Persimmon Stock

Right. Good morning, everybody. It's 9:00, so I'll make a start. Thank you for joining us today. Thank you for joining Andrew and I've also got Liam here. As you know, Liam has taken over from Ian along with Chris. Unfortunately, Chris is on holiday. Well, fortunately, Chris is on the holiday for Chris. So he's a happy boy, but you can catch up with Liam and the rest of us later.

So I'm pleased to be presenting a strong first half performance. These results again confirm that Persimmon is delivering growth today while building a larger, stronger and higher return business for the future. We've increased volumes, grown market share and strengthened our operational platform. And we've done that whilst also continuing to invest in land, outlets and capabilities that will support long-term value creation. Although the market remains challenging, we're responding from a position of strength, including with our typical self-help, and we remain confident in our medium-term ambitions.

So let me start with the strategic context and highlights from the first half before handing over to Andrew. You've seen this slide before. Our strategy remains consistent, and it's clearly delivering. At its core, this is about building a business -- a differentiated business that can grow sustainably through the cycle. We have a high-quality land bank and a growing outlet platform, giving us the visibility and the ability to increase volumes over time. We have 3 strong and growing brands, each serving distinct customer segments and giving us more routes to more markets. And we made significant progress on build quality and customer service, strengthening our reputation and supporting sales.

We continue to invest in innovation and our vertical integration that improves efficiency, resilience and cost control. Importantly, we're doing all of this with a strong balance sheet. That allows us to invest where and when returns are attractive while continuing to support sustainable shareholder returns. These strategic priorities are increasingly powerful in combination. They're driving performance today and they position us well for further growth. Indeed, they're designed to produce a 20% operating margin and ROCE in the medium term and underpin our focus on progressively improving returns over time.

Now I'll turn to our first half performance, which has been strong in what has been a challenging market. The first half has shown clear operational progress. Our underlying PBT was up 3% to GBP 170 million, reflecting a margin impact from housing association mix, build cost inflation and an interest charge from our investment in growth. Average outlets in the period were 273, up from 272 last year, and I'll say more on this later.

Net private weekly sales were 205, up 7%, with the net private sales rate, including bulk improving to 0.75. I'm really pleased that growth in outlets and sales rate have driven completions to 5,189, up 13%. As we say more about later, an increase in first-time buyers demonstrates the strength of our affordability. Importantly, we've maintained our 5-star status for 5 years. We secured detailed planning permission on over 6,100 plots, 118% of completions, which further strengthens our outlet pipeline.

The Persimmon land bank remains a key asset. We have nearly 81,000 owned and controlled plots. In addition, our strategic land bank stands at around 82,000 plots. Our forward order book is GBP 1.9 billion with our private forward order book up 5%. I think that taken together, this is a very strong relative performance in the period.

I'll now hand over to Andrew to take you through the numbers in detail and which are delivering growth.

Thank you, Dean. Good morning, everyone. So my key message for the first half year is simple. We've delivered volume-led profit growth in a challenging market while maintaining balance sheet discipline and making appropriate investments to support future returns. We've delivered strong growth in both volumes and operating profit, building on the period-on-period growth we've delivered since the beginning of 2024.

New home completions are up 13% and up 22% over the last 3 years. Housing revenue is up to nearly GBP 1.5 billion and gross profit is up to GBP 267 million. Gross margin was lower at 18%, and that reflects the product mix, including a higher proportion of affordable homes, some higher incentives and cost pressures. And I expect continued margin pressure in the second half year and 2027, but the medium-term opportunities remain clear.

Underlying operating profit increased 10% to GBP 189 million, driven by higher volumes and overhead discipline with operating margin at 12.8%. Underlying PBT is up 3%. And as we flagged in March, this includes increased interest costs because of lower cash balances and higher land creditors. And underlying EPS has increased 3% to 38p. Overall, this growth is driven by our strategy. Higher volumes, cost disciplines are supporting profit growth despite increased build costs and mix effects. Return on capital has also increased, up 10% to 11.3% with net assets per share up 3%.

So I'll now explain the sales mix and the pricing that sit behind this performance. Really pleasingly, all 3 of our brands grew in the first half year. And this reflects a strong sales rate and an increased average number of outlets. Our total sales per week, including bulk, increased to 205. Of the new homes delivered, 4,261 were private, about 7% higher than last year. The split between Persimmon and Charles Church is shown on the slide, and there was particularly strong growth in Charles Church.

Private completions included 548 bulk sales. That's fewer than in the first half of last year. We said previously that reservations in the build-to-rent market slowed in Q4 last year, and you can see the effect of that flowing through into first half year completions. But today, the build-to-rent market is open. We remain very engaged with it, and I expect home completions to increase in H2, assuming that, that market remains stable.

36% of private sales were to first-time buyers, and that actually becomes 41% of open market private sales. This is a really important market for us. Our homes are well positioned for first-time buyers because they are designed to be affordable. And I think it's particularly interesting, our sales to first-time buyers have grown 14% compared to H1 2025 at a time that Connell's research suggests the overall first-time buyer market has only grown by 1%.

Finally, partnerships output to registered providers grew very strongly by 50% to 928 units, and that is 18% of total completions, and that's within the typical range. It was a bit lower in the first half last year. So as I said at the start, all 3 brands grew their volume in the first half and the fact that the brands are all at affordable prices is a strength in the current market. The blended ASP on completions in the period was up 1% and private ASP increased 3%. Pricing has been robust, particularly in the North of England and in Scotland, and we've increased average prices in both Persimmon and Charles Church.

Our brands are deliberately focused at the value end of their respective markets with our Consumer Homes average selling price still well below the new build national average and over half of completions below GBP 300,000. Incentives on completions are around the 5% mark, similar to the second half of last year and a bit higher than the 4.5% we had in H1 2025.

So let me show you now how our volume increase has driven up operating profit. You'll be aware that in the current market, margins have been coming under pressure across the industry, and we flagged this in March. Our strategy has driven volume growth and has increased operating profit. On a margin basis, the reduction from 13.1% to 12.8% includes the effect of more HA units in the mix, which diluted margin by about 40 bps. Beyond that, the benefits of volume leverage have helped offset cost pressures and increased incentives.

Net operating expenses improved by GBP 12.5 million, and that includes lower admin costs despite the increased volume and some additional land sale profits. So our volume growth, tight overhead control has helped to mitigate the impact of cost increases in the period and has enabled us to report an increase in operating profit. And this also provides confidence for the future that we can deliver our medium-term margin and return ambitions. And we'll do this by continuing to drive volume leverage while progressing our other operational priorities, trading out of older, lower-margin sites, acquiring quality land to improve gross margin, improving the mix of delivery across our brands and strengthening vertical integration.

As well as volume, another key driver of growth is our balance sheet. Our balance sheet continues to provide a strong platform to invest in growth. As we announced in March, we now have GBP 1 billion of committed bank facilities, very important in providing both resilience and growth opportunities. We had gearing at the end of June due to the payment of land creditors and investment in WIP for delivery in H2.

Adjusted gearing, including land creditors, is 18%, and that's in the range that we indicated earlier in the year. We held GBP 168 million of PX stock at the end of June. That is lower than at the start of the year and almost exactly the same as this time last year. Net debt is GBP 165 million, and I expect our year-end net cash to be in line with our previous guidance.

Net assets are up 4% since this time last year and net assets per share of 37p higher than this time last year. And I'm pleased that return on capital is also higher than this time last year. Our net assets are up partly, as I say, because of the repayment of our land creditors. So I'll now cover our investment in land in a bit more detail.

There's 2 key points. Firstly, our strong balance sheet and our clear strategy is allowing us to continue to pursue land opportunities in a disciplined way. And secondly, our land bank will provide the opportunity for us to continue to grow outlets and grow the business. In the period, the owned and controlled land bank reduced by 4,000 units with fewer new sites acquired in Q2. But taken together with the increased plots in the strategic land bank, we've gone forward in the period overall.

Land cost to anticipated revenue stayed similar to last year. The embedded site margin is slightly down due to the increased build costs that we're factoring in. But as Dean will come on to, we are working hard to mitigate this. We're on site at most of the schemes in the lower-margin categories and over 60% of our sites are above the 27% embedded margin, which is why our margin will begin to recover as we trade through the older lower-margin sites.

I'll now cover our progress on building remediation. This work is important, and we're continuing to make progress. At 30th of June, we were on site or completed 79% of known developments. We've assessed all our known developments and 95% of these are now tendered. We continue to make progress. We've completed about GBP 24 million worth of work in the period, bringing total work to date to over GBP 200 million. We'll spend as close to GBP 100 million as we can this year, and we're continuing to actively pursue recoveries from the supply chain.

Our closing provision is GBP 206 million, and that's GBP 20 million lower than at the start of the year. But this remains complex works. And as I've always said, there remains cost risk on all of these sites until they are completed. But as this work concludes, we'll generate more free cash for the business and capital allocations for the group, and you can see that on our cash flow bridge.

Net debt at 30th of June was GBP 165 million. We're continuing to invest where we see attractive returns while maintaining a strong balance sheet and significant liquidity. The movement in cash since December reflects disciplined investment to support growth in 2026 and in 2027, including investment in WIP for H2 delivery. Land creditors have reduced GBP 132 million, that reflects the deferred payment terms that we entered into over the last year or so. And interest costs have increased, as I've already referred to.

And to the right-hand side is our capital allocation choice, and we spent GBP 24 million on building remediation, as I've just said. And in H1, our new land commitment was actually lower than our land utilization, partly reflecting that extra discipline in the second quarter. I expect us to continue to invest in new land through the second half year, and I expect year-end cash to be in line with previous guidance.

Our capital allocation policy is designed to create shareholder value. We generate returns greater than our cost of capital, and we are typically trading at a premium to or around net asset value. This creates an opportunity to drive value by investing for growth. The structure of our capital allocation policy is largely unchanged. Firstly, we're maintaining a strong balance sheet while prioritizing dealing with building safety remediation.

Secondly, we're investing in the business to deliver our growth objectives, and we assume disciplined replenishment of land with additional land investment where market conditions support it. Thirdly, we're paying a sustainable dividend, well covered by profits. Today, we've declared an interim dividend of 20p, and we set our annual capital returns at a minimum of 60p, which is currently all paid as dividends.

And fourthly, we think that in the medium term, as growth is delivered and remediation spend reduces, we will generate excess cash, and we retain the flexibility to deploy this excess cash depending on market conditions at the time by investing into more growth where returns are attractive or into additional shareholder returns or a combination of both. And those additional shareholder returns might be a share buyback rather than as dividend.

We've delivered a strong first half performance in challenging market conditions with volume growth, profit growth and disciplined investment. Assuming that conditions remain stable, our full year guidance is similar to what we have said previously. We now expect to deliver growth in the full year to around 12,500 units. That's the top end of our previous guidance. Inflation, of course, remains embedded in build costs on older sites. And because average sites last 4 or 5 years, this will continue to influence margins until those sites unwind from the portfolio. And that cost pressure is now also affected by the Middle East conflict. And as Dean will come to, we are taking action to mitigate that impact.

Assuming that we achieve our volume guidance, I expect underlying profit before tax to be in line with current expectations. And I'm reiterating our previous guidance on net cash, which means that adjusted gearing at year-end could still be around 20%. The rest of the guidance on the slide is similar to what we gave in March.

So to summarize, Persimmon is growing volumes and profits. We're mitigating near-term margin headwinds. We're maintaining balance sheet discipline, and we are investing in land that supports medium-term returns.

Thank you. I'll hand back to Dean.

Thank you, Andrew. The financial performance Andrew has taken you through reinforces the core investment message. Growth is being delivered now and the drivers of future value creation are becoming increasingly visible.

This slide brings our story together, and it will show why we're confident in the medium-term growth opportunity for Persimmon. As you can see, our strategy is delivering growth with completions up 13% in the first half. Having significantly invested in our strategy over recent years, our focus is increasingly on converting those investments into improved returns.

Our land and planning pipeline gives us visibility of outlet growth and margin improvement. Our 3 brands are giving us more routes to market and better use of land, thereby improving returns. Our quality and customer service improvements support sustainable sales momentum. And our vertical integration and innovation continues to give us a structural advantage on efficiency and cost control, again, underpinning margins. Plus a carefully managed balance sheet enables this disciplined investment whilst also supporting returns to shareholders.

Taken together, these 5 value drivers support our confidence in Persimmon's ability to grow volumes and improve both margins and returns. Our land investment and planning performance are clear examples of this platform delivering, so I'll turn to them now. Inevitably, market conditions have affected industry-wide land investment in the period, but we've pursued attractive opportunities by focusing on value, cost discipline and improved payment terms.

The strength of our land position remains the most important driver of future growth. We continue to replenish and improve the quality of our pipeline, supporting our visibility of outlet growth and margins and capital returns for years ahead. Our strategy has been working as we've driven growth in both completions and outlets in recent years. When combined with our improving sales rates, this has helped us gain market share.

Our expanding outlet network continues. We're on track to open 100 outlets this year, and we remain on course to achieve our short-term target of at least 300 outlets. Our planning performance continues to support this growth and improved outlet visibility. In the period, we secured detailed planning on 6,123 plots, 118% of completions, which is 21% more than last year. As the graph shows, detailed planning permissions have consistently outpaced completions over the last 3 years.

Our strategic land bank remains a crucial asset because it provides optionality, supports future outlet growth and typically delivers higher margins. So I'm really pleased that we've added around 6,000 potential plots in the period right across the country. We've also strengthened our capabilities, including through the acquisition of the promoter Endurance Estates in June. Focused in the East of England, this complements our previous Lone Star acquisition. Including these 2 promoters, our strategic land bank has around 93,000 plots.

I'll now turn to our 3 brand strategy, which is an increasingly important driver of growth and resilience. I want to show how our 3 brand strategy strengthens returns by giving us broader market reach, better use of land and more resilience through the cycle. Each brand has a clear market position. Persimmon remains our core growth engine, efficient to build and affordable to own. Charles Church gives us a premium proposition, supporting margin expansion. And Westbury adds a capital-efficient route to driving volume and returns growth. These complementary market positions are translating into market share gains with completions growing across all 3 brands. Persimmon is up 7%, Charles Church up 26% and Westbury up 22% in the period.

The key point is that this isn't just about having more brands. It's about using complementary brands to access more routes to market. Charles Church is building momentum through more operating and dual brand sites, whilst Westbury expands our reach into additional RP and BTR partnerships. Collectively, the 3 brands increase land efficiency, broaden customer reach, improve sales resilience and support stronger returns, which is why they're central to our medium-term ambitions for margin increase, ROCE improvement and sustainable value creation.

The same discipline applies to quality and service. As you'll see, sustained standards are essential to customer trust, pricing resilience and the delivery of our growth ambitions. Quality and service are now firmly embedded in the group and have seen sustained improvement. We made a commitment to this, and we've delivered. We maintained our 5-star HBF rating for the fifth year running, and both Persimmon Homes and Charles Church remain rated excellent on Trustpilot at 4.6 stars.

Our construction quality review score has improved further. As the slide shows, our Trustpilot CQR and reported item scores have all improved significantly over recent years. The really important point is that we are growing volumes whilst also maintaining high standards. We're investing to embed this further. The Charles Church Way and the Westbury Way have been developed to embed our excellence processes. They're tailored to the specific needs of the relevant segments and build on the clear success of the Persimmon Way.

Sales and customer care training alongside frequent mystery shopping is also driving up standards. Quality and service are central to the customer proposition. And as I've consistently said, they also support efficiency to build right first time every time.

That brings me to build efficiency. Vertical integration remains a key differentiator for Persimmon. As you can see from the chart, it supports our leading build cost efficiency as highlighted in the recent Phoenix analysis. Our deepening vertical integration provides supply and margin resilience, all particularly important in the current market. In the first half, Brickworks delivered 31 million bricks, up 13% on the year. Tileworks delivered 5.6 million tiles. And Space4 delivered a 30% increase in timber frame products with roof trust delivery now commenced.

We are prioritizing AI investment where we -- where it can make the biggest difference to operational efficiency and performance. Early areas of focus are land appraisal, a new CRM system and commercial cost controls. Persimmon has always been an early adopter of innovation, and this is another example of that. Innovation and vertical integration are helping us build faster, improve consistency, reduce cost and strengthen resilience. That combination is central to protecting margins while we grow volumes, and it provides a platform for sustained competitive advantage, as does, I believe, our self-help strategy.

You'll be very familiar with the principal market challenges the industry is facing. I want to take you through how we're managing them proactively, taking very positive actions to protect margins and cash and continue our growth. As ever, our self-help strategy. The first action is on cost inflation. As we've highlighted today, we estimate a cost wind of approximately GBP 40 million to GBP 50 million over the next 18 months, principally from the Middle East conflict, but we're not standing still. We have comprehensive reviews underway across house types, procurement, overheads, value engineering and build programs. And we're leveraging our scale and vertical integration to offset these pressures wherever possible.

We estimate we've already identified savings to mitigate at least half of the impact with further work ongoing. By 2028, we believe we can offset the costs, enhancing Persimmon's relative affordability and cost efficiency. Whilst mortgage affordability remains a challenge for some customers, demand for well-priced, high-quality homes remains resilient.

Our affordable price points, sales and marketing investment, disciplined incentive use and innovative first-time buyer support has helped drive demand. A 14% growth in first-time buyer sales in the period shows the strength of our approach. Our strong land position and nationwide footprint, diversified customer base through our 3 brand strategy and flexible operating model means we're able to respond nimbly to ongoing market constraints.

Our strong forward order book is evidence of that. As is the fact we delivered a 22% increase in completions and a 24% growth in underlying operating profit over the last 3 years. Our strategy is working. Maintaining our momentum in planning and outlet growth expands our nationwide platform. Our sustained planning approval success helps underpin future outlet growth, overcoming planning barriers. We've increased outlets by 6% over the last 2.5 years against an industry-wide decline and whilst we've been increasing completions.

The strength of our land bank, strategic land holdings and planning performance provides us with confidence in the long-term growth trajectory of the business. Building safety remains a priority. As Andrew has shown, we've continued to make good progress with the vast majority of known developments now tendered and a significant proportion either on-site or completed. At the same time, we continue to pursue opportunities to recover costs.

Finally, as we grow, maintaining quality and customer service standards is nonnegotiable. The improvements we've made over recent years are now embedded within the business, and we remain committed to ensuring that growth, efficiency and value creation are delivered without compromising customer experience. Whilst these risks are real and require active management, we're responding to them from a position of strength. We have a strong balance sheet, a high-quality land pipeline, growing outlets, 3 complementary brands and increasingly differentiated operational capabilities.

Whilst external factors may influence the pace of progress from time to time, they do not change our confidence in the strategy or our medium-term ambitions of 20% operating margin and ROCE. Once again, Persimmon is recognizing a problem and proactively addressing it. Our self-help strategy positions us well to both mitigate risk and capture opportunities. And this is reflected in our current trading position.

Our total forward order book is strong at GBP 1.9 billion, up 3% by value. Our private sales rate, including bulk in the last 5 weeks is up 6% to 0.72. Reflecting a slight softening in the market, the private sales rate, excluding bulk over the last 5 weeks is down to 0.59. But we responded to this, both through our recently launched summer marketing campaign and with an uptick in BTR sales. Taken together, this means our private forward order book is up 5% by value to GBP 1.3 billion.

ASP in the private order book is up 3%. The private book is now around 8% sold for the year. And our affordable order book is GBP 600 million, fully secured for the year. This strong position means that assuming no material change in market conditions, we expect to deliver 12,500 homes this year. This is the top end of our previous guidance.

Turning now to the conclusion. Today's results demonstrate that we're delivering growth in a challenging market while continuing to strengthen our differentiated platform, and that's really encouraging. We've improved volumes, grown market share and increased profit whilst continuing to invest in the foundations of future value creation. Assuming no material changes to market conditions, we expect to deliver an underlying profit before tax in line with consensus. We're clear-eyed about the challenges ahead, working through embedded land bank inflation, affordability pressures, industry cost inflation and regulatory demands will continue to require disciplined management. But as I've said, we're responding proactively and from a position of strength.

Our sustained focus on self-help and medium-term strategic drivers of growth is delivery. Replenishing our land pipeline at higher margins, planning momentum, growing outlet base, 3 complementary brands and differentiated vertical integration capabilities provide us with competitive advantages that are difficult to replicate. Our efficiency program, including our review of house types, will help mitigate the current cost pressures as much as possible in the short term while extending our affordability and efficiency advantages in the medium term.

While the pace of progress may vary, our direction of travel is unchanged. We remain focused on disciplined execution, sustainable growth, improving returns and delivering on our medium-term ambition of 20% operating margin and ROCE. Our identifiable and improving operational drivers underpin our confidence, better gross margins, increasing scale and faster asset turns, volume growth and overhead leverage, better sales mix, capital-efficient growth and vertical integration strengthening cost competitiveness.

In short, we're managing today's risks, investing in tomorrow's growth platform and remaining disciplined on returns. That combination underpins our confidence in creating a strong framework for medium-term value creation.

So you'll be pleased to hear that's the end of the formal script. But I thought before I hand over to Q&A, I'll just offer some of my unscripted personal reflections on the results for the half year. So I'm really pleased we've contained 210 bps of hit to gross margin caused by mix, incentives and build cost inflation to less than the impact of the HA mix because of operational leverage.

Our strat land, coupled with our promoters now stands at 93,000 high-quality blocks. We explicitly acknowledge our cost hit from the Middle East in 2027, but we're looking to solve it. Our route to higher margins and returns isn't about improving market assumptions alone. It's a combination of outlet growth, stronger mix, planning conversions, capital efficiency and structural cost advantages, all of which I believe we've delivered on in H1. We cannot control the market, but we can control the quality of the platform we're building, and that gives us confidence in the direction of travel. So I think we're delivering today as a result of the decisions we have taken in recent years. We're about self-help, not help to buy. And I think the strategy is working. Thank you.

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

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

Zaim Beekawa, JPMorgan. I've got 3. The first is just on the build cost inflation expectations. I presume a lot of the price increases that have come through have been in the form of fuel surcharges. So if we are to paint a bit of a more optimistic picture on the conflict and that falls away, what do you think that number falls down to?

Secondly, on AI, I think you mentioned the use cases there. Would you have a number in mind in terms of the financial impact you could see or expect to see? And then thirdly, just on the Charles Church gross margins. I think we can see in Appendix 3, it's come down about 340 bps. Maybe just some explanation as to why that is.

Okay. Thank you. The action we're taking on embedded inflation, I mean, look, there is already a degree of embedded inflation in build stock, right? So that is happening. That is coming through. But as I said in the presentation, we're taking a lot of action to deal with it. If it all goes away, happy days, right? Because we're in the best possible place. I think necessity is the mother of all inventions, and it's caused us to take a really hard look at what we're doing. And there's a lot of work going on, and I'm excited by the opportunity.

My point about it being not -- as it currently stands, we don't know whether it's going to be fully offset in -- with the work we're doing yet in 2027. But the reason why we point to 2028 is because we're working on a new house type range for Persimmon, which is really driving optimal performance. Inevitably, that won't be fully implemented by next year because we've got to work it through the cycle, the planning cycle. But I think there's opportunity there.

So could it be beaten? Yes. You tell me whether the war is over or not. I think there's one man who certainly doesn't know. He's not sat on this side of the Atlantic. But look, we're recognizing it, and we're dealing with it. And I think what it does do because you're right, we are dealing with it like others, I think, as surcharges. We're just getting ahead of it. So if it does -- if and when it does fall away, I think we'll be in an even stronger position. I think that's really important for our brands because it is so much about affordability at our price point.

I don't see that changing anytime soon. So ultimately, in a perverse way, I think I can see Persimmon benefiting from this unforeseen set of consequences this year. So I am quite excited by that. It's too early to call the AI impact yet. What I suppose I really do think -- I mean, there's obviously the back office stuff that finance will be doing, but I think it will improve the quality of our performance, whether that's in production, in land buying, in marketing, there will be efficiencies there. I think we already employ some of those efficiencies, certainly on the marketing side. I can't quantify it yet.

But as I said in my presentation, we do want to be leaders in that area. We do want to be early adopters. On Charles Church mix, I wouldn't read -- it's mixed. I wouldn't read too much into it. And also, it's a game of small numbers, isn't it? So I just wouldn't read too much into it. The point remains it's a better margin than. One at the front here.

Will Jones from Rothschild & Co Redburn. Three, if I can, please. First, just around price. I think you mentioned incentives up 50 bps year-on-year in the first half. Could you help us understand within the plus 3 of the private ASP in the order book, whether there's a net gain for overall pricing within that? And just your thoughts on how you might need to approach pricing -- the thoughts on how you might need to approach pricing into autumn just as you see the market?

The second was just if you could help us understand overheads maybe I think even ex the land sale gains, they look like they were down quite a bit year-on-year in H1. How should we think about the full year? And then you did, I think, reference the potential for overhead savings and yet you're still looking to grow quite strongly. So how we marry that up? And perhaps the last one for '27, you have talked about potential for some margin pressure understandable, but can we still assume your base case would be for volume growth off this higher level you exit '26 with?

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

Volume thoughts for next year.

Next year. Okay. So pricing and incentives. So yes, so look, in 2025, we saw a tick up of incentives. As I said, it was 4.5% in the first half year, and I think we were about 4.8% across the year as a whole. So you can see that ticked up. And then we've seen that 5% come through in the first half. That is all reflected in the order book. So the order book ASPs that you see, that is net of incentives. So you can see the -- that we are seeing good overall robust pricing, I think, across the piece.

But incentives are an important part of the market at the moment. It's a market, as Dean has said a few times, which is governed by affordability. It's a market where we're having to work to drive sales, and we are -- that's part and parcel. But yes, I don't think there's anything particularly unusual, particularly significant in that.

In terms of overheads, you're right. So our admin costs have come down. If you're looking at on the face of the P&L, don't forget the prior year includes the exceptional costs and the CMA settlement. But even if you strip that out, just the underlying overheads have also come down by a couple of million pounds in H1 compared to H1 last year. And we're very focused on keeping that as flat as we can as we go through this -- the full year compared to last year as well.

So I think it comes again back to the strategy of driving volume, but driving that operating leverage is a really important part of what we're trying to do. We haven't given volume guidance yet for 2027. It's a little bit early. We'll see where the -- how the market is and coming out of the summer. I suppose what I would say is though that our strategy is one of driving outlet growth, driving volume growth through the 3 brands, and that is designed to drive the growth and the growth dropping through to profits and to returns. So that is what we're focused on, but we haven't given any explicit guidance yet for '27.

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

Can you repeat that?

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

So look, I mean, what we would say for sure is that what the government has done at national planning level is incredibly helpful. However, the system on the ground is still gummed up for a host of reasons. What I would say is I think that the penny has dropped in government, and that is a good thing. The creation of the accelerator sites now looking at smaller sites is going to help the whole industry. And it's very much focused on the here and now.

I think when the government a few years back, embarked on this, it was very focused on thinking in terms of a 10-year horizon. So they create policy now and we'll be happy that maybe in the next parliament, it would deliver benefits in the next parliament. I don't think they think that now. And as a result of that, the creation of these new task force, these focus groups on accelerator sites, I believe, will begin to build momentum. And it's quite amusing for us to watch, to be honest with you, because with MLC really for the first time themselves having to deal with local planning committees, I think they're finding that a revelation. So we can only gain from that experience. So I think that's a good thing.

As I said in my speech, inevitably, the land market slowed in the first half. We absolutely were focused on getting costs right and where we bought, I believe we have. So that's margin enhancing. So we've been very disciplined. We've negotiated hard. Some we won, some we haven't won yet. So where we said no, we've seen some landowners say, well, goodbye or au revoir. And some have said, goodbye and come back the next day. So let's see. We will continue to engage in the land market. It is quiet, but there's still plenty of interesting opportunities out there. Shall we turn over to this side now?

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

Yes. So on the other income line, yes, that increased GBP 10 million from GBP 6 million to GBP 16 million. I think last full year, it was GBP 21 million, GBP 22 million in total. I'd expect it to be in the GBP 20 million to GBP 30 million for the full year again. So I think we have the opportunity because we've been active in the land market to trade pieces of land where it's the right thing and it's the right deal to do. And we've been doing that, and that's very helpful that we can do that. But ultimately, the numbers are not that significant to the overall result.

In terms of the mitigations, I think it's probably a bit early to tell you exactly where they'll come. I mean, clearly, there's a lot of it, Charlie, will come through gross margin through the cost, whether that's around design, house type specifications and so on. Clearly, we're looking hard, as Dean said, across the whole business. And that's quite right, we should do. So we will see savings and efficiencies, I think, across the piece. But we'll come back with more detail on that later in the year and obviously the full year when we've done that work. But I think for me, the key thing, as Dean said, is it's almost irrespective of what happens to the inflation, these are the right things to do. So either they are helping to protect margin or they help to give us opportunity if cost pressures reduce. So these are good kind of no-regret actions that we'll be looking to take.

Glynis?

Glynis Johnson, Jefferies. 4 quite big picture ones actually probably. Firstly, the new housing type, can you give us any sort of granularity how much more profitable they could be? Or even just color, are they smaller? Are they more designed for what might be come in any future government program? Is it about the pallet of raw materials? What makes them more profitable?

Second of all, you termed your 300 outlook for next year is short term. What's the medium term? Point 3 -- question 3, outgrowing the first-time buyer market, quite a big percentage outperformance. Why? Are you underpricing? Throw that one in just to get you railed up and answering the question. And lastly, your very first slide said pro housing government. Why do you view that to be the case at this point?

I'm not sure I caught all of your first question about house types, but I'm not going to give you much away because it's -- you'll see it when it comes, and I'm certainly not telling the competition. But I do think it will give -- it will reinforce Persimmon's edge, which I guess I think also explains your third question on first-time buyers. I don't think we're underpricing. I think we have got a highly attractive position point in that market.

You can see we're earning increase in ASPs, and we're commanding good margins. So I don't think we are underpricing. I think that it's a highly attractive proposition for a first-time buyer and Persimmon has got that dead right.

In terms of your second point, I'll answer that by saying our target is probably in a couple of years to try and get to 300. That's where we're aiming for. That -- as Andrew said to me the other day, that depends when you measure it because we might hit it one day and the next day we sold out on something else. So the multiple measurement points on outlets will determine all sorts of things. But the trajectory of travel is up, and we'd like to get there within the space of a couple of years. So I think that answers the short-term question.

I do believe -- on the supply side, the government remains committed to its policy. And we do, as I said earlier, see MHCLG continuing to drive the supply side and improving planning. And with Matthew Pennycook now given a seat cabinet, I think that reinforces that point of view. I guess what lies behind your question is what about the demand side? Who knows? We're not, as I said, focused on Help to Buy. We're focused on self-help. Sam Cullen.

Sam Cullen from Peel Hunt. I just got one. You mentioned when you talked about outlets earlier being in a bit of a transition year in terms of the last stages of some of the very early stages of others. Can you give us an idea of what the distribution of that is currently and what kind of good looks like, i.e., what would [ Nevana ] be in terms of where you are in the distribution of your outlets?

Well, I turned 60 a few weeks ago, and I realized I've never hit Nevana. So I guess this is it, isn't it? I don't know what Nevana is. And when we get there, I'll tell you. What I can tell you is we opened 41 outlets so far this year, and we're on track to open at least another 60 in the second half.

And look, with the best one in the world, you try and manage these things, it's market-driven and what sells and what doesn't sell. You might think you know what's going to happen and then we find out you don't. So that inevitably creates peaks and troughs in when outlets open and close. Added to that, planning complexity. It's just the day-to-day grind of what we do. I do think that impacted us in July as we got to the tail end because we sold out faster than we're expecting on some outlets and some outlets were delayed as we're trying to get the 106 agreed or whatever. But I don't think it alters at all our picture of long-term momentum.

Chris Millington at Deutsche. I just wanted to ask you a question about the 20% margin target. Is that purely about land bank evolution? Or does it require volume growth, lower incentives? Do want to go one at a time.

So I mean, look, where are we on that target? Yes, look, you're dead right really implicitly from where we are. It's a big leap from where we are today. I totally recognize that. And indeed, we've been very transparent today about we expect more cost inflation to come through the tail end of this year and into next. But I do think -- I think there's 2 aspects to this. I think the strategy we're delivering is working. It's delivering growth. And I think Persimmon 2,500 is delivering well below its optimum scale.

So I think operational leverage will continue to come through. And then you add to that getting your costs right in buying land, that will help the margin. And then as we grow the business, we drive Charles Church through a high margin. We drive capital returns in Westbury. We drive vertical integration. That will, in my view, we are confident in the long run, that will deliver. Will it deliver tomorrow? Will we get blown, of course, by something else that agent Orange or somebody else does? Yes, probably.

But I think what's really key, and I think you see this in our results because this is the second side of what I was trying to address here, which is I do think that, nevertheless, what we've done, and you see it from our results in the first half, we've got the benefit of 200 bps of overhead leverage coming through. So it's giving us resilience even in a really challenging market. So I think might events delay the end destination, yes, probably will. Will it -- though what we're doing give us an opportunity to outperform the market? Yes, it does. So I think it's right for us to set the strategy and it's right for us to set those targets. And Andrew and I are confident that we will get there.

A quick checking question. The 27% site gross margin, how can we look at that relative to the report? You may have mentioned this before, but can you just bridge that for us?

So we have some of cost of our commercial teams and some of the customer care costs and so on that we sit below the site margin. So you can see as we get towards the 20% target, I'd expect us to be an overhead leverage of over the sort of 4%-ish and the gap from embedded margin to statutory gross margins to be another 4%, something like that. So that embedded gross margin, as I said in the presentation, has come off a little bit because we factored in the additional build costs.

And then, of course, actually what we're now looking to do is to find ways to mitigate those and drive those through. And of course, importantly as well, it's also dragged by some of the sites that have been in there since pre-2024. So sites that were hit by the inflation in '22 and '23, which again, we're trading our way through.

Sorry, the last one. It's about -- you mentioned about pricing differentials in the North versus the South. Are you seeing a big difference in the sales rate as well? Or does the affordable product keep that a little bit more consistent?

It's selling slightly faster up North, clearly. But also, there is an affordability element of that for sure. But I think there's also a capital allocation decision that we've made internally. I mean Persimmon has always been slightly biased in the North, but investment in recent years has driven us to do even more of that. So I think that has also impacted and is impacting our performance.

Peter Ajose-Adeogun, Morgan Stanley. Two questions for me. First one is just around 2026 volumes. So with 80% of completions now secured, and I think you said all of them HA, do you see at all any execution risk for 2026 in H2 just around a build mortgage availability cancellations or I'm quite confident on that?

And then second, just on -- you mentioned on capital returns, you said surplus cash could potentially be deployed maybe via buybacks. What balance sheet or cash conversion threshold would make buybacks more likely?

Yes, I'll pick those up. So look, on the 2026 volume, we're confident in the 12.5%. That's why we've given that guidance on that improved guidance today. I mean, of course, there is always execution risk until you finished. So whether that's if the market changed or if there's always execution risk on finalizing build. So of course, there is work to be done, but we are confident in that number. And you can see both, as you just called out, from that sales perspective, we are well covered on the private side, fully covered on the HA side.

Our build is ahead of -- we're about -- we're ahead of last year's delivery build at this stage of last year. So we're in a good place. We're driving it hard, but I'm afraid there's always some execution risk until you get to the end of the year. Of course, there is. But we're confident in that number, Peter, which is why we've given it.

In terms of capital returns, so what I've tried to do, as I said, is to articulate that we keep that flexibility in looking at the market at the time in terms of where we are. So even obviously, today, we're trading above net assets, not by much on the first to admit, but we need to look at it in the context of the share register in the context of where we are in terms of share price and returns and see what is best value. So we will look at that as we go forward. What I wanted to do is to be very clear that we are flexible in the way that we will look at that as we go forward.

Adrian Kearsey, Panmure Liberum. Just one question for me. On Slide 9 on the bottom right side, you show the embedded margin across the owned sites, putting them into the 4 different buckets. How quickly do you think you'll work through the majority of the lower margin buckets?

Well, some of the sites in the lower margin are large sites and they will take time. So I mean, I think our average site size, Adrian, is around 170 to 180 units. It's been steady on that for a while. But of course, within that, there is a tail of quite long sites. So that will take time. I think what we said in March, which is still the case, is that half of our delivery in '27 will be on those sites that were acquired pre-2023. So that is still a big feature of 2026 delivery and 2027 delivery. And then it starts to unwind, but there will be a tail there, which is a longer tail, which goes beyond.

Rebecca Parker from Goldman Sachs. Just 2 from me. You've made it quite clear that you're focusing on self-help, but there has been, I guess, speculation around the potential for Help to Buy under the new Prime Minister. Just wondering if you've had any discussions with government and what format you think a Help to Buy scheme could come in?

Well, look, I'll just reiterate what I said, which is we are focused on self-help. Clearly, if Help to Buy or some sort of first-time buyer support were to come in, that would be helpful. Certainly, I think MHCLG are very actively looking at options at the moment. But it's just too soon to say whether treasury is in favor or not. I can't give you any color on that.

Sure. And then just on the levers for your net cash target, what would move you towards the top and bottom end of that range? Just any moving parts there?

Yes. So I mean, broadly speaking, I mean, we'll deliver in the second half year, 1,500 more units than we delivered in the first half. So that gives me round numbers about GBP 400 million of additional revenue build and the land spend is broadly flat. I'll spend GBP 300 million on dividends in the second half. So you can see that it's that additional volume because we're H2 weighted will drive the cash generation into the -- and then, of course, within the range, then it depends on where we are on land spend. It depends where we are on forward build. It depends exactly where we are on revenue mix. So it's all those things which then within the range will determine where we get to.

One more. You mentioned some potential restructuring costs with the cost program. Just wondering if you can provide any more color on those.

Yes. So what we tried to do on the cost piece is be very clear around the breadth of the work that we are doing to look to how we can mitigate the cost pressures that are coming to the business. And that is a [indiscernible] look across how we do things across the piece. So what -- the reason I put that line into my financial report was just to say, look, as we go through that program, if there is some restructuring, then we will face and deal with it. But there might not be. It depends on -- that work is ongoing. We are in the middle of that at the moment, and we will see where that gets to. So I wanted to be, I guess, open and clear that there could be something come the end of the year, but there might not be as well. We'll work through the exercise and we'll see what comes through.

No more questions. Okay. Thank you very much. I suppose just some summary points for me very quickly. I think the decisions that we've taken is delivering growth now and does give us confidence for the future. But we recognize it's very challenging out there, and we're clear eyed about it. However, we are addressing it and the work we're doing can only help us in the longer term. And as a team, we remain absolutely committed to driving growth and to delivering that 2020 vision. Thank you very much.

Good morning, everyone. Shall we, as it's 9:00, should we make a start. Thank you for joining Andrew and me today. I've had the positivity of the support from my Chairman, which was it's a good start. Share price is up 10%. Don't say anything anymore. Thank you, Roger.

2025 delivered double-digit growth across the business, building on and accelerating the recovery that began in 2024, and we're building a stronger business for further growth. More customers are choosing our well-built, affordably priced and attractively located homes. We've again grown completions, ASP, sales rate, excluding bulk, returns and profit. Our forward order book and land bank are both up year-on-year and while our exposure to cladding is reduced. Our strategy of carefully choosing where to build, what to build and how to build is being successfully executed across the business. And as you can see, is delivering strong results. I want to thank my brilliant colleagues at Persimmon for these results, especially so recognizing that the market remains challenging. When I stood up in front of you last year, the concern was Trump's tariffs. Now it's the uncertainty from the conflict in Iran, and I'll say more on this later, but we are getting used to managing uncertainty.

Now let me return to our strategy. Self-help is driving growth and disciplined investment is reinforcing our growth trajectory. This growth is now translating into tangible returns and is giving us confidence in our medium-term targets, which you'll see is a very clear theme of today's results.

I'll now talk some more about our disciplined investment in our clear five-point strategy, which in turn will drive further growth in the future. This is a slide you've seen before. It summarizes where we're allocating our capital across the business whilst also striving to maintain a robust and well-supported balance sheet. Since I joined Persimmon, we've taken some tough decisions to reposition the business that has allowed us to invest in our land, our brand, our factories and our quality in order to drive a new phase of growth, and this strategy is delivering. Once again, thanks to disciplined investment, we've grown both our high-quality land bank and our outlet base.

We've continued to invest in our brands, sharpening their position in their respective markets, and this is delivering some impressive results. We delivered a step change in completions without compromising on our hard won quality and service improvements. We've also delivered a step change in the output from our factories as a result of focused investment in innovation and our production capabilities.

Our investment program and shareholder returns are supported by a disciplined capital structure. We remain prudently geared after land creditors with a balance sheet that provides strength and flexibility through the cycle. In the coming years, as the group works through the fire safety remediation program, cash generation will improve, giving us more options in terms of investment and returns to shareholders. So the combination of a clear strategy and a relentless focus on its delivery and execution by our excellent teams is securing our growth and returns.

Let me turn now to the key growth fundamentals in 2025. As you can see, we delivered a strong performance last year. Our underlying PBT was up 13% to GBP 446 million. And our underlying EPS is up by 9% to 100.7p. Outlets at 31st of December were 277, up by 3%. Our sales rate was up 0.7 and excluding bulk was 0.59, up 4%. The growth in outlets and our sales rate drove completions up 12% to 11,905. And within that, we delivered 1,758 bulk completions, up 21% year-on-year. And I'm delighted we retained our 5-star status for the fourth consecutive year. Our owned and controlled land bank grew by 3% to almost 85,000 plots. Our total forward order book is up 6% to GBP 1.8 billion with our private book up 9%.

Andrew will now take you through the results in more detail.

Okay. Thank you, Dean. Good morning, everyone. I'm really pleased to report excellent results for 2025. We've delivered strong growth in both volumes and profits against a challenging market backdrop, and this builds on the growth that we delivered in 2024. New home completions were up 12%. Our blended average selling price increased 4%, and this drove housing revenue up 16% to over GBP 3.3 billion and gross profit up 13% to GBP 656 million. Gross margin was lower at 19.8%. This reflects the mix of product, and that included more affordable and build-to-rent as well as the impact of historical embedded inflation. Underlying operating profit increased 17% to GBP 472 million, and I'm particularly pleased to say that's a 20 bps increase in margin to 14.3%. This demonstrates our overhead control and efficiency and why we are so focused on volume growth as one lever to deliver increasing margins. Underlying PBT is up 13%, and that's after an increase in interest costs because of lower cash balances and higher land creditors. Overall, this is strong quality earnings growth driven by our strategy.

And remember that 2025 was our second year of growth. So across the last two years, we've added 20% to our volumes and 24% to PBT. I think that is really excellent. Our tax rate of 28% is close to the statutory 29%. 2024 did have a lower tax rate because of some one-off items, and that boosted last year's underlying EPS. So, putting all this together, underlying EPS this year increased 9% to 100.7p. We generated strong cash from operations. And really importantly, our return on capital employed increased 60 basis points to 11.7%. And again, that reflects improved profitability and continued balance sheet discipline. So.

I'll now come to the detail of the sales mix and ASP. Of the total new homes delivered, 9,830 were private, that's 8% higher than last year. This reflects our strong sales rates and increased number of outlets. Our total sales per week, including bulk, increased to 188 units. Private completions included 1,758 bulk sales, and that's 21% higher than last year as we continue to engage strategically with this sector. Reservations in the build-to-rent sector did slow in Q4, as you know, and we said this will make further growth in 2026 more difficult, and that is reflected in the current order book. Open market sales grew in both the Persimmon and the Charles Church brands. 32% of private sales were to first-time buyers, an important market for us and particularly important for our core Persimmon brand. As you know, we're very proud of our relaunched Charles Church product, and Charles Church increased 16% in 2025, in line with our plans to double it over time. And Partnerships output grew very strongly by 31% to over 2,000 units or 17% of total completions. Most of our affordable delivery is already signed up for 2026, and I'd expect a similar volume again this year.

So, let me reiterate, all elements of the business grew their volume in 2025, helping us to drive asset turn and drive return on equity. The blended ASP on completions was up 4%, with private ASP increased 5%, even allowing for the increase in bulk sales. And there's three key factors. First, pricing has been robust, particularly in the North of England and Scotland. Second, we increased the proportion of Charles Church delivery, although the Persimmon ASP also increased even without Charles Church. And third, the pricing on our bulk sales has also been robust, reflecting our more strategic approach to this sector. Our brands are deliberately focused on the value end of their respective markets with our Persimmon Homes average selling price still well below the new build national average and over half of completions below GBP 300,000.

So let me now show you how that volume increase has driven up operating profit. Underlying operating profit is up 17%, which I'm very pleased with. You can see the positive effect of increased volumes and increased average selling prices. Although as I mentioned earlier, the increase in affordable and BTR products has lowered gross margin on a like-for-like basis. The movement in the cost line is small, and we're very focused on commercial discipline and managing our costs closely. Net operating expenses increased by GBP 7 million, and that increased our overhead leverage even with the ongoing investment into our capabilities for the future. We incurred net exceptional charges of GBP 45 million. And these exceptional charges are all items that you're already aware of. Changes to our building remediation costs, the settlement with the CMA and the profit on disposal of FibreNest. I talked about FibreNest in detail in August. It was noncore and its disposal increased choice for our customers and has freed up capital for us to reinvest into the business.

So I'll now cover the remediation in more detail. Progress on building remediation work remains important. And at the end of last year, we were the first housebuilder to sign up for the new Scottish remediation contract. At 31st of December, we were on site or completed at 77% of known developments. We've assessed all the known developments and 79% or over 90% of these are fully tendered. We expect to be on site at all the developments by the end of the year, and we continue to track ahead of the overall industry position.

We continue to make progress, as you'd expect. And last year, we performed about GBP 61 million worth of work, bringing our total work to date to around GBP 180 million. But this remains complex work, and there remains some cost risk on all these sites until they're completed. And that's why I've always said that the provision might be a bit lumpy as it comes down, and that's what we've seen. So there were four new developments added to the total number in the period. The four new ones, each relatively small and they relate to some reassessment of whether they are in or out of scope, for example, based on the 11-meter threshold. And including the new developments, we added GBP 40 million to the provision. So the closing provision of GBP 226 million is GBP 9 million lower than this time last year. We'll spend close to GBP 100 million in 2026, and the bulk of the remaining spend will be made over this year and next. And of course, we continue to pursue recoveries from the supply chain, and we had some success on this in 2025.

As we said before, progressing this work over the next two years will then create capital allocation opportunities for us, especially given our strong balance sheet. Our balance sheet is a platform that allows us to invest in future growth. And to add further to our growth opportunity, we've today announced an increase in our banking facilities with a two-year GBP 250 million term loan and a GBP 50 million increase to our RCF, taking that to GBP 750 million. And thank you to our lending banks for their support. This extra facility will allow us to take full advantage of the land market at what we consider to be the right point in the cycle and to invest in the work in progress needed to grow our outlet base and to drive more volume. As a result of choosing to invest at this point in the cycle, we may have some gearing at the end of 2026. And of course, we will continue to manage the balance sheet prudently, keeping ample headroom at all times.

In the table, you can see land and WIP has increased GBP 535 million. We've invested in more land than we've utilized, and we've also increased our work in progress to give us a stronger opening position coming into 2026. We held GBP 200 million of PX stock at the end of the year. This is an important sales tool for us, and we are really focused on recycling this back into cash quickly. Land creditors are up GBP 200 million, reflecting the increased investment in land and showing that we can agree appropriate payment terms in the market. Net cash is GBP 117 million. And together with land creditors, our adjusted gearing is about 14%. And I would expect this adjusted gearing to be higher next year up to around 20%. Our building safety provision stands at GBP 226 million, down in the period given the progress that we have made. Net assets are up 3% in the year with net assets per share 31p higher than this time last year. And as I said earlier, I'm pleased that return on average capital employed is 60 basis points higher than this time last year.

So this brings me on to our cash flow. So this is the normal cash bridge, but it demonstrates some really important points about the quality of our business. You can see our cash flow from operations was GBP 488 million, 16% more than last year. To grow the business and drive quality, we've invested GBP 208 million more in work in progress. That's infrastructure and build on new and existing sites. Other working capital movements of GBP 58 million includes the increase in PX that I referred to earlier. We spent GBP 109 million on interest and tax, GBP 38 million on capital expenditure, including on IT improvements and on our automated Space4 line. And we had net inflow of GBP 65 million from acquisitions and disposals. So free cash generation before capital returns, remediation and net investment into land was GBP 250 million.

To the right-hand side of this is our capital allocation choice. So we prioritize our building remediation program, and we're paying a sustainable dividend. As we look to complete the remediation work over the next couple of years, that element of spending comes back into free cash flow. After remediation and dividends, we were pretty well cash neutral. And this shows that we are operating a sustainable business model. If we adopted a replenishment-only strategy on land, we'd have essentially maintained our cash position in the year at GBP 256 million. But given the return on capital we can achieve, we're looking to generate value through investing in more land. So our net investment into land was GBP 139 million, and we ended the year with a positive cash balance of GBP 117 million.

So I will now spend some time talking about our investment into land. So this chart shows you how our land activity has evolved in the last five years. We were very active in 2021, refilling the hopper after a period of underinvestment. The excess black line over the blue line on the graph shows how our build cost inflation took hold and our land activity reduced from mid-2022 until 2024 as a result. And since inflation has stabilized, we've reentered the land market to drive future growth. And it's important, though, to remember that the high net inflation is still embedded in build costs and in margins on sites acquired in 2023 and before. And bear in mind that our average sites last four or five years from acquisition. And as we've said before, this embedded inflation will slow our margin progression until those sites unwind from the portfolio, and I'll come back to that in a moment.

First, I'll go through what this investment means for our current land bank. Total plots owned and under control at nearly 85,000 is up nearly 3,000 in the year, and there are more proceeding to contract. The land bank is well spread across the country, and it provides confidence that we will achieve our ambition of growing to at least 300 outlets. The land cost to assumed revenue ratio remains low, but it has ticked up in the year. This is driven by more southern sites, fewer strategic land sites pulled through this year and the acquisition of more serviced sites, which means we pay for the infrastructure in the land price rather than having to build it ourselves. And of course, that actually gives more certainty over future costs and margin. The most important point is that the land bank is high quality.

Within the land bank, 78% of plots have a site margin in excess of 25% and the overall embedded site margin is 28%. This is slightly down on last year due to timing and the mix of strategic sites in the book. Importantly, the land bank supports our medium-term operating margin growth objectives, particularly as we start to reduce the effect of embedded inflation and further increase overhead leverage by growing volumes. You can see that about 75% of 2026 delivery is on site encumbered with the inflation that I spoke about a moment ago and still over 50% of delivery in 2027. But this effect begins to reduce progressively from 2027, as you can see on the graph, and that underpins our confidence in our medium-term margin targets. The structure of our capital allocation policy is unchanged and it's proving successful. We're maintaining a strong balance sheet while prioritizing dealing with our building safety remediation this year and next.

Secondly, we're continuing to invest in the business to drive and deliver our organic growth objectives. There continues to be opportunity to drive shareholder value by investing in future growth and by doing so in a disciplined way that is allowing us to also increase asset turn and drive return on equity. And we are paying a sustainable dividend well covered by profits. Today, we've declared a final dividend at 40p in line with last year's, bringing the full year dividend to 60p. And we'll review this policy again, as we've said, as we deliver our growth plans and as we progress our building remediation works.

So, to summarize, we are really proud of our performance in 2025. Assuming that conditions remain stable, we expect to deliver growth again in 2026 to volumes of 12,000 to 12,500 ahead of previous guidance and with the H1-H2 split similar to 2025. Remember, 2025's completions included particularly strong growth in affordable and bulk sales. So our 2026 growth will be more dependent on open market sales, and so it does need a stable market environment. We talked about margin progression a lot in the summer, and the position remains the same. We're growing the margin, but the pace of progression will continue to be impacted by embedded inflation, as I've just shown, and potentially by external events, especially if the current conflict is prolonged.

Overall, assuming we achieve the increase to volume guidance, I think that operating profit will be towards the upper end of current expectations. We're also investing in future growth and in our land bank. As a result, we will have higher financing costs in 2026, but for the right reasons. So, overall, I'm comfortable with how the range of 2026 PBT sits currently. And I'm guiding to lower net cash, as covered earlier, which means that adjusted gearing could be up to around 20%. The key message is that we will be delivering further PBT growth in 2026 on top of the 24% growth that we've already delivered in the last two years.

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

Thanks, Andrew. Over the last three years, we've sought to navigate cyclical downturns and growing regulatory challenges, whilst at the same time, positioning Persimmon for growth. I believe we've emerged from this period a stronger, more agile business that's well positioned to seize future opportunities. And I think these results clearly demonstrate that.

So let me firstly take you through how we've invested our capital to create a stronger business. Our disciplined investment in quality land is increasing our short-term and strategic land banks with good embedded margins. When combined with our planning success, we're converting our land into more active sites. We're on track for 300 outlets over the course of the next couple of years, and with good visibility on sites that are going to drive growth and margin improvement into the medium term. We've all -- we've enhanced all three of our brands. Each has a clear market position, a distinct customer proposition and an efficient model of delivery. And all three brands grew in 2025.

As diversified and complementary brands, they'll drive further growth, unlocking new markets and serving new customers. And I'm really pleased that we've not compromised our quality and service experience while delivering a step change in completions. This represents a real break from the past. The significant investment we've made in our factories is making a real difference to our delivery in terms of the increased output, efficiency and quality. Our rollout of digital management systems across the group is also enhancing our control of build programs and cost efficiencies.

As ever, our carefully managed balance sheet has allowed us to maintain disciplined investment at the right point in the cycle, whilst also supporting returns to shareholders. And as Andrew has said, we've taken steps to ensure our balance sheet will continue to support future growth and shareholder returns with those opportunities accelerating as we complete our building safety program. In short, our disciplined investment and self-help is building more routes to more markets to build more homes and drive returns.

So how and why is that going to happen? Firstly, our land bank and outlets are clear examples of how our strategy to combine investment and self-help are delivering results. We added over 16,000 plots to our land bank in 2025, and it now stands at nearly 85,000. We remain disciplined, and I'm pleased with the pricing we achieved as it will drive medium-term margin improvement. There was a noticeable increase in land opportunities in the year, and our improved reputation and balance sheet resilience allowed us to respond to opportunities nimbly. A great site in Thetford became available because our improved reputation reassured a promoter who had previously been skeptical about working with us. Tamworth is a large site in a great location that's going to allow multi-branded outlets for years to come. Rugeley is a service site bought from a competitor looking to sell. The opportunities are there. And alongside our focused approach to planning, we're converting land into active sites.

We grew outlets against industry decline, and we plan to open more than 100 this year and remain on track to achieve 300 outlets over the course of the next two years. Nearly 13,000 plots received detailed approval, 108% of our completions. I said at the half year that we treat an application like a political campaign. Hull Road, York, is a good example of this. First submitted in 2025 -- 2015, excuse me, the scheme stalled for many years. Anticipating the change in administration in York, we built a relationship with the incoming labor leadership two years ago to understand their priorities. We then navigated the active local plan process with excellent planning and design, achieving detailed consent last year. It's a good site with views of York Minster that we've already started on.

We've also nimbly responded to government policy. We've identified 68 potential accelerator sites and prioritized 43 for detailed work. We expect to submit 25 of these by the end of the month. We also submitted two sites to the government's revised New Homes Accelerator to unblock sites that have stalled. This is a relentless task for us, group and local teams working together to get excellent applications in and then drive them through the system, navigating the politics where necessary to get started on site. It's helping drive growth now and build a stronger business.

Our investment in our strategic land bank is an important part of a stronger business, and I want to spend a little time on this. Clearly, our strategic land bank remains a key source of strength in terms of value and volume. 47% of last year's completions came from strategic land. And with margins typically 300 to 500 basis points higher than open market land, investing in strategic land is another example of the strengthening our business for future growth. By adding around 10,000 plots across 30 sites during the year, we now have some 77,000 plots. And as the pie chart shows, our strategic land bank is well spread geographically.

I'm also pleased with the pricing we secured. It supports our medium-term margin ambitions. And we're working on progressing the land bank. We expect to achieve planning on half of it within five years. Because of our improved reputation, the increasing number of landowners and promoters who work with us is now undoubtedly unlocking some excellent land opportunities. We acquired a Midlands-based land promoter. This has brought further talent and relationships into the business, complementing our growing existing team. It also presented some great new land opportunities that we're actively exploring. This includes large sites, which will support our three-brand strategy, allowing multi-outlet developments, delivering more homes in complementary markets and securing returns faster.

And it's to our three brands, I'll now turn. All three grew in 2025, and I'm delighted by that. But I'm also excited by the opportunity for future growth they present. All three brands have clear, compelling and distinctive positions in the market, and we've enhanced each brand's customer proposition and the efficiency of their delivery. Persimmon remains our core brand and will always deliver the majority of our homes. It's renowned for its affordability and good value. We've enhanced its customer appeal with improved design, placemaking and marketing. And we've enhanced its already strong build efficiency with further standardization, build program improvements and increased use of our own battery-made products. Charles Church has been particularly strong. Our relaunch of this value-oriented premium product has really resonated with customers. Our new house types and bespoke marketing are really appealing to an aspirational market and it's broadening our access to new markets, whether customers or land opportunities.

By dual-flagging sight, we're seeing improved sales as each brand serves a complementary market. We're also seeing a halo effect in some cases where customers are attracted to us by one brand and end up buying the other another multi-brand benefit. Westbury also took a giant leap forward last year as the figures show. This is a B2B brand and is an increasingly trusted partner in this growing segment. Our improved reputation and national footprint makes us an increasingly attractive partner and our core Persimmon product is obviously well suited to BTR and RP needs. We've tailored some of our Persimmon house types to enhance the homes we offer these B2B customers further. This improves pricing and returns. And like Charles Church, we're delivering this through existing teams, further enhancing efficiency. With these three brands complementing each other and opening new opportunities, we're building more routes to more markets to deliver more homes and growing returns.

Just to bring this alive, I'd like to use an example next. Towcester, Northamptonshire is a cracking dual flag site. Earlier phases sold really well. The new phases look set to do better with a step change in the new Charles Church offering. The pictures here demonstrate the appeal and quality of both Persimmon and Charles Church homes. The prices also show they're targeting distinct and complementary markets. The combination of the brands on the right side is delivering more customer interest and a halo effect. The recent launch at Toaster was one of the most successful we've had. The Charles Church phase also demonstrates how we're pushing ASPs, including through upgraded specification. What's pleasing is that we're more than seeing the cost of additional spec back in the margin.

There are other sites that have chosen. I visited Camden a few weeks ago where we're seeing the same dynamics. The new Charles Church site launched at the end of January. In the first weekend, we took three early birds and two exchanges. We also believe it helps sell four Persimmon Homes down the hill. So I'm really excited by this as Charles Church is clearly being taken to a new level of quality and service. And quality and service is absolutely embedded across the company.

So I'll now turn to it in more detail. While delivering a significant increase in volume in 2025, there is no compromising the highest standards we've secured in recent years. Our progress on the construction quality review score has been really pleasing and important. We saw a 3.5% improvement last year, and we've improved 31% since 2021. As I said, quality and customer service are now embedded in how we do business. We reset our build programs, and that is improving both the quality of build and reducing our cost of reworks. And with more regions moving to timber frame, we're building faster. We've expanded our team of independent quality controllers with more posts being added this year. And we now use a suite of granular plot and site level data analytical tools to drive these efficiencies and improvements.

I'm absolutely delighted we remain a 5-star builder, and we ended the year on 4.3 under the new methodology. We continue to achieve our best-ever Trustpilot scores for both Persimmon and Charles Church. We recently launched the Customer Care Academy with the Institute of Customer Service to develop our customer service teams further. As I said before, a reputation for consistent quality and service is crucial to winning more customers, new partners and new land opportunities. It's yet another platform for growth and getting it right first time clearly costs us less.

Our factories are a key asset in achieving this, and it's to them and our vertical integration, I'll now cover. Our factories and vertical integration are a real strength in ensuring quality and efficiency. Indeed, they're becoming a growing strength and I think essential to our future growth. All three factories significantly increased output last year. Even with the installation of our state-of-the-art automated line. Automated line, Space4 still delivered a 36% more output last year. With its new robotic roof truss line now operational, we're further expanding the range of quality products it's producing. Our Brickworks line is operating 24/7 and delivered a 23% increase in output last year. To meet the growing demand, we're building a new line at the factory, which will be operational from next year. And Tileworks saw a significant increase of 54% in its output. Again, there's growing demand and a third shift will be added this year.

Our quality own-made products are now the preferred choice across the group. Just as we're embracing technology in our factories and using granular data analysis across the group, we're actively exploring the role of AI in the priority focused areas. The faster build times, enhanced site efficiency and fewer reworks could save around GBP 10,000 a plot by the end of the decade. My vision remains that within a few years for a large proportion of our houses, we'll be able to provide all of the main components of the superstructure from our own factories, timber frame, roof truss, joist, brick or brick facade and tile, all Persimmon manufactured. The output and cost efficiency opportunities could deliver a step change in performance.

Before concluding, we'll turn to current trading. As of the 1st of March, our forward order book is up 6% to GBP 1.8 billion, and our private forward order book is up 9% to GBP 1.25 billion. In the first nine weeks of the year, we sold an average of 199 houses per week, up 11% on 2025, with a net sales per outlet per week of GBP 0.73, which is 9% up on last year. Excluding bulk, we've sold on average 167 houses per week, up 6% on last year with a net sales rate of 0.61. Pricing is robust with ASP up 5% overall and up 6% in the private forward order book. Incentives are running at around 5%. I think this represents a very good start to the year.

To finish, I'll now turn to our outlook. We've taken some difficult decisions since I joined Persimmon, but I think the business has been well positioned and is now firing on all cylinders. As I said at the beginning of my presentation, self-help is driving growth and disciplined investment is reinforcing our growth trajectory. There are, of course, uncertainties. Even before the events in the Middle East, the macro picture was mixed.

While planning reform is supportive and should support further outlet openings, the reform's full impact is still yet to be felt. Mortgage availability has been improving and real wage growth alongside higher LTV lending has been improving affordability. Our mortgage qualification rates have improved despite wider mortgage approvals remaining subdued.

Geopolitical uncertainty is clearly adding more risk. In the short term, the most important risk is any change to customer sentiment. But so far this year, sales have been strong. And the longer the tension and conflict persists, the greater the risk to increased build cost inflation. But on both sales and build costs, we have helpful mitigations in place for 2026.

Our plans for growth in private sales are not dependent on lower mortgage rates or a scheme like a new Help to Buy. Customers still want to get on with their lives and buy houses. And we offer a range of very attractive products that are competitively priced, offering excellent value. Sales in the first weeks of the year have been strong, including in the last two weeks. Our HA and BTR partners have largely secured their funding for this year's planned delivery.

We entered this year with improved forward build and a significant proportion of this year's build program is already contracted. Alongside the significant proportion of key products provided by our own factories, this provides some assurance on cost. We've contacted all our main suppliers to understand how they are mitigating risk with fuel hedging, alternative shipping routes and high stock levels already in place, there is short-term resilience. The risk clearly increased the longer the conflict goes on. We'll, of course, continue to closely monitor for any impacts and reduce risks where we can. As of today, current trading remains positive. Our book of investor sales is building, and we have good visibility for 2026. Our forward order book is up with the value of private sales up 9% so far this year.

Taking this together, if the impact of the conflict with Iran is short, we anticipate further growth this year to between 12,000 and 12,500 units and margin progression should be similar to last year's. The growth we're delivering is now translating into tangible returns and is giving us confidence in our medium-term targets.

We undoubtedly have more opportunity ahead of us. We're building more routes to more markets to deliver more homes and growing returns. Those are opportunities I'm excited by. Above all, I think Persimmon is in great shape and is a high-quality business.

And on that note, I'm happy to take any questions. Thank you.

Will Jones from Rothschild & Co Redburn. Three, please. First, just around margin, tying up on '25. I think the gross margin dipped 50 bps. The other operating income was up 40 bps year-over-year. Just on margin for last year, gross margin dipped. I think the other operating income was up broadly by the same magnitude to offset. So just how you think about those two elements of the P&L this year within the guidance that margins going up slightly.

Second, just around build costs, if you can explore, I think you talked about muted so far this year, a bit more on that and also the cover you do have, particularly on building materials through the year at this stage.

And the last, just around growth where clearly, you continue to step up. It is the element of the medium-term target that's missing. Perhaps you could just talk about what you think the business is capable of on volume growth over time. And I suppose the extent to which you can kick on from 300 outlets is perhaps key to that.

You'll take the first. I'll do the second.

Yes, that's fine. So, yes, the gross margin, it dipped a little bit. And as I said, that was partly -- we had more BTR, more affordable. And probably between those two, that's probably 20 to 30 bps of the change is just because of the -- just when you play that through directly. So it will depend on mix, of course, as we go into 2026. But I'd expect, as I said earlier, that more of the growth in '26 will be on open market sales.

Other income, I think last year, we had GBP 21 million, the year before it was GBP 9 million, bubbles around that GBP 10 million, GBP 20 million sort of -- that would just -- and that's just bits and pieces of small bits of land sales and bits and pieces of other things, but nothing significant.

So overall, I guess the key for me, Will, is that operating margin grew in '25, and we're looking to continue to progress operating margin, and we expect that to grow, as we said, at a similar rate in '26.

Just coming on to what our thoughts are on build costs this year. I think that was your second question, right? Yes. If I can just broaden it out slightly to income as well. This was a point I was trying to make just a moment ago. If we just run through the various categories of income first, I think our fees are in a good place. We've got Ian and Liam with us this morning. So I may bring those in as well. They're certainly around for you to speak to afterwards.

But you've seen the strong growth we've seen in RPs this year. I certainly think that Ian has done tremendous work for us this year in building relationships and improving our reputation as we build our -- improve our build quality as well. And I certainly think that's helping us in the RP market and visibility for this year is pretty good.

Likewise, on investors, we don't have many investors who are PE funded. A lot of them are pension funded and they take a longer-term view. And again, we think we've got good visibility with four out of our five major customers having their funds secured for this year. So that's also in a good place. And then finally, on private, clearly, sentiment is key. Last week was our strongest week of the year so far. So just an interesting point of note. Clearly, none of us know what's going to happen.

But in terms of cost, I mean, we did a detailed exercise with all of our suppliers last week, and we found out some really quite interesting points. Clearly, the market, I think, has learned from its cost shocks and supply shocks in years gone by, and there's much more stock holding than there was maybe two or three years ago.

Hedging is in place. Some of our larger suppliers maybe have 70% of their book already hedged for this year. And the other interesting thing for me at least was how many now are already avoiding the Red Sea, and that was driven by Gaza actually. So a lot of them avoid that area anyway. But clearly, the situation changes and changes rapidly. But this is helped by our build position. So as we stand as of today, we've got near enough 12,000 foundations dug, 9,500 slabs in place and 5,000 to 5,500 rooms on. So that's an awful lot of fuel and energy cost for this year already spent.

We've done an exercise to -- so really, this is an H2 issue. And we've done an exercise to consider what -- how much of the book cost is driven by fuel and energy costs, and we are estimating it's around about 13%. And because of our build position for this year, we're thinking that's maybe around 5,000 EUs in the second half that will be impacted by cost inflation. So that's a total cost for the remainder of the year to build of less than GBP 100 million. And so that's the amount that is exposed to for this year for build cost inflation. So then you get to the question, well, how long do you think this is going to last? And if the impact is, say, two or three months, then the cost base that's exposed to it is maybe GBP 20 million to GBP 30 million. So it's the volatility on that, that would impact profitability in our view this year.

So, I mean, clearly, unhelpful, but it's something we've got our arms around, and that's before we do anything to mitigate cost increases. We came into the year with low build cost inflation of around 2%. It's hard to say when that might grow. Obviously, it will increase during the course of the year. But as I said, I think we're in a really good place, relatively speaking.

And then in terms of growth, I think there's demand and supply to this. I think our market positioning is good. And I think particularly, there's more opportunity across all of our brands. Our reputation is building, but we're not there yet. Our delivery of Charles Church, I think it did achieve a step change last year, and it's continuing into this year. But by no means is all of our business yet realizing the full potential from that market segment. And I think there's a real opportunity for there to go along with the Westbury brand. So I think there's a really good opportunity to see continuing growth, and we've got ambitions to see continuing growth. And that's also why we're investing in the factory because to achieve another step change in growth over future years, we'll have to deliver more off-site manufacture. So we're giving you a cautious outlook for this year, but I think the medium-term opportunity is really good.

And I think the most -- probably the most important slide for me is Andrew's bit where we've shown that bar chart of margin progression effectively as land comes off. I mean, I think that really is a very visible indication of what the future looks like, other things being equal.

Shall we move to the lady here, please.

Allison from Bank of America. Two questions from my side. So first, can you comment a little bit on the sentiment in January and into February? Because we know some of the peers are saying they have seen a sales improvement in the February, and we don't know if you see the same thing as well. And the second is...

Sorry, could you just repeat that. I must be aging. I can't hear. Sentiment is what?

Sentiment has improved in the February according to some of your peers. So I wonder if you see a similar pattern as well.

And the second is, I don't know if you can disclose what's the average outlet number as of now or in early March?

Well, look, as you can see from the numbers, the position in the new year has been good and it's been building. So we're really pleased by that. When I looked at it yesterday, our operational outlet number was up year-on-year by about 15% compared to this time last year. That's how I look at it. So that -- trust me, that will change when I go back to the office this afternoon because that's just life. But we have an awful lot of outlets opening this year.

Clearly, it's key to get them open by the end of April. Otherwise, you're going to miss the build year. But as we said in the deck somewhere, we plans to continue to open another 100-odd outlets this year, which will drive growth into next. So I think we're in a pretty good place in terms of outlets.

Ami Galla from Citi. A few questions from me. The first one was on underlying house prices. Can you comment on what you're seeing in the market today? One of your -- underlying house prices. price One of your peers commented on giving out discounts. Is there any impact at a site level that you are seeing from that dynamic?

Connected to that, maybe on the mix side of house prices, your order book private ASP is up significantly. Is that largely a reflection of lesser bulks in the order book? Or should we take that as a view of how mix shifts steps up in 2026?

And the last one is on Charles Church and the investment that you've been doing in the spec there. In 2025, the gross margin was down. Is that largely a good baseline to consider of all the investment that you've done on the Charles Church brand?

Well, we're not finding we've got a discount hard at the moment to get sales away. So ASPs are...

ASPs are pretty robust.

Pretty robust. I mean, clearly, we are trading, but we're trading in line with what we saw last year, but we're driving growth. So net-net, we're seeing an upward tick.

In terms of bulk, well, we're also -- I think we're also seeing a narrowing in discounts there as well at the moment.

The bulk ASP is actually up. So I think -- and I think it's about early engagement is driving better value because we're driving the right price the right products in the right places drives the value.

I think margins on Charles Church is just mix, isn't it?

Yes, it's mix. I mean you have to remember, it's a relatively small population, 1,100 houses. So there's mix of geography mix and just working through. So that -- because it's a relatively small pool, that by definition will be a little bit more lumpy just because individual sites will have an individual -- make more of an impact to the overall margin.

Chris?

Chris Millington at Deutsche. The first one is about your medium-term plans and the 20% ROCE. Good target relative to where you are today. But if I break down the components of that and look at 20% margin, it implies no improvement really within your capital term from here, which does look somewhat cautious. I just wonder if you can comment on whether that is prudent or the level of investment. Do you want to go one at a time, given that was quite a worthy one?

Do you want to take that? Yes. So, look, the margin improvement target is key. We've talked about the components in there before, whether it's mix with Charles Church, the vertical integration coming through. But importantly, as we set out in the slide deck, volume growth and leverage and the embedded inflation starting to come through and if you like the build cost normalizing in the book.

So that's going to drive that margin progression. And that's also, of course, with the inflation point, that's why we've always said the margin growth is more back-end loaded because that has to unwind its way through the book. So then you're right, effectively to get to 20% return on capital is a 1x asset. Is that cautious? Well, my view, and you probably know me long enough, we'll get to 20%, and then we'll see where we go. So let's get to 20% first.

Next one is just bridging between the site margin and the gross margin. Can you just remind us how we get there? And I'll do my third while I'm here. And that's about where you are on capacity utilization within the manufacturing operations. And perhaps you can comment about that after you've made these investments, which are planned for '26.

Yes. Yes. So site gross margin. So key thing is that is consistent. The site margin is consistent year-on-year, the way we talk about it. And then below there, there's various things, whether that be sort of the central sales and marketing, some of the central commercial functions, of course, things like some of the maintenance and customer care and warranty costs and so on. So there's a whole series of costs which sit below that site margin, but that is consistent year-on-year, which is the key thing.

Could you remind me of the quantum of the differential usually, Andrew?

Well, it will -- I mean, it varies, but typically, you're probably looking at something -- I mean, about the sort of 5 percentage points is kind of where we're at.

Just in terms of capacity, well, I mean, the investment we've already made in the timber frame factories, we'll see a considerable step-up in that. And we imagine in the long term, we'll probably get to about 10,000 of frame delivery. So that's a ways to go yet. And the new line in the brick factory will again deliver a very considerable step change in performance. And that will see us through, we think, in terms of demand this decade. So it's quite low cost. It's GBP 10 million to GBP 15 million worth of cost, and it's using the existing manufacturer that we have installed in there already. So -- and it shouldn't interrupt deliveries this year. So we'll be with that next year.

Zaim Beekawa, JPMorgan. The first is just on completions growth for this year. I think you said driven by the open market. Do we still expect Charles Church to maintain that impressive growth?

And then secondly, Dean, I think you touched upon it a bit, but in terms of the Lone Star Land acquisition, a bit more flavor in terms of what that adds for you guys.

Sorry. What was that? Was that...

The Lone Star acquisition. And then finally, on the operating expenses, I think that nudged down as a percentage of sales kind of an area where you think that gets to in the coming years?

Yes. So I mean there's a number of Charles Church outlets opening up again, again this year.

Liam, is it your baby? Do you want -- does somebody want to give Liam a mic and he can wax lyrically about Charles Church?

Can you hear me?

Yes.

Yes, in terms of this year, yes, so we're really pleased to actually. So we started the year really strongly with additional outlets already opening. So some of the ones that Dean referenced earlier, actually, it's great to get sort of three or four sites away in January. So yes, we do expect another year of solid growth actually. So too early to call some sort of exact numbers on that, but really pleased that we're sort of very, very well on track for our medium-term prospect, which Andrew outlined was to double the brand over the medium-term target. So yes, really pleased.

I think it is also -- it's interesting to connected to your question about Lone Star as well because actually, there are some sites that without an upgraded Charles Church, we would not be able to really be in a shout with. And Lone Star has got a couple of those, particularly, for instance, in the Cotswolds, where we're developing a new heritage range. And Persimmon would not have been -- would not have made the planning bar for that. So it is reinforcing that. And Lone Star, really pleased with the business. I mean Ian's got the mic.

Liam, you give Ian the mic and he can talk about Lone Star, if he likes.

Thanks, Dean. Yes. So I think kind of Dean kind of hit the nail on the head there. We are looking at maximizing the addressable markets that we're in. Lone Star gives us the ability to do that to operate in areas where we don't currently operate. So areas of the home counties through the Cotswolds and into higher-value areas that otherwise the existing business model as we operated previously wouldn't have been as successful.

So introducing Charles Church there enables us not only to grow, but to deliver higher value and higher ASPs and just increase our addressable market. And I think that's the benefit that Lone Star land has, and it also enables us to think about how we can bring new high-quality land into the order book.

Thanks, Ian. And just on the margin.

Yes. So, on the margin point, yes, so operating overheads reduced 6.2% last year. I expect that to start to track down, and we'll get that below 6%. And then you've got to think there's opportunity for that to continue to fall from there because we're still delivering fewer houses than we did in 2022, albeit our cost base to deliver the quality and the customer service and so on is clearly higher than it was previously, but I would expect that to continue to fall this year and next year as well.

I think there's a question at the back, which there's probably going to be growing frustration if we don't go and answer.

Lovely. Thank you. Harry Goad, Berenberg. Can you talk a little bit about the land market, what you're seeing in terms of supply-demand dynamics? Are you seeing more land come available basically as a result of planning changes? And then what the implications for that are in terms of pricing? I appreciate you're going to say you're hitting your hurdle rates, but are there opportunities out there where you're acquiring land now in excess of your hurdle rates as well?

Yes, we are continuing to buy land and that's achieving returns better than our hurdle rate. Is more land coming to market? I don't know whether more land is coming to market because of planning reforms. There's more land available to us because of, I think, inactivity in -- with other developers. So it's very hard, I would say, for us to see through whether that is -- is there more land coming to market. And as we tried to be at pains to point out in the presentation, another factor that's going on is that we've just got more access to more partners than we previously would have done because our placemaking framework has improved.

So I can think of two or three land promoters that we dealt with last year that we would have never dealt with in the past or we have not dealt with for many, many, many years because we didn't like what we built. And it is an interesting feature, particularly amongst private landowners. Of course, the money they make from a sale is really, really important to them, but so is the legacy. And landowners will be really careful about that legacy because they very often are continuing to live in the community where they owned and sold the land. So I think that is helping us as well.

I'm afraid I can't give you a clear answer direct line between is planning reform increasing the supply of available land. I mean I think we've yet to see that really come through. It will be interesting to see -- we mentioned in the presentation that we're submitting -- we're working on 68 potential sites, 25 are going in this month. It will be really interesting to see if that's pulling opportunity through.

I would say we haven't -- despite there being a lot of talk, we haven't really seen the benefit of that come through yet, but that is clearly an opportunity in the future. So, I think, there's a whole host of reasons as to why we have stepped up land activity, and we're achieving the right returns and sometimes in excess of what we need and that is also helping us drive growth. So we can move forward. Yes, here, and the lady there.

Carlos Caburrasi from Kepler. Just tow questions. I'll stick to planning. Last week, one of your peers said that they've seen a meaningful improvement in planning with A meaningful improvement in planning. One of your peers last week, yes, and said that around 50% of applications were now positive. And I wonder if you're seeing the same trend?

And second question, around 32% of private completions, I've seen that they were sold to first-time buyers. And I wonder if affordability improves, if you are expecting that percentage to change meaningfully.

Just on the last point, I don't think that -- look, we've certainly seen over the course of the year, qualification rates go up. So that has been very helpful for first-time buyers. So if we go back two or three years, I could go into the Southeast business and maybe less than 1 in 4 of the customers coming through the door will qualify for a mortgage. I would say that sort of really doubled, if not more, over the course of last year. So qualifications improved, and that is clearly helping first-time buyers.

Clearly, it depends on rates. I think what we're seeing is a gradual improvement for first-time buyers, not a step change absent a stimulus of Help to Buy or something like that. I'm seeing a gradual change rather than a step change. But clearly, Clearly, more lending is helping lending at higher LTVs up until very recently, we've seen a substantial increase in mortgage availability and at higher LTVs. That's all helping first-time buyers. So, again, a whole host of things is going on.

On planning, I mean, we achieved detailed consent on more units than we completed on last year. So we've seen it improved. The planning and infrastructure bill is clearly going to be helpful. It's more developer friendly. It's more rules-based. So that can only help the future.

Has the system materially improved in our view over the last year? No. I don't think we haven't necessarily seen a material improvement in cut through on the ground. But our approach to it is cutting through and is getting results. So I think over the last 12 months, it's self-help that's driving planning success. There's still, I think, a bit of a disconnect between what central government wants to achieve and the myriad of councils that you're dealing with on the ground. But if you get your relationships right and you get your placemaking right, then you will cut through and you will eventually get -- you will get the ticket. And I think as the planning bill becomes an act, that will also help us. So, the future is looking positive, too.

Should we go to the lady here.

Rebecca Parker from Goldman Sachs. Just given your comments on land and the opportunities that you're seeing there, how can we be thinking about, I guess, the right level of land to support growth? Are you expecting to again replace that over the replacement rate going into 2026?

And then secondly, I guess, further to first-time buyers, there have been like press reports of a new -- potentially new Help to Buy scheme coming into place. Just wanted your thoughts on that and any discussions you're having with government?

Do you want to do land, and I'll do Help to Buy?

Yes. So you can see that we've grown the land bank. I think this is -- this part of the cycle, that's important. It's giving us the opportunity to grow our outlets and to grow our volumes. You've seen and you can see on the slide there, more routes to more markets for more homes. And actually, I think in the market, which is improving, I think, as Dean said, but having those outlets is really healthy to drive volume. So that's why we think investing in land is the right thing to do.

Clearly, if the Planning and Infrastructure Act has the desired effect, then in due course, then that will make things come through the planning system quicker. But I think as Dean has just outlined, we're not seeing that on the ground yet. And so we're still making sure that we've got enough in the hopper to drive that growth ourselves. So that's clearly something that we look at all the time in terms of making sure we've got the right land in the right places, getting in at the right hurdle rates and so on and so on.

Just on Help to Buy, I mean, there has been a considerable step-up in engagement on the subject of Help to Buy, particularly from # 10 this year so far, whether that translates into a scheme, I don't think any of us can say at the moment. As we've said, though, we are -- it's not our base case. We're not dependent on it. And we're growing nicely without it. If it comes, we'll be in a good place to take full advantage of it. Glynis?

Glynis Johnson, Jefferies. Three, if I may. Firstly, in operational leverage, you very kindly break out how you get to your margin. The volume contribution is actually more substantial than I necessarily was expecting. We've tended to be given a rule of thumb, every 100 units is about 10 basis points of margin. But maybe you can give us your view on how we should be thinking about your operational leverage.

The second question is on your build work in progress. Again, how should we think about where that can go? Should we be thinking about it as work in progress to sales, work in progress per site? How much of that work in progress is on sites that aren't yet open for sale at this point?

And then lastly, another good chart. I'm going to talk about one that you didn't necessarily reference, but Page 13, the land plots by site gross margin. If I look at it, the number of plots making over 30% in your land bank has come down quite markedly. The number of plots making less than 20% hasn't changed. In fact, it actually looks like it's gone up slightly. It either means you were delivering from that 30% plus through the second half of the year or it means there's cost inflation or maybe it's about bulk sales. Can you just talk us through why those different columns have moved at different rates?

Okay. So I think the rule of thumb on the volume growth, is probably I think it's difficult to apply that base rule of thumb at the moment because of the embedded inflation and therefore, the margin that we're still taking through on some of the sites that's still impacting that. So if you like, I think that rule of thumb is probably a more -- if you like a more normalized scenario, where as you can see, I mean, this year, we're doing 75% of our delivery is on sites with high inflation.

So I don't think that read-through is quite there yet because of the inflation piece. But notwithstanding that, volume and driving volume and then driving overhead leverage is clearly a key part of driving our operating margin through again. And you can see that on the overhead leverage that we talked about. The build which is interesting...

In mix. I'm assuming mix comes into site mix as well. So it's really just the volume that I'm interested in.

Yes, yes. So what I'm saying is I think -- so the volume comes through from -- we've grown 12% on volume, and that's driving so like-for-like, so the same mix, same ASP that would drive that through. Within the ASP and mix, that includes then the movement into more build-to-rent and more HA. So don't forget within that -- within the overall volume, you have 31% increase in affordable product, 21% increase in build-to-rent. So that's all mopped up within the mix and the ASP bar.

In terms of build WIP, so we came into the year with more EUs built than we did come into 2025. So in other words, we were building more in 2025 ready for 2026 is delivery. That puts us in a better place. And Dean has outlined that we've got virtually all the foundations, that we've got half of our rooms already on. So that is ahead of where we would normally be. And it's important -- yes, it means I've got more WIP on the balance sheet, but it's important from a quality perspective. It's important for driving sales. I think particularly in Charles Church, actually customers having product to see helps us drive sales and get value through sales.

And I think when you look at our WIP turn, it's still pretty good in terms of -- I think we're still probably turning it twice through. So I think I'm comfortable that we're building and we're investing in WIP to drive growth, and that's the right thing to do. So -- and some of that is on new sites. Of course, I don't have that number to hand. But I think typically, what we're finding is probably within some of the sites we've got with, whether it be infrastructure spend or whether it be Section 106 contributions, the cost to open new outlets is it is cash consumptive. And so that is part of that growing outlets is utilizing working capital is part of the reason that we've increased our facilities to give us that extra firepower to make sure that we can continue to grow the business.

And then -- yes, so -- and then the graph on Slide 13, so that clearly is looking prospectively, and it's looking based on anticipated revenues and anticipated cost base. So the revenues then include, as you say, mix as to whether there's different build-to-rent mix and so on in there. So it's a -- that is a bottom-up analysis done based on the assumptions site by site is the way that we pull that analysis together. But I think the key thing for me is that the number on the left-hand side there that nearly 80% of that is above 25%. So if I was to split that third bar from the left, so the tallest bar that is more biased to over 25% than it is to under 25%.

Sam Cullen from Peel Hunt. I've got two2 also. The first one is back on that chart, unfortunately, on Slide 13. Just there's a note in there that says it's based on normalized output levels. Can you remind us what you mean by that? Is that an outlet number for the group? Is that a sales rate assumption for those sites and therefore, for the group? And when you're buying new land, are you buying the hurdle rates based on those normalized levels or on the sales rate that you're currently seeing.

Yes. So yes, so that you can see in the note, it talks about the assumed revenues, which clearly is part of that and the mix comes into that as well. So then that's the assumed and the normalized output on those sites. So what we'd expect to be driving through. So that's not it's not doing some heavy discount to try to drive -- reducing revenues to try to drive additional. It's just based on our normal sales run rates. That's all that's referring to..

And when we look to buy sites, when we look at our financial metrics, we look at -- we're looking at hurdle rates, we're looking at return on capital, and we're looking at sales rates as part of that. And we would test those sales rates based on what we're achieving in the locality, and we look at those compared to what we see in the local market. So it's all done on a kind of local site-by-site basis. But clearly, those sales rates are based on what we expect that we can achieve.

And the second one is on -- I think, Dean, in your bit, you mentioned a couple of times routes to market and -- you've mentioned routes to market and how you've expanded those over the last couple of years. do you have ambitions to go further on that, either above or below where your current route to market sit?

I think that the three segments that we've got and the four types of customer we've got within those segments give us plenty of scope. So I think the brands are right. I think for now, certainly, the job we have to do is fully exploit each niche because I don't think we fully exploited that yet. And so I think we're in a good place to further expand in each of those market segments as we build more relationships within the existing group. And as the group's skill, the collective skill across the group steps up because as I hinted at earlier, not all companies in the group yet are building like a toaster or a command. In fact, the majority aren't.

And so I think that's an exciting opportunity. Clearly, you've got to get the market right. Clearly, you've got to get them. There's no point building a toaster in Leominster. But there's still plenty of opportunity to get it right, and that gives us opportunity.

Peter Ajose-Adeogun from Morgan Stanley. Just two questions. The first was just around build cost inflation. So you talked about the material side and what you're doing with suppliers to keep that down. Maybe if you could just give a bit more color on the labor side, what the trades look like. I know the average age for a bricklayer is still over 55. So just kind of long term, just in terms of how that looks today and then going forward?

And then also the second question was just around -- you talked about the profile of how land was acquired and what that means for build cost inflation. Maybe just on the other side, I don't know if this is a benefit, if you could clarify, but around delays to certain regulations like future home standards, where the land was acquired with those standards in mind, is there any sort of benefit to that? And if not, why doesn't that benefit flow through in the same way?

You want to?

Well, let me take the second one first, Peter. So you're right, on sites where we have assumed a building regulation, which is delayed, then there may be some benefit. But you've got to also remember, there are lots of sites where we have seen regulations early adopted. I mean we have -- we've got a site where the local authority -- I'm going back now probably a couple of years. In fact, it was the first site I went to my first day in Persimmon. The local authority declared a climate crisis and early adopted future home standards in a way which was not anticipated when that site was acquired. So you've kind of got to take the rough with the smooth. So -- and there are examples of councils early adopting as well as there are examples where some regulations have moved backwards. And then there is other regulatory costs. I mean just in November, landfill tax doubled. As you know, that's going to increase significantly year-on-year going forward. So I think I would just be careful to hang too much on regulatory costs coming down because I think probably across the piece in the sector, that's probably not what we have seen. So -- but of course, there's a whole myriad of moving parts.

In terms of build cost inflation, so what we've seen -- I mean, it's a little bit -- if you kind of go back 10 days, so pre the Middle East change, I think what we're saying and what we've seen is stable inflation. So that's the low single digit that we saw last year, and that was really across materials and the supply chain, so subcontractors as well. At the moment, we've not seen any impact, as Dean has talked to in some detail from the Middle East conflict. But of course, we monitor that very carefully. I think then you raised a good point around aging workforce. I mean it's not a 2026 issue.

It's a -- but into the longer term, it's an important point. And I suppose a couple of things that come to mind from Persimmon's perspective. First, we are investing more into apprenticeships ourselves and into training and development. So clearly, that takes some time to come through, but that's one important aspect.

I also think that the vertical integration and looking at modern methods of construction, more timber frame, panelized systems in due course doing facade products, all of these are options to reduce the amount of skilled labor on site because you're taking some of that manufacturing back into a factory environment and then doing the on-site assembly. So it means that you can all things being equal, deliver more houses with the same number of people on site or the same number of houses with fewer people. So, into the medium term, I think these investments in more domestic construction are an important part of the solution as is investing in early careers and bringing people through the apprenticeship level. I don't know anything else or.

No, I think. Well, I think if that's all our questions, thank you for listening to us today. If I can leave you with a final thought, I think Persimmon is in a really good shape. I think the brands have really come on, and I think they've got great potential. I think their positioning is in each of their markets really good.

And I think with the improvement in placemaking and the appearance and the quality that we're delivering, then that helps us grow. Our land banks are strong. Our strat land is growing. And you've seen that when you buy land at the right price, then that will drive margin improvement. And then, of course, with cladding 90% secure in terms of what we know today, that does and will give us capital allocation opportunities going forward. So I think we're in a really good place. and we look forward to telling you more about it in the future. Thank you.

Good day, and thank you for standing by. Welcome to the Persimmon Plc Trading Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to our first speaker today, Dean Finch, CEO. Please go ahead.

Good morning, and thank you for joining Andrew and I today. As usual, I'll say a few words by way of overview and then hand over for the Q&A.

As you can see from our statement, we have delivered a strong end to the year with 12% growth in completions. This means that we expect to be reporting an underlying profit before tax at the upper end of expectations. This also being double-digit growth as well as growth in margins. We believe that this organic growth in completions is one of our strongest on record. I would like to thank my brilliant colleagues at Persimmon as well as our supportive subcontractor base and supply chain for this fantastic result.

Our people went above and beyond in the final quarter of last year, and I want to place on the record my grateful appreciation of this. This growth in completions is made up of 30% growth in affordable, 20% growth in PRS and 6% growth in private, with the private growth largely driven by growth in outlets. We also saw 5% growth in private ASP and 4% growth in affordable ASP, giving us a blended growth in ASP overall of 4%. We also made good progress in opening outlets over the year, ending at 277.

Forward sales are up in value terms by 2% with the value of private forward sales up by 4%, but the value of PRS forward sales down as we saw a quieter Q4, clearly impacted by budget uncertainties. As we look ahead to 2026, whilst we are only a few days into the new year, we expect, other things being equal, another year of growth as a result of another year of growth in outlet numbers, albeit we expect the overall level of growth to pare back from what we have just delivered as a result of slower growth in affordable and PRS sales.

We have an excellent pipeline of land opportunities ahead of us that will convert into growing outlet numbers towards the end of 2026 and into 2027. But obviously, we should be carrying the cost of opening these outlets and the finance costs of buying the land and progressing the WIP in 2026. Taking all this together at this stage means that we expect, other things being equal, that 2026 will be another year of good profit growth, but that profit will lie in the current consensus range.

We also update on cladding. During the year, we were notified of 3 more buildings that require remediation. So we'll need to make a modest adjustment to the provision accordingly. Overall, we expect the provision at the end of 2025 will be less than at the start of the year. To give some reassurance, we are now completed, contracted or have an agreed tender price for 90% of known developments.

So in conclusion, we do have some headwinds in 2026. Landfill tax comes in from April, and that sees our cash cost rise this year from GBP 10 million to GBP 20 million. Thereafter, and mitigated, it continues to rise. And just to remind you, we think it goes from GBP 4 a tonne to GBP 25 a tonne by the end of the decade. And of course, the Building Safety Levy comes in from October. But overall, I think the business is in great shape. As I've just said, on remediation, we have 90% of known buildings completed, contracted or costs agreed.

We have a fantastic pipeline of land opportunities that will convert into outlets towards the end of 2026 and into 2027. We have a great range of products from the affordable end right the way through to Charles Church. But throughout, we design our build costs to keep our cost low -- build to keep our costs low, by giving us more routes to market, which I think is incredibly important in this environment.

All our house types are supported both by New Build Boost and Rezide and of course, by our brick and tile and timber frame factories. And finally, I am supported by a fantastic team of individuals at Persimmon. We are looking forward to another year of solid growth in profit.

And with that, thank you for listening to me. I'll turn it over to Q&A.

[Operator Instructions] And now we're going to take our first question and it comes from the line of Aynsley Lammin from Investec.

Just 2 questions from me, please. On the -- you kind of alluded to the fact the site openings will be more end of this year into '27. Just wondered how you see kind of obviously planned infrastructure bill was passed before Christmas. Do you think that has a meaningful impact? Will we start to see that this year? And just a bit more color, I guess, around the planning backdrop, how easy that might become from here?

And then secondly, on the completions, I think you've kind of given a guidance target of around 12,000 for FY '26. Is that still in place? Obviously, you had a good end to the year. Affordable was very high. Does that kind of bring you forward some of those completions and therefore, 12,000 is still what you're saying for FY '26 at this stage?

Aynsley, so Happy New Year to you, too. Maybe if I start with planning, and then I'll ask Andrew to pick up on guidance for '26. So I think the government policy and progress thereof and the paying an infrastructure bill is enormously welcome and is probably the most positive developments that we've seen in -- I haven't had the benefit of a long career in housebuilding, but all my colleagues are telling me best environment they have seen probably all of their working careers.

However, my word of caution around it is that whilst I think that it is incredibly positive, and I'm hugely grateful to the government, policy, as ever, takes some years to break through and cut through on the ground. And I think that remains the case. So whilst we've had really good progress in developing our land opportunities into outlets, it's really hard work still. And that's because beyond the policy framework, it's the detail on the ground.

So if, for instance, you take an example of ours up in the Northeast, we've had the ticket for 2 years for a particular site, but the drainage consultants can't agree, so we can't get the discharge conditions. Also in the Northeast, we've got a site where not quite 2 years, but nearly, I've got highways consultants that are arguing the task, and we can't get on site.

In Kent, we have 2 local authorities who are preventing us from all signing the Section 106, even though we were ready to go over a year ago because they can't agree on the division of the education contributions. And in Wales, Wales have just discovered nutrients, and so that is also giving us a problem. Am I frustrated? Enormously so.

What we need to see is cut through, cut through from the great but very lofty policy statements and ambitions to cut through. If the government needs to focus on delivery in this parliament, the policy is going to enable them to deliver into the next parliament. We need to live for the here and now. So I'm hugely grateful and welcoming of the progress that's being made in planning, but I'd like to see some real cut through on the ground and get us moving.

And over to you, Andrew. Now I've served up my -- served on planning to consensus.

Yes. Aynsley, so just briefly on consensus volumes. So as you say, we previously guided to 12,000, and I'm comfortable at this stage, 1 week into the year, that is still where we're at. I mean just to put a little bit of color on it, and we can talk more in March, obviously, we did have a very strong end to 2025, particularly you can see on the affordable delivery, you can only deliver that -- those units once.

So there's -- we delivered strongly there. And we know that the affordable market is still challenging. And as Dean mentioned in his opening remarks, the order book is a little bit lighter on the bulk sales than it was this time last year. So hopefully, that market will come back post-budget, but it will mean that we're just a little bit behind the curve compared to where we might have been otherwise.

And so given those 2 things, I think volume growth then starts to be driven again by outlet growth in the business. And as we said, we will be growing outlets this year, but probably more towards the latter half of the year rather than the start. So putting all of that together, I think I'm comfortable with where the number is for now. And obviously, when we come out in March, we'll give a bit more color on the trading in the opening few weeks and see what that means.

Now we're going to take our next question, and the question comes from the line of Will Jones from Rothschild & Co Redburn.

Three, if I can, please. First, just around the Boxing Day campaign where you talked about encouraging signs. Just -- I guess, any further color around that in terms of how it's translating through to website hits, I guess, at this stage and maybe inquiries as we go forward.

Second, maybe just on pricing. I think you talked about similar incentives. So I assume that there's not a huge amount new to say around pricing, but I think the growth in the order book is quite good, but again, perhaps influenced by bulk and other mix. But yes, any thoughts on underlying pricing net-net would be great.

And then just a couple of taxation points you raised around landfill and Building Safety Levy. Any thoughts you've got on potential mitigation measures, landfill, potentially delaying the impact of the Building Safety Levy by getting your controls through early? And just in that backdrop, whether you still think there's scope to kind of nudge ahead the margin potentially in '26?

Thanks, Will. Let me pick those up. So yes, in terms of Boxing Day, I guess it's encouraging. Website visitors have been good, higher this year than last year. I guess my caveat on that, of course, it's a single data point, and it's very hard to take a trend from a single data point, Will. So we have to see how that manifests itself, how that runs through as we go forward. But certainly, in terms of website traffic off the back of the Boxing Day campaign has been very good.

Pricing, as you say, incentives, I mean incentives stayed at that 4%, 5% probably the last 18 months, actually since I've been in the business has been similar. And we have been -- probably had slightly more robust pricing, certainly, I think, in the North Midlands and so on a further away from the Southeast.

You are right that the ASP growth in the order book is not -- that's not illustrative of what I see ASP growth going into 2026 will be. That's really about the mix in the order book. As you say, there's more open market sales in there. There are fewer bulk sales and so on. So there is a mix effect in the order book. So I wouldn't try to read too much into the 6% uplift, albeit it is good that pricing, yes, I think it has been pretty robust through '24 -- 2025.

And then just on the 2 tax points. So you're right. So landfill tax, as well as doubling, obviously, they introduced -- that increases a year earlier than they originally consulting on. So -- and of course, that limits the immediate chance to mitigate. The most obvious mitigation would have been to try to do some of that groundwork before the tax increase. Of course, that opportunity is reduced by time. We've only got 3 months to do that.

Clearly, we are looking at designer sites to see where we can mitigate in terms of reducing -- taking spoil away to landfill. That's clearly the most obvious case. We've just signed an agreement externally to help -- with a third party to help us manage our spoil and landfill as well. So we are looking to mitigate that. But clearly, as we grow outlets, as we open new outlets, a lot of the infrastructure work is done early, and that will be subject to the new taxes if we can't find alternative ways to deal with the spoil.

And then on Building Safety Levy, I think you covered off the key point, which is actually getting our start on site and our building controls signed off and agreed early is clearly what we'll be looking to do to try to make sure that where we can, we can mitigate Building Safety Levy to the extent that's not already been factored into land acquisitions, of course. So there's a timing opportunity there for us to work that through.

And the overall view on margin possibilities in '26, still as you were before?

Yes. So what we said was that we saw the margin progression in '26 to be at a similar rate of progression as we have seen in '25. And I think that's probably still the case, Will, because there are some of those headwinds. And as we talked about in the summer, that embedded inflation from 2022 and 2023 takes time to work its way through the system, absent any significant house price inflation to offset it.

Now we're going to take our next question, and it comes from the line of Zaim Beekawa from JPMorgan.

The first is just on the PRS. So any expectations to when you think this will come back post-budget? And does it still remain sort of a core part of your strategy there or still part of a key strategic market?

And then secondly, on the fire safety, kind of just maybe an updated view on when you may be finished with these and how that will inform your approach to capital allocation?

Okay. Zaim, let me take those. So first on the PRS. So we saw -- and there's some specific examples that we had deals which were almost ready to agree, which were then paused in the run-up to the budget. Those customers, those investors obviously are very alive to things like gilt rates and they -- [ clearly ] all of the speculation in advance of the budget, that was weighing heavily. So I'd like to think that market will come back. It's still an important market for us. We still think strategically, it's important.

As Dean mentioned in his opening comments, what we're trying to do is to sell into different markets to give ourselves maximum opportunities, whether that's Charles Church, whether it's core Persimmon, whether it's build-to-rent. So it's a key part of the strategy still. And I think hopefully, we'll see some progress there in the first half year. So obviously, post-budget, you were straight into the Christmas running. So it was a little bit too shorter period to really see that come back in December. But I'd like to think that market will come back and stays important for us.

In terms of fire safety, Dean talked to that. It's a small adjustment. We've always said that the important thing is that we are on the front foot. We're dealing with the fire remediation work. We've always said that the provision will come down. It might come down a little bit lumpy as it comes because these are complicated projects as we work forward. But we still are looking to do the bulk of that work this year and next year. Of course, there will be a long tail, but that tail will be kind of business as usual, if you like, in terms of quantum. So this year and next year are still the key areas or the key time for getting through the bulk of that work.

Sorry, just to pick up in terms of impact on capital allocation. So we said in the summer that what we wanted to do is to see our way towards the end of that work. So not we don't have to be finished, full stop, but we want to be closer to the end point. So I still think that's the case. And as we get through '26 and into '27, that gives us opportunity to update on the capital allocation policy.

Now we're going to take our next question, and it comes from the line of Ami Galla from Goldman Sachs -- my apologies, Ami Galla from Citi.

Two questions from me as well. The first one was just a follow-up on the ASP point. You've seen a significant positive mix effect on the affordable ASP in '25. Do we expect that to reverse?

And the second question is on build cost inflation, we are targeting a similar level in '26. The first one is, could you update us what the '25 build cost inflation eventually stacked up to be? And into '26, where are the pressures on build costs really coming from?

Okay. So Ami, let me pick those up. So in terms of the ASP, so you're right, there was some mix effect. But actually, what we saw in delivery in 2025, we saw ASP growth across Persimmon and the Charles Church and affordable. So I think in terms of the affordable, of course, it's always linked to the geography because as you would expect.

So I think in terms of what we're seeing in terms of underlying ASP growth, I think we see, as I said earlier, its pricing is robust around the country. It's more of an acute issue in the South and Southeast because headline prices are higher, and therefore, affordability is more of a challenge more broadly for our customers. But I think we saw some good ASP growth overall, 4% up year-on-year. And you'd like to think that ASP growth will continue, but it will be -- I wouldn't expect it to be at the level that we see in the forward order book because that is driven by mix effects. So -- and it will be driven by mix and by geography again as we go into 2026.

On build cost inflation, we talked all the way through '25 of low single digits. So you're kind of in that sort of 2% to 4% inflation. I don't really see any reason why that will be different in -- as we go into 2026, where the pressure and that sort of level of inflation really will be across materials, it will be across the supply chain as well. So because -- and if you like, that's relatively normalized levels of inflation.

But the key thing, I think that you -- just to remember, it goes back to the margin progression point I made to Will is, of course, that build cost inflation on already elevated build costs. So it's not a question of costs coming down. It's a question of costs going up, but that's probably a similar level to 2025.

Now we're going to proceed with our next question. And the question comes from the line of Glynis Johnson from Jefferies.

I'm going to go with 3 as well, if I may. The first one is just a clarification in terms of the outlet count. You talked about growth towards the end of 2026, but should we be anticipating that outlets might dip a little bit through the middle of the year and then pick up? Or is it just going to be steady and then climbing?

The second one, just in terms of Charles Church. Can you just give us a little update in terms of how Charles Church did for the 2025 as a whole? And what we should maybe be thinking about for 2026 just in terms of proportion of completions?

And then lastly, just in terms of some of the measures, you referenced them earlier, Rezide. If you can just talk through the measures, what the uptake has been, whether or not they're making any kind of difference to your sales rate?

Glynis, let me pick those up. So in terms of the outlet count, I would expect it to be through the year, relatively steady. The tickle up will be towards the back end, as Dean mentioned. I mean of course, there's always -- if we sell faster, then we will -- then we have them falling off the belt a little bit quicker. And sometimes we see that at the end of the first half year.

But generally speaking, I think it will be relatively steady, but then -- and then that push up in the -- towards the latter part, which will then drive additional growth, hopefully into 2027. So I wouldn't be necessarily modeling for a dip in outlets. But say, as your sales rates pick up, there always -- there is always that -- there's always a chance that you end up with some falling off the belt a little bit earlier than you expected.

Charles Church, really pleased with the progress. So we relaunched it in March of 2025, as you know, and that was a -- in terms of the product, in terms of specification, in terms of the branding, the route to market. And that's done really well. So the volume growth in Charles Church was strong in 2025. We had the volume growth in Charles Church outstripped the volume growth in Persimmon, but really importantly, both products grew. So it's not that we're growing Charles Church at the expense of Persimmon. They both grew. And the Charles Church had a slight tick up, therefore, in terms of its relative share compared to 2024.

And that's good because what we said is that we want to -- in 2024, Charles Church was just shy of 1,000 units. We're looking to get that to 2,000 over the next 2 or 3 years. So we'd expect that growth in Charles Church to be quicker and to continue to grow faster in 2026. So we're really pleased with how that relaunch has gone. And again, in the current market, I think having more strings to our bow, more routes to market, more routes to different customers has proved really beneficial.

And similarly, as well as looking at Charles Church at one end of the market, obviously, we've also launched New Build Boost and Rezide in terms of -- again, it's about trying to bring people to site and offer something different to different customers. So Rezide, very little impact in 2025. We only launched it in Q4. So you wouldn't expect significant impact. New Build Boost, we launched in Q2. That has had some impact in terms of driving people to site.

Interestingly, quite a lot of people who have come in and qualified on New Build Boost have ultimately then reserved on traditional products. So it has driven footfall and driven regular sales as well as New Build Boost sales. So I think neither of the products are, if you like, transformational, but they are both incrementally helpful in driving people to site and therefore, driving additional sales.

Now we're going to take our next question, and it comes from the line of Charlie Campbell from Stifel.

Just a couple for me, really. One was on mortgages. And I'm just wondering if there's anything to say on mortgage availability, quite a bit of noise around that, but wondering if you've seen any changes on the ground or else if people are telling you to expect changes in this year ahead?

And then secondly, on affordable, just so I can sort of understand the path of that a bit. Should we expect a lower percentage of affordable in '26? And also just on the timing, just wondering when the sort of affordable homes program money start to kind of kick in. I understand people are going to apply by February, but just understand kind of when that kind of you would expect housing associations to have more appetite for buying affordable housing with those funds?

Charlie, so let me just pick those up. In terms of mortgage availability, mortgage market, I mean, look, helpful that interest rates are lowering. That's obviously useful. It's helpful that there was some additional or higher loan salary kind of mortgages coming out towards the end of last year, lower deposits. So incrementally, I think the mortgage market was probably more helpful at the end of '25 than it was at the start.

But I think it's -- again, it's incrementally helpful as opposed to being transformative. And certainly, affordability and access to a mortgage or to sufficient mortgage remains a key constraint for many of our customers. So I think there have been some, if you like, some helpful signs, but they're certainly not -- they're not transformative, if you like. And so -- and that's why the industry, of course, has been calling for something similar to a Help to Buy for exactly that reason. I mean what we've been doing with New Build Boost, with Rezide, with Charles Church is not waiting for those kind of policy interventions. We've been trying to get after the market. But I think mortgage availability and affordability more generally for our customers remains a key issue going into 2026.

In terms of the affordable percentage, it was a little bit higher in 2025. Obviously, that's where we saw a significant growth, 30% growth in affordable units in 2025. Clearly, I wouldn't expect 30% growth year-on-year. So there is a likelihood that, that percentage will come back a little bit in 2026. And so I think we're about 17% of total volume was affordable in 2025. Typically, I think it's probably somewhere in that 15% to 18% range, something like that. So it might be a little bit shy or a little bit lower percentage in 2026.

And then in terms of the new funding, I mean what we see is there are continue to be funding challenges for our housing association partners. Clearly, they have a lot of pressures on their businesses. And I'm not sure that, that new money, which is likely to come in imminently in terms of those settlements. I mean clearly, the GBP 39 billion the government talks about is separate to the Section 106 as well. So that's -- this is about really for the Section 106 funding.

So just if I may come in there. I was talking to the Chief Executive of Homes England yesterday. I mean, I suppose the point impressed on me yesterday is the government desire to press on with the program is clearly strongly there. I think them getting organized to move into delivery is more towards the end of the year rather than being materially helpful to this year. There is that pipeline of money there, and it will step up. But I think I'd be expecting more of that impacting '27 than '26, just from what the Chief Executive is saying to me yesterday.

Now we're going to take our next question, and we go to line of Chris Millington from Deutsche Bank.

A few quick ones for me. Apologies, I joined a couple of minutes late, so I don't know if you touched on this, but I'd love your thoughts around the potential for any government support, whether there's any conversations you're having there. There seems to be a little bit of conversation about it in the sector.

Next one, I'd just love to know that the key moving parts on net cash for '26. Is there any danger you move into small net debt, not that I see that as a big issue. And then I'd just love a little bit of detail around why these buildings have kind of come out of the woodwork with regard to fire safety. I know everyone's had additions, but just some of the detail behind yours because it did feel you were a little bit further through your progress than -- well, you are further through the progress than peers, but I'd love a bit more detail on that, if possible.

Chris, again, based on my conversation from yesterday, what I would say is that it's firmly off the agenda at the moment. Will it be firmly off the agenda after May? Will there be opportunities looked at from a stimulus perspective later in the year? I certainly wouldn't rule it out. It is clearly being actively discussed. Treasury do regard this as inflationary. And I think it is the job of us as developers. It's the job of MHCLG. It's the job of Homes England to persuade the treasury that in the context overall that the inflationary element, frankly, isn't a big deal.

And I can just about see how it can be inflationary, but I think it's pretty marginal. So don't hold your breath for now. But would I rule it out? No, definitely not. Is it core to our strategy? Absolutely not. If it comes, it will be a benefit to our strategy. If it doesn't, we can happily cope without it as our strong performance in 2025 demonstrates.

I'll also pick up on fire safety. Yes, it's a bummer, isn't it? Unfortunately, I'm afraid. And why is that? Well, because the tail is very long. It's 30 years. That's the contract we all signed up to. It's incredible that these buildings are still popping out at us. And it's frustrating, but there you have it. It is, and we're dealing with it. We're in a really good shape. You perhaps didn't hear me say this at the start, but I'll repeat it again. Everybody else will be tired of me saying it. But in terms of our known buildings, we are 90% either complete, contracted or agreed price. So at least that variable of escalating cost is being controlled.

And the other progress we made in Q3 and Q4 last year is that we began to achieve recoveries, which is really good news, high time. I think it is high time, as David said in the article in The Times this morning, the whole burden of this has fallen on the developers. It needs to be expanded to the supply chain.

And certainly, we are rigorously going after recoveries, and that will assist. So can I rule out and guarantee to investors, there will be no new buildings pop out at me in 2026 that I have no idea we ever built. No. But do I think that it is manageable, is a direction of travel down. Will we be out of the bulk of this in '26 and '27? Absolutely, I do, and that will enable us to look at our capital allocation.

The adjustment we're proposing for this period has obviously got to be approved by the Board. It's got to go through Audit Committee. But I think in the context of everything, it's pretty modest. So unfortunately, Chris, I think it's a fact of life. There will be bumps on the road. We never promised it would be linear. But year-on-year, the provision is coming down.

Chris, I'll just pick up on the net cash for 2026. I mean the reality is we'll give full guidance on it when we come out in March, Chris. But the point I would make, and again, apologies, I don't know when you joined the call. But obviously, we are looking to grow outlets again in 2026. And growing outlets does take cash because you have to invest in the outlets -- in infrastructure and getting the site set up and open.

So there is upfront cash requirement to do that. We've obviously been active in the land market as well. So there are -- there is investment that we're making quite deliberately so and quite rightly so, but we'll give some more guidance on where we then expect our 2026 cash to be when we come out in March.

And the question comes from the line of Rebecca Parker from Goldman Sachs.

Just one for me on the land market. Just wondering if you could provide some color on land opportunities and where you're seeing there and maybe the pricing in the market at the moment?

Well, we're seeing more opportunities than we can cope with at the moment. I was glad at the Christmas break, to be honest, in case there was another land coming to inserted into it somewhere. So yes, look, land, we -- it was extraordinary last year for us. Yes, and it certainly escalated towards the end.

So I think there's a combination of things going on there. I think certainly, the other thing that's happening as well as the sort of real dynamics of the market, I mean obviously, we've got cash and -- but I think as well, we're becoming a much better partner to do business with. So people who would never have spoken to Persimmon when I first joined 5 years ago now do speak to us. They do pick up the phone to me and others in the business. And land promoters come and knock on our door.

So I think as well as us being in a position to participate in the land market through the rehabilitation of the brand and the efforts of our people to demonstrate the improvement in customer service and build quality. And actually, the design improvement of our developments is stepping up.

So a key thing for landowners is they want to feel proud of -- if they're selling a piece of land, which can be a big piece, a big thing, a big legacy in the community, they want to be proud of the development that they're leaving after them. And so that's been a big turnaround for us and demonstrating that and burnishing our credentials. So the dynamics of it for us are very good. We can afford to be selective. But we're always keen and eager and grateful for a new opportunity.

And now we'll go and take our final question for today, and it comes from the line of Clyde Lewis from Peel Hunt.

Probably one going back on the cash and sort of talking about or thinking about build rates for [indiscernible]. As you sit here today, are you sort of thinking about changing, I suppose, the pace of build versus the pace of sales? Or are you very happy with how that was going last year? That's the first one.

I suppose attached to that, when you sort of look ahead and you look at labor availability and I suppose the overhead structure of the business, how easy would it be for the group to respond and deliver a 10% or 15% increase in volumes if a new mechanism from the government was announced or we did see an improvement in mortgage rates and demand profile?

So I suppose we're positioning ourselves to do exactly that should that happen. Timber frame being rolled out across the business. We're getting used to it. We're probably putting in a new line into the brick factory this year. We stepped up capacity in the tile factory last year. And of course, we're also looking -- we automated the robotic line in Space4 last year. That was a big step-up for us. We had some learnings from that. But now -- that is now an efficient level of production and will step up again this year. So we're trying to get ourselves into a position to exactly cope with that step-up in capacity. And of course, we just delivered a 12% growth in completions and a bigger step-up in EU build.

So I think overall, we're in a good place. And then we'll keep pushing on with build-out rates this year, so we can get ahead of the market. I want to be in the glorious position. And as I know that all of my MDs will be listening into this. I want to get into the glorious position when we get to the end of November, I have no CMLs off of existing sites into December. So that will be a real achievement. I don't know if you got anything to add to that, Andrew.

No. I mean obviously, Clyde, we look -- on the build rates and sales, of course, we keep looking at those. But as Dean says, we try to get ahead on build. It helps with quality. It helps with predictability. And I think certainly as well in parts of the market, particularly Charles Church, it helps with sales actually. So we are getting after the build, which is important.

So I think that's it. Thank you very much for listening to us today. Look, 2025 was a very strong year of organic growth for Persimmon, and I think the business performed brilliantly, and I'm very grateful to the teams for that.

We expect 2026 to be another year of really solid growth. It is going to be driven by our strong pipeline of land opportunities as well as the strength and I think the diversity of our brands and our products and an unrelenting focus on operational excellence. So we're looking forward very much to another year of growth and another year ahead, and we shall update in March.

Thank you very much for listening to us this morning.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good day, and thank you for standing by. Welcome to Persimmon's Plc Q3 Trading Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to turn the call over to your host today, Mr. Dean Finch, CEO. Thank you. Please go ahead.

Thank you very much. Good morning, everybody. I'm joining you today from our Newcastle office, where alongside colleagues I'll later be attending the funeral of our Founder, Duncan Davidson. Of course, our thoughts are with Duncan's family and friends, but it is also a sad and poignant day for us at Persimmon as we remember a man who taught us a lot about business and life.

First and foremost, Duncan inspired many, many people. What quickly struck me at Persimmon was the genuine [indiscernible] Duncan's held in by those who knew him and worked with him. I often hear a great man and a great boss. Duncan was a visionary and an entrepreneur. I have the great honor to lead this company inheriting Duncan's great legacy while trying to build on his great insights and strong foundations. Fundamentally, Duncan knew that a great value home built by great people, trusted to deliver excellence consistently would deliver for customers and for shareholders alike. I, we try to maintain these values, his drive and vision in all we do, as I hope today's results demonstrate.

We're pleased with today's results as they show we performed well in a challenging market. Across the key metrics, we can see the benefit of our investment in the business and our self-help initiatives. We've maintained a good sales rate despite a clear softening for the industry over the summer and in the run-up to the budget. Customer sentiment is more fragile. So I'm delighted we've also so far maintained a sales rate ahead of last year. Initiatives such as New Build Boost, our shared equity product have helped alongside the broader investment in sales and marketing.

Forward sales are up, both our total forward sales and the private forward sales element are up both around 15%. Pricing is robust, and we remain disciplined on incentive use running around 4% to 5%. Our build position is good. We're clearly focused on securing the year-end completions, and we remain on track to deliver our guidance.

Our proactive approach has helped drive further planning success. This is reflected in our growing outlet base. We continue to invest in the business to drive growth and returns. We're being presented with good land opportunities and are maintaining our discipline while growing our overall land holdings.

As we look ahead, the budget is clearly a crucial moment. How any measures impact customer sentiment, including amongst institutional investors will be crucial. Nonetheless, we're on track to deliver this year's guidance and are determined to continue to drive further growth to meet our medium-term growth ambitions.

Thank you very much, and I'll now open it up to any questions you might have.

[Operator Instructions] Our first question comes from the line of Aynsley Lammin from Investec.

Two questions from me, please. Just wondered if you could give maybe a bit more color just on pricing and incentives, how they've kind of evolved through the autumn selling season. I think ASP private is up 1.5%. Is that mix? Is there any HPI in there? And have you ticked up incentives more recently?

And then second question, just on -- obviously, you did a good job increasing site numbers. Just as you look into next year, what's the visibility like for kind of site openings, your expectation of planning for next year?

Aynsley, as we said, pricing has been good so far over the course of the year. I mean, we did see a softening -- well, let me rephrase that. We saw a very strong actually July and August. But then that tailed off towards the end of August as speculation mounted as to what's in or not in the budget. Although what I would say is actually over the course of the last couple of 3 weeks, we've seen sentiment improve again as numbers seem to be rebounding.

So we did see a softening [indiscernible] 2 halves, very strong first part of the summer, softening in the middle, coming back a bit now. Pricing is robust, good PD performance. The area, I suppose we've seen a bit of softening is in terms of institutional demand as well. But overall, pleased with performance. It's still up, but pleased -- a bit of softening, but overall pleased with performance and incentives have held in the 4% to 5% range. So we've maintained our discipline there.

In terms of site numbers, you're right, we've had excellent progress with opening outlets this year. We expect to do a similar number next year, looking to around -- open around 100 outlets subject to planning and looking to drive forward again next year by around 10 to 15 in terms of net. But obviously, that is subject to planning and subject to getting all the various other parties such as Highways, Natural England and all the other good people across the line.

The next question comes from the line of Allison Sun from Bank of America.

Dean, just one question from my side. It's probably more question for Andrew. Is the sales price in the order book, I see it's up by around 1.5% year-over-year. Can I ask it's mostly driven by a mix impact or it's more like underlying increase?

Andrew, do you want to take that up?

Yes, I'll take that. Yes. So as ever, Allison, there is the whole mix effect in terms of geographies and sites and size of products and so on. But I think fundamentally, the point comes back to the point Dean made a moment ago around pricing has been robust. I think particularly the further north that you move, the more robust pricing has been.

And so I think there is -- there will always be a mix effect in there, but it's not that it's a question of the mix is driving up and house pricing is coming off. I think pricing has been robust on a like-for-like basis as well. So I think we're pleased with the pricing we've achieved actually across all of our regions. So it's a combination, but pricing has been robust and that is shown through in the forward order book, Allison.

The next question we have the line from Ami Galla from Citi.

Two questions from me. The first one was on the investments that you've talked about in the release. One was on -- in the recent news flow, you had announced that you've acquired a planning promotion company. Can you talk a bit more about the land market? And how do you see that as an opportunity ahead? And the second one is on the new Rezide product. Can you talk about how the initial interest has been and what's the take-up of that product in the market?

Yes. Okay. Thank you. I mean, the land market is certainly very busy for us at the moment. I'm in a happy position of -- we are in a happy position of having choice. We have a lot of opportunities available to us. So that is enabling us to be choosy. So the immediate land bank is in great shape.

Strat land is also in a good position, and we have looked to strengthen that in places with, for instance, this acquisition of Lone Star. It's a small company, but it fits where we've got some gaps. So we're very pleased with that. So yes, look, overall, land market is very healthy for us at the moment, and we're feeling good about the future.

Rezide only launched last week. I think we've taken one sale so far. But it's -- I think the key point about this with New Build Boost and other products that we either have or we're developing is it gives our customers a range of choice. Clearly, affordability is the main issue still facing the market. So anything you can do to help with that helps boost our numbers.

As I said, we've now got Rezide as well as new Build Boost, so it enables us to give customers more options. The key thing actually really is not so much the numbers we sell through these things, but the opportunities they bring us, we often find that the headline attracts people into the door, but then they may not end up taking that product for whatever reason, but it's extremely helpful to have these tools in the toolbox.

Our next question comes from the line of Will Jones from Rothschild & Co Redburn.

Three, if I can, please. First, maybe just covering off on second half completions. I don't know if you're willing to give us a view on how Q3 looked compared to the roughly [indiscernible], I think you had last year that you gave back then. And just what risks or otherwise you see the delivery into year-end, just noting the 83% exchanged or complete compared to 85% last year. Are you reasonably comfortable around the Q4 delivery?

Second, build costs. I think this time last year, you talked about some rising costs looking into this year and a couple of issues on sites with some regulatory costs. But just anything you could give us on the equivalent this time around as we look to '26.

And apologies if it was covered right at the start of your intro, I just did miss it, but the comments you gave back in the summer around 2026 volume and margin aspirations, do they still apply an equal measure?

Andrew, do you want to pick those up, please?

Yes, I'll take those Dean. Will, so yes, in terms of the second half delivery, I mean, we're ahead in terms of absolute numbers on exchanges and completions year-on-year, as you'd expect. I think the 83% versus 85% is in the sort of margin in the round, isn't it? So pleased with where we are and continuing to progress well for the year-end, which is why we're able to reconfirm in line with market guidance. So pleased with that.

In terms of build cost and inflation, so we said coming into the year, we expected low single-digit inflation, so 2%, 3%. And I think that's around about what we have seen. And obviously, we'll talk more in January and as we go forward and coming off the back of the budget. And of course, this time last year, we just come out of a budget, which has increased national insurance and so on. So that was one of the things we were talking about this time last year, our segment was just after the budget rather than just before.

But I think all other things being equal, I'd expect to continue to see that level of some inflation, but not -- certainly not where we were a couple of years ago. So -- but this year, we have seen that 2% or 3% as we said that we would do.

And then just casting forward, obviously, we talked and gave some early guidance for 2026 in the summer. And obviously, that was all predicated on relatively stable market conditions. And I think we haven't explicitly given any update to that today. I think I'm reasonably comfortable with where the consensus is for volume for next year, also back in line with the guidance we gave on both volume and the trajectory of the speed of margin growth that we talked to in the summer.

The one thing which I have put into the statement today, I do think interest costs next year will be just a tad higher than this year. So probably we guided this year to kind of up to GBP 20 million, next year might be closer to GBP 25 million as we continue to invest in the business. I'm talking about land investment. I'm talking about the investment into work in progress to open new outlets. I'm talking about investment into vertical integration and working through the fire safety remediation work and so on.

So that's really the only sort of tap on the tiller, if you like, that I've just called out in today's statement. But otherwise, I think the guidance that we talked to in the summer is still there in terms of volume and speed of margin progression.

[Operator Instructions] Our next question comes from the line of Zaim Beekawa from JPMorgan.

Firstly, my thoughts go to Duncan's family. I hope today goes well. And then on the questions. The first would be just on Charles Church. You mentioned performing well. I was wondering if maybe you could provide some details or figure on this. And then secondly, Dean, I think you mentioned some softening in institutional demand. Is this just the nature of uncertainty around the budget or anything else going on there?

Should I take the second one first, Andrew, and then ask you to talk about Charles Church.

Sure.

Yes. Look, I mean, it is -- and we have seen 1 or 2 of our PRS customers take the decision to pause investments until they know what's in the budget. I mean, I think it's entirely understandable. So they are taking a wait-and-see approach. I don't think it is lost business, but I think it is perhaps deferred business, and we just need to wait and see like everybody else, what comes out of the budget. Not big numbers yet, but I'll just put it out there for you to be aware of.

Yes. Thanks, Dean. Zaim, so just on Charles Church. So we obviously relaunched Charles Church earlier this year in the spring. And we're pleased with how that's progressing. We've opened 7 new Charles Church sites in the period. And we're looking, as we've said before, to double the volume from Charles Church. It was around about 1,000 units in 2024, and we're looking to double that over the next few years. And I think we're making good progress.

I think there's a couple of things I would call out, particularly. So one is having that extra product at a different price, it gives us an opportunity to sell more products to different customers, different customer base. That's helpful. It gives another string to our bow, which is particularly helpful. It allows us to drive increased outlets. So we're seeing that is of value.

Clearly, it's not for every site, everywhere and some of our sites will just be Persimmon, some will just be Charles Church. In some locations, we can use Persimmon and Charles Church. So I think the extra brand and the extra outlets is giving us opportunity to play choose in a market where you're actually having alternatives and different approaches is very helpful.

So we'll give more detail on the actual numbers in terms of completions and so on, obviously, in the new year. But I'm pleased that we've been able to open more outlets and start to drive that growth in Charles Church that we talked about in the spring.

As we appear to have no further questions at this time. I would like to hand the call back to management for closing.

Okay. Thank you. Well, look, thank you all for listening in this morning. I believe we're in -- I think we're in a robust position as we enter the last few weeks of the year. I'll just repeat really what I said in the summer, which is Persimmon is building a differentiated base for itself through its investment in its land, in its brand, in its products, in its factories and its people. That's enabling us to build on our core strengths, as I see it, which is we choose what to build, where to build and how to build. And that does give us an edge, I believe.

Our products are more affordable on average than our peers. We're working hard to support those with a range of accessible ownership routes and products. We continue to invest in land and target our approach to planning, which is clearly driving growth. And production is accelerating as we drive more from our factories, both through what we're using and through timber frame. So thank you very much for listening in, and have a good day all.

This concludes today's conference call. Thank you for your participating. You may now disconnect your lines.