Taylor Wimpey Stock

Hello, everyone, and thank you for joining the Taylor Wimpey Trading Update. My name is Molly, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Chief Executive, Jennie Daly, to begin. Jenny, please go ahead.

Thank you, Molly. So good morning, everyone, and thank you for joining. As usual, I'm joined by Chris, and I'll start with a brief update before opening for questions. As you know, we are operating in a challenging macro environment. We've seen progressive weakening in market conditions through the year, evidenced by lower mortgage approvals, higher borrowing costs and higher cost of living, impacting customer affordability and confidence. While we continue to see robust underlying customer interest, we have not seen the traditional uptick in the important autumn sales period and conversion to sales are taking longer.

Our half 2 net private sales rate to the 8th of November was 0.6 per week, down 5% on the comparable period, with the cancellation rate unchanged. Excluding bulk deals, the net private sales rate was 0.54, down 11% year-on-year. As a result of this, we now expect 2026 U.K. completions to be around 10,500 homes, below our previous guidance range, with Group operating profit expected to be around the bottom end of the consensus range.

The softer sales environment is also reflected in our order book, which stands at 6,839 homes compared with 7,253 at this point last year, with a value of around GBP 2 billion compared with GBP 2.1 billion last year. Pricing continues to vary by region and by site, and incentives remain an important part of securing customer commitment. Overall, net pricing has softened a little further from the 2% decline we referenced at our last update. Build cost inflation remains in line with our expectations at around 3% to 4% for the year.

As we have set out previously, our focus has been to continue to tightly control the areas we can. In this regard, we continue to be proactive and have renewed our focus on driving efficiencies across the business to protect value and execute against our strategy. Following detailed cost scrutiny, we are progressing targeted mitigation and reduction measures across procurement, commercial, and technical activities, including product substitutions and improvements to site design and site types. I am pleased to see progress in some key areas. I'm particularly pleased on the progress we have made on outlet openings.

We told you we would be opening more this year than last, and we are well on track to do so, which has resulted in an increase in outlets to 225 compared to 206 at this point last year. We are also in a very good place for outlet openings in 2027. Whilst planning continues to present its challenges, we are also seeing success from our early action to capture the opportunity from planning reforms over the last couple of years and have made further progress in our strategic conversions, which rose to around 5,000 plots, more than double the 2,000 plots we converted at this point last year.

Overall, the short-term land bank has reduced as we are cautious on new land investment and move towards a smaller land bank, reflecting our focus on capital efficiency. It is also encouraging that the Government recognized the need for support for the first-time buyer with its -- Your First Home scheme. While the level of funding is lower than that available under the prior Help to Buy scheme, and we await further details of scheme registration and on allocations, the income and regional price caps create opportunity. And with our strong first-time buyer proposition and growing outlet base, we are well positioned to participate as the scheme develops.

So in summary, it has been a challenging year in the housing market, and we've been focused on protecting value against this backdrop. We are executing our strategy in a disciplined manner. We will pull every available lever to improve efficiency and remain very confident in the long-term fundamentals of the U.K. housing market with its pressing need for new homes.

So with that, I'll now open up for questions.

Our first question comes from Zaim Beekawa at JPMorgan.

Maybe the obvious one to start with, and thank you for the sort of commentary you've given on Your First Home. Do you have any sort of idea in terms of how much incremental volumes this might be able to drive when it's running at full capacity? And then secondly, connected to that, as we wait for the enactment of it, are you concerned about the sales rates softening further? And do you think you'll have to offer more incentives to those first-time buyers to get them over the line in advance of that?

Okay. Thank you for that, Zaim. I mean from Your First Home perspective, we've got quite a bit of the sort of eligibility detail that's sort of been filled out through the Budget and in the following days on the price caps. But I think you're well aware from the phrasing of your question, the first year funding is relatively tight at GBP 700 million. And so that's one of the reasons that I'm referring to allocation, just understanding how the scheme implementation and funding allocation is going to play out. I mean it's very welcome. It's a real positive to see Government responding to the concerns that we've expressed and that we can see in the customer for first-time buyers.

But it is hard at this point of time, given the funding envelope and with the absence of some of that detail, to say just exactly what the incremental benefit would be. What I would stress is that eligibility and pre-registration on the platform are expected from December. Customer reservations from February, but really first completions at the very earliest in April. So it's likely to be sort of second half weighted before we see that. I do think, though, looking through our sites and plot opportunity for 2027, that we have -- that we would have good availability. I think then it just depends how all of those variables I've mentioned play out.

On the sales rate softening in sort of first-time buyer maybe waiting in anticipation, I mean, it's less than ideal to have a scheme announced and for there to be such a delay on its implementation. And so I think it's a genuine area for concern. We've been watching our first-time buyers in the order book. Our teams have been very engaged with our first-time buyers on the ground. We've seen to date very little sort of cancellation behavior from first-time buyers.

And we've been driving the message. They've got the plot they want, the deal they want at the rate they want. And we're continuing to see those customers moving through to exchange. What I can't speak to is customers earlier in the pipeline who are potentially delaying on reservations. That's much more difficult for us to see. But it's certainly an area that we'll continue to watch very closely.

Our next question comes from Ami Galla at UBS.

A few questions from me. The first one was on trading. If you could give us some more color in terms of what are you seeing in terms of exit trends and the quality of buyers who are reserving in the current market? And the second one was on pricing. Can you give us some color as to the price softness that you're seeing? Is that more concentrated across fewer sites? Or is it more broad-based? Regionally, is this more London and Southeast driven dynamic?

And any color as to when do we think we can see some stability in the pricing dynamic on underlying pricing? And the last one, if I may, is on cost savings that you touched upon. When do we expect benefit of the procurement changes that you were talking about? When we think about 2027 and the build cost headwind that could potentially be there, are we really looking at a neutral price/cost spread next year?

Okay. Well, maybe, Chris, if you could pick up the cost savings and I'll pick up trading. I mentioned some in my [indiscernible], Ami, that we're continuing to see good or robust customer interest in the early parts of the funnel. And we are still seeing good engagement around customers coming to site. There is a hesitancy that we are seeing the time from first inquiry to reservation in almost all of our operational regions. So that's including the North, extend as customers became more cautious as interest rates climb. We're hearing maybe a little bit more concern, although anecdotal, greater concern around the cost of repayments and that's making customers feel more hesitant and maybe putting them into the let's wait sort of category.

So still really good levels of engagement, good levels of inquiries and appointment but just that real hesitancy and uncertain nature of customer sentiment at the moment. On pricing, as we say, pricing softened another increment since the summer. I mean it's fair to say that the London is particularly challenging. I set that apart from the wider Southeast, which is challenging, but less so than London. And then as we've been talking about actually for quite a while now, gradually improving the further north. But pricing softness is still an issue.

We're seeing a lot of competition across the existing stock and in new home sales. I mean, you asked about stability and underlying pricing. I mean those are really sort of in the macro in mortgage interest rates, customer confidence. The sense at the moment is that there's a lot of stock available and customers have every reason to wait whilst they continue to shop and wait for things to settle. So we would probably also expect to see a reduction in overall available inventory in order to get to that stabilized pricing environment.

Yes. And then on cost, we do recognize the pressure on profits and margin and returns. And as Jennie said, we're actively responding to it. A key part of that is structurally reducing the cost of building our homes through tighter commercial controls, more standardization, and just taking the unnecessary cost out of spec. We've already implemented a number of changes. We've got further pipeline across a number of areas. But the key for us is delivery. We're putting controls in place to make sure that those savings actually flow through the orders, CVRs, and ultimately to the bottom line.

But looking ahead to next year, I mean, suppliers will clearly look to convert some of the current surcharges into underlying price increases, while energy and fuel costs still remain elevated. We'll be doing everything we can to resist those increases. I've mentioned in the past, competitive tendering, e-auctions, benchmarking. We'll also be doing index tracking. And there's always rigorous validation of any cost increases, whatever form they take. And current market conditions actually are creating, I think, a bit greater commercial flexibility with some suppliers prepared to absorb or reduce surcharges as they compete to secure future volumes.

And to go to your basis of your question, which I think was neutral price cost for next year, the extent of the mitigation we can get from those negotiations with the suppliers will depend on how energy and fuel and large commodity markets develop. But obviously, we believe that the actions that we're taking should help us offset some of the inflationary pressure that we're likely to see coming through the supply chain. And on the pricing side, we reported underlying pricing down 1.5% in the first half. And by July, we were running at around 2% below last year. Since then, as Jennie said, market conditions have progressively weakened -- and we're currently running at around about 2.5% below this time last year.

Our next question comes from Will Jones from Rothschild & Co.

Three, please. The first, just coming back to at Your First Home now that we know the price caps. I wonder if you run any numbers on how much of your product might be eligible or how potentially it compares just to your general first-time buyer pricing? Second was around build costs and just within the mix, I think a few of the companies have been referring to somewhat less labor cost inflation. Is that your experience too? And then the last one just around outlets. Clearly, good progress year-to-date, I think up 12%. It sounds like there's more coming. Any sense for whether that 12% could be matched again a year forward? Or should we be thinking about a lower growth rate? I appreciate there's a sales rate element to that view as well.

Okay. Yes, we have been running our future plots through the local price caps. And I'm happy that we've got good eligibility for the first-time buyer. We continue to see, as I mentioned to an earlier question, we continue to see activity from first-time buyers, and we have a good cohort of first-time buyers in the Taylor Wimpey product range. So as I mentioned earlier, the allocation and how the allocation is going to be managed, well, I think, is the question.

It's a tight funding envelope at GBP 700 million. And to compare for the whole of the programme that's been announced at GBP 4.7 billion over those years. That's almost exactly comparable to the last 2 years of Help to Buy. So understanding how that's going to be managed, I think, is the biggest issue for us.

And maybe -- sorry, Jennie, just to jump in there just on that point. But when it opens the registration in December, if it is, I don't know, 3x oversubscribed or something like that, has Government given any indication on how they might react to that? Or is it just too early?

No. I mean -- and that's exactly what I'm sort of leading to. We haven't got any visibility of how funding will be allocated, Will. And I think that the expectation is at the funding level that it will be overallocated or will be oversubscribed and therefore, understanding how that's going to be managed, I think, is going to be key. But I'm very comfortable that we've got good representation and good eligibility for the scheme. On build costs, yes, we're seeing less on labor. We've managed to hold really strong lines through the labor side of build cost through the year. And then on outlets, yes, I'm pleased with progress.

And as you say, there's a little bit of lower sales rates, but we've had a strong showing this year. I'm not going to guide into 2027. And I'm sure that you didn't expect it, but I'm feeling actually quite positive where we sit for 2027 openings. I think it's probably fair to say we haven't been, although we've done well, I think, in our planning execution. We're not immune to the planning delays that we and others referred to. And so outlet openings are probably a bit more weighted to the second half for 2027, as I see it today.

Our next question comes from Lewis Roxburgh from Goodbody.

I just have one question, please. Just as we think about next year from a margin standpoint, it looks like a challenge in terms of build cost inflation and visibility on pricing and volumes. But parking that to one side, what can you do or what measures should we be looking at from a self-help perspective to help mitigate that maybe from a ROCE perspective? Is it outlet growth to increase turn? Can you progress on freeing up more within land? Is the land bank evolution going to give you a better cost base? Just want to get a flavor of how you're viewing that maybe on a longer horizon.

Yes. Thanks, Lewis. So as you know, we don't give guidance for the following year at our Q3 update. But clearly, there's plenty in the statement for you to process the softer autumn selling season, the change we've made to our 2026 volume and profit guidance, obviously, are relevant as you think about 2027. And yes, there's plenty that we can be doing, and you can see that evidence also in the statement as we approach 2027, particularly on outlook being more efficient with our capital. So driving that outlet number without net investment in land.

As we previously said as well, we are being very tight on our WIP and then really looking at every area of our business to make sure that we are efficient through every function and every operation. And so yes, I mean, we are very clear that we continue to operate in a challenging market and remain really focused on tight cost and capital discipline. And against that backdrop, we are working very hard to ensure that the organization is appropriately aligned with the current activity levels.

Yes. And in respect of WIP, Lewis, we have talked about how closely managed WIP is within the business, and we seek to align it to sales rates. And there's a range of management actions and processes all the way down through the business, and those are monitored and measured really regularly. And Chris and I had various MDs through the doors for our budgeting process last week and control, cost control, we're very clear elements of the discussion there.

Our next question comes from Chris Millington at Deutsche Bank.

I'll keep the usual thing going and ask a few. First one I just want to ask is on margins. I mean it does appear from a position of being one of the stronger margin players, yours are unwinding a little bit quicker than peers. Now I wouldn't expect you to comment on the peer group. But do you think there's something in CW, which is driving that differential? Is there something in geography, maybe London this year? But just curious about your thoughts on that. Next one is just on bulk sales, really kind of any change in demand discount rates you're offering there? And then finally, on fire safety, just curious about what spend this year is going to be and how robust you feel the provision is at the moment?

Okay. Thank you. I mean I'll start with bulk just for me. I mean the demand has been variable as interest rates have increased. There's clearly some pricing pressure in the stack for a number of the bulk as a BTR operators. So that is, I think, weighing on appetite and the pricing of bulk. I think into the more strategic partnerships following the announcement of the Social and Affordable Housing Programme, a bit of variability there, strategic partner allocation, some of the RPs, the allocation probably didn't get quite as much as they had hoped for, and meaning we can see that they're reshaping, rethinking, moving pieces around a bit more than they had anticipated. So that's clearly affecting some of their short-term behavior, I think, as we just get their head around that also. Chris...

So Chris, on the cladding spend, we're expecting within this guidance spend of around about GBP 70 million for the year. And in terms of the provision, it continues to reflect our current best estimate of the cost of completing the program. Cost certainty is continuing to improve, as you would expect as we complete assessment of more buildings. And we'll continue to update the provision as that work progresses. And then just on the margin point, there's no question really that our margin has reduced significantly from the levels that we were earning, say, back in 2022. And we're very transparent about what has driven that. And every half year and full year, obviously, we provide a detailed bridge explains the movements in the margin.

And I think we've reported that basis consistently for well over a decade. I think if you look at those bridges, the majority of the reduction comes from build cost inflation, lower underlying selling prices, the operational gearing effect of lower volumes. And those have clearly been significant pressures across the sector. I think if you look at our specific circumstances, then obviously, we have a geographical spread that is right across the country. And yes, that means we are exposed to the weaker markets in the South. And also the other thing is we tend to have a longer land bank than others, perhaps. And the length of that land bank does mean it just takes a little bit longer for new lands to flow through.

Our next question comes from Rebecca Parker at Goldman Sachs.

First one on marketing incentives with them remaining elevated across development and then also underlying pricing continue to experiencing marginal pressure. How can we think about this dynamic, I guess, feeding through to down valuations? Secondly, on the -- Your First Home developer fee, that with homes over 250. How do you expect that to play into current incentive levels? Do you see scope for margin expansion by rolling some of those incentives back? And then thirdly, on the margin side and thinking about land bank evolution into 2027, can we expect an uplift as you do cycle through some of those lower-margin sites and start getting more of that higher-margin land bank?

Okay. Thank you, Rebecca. I'll start with your first and maybe quick on the land bank evolution. I mean, incentives have remained at some elevated levels between 6%, 6.5% that we've been reporting for a while. And it's the same story, elevated levels of inventory available across both the new and existing homes market, a cautious customer with a degree of caution and not really feeling the need to make a decision. There's very little in terms of push factors for customers at the moment. And so incentives become really important as part of that process.

Down valuations by lenders are actually relatively low. But I think that that's more reflective of the level of competition, the fact that our teams are watching and managing pricing across the markets as they see them and ensuring that whilst we're not trying to lead the market that we are following the market closely, and therefore, we're not seeing many down valuations as a result. But they are there and a degree of tension.

On the 4% developer contributions, I mean, certainly, it's a bit higher than we might have hoped. It will play into how we would look at both the sort of the pricing and the incentives that are available for the first-time buyer, but it will also be a reflection of how the market operates from here. So something that would be very much under from scrutiny and something that we'll be looking to manage or to optimize as best we can given the broader market conditions. And to Your First Home and margin expansion, if there is a sort of additional volume as a result of the scheme, then that would certainly be very helpful.

Yes. And just on land bank evolution, I mean, the timing of that benefit is very much linked to sales rates. So high sales rates mean we close out the old sites more quickly and bring the newer, higher-margin land through the P&L faster. And with sales rates lower this year, that benefit is effectively being pushed out a little bit. It was 0 in the first half. I wouldn't expect much in the second half. The overall shape I described in October last year, I think, is still broadly right, limited benefit in 2026, building in 2027 with majority in '28 and '29. But obviously, the lower sales rate this year just means that the 2027 benefit is likely to be more muted than we previously anticipated, and the precise impact will depend on closures next year.

Our next question comes from Sam Cullen from Peel Hunt.

Just got a couple. The first one is back on your first. I take your point around you've got good eligibility. Are you doing any or much replanning of sites coming down the pipe to ensure you've got good levels of availability in all regions at the margin trying to move more balls into 3 beds and 2 beds.

Yes. I mean, look, I think the first thing that I would say is 2027 is pretty written from a mix perspective, Sam. But even on that basis, I'm comfortable that we've got a good level of eligibility. Part of the cost and efficiency, value improvement measures that we're actioning across the business -- our reviews, and reforms, trying to optimize mix where -- we think that the market has moved and we could introduce a slightly different balance of mixes where appropriate.

There are limitations at times through the planning process that the teams will come across, but that's something that we're actively involved in. I mean, in future years, depending on how the scheme allocations operate, we would be optimistic that if it is successful, the Government would feel able to extend the spending envelope in future years. And then potentially, we could look to just gravitate parts of our mix towards it to support increased volume. So that's something that we'll continue to watch. But even from a standing start, I'm happy that we've got good eligibility.

Okay. And I guess second question, which is partially related to the latter part of that answer is clearly, the backdrop is challenging, and you've got probably less support from the Government than people would have hoped, particularly around the fee that you're having to pay to access Your First Home. So even if it was extended, how do you think about the potential uplift to volumes? And given it's going to be less than -- as I say, less than people might have hoped, does it make you think again about the regional footprint of the business and the cost structure you're pricing with?

Well, look, that's something that we're constantly reviewing. In some of the areas that are more challenged around local authority caps. I know they are markets that we don't really participate in, even though we've got really good coverage because they're not tradable markets or potentially there's viability challenges. Further north, some of the caps aren't that generous further north, but we would still see that as a really strong market with good or comparatively good affordability measures. So it is an area that we will continue to review.

But in the areas that we are actively operating in and where we've got our land investment, I think that there's good representation. But -- and in terms of our regional structure, we are comfortable with our coverage across those regions. Our regions, as you know, Sam, are slightly bigger than many of our peer group in the sort of in housebuilders. And therefore, it does give us more access to better -- sort of a more resilient markets. And I think that that's a positive for the business.

Our next question comes from Peter Ajose-Adeogun from Morgan Stanley.

Jennie, I just wanted to get your thoughts a bit more on Your First Home. Just in terms of the customers who inquire, but can't proceed today, could you give a flavor of how many of those are constrained by the deposit versus mortgage availability -- sorry, affordability? And the reason I ask is because, I guess, do you think there's a risk that the scheme may subsidize purchases that just would have happened anyway? And then the second question was just around with sales rates falling, at what point does it make sense to maybe slow down opening more sites? What would trigger the decision to potentially slow that down to protect returns at some point?

Yes. Thanks, Peter. I mean, look, in terms of customer engagement at this point, we've had some customers inquiring. Affordability, I think, we will potentially still be an issue. If you look at the interest rates for a 75% LTV, it's still over 5% the last -- when I looked earlier in the week. So there's still a potential issue there for some. But the deposit, 2.5% will be very attractive, and it will open the scheme to a significant number of purchasers. But with any scheme, even with the eligibility criteria that government have placed around it, there's always the potential for those who could have partaken in the market anyway to use it.

But I think that the design of the local authority price caps is one of the ways that Government are seeking to control that a bit better than they may have perceived in the Help to Buy scheme. So I think the overall local authority house price cap is the method of trying to ensure that people aren't using it just to grade up as we might have seen in Help to Buy. Does that make sense, Peter?

It does, yes.

And in terms of sales rates and our approach to opening, where we've already committed to land and invested, then we are committed to opening the site in an efficient and disciplined way because we see benefits to being represented across a broader spread of markets, and even more so in more difficult trading conditions. But we talked a little bit earlier about WIP control and other things. So we would be very disciplined in the way that we would do that.

And maybe just a quick follow-up, Jenny. Maybe just on the sales rates. Is it possible at all to maybe separate the performance of outlets already open, maybe, say, more than a year versus newly opened? I guess I'm just trying to establish if the established outlets are losing sales or the lower group rate maybe is a consequence of the opening program?

Yes. I mean it's a good question, Peter. And the answer is, I think it's a bit of a mixed bag. In a market where there's hesitancy and looking for -- customer or a bit more hesitant, then it's probably fair to say that they prefer to see a bit more of a maturity on a site opening to make sure that they're confident in their purchase. On the other hand, there are some long-established sites that maybe just given some of the wider issues, whether it's employer-driven or sort of other issues can struggle. So it is a mixed bag. But we work hard to drive a good quality of place and to open our sites well to get as good a start as we can.

We currently have no further questions. So I'll hand back to Jennie Daly for closing remarks.

Thank you, Molly. So look, thank you all for your time this morning. It's appreciated. While market conditions remain challenging, we are focused on the areas we can control, driving efficiencies, protecting value, and improving capital discipline. So alongside our confidence in the long-term fundamentals of the U.K. housing market, our progress on outlet openings, and strategic land conversions, I think, position us well for the future. So thanks again, and we'll speak to you in the new year.

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

Okay. Good morning, everyone, and thank you for joining us today. I'll start with some key areas of focus in trading and bring you up to date on what we're seeing before Chris takes you through the financials and capital allocation in more detail. I'll then return to cover the proactive actions that we're taking to protect margin and improve returns and the progress that we're making on executing the strategy we set out last year, which I think sets us up well for the current market.

So as you're all aware, the housing market backdrop remains challenging. Underlying demand remains resilient, but customer confidence is subdued. So our focus in the first half and my key messages today is on controlling what we can, sharp disciplined execution and a relentless focus on improving return on capital. In other words, we are carefully managing the business to protect value [ NOI ] while also preparing for a cyclical recovery.

Our teams worked extremely hard to deliver these results, and I'd like to thank them all and our subcontractors for their work and the commitment in the delivery. As I've set out here, the first priority is maintaining our tight grip on cost, and we are navigating the current uncertainty with decisive cost and efficiency actions across the business. I'll come on to these in more detail later. But for NOI, I'd just like to pick out a couple of examples for you. Through tight WIP discipline, we are driving enhanced efficiency with WIP per outlet down 6% year-on-year, which, as you know, from October is in line with our plans.

Our scale, rigorous approach and established partnerships have enabled us to identify further procurement efficiencies to offset some of the build cost inflation through retenders, rebates and e-auctions. Our second priority is continuing to drive outlet growth. As you've heard me say many times, we've been proactive and assertive in our planning applications over several years to unlock the opportunity brought by the recent planning reform changes. And you will see the benefit of this as a key lever for future volume recovery. In the period, I'm pleased to say that average outlets increased by 6% year-on-year.

And third, capital allocation. Our priority here continues to be maintaining a strong balance sheet to underpin our ability to deliver attractive returns through the cycle. You will have noted the change to shareholder returns this morning, revising our total payout to 4% of net asset value. Chris will take you through this shortly, but there's no change to how we allocate capital, but the housing market downturn has been more prolonged than anticipated and affordability pressures continue to affect demand and profitability expectations, which remain lower than when the current distribution level was set. More recently, uncertainty arising from the events in the Middle East has added to an already challenging backdrop.

Taken together, these factors have led the Board to conclude that a lower level of annual distribution is appropriate for the current environment and will give us greater flexibility and resilience through the cycle.

So despite the uncertain backdrop, on the whole, trading in the first half remained pretty resilient. I'm really pleased that during the period, we made further progress on outlets, one of our key priorities, operating from an average of 219 outlets in the period and opening 39 new outlets compared with 32 in the first half of last year.

Turning to sales. The first quarter was solid, though more subdued than the comparable period in 2025. However, from April, the market has been incrementally more challenging and uncertain given the conflict in the Middle East and also recent domestic political uncertainty. Our net private sales rate was 0.75 per outlet per week, about 5% lower than the GBP 0.79 in the first half of last year, whilst bulk sales remained around the same level. Private average selling prices increased to GBP 371,000, up from GBP 350,000 in the first half of 2025, mainly to do with mix.

The cancellation rate reduced to 14%. The order book as at the 28th of June stood at GBP 1.9 billion, representing 6,882 homes. So looking at current trading. As you know, the summer is a traditionally slower season for sales, and this is only 4 weeks' worth of data. But you can see that the net private sales rate per site is running 7% down on the same period last year, 5% down excluding bulk. Pricing, which has seen a gradual decline through the first half has stabilized in more recent weeks. Customer behavior is cautious, and they are taking longer to make decisions.

On a site-by-site basis, this means our focus is on driving more appointments and our regional teams are using targeted incentives where they genuinely support conversion rather than taking a blanket approach. And I'll talk you through this a little bit more shortly. Affordable housing providers remain quite constrained in the Section 1 and 6 market, so securing affordable housing delivery remains challenging. We are in a good place for 2026 affordable completions, but with the flexibility introduced by the ministerial statement in January, having a December 2027 delivery cutoff, the challenge remains.

We continue to press government for greater flexibility in type and tenure through cascade mechanisms to support the delivery of affordable housing. And with that, I'll now pass over to Chris, who will take you through the financial performance, cash flow and capital allocation in more detail.

Thanks, Jenny. Good morning, everyone. I'll start as normal with our first half financial performance before moving on to the balance sheet, how we're improving our capital efficiency, supporting cash flow and capital allocation and then finish with our outlook and guidance for the remainder of the year. As Jenny has outlined, market conditions remain challenging through the first half. Against that backdrop, the group delivered a solid first half performance. Group revenue increased to GBP 1.68 billion, supported by disciplined U.K. delivery, higher average selling prices and GBP 32 million of land sales, partly offset by lower completions.

Margins and profitability were impacted by the ongoing pressure from lower underlying pricing and build cost inflation. Gross profit was GBP 254 million, down 10% year-on-year, with gross margin reducing by 200 basis points to 15.1%. The reduction in gross margin was the primary driver of lower earnings in the period. Adjusted operating profit was GBP 130 million compared with GBP 161 million last year, while adjusted operating margin also reduced by 200 basis points to 7.7%. Our balance sheet remained resilient with tangible net asset value per share broadly unchanged at 117p and return on net operating assets measured over the last 12 months, also broadly stable at 10%.

Turning to U.K. performance. U.K. completions, excluding joint ventures, were 4,723, down 3.5% compared to half 1 last year, but ahead of the first half weighting assumptions we outlined at the start of the year and updated at the AGM. Average selling price, excluding joint ventures, increased by 6.7% to GBP 334,000. Private ASP increased by 6% and affordable ASP by 9%. Mix was the principal driver of these movements with a higher proportion of completions from the South and homes that were on average around 3% larger than last year. And these factors were partially offset by lower underlying pricing, reflecting ongoing market pressure. For the full year, we now expect the blended U.K. average selling price to be around 1% ahead of last year with affordable homes contributing approximately 21% of completions. Joint venture completions increased to 88 with our share of joint venture profits contributing GBP 4 million in the first half. We aren't expecting any net contribution in the second half, and therefore, guidance remains at GBP 4 million of JV profit for the full year. U.K. gross profit margin was 14.4%, down 180 basis points year-on-year, which will be explained on the next slide.

And this slide, which will be familiar to you, sets out the key drivers of the movement in U.K. adjusted operating profit margin versus half 1 last year. Overall, margin reduced by 160 basis points. The largest driver was the net market impact of 280 basis points, comprising around 110 basis points from lower selling prices and 170 basis points from build cost inflation. Starting with pricing, performance was broadly in line with the trends that we've highlighted since January. Following modest softening through the spring selling season, particularly in the southern markets, pricing has been more stable in recent weeks. Overall, underlying pricing on half 1 completions was around 1.5% below the prior year. Build cost inflation in the half was 2.5%. We continue to challenge supplier cost increases robustly and leverage our scale and procurement initiatives to mitigate inflation.

Conditions appeared to be easing during May and June, and we were actively discussing the removal of certain surcharges with suppliers. However, the subsequent increase in energy and fuel costs has slowed that progress, and we now expect surcharges to remain in place for at least the next few months. Land bank evolution has no impact on the half 1 margin as the contribution from newer land offset the reduction in older, higher-margin sites bought after the Brexit referendum.

The 130 basis point positive movement reflects the absence of the GBP 20 million charge for historical defective workmanship recorded in the prior year. Land and property sales reduced margin by 20 basis points and joint ventures provided a modest benefit. We remain firmly focused on the areas within our control, build efficiency, cost discipline, procurement, WIP management and disciplined capital allocation, which I'll come on to shortly. Looking ahead to the second half, the margin outcome will continue to be shaped by the balance between pricing, build cost inflation and volume delivery.

Underlying pricing is currently around 2% below prior year levels and has been stable in recent weeks. Build cost inflation is expected to increase to around 3% to 4% for the full year, reflecting the factors I've just discussed. Accordingly, both pricing and build costs are expected to remain headwinds in the second half. We will continue to focus relentlessly on procurement and cost discipline to mitigate those pressures wherever possible.

Turning to the balance sheet. A key message from our October strategy update was that growth would come from unlocking value within our existing land bank rather than increasing investment. The GBP 169 million reduction in land, net of land creditors over the last 12 months demonstrates that approach in action. With all the land required for 2027 already owned, we remain focused on improving capital efficiency while supporting future growth. The quality of our land bank continues to reflect many years of disciplined investment and asset management.

With a reported U.K. gross margin of 14.4% in the period, there remains plenty of embedded value across the portfolio. To give you some sense of this by way of illustration, our sensitivity analysis indicates that a further 5% reduction in prices today would result in an NRV charge of only around GBP 30 million. Work in progress is in line with our expectations at this stage of the year, but remains higher than where we ultimately want it to be. It reflects the second half weighting of completions, investment to support new outlet openings and certain legacy more capital-intensive sites.

However, as I'll show you on the next slide, we are making good progress against the actions that we set out last October to normalize that position. Debtors at the half year were elevated principally due to deferred receipts on land sales and BTR deals, and we expect that elevated position to unwind by the end of the year. Provisions have reduced over the last 12 months as fading remediation works have progressed. There was no material change in the gross provision in the period with only minor movements for discounting and inflation.

Spend in the first half was GBP 36 million, and we now expect around GBP 100 million for the full year, lower than previous guidance due mainly to delays in securing approvals and building safety fund reimbursements. Importantly, our expectation to complete all works in 2030 remains unchanged.

Before moving on to cash and capital allocation, I wanted to briefly revisit the commitments we set out at our investor and analyst event last October around improving capital efficiency. As we said at the time, improving returns is not dependent on a recovery in the market. It is fundamentally about improving the efficiency with which we deploy capital across the business.

Since October, we've continued to make tangible progress against the operational actions that underpin that strategy. We've improved WIP efficiency with WIP per outlet reducing by 6% year-on-year. We've continued to recycle capital from London apartment schemes and other infrastructure-intensive investments, releasing capital for redeployment into higher return opportunities.

We've increased outlet numbers by 9% while maintaining a stable short-term land bank, demonstrating our ability to generate more selling outlets from our existing land position. We're continuing to increase the proportion of smaller, more capital-efficient sites entering the business, which supports higher outlet density, lower capital intensity and improved asset turnover time. We've also reduced land bank years and lowered the capital tied up in land, further improving the efficiency of our capital base. I see this as encouraging early evidence that the actions that we set out last year are gaining traction with the business responding to pace to improve efficiency.

While the full benefits will take time to flow through into volumes and returns, the progress achieved demonstrates our focus on controlling the factors within our influence despite a challenging market backdrop. The actions we're taking today continue to strengthen the business, laying the foundations for improved asset turn, stronger cash generation and higher returns over the medium term.

Having shown the progress that we've made against our capital efficiency commitments, this slide illustrates how that translated into cash generation and capital deployment during the first half. We started the year with net cash of GBP 343 million and generated GBP 130 million of cash from adjusted operating profit. Consistent with the disciplined approach we outlined in October, we've been highly selective on land approvals and land spend during the period, resulting in a GBP 49 million reduction in land investment. We also invested GBP 108 million in work in progress, consistent with the operational priorities and phasing discussed earlier. As a result, the business generated GBP 52 million of cash from operations during the first half.

After tax, shareholder distributions and other cash outflows, we closed the period with net cash of GBP 169 million. The key takeaway is that we remain disciplined in how we allocate capital across the business. While the timing of cash generation will naturally vary between periods, our focus remains on improving capital efficiency, maintaining balance sheet strength and preserving the flexibility to deploy capital in line with our long-term priorities.

Turning to capital allocation. First of all, by way of context, there is no change to the strategy we set out at our investor and analyst event last October and no change to the capital allocation framework that underpins it. Our priorities remain straightforward and consistent. First, we maintain a strong balance sheet appropriate for the cyclical nature of the industry. Second, we invest selectively in land and work in progress for growth and long-term value creation, noting our clear focus on driving improved capital efficiency. Third, we understand the importance of cash returns to our shareholders and remain committed to delivering attractive returns through the cycle.

And finally, where capital is genuinely surplus to the needs of the business, we return that excess cash to shareholders. Those priorities remain unchanged. However, given the prolonged housing market downturn and in particular, the continuing uncertainty in the macroeconomic and political environment in which we're operating, the Board has determined it is now prudent to reassess the level of cash returns we are making. As you will have seen in this morning's announcement, we're updating our distribution policy from a total annual return equivalent to 7.5% of net assets to 4% of net assets. Before turning to the mechanism, I'd like to explain the basis for the Board's decision.

Whilst we're making good progress against our operational priorities, the current cycle is seeing a more prolonged downturn than we anticipated, exacerbated by the crisis in the Middle East. Consistent with our long-standing priority of maintaining a strong balance sheet and financial flexibility, the Board has concluded that a distribution level equivalent to 4% of net assets is the appropriate basis for shareholder returns going forward. This will comprise an annual ordinary dividend equivalent to 2% of net assets, supplemented by a further return of 2% of net assets by way of incremental dividends or share buybacks.

Cash dividends remain an important element of shareholder returns, but at current valuation levels, we see significant merit in complementing them with share buybacks. Overall, we believe this approach strikes the right balance between delivering attractive shareholder returns, maintaining confidence in the sustainability of distributions and preserving financial flexibility in a less supportive market environment.

Before turning to guidance, I just want to reiterate some of Jenny's comments about what we are seeing in current trading. Whilst underlying demand for new homes is robust, affordability remains stretched in a number of markets and customers continue to take a measured approach to purchasing decisions, which is reflected in the lower sales rate that we saw in the first half. Accordingly, we expect the headwinds from both pricing and cost that we experienced in half 1 to persist through the second half. While underlying pricing has been broadly stable in recent weeks, it remains on average approximately 2% below prior levels. At the same time, we anticipate build cost inflation on completions will increase to around 3% to 4% for the full year, given the continuing pressure from energy and fuel-related costs.

Conditions also continue to vary across the country with the South generally experienced a more challenging backdrop than other regions, given affordability pressures and a greater reliance on discretionary movers. So pulling this together, we're adjusting our guidance for U.K. completions this year to a range of 10,600 to 10,800 homes, which is the lower half of the range we provided in March. We expect blended U.K. average selling prices for the full year to be around 1% higher than last year, driven by mix and assuming an affordable share of approximately 21%. However, as noted earlier, we expect further pressure from underlying pricing, which is currently running at 2% down year-on-year compared to 1.5% in half 1.

Build cost inflation, as I called out earlier, is expected to increase from 2.5% in the first half to around 3% to 4% for the full year. Group net operating expenses were GBP 128 million in half 1 and will be at a similar level in half 2. We don't expect any net contribution from JVs in the second half, and therefore, guidance remains at GBP 4 million of JV profit for the full year.

Net finance costs are expected to be around GBP 25 million, GBP 5 million less than previous guidance. Net cash is expected to improve during the second half, increasing from GBP 169 million reported at the half year to around GBP 250 million at the year-end, assuming approximately GBP 100 million of cladding-related cash outflows during the year. So in conclusion, the market remains challenging, but our priorities are clear. We're focused on disciplined execution, improving capital efficiency, maintaining balance sheet strength and allocating capital responsibly. Those actions position us well to navigate current market conditions while continuing to execute against our strategy and create value for shareholders over the longer term. I'll hand you back to Jen.

Thanks, Chris. So I'll now turn to how we're managing the current uncertainty and how we're positioning the business to protect value now while preparing for a cyclical recovery over the medium term. So let me first step back and just put the current environment in context, looking at both demand and supply. On demand, sentiment, confidence and affordability continue to be affected by the global and domestic backdrop. So while there continues to be very high underlying demand, effective demand has been weakened. It's not all bad news as the consumer has proved pretty resilient and continues to transact, albeit they're very value focused. Mortgage availability remains good and lenders remain committed to the market.

On supply, there's been a little disruption due to the local elections. But despite this, we've been able to drive continued planning momentum and are pleased to see positive progress with planning and continuing commitment to positive determinations, especially by planning officers. There have also been some positive policy measures from government off the back of the Planning and Infrastructure Act, although we await the formal introduction of the National Scheme of delegation and await the NPPF redraft, which is now expected in September. Build cost is facing increased pressure because of knock-on energy surcharges, particularly in materials and mitigation is a key focus for the business, which I'll come on to in a moment.

The labor side has been more stable, and there's good capacity in the industry, though there are some signs of financial stress. We've spoken previously to you about the cumulative impact of regulation. The HBF recently estimated that these factors, together with the underlying build cost inflation have added approximately GBP 76,000 to the cost of delivering a new home since 2020.

In London, the figure is closer to GBP 98,000. These additional costs are now visibly impacting the viability of new sites, especially in areas of lower ASP or underlying ground conditions or infrastructure demands or Section 106 agreement requirements are overweight. This subject remains one we raise regularly in our engagement with government, and we will continue to do so. It's particularly important given the recognized economic multiplier effect of new housebuilding as well as the scale of the opportunity and job creation our sector brings to local communities and the support it provides for the wider supply chain. So the environment is not a straightforward one, but it is one we understand, and we are sharply focused on the areas we can control.

From a customer's perspective, affordability remains the key challenge to overcome as it has been for some time, particularly for the South and for first-time buyers. We're responding by helping customers navigate affordability through tailored incentives and our summer campaign, your home, your budget, your way, helps our customers understand the support available and to see a route through to homeownership.

We continue to generate a healthy level of site activity with a good number of appointments, although customers remain cautious. More visits are needed prior to reservation and as a result, time to reservation is taking longer. All in all, I'd characterize it as a buyer's market out there with listing levels near 12-year highs for this time of the year according to Rightmove. Our approach over the last couple of years, as you'll know, has been to prioritize high-quality leads as opposed to overall traffic, upweighting investment in the channels we have assessed as delivering this objective. We're applying an increasingly more systematic approach to sales, leveraging our customer database using targeted media spend to drive higher quality leads and applying incentives in a disciplined way to support conversion.

This is having a positive effect in driving customers to book appointments predominantly through our website with website appointments up 13% per outlet year-on-year. Overall, when we include all types of appointments, so that includes walk-ins and appointments booked by our sales executives directly, they're also up year-on-year in absolute terms. However, on a per outlet basis, the picture is pretty stable.

Right, there we go. Tight operational discipline and cost management are business-as-usual at Taylor Wimpey. But here, I want to give you a sense of what we're doing to drive this even further throughout the business. I'm really pleased with how the business has responded and I have a few examples to share with you this morning. Firstly, we're applying the lessons that we learned in the 2022, '23 energy price shock and have been quick to respond even before the cost pressure emerged. That included a surcharge model, forensic input scrutiny to challenge increases, seeking substitutions where appropriate and using procurement scale to mitigate the impact and of course, through our partnership negotiations. A second example is how we've been actively preparing for the building safety levy, which is expected to come into effect from the 1st of October this year in relation to both new and existing land assets.

Through considered action, so in effect, the submission of new initial notices for existing and pipeline sites, we've been able to mitigate these costs, ensuring that sites will not be liable for building safety payments until 2029. We are implementing tangible and deliverable savings through our value improvement program. And these aren't theoretical initiatives. They're site level actions that can be delivered quickly. So for example, as you know, taxation for landfill increased last year, and we're therefore driving savings in site waste and disposal costs using the Nexus ReGen digital materials exchange platform to identify reuse opportunities across our own national network. This is delivering meaningful savings on waste disposal costs as well as enhancing our sustainability.

We're working proactively with 15 key partners in high-value areas to identify new opportunities to drive value. So for example, rationalization and change of white good providers aligned with customer research. Individually, the improvement is incremental, but overall, it is meaningful and importantly, embedded in our mindset with the team driving operational excellence and a cost focus, which is now considered business as usual.

And finally, we're continuing to increase delivery from the standard house type range and standardized products and processes so that each improvement is repeatable across the business, levering cost and efficiency benefits. So that's just a flavor of some of the core initiatives underway. We are relentlessly seeking ways to improve the cost base of the business, and we'll continue to do so over the coming months.

So turning now to the actions that allow us to unlock value from the existing land bank and underpin future growth. We've continued to stoke the planning momentum we've created, and we currently have around 32,000 plots in planning for first principle determination. And there are 11,000 plots targeted for a set of planning application submission over the remainder of 2026, and that's over and above our business-as-usual activity. We converted around 3,000 plots from the strategic pipeline in the first half compared to around 1,000 in the first half of last year, showing some improvement on delivery as expected.

We also achieved a 72% increase in detailed planning commissions in the first half compared to the first half in 2025. And importantly, we own all the land required for 2027 completions, over 97% of which have detailed planning permission. The quality of our land bank has allowed us to be highly selective. And in the first half, we approved around 3,000 new plots. In terms of the current land market, though we remain highly selective, we are seeing a modestly improving pipeline, albeit from a fairly low level of activity. Where there are realistic landowners, there are some deals to be done and our financial resilience and market positioning means that we are well placed to benefit.

The focus on smaller, more capital-efficient sites with lower planning and technical risk aligns with our commitment to drive capital efficiency. And in the first half, the average site approved was 166 plots, and you can see on the graph here how that has moved over time. Together with planning commissions unlocking value from the existing land bank, smaller sites will support outlet growth without the need for new net land investment. I'm really pleased that despite the backdrop, we remain on track to open more outlets this year compared to last year and continue to expect higher average outlets in 2026 than in 2025.

To summarize then, we're firmly focused on the areas that we can control, including outlet growth, cost and improving return on capital, and I'm pleased to see the progress being made across these measures. We continue to support the government's housing ambition. And if we are to unlock delivery at scale, targeted action is needed to support both demand and viability. And we're committed to disciplined capital allocation in line with our long-established capital allocation framework, which demonstrates our commitment to prioritize -- to the priorities of managing a strong balance sheet, disciplined investment in the business and a commitment to returns for shareholders.

So thank you. And with that, we'll now open up for questions.

Aynsley Lammin from Investec. I think I've got 3 actually, please. Just first of all, on price and incentives, just kind of what you're doing there, what they're currently running at and the kind of slowdown you've seen over the last 4 weeks, is that, in your view, just the more summer kind of seasonal slowdown? Or have you increased price incentives as a reaction to that? And then secondly, I guess, related, just what you're seeing on mortgage rates, how big an impact is that having on kind of sales rates? And just on your strategy in the CMD, the kind of obviously saying that hasn't changed fundamentally. But when you look out for the medium term in terms of return on capital and the targets you'd expect to reach, has that changed given the backdrop of where you think the medium-term kind of returns for the business can get to?

Okay. So as Chris mentioned, we have seen a real sort of gradual erosion of on price over the half year, and we're now running at about sort of 2% down on year-on-year. There has been some stabilization over the last few weeks. But as you've seen, sales rates have also sort of shallowed off. In the last 4 weeks, I mean, we are now in proper summer season, and we would expect a slowdown, but it is perhaps disappointing to see it come off just quite as much as it has. But that, I think, correlates Aley to your question about mortgage interest rates. We have seen a move in mortgage interest rates within those weeks also. So if we think back to sort of Middle East sort of conflict, we saw a sharp increase in mortgage interest rates. I think through last year, we've seen some gradual improving, obviously, of interest rates, but we also had the benefit of the FCA and the PRA improvements, which for some borrowers, improve the multiple of income that they could borrow.

We saw interest rates easing a little bit, albeit some of the stress testing didn't maintain the benefits from the previous year. And then really on the collapse of the cease fire at the start of July, we've seen a sharper correction and interest rates rose again just in the last few days. So the mortgage rates are, I think, having an effect on affordability. And the sales teams would report that we're seeing people right on the very edge of affordability and that that's qualification is proving challenging for some.

The -- I mean, in terms of our CMD and the strategy, I think as we've said this morning, fundamentally, there's no change in that strategy. We've got an excellent land bank and the opportunity to leverage that as well as investing cautiously or highly selectively at the moment in smaller sites, I think will help drive our outlets and ensure that we're driving stronger sort of capital efficiency.

And overall, in terms of the medium term, clearly, the current conditions aren't conducive of one of the fundamentals that underpins the medium-term targets you think the regulatory -- offsetting of build cost inflation, including regulatory cost against house price inflation. And clearly, that's not the environment that we're currently operating in. So at this point, we still feel that the strategy is correct. There's the opportunity to get there, albeit it's probably moved out given the current climate.

Kate Middleton, Panmure Liberum. Three questions from me, if that's all right. So you've reduced WIP by 6% per outlet. I was just wondering if you see this coming down any further? And if you can maybe talk about the optimum levels that you see for WIP per outlet efficiency. Secondly, there's been a nice progression of outlets opening year-on-year. Just wondering how we can think about this one moving forward and if it will continue to progress at a similar rate?

And finally, the distribution policy, should we think about that staying at 4% moving forward in the medium term? Or is there perhaps any catalyst that could cause that to move? And if so, what might those be?

Okay. If I take the outlets and the sort of distribution policy and Chris, if we do the web, that would be helpful. We don't guide on outlets. And although we are seeing momentum in the planning environment, we are waiting at this point now to see what government's new sort of housing and planning policy looks like. We're very hopeful that the national scheme of delegation that will kick in from October will help ease some of the bottlenecks and planning resource issues that we've seen through the last few years. So I remain optimistic. And as you've heard, we continue to prime sort of the planning system to take the benefit of that. But that and how the land market operates really is what will drive sort of outlets overall.

You heard us say that we're in a good position for 2027 with all land owned for completions in 2027 and the vast -- well, 97% of it has detailed planning permission. So I feel that we're in as good a position for 2027 as we can, but there are a number of other moving parts that will contribute to outlets over the medium term. And in terms of the distribution policy, we believe that the revised annual return of the 4% of net assets strikes the right balance between continuing to provide an attractive level of shareholder return but given the group much greater flexibility and resilience through the cycle. I think NAV is still the correct way given that we're an asset-backed business.

And clearly, you've seen that we've made the decision that given the share price at the moment that there's the opportunity to include the share buyback on that. And we remain committed to delivering sort of sustainable returns for shareholders. In terms of catalysts, this is the best judgment that we make at the time, given the conditions that we observe. We're confident in the 4% that we've declared today, but the Board will review as they always do, the share and the dividend structure on a regular basis. So Chris, on WIP.

Yes. So okay, we reduced WIP per outlet down to 9.3 million. And you've heard me talk about sort of normalizing the WIP balance in terms of reducing the capital that's locked up in the London apartment schemes and also in the infrastructure-intensive sites. I think if you strip that out, we could get down to something like GBP 8 million per site. So that would be a medium-term sort of target to try and be helpful.

Allison from Bank of America. Only one question, very big picture. Do you have any comment or thoughts on the recent rumors on this potential renewed Help to Buy thing from the new leadership?

I mean, look, we will plan and run the business based on the environment that we see. I think they're just that at the moment, rumors. There is regular engagement, both from Taylor Wimpey and the sector. Given all that we see in the current operating environment, the risks that we see potentially to contraction across the sector for a government that's ambitious for housing delivery, we do think that they need to address demand and viability, as you heard from me this morning. So it's certainly something that we're leaning into. But I haven't heard anything substantive from the new government.

It's Charlie Campbell at Stifel. Two questions, please. Land market, I think you're suggesting that some land vendors are more realistic. But just wondering kind of how many and at what point -- how long it will take for the land market to adjust to current selling prices and current build costs? And then secondly, it seems that what you've been saying and others have been saying is that a lot of the energy has been dealt with through surcharges, which kind of gives the impression that if energy prices sort of come back, then build costs would come down quite quickly. Just wondered if that's the right interpretation?

Okay. I mean just dealing with energy quickly. We've been very deliberate and our teams have been really deliberate to ensure that we are marking this market increase in build cost as surcharge as distinct from underlying or other of the sort of variable inputs for exactly that reason, Charlie, that if we see energy costs coming back in again, that we can get those surcharges removed visibly as quickly as possible.

And I think as Chris mentioned, there was a period through May and June where we had started the discussion and some of the sort of material suppliers were talking about starting to reduce the surcharge because the barrel price of oil had come down. That has unfortunately been reversed with the sort of the recommencement of facilities. And so we're keeping a really close eye on those surcharges. That's exactly the approach.

In terms of the land market, there's always a difference between a transaction and whether that's the market or not. We've talked about being highly selective. I think it's fair to say that there was a noticeable pause across the sector through spring, real visible reduced bidding depth, so less active bidders in the market, but also a few contracts actually being completed.

Some parts of the market have become more realistic. I would say that landowners are often the very last to accept that things have changed, potentially hoping that there'll be a reversal on some of those costs. But we have noted more recently that the markets have become just a little bit busier. But I would again just check that, that's from quite a low base. And I don't really think that, that's showing an easier transaction environment. But what we are seeing is landowners and promoters possibly checking the market for value at an earlier stage, particularly if they're in the planning process and understanding really what sort of value they would be. a lot of reliance on deferrals and conditional structures at this moment.

And probably fair to say that landowners are really struggling, even if you took the more recent sort of build cost, really struggling to process the impact of those regulatory costs that have been sort of loaded into the sector. So land price adjustment, there's a number of elements that play into that. We would say, so the sector and our land teams, we're looking really closely at house price, what we're seeing absolutely current day in build cost, and we're looking at sales rate in a very known basis, landowners are often still thinking about a few years ago before some of these issues hit. So I think adjustments, we've learned, I think, over the last couple of years that adjustments in the land market take longer than they have done in other parts of the cycle.

Rebecca Parker from Goldman Sachs. Just 2 questions from me. Firstly, on appetite for bulk sales and what type of discounts you're seeing in the market at the moment? And then secondly, on operating costs, just noting that the guidance for the full year is up about 7%. Just wondering if you can provide some color on the key drivers there and then potential cost out into next year and where we could see some of those costs come from?

Okay. Chris, will you pick up the operating cost point? I mean in terms of bulk sales, we remain really consistent, Rebecca, in the way that we tend to look at them. We look at them on a project-by-project basis and trying to understand the benefit versus the potential discount on return on capital and being able to recycle WIP. Our bulk -- our activity in the bulk market has been very similar to what we saw in half 1 of 2025. And we tend not to do large multiyear sort of bulk deals very frequently at all. Discounts that are being reported in the market are between 15% and 20%. And I'd say we're not seeing anything different to that.

Yes. And just on the operating cost, the increase are driven principally by wage inflation. Also in this half, obviously, we've got with the full impact of the NI increases introduced in April last year, together with some additional IT investment and other inflationary increases.

And then just potential request.

Yes. Sorry, yes. Obviously, we -- as part of our business as usual, we look at constantly how to do things more cheaply. And I think that the focus this year has shifted somewhat into the things that we do and whether we need to do them and looking at our processes and our procedures and really more fundamentally at where we can get at cost. So yes, that's very much front of mind.

Emily Biddulph from Barclays. I've got 3, please. The first one was just on WIP in London on those infrastructure-heavy sites. Based on what's on the order book at the moment, can you give us a sense of where you expect that to be by the end of this year? Secondly, you said that price is down 2% at the moment, but it's been relatively stable in the last few weeks. I was just trying to remember what the phasing of price was last year. I seem to remember it weakened into the end of the year. So if price stays where it is today, does that mean that when we look at that margin bridge at the end of the year that for the second half, it will be minus 2%?

Or is there scope for it to be a bit better than that because the comp starts to become a bit easier? And then thirdly, just on the margin mix of sites. Obviously, you're doing a really good job of opening new sites. And you said at the end of last year that you didn't expect to get much margin mix help for this year. You did have a big step-up in numbers for next year, and it looked like the mix was going to be better. Presumably, that's still the case. Even if the sales rate continues to be weaker, do you still get that? Or does a weaker sales rate mean that sort of lower margin stuff kicks around for longer and it's harder to achieve next year?

I will take this.

Yes, yes. So in terms of the WIP and London and the infrastructure and specifically, you asked about the London sites, the 9 that I said, I think, in October that we had 270 million. We've said that, that's reduced down to GBP 220 million. I think actually, you'll start to see that there's further reduction as we get to the end of this year. probably of the same order of magnitude of reduction that you've seen over the course of the last year.

But -- and I was pretty clear about this in October as well, that's going to fluctuate. So it will come down a bit more and then it will go up a bit. And it will take until 2029 for us to literally shift all of that GBP 270 million. In terms of the second question, and Emily will need to like correct me if I'm interpreting your question wrong. But I think really what you were saying is in a scenario where pricing continues to be on an underlying basis, 2% down for the rest of this year, what would you expect to see in the margin bridge at the end of the year?

And if the first half margin bridge is at 1.5%, and we stay at 2% for the rest of the year, then I'd expect the margin bridge at the end of the year to be somewhere between 1.5% and 2%, does that help -- and then sorry, if you remind me what the last question...

The margin mix on site. The margin mix -- the guidance [indiscernible].

The margin with a guidance from the sector.

Yes. I think it's the margin evolution through the land bank.

Right. Yes, yes, yes, sorry. So I mean, when we set the medium-term targets in October, obviously, we assumed that house price inflation, build cost inflation, as Jenny said, was broadly offset. And obviously, the backdrop has been less favorable. But I think it's important to remember that the medium-term targets weren't just set on that one assumption. They're underpinned by a much broader sort of operational plan, outlook growth, improving capital efficiency, reducing with evolving land bank. And you're specifically asking about that evolution of land bank element.

Yes, I mean, from October, you saw that chart, which shows you the different vintages of land and how they sort of play out over time. Absolutely, we would expect that evolution to continue. I think you've seen last year, the land bank evolution was a small negative. In this period, it's flat. It's probably going to stay pretty flattish this year, and then there should be the start of small levels of improvement. But as I emphasized in October, it ramps up towards the end because that is the nature of how the evolution plays out. That answer your question.

Sam Cullen from Peel Hunt. I've got 2 also. The first one is on, I think... Chris, there's a comment in your section about London being -- or South rather being a bigger part of the mix. Does that reflect just the sites coming through? Or is that a conscious push to really get through the London apartment as quickly as possible, given North has been generally in the south for the last year or so? That's the first one, one at a time or both. Okay. I'll do the second one. And then I guess a year ago, we were here and the distribution policy was reliable and sustainable. And clearly, it's been nearly cut in half. At the same time, we're still investing for a cyclical recovery in the OpEx base. I'm just trying to square the 2 parts of that, that the dividends come down, but the OpEx base is going up by percentage increases this year? And is there scope for more rationalization within the business?

Okay. I mean I think, first of all, in terms of London, the South and being a bigger part of the mix, there's an element of the sites there are sort of mature, but we also have been trying to drive out some of those sort of apartment schemes. So there's a balance. And you heard us last year talking about the impact of some of the bulks that we had taken on that basis going into the order book. So that's probably a fair characterization. In terms of the sort of cost savings or where we are sort of OpEx, and I think that Chris has already addressed it, we are driving for savings and to really ensure that we are driving the most efficient business. But we are also mindful of the opportunity for recovery and want to make sure that we're not cutting into bone -- or taking out parts of sort of the business structure that will actually allow us to take best advantage of sort of the cyclical upturn.

Okay. Well, thank you for your questions this morning. It's much appreciated, and thank you for coming out and a sunny summer's day. We'll see you all again in November. Thank you.

Hello, everyone. Thank you for attending today's trading update call. My name is Ken, and I will be your moderator today. [Operator Instructions].

I would now like to pass the conference over to our host, Jennie Daly, to begin. Please go ahead.

Thank you, Ken. So good morning, everyone, and thank you for joining the call. As usual, I'm joined by Chris Carney. So I'll start with a few quick words before opening up for your questions. You'll have seen from the statement that trading in the year so far has been steady, only slightly down on a strong comparator at this point last year. Nevertheless, we are not immune to the uncertainty and challenges posed by the macro backdrop, and I'll talk about this shortly.

Suffice to say, our excellent sales teams remain focused on driving our database and supporting customers through their buying journeys. Our net private sales rate for the year-to-date was 0.74 per outlet per week compared to 0.77 at the same point last year with a cancellation rate of 14%. Excluding bulk sales, our net private sales rate for the year-to-date is 0.72 per outlet per week compared to 0.76 at the same point last year. Our total order book stands at GBP 2.2 billion compared to GBP 2.3 billion at the same point last year, representing around 7,700 homes compared to around 8,200 homes.

The pricing environment has been more challenging in recent weeks, particularly in the South of England, where affordability is more stretched and overall pricing in the order book is around 1% lower year-on-year. You'll recall that at the start of the year, we talked about a proactive approach, particularly in London, where we are working our way out of certain apartment schemes. And it's fair to say that some of this pricing weakness reflects decisions taken here to make sure we keep recycling capital in line with our strategic goals. Elsewhere, pricing is softer with some geographies, particularly in the North being more resilient than others, as you would expect.

Overall, and encouragingly, new customer visits to sites and engagement remains pretty consistent throughout the spring selling season, helped by increased sales and marketing spend. As we discussed at full year, we are seeing customers visiting sales centers multiple times before making buying decisions. And given the outlook for prolonged higher interest rates this year, they are deal and incentive focused. Cancellation rates to date also remain consistent with recent experience. Another area of focus given the backdrop is build costs.

In terms of our suppliers, as we said at the full year, we've negotiated strongly on contracts for this year with some success, but are seeing increasing requests for price increases and surcharges due to rising energy and fuel costs as a result of the conflict. In that context, and it is still relatively early in the year, the outlook for build cost inflation in 2026 is now perhaps more like low to mid-single digit rather than the low single digit, I talked about when I spoke to you at our full year results.

Of course, we continue to scrutinize all supplier requests closely and work to defer and mitigate increases where possible. So it is hard to call it right now. The duration of the conflict will be a key determinant, but this is what we're seeing currently. And of course, we will keep you updated as we move through the year.

We're making good progress with the share buyback program. And as of the close of business on the 24th of April 2026 have purchased 39 million shares, equating to GBP 34.9 million of the planned GBP 52 million, which we continue to expect to complete in the first half. Pleasingly, we continue to see good progress on planning and are prioritizing outlet openings. And in the year-to-date, we operated from an average of 219 sales outlets compared to 208 for the same period last year and are currently operating from 218 and on track to open more outlets in 2026 than in 2025.

We are taking a highly selective approach to land buying given the backdrop and have approved around 1,000 plots in the year-to-date compared to around 1,700 plots at the same point last year. But our strong land position gives us some flexibility here, and we will see how market conditions evolve going forward. When we set out our guidance for 2026 at the prelims, we were very clear that it did not assume any impact from the situation in the Middle East. At that point, it was an emerging event with a high degree of uncertainty around how it might develop. Since then, it's fair to say that market conditions have become more challenging.

Bringing that together, while we're not setting revised guidance today, we are being open with you about what we're seeing on the ground. For the first half, we now expect U.K. volumes to come in slightly ahead of our previous half 1 guidance. That said, the pricing and cost pressures I mentioned earlier more than offset this benefit. So we now expect half 1 profitability to be slightly below our prior expectations.

The increased uncertainty means that there are a wider range of potential outcomes for the full year 2026 than we were previously planning for and a lot will now depend on how long the conflict persists and the implications that has for both interest rates and consumer confidence. We will update you further in the interim results when the outlook for 2026 will be clearer.

For now, we are facing into this uncertainty, laser-focused on keeping a tight rein of what we can control, staying close to the customer, making proactive choices where we believe it's the right thing to do and tightly managing costs. And I want to thank our teams in this regard for their strong operational discipline.

We remain confident that we have highly experienced teams in place, great product, excellent land position and the right strategy, and we will remain agile to respond to changing conditions to optimize performance in all markets.

So thank you for that, and I'll now open up for your questions.

[Operator Instructions]. We have our first question from Carlos Caburrasi from Kepler.

Just one from my side. And apologies because I know you said you don't want to speak about guidance. But I mean, in today's trading update, you have not reiterated the full year completions target, which I mean could raise some concerns given the current macroeconomic backdrop. And at the same time, you've said that pricing and build cost inflation will be worse than what you were previously expecting. So I mean, can you please shed some light on the potential impact this could have on the GBP 400 million operating profit target?

Thank you, Carlos. I'll hand over to Chris.

Yes. Thanks, Carlos. So we're not setting revised guidance today. When we set out our 2026 guidance at the prelims, as Jennie said, it assumed no impact from the situation in Middle East. And I can understand there might be a bit of frustration by this, but uncertainty has clearly increased, which inevitably means a wider range of potential outcomes. But we are trying to be helpful in the statement as well. So pricing in the current order book is around 1% down year-on-year.

In January, we said it was down about 0.5%, which implies that the pricing on more recent sales have softened a little further. And on that basis, the current run rate pricing is around 1.5% down weighted towards the South. And from here, the direction is hard to call with several moving parts in play.

On build costs, we previously guided to low single-digit build cost inflation for 2026, so say 2% to 3%. That's clearly moved up, and we're now thinking around the 4% for the year as a whole. Given the level of volatility, it could be higher or lower, but that gives you a sense of how we are thinking about it.

And then on volumes, just to step back, our net sales rate in both 2024 and 2025 was 0.75. When we set the 10,600 to 11,000 U.K. volume guidance range at the prelims, we assumed a rate slightly below that at the bottom end and slightly higher at the top end. But the volume guidance wasn't just driven by sales rates alone.

We started the year with a smaller order book and the key offset was an expectation that higher outlet numbers would more than offset that and allow us to grow volumes through 2026. If you look at the year-to-date performance in the statement, the sales rate, I think, is around 4% behind a strong comparative from last year, while average outlets are higher. So in combination, we're broadly tracking in line with our expectations.

That said, since we set the guidance, both interest rates and mortgage rates have increased, which has weighed on affordability and customer confidence. And cancellation rates are actually pretty good, actually lower than last year, likely reflecting customers with mortgage offers secured pre-March, proceeding with a decent amount of urgency.

We have our next question from Will Jones from Rothschild & Co Redburn.

Maybe 3 for me, please. First, you described as a steady-ish sales rate, but could you just help us with how that pattern has evolved in April and any differences you may or may not be seeing around lead indicators and inquiries and visits and the like?

Second, on pricing really just to confirm that there's no particular change to the pricing picture in the Midlands and the North. And any sense perhaps if you can, on what's left to do on London apartments?

And then on build costs really just what communications you've had so far from manufacturers? And does the low to mid-single digit allow for kind of formal price increases being agreed rather than just the delivery surcharges you've seen so far?

Okay. Thanks for that, Will. I'll take the first 2, and then Chris will pick up on the build cost. Yes. So I mean, we talked about sort of customer engagement remaining resilient. So we have seen good levels of inquiries. It's notable that appointments in particular, have held up really strongly. I did sort of make it clear in the narrative that we've invested quite strongly in sales and media spend. So that needs to be factored in.

What we are seeing and a bit of a repeat, but maybe more so of what we said at the full year, customers visiting sites multiple times. There's a high level of inventory. I think it's about 11-year high inventory across the market. So there's a lot of choice. There's obviously a lot of macro noise. So customers are cautious, and we can see that flowing through the GFK. So that's really where that sort of price weakness, particularly weighted to the South and London is coming in.

So forward indicators generally held up fairly well. We've seen a bit of a drop off in recent weeks. It's hard to see through that. Easter was earlier this year than last. We tend to see a bit of a dropoff in the weeks following Easter, aligning with school holidays. So modest drop-off, but really now seeing how that develops in the coming weeks.

But I would say around the sales pattern that we've seen in the last few weeks has probably been a bit of softening, but gradual. And again, not unusual given where Easter has fallen at this point. Really, we'll see more in the weeks ahead of us.

Around sort of London apartments, I mean, we've been talking about that for a while. And Chris last year in October talked about sort of the unwind and that, that was sort of run out to 2029. So we are on exit. We haven't invested in London for a long time. But clearly, the complexity of the schemes, some of the delays that we've seen with BSR and other things have really elongated sort of developments there. London is effectively unwinding. It is a diminishing part of the business and a diminishing part of the land bank, but it will take some time for us to exit. And around the Midlands and North, they have remained resilient. There are some pockets of weakness on a location-by-location basis, but they're holding up pretty well.

Yes. And on build costs, at our last update, we were feeling reasonably comfortable with how we manage build cost pressure in the early part of the year. Since then, we've seen a shift, as you might expect. We've received a significant number of surcharge and price increase requests from across the supply chain, driven primarily by higher fuel and energy costs. And the proposals range from low single digits to, in some cases, high teens percentages.

Now our default position has been and remains to resist surcharges. We require suppliers to evidence genuine underlying increases to their cost base, and we robustly challenge both the timing and content. Now we use our scale and our long-standing relationships to make it clear that costs have to move down as well as up.

But that said, we also have to be realistic. And where suppliers are being transparent and are sharing the pain and are prepared to share upside as conditions normalize, then we're prepared to engage constructively. And it's against that context that we're now sort of indicating that the build cost inflation for the year is higher than our initial expectations.

We have our next question from Aynsley Lammin from Investec.

I think I've got 3 actually. Just going back on the kind of guide your comments that you said were quite helpful around pricing and costs. I mean is it -- is my math correct, if I was to assume kind of where we were at the full year results and the incremental news you said today on weaker pricing and the cost inflation, that it's kind of around 150 to 200 bps hit to margins back from where we were expecting them to be a few weeks ago when you had the results. Would that be right? So the EBIT of GBP 400 million would be down, call it, GBP 70 million or so or 18% to 20% cut from the GBP 400 million, if we just assume what's changed on pricing and cost inflation at this point and the expectation for the full year? That's the first question.

Second question, I just one, are you taking any cost out kind of reacting to what you're seeing on build cost inflation and what looks like probably a slower market? And then just any comment around kind of cash, how you're managing that and what your expectation is for the full year based on your new kind of view of where margins and profits go?

Thanks, Aynsley. Well, I'll ask Chris to take sort of your first and third sort of questions on the sort of margin and sort of cash. But on cost out, look, we're a really disciplined business. We run a sort of a zero-based budgeting sort of philosophy. We have a history of taking swift action when market conditions change.

We are sort of as ever focused on sort of cost management and value improvement right across the business. At this point, we're not signaling any immediate sort of structural cost action, but we are sort of focusing on driving those material cost reductions and the engagements that Chris talked about with the surcharging and a really sort of incremental way. We're looking at optimizing the opportunities from our logistics business, and we'll focus on sort of a range of other sort of simplification improvements across the business. So really sort of digging in there.

Yes, Aynsley. And on guidance, look, the reason we're not giving in your guidance today is simply that there are just still too many moving parts to give you a number that we have confidence in. So our focus right now is on mitigating downside where we can and understanding how these uncertainties translate into outcomes. And we'll be in a much better position to do that by July, and that's when we intend to give you more color.

Sorry, just following up on that, Chris. So just following up on the kind of what you've said today compared to what you said at the beginning of the year, though, is it correct to assume that it's kind of an extra 1% on price erosion and kind of, let's call it, 100, 120 bps of erosion due to the higher assumption around build cost inflation. I mean, is that the right way to think about it? If we look at -- start with the GBP 400 million of profit full year guidance, and then we kind of expect -- we calculate today roughly 200 bps hit to margin on what you've said incrementally today. Is that fair?

So Aynsley, when we give guidance, it's really important to us that it's meaningful. And with the range of outcomes still very wide and evolving, what we're saying is July is the right point to update when we've got better visibility.

On cash, the business remains in a strong balance sheet position. We guided to net cash at the half year to be in a range of GBP 0 to GBP 50 million. We are fully sold for the first half. So assuming those sales rates convert to completions in the usual manner, I'd expect to be towards the top end of that range. Probably a bit less land spend, lower land sales receipt than anticipated, but those offset to some extent.

We have our next question from Zaim Beekawa from JPMorgan.

First one just on the incentives. Can you give an indication of where we are now? I think you were around 6% at the sort of full year results.

And then secondly, on the -- on bulk, is there a level that you had assumed for the year-end? And how do you think about that evolving?

And then thirdly, I sort of know you mentioned lower land spend, but I guess I echo some of your peers have spoken about reducing activity in the land market going forward given the outlook. Is that something you think you'll follow in a meaningful way?

Okay. Thank you. From an incentives, yes, you're right. At the prelims, we said 6%. I think that we're just a nudge above that at the moment. Regarding bulks, our sort of philosophy and approach on bulks really hasn't changed. In the sort of the year-to-date, it's slightly ahead, but actually really a relatively sort of low number. They're hard to plan forward given the sort of the sickness of that market, and they're also very sensitive to interest rate movements as well. We do have sort of a few perspective, but really, they're not done until they're done.

On land, I've talked about being highly selective. We're obviously monitoring events on the macro and monitoring the land market sort of carefully at this stage. You can see that our approvals year-to-date are down, and that's sort of being selective around where we are willing to invest at this point given all of the moving parts that we're talking about this morning.

We have our next question coming from Alastair Stewart from Progressive Equity Research.

Just is it possible to give a bit more detail on the London apartments position? I know Will asked about it earlier. For instance, can you give a rough idea of the outstanding number of the -- number of outstanding apartments roughly on discounts, have you contained these to within single digits? Are the apartments clustered around any specific areas? Are there any 1 or 2 big developments? And who are you selling to? Is it bulk investors or a mix with individuals?

Okay. I mean I think the thing that I'd say about London apartments is to stand back to start with and look at what the sort of the dynamics of the London market are. There's a really high stock of availability in London right across both new and existing markets. Affordability is constrained. We have the sort of post Help to Buy sort of sense of that equity supported 40% that really supported affordability.

There's overlay of investors effectively selling out or seeking to sell out of the market, both as a response to increasing tax sort of issues on a personal level and then a degree of sort of the rental reform sort of act flowing through. And I think it's also fair to say that there's a bit of a sentiment sort of overhang from sort of post grant [ fell issues ] around planning, just that's leaving sort of the apartment market sort of feeling sort of very, very heavy sitting in the market. So that's the backdrop that we're looking at in London.

As I mentioned, we have a number of apartments schemes sort of they're dotted around. So in terms of concentration, Alastair, I don't feel that we're overly exposed to one market. We've got good distribution. They would be in areas that you and I would have considered to be sort of good prospects. And we're working our way through them.

But as I said at the top of the Q&A, it will take a few years to unwind it entirely. There's no sort of response to a specific operator or sort of specific actions by others. We're really following a market that is sort of under pressure for price. So I don't feel that we've got a specific sort of issue. It's really just how the London market is operating. I mentioned that -- and I think it is important that you understand what the environment is like there. But we're not sitting on our hands.

We are being active, and we're making those proactive choices, I think, consistent with a strategy of redeploying our capital. So we are sort of taking sort of price action in order to move that stock on. There's a mixture of some bulks, but also private sales that we're playing through. So it's really the amalgam that we're leaning into today. And I'm not really going to get drawn into specific sort of numbers, but I think I've given you enough of a sense of...

Just one specific point you brought up. Did you say overhang of the 40% you mean the London Help to Buy scheme? Is there an overhang? And can you just give a bit more color on that? I hadn't heard that mentioned before.

Yes. It's really just in terms of sort of the overall sort of change in affordability that's happened with the withdrawal of sort of the Help to Buy support, which was significant in London has left affordability really very, very constrained.

Did I mishear you when I thought you said there was an overhang. Is there a glut of people who bought under Help to Buy and wanted to move -- London Help to Buy and wanted to move on, but couldn't because they're facing some form of negative equity. Am I misunderstanding you there?

Well, I'm not making any comment at all on negative equity answer. Look, it's really a sense that affordability in London has been supported for a number of years with Help to Buy. And in the absence of that, there's now an increasing number of sort of purchases that really just can't make the stretch on affordability.

We have our next question coming from Chris Millington from Deutsche Bank.

I'd just like to explore this pricing point a little bit more first. I mean, perhaps you could provide some color about when pricing starts to go backwards. I vaguely remember that at the start of the year, you said you were 0.5% down on the order book, but you caught it up, I think, by kind of spring time. So it suggests there's obviously been quite a lot of incremental movement. And perhaps you could also just comment on pricing about whether or not the trend has been deteriorating over time, i.e., it's been declining month-on-month. That's number one. Sorry, it's a bit long.

Next one, Chris, you mentioned H1 is likely to be worse than guidance. Can you just remind us what guidance was and what has changed there? And perhaps if you could just link into that, under what circumstances would margins rise from H1 to H2 because I think there was quite a big movement in the second half.

And then look, finally, and you probably won't like me asking this, but just a final question on your thoughts around distribution policy still if we are looking at profits, which are, again, 20% lower or so.

Okay [indiscernible]. Shall I start with half 1 guidance and distribution, then we go back.

Yes.

So just to recap what we previously said on half 1 performance, Chris, I think in January, we flagged that 2026 volumes would be more second half weighted with around 40% in the first half. Then in March, when we updated, we said half 1 operating margin would be lower than half 1 last year being 2025, reflecting lower pricing in the order book, ongoing build cost inflation and that second half volume weighting. And at that point, we estimated roughly 30% of the full year operating profit being delivered in half 1. So that 30% of the GBP 400 million. So the half 1 profit guidance was effectively GBP 120 million.

Since then, U.K. volumes are actually tracking slightly ahead of our previous half 1 guidance. However, as today's update shows, pricing pressure and build cost inflation have both been a bit stronger than we anticipated. I think it's worth noting that consistent with standard industry practice, when we assess cost to complete at the site level through our regular evaluation process, any increase in cost to complete is spread across all the blocks on that site from the first legal completion in the period through to the final completion. And that means homes legally completing earlier in the year will still bear their proportionate share of the updated site cost to complete, even where the plot itself was largely built complete before any supplier surcharge or price increase takes effect.

So whilst half 1 volumes a little bit better than that sort of 40% estimate, the combined pricing and cost pressure mean that half 1 profitability is now expected to be slightly softer than we previously anticipated.

And then in terms of capital allocation, obviously, a fair question. What I would say is the business is in a good position with a strong balance sheet and low adjusted gearing. We're holding our AGM later today and the proxy voting shows very strong support for the payment of the 2025 final dividend in May. And as we have said previously, we keep our distribution policy under regular review, but nothing has changed in terms of our approach or our priorities. And the assessment of the 2026 interim dividend will take place in the coming months as usual, and we will remain disciplined on that.

We have our next question...

We have some pricing questions that we didn't get to. So I think it was just a little bit more pricing color on the timing. So yes, so you're quite right, we entered the year this year. And in January, we indicated that pricing was in the order book down 0.5%. That then rolled forward to the prelims. And in that period, pricing -- net pricing was broadly flat. And I think that's what we were very clearly saying at that update.

And what we've seen since then is a gradual sort of deterioration in pricing as consumer confidence has sort of weakened and many our customers have just been more interested in incentives and the deal that they can secure. And what I should say as well is all of these decisions are made locally on a site-by-site basis.

So what we're aiming to do is drive the best return that we can from each one of those assets, and that's a balance. We've got some locations generally more towards the north of the country where we are seeing a reasonably resilient market. And that strength allows a slightly different approach. And then as Jennie has outlined, in the South, that is much more stretched with affordability and so much more pricing pressure down there. So yes, that's the color, I think.

We have our last question coming from Rebecca Parker from Goldman Sachs.

I was just wanting to go back to this pricing discussion. What is attributable to in London? And have we seen any of the London, I guess, worsening of pricing come through after your full year results? And what can we kind of see as underlying pricing...

Thanks, Rebecca. Yes. Look, I think there are sort of 3 parts to this sort of pricing story. And I would say London, where we are seeing very price sensitive. I gave you sort of earlier on the Q&A, some of the building blocks of that very high stock, quite a significant amount of sellers across new and existing markets. So the London specific market is very price sensitive. That's more than the sort of the wider Southeast and South.

And then as Chris has said, also, we're seeing more resilience the further north we go. So there is a London weighting to that pricing element.

And then just wondering if you're seeing any other inflationary impacts outside of those supply increases maybe on your admin costs or on labor costs?

So at the moment, the sort of the build cost sort of inflation story is really focused on materials. We're not seeing sort of movement on the labor side of the equation. We're still in a relatively sort of low volume environment from a supply chain perspective. And we would -- we're not hearing any specific signals around labor costs at this point, but it is worth noting.

Thank you. I can confirm that there's no further questions.

Okay. Well, thank you very much for your time. I understand that it's a busy morning this morning. And Chris and I look forward to seeing you at the half year results on the 31st of July. Thank you.

Thank you very much. That concludes today's call. Thank you for your participation, and you may now disconnect your line.

So good morning to you all. We're going to start nice and sharp today because I know it's a really, really busy results day. But before I do, and it has become usual practice, we have members of our group management team with us here today and also our first newly appointed Customer Experience Director, Maria Sebastian. So Maria, give everybody a wave so they know who you are. And we will -- hopefully, you'll have the opportunity to catch up with Maria later this morning.

And while not -- there is Maria. Actually, you missed your moment, Maria. So here is Maria, our Customer Experience Director. And while not here today, I'm also pleased to say that we have appointed a new Divisional Chair for the London and Southeast, Tom Pocock, formerly of Barclays. And Tom will be joining us soon, and you'll no doubt meet through the course of the year. Right.

Let's get started. So I'll start with some highlights on 2025 and the delivery of the medium-term targets we set out last October. And Chris will cover 2025 performance in more detail and turn to guidance. And then I'll update you on how the spring selling season is playing out and how we are driving the business forward with those medium-term targets firmly in our sights.

There we go. So this morning, you'll hear our strategy for driving returns in what has been a challenging year for the industry. Against that backdrop, we delivered 2025 volumes in line with guidance, growing completions by 6% with new outlet openings up 29% in the year, ending 2025 with 219 outlets ahead of expectations. The planning activity we created and stopped over the last 3 years has gained momentum through the year and is now delivering both in applications -- results, sorry, in both applications submitted, but more pleasingly, in the rate of permissions granted. And this is ultimately the basis for future outlet openings. And you'll hear that we remain very confident in delivering average outlet growth year-on-year.

Another key focus is utilizing our strong existing landbank and increasing capital efficiency. Chris will speak more about this. It's not something that happens overnight, but we are well on that journey. Our strategy and the actions that we've been taking will drive improved returns, both in terms of margin and return on assets in the medium-term. We have a continued focus on cost discipline, grinding out cost whilst protecting value and balancing the medium-term strategy commitments. And while the housing market remains tough, we remain confident in this plan that is in our control and deliverable. And you'll hear more about this during the presentation. However, our outlook does not incorporate potential impacts from recent events in the Middle East that may arise for the U.K. economy and our business given the early stages of development.

And finally, you will have seen that we've added flexibility to our capital allocation. Chris will talk you through the detail, but suffice to say that we remain confident that the unchanged quantum of net asset value-based returns remains appropriate, but do see benefits for shareholders and having more flexibility by adding the potential for a buyback element to our ordinary distributions.

So this slide will be a bit more familiar to you and gets a bit more into the guts of our 2025 performance. I won't run through them all, but I'll just pull out a couple of the highlights. We delivered a robust sales rate, which I think attests to the quality of our product and locations and the efforts of our teams.

Turning now to landbank. You can see that our landbank has come down slightly as planned as we seek to reduce landbank years. This is a key objective for us given the strong landbank that we hold, though we will do so principally by growing volumes. We've continued to prioritize customer scores and build quality as part of our commitment to operational excellence. We have a high customer score comfortably above the 5-star threshold under the new survey criteria, and our build quality continues to lead the sector. I'm delighted that for the second consecutive year and the third in 5 years, our Taylor Wimpey site manager was awarded the Supreme Award in the NHBC Housebuilders Award. This year, congratulations go to Lee Dewing of our North Yorkshire business.

So you'll have already seen most of the key numbers on the slide through the trading statement, but I'll just highlight the outlet chart, which I think illustrates the progress that we are making in outlet openings. We opened 71 outlets last year, 29% up from 2024 with good progress year-on-year. There's some good momentum here, and we remain very much on track. We expect to open more outlets in 2026 than we did in 2025 and remain confident in growing average outlet numbers year-on-year. I think it is worth reminding you what we said about our approach to outlets. We have a strong single brand, and we mostly run our sites as single outlets. So this increase in outlets represents real growth in new markets.

So I'll now hand over to Chris to take you through our performance and guidance in detail.

Thanks, Jennie, and good morning, everyone. As usual, I'll take you through the financial performance for 2025, a year in which the group delivered a robust set of results despite a challenging market backdrop. Our disciplined operational focus, the consistent execution of our strategy and the continued progress in planning and outlet openings underpins the financial resilience you'll see across the next few slides.

So let me begin with the headline financials. Group revenue increased 13% to GBP 3.84 billion, supported by growth in the U.K. completions, resilient private pricing and a stronger contribution from land sales. Overall, a very good performance in a year where second half sentiment softened. Gross profit was slightly higher at GBP 658 million with gross margin stepping down to 17.1%. This movement is consistent with the factors that we've been flagging throughout the year, modest build cost inflation, slightly lower opening order book pricing and the impact of landbank evolution.

Adjusted operating profit was GBP 421 million, up 1% year-on-year, delivering an adjusted operating margin of 10.9%, and I'll come back to margin performance in more detail shortly. PBT and adjusted EPS were both lower year-on-year, reflecting higher net finance costs. And finally, return on net operating assets edged up to 11% with improved asset turn more than offsetting the margin headwinds.

Turning to the U.K. We completed 10,614 homes, excluding joint ventures, up 6.4% year-on-year and in the middle of the guidance range we set a year ago. Private completions increased by 7.7%, while affordable completions increased by almost 2%. Affordable represented 21% of total completions, and we expect a similar mix of around 20% to 21% in 2026. The blended U.K. average selling price was GBP 335,000 with the private average selling price at GBP 374,000, both about 5% higher. This reflects a greater proportion of completions in London and the South.

Underlying pricing was positive in the North and became progressively softer as you move down the country, but overall remained reasonably resilient. As we entered 2026, underlying pricing in the order book was roughly 0.5% lower year-on-year, primarily due to those late year book deals in London that we highlighted in the January trading update. After taking that into account, we expect mix benefits to support an increase in the 2026 blended average selling price of around 2% over the GBP 335,000 reported for 2025. Adjusted U.K. operating profit remained steady at GBP 369 million, while margin softened to 10.1%.

On the next slide, I'll walk you through the main drivers of the 1.4 percentage point operating margin reduction. So in 2025, we saw modest market-driven pressures from both pricing and build cost, which together reduced adjusted operating margin by 110 basis points. On pricing, the pressure came from the opening 2025 order book and the London bulk deals, which contributed to completions in 2025 and formed part of the order book for 2026. Build cost inflation was about 0.5% in half one and 1% for the year overall, driven mainly by materials rather than labor.

The underlying market rate was slightly higher, but our supply chain self-help initiatives and increasing usage of our new house type range helped offset part of the pressure, and that work will continue into 2026. Landbank evolution was also a factor as we continue to trade out of older higher-margin sites acquired after the Brexit referendum. We still expect this to normalize and then become a positive contributor. And as we discussed in October, that improvement will start in 2027 and become more meaningful in 2028 and 2029.

As we said in January, land sales were particularly strong in 2025, enhancing our group margin by roughly 60 basis points, a similar benefit to 2024. However, as we said, we don't expect land sales to be margin enhancing in 2026, so that benefit will unwind. We also had a 0.5 percentage point impact from the GBP 20 million one-off charge relating to historic workmanship issues at the legacy London apartment scheme. So these 2 impacts dropping out will be broadly neutral going into 2026. The headwinds from pricing and build cost inflation were partly offset by improved recovery of operating expenses as both volume and revenue grew.

So turning to cladding and fire safety. This slide will look familiar to everyone from the half year, and I'm pleased to say that the overall provision has remained broadly unchanged. That sits alongside strong operational progress. We've continued to move at pace, progressing assessments, initiating further works, and we've now fully remediated 62 buildings. Since June, the number of buildings awaiting formal assessment has reduced by around half. There is still significant work ahead, but the stability of the provision over the past 6 months reinforces the robustness of the assumptions we updated in June.

To date, we have set aside GBP 544 million for cladding and fire safety remediation and spent GBP 131 million. That leaves a remaining provision of GBP 413 million. Our cost estimates on assessed buildings, including the cavity barrier risks highlighted at the half year have continued to prove robust. The small uplift you see reflects routine mechanics, the unwind of discounting and minor updates to assumptions such as inflation and legal costs.

Cash spent in 2025 was GBP 49 million, around half our previous guidance, mainly due to the delayed invoicing from the Building Safety Fund. With those payments now expected this year, we anticipate around GBP 150 million of cash outflow in 2026 and about GBP 100 million in 2027, with remediation still expected to conclude in 2030.

Our balance sheet remains a core strength of the business. Net operating assets were broadly flat at GBP 3.8 billion. Land -- net of land creditors reduced modestly, reflecting the contraction in the short-term landbank to 77,000 plots, consistent with progress towards the targets we set out in October. Work in progress increased year-on-year, supporting higher outlet numbers and continued infrastructure investment to support new outlet openings. Tangible net asset value per share declined to GBP 1.176, driven by the increase in the building safety provisions in the first half.

Turning to cash flow then. This bridge shows the movement from opening to closing net cash. The working capital outflow reflects higher debtors due to the London bulk deal signed towards the end of the year and lower creditors mainly from reduced affordable advance receipts and customer deposits. The land decrease includes a higher level of deferred receipts on land sales and the increase in WIP supports our outlook growth strategy as planning momentum improves. After tax, interest, dividends and other items, we ended the year with a strong net cash position of GBP 343 million, in line with guidance provided at the half year.

Now I've included this slide to reiterate a couple of points from our investor and analyst event in October as this is a critical focus for the business. Our medium-term plan remains 14,000 U.K. completions, 4.5 to 5 years of short-term landbank, 16% to 18% adjusted operating margin and return on net operating assets above 20%. Capital discipline across land and WIP is central to delivering those improved returns.

In 2025, we made good progress, returning capital into smaller sites, reducing the scale of the landbank, increasing outlet numbers and improving the distribution of our investments across the country. The short-term owned and controlled landbank is now 77,000 plots, down from 79,000. The average approved site size reduced again in 2025 to 211 plots compared to an average of 260 in the previous 5 years. And we closed the year with 219 outlets, up 3%.

As we discussed in October, WIP invested in both London and infrastructure will take time to normalize, but we're seeing early progress. WIP per outlet has improved since the half year and is now back in line with end of 2024 levels. London apartment WIP reduced from GBP 270 million in June to GBP 200 million and the GBP 100 million of land sales completed in 2025 will release around GBP 30 million of infrastructure capital for reinvestment to fuel future growth. So there was good progress in 2025, increasing confidence in our ability to deliver the returns set out in our medium-term plan.

Next, turning to our capital allocation priorities. Today, we're announcing an evolution of our shareholder distribution policy. But before outlining the change, I think it's important to note the context. Taylor Wimpey is inherently highly cash generative through the cycle, and that cash continues to fund the consistent investment we make in land and work in progress to support future growth. That remains unchanged.

As a result, the first 2 priorities of our framework stay exactly as they are, maintaining a strong balance sheet and investing in land and WIP to underpin sustainable long-term growth. We've been equally consistent in returning significant cash to shareholders. Since introducing our ordinary dividend policy in 2018, more than GBP 2.8 billion has been returned. Our existing distribution policy, returning 7.5% of net assets or at least GBP 250 million each year through the cycle also remains in place.

What we're introducing today is an element of flexibility in how that amount is delivered. We will continue to return 7.5% of net assets split equally between the final and interim. However, from here, a minimum of 5% of net assets will be paid as a regular ordinary dividend with the remaining portion returned either via dividend or share buyback to be determined by the Board as most appropriate at the time. This added flexibility strengthens the policy and supports the long-term interests of all shareholders.

Accordingly, today, we are announcing a final 2025 dividend of GBP 0.0295 per share, equivalent to GBP 105 million and a GBP 52 million share buyback, which will commence shortly. Taken together, this brings total shareholder distributions for 2025 to GBP 322 million, including the 2025 interim dividend. Finally, our fourth priority remains unchanged. We will return excess cash to shareholders when appropriate. So with the combination of good cash generation, a strong landbank and an invested WIP position, giving us everything we need to support disciplined profitable growth, it's clear that our long-standing commitment to funding the business first remains fully intact, and this evolution in policy is built on that foundation.

So finally, turning to guidance. As you would expect, we remain mindful of the broader geopolitical backdrop, including recent developments in the Middle East. Our outlook today reflects the conditions we see in our markets at present and does not incorporate any potential impact from those emerging events given the uncertainty and the early stage of development. With our strategic approach to land and strong conversion into outlets, we continue to expect average outlets to be higher in 2026 than in 2025.

Trading in the year-to-date has been encouraging, although we did enter the year with a slightly lower order book. Against that backdrop, we are setting U.K. volume guidance, excluding joint ventures at 10,600 to 11,000 completions for 2026. At our January trading update, we covered the 2 main moving parts impacting adjusted operating margin in 2026, and I'll recap those now together with one further relevant factor for 2026.

Pricing in the opening order book was around 0.5% lower year-on-year, driven by bulk deals. We continue to see low single-digit build cost inflation and legal completions in Spain are expected to normalize this year to around GBP 350 million to GBP 400 million after 2 years of higher than usual output. Taken together, these factors are a headwind to profit margin in 2026 relative to 2025, and we, therefore, expect adjusted operating profit of around GBP 400 million, and we expect pre-exceptional net finance charges to be around GBP 30 million.

As we said in January, U.K. volumes in 2026 are likely to be more second half weighted than usual with around 40% completing in half 1, reflecting the softer market conditions in Q4 last year. Given the half 1, half 2 phasing effect, we anticipate a larger half 1 cash outflow than last year, resulting in around GBP 0 to GBP 50 million of net cash at the half year with the half 2 weighting of completion supporting a recovery in the balance by the year-end.

So in summary, I'm pleased with the group's performance in 2025, a strong and resilient result despite a changeable market backdrop. Looking ahead, our focus is on leveraging our excellent land position to drive outlet growth, which in turn supports volume growth, margin progression and enhanced return to shareholders over time.

I'll hand you back to Jennie.

So taking a step back then and looking at the market as a whole, we are pleased to see some signs of improvement and opportunity. Mortgage availability remains good with mortgage rates lower year-on-year and real wage growth supporting affordability, though still more challenged than in the years before the downturn. Unemployment remains at low levels. And although customer sentiment is lower generally, it has been on an improving trend.

In addition to the budget uncertainty through much of the second half, last year was also impacted by a notable increase in the amount of secondhand stock on the market. And although we hope for improvement this year, we're also ensuring that our customers are aware of the benefits of buying new. Encouragingly, first-time buyer numbers are showing some signs of improvement, but remain well below the levels we saw before the downturn. Deposit building remains a real challenge for this group, particularly in the affordability constrained south.

On the Section 106 affordable housing side of the market, securing partners remains a challenge. But despite that, we are in a good position for 2026 affordable deliveries. Overall, medium- to long-term drivers continue to look positive. And as a result, our medium- to long-term view of the market opportunity is unchanged. There is a long-term structural undersupply of homes in the U.K. However, we also now have a political commitment to address undersupply with meaningful interventions to support supply side bottlenecks such as planning and more on that later.

So turning now to Taylor Wimpey and our focus on controlling what we can and driving value from it. A good example here is the performance that we're driving from our marketing platforms. Last year, we updated you on how we changed our marketing approach to target fewer but higher quality leads, and it's pleasing to see clear benefits of this. We've also improved the online experience for customers through optimizing media and website effectiveness. We are seeing good quality lead generation, a year-on-year increase in overall appointments, which is still the best indicator of future intention to purchase and better conversion rates.

And finally, we are seeing good quality visitors with a strong intention to move, but decisions are taking time with customers visiting sites multiple times before commitment. Spring selling season is progressing well with our performance similar to this time last year, which you will remember as a strong comparator. The year-to-date net private sales rate compares well to this point last year. The last 4 weeks have been a bit stronger at 0.87, including bulks or 0.83, excluding bulks, and that compares to the same period in 2025, which was 0.82 with no bulks. Whilst this is encouraging, I think we should remain mindful of the weak trading in quarter 4 and that it is still early in the year.

As we told you in January, our order book at the start of the year is a bit lower than the comparative period given the tougher trading environment that we saw in the second half of 2025. We had a strong Boxing Day sales campaign supported by proactive management actions, and we can see that the appointments taken in this period are now converting into sales in recent weeks. As a result, the order book has made some progress, and it currently stands at 7,678 homes compared to around 8,000 at the same time last year.

As I said, customer sentiment is moving in the right direction. However, we are still seeing first-time buyers, especially those in the South, grappling with affordability constraints. As a result, incentives remain an important factor in gaining commitment and are running around 6%.

Now over the next few slides, I'll show you the progress that we're making in driving a more efficient land position and liberating our strategic land pipeline through our assertive planning strategy. We're still at the relatively early stages of the new planning cycle. But as expected, we've seen some early improvements in decision-making because of the changes introduced by the NPPF at the very end of 2024.

These pie charts represent a snapshot of expected outcomes for our assertive strategic applications as at February 2025 and February 2026. I think if you want a stat that really shows a shift in sentiment, this is a good one. At this moment in time, we forecast 49% of planning officers will make a positive recommendation on our assertive applications. That's more than double the 22% we saw at the same point last year. I would stress that this is a point-in-time snapshot of what is a dynamic process. So as applications progress through the various stages of planning consideration, such as consultation stage, we would expect the not known categories to crystallize in some numbers towards the positive.

With a clearer and more consistent planning policy backdrop weighted to housing delivery, our proactive strategy is delivering. This clarity means that we are being more determinative in our approach to engagement at a local level. It also means that we are more confident in a positive appeal outcome than in past years, and we are choosing this route more quickly when local engagement routes are exhausted.

And not on the slide, but in terms of overall applications, sentiment has visibly improved with positive planning progress or planning achieved on 71% of applications in 2025 compared to 58% the prior year. So against this positive and improving backdrop, how are we faring? So you will recall that I've been telling you for some time that we've had a very deliberate and targeted strategy since 2023 to get ahead, load the planning basis and now we are seeing results. We achieved detailed planning for over 10,000 plots in 2025, 28% increase year-on-year.

On the chart that you can see on the left, while some of those applications have been in the system since 2023, many more were submitted more recently and have benefited from early progress following the NPPF. We also converted over 5,000 plots from the strategic pipeline in the year, not unexpectedly weighted to the second half and final quarter. Additionally, plots for first principal planning determination are continuing to increase, now standing around 32,000 plots, and we are progressing them through planning at a pleasing rate.

At the investor and analyst update, we set out a number of set of applications that we intended to submit from our strategic land pipeline. Just to stress, these applications are over and above our business as usual planning activity. In October, we expected to submit 52 applications in 2025 compared to 20 in 2024 or around 11,500 plots. I'm pleased to say that our teams have worked hard and hit the application target, surpassing the plot count level. In October, we also talked about 17 set of applications being targeted for committee decisions. And this was a stretching target. And whilst applications came in slightly below, in plot terms, the numbers came in broadly in line. And we have since had a number of those delayed applications go to planning committees in 2026.

So all in all, I think it's a good showing relative to our experience in most recent years. All this is key to driving outlets, and we are maintaining the momentum, which we will see in the next slides. We start from a position of strength, a strong short-term landbank sitting at 77,000 plots, which continues to give us the confidence that we can deliver growth without net investment in land. Our intention in the land market in 2025 was to continue to be selective and below replacement. In the year, we approved around 8,000 plots. And as you heard from Chris already, the average site size of those approvals was around 211 plots, in line with our strategy to target smaller sites. And the geographic distribution approvals nudged in favor of our Northern businesses.

The land market remains uneven, but there are signs of gradual stabilizing as the flows of opportunity improve. Competition remains high for well-located deliverable sites, whilst more complex or lower-value locations see less competition. Investment is, I think, expected to remain selective in the near-term as landowner pricing realism continues to act as a constraint in some areas. We remain confident of delivery over the next few years. We already own and have planning for all of our 2026 completions and already own or control everything we need for 2027, almost all of which has planning. With the momentum we've outlined, we are on track to open more outlets in 2026 than we did in 2025 and expect average outlets to increase year-on-year.

So now I'm going to run through a couple of example sites approved during 2025. Both examples are own sites that we've unlocked and I think reflect the tangible benefit of our assertive planning actions. They demonstrate the improving planning environment and illustrate how our mature strategic land pipeline is supporting early delivery during this period of planning opportunity.

So you may recall that in October, Shaun White highlighted this particular site located in the Green Belt on the edge of Solihull. We have held this land for over 30 years. And I think a few sites demonstrate the maturity and value within our strategic pipeline or indeed the frustrations of the planning system quite as well as this one. The journey hasn't been straightforward though it was considered as a draft allocation in the early 2010s, the site didn't make it into the 2013 adopted Solihull local plan given limited Green Belt review.

Though the site was not formally adopted, it was never dropped, but was identified as a draft allocation since the local plan review commenced in 2015. After various stages of consultation, the local plan journey concluded negatively in October 2024 when an inspector's report into the plan concluded that it would be found unsigned if pursued. So after nearly 10 years of effort, the council withdrew their plan. But the breakthrough came when 2 things aligned, our continuing local engagement and the emergence of the draft NPPF 2024. This caused an immediate shift in sentiment within the council, a council which now find itself under real pressure to deliver a 5-year housing land supply.

In fact, as Shaun noted in October, whilst we had already worked to prepare an application, we were now actively encouraged by the planning authority, and we submitted an application in December 2024. This came against a positive backdrop, an updated NPPF guidance on Green Belt release and strengthened recognition of local housing need. What followed was a marked change in pace, engagement with officers and elected members was constructive throughout, and we secured a resolution to grant within 12 months. That is rapid progress in today's planning environment and a testament to the quality of the work from our team and the appetite of forward-thinking councils to approve high quality schemes on a proactive basis to support their housing need.

We now move to the next phase. Reserve matters applications are underway and will be submitted later this year with an outlet anticipated late 2027. This site, I think, is a story of the commitment and our commitment to strategic land over the long-term, to partnership and being agile enough to act decisively when the environment shifts in our favor. And it represents exactly the kind of capital-efficient progress we need, land we have held for decades, unlock through determination, good timing and the strength of our relationships.

And now a smaller site example, this one at Abbots Langley, another owned site, which was acquired in 1996 on Green Belt land now considered grey belt. We submitted a detailed application in July 2025, proposing 50% affordable housing. What made this possible was the constructive early engagement with the local planning authority. They encouraged a detailed submission in this instance because the housing need was clear and the authority could not demonstrate a 5 year housing land supply. And as a result, the presumption in favor applied, giving the application a strong footing from the outset.

That clarity and national policy meant that our teams could move confidently and present a high quality scheme with the right evidence behind it. The shift in sentiment, combined with the planning reforms created an environment where good applications are now progressed quickly and Abbots Langley is a perfect example. We'll shortly begin work on site with an outlet scheduled to open in the second half of this year.

So to summarize, the assertive planning strategy that we've pursued since 2023 is delivering results. The planning reforms have created a more decisive and supportive environment and where engagement is tougher, if updated, then the NPPF gives our teams the certainty they need to pursue an appeal route if required. The examples this morning give me confidence that the planning landscape is continuing to improve and that it will be supportive of our medium-term targets.

So we outlined these targets to you in October last year, and this is our business focus. We remain both committed and confident in achieving these over the medium-term. During 2026, we will continue to focus on strategy execution and with improvements in results coming through over the medium-term. And as a reminder, this plan is predicated on current market conditions, so sales rates around the levels we've seen over the last 2 years.

So you've heard today that our strategy is in progress and is driving returns on what has been a challenging environment over the last few years. We are a business with a strong balance sheet, excellent landbank and experienced teams, and we've ensured that we are ready and poised for growth. We are well positioned. Our planning strategy shows signs of early wins with continuing momentum in an improving planning backdrop. Day-to-day, we're focused on driving outlets, recycling capital and driving returns without net land investment.

Thank you, and happy now to move to questions.

Jennie, Allison from Bank of America. Just 2 questions from my side. So first, can you give us a bit color in terms of the sales rate in January, February, like how it is progressing? And what's the driver behind that?

And the second is, can you tell us how the incentive has changed maybe year-to-date versus last year?

Okay. So I think in terms of what's driving the sales rate, probably different than we saw at the end of 2024 and start of 2025. we had a fairly subdued market in the final stages of 2025. I talked about sort of our leaning into the Boxing Day campaign. We had generated a lot of interest, but we were coming off a fairly soft start. So the teams need the opportunity to build the leads into sort of further engagement into site visits and then reservations. So it's perhaps not surprising that January was just a little softer given that sort of a slow start coming in from the tail end of 2025. And as I mentioned, we have seen sort of increased momentum in the last 4 weeks. So February, the last 4 week rate was 0.87 and excluding bulk was 0.83 against a comparator of 0.82. So month-on-month improvement there.

And in terms of incentives, we're running at around 6% now. We are seeing that customers have an expectation of a deal. And there is, as I mentioned, quite a lot of inventory on the secondhand market. So there's customer choice. So using that incentive to support customer commitment.

Zaim Beekawa, JPMorgan. The first is on the -- obviously, in light of no demand stimulus, some of your peers have done some shared equity schemes. Has a view changed there in terms of offering something similar?

And then second, on the landbank evolution, Chris, I think you gave sort of the details on the margin bridge, but maybe some details as to how much that could impact completions in '26 also?

Okay. I'll give Chris the landbank evolution question. We continue to look at various models in the market around sort of shared equity and others. We see them as quite expensive, both for the customer and for our balance sheet. And from what we can see in the market, they're not really driving sort of customer engagement. We have a very strong platform to engage with customers and to drive inquiries, which is working well for us at the moment. I would stress that we do continue to look at various models coming to the market, but we need to ensure that it is actually a benefit to the customer and that it also comes at a reasonable price to the developer. Chris?

Yes. And on the landbank evolution, I said back in October that our expectation was that the impact would be minimal in 2026. It would start to kick in, in 2027 with the lion's share in '28 and '29.

Ami Galla from Citi. A few questions from me. The first one was on the market. To an extent on the PRS side or on bulk deals, I remember that the broader backdrop was a lot more difficult in the second half of last year. How has that shifted into early this year? And are you seeing more sort of opportunities there to make bulk deals at a better pricing? If you could give us some color in terms of the sort of discount that you have to give on bulk deals, that will be helpful.

The second question was just on the Section 106 process. The government has talked about a clearance mechanism. Can you give us some sense of how do you think that will pan out? And do you think that would help you as we think about the sort of second half and the order book beyond that? And the last one was just on the timber frame facility. Can you give us an update of how that is progressing? And how should we think about the utilization there?

Okay. Just on the Section 106, Ami, to government clearance. Yes. Okay. We haven't seen any sort of material change in sort of PRS sort of activity or pricing since we entered the year. And we're seeing some fairly deep discounts being sort of presented sort of out in the market. So no shift that we are seeing.

On the Section 106, although government have sort of made some guidance available, the frustration, if I can call it that, is that it is just guidance. It's not a directive, and it lacks a degree of punch that we need with local authorities who are unwilling to engage. We're actually making really good progress with local authorities who are willing to engage, and that's very pleasing. But we do continue to meet some fairly incalcitrant authorities unwilling to discuss potential cascade mechanisms, for example, for Section 106. So we would be still asking government for something that's genuinely a solution to drive that part of the market. But to just reconfirm, we are in a good place for 2026.

And in terms of timber frame, it's progressing well. It's maturing. We're learning as we go, and I'm quite pleased with progress at this point, Ami. But it really will come into its own when volumes start to step up. It's intended to be there to support us through skill shortage and sort of more rapid growth period.

Aynsley Lammin from Investec. I think I've got 3 as well actually, please. Just you flagged up again the kind of affordability constraint around first-time buyers, and there's been some noise again around the potential kind of fiscal stimulus support on the demand side for government. Just interested, I think you're always quite well plugged in. So interested in your view of where we might be there, where government's thinking is on a kind of Help to Buy type scheme.

And second question, just interested a bit more color, I guess, on build material cost inflation, labor inflation, what the trends are doing there? And then thirdly, just on the kind of change of more flexible share capital returns, did you consider at all reducing the quantum? You still obviously seem very wedded to that 7.5%. And what's the criteria you'd use between kind of choosing dividends versus share capital return -- share buyback?

Okay. I mean in terms of affordability, although we're seeing some improvements, we talked about the sort of variable difference between North and South. The wage growth and some improvements into -- sort of from the FCA and PRA changes last year have helped around thresholds, stress testing, income multiples. But in higher value areas where deposit building is still a very significant challenge and maybe add on to that stamp duty as well in some areas where entry homes are above the stamp duty threshold.

So we see that the first-time buyer is still sort of heavily impacted. And I think that, that's playing out right across the market. The scale of the inventory sitting in the second half market. I think that the lack of activity from first-time buyers is part of the cause of that also. So we do think that there is a case, particularly now that we're seeing such progress in supply side, but continuing weakness in demand for some form of demand side stimulus. There have been discussions with government, but it would be too much to say that those are progressive at this point.

And then in terms of sort of capital returns before I pass over to Chris for the build cost and maybe more detail around dividend, I think it's important to note that the overall distribution remains at 7.5% of net asset value. But that flexibility or sort of evolution, we think, is in the best interest of our shareholders at this point in time.

Chris, do you want to pick up on build costs?

Yes, of course. So you saw on the slide today, 1% build cost inflation for completions in 2025. The exit rate that I mentioned, I think, in January was 1.5%. In January, we saw several manufacturers request pretty sizable increases, the order of 5% to 10%, well above inflation. We pushed back and many of those were sort of either withdrawn, deferred or partially offset through rebates, although we haven't been able to eliminate all of those increases. And the pressure is coming from sort of raw materials, energy, packaging and a little bit of labor inflation as well.

So based on where we stand today, obviously, you can see we're guiding to another year of low single-digit build cost inflation, likely higher than the 1% that you saw on the slide. But we'll continue to aim to beat the market through improvement in our procurement practices and other self-help measures, including the benefits from the pull-through of the new house type range, but we would still expect build cost inflation to be above 1% in 2026.

And just to follow-up on what Jennie said on the question on capital returns. We're in a very strong position, Aynsley, to grow output and volumes without needing additional investment across land and WIP as we set out in October. And yes, as you'd expect, the Board does regularly review the overall quantum of distributions in the context of our capital allocation priorities. And you remember what they are. The first one is maintain a strong balance sheet and the second is to invest in land and WIP to support future growth. And yes, if either of those constraints came about in either one of those priorities, then that would prompt to change, but we don't have that at the moment.

Will Jones from Rothschild & Co Redburn. Try 3 as well, please. First, just maybe extending on build costs. Could you just remind us at this stage of the year, what visibility you have in terms of cover for the year ahead? And maybe just expand if you can a little bit on those efficiencies and particularly interested in the house type range and where we are on rollout.

Second was London. Could you give us a sense of either plots remaining completions, just some sense of the proportions there? And maybe if you could help on what the margin drag has been from London in '25 and potentially '26, just high level to think about as and when that reverses back out? And the last, maybe just around land and intake margins, and I appreciate you don't give kind of hard numbers anymore, but any color on as you've got migrated somewhat to the smaller sites into the north, how that's affecting the economics?

Okay.

Yes. So in terms of build cost inflation and cover, yes, I mean, we are well progressed in those -- in that position. So over 90% of our materials are negotiated centrally. We don't -- we've moved away in recent years from having like a point in the year where they all get negotiated, but we have pretty good visibility for this year. So very comfortable with what I've outlined.

I think it's worth just bearing in mind that we've been dealing with build cost inflation and little or no house price inflation for 3 years now, and that's been tough. And it has driven a real sort of step change in how we procure. We've expanded the number of categories and the spend that we manage centrally to maximize our purchasing power. We're retendering those categories more often. We've introduced rapid repricing, which lets us benchmark more quickly and secure better terms as soon as we see sort of signs of pressure from suppliers. And we've recently added e-auctions as one of the things that we're doing and the early results are very encouraging.

And yes, where we have suppliers who are a bit in transient, pushing for unjustified increases, then if we have to, we'll switch supply. So we've made pretty meaningful changes in how we address the market conditions, and we're seeing benefits in that. In terms of the new house type range, it accounted for just over 1/4 of our completions in 2025, and that will rise to just under half in 2026. So obviously, those rollouts just take time to flush them through the landbank. And obviously, planning has been difficult. So now it's a little bit better than obviously, the pace improves.

In terms of, pardon me, London completions and margin drag and all that sort of stuff, actually, it's -- I don't think you should necessarily think about it like that. It is all tied up in the landbank evolution that we've talked about. But actually, some of the London sites that they were procured a long time ago, and they've been delivered very well. So it's not quite right to just assume that they have a massive drag. Some of them are actually pretty good in terms of the margin performance.

And the last one was...

Yes, the landbank or the land intake, I'll take that I'll give you a rest there, Chris. I mean, look, we don't give sort of guidance or -- but I'm really comfortable the acquisitions that we made last year, good markets, good sort of intake margins, entirely supportive of our medium-term targets.

Glynis Johnson, Jefferies.

Yes, Glynis.

Nice to steal the microphone for someone else. Four questions, but hopefully, super quick. You talked about North-South in terms of approvals, a bit of a skew. Can you talk about the outlet openings? Do the outlet openings also have a North-South SKU? And does that make a difference?

Second of all, in terms of incentives, one of your peers yesterday talked about stepping up incentives and stepping up quite substantially and was of the view that others would have to follow. Have you seen incentives move up as we've gone through February? Are you seeing any areas where incentives have stepped up markedly or competition as a whole step up?

Thirdly, London, when do you need to take the decision about whether or not to do further bulk sales in London? What is the -- what are you looking for in London to say, okay, we can just sell out on a normal basis or need to do bulk deals, which you've already said PRS is at quite substantial discounts. Actually, I'll leave it there at 3.

Yes. In terms of sort of outlet openings, we're a business that looks to support all our businesses. And I think that we've got a reasonably good spread sort of across our divisions of outlet openings. On incentives, I mean, I mentioned that incentives are running at 6%. I think that we're working hard on pricing, Glynis. It remains disciplined, and we're certainly aligned to the wider market rather than trading aggressively sort of for volumes.

So we're working, as we always do, to balance price and sales rates without sort of sacrificing sort of value or sort of long-term value. We can see some movements. It's part of the every day. There's a lot going on in the markets. And so our businesses are mindful of sort of changes in behavior by others. But we'll continue to drive that really disciplined sort of balance and ensure that we're doing the right thing in terms of long-term value.

And then in London, the decisions around sort of bulk deals, they're carefully balanced. They're relative to how we're seeing the sales market evolve. We're also mindful of the capital that's potentially locked up and where we think that, that capital is better recycled through a potential bulk deal. As you saw last year, we will make those decisions. But we remain very active in the private sales market also. So there's no plan as such, we will continue to watch the market, and we'll make judgments as we progress. But overall, our approach to bulks hasn't changed. Our preference is to do those on a planned basis.

Alastair Stewart from Progressive. A couple of broad-ish questions. First, on the market. You mentioned it's taking time to secure sales. Have you got any broad comparatives either in the overall length of time from first clicking on to the website and then finishing? Or is it a case of coming back and forward more often than in the past? And related to that, you said there's quite a lot of inventory in the secondhand market. Is a lot of that buy-to-let landlords trying to get out? So that's kind of the first question.

Second question is on the Iran situation. Obviously, a week is not a long time. But are you getting any feedback from your sales outlets that the rank and file buyers are getting a bit jittery. And possibly on the other side, is this great exodus to Dubai tax [indiscernible]. Some of them actually thinking of getting back in a hurry and that in turn may actually support your London market.

And finally, again, costs, any brick manufacturers or anybody else giving you gentle calls saying we've been noticing the price of gas recently, guild your lines for further increases.

Okay. Quite a few things there.

Two questions.

Yes, yes. I think there's 4, but we'll go. In terms of taking time, I mean, I think the overall time taken about 80 days from inquiry to reservation.

Sorry, what was that?

80, 8-0. And actually, that hasn't moved massively. The interesting point in the comments that I made was the multiple visits. So we're seeing customers coming back sort of more frequently than previously. And our teams are working hard with our customer group.

In terms of the secondhand market, it's a good question. And we did do some work as we saw the secondhand inventory climbing sort of last year. It's not as simple as that. Yes, there's a couple of markets where you would say maybe buy-to-let landlords. But it's pretty pervasive, Alastair, right across the country. And I would take it back to you, you need first-time buyers to drive the whole ecosystem, and that's where I would put the issue. We're not hearing anything from customers as yet. And we haven't had any calls from any of the suppliers. And if they're listening, I don't want any are on gas. And a lot of them are hedged in the near-term in any event.

And as Chris says, then we will make sure that we're sort of pushing back very hard on that. And whether there's opportunity sort of in this crisis, I'm going to say there's a human cost to what's going on in the Middle East, then I'm sure that our London teams will be sort of ready and able to talk to them.

Rebecca Parker from Goldman Sachs. Just wondering in terms of your outlets that you plan to open in 2026, how many of those have detailed planning consent? And then secondly, how are you seeing land market opportunities? At the moment I know that you were saying that some landowners, the pricing realism is acting as a bit of a constraint. And then thirdly, how should we be thinking about WIP as we go into 2026, just given that you do have that target to increase outlets?

Okay. Sorry, could you repeat the second question?

How are you seeing land market opportunities just given that you commented that there was a bit of pricing realism acting as a constraint?

Okay. I mean I think as I said in my narrative, we're in an excellent position for 2026 in terms of planning and in fact, in an exceptionally good position for 2027 as well. We are seeing, as I said, some stabilization in the land market. We are seeing more opportunities coming through in many of the geographies. Competition is stronger for sites that are sort of further along the planning process and in good quality locations, weaker where it's more complex, where planning is less evolved. But we talked about in an environment with build cost inflation and particularly with some of the regulatory costs that we're going to see sort of realizing over the coming year, ensuring that landowners are realistic is an important part in the market. And some of the other commentators, Savills and the RICS are seeing very similar sort of positions.

And then WIP, Chris, can you take the WIP question?

Yes. So WIP at the end of 2025 was GBP 2.07 billion. And I think as we progress to the first half, it'd probably be somewhere between GBP 2.1 billion, GBP 2.2 billion at that point.

Chris?

Chris Millington at Deutsche. First one, I just wanted to ask about the medium-term targets. Obviously, the market has been a bit stop starting over the last couple of years. And recalling back to the CMD, it looked like the profile was to get you to those 14,000 completions by about 2029 based on the CAGR growth rate. Where do you think that is at the moment? Obviously, this year, we're looking at kind of 2% growth at the midrange. That's number one, just the timing about mid-terms.

Second one is you've had a few questions around London, et cetera, et cetera. But could you just talk in a general sense kind of how North Midlands versus South has progressed over the last couple of years? And does it move up? And is there much of a margin difference between the 2, given the relative demand profiles rather than just picking out discrete parts of the market?

And the final one is H1, H2 margins this year with volumes back-end loaded with the order book coming in a bit lower. Can you give us some feel kind of how that H1 margin can look? Obviously, we can do the sums over the full year and back out H2?

Okay. If you will take the last one, Chris. I mean in terms of the medium-term, I think we were really clear when we spoke in October about 2026, not likely to sort of demonstrate sort of full growth, and we talked about the achievement of our medium-term targets not being linear. And we also said somewhere between 3 and 5 years. So I think that we remain confident. I've talked a few times in the narrative about remaining confident in the medium-term targets over that time frame.

In terms of London differential, I think it's probably the same answer that Chris gave really. There are differentials. There's always been sort of differentials between our Northern operating businesses and in London. And it would be wrong to characterize all schemes in and around London as per schemes. There's definitely some challenge around sales in those sites, but some of them are performing fairly well on a relative basis.

And then half 1, half 2 margins, Chris?

Yes. Yes, of course. So our half 1 operating margin in 2026 is going to be lower than half 1 operating margin was in 2025, which I think was 9.7% and that reflects 3 sort of key factors. We came into this year with underlying pricing in the order book around 0.5% lower year-on-year. Second, we've seen low single-digit build cost inflation in that 12-month period, we talked about that this morning. And third, obviously, we've signaled very clearly in the statement that the volumes are going to be weighted 40% in the first half, 60% in the second half. And that was due obviously to the softer market conditions that we experienced in Q4. And I think that means we expect to deliver around 30% of the group's 2026 adjusted operating profit in the first half.

And can I come back really quickly? Not on the margin on the geographic split, proportional on completions. However you do split your geography, how much would you regard as North and Midlands versus below that or South of that?

Sorry, Chris.

I'm talking about the proportion of...

Yes. So [ between the ] segment, Chris as you know, I mean, it would be reasonable to expect everything sort of from Nottingham, Birmingham North is North and everything South is South. But we've talked about it's also gradations of. So it gets softer the further South you come. It's not simply just characterizing all of the South as impacted. There are some markets that are more challenged in the South. There are some markets in the North, which are more challenged. So I'm not happy to sort of strike a line and say that's North and this is South because it's a movable depending on markets.

It's just -- it keeps getting referred to as being soft. And it's just to put context around that comment.

Yes. Well, you just think of it on the basis of the further South you come, there's a gradual softening or look at it in terms of sort of pricing. Pricing is, as you come South as it increases, then it becomes more challenging. There are some markets in Kent where affordability is easier. They're doing really well. So I think it's just a way of sort of helping you understand the broad variables.

Okay. One more.

Kate Middleton, Panmure Liberum. Just a quick question on pricing. So I know you're speaking about stronger growth in sales prices in the Northern regions. But just wondering if you can attribute a particular ASP to the North versus London and the South. And then just a couple on sites. So guiding to net outlet growth. And obviously, you've said 211 plots per site is the average for the year. Wondering if that's just what you're continuing to target moving forward or whether that's due to reduce?

And also with the outlet growth, are we looking at sites closing as well as opening at a greater rate? Or is the rate of site closure kind of staying relatively consistent moving forward?

Okay. So we don't segment on an ASP basis, albeit we do give Spain on a separate basis. In terms of sort of average site size, so the 211 that we referred to was on land intake rather than outlet opening. We talked about targeting smaller sites. I think we were really clear in October, that's not small. It's sites that we can still achieve a volume housebuilder sort of benefit in.

So 211 is pretty good. I'm comfortable with that. If it was a little bit lower, that would be good, a little bit higher, fine. And then in terms of outlet growth, well, the rate of closure is a function of the market. And so we'll see how the market sort of evolves over time in the coming months.

All right. Well, thank you very much for your time today. I do know it's a busy -- it's been a busy results day. And Chris and I look forward to seeing you later in the year.

Hello, everyone, and thank you for joining the Taylor Wimpey Trading Update. My name is Gabrielle, and I will be coordinating your call today. [Operator Instructions]

I will now hand over to your host, Jennie Daly. Please go ahead.

Thank you, Gabrielle. Well, good morning, everyone, and happy New Year to you. As usual, I'm here with Chris. I know that you will have seen today's statement, but I'll say just a few words before handing over for your questions. So there's no doubt that 2025 was another challenging year for the industry. However, despite this, we delivered a robust performance. We are delivering on our strategy and remain confident about how the business is positioned for the medium term, but I'll come back to this later.

So first, 2025 performance. We've spoken to you before about how the delayed budget impacted customer sentiment in the second half of the year. So I won't labor this. But given the customer uncertainty that's caused, I am very pleased with our robust closeout of the year. Our U.K. net private reservation rate for 2025 was 0.75 homes per outlet per week compared to 0.75 in 2024, with a cancellation rate for the full year of 15%, the same as the prior year. Excluding the impact of bulk sales, the net private sales rate was 0.65, very consistent with the 0.67 we delivered for 2024.

Total group completions, including joint ventures, were 11,229 and U.K. home completions, excluding joint ventures, were 10,614, so in the middle of our guidance range. U.K. overall average selling price was GBP 335,000, marginally lower than our GBP 340,000 guidance due to mix, including a slightly higher weighting of affordable completions. The softness in the second half inevitably impacted order book, and we ended the year with an order book valued at circa GBP 1.9 billion, a little lower than the circa GBP 2 billion closing order book this time last year.

Given the more subdued autumn customer backdrop, we carried 6,832 homes into 2026. That's 480 units down year-on-year. And as a result, we expect to be more second half weighted this year. Importantly, though, I am pleased to say we continue to make encouraging progress on outlet openings. We traded from an average of 208 outlets in 2025 and ended the year with a total of 219 outlets. So pulling all of this together for you, group revenue for the year increased to circa GBP 3.8 billion, driven by higher volumes, average selling prices and land sales. As a result, we expect to deliver 2025 group operating profit of circa GBP 420 million and an operating profit margin of around 11% in 2025, which includes 60 bps benefits for land sales, which I will come back to just shortly.

Turning now to land and planning. We've seen positive planning progress through the year, and this, in turn, has led to stronger land sales, which we typically do once we get planning or put infrastructure in place. This is consistent with our strategy. And as we set out in October, we will deploy this cash into smaller sites, which will help to give greater breadth of outlets over time and increase group returns. Reflective of our attractive land holdings, the land sold was at a good profit, contributing 60 bps to our margin as we disclosed in the statement. So it is worth noting for your models that we don't expect this to reoccur in 2026 to anything like the same level.

I think it's also worth spending just a few moments on the very good progress we have seen in planning in 2025 because it's a key part in progressing towards the medium-term targets we outlined in October, and we remain confident in those targets. As expected, we saw a noticeable pickup in decisions in the last quarter. Firstly, we saw a number of planning approvals effectively clearing along the way the determinations by local authorities where we had previously seen little momentum, but where councils are now feeling pressure to target a 5-year housing land supply.

A good example of this would be our scheme in [indiscernible] for 311 plots where the application was 4 years old on an allocated site. Secondly, in the final quarter, we also saw a number of important determinations of applications submitted as part of our assertive planning strategy, which has been operating since 2023, including own sites in Solihull and Berkhamsted, both around 650 plots each.

And thirdly, we saw the speedier determination of a number of applications for smaller sites submitted specifically in response to the December 2024 NPPF. And 2 great examples of this are our applications at Merchant, which was for 103 plots and Abbots Langley for 192 plots, which demonstrates just how quickly some local authorities are now moving. Both these proposals were submitted following the NPPF, achieved planning committee approval in 10 months and 5 months, respectively, noting like the Abbots Langley proposal was, in fact, a detailed scheme. So really pleased here, but much more for us to go at.

Turning to current trading and 2026. I know you'll be interested in how the year has started. The usual caveat applies. We're only in the second real week trading. So it's very early in the new year. But as you would have expected, we've released a Boxing Day campaign and are staying very close to customer response. The interest rate cut in December continues the trajectory of rate cuts, which while largely factored into mortgage rates are nevertheless helpful for overall customer sentiment. Inquiries are at similar levels to last year, and our focus has been turning that initial interest into appointments on site.

As usual, we'll give you full guidance for 2026 alongside our full year results when we have seen how the spring selling season has started. However, we've given you some additional color in the statement this morning, which is hopefully helpful when you think about the moving parts for 2026. At present, we are continuing to experience low single-digit build cost inflation. Overall, private underlying sales prices remain resilient. However, pricing of bulk deals contracted in the second half of the year was softer. And so overall pricing in the order book is around 0.5% lower year-on-year.

This reflects certain site-specific transactions in London where given challenging market conditions, we have chosen to transact to reduce sales exposure and recycle capital in line with our plans. Together, these will have an adverse impact on 2026 group operating profit margin, and we've been explicit today that we expect this to be lower in 2026 than in 2025. We remain focused on positioning the business for growth as the market recovers. As I've outlined, the positive impact of planning reform is noticeable in recent decisions and with an improving planning pipeline, our teams remain focused on aligned to drive value for our shareholders, including tangible progress in outlet openings to best position us for delivery and growth, and we still expect average 2026 outlets to increase year-on-year.

Market improvement may be taking longer than anyone would have liked, but there remains significant opportunity to deliver much needed homes. We have aligned the business, both strategically and operationally to benefit from the improving planning environment even in a more subdued market through outlet-led growth and remain confident this will be demonstrated over the medium term.

So thank you, and I'll now hand over for your questions.

[Operator Instructions]

Our first question is from Will Jones from Rothschild & Co Redburn.

I'll try 3, if I can, please. The first, maybe just on your various lead indicators you track any color? And I think you talked about inquiries being similar year-on-year. Just wondered if that marked any change versus how the second half last year was looking on inquiries compared to prior year.

Second was just around pricing and just generally what you think it will take for the group to be able to post, say, a 1% to 2% price increase at some point? Is there a certain sales rate we should have in mind or maybe affordability is getting to a position where you can start to think about that? And then lastly, around outlets, obviously, a move up into year-end. Do you think that 219 can kind of hold in the near term? I'd appreciate you're saying the average will be higher year-over-year, but just wondering on that spot figure, perhaps just high-level thoughts for the first half.

Okay. Will, thank you. In terms of lead indicators, yes, I think our inquiry levels were fairly consistent with what we had seen in the similar period in 2024. I mean that does mark a fairly strong increase on where sort of we were ending the trading part of December. So pleased with that. You'll know that we put some sort of work in last year. We talked about driving better quality inquiries. And I think that we're satisfied that we are seeing better quality inquiries coming through. I mean just to put a little bit more color around it for you, perhaps not surprisingly, organic traffic was lower. So it was very much driven by sort of paid media and sort of active sort of campaign intervention, but total traffic was pleasing, and we're seeing a strong sort of conversion into appointments sort of following that.

So as I say, inquiries consistent really be how those inquiries start converting over the next few weeks. Around pricing, I mean, probably not surprising, we're continuing to see that differential between North and South. The North has been sort of robust. We've seen some gains, but the south has been very challenging. And you'll have noted that comment that I made about sort of London in particular and the choices that we've made there. I am pleased that we are seeing gradually improving affordability. And we're seeing that interest rate play through and sort of wage growth playing through. But my comment in the top of the statement around first-time buyers is very much sort of that deposit, still struggling with deposit, that transactional cost.

The cost of servicing the mortgage, I think, is a case well made. And as always, we look at our plot releases sort of each week. And if there's an opportunity to drive price, then we'll be taking it. And on outlets, yes, look, we closed the year at 219. You know that in October, November, we were guiding sort of in the range of 210, 215. So a bit of benefit from the slower sales, but generally moving in the right direction. And I'm confident that we will grow average outlets year-on-year.

Our next question is from Aynsley Lammin from Investec.

I think I've got 3 as well, actually. Just following up a bit on Will's comment around site numbers. I mean, just thinking about completions this year, if we assume a stable market, obviously, your order book is lower, you're kind of flagging up maybe some weaker trends in demand in the bulk sales. Would you still expect completions to be higher in a stable market in FY '26, given your kind of expectation around higher average sites?

Second question, just on margins. And just to clarify the comment that margins are expected to be lower for FY '26. Is that even once you take out the impact of the 60 basis points of the land benefit, so lower again on that? And then third question, just on the interest cost. I think that was slightly higher than I had in at GBP 30 million for this year. Would you expect that to be similar in FY '26 at this point? Obviously, lots of moving parts there. But just -- and generally, maybe a bit of color around the interest cost, which was higher.

Okay. Thanks, Aynsley. I'll take the first, and Chris will pick up on the margin and interest costs. I mean, as you know, look, we won't give volume guidance until the prelims and once we see the spring selling season sort of mature a little bit. We're starting with a slightly lower order book on a private unit basis. But as I mentioned there, we do expect average outlets to grow year-on-year. So taking your starting point, if we assume a stable market in that 0.75 that we've seen '25 and '24, then I'd still expect there to be maybe sort of low single-digit year-on-year growth. Chris?

Yes. And on the margin, we've tried Aynsley, to be helpful in this statement by providing visibility on the outturn and components of the 2025 operating margin together with the factors impacting the margin trajectory into 2026. And yes, you can see clearly that we expect group operating margin to be around 11% in 2025. That figure includes the one-off GBP 20 million half 1 charge as well as the margin-enhancing land sales in half 2. And those 2 impacts broadly offset each other. So the underlying margin for 2025 is essentially the same, 11%, and that forms the starting point for thinking about 2026.

Owner-occupied pricing on private homes has remained resilient. However, as Jennie just touched on, softer pricing on bulk deals secured late in the year means the net underlying pricing in the closing order book is about 0.5% lower than a year ago, and we continue to see low levels of build cost inflation. And taking these house price and build cost dynamics together, which are both slightly unfavorable, we expect group operating margin to be lower in 2026 than in 2025. And as usual, we'll provide further guidance on both pricing and build costs at the prelims when we have had the opportunity to assess trading at the start of the spring selling season.

And in terms of net finance costs, yes, they were a bit higher in 2025 than we expected at GBP 30 million. And you'll recall, we guided to GBP 25 million. And that was just due to a number of small movements, including lower bank interest receivable as cash from completions came in a bit later than we anticipated and higher level of imputed interest on land creditors. We'll obviously give you guidance in March for 2026. But overall, I'm not expecting them to change much year-on-year.

Our next question is from Ami Galla from Citigroup.

A few questions from me. The first one was on build cost inflation. If you could give us some color as to what are the moving parts? And a degree of -- can we have -- can you really push back on the build cost inflation coming from the supply chain given the market that we're working with? The second question was on outlet openings. I appreciate the color that you've given in terms of outlet growth into next year. Given that we've got local elections in May, to what visibility do you have on your outlet opening plans and with the assumption that we could see some stalling in the market in the very short term this year?

And the last question I have was on Section 106 take-up. Has there been any change post budget on the regulatory side that could make life easier in that end of the market?

So I'll take the last 2, Chris, if you want to sort of do build cost. I mean, working backwards, Ami. Section 106 take-up, not much change. No specific sort of help coming out of the budget. The rent convergence that I know others have talked about would help give sort of greater visibility and capacity and balance sheets for housing associations and therefore, could see some improvement. But it's still quite sticky. And the teams are working hard with some of our very established sort of partners there.

On outlet openings, we do have good visibility, and we're in a very strong position from a sort of planning perspective. And whilst there's always concern around local elections and disruption that, that might have on decision-making, I'm less concerned about it for our 2026 outlets. Potentially, it could have some sort of future knock-on, but not a meaningful risk for us for 2026. And then build costs, Chris?

Yes. So in line with our guidance there was low single-digit build cost inflation in 2025. The spot annualized build cost inflation as we exited 2025 was about 1.5% which obviously incorporated the increase in pressure from ground workers that I referenced at the half year. Supply chain negotiations for supply of materials in 2026 are ongoing. So it's just too early to guide for 2026. But we have seen a number of material manufacturers ask for significant cost increases well above inflation. And given where the sector volumes are at present, we are pushing back strongly on those requests for price increases. And we're able to do that by having a diversified supply chain.

We managed the pressure on the labor side very effectively in 2025, which will no doubt increase the pressure as we progress through 2026. But obviously, as Jennie has touched on, we have plans to open plenty of new outlets and the negotiations that, that then drives will help us mitigate that pressure.

Our next question is from Chris Millington from Deutsche Bank.

A few, if I could, please. The first one, I just wanted to understand is kind of the strategy behind pushing those bulk sales out at the end of 2025. We've seen obviously, one of your peers kind of let the sales rate fall away at the back end of the year. And I understand that has order book connotations, but it does feel like if you're having to give quite a lot of price away there. So really just curious about where your attitude is on volume cash versus price and margin. So I'll do one at a time actually rather than just witter on.

Okay. I'll take that. I mean, look, I think that I'll start off by saying the volume of bulks that we did in 2025 was very similar to 2024. So there's no real change in terms of sort of quantum or overall outlook. And I've very specifically referred to sort of the London market. So these are multifamily apartment schemes. I'd say they're well designed. They're well built, but we are seeing quite sort of meaningful challenge to trading conditions in London. And we've got a sort of good level of visibility on build costs. We're very advanced on procurement. And so this is a challenging sort of business decision that's taken on balance disappointing in the short term. But ultimately, I think it's in the interest -- best interest of the business in the medium term. So very much focused on the specifics in this particular instance, Chris.

Okay. That makes sense. And look, if we had a situation at the back end of 2026 where sales rates were lagging against that kind of expectation of flat sales rate, do you think you'll be doing something similar? Or do you think you would take your foot off the pedal on volume and support margins? Just curious about kind of how that progresses through this year now you've sold those multifamily units.

Well, look, we've sold those multifamily units. The schemes still have a bit to run. But look, it's always a matter of do we see -- what do we see in the outlook? What are all the other variables that are going on at the time. As I say, it's a balanced decision. I'm disappointed because I think they are good schemes. But overall, recovering our WIP and investing for shareholder benefit in the medium term on the balance in that instance.

Got you. Next one, I just wanted to ask really, it's a bit of a reminder, and perhaps this is for Chris, but you're down 0.5% in the order book at the start of '26. By memory, I think you had a similar thing at the start of '25. So should we think pricing in the order book is roughly about a percentage lower than it was coming into 2024? Am I thinking about that right, Chris?

Yes, that's correct.

Good. Okay. And then look, that was an easy one. Final one. It's just -- we talk a lot about build cost inflation here and your guidance has been really helpful there. What about your employee costs, both in the cost of goods sold and administration costs? What pressures are you seeing there? How much could those costs move up in 2026?

Yes. So I mean, if you look at admin expenses, then in 2024, they were over 7% of revenue. And in 2025, we brought that down to just under 6.5%. And that improvement reflects the higher completion volumes, the increased average selling prices and disciplined cost control to offset inflationary pressures. And as we look ahead to 2026, yes, it will be challenging, I think, to drive further efficiency gains because volume growth is likely to be lower than in 2025, given the weaker opening order book, and we expect continued inflationary pressure on overheads, much of which relate to salary costs.

We're always going to be very tight on cost, but we also need to balance and be conscious of our ambitions for the medium term and the targets that we set out in October for the business to grow U.K. legal completions to 14,000, margin to 16% to 18% and [ renewal ] of greater than 20%. So in the medium term, that means we're targeting admin expenses probably somewhere in the range of 5% to 6% of revenue, but we're not likely to see that much progress on that in 2026.

Our next question is from Allison Sun from the Bank of America.

I have 2 questions, if I may. So first one is on the volume growth because I think right now, we are seeing the order book is still going down. So how should we think about the trajectory of, let's say, the low single-digit volume growth you are thinking? Is that going to be pretty much rely on the second half recovery? And I would guess it's going to be maybe some improvement in sales rate and also the outlet growth. Is that how we should think about it?

The second question is on the pricing. So because we know in last year, you have some London projects, which probably affect the average price a little bit. So into 2026, should we be concerned about it? Or should we still expect maybe the pricing can still go up?

Okay. Allison, Chris is going to take both of those for you.

Yes. So obviously, on the volume, we'll obviously provide guidance on volumes of the prelims. But as you've seen from the statement, we're starting 2026 as you identified with a lower order book in unit terms. And of that 480 unit reduction, just over 300 relates to private units with the balance in affordable, which, as you know, is much further forward sold. So effectively, yes, we start the year with a private shortfall of around 300 units. At the same time, as Jennie just touched on, we've indicated that we expect to increase average outlets year-on-year. And if sales rates hold broadly stable at, let's say, the 0.75, so consistent with what we've delivered in both 2024 and 2025, then the growth in outlets should more than offset the opening shortfall in the order book. And in that scenario, yes, I guess we'd still expect to deliver low single-digit year-on-year volume growth. But that said, the spring selling season will be key, and we'll update you in the usual way at the beginning of March.

In terms of average selling prices, you can see in the statement, 2 things. I suppose you can see that last year, we achieved a blended average selling price in the U.K. of GBP 335,000. And if you looked in the order book and did the math on that, you'd see that the nominal average selling price is flat year-on-year. I think what you're more likely to see is that mix will provide a benefit of around about 2% from that GBP 335,000 in '25 into 2026.

Our next question is from Zaim Beekawa from JPMorgan.

A few on my side. The first would just be on the Planning and Infra bill. Just any expectations on if you think this is going to be a major change into '26. And then second on the bulk sales price contracting. Would you be able to provide maybe a magnitude? And are you expecting a better environment in '26? And then finally, on the landfill tax increase, just the impact on your business in '26 and how you aim to mitigate some of the increasing costs there would be helpful.

Okay. On the planning and infrastructure bill, I mean, there are a number of elements of the planning and infrastructure bill, some of which will require regulation and statute to be put in place. But I know that speaking to MHCLG and the Housing Minister that they're keen to get those things moving. In terms of pace of determination, the national sort of plan or scheme of delegation, I think, is one because even if it doesn't touch on our schemes, say, it's focused on small house builders. That still removes quite a lot of friction and resource time from a planning determination and sort of resource and productivity perspective. But the issues around the national scheme of delegation and others, I see that the planning and infrastructure bill could meaningfully move sort of the pace of determination, particularly around conditions and other and other things.

On bulk sales, I'm not going to give you sort of visibility into the sort of commercial sensitivities. Look, the number of players in the bulk market is very broad. And there are differences between those that operate in the multifamily type scheme and those that operate in single family. So structurally, they can be quite different. And overall, their sort of objectives from investment can be very different. So it would be wrong to think of them all as moving at the same pace. Nevertheless, as with all businesses, they are sensitive to interest rate movements, gilts and the bonds market. We tend to look at them, as we've said, consistently on a project-by-project basis, and we'll continue to do that.

On the landfill sort of issue, I think that with the change that came through the budget, the increase in the rate for the lower rate of an active waste was disappointing. But what was more encouraging was that exemptions that we had understood would be removed as part of the consultation have actually been retained. And so the majority of the material that we dispose of, it goes to things like quarry filling operations and land restoration. And those would still fall within key exemptions for landfill.

There are impacts. So things like potentially live material, so whether there's vegetation or other things. So there will be impact, but it's maybe a little less than we had understood from the consultation. Our teams already work very hard to limit the amount of material that goes to landfill, but we will be sort of working really hard to minimize those costs wherever possible. But because they're quite specific on a site-by-site basis, it's very hard to give you a value to that.

Our next question is from Rebecca Parker from Goldman Sachs.

Just 2. Just wondering how we should be thinking about the net cash position as we move into 2026 and any moving parts there? And then second question, I know it's a small part of your business, but if you could just give some color on how you're expecting the Spanish business to perform in terms of volumes and prices as we move into 2026.

So I'll do Spain. Chris, you will pick up on sort of the net cash. Spain has performed really well over the last few years. It's fair to say that their volumes have been higher than their normal run rate. And so we would expect Spain to sort of normalize in terms of its output, so more in the 400 sort of unit level. The market remains strong in Spain and sort of pricing remains quite stable. So really pleased with the operations there. On net cash?

Yes. And on cash, obviously, net cash at the end of 2025 was GBP 343 million, so pretty close to our guidance of GBP 350 million. Net cash at half year will be lower because it's always lower at the half year, mainly due to the second half weighting of completions. Last year, net cash reduced in half 1 by GBP 240 million. So that's from the end of '24 to June '25. This year, I'd expect net cash to fall by a little bit more than that because completions are going to be more weighted towards second half due to the lower opening order book and because we'll pay out more in half 1 this year on cladding. And obviously, I'll give you more color on that when we get into March.

Our next question is from Sam Cullen from Peel Hunt.

Just a couple from me, please. Just coming back to the London apartment schemes issue. Can you give us a sense of -- I think, Jennie, you mentioned there are a few more of those to go. What's the scale of those types of schemes in the land bank as it stands currently? Are there more things that we should expect to come down the track in '27, '28 and '29? And then the second one is just your view on what a normalized sales rate is for Taylor Wimpey in the wider industry.

Okay. I mean on London schemes, I think as I mentioned in the sort of October Investor Day, our pipeline in London is effectively winding up. So it's a diminishing part of our business and a diminishing part of our land bank, Sam. So what I'm not ruling out is that there's more completions to go, but we're really in the wind down. And normalized sales rate, now there's a question. It depends where we think the market overall is going to stabilize. I mean I'm pleased given all of the headwinds that we experienced in 2025, really pleased with our sales rate. You've heard us talking about what sort of reasonable assumptions might be for 2026 at the 0.75. Our business can support a higher sales rate. We can build to it. We've got really good execution, but we need to see that affordability, particularly first-time buyers, and we need to see customer sentiment really settling in order to take the benefit of some of that improving sort of affordability and improving interest rates.

Our next question is from Harry Goad from Berenberg.

I've got 2, please. Just the first one around customer affordability. Obviously, debate goes on about whether the government may relaunch Help to Buy. But in the absence of that, would you think about doing anything yourself with regard to shared equity or any other sort of innovative scheme? Have you thought through maybe some of the mechanics of how you could do that?

And then the second point is around land. And obviously, you're talking about more progress on the planning front. Does that mean maybe not right now, but over the next year or 2, it becomes more of a buyer's market as more land -- more consented land comes available?

Okay. I mean I think in terms of sort of customer affordability and looking at sort of potential sort of shared equity and sort of other interventions. I mean we've been very active in reviewing a range of product on the market, but they tend to come both an expense to our balance sheet and more expensive to the customer, and that's not a good outcome for either party, but we'll continue to review those. But what we want to be able to offer for to smooth the dial is something that's genuinely sort of a positive. The focus for me around sort of the first-time buyer as rates ease is really that deposit building and the fact that particularly in the South, but in higher value areas, stamp duty and the change that was made last April has become a headwind for first-time buyers.

And we can see that in instances, although our cancellation rate was very stable, the cancellations due to sort of chains breaking down generally can be tracked back to the first-time buyer. And in order to get the market moving, that's got to be a focus.

On land, I mean, you're absolutely right, Harry, planning sort of relaxation and improved planning outcomes and pace flow through into land market. And if that starts to sort of move more quickly and there's more opportunity available, then that has benefits for pricing. I mean, through last year, we saw, as we did see the land market improving, particularly towards the end of the year. Some of that was to do with new products coming to site. Some of it was to do with the absence of other participants in the market. So a bit of a sort of 2 elements playing through there.

There's also in some specific areas, some noticeable removal of sort of regulatory constraints. So South TAMs, for example, that's been suffering from water neutrality as the solution for that came through in the second half of the year, we saw the land market sort of getting quite busy and good value in that area. What we have seen is vendors becoming a bit more realistic on payment terms, which is really welcome. So we have seen some improvements, room for more improvement, and you'd like to see some areas that have still got a level of constraints seeing some benefits from the planning changes.

We currently have no further questions. So I will hand back to Jennie for closing remarks.

Okay. Well, look, thank you for your time and questions this morning. I appreciate that it's been a really busy week. We look forward within the business to the spring selling season. And Chris and I look forward to seeing you again at the prelims in March. Thank you very much for your time.

Thank you. This concludes today's Taylor Wimpey trading update. Thank you for joining. You may now disconnect your lines.

Good morning, everyone, and welcome to today's Taylor Wimpey Trading Update Call. My name is Seth, and I'll be the operator for your call today. [Operator Instructions]

I will now hand the floor to Jennie Daly, Chief Executive, to begin the call. Please go ahead.

Many thanks. So good morning, all, and thanks for joining Chris and I this morning. I know you have all seen the statements. So as usual, I'll just take a few minutes to run through the key areas before opening up for your questions.

So the high-level story is that we are executing well on the priorities we set out in October, including a focus on efficiency, driving planning progress forwards and opening outlets. In terms of the market, given the uncertainty for customers as they await the budget and also the trajectory of further interest rate cuts from the Bank of England, sentiment continues to be cautious and affordability remains stretched for many, particularly first-time buyers. As a result, there's a lack of urgency with customers as they wait and see the outcome, and gaining customer commitment is a key focus for our sales teams.

As we've previously stated, incentives remain an important part in this. And while underlying pricing is broadly flat, pricing in the southern parts of the country is more challenged. This, together with the low single-digit build cost inflation we have previously flagged is creating a headwind. All of this is reflected in trading for the second half to date with a net private sales rate of 0.63 compared to 0.71 last year, and a cancellation rate of 17%, the same as the comparable period last year. Excluding the impact of bulk deals, the net private sales rate was 0.61 compared to 0.68 for the comparable period.

For the year-to-date, we have achieved a net sales rate of 0.72 , so very similar to the 0.73 at the same stage in 2024, with a cancellation rate of 16% compared to 15%. Excluding the impact of bulk deals, our net private sales rate for the year-to-date was 0.68 against 0.68 last year.

The order book, excluding joint ventures as of the 9th of November is lower at -- sorry, 7,253 homes compared to 7,771 at this point last year with a value of around GBP 2.1 billion compared to around GBP 2.2 billion in 2024.

As you know, we are focused on growing outlet numbers. So I'm pleased that, as you will see in the statement, we are on track with outlet openings for the year. In the second half to date, we operated from an average of 210 sales outlets compared to 208 in 2024, having opened 51 this year-to-date compared to 34 at this stage last year.

Turning to planning. As we told you in October, we are seeing positive signs and a shifting more positive sentiment in many local authorities responding to the changes introduced by the NPPF. The NPPF has reestablished a much needed tension between house builder and decision-maker by reintroducing housing delivery targets and the need for a 5-year housing land supply. And as a result, we are seeing councils respond more favorably to our applications, though timing and resourcing challenges remain.

But we have an example in the Northwest. We've had a site for 340 homes where our first principal application was submitted in May 2023. We have progressed well with engagement but have been frustrated by delays in determination. Confirmation of the NPPF strengthened the principle of this site, and we saw a marked improvement in the engagement with officers and achieved a determination for beneficial development in September this year. This is only possible because of the actions we have taken in the early submission of applications and the tension housing delivery requirements are placed on local planning authorities via the NPPF changes.

We continue to closely monitor and track progress and local authority sentiment on all of our early applications and are continuing to see a shift from red to amber and green. Of course, this isn't universal. So we're not there yet, but the progress we are seeing is consistent with what we expected at this stage. As a result, we continue to believe that the NPPF and the upcoming Planning and Infrastructure Bill will provide the basis for us to accelerate progress in outlet openings, particularly given our proactive and assertive approach that we've been undertaking over the last couple of years.

So we've said today that we continue to expect to deliver full year 2025 U.K. completions and group operating profit in line with our guidance. The current market sentiment is challenging, and we are working hard to build the order book into the year-end. I will update you on the order book as usual in January and then confirm our guidance for 2026 with our prelims in March with the benefit of some early spring trading. And looking further ahead, we remain very confident in the underlying fundamentals of the U.K. housing market with this pressing need for new homes and our strategy for the business to deliver profitable growth and attractive shareholder returns in the medium term.

So with that short overview, I'll open it up for questions.

[Operator Instructions] The first question is from Will Jones at Rothschild & Co Redburn.

I might try three quick ones, if I can, please. First, around, I guess, your lead indicators away from the sales appointments, website visits. Are they tracking similarly to the sales rate?

Second was around pricing. You've maintained a broadly flat year-on-year comment. But just wondering if any change sequentially since the summer and just potentially how you're thinking about possibilities into the new year as affordability potentially improves for customers.

And then the last is around build costs and whether from your suppliers, you've had any early indications on their expectations or hopes for next year?

Okay. Thanks for those, Will. In terms of sort of lead indicators overall, I mean we have sort of significantly sort of uplifted our sort of marketing activity, as you would expect. There's a range. I mean organic inquiries are sort of down year-on-year, but we are seeing a little bit of improvement. Appointments held sort of broadly flat. Website appointments actually sort of looking fairly strong.

So we've got decent leads, we're seeing sort of decent levels of inquiries and visits. What's really coming up from the sales teams there are that customers are not committing, that they're really sort of holding back and waiting to see the outcome of the budget and I think of interest rate trajectory.

In respect of pricing, I mean it has got a little bit tougher. But I mean I think it's still fairly consistent with what we've been saying for a while now. The north is a bit better. We see some improvement in pricing, both the site remains sort of a real challenge from an affordability perspective. We're seeing quite a challenge around chains, a lot of which can be linked back into sort of first-time buyer sort of challenges. So I think the dynamics are very much similar to our discussions in the past.

I think you were asking about sort of the incremental or the sequential possibilities going into the new year. I think the budget event is proving to be sort of quite a pause, whether it's a hiatus or in customer sentiment. We will need to see what the budget sort of elements and the likely impact on sort of customer, and a lot of those impacts could be very individual. But if we believe that, that's a sort of a clearing moment or an opportunity, and particularly, if there's an interest rate cut alongside that in December as many are penciling in, then you will be certainly trying to get on the front foot and lean into the early part of 2026 trading and into the spring budget.

And in respect of build cost, we're still in that sort of low single-digit sort of period, a few sort of ups and downs. We're just entering the period where we would be starting to negotiate with our suppliers well. So it's something I probably can give you a bit more color on in January. But really, even then, there'll still be very live negotiations on our calendar.

Our next question is from Allison Sun of Bank of America.

So two questions from my side. First is, if you can give us some color on your long-term projects, which we understand has been pushed from first half to second half. Is there still progress as expected?

And the second question is, I mean, I don't know if you have any case scenario on what might happen in the budget? Do you hear anything on the stamp duty removal potential? What do you think? And if it has been removed for the Taylor Wimpey existing outlets pipeline, do you think you can accommodate all the new demand potentially?

Okay, Allison. Just on the London projects, I wasn't quite clear, I apologize, on the question. Progress on?

Yes. Yes, I think you mentioned in the first half, there are some big, large projects going on in London, it's expected to -- I don't know, maybe completed in the first half, which has some impact on your pricing, if I remember it correctly. But it looks like the project has been now pushed to the second half? So we wonder if there was an update there.

Yes, yes. Got it. Sorry. Thank you for that. Yes, we did have some delays with the building safety regulator. I know the team have worked exceptionally hard, and that scheme is now moving. So that's very, very pleasing.

In terms of the budget sort of various scenarios, I mean, there's a wide range. I mean clearly, there's a lot of speculation sort of in the market. In respect to stamp duty land tax, many of you will know my view in stamp duty land tax, it's a tax on mobility and it has a distortive effect on the market. I think that we can see that clearly in both ends of the market, at the lower end of the market where we've got effectively overcrowding and the top end of the market where we've got sort of under occupancy and economic and social mobility I think are hampered by stamp duty.

I'd add to that, while I'm on my soapbox, a little bit that I do think that the treasury receipts from stamp duty could be more than recovered just through the level of economic activity from a more free-flowing housing market. That said, Allison, I'll come off my soapbox now. I haven't heard any sort of significant sort of commentary other than speculation in the press around stamp duty removal. But if there were to be any form of demand side, sort of stimuli or removal of some of the friction points then, I think that the scorecard of sites that we have, which includes many sort of multiphase and larger sites, which have the ability to step up delivery should there be a sort of a rebound or a stimulus to demand. It very much depends on the timing of any announcement as to how much of that can be captured in any 1 year. But I think that we would be in a very good position to capture that were it to happen.

Our next question is from Zaim Beekawa from JPMorgan.

Just two on my side is coming back to London, much of a positive impact you see for the business given the affordable housing quota being reduced. And then secondly, if I could push on the potential landfill tax. Is this something that you're still expecting could go through? And is there sort of any indication you could give on how much this would impact your business?

Okay. I mean, I think in terms of the package of measures consulted on our -- going into consultation from the GLA, the reduction in affordable housing from 35% to 20%, sort of reduction in sale and other things, look, these are sort of incrementally welcome. I'm not convinced that they are sufficient to address the significant sort of amount of issues that are weighing on housing delivery in London, which are both supply and sort of demand upside.

As we discussed in October, we are effectively building out of our London schemes. We remain sort of present and open in the market, but we're not seeing anything that we think would materially change our position, and we have a very limited sort of pipeline in London. So I believe a more radical approach to stimulating London house building is required.

In respect of land tax, it's a consultation. That's still -- we haven't had any response. So we've had no closure to that. And there are concerns that a landfill tax could have an impact right across the sector. It's a very substantial potential uplift, and because the impacts are different depending on the topography, the geology, the nature of the scheme, including the level of sustainable urban drainage or protective land like biodiversity net gain that's included, it's quite hard to calculate. But I would point you to the HBF document that they issued some weeks ago, and they're recording a figure of about GBP 15,000 a plot.

Our next question is from Ami Galla of Citigroup.

Just a few questions from me. The first one was on Section 106 take up. Have you seen any improvement in that respect? And post the budget, do you expect that dynamic to become a little bit more easier?

The second one was on the land market. On the back of all this sort of tax changes that have been speculated across the press, have you seen any shift in terms of how the land market is reacting to it and how the land vendors are considering the outlook ahead?

And the last one, I appreciate, on 2026 guidance, I appreciate that we'll get more explicit color next year. But is there any sort of broad view of how we should think about the moving parts in the business as we look ahead?

Okay. I mean in terms of Section 106, I mean the teams are continuing to work with long-established partners to place Section 106. But it is a challenge, and there are some geographies where it's particularly challenging with the absence of any meaningful number of RSLs in the market. And these are points that are being made to government, not just by ourselves but by sort of the whole sector on a very regular basis. So it's hard to see across the board improvement, although there are some localities where there's been a slight easing.

I mean in respect of post budget, I think it's really the formalization of the affordable housing program. That's the dynamic there. And we would hope that sort of the allocations will become more visible, and we continue to seek support from government around utilization of cascade mechanisms and other elements.

Land market shift, Ami, not as dramatic as we saw last year. I mean last year was sort of commentary around sort of capital gains tax. There was quite a seminal moment, I think, for many landowners and just trying to get things done, and we were able to take the benefit of that in some of our negotiations. I can really only bring to mind one sort of deal, it's the landowners focused on the budget. And I think that, that's for more personal reasons than a significant shift there.

And in terms of '26, I mean, you're right. It's a quarter 3 update and we're not going to guide for 2026, although we'll absolutely tell you what we're seeing in the market. But the dynamics are how does the budget leave the customer feeling, what are the sort of interest rate trajectory as we exit the year, how our order book looks as we exit the year and really that all important spring selling season. So I think sentiment is a really strong element for 2026 right across the sector.

Our next question is from Chris Millington at Deutsche Bank. We can't hear you, Chris. Yes. So we'll move on to the next one. Well, currently, there's nothing else in the queue. [Operator Instructions]

Our next question is from Rajesh Patki from Barclays.

I've got two questions, please. Firstly, if you could provide some color on incentive levels. And if those have changed compared to what you reported at the first half stage.

And secondly, sorry to come back to '26, but consensus has about 100 basis points improvement in margins for next year. Would you be comfortable with that given the commentary about sort of prices, underlying pricing being flat and build cost inflation up low single digit at this stage?

So in terms of incentive levels, Rajesh, we have seen them sort of tick up to being broadly in that 5% to 6% sort of bracket through the year, but they're probably sitting at the higher end of that range at the moment.

And I'll pass you over to Chris, who's been very quiet so far on the call, on the second point.

Rajesh, as Jennie has already said, our normal approach to providing guidance for 2026 would be to do it in February next year with the knowledge of the order book that we take into the year and after we've had the opportunity to see the start of the spring selling season. I don't think right now, in advance of the budget, is the time to be making a change to the pattern of when we guide. So we're not going to be giving specific guidance on that today.

But just to try to be helpful, I'll repeat some of the comments that I made at the event in October. Well, I'm trying to be clear but, yes, I think some analysts haven't necessarily reflected them yet. And obviously, that plays through to consensus. So I said short-term uncertainty may well mean that the U.K. volume growth in 2026 is below the straight line run rate to the medium-term 14,000-unit targets. I indicated that the margin uplift from the landbank evolution would be minimal in 2026, more meaningful in 2027 with the lion's share delivered in '28 and '29. And in summing up, I think I noted margin growth stepping up from 2027. And also, obviously, worth remembering that our assumption was of the medium term that the sufficient house price inflation to offset build cost inflation, which in the short term currently isn't the case, as you can see from the statement. So hopefully, that's all clear. But as I said, too early to specifically guide for 2026.

Next question is from Chris Millington at Deutsche Bank.

Sorry, everyone. I'll try again. I've got a few quickly. To talk about the sales rate at the back end of 2024, a lot -- I see year-to-date, you're at 0.73. You ended the year at 0.75. So you had a good run at the back end of '24 to lift that sales rate up for the full year. Can you just talk about quickly what happened? And kind of how you may see that feeding into the order book at the back end of this year? That's the first one.

Second one is just about the average sales price in the second half of this year. I think you've got a block or something completing from the post market development, which takes the private ASP to around GBP 400,000 versus GBP 350,000 in H1. Do you think there's a danger that ASP could shift backwards a little bit as we go to next year, and you don't get a repeat of that London one?

And then the final question I just wanted to ask you is about the order book margins. So not talking about '26, but I remember at the start of this year, I think you said the order book margin was down 50 bps year-over-year. How are we looking at the order book margin year-over-year at the moment, if possible?

Yes. Thanks, Christopher. Good to hear you. I'll pass your second two questions to Chris. But on the sales rate at the back end of 2024, I think regrettably, it's really straightforward, the budget did create a bit of a sort of a hiatus and a slowdown in demand, but it was much earlier. So there was still a reasonable sort of runway in that final quarter of 2024, and that really did drive the sales rate, which was very pleasing. And whereas this year, clearly, we've got much later sort of date for the budget, and it has created -- has cast a much longer shadow I think in terms of how customers are feeling when we saw speculation start right in the summer.

So I'll pass you over to Chris on those other two questions.

Yes. So we continue to expect that the full year blended U.K. average selling price will be approaching GBP 340,000. You're quite right. There was that switch from half 1 to half 2, more completions in the -- well, from Central London, in the second half pushing the average selling price up. The risk is probably to the downside if there are a few more affordable homes in the mix, but we're still happy with that guidance. And then how that plays out into next year, I'm expecting it to be, at this early stage, pretty flat.

And then the order book margin year-on-year, obviously, we're not giving a 2026 guidance today. And relatively small volumes relative to next year, obviously, in the order book because you've got a mix of the order book between what's going to be delivered this year versus what's going to be delivered next year. So maybe ask me that question again when we get to January, and we've got a clean order book, Chris.

We have no further questions in the queue. So I will hand back to Jennie for closing comments.

Thank you, Seth. So look, thank you for your time and questions this morning. Clearly, there are market challenges right now. But we are working on delivering what we told you in October to ensure we're well set up in land and outlets that we need to drive progress. And we'll see you again in the new year. Thank you, everyone.

This concludes today's conference call. Many thanks for joining, and you may now disconnect.