27. But the reality is that funding is now coming through, you can apply for the funding. So I think the HA position is materially better than it was, say, 12 months ago.

Do you think, David, there's any scope for higher affordable to offset lower price if we do see that trend happen with this backdrop?

Yes. I mean, certainly, if you look at the government's ambitions in terms of affordable housing, particularly affordable rental, I think there's plenty of scope for there to be more affordable housing delivered into the marketplace. I mean, it will largely depend on what the funding model is and the extent to which there is grant funding available beyond the 106 to deliver more affordable housing. So that's very much a matter for -- in practice, both central and local government.

As we have no further questions, Mr. Thomas, I turn the call back over to you for any additional or closing remarks. Thank you.

Yes, that's great. So I mean, just to say thank you very much, and thank you for the questions. And we will be back on the 15th of July with a pre-close trading update. Thank you.

Thank you, sir. Ladies and gentlemen, that will conclude today's call. We thank for your attendance. You may now disconnect. Have a good day, and goodbye.

So I'm going to make a start. Good morning, everyone. Thanks for coming along to see us this morning, and welcome to Barratt Redrow's Interim Results Presentation for FY '26. This morning, I'm joined by Mike Roberts, our Chief Operating Officer, who will provide an update on our operational performance; John Messenger, our Investor Relations Director, who will update on our financial performance. And after John, I will then update on the market, current trading, synergies and also set out how well positioned we are for the future.

First of all, I would like to take you through some of our key messages. Barratt Redrow's performance over the half was resilient, both operationally and financially. And that is despite what has been a generally subdued market. While the consumer did benefit from 2 interest rate cuts and mortgage availability improved, consumer confidence clearly remained low.

Speculation ahead of the November budget caused many to postpone decision-making. But we have maintained our financially robust position and solid balance sheet. Importantly, the successful integration of Redrow is near completion, and our synergy target remains unchanged. And we are now operating from 3 distinct high-quality brands.

Building on all of this, our focus centers on business as usual for Barratt Redrow around both optimizing our capital employed and fine-tuning our costs to ensure that we drive operational excellence and efficiencies across the enlarged group. So that we are going to be -- we feel well placed for the full year and well positioned for future growth.

If we look in more detail at the operational highlights from the half year, clearly, embedding Redrow into the business was, of course, a highlight. And we have started to see the benefits of this reflected in our performance with good progress on synergies that I'll cover in more detail later.

Our land position is strong at 5.6 years, allowing us to be even more selective around land intake. We delivered 7,444 homes, in line with our plans for the year, which was a good achievement given the market environment. I would also like to highlight some of our externally accredited credentials in the period.

Our repeated success in the HBF ratings and in the NHBC Pride in the Job awards are testament to the dedication of our teams across the business as well as to the quality of training that we provide and the customer-first culture we maintain across the group. This quality is also reflected in our Trustpilot scores given by our customers, which award all 3 of our brands with the highest rating of excellent.

John will cover our financials in more detail, but just to pull out a few highlights. Adjusted PBT before Purchase Price Allocation impacts was lower than last year at GBP 200 million due to higher net interest costs and lower joint venture profits. So return on capital employed, again, pre-PPA adjustments was in line with last year at 9.1%.

We were particularly pleased that nearly all of our GBP 100 million target synergies were confirmed at the end of December. And finally, we finished the year with a solid net cash position after organic investment, which supports our growth plans, also our dividend payments of GBP 172 million and the share buyback of GBP 50 million in the half.

With that, I will hand over to Mike, who will now go through our operational performance in more detail.

Thank you, David, and good morning, everyone. I'd like to take a moment just to introduce myself. I've been in the housebuilding industry for 32 years, and I joined Barratt back in 2004. I've worked closely with Steven Boyes as Managing Director of our Northeast division. And in 2017, I was appointed Regional Managing Director for the Northern region. In July last year, I was appointed Chief Operating Officer on Steven's retirement. And today, I'll be taking you through our operational performance for the first half.

Starting with the private reservation mix on Slide 7. There are a couple of points to highlight. Firstly, PRS. Given the budget uncertainty, the market became harder in the period and potential discounts increased. But we maintained our discipline and were less active. As a result, PRS reservations were a lower proportion of overall reservation volumes at 4% down from 9% in the equivalent period last year.

Secondly, for existing homeowners, we saw a significant increase in the use of Part Exchange at 23% of our private reservations, up from 14% last year. We've introduced our industry-leading Part Exchange skills into the Redrow brand. It offers a stress-free moving option for our customers. And at a time when conveyancing chains were a concern for many potential homebuyers, it has proved a popular incentive.

To be clear, it's offered as an alternative and not additional incentive. And it's worth noting that the combination of Part Exchange and second home movers remain fairly consistent year-on-year. Part Exchange has been an integral part of our business for many years and stock levels are carefully managed. At the end of the half, we had just 180 units unsold.

Turning to completions on Slide 8. We delivered 7,444 homes, an increase of 4.7% on the aggregated performance last year. Both private and affordable completions were ahead, although this is more about timing. So our guidance for FY '26 is unchanged. Underlying private completions were 1.8% ahead and PRS completions were up over 50% to 423 homes. This increase was largely a function of our order book coming into the year. And as I said earlier, the market has subsequently hardened.

Affordable home completions were up 26%, helped by the rebuilding of our order book in the prior year and are now 19.5% of wholly owned completions, which is in line with our expected affordable mix. Joint venture completions were lower than the prior year due to timing, but we are on track to deliver approximately 600 units in the full year.

In terms of pricing, the wholly owned average selling price was up 4.9%. More detail is provided in the appendix, but this was driven by a combination of mix, producing a slightly larger average unit size and geographical volume variances given the spread of average selling prices between the regions. There were some notable variations by region with our Central and East regions seeing the strongest average selling price growth.

Now turning to sales performance here on Slide 9. The underlying private rate remains solid at 0.55 reservations per week ahead of last year, with customers benefiting from an improvement in mortgage availability and affordability. This good performance came despite the uncertainties which overshadowed much of the period.

PRS and other multiunit sales effectively paused in the run-up to the budget. And although we saw a pick up afterwards, this added just 0.02 reservations per week over the period, down on last year. We operated from an average of 405 sales outlets, below last year, but very much in line with our plans. David will cover our view on sales outlet evolution later in the presentation.

Turning to the private forward order book. This was 10% lower at the half year stage. This partly reflected a high starting point coming into the year, but also the reduced reservation rate, lower numbers of sales outlets and increased completions in the first half, all of which contributed to the overall lower number. Given the solid start to the calendar year, we are confident that we can deliver full year completions in line with the guidance.

I'd like to wrap up with our industry-leading credentials around design, build quality and customer service. It's what underpins our brands and is key to our sales success. We achieved a 5-star rating for customer service in the HBF survey for the 16th consecutive year.

And our site managers have secured an industry-leading total of 115 Pride in the Job awards and 45 Seals of Excellence. Reportable items per NHBC inspection have increased slightly following the Redrow acquisition, but with opportunities to share best practice across the divisions, we expect to see this improve.

And finally, I'd like to take this opportunity to congratulate Dane Mumford from our East Midlands division, who is runner up in the large builder category at last month's Pride in the Job Supreme Awards, an excellent achievement.

On that note, I'll hand over to John for an update on our financial performance.

Thanks, Mike, and good morning, everyone. Today, I'll take you through our half year '26 performance, an update on our land bank and also on building safety. Here is an overview of the -- our half year numbers. To be as clear as possible, we have set out here the adjusted pretax profits before PPA adjustments, then the adjusted profit before tax after PPA and finally, the statutory pretax after adjusted items.

The first point to note is that both adjusted measures are now stated prior to the impact of imputed interest charges on legacy property provisions. We believe this measure provides you with the best view of the underlying performance of the business, moves us in line with peer reporting and includes the reclassification of GBP 19.6 million of noncash imputed interest in half year '26 and GBP 18.4 million in half year '25, which has been added back in arriving at the reclassified results you see here.

We also show the comparables and just to flag the aggregated and reported periods have seen minor restatements for the finalization of the purchase price allocation process, which was completed at the end of last year. I will focus on our performance relative to Barratt and Redrow aggregated for the whole of half year '25. And you will remember, we consolidated Redrow actually from the 22nd of August.

So adjusted profit before tax before PPA impacts was down 13.6% in the half year to GBP 200 million, and I'll take you through the key drivers of that in a moment. The good news is that the purchase price allocation impacts largely fall away from next year, which will make all of our lives a lot easier.

Slide 13. This slide looks at the margin performance in more detail, and there are several points to highlight. The increase in home completions, coupled with an increase in ASP, generated revenue growth of 10.5% to GBP 2.6 billion. However, the adjusted gross margin was 200 basis points lower at 15%, giving an adjusted profit of GBP 394.8 million.

There were 3 drivers behind the margin movement. Firstly, while we benefited from growth in completion volumes, underlying pricing was flat. We then saw 2 headwinds on 2 fronts. Our targeted but increased use of noncash sales incentives, particularly extras and upgrades to convert reservations against the challenging backdrop through 2025 was a negative to gross margin. These incentives added directly to cost of goods sold and had a direct impact on the gross margin.

And we also experienced underlying build cost inflation of approximately 1%, including procurement cost synergies. At operating profit through both cost discipline and the benefit of cost synergies, adjusted operating profit before the impact of PPA adjustments was flat at GBP 210.2 million, with the margin down 90 basis points to 8%.

I'll cover margin movements in a moment, but just the final parts in the mix here. Adjusted finance charges at GBP 12.4 million compared to finance income last half at GBP 12.2 million. This reflected reduced average cash balances, utilization of our RCF in the period and the imputed interest rate on new land creditors relative to those being settled. And JV income with lower completions in the period has reduced to GBP 2.1 million.

As a result, adjusted PBT before PPA impact was GBP 200 million, giving an adjusted earnings per share of 10p. And we have proposed an interim dividend of 5p per share with our 2x dividend cover ratio in place for the full year.

In summary, we saw good momentum on home completions and are pleased to see the benefits of Redrow integration coming through. Looking forward, there are clear opportunities to improve our gross margin, which David will cover.

Turning now to our land bank on Slide 14. A steadier pace of land acquisition, growth in completions and the reclassification of some Redrow plots into our strategic land bank has seen the duration of our owned and controlled land bank move to 5.6 years in December. Our land bank is in a strong position and very consistent with our plans to optimize our capital employed, as David will set out.

A key metric here on the slide, which we are increasingly focused on is the average number of detailed consented plots on each of our sales outlets. This is clearly a function of the size of the outlets and the time frame over which it has been actively selling, but we are looking to ensure our land bank is efficient with sales outlets sized to deliver typically sales over a 3- to 4-year period. And with more than 27,500 strategic land bank plots submitted to local planning authorities across 103 applications, we expect to make further progress on strategic land conversions over the coming years, too.

Now looking at our embedded margin in the land bank. Here, you'll see the updated plot distribution of embedded gross margins across our owned land bank plots. There are 3 moving parts to highlight. First, a positive 40 basis point impact, reflecting the plot mix traded out through completions this half at a margin of 14.5% after including the PPA impact. Second, a negative 90 basis point impact from the flow-through of flat pricing, build cost inflation and incremental sales incentives.

And thirdly, a 20 basis point improvement from land acquired in the period at a 23% gross margin. As a result, the embedded gross margin ended the half 30 basis points lower at 18.9%. Improving the embedded gross margin is a clear priority. With little movement on pricing, we will do this best by managing cost base inflation, driving development pace and buying land appropriately.

To Slide 16. Here, we look at our adjusted operating margin and the bridge. On a pre-PPA basis, including Redrow for the full 26 weeks, this was 8.9% for the combined operations in half year '25, first column shaded here on the left. We saw a benefit of 40 basis points due to the gearing effect of higher volumes. The combination of flat pricing, but underlying build cost inflation of 1% and the targeted use of noncash incentives created a negative inflation impact of 90 basis points.

Completed development provisions reflect the local authority delays in adoption of roads and public spaces accounted for a negative 40 basis points. The impact of cost synergies, which I'll set out in a moment, added 90 basis points, and these savings covered off both the underlying inflation in our admin expenses as well as mix and other items. This has resulted in the operating margin before PPA impacts of 8% for the half. And finally, you can see the PPA dropping off to deliver the 7.5% margin on an adjusted basis.

Turning to administrative expenses and adjusted items. We reduced our adjusted admin expenses by 5.4% in the half year to GBP 184.8 million when compared to the aggregated business last year at GBP 195.4 million. We also then show the adjusted items here in arriving at our reported admin expenses at GBP 208.7 million. This included adjusted items charges of GBP 23.9 million with GBP 18 million charged on further restructuring and integration and legal costs on legacy property recoveries at GBP 5.8 million. Whilst not shown here, the net impact of adjusted items in the period was GBP 10.5 million, with significant legacy property-related recoveries from third parties of GBP 13.4 million recognized in gross profit. It's positive to see both cash-based adjusted items falling away as well as receipts coming in with respect to building remediation.

Here is just a quick bridge in terms of the admin expenses. The movement in admin expenses from the aggregated base of GBP 195.4 million to the GBP 184.8 million is set out on this slide and shaded light green. We saw an increase of GBP 4.3 million related to changes in national insurance contributions and a further GBP 8.1 million from cost base inflation.

Cost synergies then delivered a GBP 23.2 million positive impact, which were then coupled with a reduction of GBP 0.2 million in sundry income, which covers JV management fees and ground rents delivered the outturn of GBP 184.8 million. It is positive to see the synergies we identified at acquisition having a meaningful impact on our profit and loss account.

Turning to Building Safety, where I'm pleased to report that there is very little to cover. There were no changes required to our provision position and having spent GBP 77.8 million on works across our Building Safety and reinforced concrete frame portfolios in the half and seeing the unwinding of imputed interest of GBP 19.6 million, our total legacy property provisions just sat at just over GBP 1 billion.

To cash flow. Slide 20 sets out the cash flow bridge for Barratt Redrow from reported operating profit on the left to the net cash outflow on the right. We have just a couple of cash flow numbers to point out. The biggest driver of cash outflow in the period was the seasonal increase in construction work in progress alongside Part Exchange investment, together equating to just over GBP 313 million. 3/4 of this is construction work in progress, very much following our sales cycle and construction seasonality.

Our net investment in land was relatively modest at GBP 68.7 million. And adjusting for the dividend payments of GBP 172 million and GBP 50 million in share buybacks, the net cash outflow was just under GBP 600 million. We would expect an inflow of circa GBP 300 million in the second half and for the year-end cash position to be in line with guidance at between GBP 400 million and GBP 500 million.

Fees, we have included on the slide here, a reminder of some of the other relevant guidance points around cash flow.

Turning to Slide 21. Here is our usual balance sheet breakout. Liberty really to highlight. Over the 26 weeks, we saw a GBP 21 million net investment in our gross land bank and land creditors reduced by just over GBP 42 million, giving a net land position at GBP 4,358 million, with land creditors funding 15% of our land investment.

Land creditors clearly remained below our target range of 20% to 25%, but we are looking to add a larger portion of land purchases on deferred terms to take us towards our target range and also to manage our land bank more efficiently, as I alluded to earlier. The other balance sheet item to mention here, as already discussed by Mike, is our part exchange investment -- sorry, Part Exchange investment, which you can see closed out at GBP 219 million with GBP 74.7 million added in the half year period.

Before I wrap up, I thought it would be helpful to remind you of our capital allocation priorities set out here. Our enhanced scale and balance sheet strength clearly put us in a strong financial position. But we are very mindful of the obligations we have, particularly with respect to building safety, how we are managing this appropriately. The Redrow acquisition has multiplied the opportunities we have to drive growth and value from the business. So we will invest in these, but at the same time, we will look to drive efficiencies in the way we manage both our capital employed and our cost base.

And finally, we recognize the importance to our shareholders -- our shareholders place on capital returns. We have a clear dividend policy, and this is alongside an active GBP 100 million buyback program with GBP 50 million completed in the first half and a further GBP 50 million underway and set to complete in the second half of the year.

So to summarize, our operational performance in the half year has been resilient, and that's despite the macro uncertainties faced. Our balance sheet remains solid, and we are capturing the cost synergies from the Redrow integration with our cost synergies confirmed.

Turning to guidance. You will find a detailed slide in the appendices, but I thought it helpful to cover the main points here. As previously set out, we expect full year '26 total completions to be within the range of 17,200 to 17,800 homes. Underlying pricing is expected to be broadly flat, and we expect build cost inflation to be around 2%, including the benefit of procurement synergies.

Reflecting the reclassification of imputed interest on the legacy property provisions, we anticipate an adjusted finance charge of approximately GBP 30 million with provision-related adjusted item imputed finance at GBP 32 million for FY '26. And our building safety program remains in line with guidance at approximately GBP 250 million of spend in the year. And we expect to finish the year with between GBP 400 million and GBP 500 million of net cash.

Happy to take questions later, but I will now hand back to David. Thank you.

Thanks very much, John. I'd like to start this section with an overview of the housing market. So we've talked before about the fundamentals of the market, which underpin our sector, and these continue to be strong. There is a long-standing imbalance between demand and supply. The challenges for our industry are affordability constraints on the demand side and planning constraints on the supply side.

Housing and planning reforms are clear priorities for the government, and we welcome the steps that they are taking to improve the planning environment. However, it will take some time for these reforms to feed through at a local level and with many local authorities having elections in May, the planning backdrop in those areas could remain challenging until the second half of the year.

Meanwhile, some of the near-term indicators on the demand side are more encouraging. Uncertainty has definitely moderated post budget. Markets are pricing in further interest rate cuts and mortgage availability continues to improve. But consumer confidence remains weak. And despite some slight improvements, affordability remains challenging, particularly for first-time buyers needing to bridge the deposit gap. In this environment, we recognize that self-help measures are very important.

As Mike outlined, we continue to develop our Part Exchange offer, particularly for Redrow. And in the half, we also launched our own shared equity offer alongside our popular first-time buyer and key worker schemes. We continue to believe that the key to a sustained recovery in the housing market and volume increases across the sector is government support for prospective homebuyers of the type which has been in place for many decades until 2 years ago.

Overall, given the market context, recent trading has been resilient. We have seen encouraging consumer activity since the budget, but consumers are still taking their time. So our net private reservation rate over the 5-week period was down slightly on last year. The FY '26 opening order book and slightly improved affordable housing sector backdrop means that year-to-date completions and forward sales are both ahead of the position last year. But there continues to be a lot of political and economic volatility at the macro level, which is clearly unhelpful for consumer confidence.

So given the broader market context, for us to maintain a sharp focus on efficiency and leveraging the benefits of the integration is going to be key for Barratt Redrow. So I'd like to give you an update on our synergy program.

If we start with cost synergies, we have confirmed our target of GBP 100 million of annual cost synergies. In FY '25, we delivered GBP 20 million of cost synergies through the P&L, as you can see on the chart. We expect to deliver a further GBP 50 million through the P&L in the current financial year, having already delivered over GBP 30 million in the half year. So we are very definitely on track for that cost synergy delivery.

Looking at revenue synergies. Our target is to open 45 incremental sales outlets. To date, we have submitted 31 planning applications, of which 16 have already received approval. We are on track to submit the remaining applications in the second half of the financial year, and we expect the first sites to be ready for sales opening at the start of FY '27.

Moving on to outlets. As we've said, the planning reform is positive, but we do have to experience that improvement on the ground. So as we've previously guided, we expect average outlets to be flat in the current year, but we would expect to see a good uptick in FY '27, both through organic growth and with around 15 synergy outlets coming on stream. This should bring average outlets for FY '27 to between 425 and 435. Importantly, given the strength of our land bank, we do not have to make significant future land purchases to drive our outlet opening plan. It is primarily about using the land that we already have.

So as you can see, our integration activity is largely complete. Looking forward, our focus is on 2 key areas: optimizing our capital employed and fine-tuning our cost structure. This half, given the strength of our land bank following the combination and our land approvals in FY '24 and FY '25, we have substantially reduced approvals. But alongside some land swaps and land sales, we will continue to make targeted acquisitions, and we anticipate approval of between 10,000 and 12,000 plots in FY '26. Dual and triple branding our sites means we can reach more customers, which should improve our sales volumes and help our asset turn.

Turning to costs. Given our scale and reach, we see opportunities to drive efficiencies across our supply chains and to make marginal reductions in our overheads. This discipline is business as usual for us. Pulling this together, we remain very confident that Barratt Redrow is best placed to navigate the market for all points of the cycle. Fundamental to this are our 3 high-quality and differentiated brands, and we have the skills and experience to deploy them effectively. These brands allow us to operate in a variety of locations and local markets with the optimal divisional infrastructure to match.

Our customer focus has been established by our numerous third-party credentials over the long term. We are the reliable partner of choice across the private and public sector, allowing us to be flexible and innovative. Our reorganized divisional structure and brand portfolio positions us well for growth over the medium term. And finally, we remain financially strong with a robust balance sheet and a solid net cash position.

So to wrap up, we do have 3 high-quality differentiated brands. We have a strong land bank. We have clear visibility over our outlet opening program, and we are a leading platform for growth. Virtually all of the GBP 100 million of synergies are confirmed, and we expect the integration to complete by April this year. Looking forward, our focus will be on continuing to drive our operational efficiency and using the opportunities we have identified to drive growth and value for all of our stakeholders.

Thank you. Thank you very much for that. And we're now going to open up for Q&A. John is going to facilitate the Q&A, and he is looking forward to the large number of questions that I know you're going to put his way.

If we just -- we'll start in the front row, Chris, and I think you need to pull and press basically. Great. Chris Millington.

So I just want to ask about the pricing experience so far in calendar year '26 and whether or not you've seen any sort of improvement there, obviously, with incentives. And perhaps you can just put a regional overlay on that.

Second one is just around the outlet opening profile. It's a big ramp-up you've got there. Now if I understand what you said correctly, is you're going to be flattish in the second half, but then potentially up at GBP 430 million next year, so roughly about 8% growth. Now if that's linear, it means the opening close is going to have to be 16-ish percent higher. I mean it feels a big number with some of the uncertainties out there, but perhaps you can give me some confidence there.

And the final one is just really about the gross margin in the land bank. It looks like you're taking the lower-margin plots at the front end that makes a little bit of sense because of the new land coming in at higher margins. But how long do you think you get to the average land bank margin. Because you're kind of under-indexing what, 400, 500 bps at the moment versus our average.

Chris, thanks very much. I mean if I take in terms of pricing and incentives to start with. And then I'll say a few words about outlet opening and then John will follow up in terms of outlet opening. And then John will pick up in terms of gross margin. So I think in terms of pricing and incentives, I mean, the first thing that I would just put in context is that if you went back to August '25, we started to see a lot of news flow about what may or may not be in the budget. And at the beginning of October, we made a very conscious decision that we needed to push harder in terms of incentives, not in terms of gross price, so generally keeping gross price as is, but pushing more in terms of incentives.

And I think that's seen a step-up in relation to Part Exchange, a step-up in relation to related incentives. Coming into the new calendar year post the budget, I just think we've seen a higher level of customer interest, and we probably have a bit more confidence in terms of our ability to maybe gear back a little bit on incentives, not in that we're going to move it 1% or something in a short period of time. But there is just more interest out there. And I think all of our divisions feel that, that is a slightly better backdrop with a possible caveat around London, which I would say is pretty much unchanged.

And then just before I pass over to John, in terms of the outlet opening program, I think the really key point is that we have the land under control. In terms of our FY '27 position, we're in the high 90s in terms of having a planning position in relation to that. And we would see some uptick in outlets late in this year, which will not impact reservations. And we overall will see quite a substantial uplift in FY '27. But I think the key point is we don't need lots of planning to deliver that. And bear in mind, a big chunk of it is coming from synergy outlets, which are already under our control.

John, do you want to...

Yes, David had stolen some of my thunder with the synergy points, but there you go. Yes, if you look at where we are broadly at the end of this year to where we'll be at the end of next, a big part of that is effectively 30 synergy outlets in there, which will leave you with a balance of 20 to 25 that need to come through the organic route, Chris. And I guess we are certainly comfortable in terms of that profile coming through.

And when we look at the timing of it, there is quite a significant outlet opening program clearly across '27, but there will be certainly a decent boost in the second quarter, which will obviously lead us into the spring selling season for Q3. So part of it is very much kind of profile across the year, but we actually have a pretty useful program planned for the second quarter, which will obviously give us a January start into that new calendar year.

The other one was around gross margin. Just to be clear, the embedded gross margin at 18.9% is post PPA. So it's all in. So the Redrow plots are in there, including the PPA component. So we expensed at 14.5%, as you saw in the slides. The embedded is 18.9%. So you've got a kind of 440 basis point differential there. I think when you look at the length of the land bank at 5 years, clearly, the average to get there, we're probably talking about 2.5 to 3 years realistically before you're going to hit that point because obviously, it's partly about the timing of when we purchased and when those new sites that are coming in at a higher gross margin start to really feed through in terms of volumes, not just in reservations, but in the completion mix. So I hope that's helpful.

Will Jones at Rothschild Redburn.

Will Jones at Rothschild & Co Redburn. Maybe just 3, please. Perhaps just touching base on build costs. I think your guidance for the second half implies about 3% perhaps including some synergy benefit as well. So just the moving parts within the latest on build costs.

Secondly, perhaps just more of an overview inflection 6 months plus on from the formal integration, just your view of how the Redrow brand and business is performing post acquisition. And then lastly, if we just cover off on building safety. Obviously good to see no movement in the provision, but just your level of confidence as you assess the portfolio and what you may still not know about potentially as we look forward.

Yes. Okay. Will, thank you. So Mike will pick up in terms of build costs, and I'll pick up in terms of Redrow and building safety. So I think in terms of Redrow, we said at the time, we are admirers of the Redrow brand. We think it's an absolutely fantastic brand. And getting Redrow really focused on the heritage brand because inevitably to grow the business, Redrow were doing more than just heritage. And we think Redrow really focused on the heritage brand. It's where they want to be and it's where we want them to be, and it is the premium brand in our portfolio.

In combining with the business, they have a fantastic land bank. And so I think the opportunity for us to be able to take Barratt through the Redrow sites to work together and maybe Barratt deliver more of the affordable housing, for example, alongside the Barratt housing is a really big opportunity. And then where we have sites where perhaps we were already Barratt and David Wilson, and we might have sold land to a third party, we can bring Redrow on to those sites, and we clearly have a number of those sites. And both in terms of the synergy sites, but I mean, the synergy sites are just the start of the story.

I mean, I think all of our land acquisition going forward, where all 3 brands operate in that geography, then we are looking for opportunities for those brands to operate well. So I really feel that in terms of the brand, the consumer proposition and in terms of the build sales teams, it's really done well and really integrated well. So that's all positive. And I know we've touched on the synergies, but I think it's just pleasing to be in a situation that we've effectively banked the GBP 100 million of cost synergies.

We're obviously looking for more, but the reality is that our main focus now is on the delivery of those cost synergies and then ensuring that we get the revenue synergies executed, which I think we're well on with.

In terms of building safety, John said that we are pleased to really be saying nothing. I think that's a nice position for us to be in. I think it's too bold for anyone to say we're absolutely comfortable with all our provisions and so on. I mean, I think everyone has seen that the evolution of this has been challenging. But we feel that we really have our arms around both building safety in terms of the remediation of buildings and also concrete frame. So both parts of it, I think, are moving well, and we'll just continue to update on a 6 monthly basis.

Mike, do you want to pick up build costs?

Yes. So we've guided inflation at around 2% for the full year. We estimate that, that will be split between labor and materials, 1.5% labor, 0.5% materials. Labor generally, we're seeing 2% to 3% price pressures, really around National Insurance and salary reviews as per would be the norm. What we're not seeing is any inflationary pressure around scarcity of labor or labor availability.

So there is no excessive pressure on the inflation for the labor content. The materials, pretty variable. Actually, we've obviously bringing the Redrow business into the Barratt, David Wilson team. We've improved our procurement capabilities. But we've seen bricks and blocks around 3% unengineered timber up at maybe 10%, but lots of materials at flat line or very low digits really. So overall, we're pretty confident that we'll be able to land that at around 2% for the full year.

Emily Biddulph, Emily at Barclays.

Emily Biddulph from Barclays. I've got 2, please. The first one just on how we should think about the margin bridge, I suppose, for the second half of the year. Conscious you've guided build cost inflation higher, but presumably the way that you account for that, you sort of already reflected that in the first half margin. And then the sort of positive things around the potential for incentives to be a touch lower. Is that sort of the way we should think about it? And then on top of that, can you just remind us the sort of the extent to which you benefit from sort of fixed cost of goods and some leverage over that in the second half of the year and potentially that sort of a little bit of land bank evolution. Can you give us a sense of sort of what the magnitude of that might be?

And then secondly, I think David mentioned the sort of evolution of the part exchange offering in Redrow. When we look at that on the balance sheet, is there a number that you sort of -- you're comfortable with it sort of ticking up to be? Or is that the way -- is that what you're sort of trying to tell us that it might actually be a little bit more on the balance sheet towards the end of the year? Or how should we think about it?

Emily, thank you very much. I think that first question you sort of asked and answered it at the same time. So you've given John too much of clue.

Can you give the whole margin bridge?

Yes, yes . Yes. So John will cover the margin bridge. Look in terms of Part Exchange, I mean, I think most of the housebuilders have a Part Exchange offer. It is a fantastic way for us to compete in the marketplace. I mean, bear in mind that the vast majority of customers sell a secondhand home and buy a secondhand home. So where we are able to break into that, we are best to break into it with a part exchange offer. And I think you'll see that part exchange is 2 things for us.

One is we have something that we would call movemaker, where we would effectively give a commitment to buy the property, but we would primarily focus on the property being sold before we get to the point of completion on the new build house. And then we would then have a part exchange offer where either that movemaker doesn't work or we agree to take the property from the beginning. The number of properties and the value of properties is not a huge concern to us.

I mean the operational and the financial risks are similar. And Mike touched on that. We have about 180 properties that are not reserved, which I think when you look at the size of the group across 30 divisions or 32 divisions is a small number of properties. So the more part exchange we can do in the current market, the better.

In terms of Redrow, Redrow did have a movemaker equivalent, and they did have a part exchange offer. But I would say that they were reluctant to use it. And we just see in the market that we need to do more of it. And so the Redrow position in the underlying numbers has grown from what in the FY '25 was around about 2% of their business was using the PX offer to it now being kind of above 10% of their business is using the PX offer. So yes, we're very, very positive about that offer in the market.

And then just to pick up on the margin bridge, Emily. So I think there are probably 4 aspects to this to keep in mind in terms of the bridge from last year to this year. First, plot mix-wise, which was mentioned there, if we look at the delta, I guess that implies with 440 basis points from where we reported in the first half to the average in the land bank, that broadly equates to 80 or 90 bps per annum, thinking of that movement. So that's probably, call it, 50 bps in the half year period, if I was looking to try and work a number through there, Emily.

Second one is then on build cost inflation. And you're correct in terms of given the accounting approach and margins on site-based approach, a lot of that cost inflation is already built into the margin that we're recognizing. But there clearly, we've got to work hard in the second half to control and limit that impact from build cost inflation. But the positive on the other side of that is clearly from an incentive level where we added circa 1% to our incentives in the first half, that was very much driven by the budget and the need to convert people and to give people a call to action effectively to reserve and move through to completion.

Obviously, as we work through the spring and given we've had a pretty encouraging start certainly in the 4 weeks of January post the first week we had, then we'll be working site by site, literally trying to move and make sure that we're optimizing both the balance of volume and value and that around the incentive that's applied. So there will clearly be a push to try and work as we can to get that incentive lower.

And then finally, on the volume gearing aspect, when you look at our volumes, we're broadly 40% more volume in the second half than the first. That mathematically obviously will come through in terms of operational gearing, and that should again help on the second half margin. But those are the 4 ingredients in terms of that movement there. Thanks.

I think over to the other side, Aynsley and then Clyde.

Aynsley Lammin from Investec. Just 2, please. Just picking up on your comment actually around the sales rates. John, just I think you said the last 4 weeks particularly have been good. Just wondering if you had any more color. Has it been progressively improving. And when -- you've maintained your full year kind of completion guidance, but I think you mentioned that also depends on sales activity. How much risk is there? What do you need to see in the spring selling season to kind of meet that full year completion guidance, I guess?

And then second question on the provision, as you say, good to see it kind of stay around the GBP 1 billion level. But could you just remind us how long you expect to work through that and what the kind of annual cash outflow profile looks like during that period?

Okay. Aynsley, so I'll just make sort of comment on the sales rate and the sales risk and pick up on the provisions. I'm just going to answer them both. That's it. Yes. Look, in terms of sales rate, I think that we had quite a bit of debate about this, okay. So the reality is we've always said we're not going to split current trading, whether that's positive or negative because it's such a short period. And then we get into saying, well, the first week was this and the third week was that and so on.

So we're not going to kind of break with that. But I think what we would say is that our business is positive about what we've seen during the month of January. And December is always a tricky month. But when we come into January, we've just seen good consumer interest, good level of appointments and reasonable levels of reservation. Now bear in mind that we're not comparing really to last year. We're presenting the numbers compared to last year because that's the convention. But we're really talking about what was it like in October compared to what is it like in January, and it is substantially better in January than it was in October.

That's the reality, that October, November period. In terms of looking at the risk, I mean, we are sort of really working on the basis that we need to sell at about 0.6, and we feel comfortable in terms of that sale. And we give ranges, you're sort of -- it's a problem if you do and it's a problem if you don't. So I would say that we've got a high level of confidence of hitting the midpoint of the range. And we don't see lots of downside to that and potentially, there's a little bit of upside, but I think we've got to focus on that midpoint of the range.

And then -- sorry, provisions. Yes. So the cash run rate on provisions, well, my sense is that there's another 4 years at least in terms of runoff of the provisions. We would expect expenditure will start to accelerate in '27. So there's a huge amount of setup to be done to get the developments through the building safety regulator because all of these developments have to go through the building safety regulator. We see that, that backdrop with the building safety regulator has improved from where it was 12 months ago, there's much more transparency about what is happening, but they have a huge amount to address in terms of the backlog. So getting stuff through the building safety regulator and therefore, substantial expenditure in '27 and '28. But realistically, on a GBP 250 million run rate cash spend this year, I think we're very unlikely to be above that cash spend, and we'll just run it off over the next 3 or 4 years.

Clyde.

Clyde Lewis at Peel Hunt. Three, if I may as well. Probably following up on Aynsley's question there about sort of recent activity. I mean I'm still a little confused as to where we are because normally, spring is the best selling season for all housebuilders. And obviously, we've had a pretty shocking October, November, December period. So there's a catch-up. And I'm just, again, really trying to get a feel for whether it really does feel better than last spring or spring in '24 or spring in '23 compared to where you would have been in Q4?

I understand clearly, it's better than Q4, which it traditionally is. So just pushing a little bit more on that. On land creditors, I suppose, interested to hear how quickly you think you can get into that range of 20% to 25% that you're talking about. And inevitably, there's a trade-off with chasing a higher gross margin on new land sales. So just interested in, I suppose, probing that a little bit more.

And the last one was obviously, I can't not ask it, was really the government support. And David, you've mentioned it. Others are increasingly mentioning it in their updates. Do you think the government is starting to move to think about this a little bit more? From what I understand, treasury is the bigger blocker rather than maybe the political side, but I'd be interested on your views there.

Yes. Okay. I feel I've sort of had to go at the sales rates and stuff. So I think I'm going to ask maybe Mike to comment on it, looking particularly at where we were October, November compared to where we are now. I think that's really the key thing. But I would say on the sales rates, our forward forecasts are very much thinking, okay, we need to be at this level of 0.6, which we're not far away from.

In terms of land creditors, look, I think probably just 2 comments. I mean, one, us increasing the land creditor position is obviously dependent on land intake. And our land intake in the first half is -- our land approvals is obviously very low, the first point. Second point, I think when you look at the next couple of years, it would seem that there is going to be a huge amount of land coming through planning. So John referenced in his presentation that we have more than 100 strategic sites in for planning.

So what I would see is that the ability to defer land payments will be greater if there is much more land coming into the marketplace, and we're already focused on the deferral of payments. So I think it's very achievable to get into that higher banding of kind of 20% to 25% in terms of land creditors, but it will depend on land intake.

In terms of government support, well, I think really 2 things. I think everyone would agree, I believe that everyone would agree that you have to address the supply side. If you don't address the supply side, then you are just going to create issues by putting in demand side support. So I think that's kind of been well documented. So the government have really got after the supply side. Now I understand it hasn't changed yet.

But from what we can see, the supply side changes are far more powerful than the original conservative government, national planning policy framework, et cetera. And therefore, numbers can go much higher. We're back to top down and there's an obligation on the local authorities of some scale. That is not going to improve the position on affordability in the short term. Even if you believe that there'll be a lot more supply in the future, there won't be a lot more supply to change the affordability equation over the next 12, 18 months. So we do think the affordability equation is key if we want higher volume levels.

So we are doing the self-help. We've got a shared equity offer. We're doing part exchange. We're providing good incentives to our customers. but government stimulus would be a game changer in terms of the demand side. And the industry, it's not only bad at Redrow, but I think the industry have been kind of uniform in saying that they're quite happy to pay. We launched the scheme with government back in 2012, and we paid for that scheme. So the reality is that we are very happy to pay for the scheme, but we think it would be a game changer, and that would be particularly true in terms of London and the Southeast.

John, do you want to -- sorry, Mike, do you want to answer?

Okay. I feel like I might just be repeating on what David said when he answered the question, but just trying to add a bit more color. We certainly saw after the budget a level of interest and leads and web visits and the like from the market. I guess that's because there was no negative news in the budget around housing. I think that carried on through Christmas, and we have seen an uptick since the October, November performance in the trading since Christmas.

I think in the slide, we say that it's very slightly down year-on-year. I think there's a slight anomaly maybe in the first week. But if you look at more recent trading in the last 4 weeks or so, 5 weeks, then that is in line year-on-year and gives us every confidence that we'll hit our full year completions. So really the message is year-on-year, it's the same, and we're confident we'll hit our completions.

Allison, I think in the middle there.

Two questions from my side. So one is on following up on the demand stimulus. Because if you said builders are happy to contribute to the scheme, do you think that it will probably increase the chance for the government want to actually launch something given right now, there's a lot of political noise going on right now as well. And the second is on the outlets. If I can follow up a little bit as well because you said for 2027, you're expecting average outlets around 425 to 435, right? So that's probably an incremental of around 20 to 30 year-over-year. But I mean I might remember it completely wrong, but I think previously, you are probably more guiding around 30 incremental outlets opening. So I don't know if there's any color you can give on maybe the planning environment or maybe why it's not hitting the 30 level instead of 20, you said 30.

Okay. So John will pick up in terms of the outlets. So yes, I mean, look, I think in terms of government, I mean, I do understand that the government position in terms of funding generally has got challenges. So I think the reality is that the housebuilding industry, I mean, mainly through the HBF, our trade body, have been very clear that if there was a new scheme, then the housebuilders would expect to pay for it. And as I say, we launched the scheme in conjunction with government in 2012, pre-Help to Buy, and we paid for that scheme.

So I don't think the idea that the housebuilder is paying for a scheme is unusual. So yes, of course, that will help, but there are clearly other considerations that the government have to take account of.

And then on the outlets, your math is correct, Allison. So probably 20 to 30. I think we were more at the 30 end of the scale. I think we still are, but we just have to be pragmatic in terms of -- I think everyone in the room is aware that planning is taking time, and Mike mentioned it earlier to see the actual on-the-ground benefits of that coming through. So we're shooting to deliver 30. But clearly, setting a banded range there of 20 to 30 outlets just looks a prudent position to be holding. But clearly, all of our divisions and all of our teams are working damn hard to try and pull through outlets and get them opened because ultimately, that's going to drive our top line and drive the volume growth as we look forward.

Zaim next door, and then I'll come forward to...

The first would just be on the PRS market, the view for the remainder of the year and what's in your expectations. And then secondly, I think you mentioned 31 planning applications submitted and 16 approvals -- 16 received back. Sort of any anecdotes on how easy or quicker has those been since all the government changes would be helpful.

Yes, of course. So if I pick up those. So I think in terms of PRS, and again, just in context, that the PRS market was building a lot of momentum pre the budget in 2022. And the reality is that the funding costs for the PRS operators as they did for everyone changed fundamentally. So I think there was less activity in the marketplace, first of all, simply less people looking to buy PRS.

I think we're seeing the return of more interest in terms of PRS. We announced in, I think in '21 and it became effective in '22, our cooperation with Lloyds Bank and Lloyds Living. And we have undertaken 3 groups of transactions with Lloyds Living. We've undertaken transactions without other PRS providers as well. So we felt that setting a range of 5% to 10% of our completions being through PRS was the kind of range that we felt comfortable with, which we set out last year.

So we are definitely still looking to do PRS, but we're only looking to do it at the right price. It's something that can work very, very well for us in terms of return on capital employed, very well in terms of the efficiency of our build teams, but we've got to make sure that we are pricing it properly. I think in terms of planning in relation to the synergy sites, I don't think there's been any particular issues. I mean, bear in mind that these sites have already got a detailed consent. We would probably have expected to have been able to agree more plot substitutions rather than having to go to a full committee.

But I mean that kind of is what it is at a local level. So again, we're very confident we will get the planning and we will get those outlets through as we outlined in FY '27.

Alastair down in the front and then back to Rebecca.

It's Alastair Stewart from Progressive. Three questions based actually on one slide -- on one chart on Slide 7. In terms of the moving parts in the private reservation buyer type, the biggest change was in part exchange going from 14% to 23%. Obviously, Redrow's greater uptake is a big part of that. But was it all? And within part exchange, do you get a sense of how many people using it in the secondhand going into new? Is it they have to use it because they just get stuck in chains elsewhere. And how much is it a nice to have?

Then the next one was first-time buyers going from 31% to 33%. Do you get any sense in there how much is Bank of mom and dad and how much is using your own Part Exchange. And then finally, following on from the previous question, PRS and other going from 9% to 4%. You said you were originally aiming at 5% to 10%. Can you -- is it going to take some time to get to the top of that range? Or are the financial costs for PRS investors just too high at the current moment?

Thanks, Alastair. I've never answered 3 questions on 1 slide. I think we're going to have a bit of a joint go at this one. So if I pick up in terms of PRS and first-time buyers and if Mike picks up in terms of the part exchange element of it. So I mean, I think on first-time buyers, look, unquestionably, the bank of family, as [ Ians ] get referred to, is very, very important. Now I can't say this is the percentage because, as you know, we are separate from the independent financial advisers. So we don't really get into the nuts and bolts of that.

But I think it's well documented that, that has become more and more important post '22 as interest costs have risen substantially. So it's good to see a little bit of a tick up generally in first-time buyers. But as we touched on in some parts of the country, particularly London and the Southeast, I think first-time buyers are largely priced out of the market, even in some cases with Bank of Family, looking at deposit levels that are well in excess of GBP 100,000 for a lot of purchasers because they don't want to be in there on a 95% loan to value. They want to be in on 85%, et cetera. So that's the first thing.

In terms of PRS, we can unquestionably operate in a 5% to 10% range. The deals tend to be quite large. I mean they might not all be delivered in the same year, but I think you would tend to be looking at deals that would be for us historically between 250 and maybe 750 homes. So that might be delivered over 2 financial years, but it can have a significant impact one deal in terms of the percentages. So at the 4% percentage, we're obviously just outside that range. But we are hopeful of closing some PRS deals certainly in calendar '26, which will materially alter those percentages.

Mike, do you want to just talk a bit about PX?

Yes. So we have introduced our PX proposition more heavily into Redrow, and that's seen an increase. So part of that increase is certainly just the extra volume that's coming through Redrow. It's not all of it by any stretch of the imagination. It's a more popular incentive that our customers are utilizing.

I think the reason for their utilization is -- I think there's many factors. A lot of it is around just simplicity in that clearly, we sell their houses eventually. So we don't carry PX for the next 12 months that they can't sell. So we can sell their houses, so they could sell their houses. It's just about simplicity. And there's an element of when somebody visits the site and set the heart on a plot, if they're not in a position ready to go, say if the PX, we can take that reservation and reserve the plot that they want. So a lot of it is around consumer choice rather than necessity. Does that answer the question? I think that's helpful.

Great. Glynis?

John, I'm going to throw some at you actually. So I'm going to -- just a few that hopefully are very short answers. I will reel through them. Given the order book on the affordable, what should we anticipate in terms of the affordable private mix this year and maybe into next year?

Second of all, the gross margin on your acquired land, can you confirm what you're actually buying in at? And thirdly, just in terms of the completed development provision, what was it last year? Is it always around that level? If this year was unusual, why? Next, the third-party payments for the build safety provisions. So that's in the gross profit, but you're taking the legal fees for getting them in the adjusted. Is that correct?

And then 2 that require perhaps a little bit more color. One, the size of the outlets, is that to do with just the fact you're putting 3 ranges on it? Therefore, it's each size of site is 3 outlets? How should we be expecting that average size of outlets to progress? And then lastly, just in terms of the land approvals, there obviously the guidance has changed quite substantially. Can you give us a bit of color about why that's happened and what that might mean 1, 2 years out?

So if we start off, we can't do just one word on each, but we'll try. So order book affordable through the mix. So I think if you look at 10 years for us, you would conclude that somewhere around 20%, 21%, that sort of level is what we would deliver in terms of affordable housing. What we saw last year was really quite an unusually low level of affordable housing, a lot of which was driven from Redrow because Redrow had been very high in the year to June '24. So in terms of the sort of pre-acquisition position, Redrow was very high in that year. So when you look forward, I would think that kind of 20%, 21% is what we should look at.

In terms of gross margin on acquired land, we've said that we're acquiring on a gross margin at 23%. We're very comfortable with that in terms of the forward acquisition position. And once all of our cost and procurement synergies are embedded, we should be acquiring on a gross margin at 24%, which is just in line with what we said last year.

The CDP, I'm going to pass to John because I'm not sure I understood it, so I'm just going to pass it to John. And then Building Safety, I mean, anything relating to building safety should be in adjusted. So the legal fees in respect of recovery are in adjusted and any recovery of costs would be part of our adjusted provisioning and therefore, is in adjusted. So we're not putting the recovery in gross margin and the costs in adjusted. And everything else is over to you.

Right. Yes, yes. So just on that one, gross profit, the ones I quoted here were excluding that GBP 13.4 million gain. So -- and we're obliged to recognize that through income rather than take it as a deduction against our provision as well, just the IFRS rules we operate within.

On the completed development accruals of provision, that does tend to move around a little bit. If you look back at the full year, it was a credit. So it helped us at the last full year sort of results. It does kind of ebb and flow depending on sites and the number of outlets coming to kind of closure basically as well, Glynis.

So when a site closes out, you obviously then have that period, it's waiting for local authorities to adopt is the big issue there. So it does tend to be down, but it's the incremental, that's the change year-over-year. So you can see that impact there, but happy to talk about afterwards. On the third party -- sorry, I'm just looking at third party for building -- sorry, outlet size, coming on to that one. If you look at the outlet size, we're talking -- if we look at -- we think of developments and then we think of outlets. And clearly, as we look at particularly land deals that involve larger sized developments, that's where the opportunity is for us to bring on 2 or 3 brands to optimize those at that kind of 140, 150 per sales outlet, which then gives you the lifetime of 3 to 4 years.

So as we look at land opportunities and how that will be driven by development activity, it's looking at those and thinking, okay, what can we do here that will optimize the brand choices, and that is kind of the differential there. So it's all about trying to optimize the speed at which we're going to be there with the show home with the sales team, building out and completing the sales.

On the other one on approvals, really more a function of just the opportunities in the market, but also a deliberate point for ourselves is that, that pipeline that David mentioned on strategic land conversions, we've got a hopper there of about 27,500 plots. Now those have all gone into planning across 103 applications. The time frame over which they may come through on planning is something we want to be prepared for. And therefore, the focus has been on really optimizing the existing land bank because obviously, we were sitting there in excess of 5.5 years when you look back 6 months ago for the last 6 months, it's been about what can we do across the portfolio, either splicing and dicing the current land, but also looking at that strategic and what's going to come through.

So this will give us flexibility to infill and to look at the strategic stuff as that comes through and then look at elsewhere in the market. So I think that hopefully covers that one there. And I think that covers a lot.

So Glynis, so just on the consented plots number, I mean, you can see that over the last 3 reporting periods, it's recent reporting periods, it's reasonably consistent. But just to illustrate it, when we add in the revenue synergy outlets, what we should do is see an increase in outlets and no increase in plots. And therefore, the revenue synergy outlets will drive that number down. So I do think that when you look at the land bank, that number is very important because I mean that is a kind of measure of the sort of raw efficiency of the land bank, i.e., if you've got one site for 1,000 plots, the answer is 1,000. And if you've got 3 sites on that 1,000 plots, the answer is going to be 330. So I think it's an absolutely key measure in terms of looking at that efficiency ratio.

Rebecca, then we'll have a couple more after that, conscious of time.

Just a couple from me. The first one, just wondering if you can talk to kind of how that net cash balance moves into the year-end, I think you're sitting about 170 at the half, but expecting 400 to 500, just some of the moving parts there, knowing that there's going to be some more volumes coming through, but then I guess, an increase in WIP as you increase your outlet profile.

And then just following on, on the approvals on the land bank question before. So would we expect to see the land bank, I guess, roughly stable here as, I guess, you're doing less approvals, but getting more from your strategic land bank. And then on the outlet opening profile as well, just wondering how many of those 20 to 30, I guess, increase in outlets do you think that you'll be doing dual or triple branded outlets? How many of those outlets?

Okay. So if John picks up in terms of the net cash balance and how that will progress towards the year-end. And then I think I'd ask John to pick up on the outlet opening profile. But what I would say in the outlet opening profile is that which I'm sure John will just restate that position, but we are talking average outlets. So therefore, if we were saying our average outlets are going to move from just above 400 to 425 to 435, we've also got to open a lot more outlets during the course of that year. But John can just outline that in terms of figures.

I think in terms of the land bank and the approvals, we feel that we have a lot of flexibility. We've set out what I think is quite a strong growth agenda in terms of our outlets profile. So to move from where we are now to a sort of net outlet position of around 500. So broadly, we're moving from 400 to 500 over a period of time. I think with our land bank at 5.6 years and the strategic sites that we have in for planning, we see that we have a lot of flexibility. So we've set a target, which we'll obviously keep under review, but we've set a target of between 10,000 and 12,000 for this year.

We'd be happy to be at replacement level. So if in FY '27, we were at replacement level, say. But the reality is we are very happy to shrink the land bank as long as we're delivering the required number of outlets. So I think we see that drive to 500 outlets as being the absolute key thing that we're trying to achieve.

And maybe just before going to cash flow, just finishing off on the outlets point, I guess, certainly, when we think about the 30 synergy outlets that are opening, by default, those are generally going -- they're dual because they're an existing site that's adding Redrow to it or Barratt or David Wilson on to a Redrow. I'll get hold of some numbers, so we can always share with them with you, Rebecca. But primarily, it's dualing, but there will -- there are, I think, a handful of triple sites as well. So within that mix of synergy sites, some of them were already David Wilson and Barratt and are having Redrow added to them. So I think there's half a dozen that will be ultimately broadly triple site opportunities once we get through there.

But then on cash flow, I guess, 3, I think, big ingredients really in terms of cash flow performance in the second half. First is clearly operating profit in terms of driving the initial -- our profit from operations in the second half should start as a significantly higher number. If we look at our working capital and particularly the construction WIP where we had that GBP 313 million outflow, including Part Ex, broadly 3/4, if not more of that should come back in the second half given the seasonality of our working capital cycle in terms of completions in the second half.

The other one in there is then land where we would expect, as David mentioned, we're probably going to actually end up unlocking a bit of value in land in the second half. If you put those together, plus the dividend, obviously, in terms of the interim going out, which is probably GBP 60 million and the buyback of GBP 50 million, those together should get you back to that kind of somewhere between the GBP 400 million and GBP 500 million net cash at the year-end.

Conscious, 2 more, Charlie, and then we'll go to the back. And I think that will probably be our time limit.

Charlie Campbell at Stifel. Just one really. Just on mortgage availability, not something you've talked about today. There are clearly quite a few changes going on there. So just wondering what the banks are telling you in terms of mortgage availability for calendar '26. Any changes there? And I suppose just to help us think about that a bit more, any changes in the customer mix in January versus, I don't know, say, July for the sake of an argument before people started to worry about property taxes in other direction?

Okay, Charlie, if I pick them up. I think the mortgage backdrop is of gradually improving backdrop. I would say from probably 3 particular points. One, from a regulatory point that there has been a free up of the regulatory environment in terms of, as an example, the earnings multiples that is allowed to be lent. So there's no question there's a free up of the regulatory environment, which is a positive, but it's obviously been a relatively slow burn. So that is good.

Secondly, I think generally, there are more and more mortgage offers that are at 95%. Now the reality is that, that isn't necessarily fully addressing affordability because the 95% mortgages can be expensive. And therefore, if somebody is comparing that to renting or staying at home, it isn't necessarily giving them what they need. And then I think the third area, which isn't particularly big for us, but it's certainly big in London is that there has obviously been more of a movement to higher loan to values on apartments.

And we came from a situation, albeit a long time ago where most banks were lending perhaps 10% different as a maximum LTV. So if they were at 90 in houses, they would be at 80 on apartments. So again, we've seen some freeing up in terms of that environment. I would say overall that there's not any big change in customer mix. I mean we -- to some extent, I know it's both product and customer, but we're giving some indication of customer mix on the slide that we went through in the Q&A.

But I think there's 2 customers that can really just sit out the market. So in periods of uncertainty, One is a first-time buyer who I would say generally can sit out. They would normally be living at home or renting and they can sit it out for some period of time. And the other category of customer who can sit it out is the downsizer and the downsizer was a significant part of the Redrow business. So I don't think that those are customers that have gone forever almost by definition, the first-time buyer and the downsizer can come back into the market, but they can certainly sit it out. And Redrow has seen that in terms of maybe where they were on cash sales so circa 40% of their business was cash sales, and they're now around about 30% of the business being cash sales. And that will be primarily first-time buyers sitting out -- sorry, downsizers sitting out.

Peter, did you have a question?

Peter Ajose-Adeogun, Morgan Stanley. It was a similar question really just in terms of the growth going forward, which customer segment do you expect to grow the fastest just because when I look at some of the metrics on first-time buyers, I think 1 in 3 now in terms of purchases in the U.K. will be first-time buyers. There's perhaps a notion that maybe not to disagree with you, but they can't sit it out because maybe they've got family formation or they'll do more to kind of get it done. And so just in terms of where you think the growth will come from if first-time buyers are starting to run too hot in terms of the level of completions they make up in the U.K.?

And also maybe if you can give some color on where -- how down it is from the peak for you first-time buyers in your business?

Okay. Thanks. I mean, that's quite a big question. So I think if you step back for new build and for Barratt Redrow in particular, I think a really big opportunity for us over the next 3 to 5 years is about the efficiency of our homes and the substantially lower running costs of our homes. And therefore, I think from a Barratt Redrow point of view, I would say that we mainly want to take market share from the secondhand market.

So we don't mind if they're first-time buyers, secondtime movers or downsizers, we should be actively seeking share. And we can do that as we talked about through a part exchange offer for existing homeowners, but we can also do that through demonstrating substantially lower running costs. And the running costs are not just about the heating or so on. The running costs are also about you don't have to put in a new bathroom or a new kitchen within the first 2 or 3 years.

So in cash terms, there are big, big benefits of newbuild. And so that's the first area that we should look at. And then really in terms of the mix point, I would say that we should expect to see more growth on first-time buyers and more growth on downsizers across the piece. And I do think for downsizers that there is more we could be doing in terms of part exchange offers with downsizers. And that's something that we've been looking at quite actively because we would tend to say that your house can't be worth more than the house you're buying. And therefore, that precludes a lot of downsizers.

And I think that's something where we need to challenge ourselves in terms of how attractive we can be to downsizers. But I think you see on downsizers that a lot of what they want is low maintenance, low running costs and not having to think about replacing kitchens and bathrooms and so on.

Great. I think consciously, we are 10:00. Any last ones? Otherwise, thank you, everybody. and over to David.

Yes. Thank you very much. I appreciate all the questions. Thank you, and we will be back in April with a trading update. Thanks very much.

Great. Good morning, everybody. Thank you for being with us this morning for the Barratt FY '25 full year results meeting. Just a couple of points of housekeeping. There is no fire alarm expected. So if there is an alarm, follow Mike through that door, because he will be the first off or through this door with myself. We're going to start with David in a moment. So David is going to do a first intro, then pass it over to Mike, and then return to David, and then we'll open it up for Q&A.

But with that, I'll hand over to David. Thanks, David.

Thanks, John, in your comparing role. So good morning, everyone, and welcome to the first full year Barratt Redrow presentation. So as John said, Mike and I are going to take you through our FY '25 performance and current trading as well as updates on sales outlets and also building safety. We'll conclude by looking at the market and the underlying fundamentals and why Barratt Redrow is best place to perform across the cycle.

First of all, I'd like to just take you through some of our key messages for today. In FY '25, the market clearly remained challenging. Affordability was a constraint for many and consumer confidence remained low with political and economic uncertainty persisting. Despite this, the business has produced a very resilient performance, both operationally and financially, alongside completing the majority of the Redrow integration whilst delivering cost synergies well ahead of target.

The business remains financially robust, underpinned by our strong balance sheet. And now through our acquisition of Redrow, we have 3 distinct brands that position us well for future growth.

So looking in a little more detail at the operational highlights from last year. Bringing the Redrow brand into the business was, of course, a particular highlight, allowing us to reach most of the market as well as capitalize on synergy opportunities. We received CME clearance in October 2024 and as mentioned, have already completed the bulk of the integration. This allows us to concentrate on maximizing the benefits of the combination and driving the total business forward.

In the year, we remained active in the land market, enhancing our land position through strong approval levels utilizing our numerous land channels. We delivered 16,500 homes, which is a significant achievement in what is a challenging market. I would also like to take a moment to highlight some of our externally accredited achievements over the past year.

Our repeated success in the HBF ratings and the NHBC Pride in the Job Awards are testament to the dedication of our teams across the business as well as the quality of the training and the customer first culture we maintain across the group. This quality is also reflected in our Trustpilot scores given by our customers, which award all 3 brands with the highest rating of Excellent.

Mike will cover the financials in much more detail, but just to pull out a few highlights. Whilst our completions came in modestly below guidance, our adjusted profit before tax and PPA was in line with market expectations. This reflected our rapid progress on cost synergy delivery with GBP 69 million confirmed in the year and GBP 20 million crystallized in FY '25, double our previous forecast.

Our return on capital employed, excluding PPA, improved to 10.7% from 9.5%. We finished the year with a strong net cash position, supporting our growth and capital allocation plans.

Now looking at reservations. Our growing portfolio of PRS partners helped to increase our overall reservation rate to 0.64. Additionally, some improvement in mortgage competition and availability provided a boost to our net private reservation rate, excluding PRS and other multiunit sales. However, the improvement in the rate was offset by the reduced number of sales outlets and our opening order book.

Turning now to completions. Our total completions were down 8% compared to the aggregated figure for FY '24. This was due to a reduction in affordable completions, reflecting the nature and timing of these types of deals. However, we were pleased that our underlying private completions in the year were up around 3.5%. Our average selling prices saw price inflation of around 1% with customers remaining very sensitive to both increases in headline prices and reductions in incentive levels.

Other increases in underlying private ASP were largely due to increased delivery of larger homes outside of London. For more detail on reservation rates, completions and ASPs, please see the information in the appendices. Our land bank supports our medium-term growth ambitions. Our multiple land pipelines allow us to source high-quality land throughout the cycle. While planning remains a slow process, we are very optimistic about the reforms and the positive changes we will see once the legislation is passed.

Gladman remains an important part of our business and will also benefit from the planning reforms, being the partner of choice continues to benefit us in the land market as well. In the year, we announced the MADE partnership alongside Homes England and Lloyds Banking Group, and also the West London partnership with places for London, giving us access to further high-quality land opportunities.

Moving on to outlets. The proposed planning reforms, as I've said, are extremely positive. However, they have taken longer to come into law than we expected. Therefore, as announced in our July trading update, we expect outlet numbers in FY '26 to be largely flat. From FY '27, we will start to see organic outlet growth plus the benefit of our revenue synergy outlets.

As seen on this graph, the vast majority of our FY '27 outlets are already open or have detailed planning concern. In FY '28, there is still a relatively low proportion of forecast outlets that rely on future planning approvals. This provides us with excellent visibility over the next few years and gives us confidence in our growth forecasts.

On current trading, in July and August, we saw our net private reservation rate, excluding PRS, increased slightly compared to the same period in FY '25. However, we recognize that the market remains subdued. And after speculation about stamp duty, some customers are going to wait to see the impact of the budget in late November. Meanwhile, the lack of PRS reservations in the period simply reflects the timing of deals.

Our year-to-date completions are marginally ahead of last year's and our forward sold position is in line. So we are very pleased with the solid start to the financial year.

So I'm now going to hand over to Mike who will take you through our FY '25 performance and financials.

Thanks, David. Good morning, everyone. So as David said, I'll take you through our FY '25 performance and also spend a few minutes this morning on building safety.

This slide shows FY '25 performance against the reported position for FY '24, which obviously excludes any impact of the Redrow acquisition. I'll touch on the P&L metrics shortly. But you can see here our total home completions of 16,565 homes and strong closing net cash position of GBP 773 million after the payment of GBP 249 million of dividends, GBP 50 million spent on the share buyback and just over GBP 100 million spent on building safety remediation.

So if I move on now to a more meaningful comparison of performance as Barratt Redrow. As we did at the half year, we're focusing on the FY '25 performance stripping out the impact of deal purchase price allocation adjustments, which I'll touch on later. And these are noncash accounting adjustments, which largely fall away from FY '26 onwards. We think this is the best view of underlying trading in the business during the year.

In the comparative for FY '24, we're including Redrow here from the 24th of August 2023, but without any adjustment for accounting policies. And we've put a more detailed slide in the appendices if anyone has the appetite which shows the reconciliation of all of these amounts to ensure you've got full transparency.

So several points to highlight. First of all, total home completions, as David said, were down 7.8% as a result of lower outlet numbers during the year. Despite the lower volume, adjusted gross profit was broadly flat at GBP 970.3 million, and gross margin improved by 30 basis points to 17.4%, which mainly reflected modest sales price inflation and the positive mix effect of more recently acquired land coming into production.

Adjusted operating profit was up 2.9% at GBP 595.4 million, with margin up 50 basis points at 10.7% reflecting the benefit of cost synergy delivery during the year. Adjusted profit before tax was GBP 591.6 million, slightly ahead of guidance in July, and adjusted EPS was 30.8p, which delivers a full year dividend up 8.6% to 17.6p. So overall, we're pleased with the performance of the combined group delivered in the year despite the reduced total home completions and particularly positive to see both gross and operating margins moving in the right direction.

This slide updates on the accounting fair value adjustments that have been finalized since our provisional position at the half year, and 4 changes to draw out here. First of all, the uplift on land and work in progress is now GBP 120.4 million, that's up from GBP 93 million at the half year, and that reflects the final valuation of sites in the opening balance sheet.

Secondly, as I mentioned back in February, the recognition threshold for building safety liabilities is lower than normal for Redrow because we were required to bring contingent liabilities onto the balance sheet by the accounting rules.

As we detailed in the July trading statement, we've increased Redrow's building safety provisions to take into account concrete frame issues in London, and this has increased this adjustment to the GBP 144.5 million shown here. The final changes relate to the tax effect of the fair value adjustments, resulting in a GBP 94 million adjustment to deferred tax. So goodwill recognized on the Redrow transaction is, therefore, GBP 321.9 million and that's up from the provisional estimate of GBP 259 million.

So again, just to note that most of these fair value impacts have actually already unwound in FY '25 with a reduction of GBP 103.3 million in adjusted profit before tax. We're expecting a further GBP 20 million charge in FY '26 before this becomes immaterial to future years.

So moving on to land, and this is the updated position on embedded gross margin in the land bank. And pleasingly, the land bank margin continues to improve, up 90 basis points since half year to 19.2% at the end of June. So with little net inflation impact, roughly 1/3 of the improvement came from the utilization of land in the half and the remaining 2/3 from the new sites that we've added to the land bank. And as you know, we remain focused on improving this position over the medium term to our current gross margin hurdle rate of 23% by optimizing price, managing build cost inflation effectively and bringing new land into production.

So moving on to look at adjusted operating margin in FY '25. And from last year's Barratt only operating margin, we saw a reduction of 120 basis points from reduced volume. That was almost all offset by improved pricing across the year. And as we've said previously, build cost inflation was broadly flat in FY '25.

Looking at our same site, same house type measure of inflation, which covers around 1/3 of our volume, like-for-like sales price inflation was around 1.4% in the year. Last year, we saw a step-up in completed development costs, but these have normalized this year, resulting in a positive margin benefit of 80 basis points. The impact of other mix effects, including Redrow coming into the group, contributed 70 basis points together with a further 30 basis points from the cost synergies we realized during the year.

Our adjusted operating margin before the impact of fair value PPA adjustments was therefore 10.7%. And you can see the impact of those PPA adjustments, which take margin to 9%, flat on the Barratt only margin from last year.

So now just to update on cost synergies. We're making really good progress on realizing the cost synergies target of at least GBP 100 million with GBP 20 million included in the income statement in FY '25. With 9 office closures confirmed, 6 were completed by year-end and 3 are in the final stages of closing at the end of June with GBP 23 million of savings confirmed.

The head office rationalization is also underway, and will complete shortly with GBP 21 million confirmed at the 29th of June. And on procurement, we're making good progress in aligning pricing and terms across key materials categories with GBP 25 million confirmed at the 29th of June.

As we said, our operational leadership was aligned and effective from the 1st of July 2025, and the IT integration is in progress with the migration of 6 remaining divisions expected to complete in FY '26. Having crystalized GBP 20 million of cost synergies in FY '25, we're well on track to deliver an incremental GBP 45 million in FY '26.

So on revenue synergies, just to give you the latest numbers to date, we've now submitted 25 planning applications at the end of August, and we've already received planning permission on 9 of those sites. We expect to submit the remaining applications during the course of FY '26, and we're very much on track to see the first incremental outlets ready to open at the start of FY '27.

So now I'd like to spend a few minutes just updating on building safety. So as you know, our approach from the start of this issue has been to focus on the safety of the buildings we've built and the people who live in them. We've been very engaged with government, and we were the first housebuilder to create a unit dedicated to remediation, and we commit significant time and resources to support it in delivering our program.

We apply a rigorous process in assessing buildings within the scope of our obligations. That includes using reputable fire engineers and seeking peer reviews of all fire risk assessments undertaken on our buildings. We're also making some progress with recoveries from the supply chain, where we have a robust case to pursue them for substandard workmanship or design.

So looking at our building safety provisions, we currently have GBP 886 million on the balance sheet relating to fire and external wall system issues. During the year, we brought the Redrow provision of GBP 184 million onto our balance sheet. And as we announced in July, within the Barratt legacy portfolio, we've provided GBP 109 million across 3 areas.

Firstly, GBP 76 million in relation to developments in our Southern region, which related to a specific build typology we don't think is repeated anywhere else in the group. We've also seen GBP 17 million of incremental costs at an existing remediation project in London. But other than that, the underlying position was relatively stable with a net GBP 16 million movement of costs, which was offset elsewhere in the income statement by supply chain recovery.

Moving on to look at the provision for concrete frame issues. We carry a provision of GBP 187 million at the end of June. During the year, no new buildings came into scope in the Barratt portfolio. As we updated in July, we identified concrete frame issues similar to those identified on legacy Barratt development at up to 4 Redrow developments. And we booked GBP 105 million to the opening balance sheet provision for these issues. But based on the reviews we've carried out today, we don't expect any further buildings to come into scope for these frame related issues going forward.

So on to the balance sheet, and here's our usual balance sheet breakouts. And in the appendices, we've included a slide which reflects the impact of the consolidation of Redrow at fair value and also the movements from underlying trading. So 2 points to highlight here. First of all, the ongoing organic investment in land. And as well as bringing Redrow's land into the balance sheet, we invested an incremental GBP 181 million across FY '25.

The significant increase in land creditors saw an additional GBP 167 million added over and above Redrow's consolidation. So land creditors remained below the target range of 20% to 25%, but moved up to 15.9% this year, and we're looking to ensure that we add land on deferred terms to take us into that 20% to 25% range.

Part exchange has increased by GBP 39 million, which is a reflection of its importance of a selling tool in a tough market, but more than 2/3 of the 549 homes in our portfolio had already been sold by the 29th of June. And as you know, we keep tight control of part exchange stock.

So here's the cash flow bridge for Barratt Redrow from reported operating profit on the left to the net cash outflow on the right and really just a couple of things to point out from this slide. Firstly, a step-up in tax payments was the prime driver of the GBP 101 million outflow in interest and tax. And as I've already noted, building safety spend totaled GBP 101 million.

Our operating cash inflow was GBP 50 million, and we brought Redrow's cash onto the balance sheet and also made some further investment into additional timber frame facilities at our Oregon factory in Scotland. With dividends paid and the share buyback of GBP 50 million, the net cash outflow for the year was GBP 96 million.

So just to update on capital allocation and just reiterating our unchanged capital allocation priorities here. Clearly, our enhanced scale and balance sheet strength with net cash of GBP 772 million and committed lending facilities of GBP 700 million put us in a very strong financial position looking forward.

We're focused on investing in our business to drive our future growth. David detailed our sales outlook profile, and we're focused on delivering land to accelerate development using our 3 brands. We remain committed to innovation and development and we'll continue to invest in opportunities like the timber frame facilities and also our sustainability initiatives.

And finally, we have a clear approach on shareholder returns, including our ordinary dividend at 2x cover and the ongoing share buyback program of at least GBP 100 million per annum.

So turning now to guidance. Most of these points have been covered, but just to highlight, we expect our adjusted administrative costs to be around GBP 400 million. This reflects the additional period of Redrow's overhead base, which will impact FY '26, underlying cost inflation and the benefit of incremental synergies of approximately GBP 30 million. We're anticipating total synergies of GBP 45 million with the balance of GBP 15 million crystalized in cost of sales.

A finance charge of approximately GBP 50 million, which is dominated by noncash charges in relation to land creditors and legacy property provisions as well as modest cash interest income on a reducing cash balance. In relation to land, we expect to operate at broadly replacement levels and spend between GBP 800 million and GBP 900 million on land and land creditors in FY '26.

On building safety spend, we estimate spend will be around GBP 250 million for FY '26. And within this, I'm assuming that around half of our building safety fund costs will be paid during the year, so that's around GBP 70 million.

Looking at net cash at the end of June 2026, we expect to be between GBP 400 million and GBP 500 million. So finally, to summarize, we believe we've delivered a solid financial performance in FY '25 in what was a tough market. Adjusted profit before tax was delivered slightly ahead of expectations for the year. And notwithstanding the tough market backdrop, our balance sheet remains strong. We've delivered cost synergies ahead of schedule whilst also making good progress on revenue synergies and the wider integration program.

Our land bank and strong balance sheet give us a great platform to grow the business. And finally, we've put in place both clear capital allocation plans with an updated dividend policy alongside the annual GBP 100 million buyback program.

And with that, I'll hand back to David.

Thanks very much, Mike. And now just turning to look at the market. So I think whilst I've covered earlier that the current market clearly has its challenges, I think we need to bear in mind that the fundamentals of our industry remain very strong. Housing is clearly a top priority for government and the demand for homeownership remains steadfast. When consumer confidence returns, the policy environment becomes clearer and the planning reforms kick in, we can expect to see a strong uptick in planning approvals, outlet growth and opportunities to increase sales and volumes through our 3 leading brands.

We remain confident that Barratt Redrow is best placed to navigate the market at all points of the cycle. Fundamental to Barratt Redrow are our 3 high-quality differentiated brands, and we have the skills and experience to deploy them effectively. These brands allow us to operate in a variety of locations and local markets with the optimal divisional infrastructure to match. Our customer focus is clearly demonstrated and recognized by our numerous third-party credentials.

We have demonstrated that we are a reliable partner, allowing us to be flexible and innovative. Our reorganized divisional structure and brand portfolio positions us well for growth over the medium term. And finally, we remain financially strong with a solid balance sheet, a robust net cash position and cost synergies, which will increasingly drive higher profit margins.

So in summary, we remain confident in the medium-term guidance that we gave in February. Outlet growth on which we have good visibility will allow us to reach our outlets goal, which will flow through to 22,000 total home completions. Our progress on cost synergies has enabled us to deliver on profit expectations, and we will continue to benefit the business financially as we move forward.

Savings through synergies as well as greater efficiency of our fixed -- on our fixed cost base will help us to drive our operating margin back to 15%. We will be increasing our use of line creditors, which will aid our return on capital employed, recovering back to 20%. Also helping us to improve return on capital employed will be the effect of multi-branding of developments using our 3 high-quality and differentiated brands. And finally, as we've touched on, we remain financially robust and that gives us confidence in our growth aspirations and also providing stable shareholder returns.

Thank you very much. And Mike and I will be happy to take questions, which John is going to host. Thank you.

Thank you, David. We're going to open up for Q&A. [Operator Instructions] We'll start in the front row with Will, if you could, please.

Will Jones at Rothschild & Co Redburn. Try 3, please, if I can. First, just referencing, I think, in the statement, you talked about additional risk given the obvious and understandable around the budget in November. And I think the need for a normal autumn. Could you just expand on what the normal autumn might look like? And perhaps just remind us of the -- roughly the full year sales rate you're assuming?

Second one was actually back to building safety, 2 parts to it. To what extent is there still risk around the building count with respect to inactive buildings maybe coming into scope? And perhaps you can expand on the other side, the recovery process. I think you talked about some steady progress there, but what's the potential for that over time?

And then the last one is maybe just around build cost. I think you've reiterated your guidance for the current year and you've got good visibility, but just wondering what -- how you think things might shape up for the conversations that start to take place at the end of the year, start of calendar of '26 with suppliers, subdued market for you guys? Will it be, I guess, subdued for them in terms of what they end up achieving?

Well, first of all, good morning, Will. Good to see you in the front row. So Mike will pick up in terms of building safety and also on build costs. I mean if I just touch in terms of the budget, I mean, I think really kind of 2 points to make. I mean one is, look, we're pleased with what we've seen through July and August. So that's the first thing. And we've also provided that information in terms of reservations through July and August.

I think it's understandable that we would flag that speculation relating to the budget can affect customer sentiment. And we recognize that, that can be both positive and negative. So what we've got to do is we've just got to concentrate on trading our business, making sure that we're putting attractive offers in front of our customers, and we feel that we're doing that effectively, given the market conditions.

In terms of rates of sale, we would normally see some tick up as we move into the autumn. So we've clearly provided rates of sales through July and August. I think the tick up in the autumn or the tick up in the spring has probably been less substantial than it used to be. Primarily, I think because we've just seen strong trading through, say, January, February or strong trading through July and August, which we haven't necessarily seen previously. And I mean overall time, I think we said earlier in the year that somewhere around about 0.6 is the kind of rate of sale that we're looking at as a group. Mike?

So if I pick up building safety first. So first of all, on the portfolio that's provided, I think we've got increasingly good visibility on costs and progress there. So about 90% of that portfolio has now been through some kind of tender process on costing or we're actually actively remediating it. So I think the visibility we've got on that is really good.

On inactive buildings, I mean they have been through a process, albeit largely desktop in terms of documentation around the status of risk assessments, the build typology, the external wall systems and so on. So there's been an element of process there already. And that's why we don't believe that there's work to do, and they're not in the active bucket.

And then if you look at the flow-through of buildings from that sort of inactive group into the provision over time, actually, it's very, very low in the second half of the year, literally just a couple of buildings that moved across. So I think as we move through time, we are increasingly confident of the position. The problem with it is you can't say that nothing will come out as we get into buildings and time passes. But I think our visibility and confidence is increasing.

On the recovery process, I mean, we're engaged in a number of conversations. Obviously, we can't talk too much about them for commercial reasons, obviously. But I think we are engaged in that process. We recovered GBP 60 million from the supply chain during the year, and we're actively engaged on a program to do that as we go forward.

Moving on to build cost. So I mean, I think we're still comfortable with the 1% to 2% guidance range for the year from everything that we've seen. As we said previously, a little bit more pressure on labor and the subcontractor side than on materials. And I think some of that's now the flow-through of the national insurance increases and the other labor cost increase is coming through. And again, it's the early-stage trades. It's the ground workers and so on that we're seeing a little bit more pressure on.

But we obviously also have the benefit of the cost synergies through our procurement program. And again, we've had really good engagement with the supply chain on that. We're able to get very good forward visibility of the growth of the business, which is helpful. So overall, we're comfortable with 1% to 2% for this year.

Aynsley from room.

Aynsley Lammin from Investec. Just 2 from me, please. One, if you could just provide a bit more color on incentives and pricing and what you're doing going into the autumn selling season in relation to that? And then secondly, just on the planning, obviously slow to come through at the local level. Could you just remind us of the time line of what happens from here when you expect that to actually start to impact positively at a local level when the legislation comes in, et cetera?

Yes. Aynsley, so I mean, first of all, in terms of incentives, I mean, the short answer is no real change in relation to incentives or incentive levels. I think when you look at our incentives, I mean, I won't run through them all, but if I just highlight 2 or 3 of those incentives. So for example, for first-time buyers, we will offer a deposit match. So if the first-time buyer has a 5% deposit, we will effectively match that deposit. It allows the first-time buyer to get on to a 90% loan to value, and that is an attractive proposition.

Secondly, we have, for a period of time, accelerated post COVID, run a key worker discount. So primarily aimed at blue light workers, but a broader range has been brought in of key workers. I don't think analysts are in that range. But we can expand it, and that is a really attractive proposition. So we're typically offering a 5% discount subject to ceiling. So it probably blends at about 3.5%, 4%.

And then the third offer is part exchange. So part exchange is probably our most expensive offer. We don't look to make profit on the part exchange offer, but it is a very attractive offer for consumers. So if you were a second or a third time buyer, then clearly taking all of the pain out of the move process is attractive. And I think we tend to see that when the second hand market, the existing home market is a bit slower than part exchange becomes much more attractive. But we're still seeing overall incentive levels as we've set out sort of 6% plus in terms of overall incentive levels and quite a bit of that is driven by part exchange.

In terms of planning and infrastructure, we've said very consistently that the government coming in, in July '24, have really tried to take a transformational approach to planning. We have to remember that if you go back to March, April '24, we were going backwards very, very rapidly from a planning point of view. And I think the government has set out what I see as being a very bold and ambitious agenda in terms of planning, not just for residential development, but for commercial development, for infrastructure and so on.

Most of that is contained within the planning and infrastructure bill. I think it has taken a bit longer than we would have thought back in July, August '24. And our understanding of the time lines presently is it's going through the review within the House of Lords. And we'd expect that perhaps November, December, it will come into legislation. And then all local authorities will need to comply with the requirements of the planning and infrastructure bill. So we should start to see that taking effect during 2026.

Chris?

Chris Millington, Deutsche. First one, I just wanted just to kind of gauge your steel behind the outlet opening profile. Obviously, we had a delay last time. They're still obviously subject to third parties kind of moving in line just how front or back-end loaded in those periods, do those outlets come through. So that's just the first one.

Second one is looking more at the longer-term shape of the balance sheet. There's obviously quite a lot of demands on cash over the next few years. Where would you start getting uncomfortable with regard to adjusted leverage? It does look like the net cash balance is probably going to be eliminated in the next couple of years?

And the next -- the last one, I thought a really helpful slide on the land bank margin really good to help us build it up. Perhaps you can give us some sort of guide as to the evolution of that maybe something like when do the sub-15% gross margin categories get eliminated or something to that effect?

Thanks very much, Chris. If I pick up on outlets and then Mike will pick up in terms of the sort of shape of the balance sheet and cash and land bank margin. So think in terms of outlook, so we recognize that we had a revision of guidance for outlets for FY '26, which we updated the market with that in July. I mean I think our confidence regarding outlet delivery is twofold. One, we're putting it up on a slide, we've broken it down in detail, and I'm presenting the slide. So I think that demonstrates a strong level of confidence. We wouldn't normally give that level of detail.

I think the second point I would say is that this is unusual. I mean I've been here 16 years, and I think at any point over the last 16 years, if we had put up an outlet profile, we would have had much less with detailed consent or much less with planning submitted. And that's just a byproduct of 2 things.

One is that since we've gone back into the land market post 2022, we have acquired sites that can be single, dual or triple branded. So that gives us good outlet delivery. And secondly, through the combination with Redrow, we've identified that 45 sites can be delivered. And obviously, we see that there are more than 45 potential. So we take a reasonably conservative view and say we can deliver 45. And that's also entirely in our control, and Redrow are already on those sites or Barratt are already on those sites, and we're effectively either doing a plot substitutional or we're doing a replan.

So yes, we have a high level of confidence regarding delivery. As I touched on a moment ago, I think everyone in the industry is very positive about the government's approach in relation to planning. I mean why would you not be? But I think it has been more protracted than anyone would have expected because we're now 14 months later, and we still don't have the legislation. So -- but we are where we are. The legislation will come, and it should be effective from the beginning of '26.

If I just pick up on the balance sheet first. So I guess the first point to make is we're starting from a really strong place. GBP 770 million of cash at the end of last year. We flagged in February that there would be a couple of years of investment in web and infrastructure to get the new outlets open and get us up to the 500 outlet target in a few years' time. So we do expect to be in that phase. We expect to use that net cash over the next couple of years, but then we start to generate cash at the end of the plan as those outlooks come into production and we sort of stabilize outlet numbers.

I think when you step back from it, the shape of the balance sheet over the last 3 or 4 years has probably been the outlier in a sense with the level of net cash that we've been holding. If you look over a longer period of time, we'd normally have targeted very small level of net cash at year-end. And that's probably where we'll end up getting back to trust. But I think we're starting from a very strong place. We've got good line of sight to those investments and work in progress and infrastructure to get the new outlooks open. And we've said many times that the strength of the balance sheet is a real priority for us and the board as we go forward.

On the land bank margin, I mean it's difficult to predict exactly when those sites will roll off, but average site length is sort of 3.5 years. So you think over the next 2 or 3 years, you'll see those lower site margins roll off. We've given the medium-term target of getting to the hurdle rate of gross margin of 23 and then 24 when the procurement synergies have kicked in. So you'd expect to see that evolution continue over the next few years, 90 basis points up in the year this year with the land we've added. We're carrying on adding land hurdle rates that will blend up over time. So again, it will take a few years to get there, but we're confident that that's directional travel.

Great. Ami?

Ami Galla from Citi. A couple of questions for me. One was on the gross margin in the land bank. Can I clarify, is the synergies on top of that, the procurement synergies associated with the gross margin, will that be on top of that? Or is that included in the land bank gross margin that we see?

The second question was really on the WIP investments linked to outlets. You've talked about this previously, but can you remind us how should we think about that investment profile over the medium term?

And the last one was on the ASP in the land bank. That's also marginally higher, and I presume that's mix as well. Can you give us some color as to how is that -- how is the shape of that mix adjustment over the next 3 years?

Sounds like 3 for me. So gross margin in the land bank does include procurement synergies. So that's fairly straightforward. On work in progress, so I think we're guiding this year that we'll have GBP 200 to GBP 250 million of incremental with investment as we go through this year. And again, that's investing in outlet openings that we'll see coming through both at the end of this year and into FY '27.

And then we're not guiding for '27, but we've been at that level of GBP 200 million to GBP 250 million for the last couple of years. And on ASPs in the land bank, it is largely reflective of mix. And clearly, in the land bank now we're reporting Redrow as well, which operates at a slightly higher ASP than Barratt and David Wilson did previously. We're not seeing any particular sales price inflation at the moment. Our sort of like-for-like measure is broadly flat on selling prices. So the increase in ASPs that you're seeing is coming through the mix of sites rather than inflation.

Clyde?

Clyde Lewis at Peel Hunt. 3, if I may as well. Firstly, on the desire to grow the deferred terms around the land buying, how easy do you think that's going to be? And do you think that's going to limit your choice in any way in terms of what you can buy?

Second was around the sort of bulk sales mix in terms of the volume guidance this year, what sort of contribution are you expecting to see from bulk sales?

And the third one probably was going back to your comment, David, about being up at the company with 16 years, pretty much in every one of those years, you will have seen some sort of demand incentive from the government, whether it's stamp-duty holidays or specific first-time buyer help. Do you think this government actually understands that it's probably going to need some of that to try and get the overall housing market back to where it wants to be, despite all the extra money they put into the affordable housing sector?

Yes. Okay, Clyde. Thank you. I think if I just pick up on the deferred terms and Mike will pick up in terms of multi-unit bulk sales, and then we'll just talk -- I'll about the demand side. So I think on deferred terms, I mean -- I think it obviously depends on the position of the land owner, but I would say as a generalization, we are buying sites that are larger than average and the ability to secure deferred terms is greater.

So I don't see anything that will change that because we see that when we're bidding maybe on a site that might be 150 to 200 plots, there can be a huge amount of interest in those sites, whereas if we're looking at sites that are maybe 750 plots and above, there's just a limited number of buyers, probably ourselves, Vistry, maybe a couple of the other majors might be in that market. And so I think there is an ability to structure deals, which is -- it's got to work for both sides, but securing deferred terms for us has always been important, and we're just going to place a little bit more emphasis on it going forward. So that's the kind of deferred terms.

I think on the demand side, and you've seen everything unfold in terms of the way that the markets evolve. So all the 16 years I've been here apart from the last 2 years, there has been a government-backed program in the market. So since 2009 without interruption. The programs have changed in their nature. And as you know, in the early days, the house builders either participated by providing 50% of the shared equity loan or the house builders paid to access the scheme.

And with Help to Buy, the house builders were not asked to pay to access the scheme. And we've said Barratt Redrow, and I know many other house builders said that we would happily pay to access the scheme. We see that when you look at affordability in areas such as London or London in the Southeast, affordability for first-time buyers is at record levels of challenge. We've not seen the kind of metrics on affordability previously.

And therefore, you can see that particularly in London, as you know, London for us is a relatively small part, 5% to 7% of our completions in London. But the reality is that affordability challenges in London are acute. And you can see that coming through in terms of the numbers. So our message to government has been the house builders are happy to contribute towards a scheme. It should be targeted at first-time buyers and there should be a particular focus on areas of acute affordability.

And then just on multiunit sales and so on. I think on the affordable side, we are seeing slightly more appetite from the registered providers to do additionality. Again, that was probably backed off a little bit over the last 12 or 18 months, and we're seeing good levels of grant funding come through into some of those deals that we're doing. So I think they'll definitely be a feature for us this year.

And then on PRS, as you know, we sort of focused on 2 or 3 key relationships on PRS, the most significant of which is Lloyds Living. And we've talked about the framework we've got in place with them, want to do about 1,000 units a year over time. And in general, as we grow the business to 22,000 homes per year, we think PRS will be about 2,000 of that 22,000.

So I think for this year, we'd probably expect multiunit sales in PRS to be just over 1,000 units in the completion mix again. But we're seeing -- we're still engaged in good conversations with the PRS providers. I think that there are still deals there, pricing that we're comfortable to do the deal. And it will just be part of our mix going forward, I think.

Charlie?

Charlie Campbell at Stifel. Just a couple of questions, please. Just firstly, on mortgages, some changes in stress tests and loan to income. Just wonder if that's had any impact yet and whether we should expect that to have some impact going forward?

And then secondly, on Section 106 and HAs, affordable housing, has that appetite return back to normal after the hiatus or do we need to wait for things like the prospectus to come out for the affordable homes program?

Charlie, okay. If I pick up both of them. And first of all, I think that everyone is conscious of the fact that there was very substantial tightening of the mortgage lending rules post the financial crisis. And I think we recognize that there is some concerns about a rapid relaxation of those rules. But we would welcome the relaxation that has taken place, and we think that the scope for further relaxation, particularly around multiples of joint income multiples.

So I think it's very difficult to disaggregate that from exactly what is the impact. But clearly, it is a positive impact in terms of allowing more lending to take place in the market. And there has been quite a lot of documentation published around the way in which it improves affordability. So that has to be a positive.

In terms of the Section 106, I mean, look, at a headline level post the announcement by government, I would say, at June '25, we found the closure of Section 106 agreements in aggregate to be much easier than at June '24. I'm not saying it was easy, but it was much easier.

And I think beyond that, it is an assessment on an HA by HA basis. And I think where housing associations have got challenges regarding cladding and cladding remediation, and the government have done something to alleviate that by allowing the housing associations to access the building safety fund. And also where housing associations have got particular challenges around the remediation of existing housing stock, i.e., it needs to be brought up the standard under Awaab's Law. I think the reality is that housing associations have got some cash and funding challenges.

So I think it is the housing association specific. And the industry is very definitely flagging that it is not a resolved issue for government. And there's a consultation in terms of the effectively, the equalization of rentals. But that consultation is not closed. And so the equalization of rentals is another very important thing for the HAs in terms of the financial impact it has on the HAs.

Allison?

Allison from Bank of America. 3 questions from my side. The first one on the ASP for next year, I don't know what's your expectation is overall. Do you think it's going to still be positive, stable? Or you just still a lot of uncertainties there given the budget impact? Number one.

And number two is on the PRS because we also saw the news like the government might impose some landlord tax or the national insurance on the investors. Do you see it's going to be a negative impact for the future investment demand for the PRS?

And thirdly is on this future home standard, which I understand we still haven't got full details yet. And I heard there are some builders saying, if there is a mandatory requirement on the solar panel installation, there could potentially be a negative or the downside risk to the earnings for that particular builder. But I wonder if you heard anything on the regulation and what's the progress for the Barratt portfolio?

Yes. Certainly. Mike, can you take the ASP one? So if I just pick up on PRS initially. I mean I think this just falls into a category of the sort of budget speculation. And clearly, we don't know whether there is any intention to put national insurance on rental income. So we just have to wait and see. I would think that if you're an institutional investor, then you're going to want to look at that fairly carefully, I would assume. But we'll find out in November about directionally where that is going to go.

In terms of the Future Homes standard, so I chair the Future Homes hub. So I'm sort of very close to the Future Homes standard of what's happening with the Future Homes standard. So I think the first thing is that the Future Homes standard has been delayed. It depends on at what point you're measuring, but the Future Homes standard is probably 12 months to 18 months behind when it was originally anticipated to be.

And that is giving all participants in the industry more time to adjust. And when the standard comes into effect, we expect the standard to be published prior to Christmas. There will be a transition plan, and that transition plan will run through certainly '26, '27, '28, but the transition plan will be published.

And then thirdly, there is a subconsultation about the number of -- the amount of solar panels that will be required on properties. And certainly, from the Future Homes point of view, we've just effectively said that there has to be a balance to that. We shouldn't be in a situation that we're mandating very large quantities of solar panels because the standards can be achieved in different ways, not simply through the provision of solar panels. But when the standard is published in December, we will see the outcome from that. But again, I would emphasize it will be over quite a long transition period.

And then on ASP. So on pricing, generally, we said that using our like-for-like measure last year, pricing was up 1.4%. So that's the sort of underlying pricing position. Year-to-date, that's been flat. So clearly, the pricing position has been more challenging in recent months.

And so looking forward into FY '26, we're not expecting any benefit from sales price inflation in the numbers. There will be a small increase in ASPs just coming through the mix effect. We'll be blending in Redrow. And that will be slightly offset by a higher proportion of affordable housing in the year, but I'd expect it to be very slightly ahead year-on-year. I don't think there will be significant movements in the ASPs.

Alastair?

Yes. Alastair Stewart from Progressive Equity Research. A bit of a niche series of questions all based in Scotland, no vested interest there, of course. Yes. Just a bit of color on Scotland. First of all, you did a couple of deals with Springfield. Any further organic opportunities north of the Borden? Also, the Scottish government seemed to have changed tack quite a lot on -- especially build to rent, but just generally seem to be a bit more pragmatic, let's say. Any color on that? I suppose it's a question for you, David.

Yes. I feel well qualified to answer. Yes. Look, we have a big business in Scotland. So we're based in Glasgow, Edinburgh and Aberdeen. And we've had a big business in Scotland over a long period of time. I think that the Springfield deal that you touched on is reflecting two things. One is we have a very positive view of the market in Scotland. It is a market that operates under different regulations and different policy from England. So for example, Scotland never had a government support program, not in the same way.

And policies in Scotland have probably been a little more slanted towards affordable housing generally. But we see it as being a positive environment. And therefore, we acquired the sites from Springfield, and they've obviously gone through a restructure of their activities to be more focused in terms of the north of Scotland. So we're positive about that opportunity.

Again, I would say that the rent controls in Scotland adversely impacted the buy-to-rent market. And the institutional investor, I think, was less enthusiastic. But that position seems to be altering and therefore, we should see the opportunity for more private rental, particularly for Edinburgh. I think Edinburgh is a very, very strong market or a very strong potential in terms of private rental. And then the other area, which Mike, maybe just touch on, is just on building safety because, again, I think that -- do you want to just touch on building safety?

Yes. I mean, I guess, it's been an open conversation for a while in terms of where the standard for remediation would end up compared to the standard in England and Wales. I think that has moved during -- this year has moved towards the England and Wales position, which clearly for us is positive because that's the basis that we've approached building safety in Scotland, but still not concluded, but I think closer to conclusion and in a more positive sort of state.

Marcus?

Marcus Cole from UBS. Just one question on timber frame. Obviously, you all went up to the factory earlier this year. I'm just thinking about how that's progressing. Any learnings you have there? And how do you think about more about vertical integration on the back of those learnings?

Yes, we're very positive about timber frame. I mean, if you -- just to go back to Scotland very briefly, when I came into the business, we were almost entirely brick and block in Scotland. And we're now almost entirely timber frame. So 95% plus in terms of what we're doing in Scotland is timber frame. It would only really be on higher apartments where we would move away from that.

So I think that the use of timber frame is going to become more and more prevalent in England. And you can see that through the majors that most people have either got agreed sourcing arrangements or they have their own factories. I mean -- and that's the reality. It's very much the direction of travel. So we are very positive about it.

The factory -- the new factory in Derby is progressing well and we see volumes rising. Ultimately, we see capacity between the 2 factories up to 9,000 frames. But I think the opportunity goes beyond that in terms of being able to do more and more within the factories.

So having closed panels, being able to put services into the panels, whether it's windows, doors, plumbing, et cetera. There's a lot of stuff that can be done within the factory. So we see that -- what we have in Scotland and what we have in Derby is very much a platform for us to grow from over the next few years.

In terms of vertical integration, I mean, I would say our starting position is that we would prefer not to vertically integrate. You'll find that many of the products that we buy we are a relatively small part of the manufacturers business. And what we don't really want to be doing is running a business where because of the economics of the business, we're having to provide a lot of product to other companies. We want to be able to like with timber frame, bring something into our portfolio where it can provide exclusively to Barratt Redrow. And therefore, when you look at the sort of volumes that are involved in certain production areas, that just wouldn't be possible. You wouldn't be able to run the sort of economies on our volumes alone.

So I think we're very, very selective about what we would vertically integrate on, but where we see an opportunity like our acquisition of Oregon or for example, we run our own in-house wardrobe factory, then we're certainly happy to further integrate those types of businesses.

Any more questions? Hope we exhausted everyone. Thank you, everyone. One more? Yes, of course. Chris?

Sorry, Chris Millington, Deutsche. It's just about what your thinking is about the proportion of affordable going forward. Do you think it can keep pace with the private growth within the business on volumes? Or is there an assumption that will lag slightly because of the funding issues we've seen historically?

I think if you look at a policy level, then I think you would expect the proportion of affordable to increase slightly going forward on the basis that for greenfield sites under the planning and infrastructure build, there will be a higher assumption in terms of affordable for example. So I think you would say that the general trend would be an upward trend on affordable.

I think the funding question is we've touched on that, that's a kind of separate question. And the funding challenge is real. I mean the government obviously announced a huge funding program over a 10-year period, but short term, the funding challenge is real.

And I think the final point, and we -- this has been well documented in London is that 35% or 40% or 50% of nothing isn't benefiting anyone. And I think we've consistently seen this over 20 or 30 years is that as there is an attempt to take more value from the land, the landowners have an opportunity to say, actually, we won't participate or sites get bogged down in viability arguments. And that clearly is what's playing out in London presently.

Great. Thank you, everyone, for coming along. If there are any follow-up questions, don't hesitate to get in touch with myself. But thank you, and we'll close proceedings.

Thank you.

Thanks very much. Thanks, everyone.