Vistry Group Stock

Good morning all, and good to see you all. Welcome to the half year results presentation for 2026 for Vistry. Thanks to all those who are attending in the room and online. Today, we'll talk you through our half year results, but also cover the conclusions of our CEO review that we've carried out through the summer.

I'm Adam Daniels. I was appointed as Chief Executive on the 13th of April of this year. I started my career in pure housebuilding, then moved into contracting housing before I joined the business in 2016 when I joined Countryside, who were already doing partnerships at that time. So I have got deep expertise in mixed tenure and partnerships housebuilding. I became part of Vistry in 2022 when they acquired Countryside at that time.

A little bit what we're going to talk about today. So I'll have a brief introduction into what we might go through and some of the early observations I've had during my time as Chief Exec. We'll then go across to Tim, who will talk about our half year results before we cover the CEO review. After that, we'll look at current market conditions and outlook and then conclusions and clearly, a Q&A.

So just to open, set the scene a little bit, we started a review of the business in May, which is a detailed work stream with external support. So an internal team working alongside an external team to really look at the business in a root and branch way, building up from the quality of the sites into the way we operate and looking at what we're doing well and what we're not doing so well.

We acknowledge that the execution of our model since 2023 has not all gone as we planned, but there is very good reassurance in the work we've done that the models worked excellently in some areas despite the difficult market conditions we've had during that time. We've made very good progress on deleveraging the business and improving that cash generation, and we're continuing to see the outcomes of that work.

And there's early actions been taken to resize the land bank and look at where we're reinvesting in new land to make sure we've got those suitable land positions for our mixed tenure model. We talked a July statement about half 1 profit being impacted by cash actions, and we'll talk about that and summarize that shortly.

In very, very good news, the SAHP grant allocation was announced in August. That was a GBP 9.6 billion award across the affordable housing sector going to 33 partners, 29 of which we already work with and in contract with up and down the country. We received GBP 350 million of direct grant award, the top allocation in that award, clearly showing the market's confidence in Vistry as a key deliverable deliverer of affordable housing. So a really good piece of news in August.

Our refinance process is due to start in October as planned, and we'll be aiming for less borrowing in the medium term as we bring down the size of the balance sheet and make the business less capital intensive. In summary, we are taking the necessary action to make this business less capital intensive, more profitable and more reliable.

So a little bit of progress on deleveraging. Just first, as a bit of a headline, peak debt lower in FY '26 than it was in FY '25. So despite poor market conditions, despite the continued delay of the SAHP until the end of August, peak debt did not reach levels in FY '26 that did in FY '25, good reassurance. And we're past our peak debt point for this year. So it won't return to that peak again between now and the end of the year.

In relation to overall leverage, good progress on land creditors. So we reduced land creditors by another GBP 100 million since half 1, and we expect to further reduce that by GBP 70 million by the year-end. So paying down those land creditors reducing that overall leverage. Overall, in 2026, expect a reduction of circa GBP 300 million during this year.

We've started some work around reshaping the land bank. We made some good progress about how we reshape that to be more suitable to our model in the right areas, the right sorts of sites. And we've reduced land buying in H2 following that CEO review to ensure that we're really focused on the schemes that work best for us.

In relation to private WIP, more good progress. So unsold stock continues to fall. We talked in the July statement that we've made GBP 300 million of progress in the year already, and we've made a further GBP 80 million of progress since the half year. And as we talked about in July, we've exited our Part Exchange position, which brought in another GBP 20 million of cash in quarter 3. So good progress around private WIP.

What these things have allowed us to do is really look at the quality of the deals that we're doing with our partners. This is a business all about the quality of deals, the quality of land deals, the quality of partner deals that feed into those. So it's allowed us to step away and renegotiate some of those deals to improve returns and improve the quality of the underlying deals that are being fed into the business.

Because of these self-help measures that we're making very good progress with, no expectations for an equity raise, and we're very confident these self-help measures will deleverage the business as we work through the balance of '26 and into 2027.

A few Vistry's fundamentals I wanted to cover just at the start. Firstly, Vistry is an excellent business. Underlying some of the challenges that we'll talk through today, we've got excellent people, excellent quality, comfortably maintaining our 5-star HBF status, great feedback from our partners, and that is giving us fantastic reassurance that the business remains in very good shape.

We've got lots of highly motivated people with deep delivery expertise in what we do. What we do is different to the rest of the market, and our people understand it and know it and operate it well. Clearly, the segments of the housing market we work in have high structural demand. There is lots of need for affordable housing, mixed tenure housing all across the country, and therefore, we're in a good place to deliver in that.

We can prove through some of the work I'll talk you through today that when executed effectively, this model delivers those low upfront capital requirements, really good flexibility between the partner demands and open market channels. And we've got a wide customer base between all of our private customers, our housing associations and our PRS investors that we can sell into.

In summary, we are market leaders in what we do, and we generate great value for our partners. The focus now is to increase the operational control, release cash and reduce complexity. There is an opportunity to really simplify Vistry and make it more reliable as we go forward.

So a bit of a snapshot of what I'll talk about later. So what is the vision as we move forward? We'll be industry-leading capital-light, a specialist mixed tenure housebuilder focused on that balance between partner-backed demand and open market. And clearly, we'll prioritize cash conversion and returns over volume.

The conclusion of the CEO review shows that we need to tweak the tenure mix to 60% partnerships and 40% open market and use that tenure mix in the right areas of our geography. We want a more focused and agile platform, 12,000 units is the medium-term target of the business to realize that balance between volume and quality.

We'll reduce the balance sheet, targeting a much smaller owned land bank position of 36,000 homes, and we'll make sure there's consistent adherence to the mixed tenure model all across the geography with an overall target of 30%-plus ROCE by the medium term.

As we reshape the land bank, really focusing our land teams on the quality of opportunity rather than a quantity of sites bought and tweaking the regional structure to move from 25 to 12, really focusing around the quality of our site teams and project-led focus, something that I'll cover a little bit later on.

So hopefully, that's a little bit of a snapshot of what I'll take you through the detail with later on. Before I do that, I'll hand to Tim for the finance review. This is Tim's last action with us before Tim leaves the business very shortly. I just like to thank Tim for his work over the last few years and also thank him for his time with me over the last few months. I'm very pleased that we've made very good progress with Tim's replacement, and we expect to announce a new CFO imminently. Thanks, Tim.

Thanks, Adam. Good morning, everybody. So we'll start. I'll talk now about the half year position. I'll come back later for a bit of a recap on the financial implications of the strategy after Adam has taken you through the strategic changes.

So half year, we had an extensive July trading update, and we had a conference call. So I'll try and avoid being too duplicative of stuff we've said before. I'll try and wade through the old news, if you like, on half year. So in terms of the group result at the half year, back in July, we said our first half year was a GBP 30 million loss, excluding the impact of CEO review items. So that's clearly adverse to last year.

Two principal reasons for that. One is that we took a lot of discounting action in the first half year to clear our stock down to generate cash. The impact of that discount was around GBP 50 million of profit in the first half of the year. And the other thing we saw in the first half of the year was that partner volumes were subdued. There was a period of hiatus as partners waited for confirmation of what the new grant program was going to offer them. And so there are less deals in the first half of the year than would normally have been expected.

The other thing we reported at the half year was that net debt was higher than last year, again, impacted by the lower volume of partner deals. So that's the old news. The new news for the half year is that we've now completed the CEO review process. We're still in the process of working through the details of the exact financial quantification of all of those items and also working out whether they're exceptional or otherwise and also whether they should be booked in H1 or H2.

And that last bit, the H1, H2 piece is complicated by the fact that the CEO review started back in April effectively when Adam took the reins. So what we've done is identified GBP 50 million of charges, and I'll go through the charges in a bit more detail later, but GBP 50 million of charges that should be booked in H1. So this was because the actions were fairly well progressed. They were the lower-hanging fruit, if you like, of the CEO review change.

So these were things like accelerating closure of sites that we knew that we weren't going to proceed with on the basis of the new strategy. They were things like the part exchange decision to take work down to part exchange in order to clear part exchange. So that's GBP 50 million reconciles to GBP 30 million that we talked about before, only GBP 83.3 million that you can see on the slide for profit.

The other two things that have been booked in the half year that we haven't talked about before are exceptional items, one around goodwill impairment, which I'll tell you about later and also an additional charge on building safety. All right. So back to H1 trading. So as we've disclosed before, the units were down 8% year-on-year and revenue down by a similar amount. That was largely with -- down to the partner volumes coming down. The open market volumes were actually up because of the discounting action. But overall, net-net, we were down 8%.

In terms of pricing, despite that discounting action, actually, pricing didn't drop. The average sales price went up by about 3%. And the reason for that is because a lot of the discounting action that we took was to more expensive product. So the stuff that tend to be slower moving were the 4- and 5-bedroom houses and probably more in the south than the north. And hence, the actual ASP of our sales went up despite the fact that we were doing this discounting.

A couple of other things to call out here. One is that land sales dropped in the first half of the year. It's something that we were evaluating. I think one of the things we've been doing over the course of the summer is pausing some activity while we identify the criteria that's appropriate for the new strategy. So I'll come back to some of the impacts of that later.

So there were low land sales in the first half of the year. We expect further land sales in the second half. So land sales will be higher and not as high as the full year last year, but they will be higher in the second half of the year. And then finally, gross margin. So obviously, the gross margin is adverse this year. If you add back the GBP 50 million of cash-generating actions and you add back the GBP 50 million of CEO actions, our gross margin is a little above 10%.

So working our way down the rest of the P&L. Overheads were down. So this is before the impact of the voluntary exit scheme and the further restructuring that Adam will describe later, overheads were down because the headcount was lower from previous action. We took steps around a voluntary exit scheme back in June, which has resulted in a large chunk of the exceptional charge within the GBP 10 million that you see there. The benefits of that will start flowing through towards the end of the year.

And then quickly, net finance costs is up overall. A few movements within there. Average daily net debt was higher in the first half than the previous year. Land creditors, the average land creditor balance is also higher in the first half than the first half of the previous year, which both drove finance costs up, but slightly offset by the fact that our average cost of borrowings was down to closer to 6% from being around 6.5% last year. And finally, to mention tax. So the big charges that we'll talk about later will generate tax credits and hence, tax is an add-back to profitability.

So building safety, we took an overall charge in the first half of the year of GBP 79 million, which is higher -- obviously higher than we expected. There was a surge in new buildings coming through assessment in the first half of the year. Principally, these were contracting business -- contracting projects where we've done the work back in the 1990s. So we don't have any records of some of these developments that were put together by companies that were former incarnations of parts of our business.

Last year, there was a pledge signed by developers, which accelerated the need for assessments. That acceleration led to more claims coming through in the first part of this year for the buildings where we're contractors and hence, an increase in the provision related to that. So that's the main part. 31 of the additional 40 buildings are contracted buildings.

We would expect that we're not going to see a surge like that again. Sure, there may be some other buildings that come out of the woodwork over the next few years, but we think that the volume should be significantly smaller because this should have come out by now. In terms of cash, about GBP 27 million of net cash outflow on building safety in the first half of the year. That's net of recoveries that we've received, and we received about GBP 6 million of recoveries in the period.

So goodwill. I've got 10 slides on goodwill because I thought you'd all be fascinated to know about goodwill. I haven't really. The -- so where does goodwill come from? Goodwill has come from the acquisition of 3 parts of the business from Countryside, from Galliford Try and from Linden Homes. It all goes into one big bucket, and it gets assessed when there's an indicator of impairment. And clearly, a lot has happened in the first 6 months of the year that has indicated that we needed to look at it.

So the market environment being difficult, all of the noise that's created with the Iranian conflict, our market capitalization has dropped and all the actions of the CEO review. So all of that meant we needed to test it, and we needed to test on the basis of a discounted cash flow based on our revised model. So again, I don't want to jump the gun, but we've got a different outlook for our 5 years, which got factored into the goodwill calculation.

What gets spat out at the end of all of that is that more than half of our goodwill is impaired. So an impairment charge of GBP 475 million. It's noncash. It doesn't impact our covenants. It doesn't impact our ROCE. But in terms of headline profit, it's a big number.

But let's just walk through the half 1 cash flow quickly. So we opened the year with a net debt of GBP 144 million. We made losses of GBP 83 million. A lot of those CEO review costs are noncash and effectively reduce inventories. So while inventories dropped -- sorry, inventories increased slightly and there was cash outflow in the first half of the year, it was -- the underlying inventory buildup was slightly higher than that. And where we're seeing that inventory buildup net is in infrastructure on some of the larger sites. So that's where the inventory is trapped, and that's fed into our thinking in the CEO review.

More significantly, we've reduced our land creditor balance by over GBP 100 million in the first half of the year. We expect further reduction in land creditors in the second half of the year. And I'll pick up one more point in there, which is around the net investment in JVs. So while our investment in JVs picked up by GBP 30 million, a large chunk of that was the funding that we put into the JVs to pay down the debt within the joint ventures. So joint venture debt and land creditors, our share has dropped by GBP 23 million in the first half of the year.

And then in terms of capital employed. So we always see capital employed jump up in the first half of the year. It's relatively seasonal. There's more activity in the second half than the first half, and hence, there's more capital employed generally in the first half. The impact was bigger than normal because the reduction in land creditors was abnormal. We don't normally see a land creditor reduction of the scale that we saw in the first half of the year. And so as land creditors goes up or land creditors comes down, capital employed goes up.

So work in progress. We're making good progress in terms of getting rid of the unsold, getting rid of our stock, and we'll see more of that in the second half of the year. But as I mentioned before, it's the infrastructure investment that is offsetting that.

So finally, giving a little bit more color in the presentation to covenants because we've been asked about it a lot, and there's no reason to hide from what is actually a pretty good covenant story. There's significant headroom for all our covenants at half year. You'll see the interest cover, which gets a lot of focus was actually way above the minimum requirement, and that's because of the way it's calculated with some of the add-backs to interest costs. So significant headroom for the half year covenant tests.

One of the things we did, though, in anticipation of the impact of the CEO review was we engaged with our banks to say, 'Look, the CEO review items that are coming out are going to impact our profitability.' We can't be sure about the treatment of exceptional or otherwise. So let's be prudent. Let's talk about these covenants in advance.

So we're talking about the covenants at the end of this year and at the half year point next year. And we've had a very active engagement with our banks, many of people in the room here today from our banks. It's been a very supportive process and the banks have waived the interest cover covenants for the end of this year and the half year next year, recognizing that these charges are one-off and the right thing to do for the business.

So I'm grateful for the banks for taking that area of uncertainty away. And I think what that demonstrates is the support that our banks have for Vistry. And then in terms of going concern, again, we provided a lot of disclosure in our RNS to enable you to spend some time pouring through the assumptions and assessing them. But we've looked at a severe but plausible downside case and concluded there was no material uncertainty on our going concern.

That's been supported by -- obviously, by the Board of Directors, but also by the auditors and a clean opinion again for going concern. And I'll come back to the refinancing activity that we expect to commence in October later on. Good. That will do for me -- do me for now.

So as I touched on earlier, I'll pause while I sort out some technical issues. Thank you very much. So as I talked about earlier, we did a root and branch review of the business. This is a very detailed piece of work with external support working alongside our internal teams. And so we looked across all the sites in the portfolio, all the live sites, site-by-site review, and we did a detailed review of how we're operating, what's going well, what's not going so well.

So the objectives were how do we get this business performing rather than disappointing. And that's a key driver. I've got real faith that this business can perform well and how do we get it into that shape. We want to understand where the model works and where it's laying us down. What scale of business do we want to create that gives us the requisite quality of returns that we want.

We identify how those best performing sites succeed and therefore, how we replicate that and see where those worst performing sites are and how we avoid that in the future. And then following that, we shaped the overhead to ensure we've got those high-quality teams delivering on the plan.

So the review assessed our geographic footprint. It looked at margin quality, capital intensity, risk profile, all across those schemes. It looked at a detailed review of the market demand for the tenures across our footprint and it looked at the implementation challenges since we started moving to all partnerships in 2023. And I'll talk through in detail what we found in those sites.

We looked at capital intensity and scale of the balance sheet, and we talk to our stakeholders, including our partners about how we may improve as we move forward. So key findings. Firstly, Vistry rapidly evolved through M&A, and that gave us a differentiated mixed tenure model at the end of that. Vistry remains a high-quality business. We have got the best relationships in the sector with partners, local authorities, landowners and our supply chain.

And that transition from all the business we bought together into partnerships clearly offered some challenges. And the operating controls culture and model didn't keep pace with that shift across to partnerships. And even though we had external market headwinds, that hasn't explained all of the underperformance in some areas of the business, and there's lots of site-by-site variability.

There's been a big focus on short-term targets, short-term growth, and that's compounded a misalignment between profit and cash. And that significant variation in site performance that I mentioned earlier involved inconsistent commercial terms, operating processes and discipline around capital deployment, particularly into land and WIP.

The product remains very strong. So excellent product for our partners, very good private product with very good quality. But all of the sites that we looked at that were performing well, had a consistent set of site characteristics, which I'll talk you through. The summary is that a mixed tenure model is right -- is the right model for Vistry. There are attractive structural economics and great demand for the type of sites that we will bring forward.

So how do we get here? In 2020, Bovis acquired Galliford Try Partnerships and Linden. That was the first step to add partnerships into the wider group in 2020. That was followed up in 2022 by the acquisition of Countryside and where they added more partnerships expertise into the business. And from that point for a couple of years, ran the business as a housebuilder and the partnerships business sitting alongside each other.

In 2024, we shifted the strategy to all partnerships by turning all the regions we've got into developing all the sites on a partnership basis to try and maximize our capital efficiency. And the 2024 step has shown some very good signs, but wasn't executed exactly in the way that we should have done and caused us a few issues during that period of time.

What it did give us this rapid evolution in M&A is great reach, very, very good people, really good capability in various areas of mixed tenure development, including partnerships and regen and mixed tenure. And so some great positives about this piece of work. And since 2024, I can evidence some really good sites since then, and I can also evidence some missteps.

The goal of the CEO review is to simplify the platform. This business is quite complex. It's come from lots of different areas, and we can make it a lot simpler. So I'm not telling you anything new on this slide. We've had market challenges since 2023. We've had high build cost inflation, high interest rates, the RPs have come under pressure with funding and how funding has flowed, and we had fluctuating consumer confidence. But I do want to talk about how a majority of our sites have performed well despite these market conditions and this weakness in the market.

Just to talk briefly about the mixed tenure model. So on this side, we've got how a housebuilder operates. They buy land, they don't bring any cash upfront in land. Then they spend money building their plots. They bring a small amount of cash in through their RPs through Section 106 units. And at the end, they bring all their cash back in when they sell their homes and hand them to customers. They clearly want a higher gross margin, but there's more risk here and cash takes longer to come back into the business.

From our perspective, we've got immediate recovery of cash upfront. So we buy our land and then we bring in cash from our partners straight away. 10% to 25% of the cash potential of the site arrives right upfront. Following that, we build our units, partners acquire circa 60% and therefore, 25% to 35% of the cash comes forward as we build the site out, lowering that overall capital exposure. And at the end, we have a number of open market units and they recover cash, but far less than our housebuilding counterparts.

So we'll look for a lower overall margin, but clearly, easier cash conversion and that cash converting more earlier on in the process. And this graph, I think, shows very clearly the advantages to that. So if we take the purple line, this is a housebuilder, buys land that expense a lot of cash, invest in WIP and gradually over time, as they sell their houses comes back to this breakeven point. We've seen that. And we see that in that model, you want a high margin because of the risk you're taking and you deliver a lower ROCE.

Vistry sits between this pink line and the blue line in this shaded area in the middle. The pink line at the bottom is a mixed tenure site, more balanced towards private. So it's got a small amount of upfront capital because we pay our land payment the same as a housebuilder, but we recover this element from our partners, giving us a capital-light start to the site.

On a mixed tenure basis, we then do invest in the site with some WIP, but that recovers more quickly as partners pay us on a monthly basis alongside our first completions. We get to this breakeven point much earlier in the process. The blue line is our all partner, what you may describe as contracting schemes, all partner delivery schemes. So in these examples, we buy the land, but on the same day, we transact with a partner, they become cash positive straight away. They're always very high ROCE and they're always cash positive through to the end.

Lower margins in the blue line because ROCE is extremely high and there's no cash investment and better margins between 12% and 30%, depending on where on that scale we sit on the pink line. So I think a really good graphic to show exactly why mixed tenure should make us lower risk, more reliable and more consistent. So shorter, shallower troughs, 60% of the model funded from our own partners and earlier breakeven points versus housebuilders, which require greater capital investment.

So when we reviewed the sites, they ended up in 2 areas, good sites on the left and underperforming sites on the right. And the good sites had 3 consistent things we wanted to see: low peak fund requirements, greater than 40% ROCE and a margin better than 12% all the way up to 30%-plus margins in some of the sites.

In the underperforming sites, we had schemes that exhibited weaker performance, mainly around balance sheet drag, so money going out the door without quick enough recovery. Challenges relate to tenure mix. So how does the open market play alongside the additionality affordable and the PRS and poor commercial terms on the transactions.

And we could sort these into those areas and create a clear and concise list of the sites that we've got in our portfolio. And what the CEO review has done is converted these site level lessons into mandatory investment criteria, which will drive the future quality of our land, meaning we get more repeatable cash margin and returns.

And I think this pie chart is really interesting. If you look at the partnerships model, what our findings said is that 59% of our business as it is today across all of our active sites are performing well. 18.5% gross margin average in the 59%. That's a really reassuring stat. So despite all those market headwinds that I gave you at the start, despite the fact we've had those inflationary environments, low consumer confidence, et cetera, gap in funding, 60% of the business almost is doing exactly what we expect it to do.

And this is a picture of what this business can achieve when executed effectively. So a really, really reassuring pie chart that shows the purple is a great underlying business. The light blue shows some sites that have underperformed. And you're always going to get an element of the light blue. We're a developer. We take some risk, sometimes things don't go quite as you plan. So you're always going to get an element of the light blue that holds back your performance.

And in the gray at the top, that's a part of the business that really isn't performing, really is an area that's holding us back and not allowing us to show off the benefits of this 59% -- so you can see here by the detailed work we've done, the reason why we're recommitting to mixed tenure is because we have evidenced it works. It works in the right geographies with the right tenure mixes. And with this average gross margin of 18.5% with an estimated operating cost of around 5%, that 12% target that I've talked about in the future in the RNS this morning is very, very achievable.

So I'm going to take you through a couple of sites, a few really good performers and a few that are holding us back. This site is in the Northeast. It started in February 2020 and finished in September 2025. So it went through that process. It went through COVID, it went through high inflation. It went through poor consumer confidence. 375 units of good scale and a very, very strong gross margin, 25% on a mixed tenure basis of 45% open market and 55% additionality through PRS, affordable and Section 106.

An extremely strong ROCE and no cash tie-up at any point through the job. So land payment went out, land monies came in from our partners, made us a 0 cash at the start. And through that, the partner-generative cash -- cash-generative partner work paid for our WIP investment on the private. So no cash tie-up, extremely high ROCE, fantastic margin. And you can see this is a finished site in difficult market conditions. So face those market headwinds and yet achieved some very, very good returns. So a fantastic example of what is achievable even in difficult times.

Here is a second example in the Northwest. And I want to talk about this site because it shows how our tenure flexibility should allow us to follow the market, and that's what Partnerships business should do. Our business should follow the market conditions and not speculate. Housebuilders speculate, they buy a land, they hope that they're getting the private price that they want, they make better margins. We should adjust our plans to follow the market.

So we bought this site in November 2024. When we first bought the site of 250 plots, we were expecting to do 50% additionality affordable and 50% private. As we got through the market conditions we've been in, we said, is that -- is private as reliable as we want in this market? Do we think we're going to sell at the rate we expect. And so we went out and we got an offer for taking 50% of the site as PRS. So we decided that in the market conditions we're in, making this lower risk all presold would be a better outcome.

The margin reduced slightly from 23% to 20% to allow for that discounting to bring in the PRS. But as you can see, the ROCE went through the roof to 311, and we still maintain a very strong margin percentage with a max cash tie-up of GBP 4.1 million. So a very well-structured partnership arrangement, cash positive very early in the process, very low cash upfront investment and an attractive scale of circa 250 plots.

But this is the benefit of the model. If you're in a better time on private and you approach this site, you'd sell you 50% private, you make a bit more margin, and it will still keep a low footprint on your balance sheet. If you're going into a market where private is less reliable, you can move it into partnerships and tie down your risk and keep your cash investment lower and drive your return on capital employed. So a really good example of following the market with our model rather than speculating.

So what are the themes of those successful sites, and I'll allow you to read these in the packs in detail. I'll call a few of these out. So where we've got that strong regional demand, something I'll come back to a little bit later on. Concluding our land deals back to back with the partners. We've got to make sure that when we expense our capital and capital flows out, the partner is ready to give us that capital back and make sure those sites sit in a capital-light fashion on the balance sheet.

The locations and the proximity to infrastructure that our partners want, clearly very important and standard house types, clear tenure strategy and manageable complexity of infrastructure. And we don't want to be spending millions of pounds on infrastructure going out unless the partner is there working with us to deliver those sites. So a key set of site characteristics that are now embedded into the investment committee decisions that we make and in our controls of new site delivery.

So an example of a weaker site. This site is in Southern England. It was bought in April '21. When we converted to partnership, there was an attempt to convert this site into a partnership type scheme. You can see how the tenures were adjusted. So this would have originally have been an open market site with Section 106. When we flipped into partnerships, there was an attempt to try and move this into a partnership's tenure mix.

The challenges in this part of the country are very, very high open market average selling prices, which do not sit as well alongside additionality affordable and Section 106. The second issue, we're making very substantial land payments, GBP 66.3 million of cash tie-up on this site at one time, and that cash is going out without income coming from our partners. And so you've got a big tie-up on the balance sheet, and that's taking longer to recover.

And as you've seen through those market conditions, because the way the partner deal was structured, because the land payment terms didn't match the outflows and because of the exposure to that high-value open market sales price, margin has declined quite rapidly through that 3-year period. And this is one of those sites in that gray section of the pie chart that I talked about earlier that is holding us back and really not letting us show off the quality of returns that this business can make.

So inconsistent site level execution, implementing the model effectively, getting the right commercial terms with our partners and making the operating model more efficient. And one I'll draw your attention to is this overspeculative land positions. We will follow the market and not speculate. We will buy land that's in the right locations and it's got the right amount of partner and open market interest.

So just an example of what that overspeculation on land can lead to. So it's a site we bought previously. It's 2,000-plus units, purchase price of over GBP 100 million and large infrastructure costs. So a big investment for the business. It's a cracking site, very high-quality site, great location, very good price paid. But we paid GBP 30 million land payments out in the first period of time before we secured our partner deal.

So we speculated that we'll buy this site and a partner will be there to take a portion of it for us, and we'll be able to back off some of that investment into a partner, which we eventually have been able to. But the gap between that investment and the income has been too long. So we've had GBP 30 million investment and balance sheet drag before the time at which we've been able to bring the partner income in.

So we do this site exactly the same in the future in relation to the type of site, the quality of the scheme, et cetera, but we would pair these land payments to stages at which we would receive capital. So you would not conclude this site until your partner was contracted on their side and that you had a guarantee of inflow. And then you'd match your partner payments to your land payments out to keep that capital line much smoother. You still have money invested here, which is fine, but not to the scale or the values that we've seen in this example. So...

Just let me on end of the slides, if you don't mind, just so we can see your summary slide for this. It is there, just give me 2 seconds.

Okay, no problem. Just flipped.

Apologies about this.

Okay?

I think it should be a summary slide, no?

No, that's fine. That's fine. I can't get it to move on now. I'll give it a go. Hopefully, we'll get through it. Okay. So when I was pulling together this section of the presentation, I asked -- I wanted to pull together what is a picture perfect Vistry site. And I was going to create sort of an invented example, so I could just talk you through the sort of things we'll look through in a scheme. But a number of weeks ago, I visited a site in Crewe, I think it showed off exactly what this mixed tenure model can do and how it will achieve this.

So this is Crewe, town in sort of northwest of England, extremely well-located town. So this is on the motorway network, as you can see, very close to the M6, great transport links up and down the country. Trains into London and trains into Liverpool or Manchester. So very well connected. So if you're in any tenure, if you're affordable PRS or open market, you can get around, you can commute, you've got access to the motorway network.

Then we look at Crewe itself and where the site is located. So our site is on the left-hand side of the corner here. You can see that it's located in the top left-hand corner. And we're very well connected to a number of areas we want to be in a mixed tenure model. It's got education close by. It's got sort of leisure facilities, very good employment opportunities and not far from the train station. And all 3 tenures would want to have some reliance on that sort of infrastructure, those semi-urban locations. So really shifting the focus into semi-urban and urban locations, less exposure to those more rural geographies we may have operated in the past.

This is the site itself. So circa 450 units, other developers on this site as well. And I'm going to concentrate on this parcel in the top left-hand corner, just to give you some examples. So 125 homes in this parcel. A few things that I want you to take away. Number one, the simplicity and consistency of the house types. You would not tell from this plan, apart from perhaps some detail around roundabout as you come into the site, which tenure each of those plots were.

They're all the same house types. There's 9 house types on this site, and they're the same house types that the affordable provider wants and that our private customers want. And so it gives you that flexibility to move the model as you need to as you build through and market conditions change. The top -- the left-hand side is private. And what this means is that you can invest in this private site without too much WIP exposure. You only need to build these frontage plots and you can get to your mixed tenure site further down the bottom.

The other advantage of this layout is if you start on this site and sales aren't as good as you expect or the market changes, you could sell this little parcel to a partner, bearing in mind, it's the same product as the second stage. In this example, in this market, this site is sold at 1 a week for the last 4 weeks. And that's before opening the showroom. We're selling from a cabin on this site, slightly off here. We opened a showroom this weekend. So you can see you can generate a good sales pace with simple product, well priced in good locations.

In addition, we've got the second part of the site, which is for additionality affordable and Section 106. And this area, you can build as quickly as you can, bringing in your road and build those plots at pace. This is all timber frame coming out of our factory, not far away in Warrington. And this area is cash generative. So you get on to site, you build this pace, generate cash and that funds the private near the front, which is selling very well. And on line with that, you keep this tenure flexibility, simple house types, all the same for the tenures, so you can move between them as you wish.

So a really, really good example of the sites we should be targeting, right product, right location and right tenure mix with flexibility to navigate the model and the market as we move forward. So summary of the root and branch review, very strong evidence the mixed tenure works, and it can provide those excellent returns that we expect. The rapid M&A caused some challenges, but things here are absolutely fixable. And although market headwinds expose some weaknesses, we could also evidence that market headwinds we navigated well in a lot of areas of the business.

Mixed tenure lowers that upfront capital and accelerates cash recovery. And although site economics vary sharply, we need to manage that land portfolio in a better way. The better sites align partners funding, tenure and delivery and using a standard tenure flexible product is certainly the way we should operate. So as we move forward, we'll become smaller, more selective and capital-light, improving the quality of the business as we focus on the best partners and the best returns. And part of the financial impact that Tim will talk about later is that we're adjusting our strategies in the existing land bank to fit this model and to accelerate cash generation and improve deleveraging.

So I'm going to move into strategic evolution. So the opportunity, the market need for what we do remains strong. There's great market need for all 3 tenures that we operate in. And the model gives us clear advantages, established partner relationships and an integrated mixed tenure delivery model give us that differentiated proposition that we want. And we can show that attractive returns can be unlocked.

We have an extremely attractive opportunity to create value by replicating that purple part of the pie chart across the business. We do not have a direct competitor in this space. There's no other organization with the relationships and the quality of teams that we have able to deliver this at scale, pace and quality. So the unique position. We've got a differentiated mixed tenure model, attractive structural economics, but I'm not convinced that the terms we've used in the past are consistently understood. What I feel we are is an expert mixed tenure housebuilder.

So we have a wide array of customers that we can work with. We've got a strong open market sales team. We've got very good relationships with affordable providers, both for profit and not-for-profit. We've got great relationships with local authorities who buy housing, and we've got great relationships with PRS providers and investors. So we can be the specialist mixed tenure housebuilder who really brings those customers through, diversifies the risk across those various areas of the market.

We want strong operational performance, high quality, tight controls and consistency and importantly, greater selectivity to improve the quality of returns. So a piece of work we did to work out what type of business we want to be as we move forward. On the left-hand side, we did a detailed assessment of what the volumes could be of a model of our type. So this said, let's look at all the areas, RPs, local authorities, private rent sector and open market, and let's assess how much volume Vistry as an organization could do.

And we looked at the RPs and said, most RPs only want to work with one developer 25% of their output. We looked at local authorities in a similar way and PRS sector in a similar way. And we worked out that these are the scales at which a business of our size could theoretically operate. We then looked at open market and saw how we could sell alongside our additionality, what is the absorption capacity, and we assessed that 7,000 to 8,000 units per annum of open market. So the theoretical addressable opportunity based on the data, based on detailed review of our sector shows that 19,000 per annum is the theoretical addressable opportunity.

We then sat back and said, that may be what you could get to, but where can we operate to get the real quality of returns that we want. So we went through our partners, and we focused on the attractiveness of those partners, how they behave, how they work with us, how they treat us, the quality of the deals we're able to do. We looked at pipeline, and we looked at financial resilience. And through that assessment, we said that 7,000 of the 12,000 units are really going to drive that quality of return that we want to see are really going to let us achieve that purple part of the pie chart I showed you earlier.

But then looked to open market selection, went through the regions, saw where the demand was and calculated that 5,000 units is a good target for us on open market, focused on the right quality areas where our product sits the best. And this has led us to this revised annual target of 12,000 per annum. But as you can see, we're focusing on the real quality part of the market. So we're taking the 2/3 of the market that we think can deliver the best returns, of which 60% will be partnerships presold and 40% will be open market.

I'll come on to sales, which is clearly a key part of what we do. And I talked earlier about a great example of effective sales that we've had. We're talking today for the first time about our pure open market sales rates. And as you can see from the top left-hand side, we have underwhelmed on open market sales. We have lagged behind the market in the last 3 or 4 years. We've had a slight uptick this year because of our discounting, but actually in prior years, has been less than 0.4, which is not where you want to be, particularly with a focus on sales pace as a presold mixed tenure business.

So we're going to change our sales strategy. We're going to target smaller units, maximum size targeted at 1,500 square foot. Lower ASPs, maximum price point of GBP 600,000, sitting better alongside that presold affordable and additionality. We're going to move to those standardized house types, aiming for 35 standardized house types, but really a core of 12 simple interchangeable house types, a bit like the site in Crewe that I showed you and targeting the lower end of the market, so building homes that are seen as good value and high quality but lower end of the market.

So to do that, we're going to simplify the sales branding. We've got 3 sales brand at the moment, and we'll retire Bovis and Countryside and invest in and create a fantastic sales brand in Linden. It's already known for the type of product we want to build, and we'll continue to improve that brand and make it a real market leader, refocused as a sensibly priced, modern, affordable, energy-efficient private sales offering. And these changes as we get through the next few years will allow us to get to this 0.6 open market sales rate that we would expect in a model like ours.

So I'll talk a little bit about geographies. On the left-hand side of this slide is our historical geography. You can see it's relatively mixed, a bit of concentration in the center of the country, but relatively mixed. On the right-hand side is where we'll move the forecast geography to. So you can see more focus in the Midlands and the West and into the North with still substantial coverage in the Southwest and in London.

And as part of this change, we'll have a reduced exposure to the areas in the south of the country that have underperformed as we may have found challenges in executing that mixed tenure model, and we'll shift Southeast England to a fully presold partner-funded model. So over the next few years, we'll exit private sales in the Southeast England -- Southeast of England, and we'll be focusing on what are some very large partners down there and doing a number of all affordable or all PRS schemes in that part of the country to lower our risk and improve our return on capital employed in the South.

I want to touch on London, as I mentioned it a little bit earlier. We have strong belief in the long-term success of London and demand for our mixed tenure model. We've grown that business to 2,000 units per year, and our plan now will be to hold 2,000 units per year through the next 5 years of the plan, but to really reduce the capital allocation that we've got in that part of the business to between GBP 100 million and GBP 150 million. So a more capital-efficient, sensibly sized business in London.

At the moment, London is 90% presold. And for the short to medium term, we expect that to continue. So a low risk, less exposure to private sales, well presold, working with our partners. And to make this business more efficient and drive more profitability, we're going to make it more efficient from an overhead perspective, and we're going to split London into East and West and move from 3 regions into 2. So the combination of a more profitable London and a less capital-intensive London at the right size will give us a really good position in London, and it will continue to remain strategically attractive. And as we execute the model into the future, as I said earlier, we'll flex the tenures based on the market conditions, follow the market. If we start to see open market conditions improve in London, I would expect us to drive more open market in the future.

And I'll just touch on Southeast, as I mentioned earlier. So the interplay between high-value open market and partnerships is causing a challenge. High-value open market is not selling at the pace required when you've got additionality affordable. You've also got high land values and infrastructure costs. So when you start a site, it's very difficult to keep that capital low and keep your return on capital employed up. The South tends to move downwards first in poor market conditions and come back last when it improves. And so exiting that part of the business will make us more reliable, and we will have a region down there focused purely on 100% presold schemes. So how are we going to achieve this over the period? We'll sell some land. We'll have some increased discount on open market sales, and we'll bulk sales to partners. And we've taken a charge in 2026 to allow us to have the discount to achieve the things on the left-hand side.

This will bring forward GBP 200 million of incremental cash generation over the next 2 years. So not only will we achieve what we already expected, a further GBP 200 million in those first 2 years. And once we've concluded that piece of work, we'll clearly be able to operate with lighter overheads in that part of the country. So there's circa 2,700 plots to exit. All of the sites in this part of the country are in this part of the gray wedge. So if we can exit this at pace and move away from this part of the country that's underperforming for us and focus on the right sites in this area, we expect the balance of this pie chart to change substantially over that period of time, and this will significantly reduce the group's risk profile. So we want disciplined land acquisition. We want to have a portfolio-led land strategy that looks more widely across the geographies, stronger investment discipline using our investment committee, all the sites coming to me for final sign-off and the right-sized land bank.

So we can really lighten the balance sheet of this business by moving from the 51,000 plots of owned land we've got now to the 36,000 plots of owned land that we would want. And this is how the land bank migrates over the coming years. So the blue at the bottom is the land bank runoff in the Southeast. And you can see it retains for a couple of years as you exit that private sale. So volume sort of stays the same for 2 years as you convert to partnerships and exit and do that in FY '27 and FY '28, and it gradually declines. The red is the balance of those underperforming sites that I showed you on the pie chart earlier. So this section of the business is less than 12% gross margin, has lower ROCEs and ties up more cash than you would like. But as you can see, we're working through that over the early part of the 5-year plan and reducing our exposure to those sites.

That really reassuring part of the pie chart is this purple section in the middle, the land bank of 43,000 units that's performing at those margins we talked about, an average gross margin of 18.5%. And you can see that, that plays a really good part in the business as we go forward. And the new land in green is the new sites we add into the plan through that period that we acquire, limited exposure in '27, but clearly, that's growing in the future years to give us this blend by FY '31 and a volume of 12,000. So this sheet really explains the evolution of the land bank and how we got confidence that we'll achieve that 12% operating margin in FY '31. A little bit of time on contracting. So you can see some of the logos of the people we work with on a week in, week out basis. And we've got 150 partners currently in contract with us, a big diverse mix of RPs, PRS providers and local authorities.

And particularly since the SAHP award, a good spike in conversations and negotiations with our partners with GBP 3.4 billion in further value under negotiation across 60 partners. So clearly, huge continued interest for what we do, and we maintain those deep partner relationships. Our largest partners account for 47% of our actual contract value. So what we want to focus on here is who are the quality partners, and we need to work on them -- work with them on a repeatable basis consistently into the future. And so what we've been working hard on for the last few months, Stephen and his team since our July announcement, where I talked about having strategic development agreements or framework agreements with partners is signing a number of our larger partners into strategic development agreements to give us more certainty on volume delivery in the 5-year period.

So we want to focus the business around a smaller number of high-quality partners. We'll still work with a very large array, but we want the bulk of our work to come with partners that we can repeat business with simpler contracts, simpler commercial terms, easy for us to work at pace. And we've executed 5 of those since July, so very good progress. And we've got 10 more at advanced stage that we expect to sign in the coming months. And delivery through those partner arrangements will start in October 2026. And what this does is gives us 20,000 committed homes over the 5-year period with partners who really want to work with Vistry and really want to develop affordable homes, PRS homes with us. And you can see the split between RPs for-profit RPs and PRS providers. This, alongside our award from Homes England of GBP 350 million, absolutely underlines the quality of the business that remains.

We would not be getting a support like this from our partners or the award from Homes England without continually delivering high-quality affordable housing across the country. So Vistry Works, we continue to use Vistry Works well, and it's feeding a number of our regions up and down the country. And it's key to living those partnership sites, mixed tenure sites at pace. We've achieved volumes this year between 5,000 and 6,000 homes, and we'll hold that volume of 6,000 as we go forward. We won't look to grow that. That will be a steady state for Vistry Works. That will be meaning that we're feeding half the business for timber frame, 12,000 medium-term target, 6,000 coming from timber frame. And the key shift here is to make it more efficient. So we'll shift our focus to the right geographic locations.

Previously, we've used timber frame all across the country from our factories in Leicester and up in the Northwest. And clearly, that's not as efficient as it could be. So focusing our delivery of timber frame around where the factory is based, the Midlands and the North is going to make us more efficient in our Vistry Works capability, really aligning Vistry Works to where we buy land, simplifying that product mix down to that 35 house types that I talked about earlier and ensuring there's that discipline and planning around the operations to make timber frame work very well. Lots and lots of examples where this is working excellently across the business, I'd say, a few that I touched on earlier on. And so to achieve this, we'll reorganize the business. We currently run with 25 regions across the country, and we will move to 10 operating areas as per the left-hand side map, 2 in London and 10 outside London.

The shift here is that we want more of our focus of overheads in the site-based teams. Our projects are challenging to operate with multiple partners and with fast build pace out on sites. And so improving the quality of our project-based teams and ensuring that our operational teams are collectively based on site together, working in project teams, our commercial, technical, sales, customer service and build teams will really, really help support the quality delivery that we expect this business to provide. Those 10 larger operating areas will be focused as per the table on the right, and we have good evidence of regions already doing 1,000 to 1,200 plots in a very good way. So this will refocus. We can pick the absolute best people that we've got in our business to be part of our 12 regions and really, really deliver those great results and let these teams lead and take the business forward.

One change as part of this is that we'll take land buying away from regions and move it into the divisional teams so that those land teams have got a wider view of the business and are really, really focused on the best quality land. Rather than focusing on volume of sites bought, they'll focus on quality of sites bought, and then we'll work closely with the regions and feed them in so these regions can become expert operators out on sites, delivering quality returns, and we can buy the best quality land to feed them with. So we'll drive some efficiency from that. We'll focus the people investment at a site level and with high-quality management teams based in the regions. And we're targeting GBP 50 million of overhead savings in 2027 with further improvements by 2029 and in the medium term. And those will come from the BAU savings, regional reorganization that I've talked about, clearly reduced activity and a slimming down of our central services team in order to support the revised size of the business.

And that will be a gradual piece of work over the near term in order to bring us into the right shape by the time we achieve the medium-term targets in FY '31. We should continue to tighten our controls so we can manage risk effectively. So stronger governance around land, proactive CEO intervention from myself to ensure that we're controlling the land pipeline effectively and earlier involvement of the investment committee in our land decisions. Increasing that standardization and consistency. We have evidence that when we do this well, we can create great returns, and it's about replicating that all across the business. Ensuring the structure and people suit the way we want to operate, site-based teams working well along high-quality management teams, and we measure and monitor that work closely using data to make sure that we manage this change and implementation effectively.

Clearly, alongside that, we'll continue to build the right culture. We have a large portion of the business with a very strong culture that really understands the purpose-led mixed tenure model that we operate, and we need to continue to replicate that all across the business. So understand the strategy clearly. Now I want to simplify what we're doing and make it more understandable so people can really be on board with the plan, foster that unified culture that we want all across the regions and in the group teams and ensure we set consistent expectations. I'm extremely reassured by the engagement through the CEO review. We have a huge amount of very talented people and a very strong core of colleagues who are in line with our purpose and want to continue to build high-quality housing that solves the housing crisis.

So I've talked for a little while there and given you a lot of detail about what's gone well, what's not gone well, how we get this business to perform. But this is not as complicated as I perhaps have made out in the last half an hour. This is about simplifying Vistry. 25 regions down to 12. 16,000 volumes to 12,000, a 100 standard house types is roughly where we are at the moment, down to 35. 3 brands to 1. Vistry Works refocused and an owned land bank of 51,000 down to 36,000. This is making this business easier to operate, more reliable, more consistent and less risky. And I want you to take a few things away. As I said, in my view, this is not complicated, and you can simplify these into three things. The success of this business is the right deal structure on the land and the partner side, and we can evidence we've done that a hell of a lot of times.

It's about the right tenure strategy, a complementary mix between the tenures and a flexibility to move between those tenures to suit the market conditions, and it's about the right execution. And the changes we're making to the business today will ensure that we do those things time and time again and deliver a high-quality business as we move forward. And those three things are what I'd like to take away as how we simplify the business and how we get it performing and how we get more and more of these sites that deliver high cashback returns, good margins and return on capital employed. So the financial benefits of the strategic evolution, lower debt, higher margin, reduced capital employed and more consistent returns. If we move forward on this course and achieve the buildup of those sites that I talked about earlier, this will come and we'll be able to operate the business in this way.

I'm confirming our 5-year targets today for FY '31, so 12,000 units per annum, which I've talked about the reasons behind that and focusing on the quality of those volumes, a 60-40% mix between open market and partner, a 12% operating margin. You can see already we have got a bulk of our sites achieving 18.5% gross margin. As I touched on earlier, 5% of operating costs will be able to get us comfortably to this 12%. A 30% plus return on capital employed, industry-leading return on capital employed from this model, a really key step that we'll go out and achieve. Bringing that land bank down to 36,000 owned plots, a target of average daily net debt of GBP 300 million in the medium term with operating profit of GBP 450 million and a capital employed of GBP 1.5 billion. So that is our 5-year targets for Vistry by FY '31.

And just to touch on capital structure. You can see the allocation hierarchy on the right-hand side, clearly focusing on cash generation and strengthening the balance sheet before we move down that flow. And we're targeting 100% free cash flow conversion, supported by that tight discipline of land acquisition and consistency of build programs. Average daily net debt, we expect in the medium term to be not exceeding normalized rolling 12 months EBITDA or 30% of tangible net assets. So we aim for GBP 300 million, sorry, from FY '29. And to get there, we're targeting a reduction to GBP 500 million in FY '27 and below GBP 400 million in FY '28. Peak debt will look to maintain a headroom at least 20% of our total committed facilities, but very importantly, aim for this smoother profile.

So we tend to see that we have a lot of outflow in January and July through land payments and smoothing that profile will really help. We'll continue to use land creditors where possible to help the timing of payments, but we'll manage the profile of that to remove the lumpiness, as I talked about earlier. In relation to shareholder distributions, we look to reintroduce those once sufficient progress has been made on the balance sheet. And as I work with the new CFO into 2027, we'll look to review that distribution policy and update the market on that in due course. So I think a really compelling case about why mixed tenure works. I think a really compelling case about how we need to move the business forward. And I'll pass to Tim now to talk about the financial evolution on the back of the CEO review. Thank you.

Thank you. Hopefully, you've still got some brain capacities for some numbers. So let's run through the financial journey then from here to the end of the year and through to FY '31 with some building blocks. So the first one, there's quite a lot of information on this slide. This is to try and orientate to what we're saying for the end of the year because it's a slightly confusing picture. Let me start at the top. Last year, we delivered GBP 269 million of profits. Back in July, we said that excluding CEO review -- excluding the impact of the CEO review, we will get to around GBP 200 million of profit. And we said that the reason for that is largely the cash discounting of open market sales. So GBP 200 million is the starting point then for the reconciliation of today's news.

First thing is that there's been trading deterioration that, frankly, is not anything really to do with the CEO review. It is due to the open market conditions that were disappointing in the summer. So the equivalent of the GBP 200 million now is GBP 165 million. We're calling that normalized for the benefit of reconciling in the future page around how we get to FY '31. Within the GBP 165 million or within the GBP 200 million, we had GBP 40 million worth of profits that we assumed we were going to get from deals under the previous criteria that was being used to determine what sort of deals we prepared to do. During the course of the summer, we've refreshed those criteria, as Adam has talked about, and concluded that we need to go and renegotiate those deals. So the deals are still there, but they won't happen in 2026 because we need to look at the terms and conditions of those.

So we'd expect them to get them back. So there's an abnormally lower run rate of partner deals in 2026. So what that takes you to is a number of GBP 125 million. Now that GBP 125 million then is effectively the maximum APBT that we're guiding to this year. After the GBP 125 million, then we've got the impact of these actions that are being implemented. So there's the change in the strategy for the Southeast of England. There's the reshaping of the land bank and there's a few other bits. And the sort of things we're talking about here are changing the tenure mix on our sites as we review each and every site strategy to say, is it the right thing to be doing? So changing the tenure mix in the Southeast, for example, we'll be moving more product from private to partner sales. And hence, you've got a discount on price and you need to write down your inventory or take a provision or reduce your margin going forward.

Also, what we do is look to accelerate the exit from the Southeast by discounting the private sales. So not necessarily changing the tenure, but changing the pricing in order to accelerate the cash and coming out of the Southeast. Then other things we'll be doing in this area we'll be looking at the timing and the programming of build. So we might be accelerating some costs. We might look at some additional risk contingency that we need to be putting in to account for the transition risk that's going ahead. So all of those things go into the site-by-site calculation that will be finalized in the second half of the year. We're working through this with some -- the support of some external consultants to work through the precise numbers. And our current estimate is that the impact of those combined is GBP 470 million.

Now some of those will be clearly exceptional items. Some of those things may not meet the classification of exceptional items. And hence, somewhere -- some of the GBP 470 million will be charged against APBT and some will drop into exceptionals. So at the moment, there's a range of APBT for the full year, which we'll update on as we develop the work in the second half of the year. Then there are those items that we know are exceptionals and won't go into profit before tax. So restructuring, where we took the GBP 10 million charge in the first half of the year. We're expecting a GBP 30 million additional charge to be taken in the second half of the year to cover the cost of exiting headcount and also to reduce the office footprint that we need for our regional offices. So GBP 40 million there. I talked earlier on about the GBP 475 million of goodwill impairments. And within other exceptionals, we've got the GBP 73 million or GBP 79 million of building safety costs that, again, I covered earlier on.

So all of that takes us to a profit before tax of GBP 975 million. So what about getting to FY '31? So starting with that GBP 165 million that I referenced on the previous page. Add back the finance costs to get to an AOP number of around GBP 260 million for this year. So the building blocks to get from the GBP 260 million to the GBP 450 million in our targets have got these chunks. First of all, the reduction in volumes by 3,000 to 4,000 will clearly to take out volumes at standard margins. So about a GBP 90 million impact to profit from the volume reduction. And we make that back by margin improvements from the actions that Adam talked about. So category 1, the runoff of low-margin sites, that GBP 90 million, what that GBP 90 million is improved performance. So that's saying we're not going to have all of these low-margin sites.

Of course, there will be some and we can't get everything right. But the general blend will improve because we've got a more standardized approach. We're more selective about what we're working on and the new land we expect to come in at a higher margin than the average margin at the moment. So GBP 90 million really from better site performance. The next chunk, GBP 70 million is a tenure mix change. So at the moment, we're at sort of 70-30 over the last few years, 70% partner funded, 30% private. By moving to 60-40, you're going to get a higher margin because of the higher open market mix. So that's the 70. Then there's an element from partner-funded pricing. So the less we chase volume, the more selective we can be about the deals we do and the harder we can be about taking only those deals that work.

And by moving away from the rush for deals in June and December, it will strengthen our negotiating position, so being prepared to walk away. So while most of the partner-funded deals are good pricing terms, there are some that have been overly discounted that under the new structure, we wouldn't proceed with, and that will lift margin. Other margin movements are more around cost efficiencies within what we build. So the more we standardize, the more mature we are about how we're doing this, the lower the unit cost we expect of every house we build. And then finally, in overheads, we're talking about a GBP 70 million improvement over the 5-year period. So that is the GBP 25 million that we talked about earlier that's coming from the efforts that were underway back in July, including voluntary exit scheme and a further GBP 50 million from the additional restructuring that we're starting now.

And the reasons why it's GBP 70 million is because we're assuming we're going to get around GBP 5 million of benefit within the '26 number. So that's the conceptual bridge to get to GBP 450 million in FY '31. Turning to debt. So here, we're starting with an average daily debt of GBP 775 million for 2026. The left-hand column of the table on the left-hand side of the chart shows a reconciliation to get to GBP 500 million of average net debt next year. So how are we delivering that? Well, the first piece is that we're expecting that we're going to start the year with GBP 140 million lower debt than we started '26 with. And that's going to come from the influx of a number of deals that we're doing during the course of the fourth quarter. So expecting to be, as I said earlier on, broadly net debt neutral at the end of this year. So then the trick is holding on to that GBP 140 million.

And what we saw last year -- or sorry, in 2026 is there was a big outflow in the first quarter. We're not expecting the same level of outflows. So we should be able to hold on to that GBP 140 million through the year. Then there's going to be just the cash that's generated from operations, lower profits, lower profit run rate next year, some costs from building safety, but still that's going to contribute to the average debt coming down next year. And then there's going to be the contribution from starting some of this capital release, including reducing the Southeast land bank during the course of next year. So GBP 75 million from capital release next year. So that's the bridge to the GBP 500 million. Then we're saying we want to get to GBP 300 million of average net debt -- daily net debt by FY '29. So we still got the GBP 140 million in there.

But now we've also got the 3 years of earnings contributing towards that debt reduction and a greater level of capital release. So expecting broadly GBP 300 million to come out of the land bank in that period that's going to impact the average debt. What that says at the bottom is there's a buffer actually of GBP 255 million to get to that GBP 300 million. So what is that buffer? Well, that's some mix of contingency, the option for additional investments or it's shareholder distributions. At the moment, we're keeping the optionality rather than declaring what we expect the distributions to be, but we certainly expect to be starting distributing to shareholders within this 3-year period. So then on the right-hand side, you can see the average debt profile and we emphasis that we are committing to stabilizing average daily debt at 300 by FY '29.

So what are the next steps on financing in a bit more detail? So the jumping off point for debt, as we've said, the average debt now is forecast at GBP 750 million for the second half of the year. Was a higher level of debt than we previously forecast because of the delay of open market sales principally. And our full year debt will be broadly neutral. Our land creditors, however, will have come down to GBP 700 million by the end of the year, having started at GBP 990 million. So significant paydown of land creditors during the course of FY '26. We've got GBP 1 billion of committed facilities. GBP 100 million of that is in the form of USPP, which we expect to pay out of our existing cash flows in February next year, not expecting to refinance that.

And while the rest of the GBP 900 million with our banking syndicate runs out until April '28, to ensure that we've got 18 months visibility for our going concern assessment in March next year when we report our results, we'll be looking to conclude whether it's a refinance, full refinancing or an extension with banks during the course of fourth quarter. So we've waited until we concluded the CEO review. So we've got a firm foundation upon which to go and have that discussion with the banks. As I said earlier on, we've had very productive discussions with the banks during the course of the last month or so around covenant waivers, and we expect to continue with those discussions as soon as the investor roadshow is finished. And we're confident we'll reach a good conclusion and keep the market appraised of progress as we go. I think that will do for me. Back to you, Adam.

So I wanted to touch briefly on implementation. Clearly, some change here and a clear implementation plan required. And so just the selection of the work streams needed to bring together this plan and execute it during the next 12 to 18 months. So in land, clearly a focus around the quality of our land acquisition and the quality of the land portfolio, so optimizing that between now and the middle of 2028, bringing those sites forward that we know work and exiting those sites that aren't suitable for us, drive a real improvement in our delivery efficiency and that site standardization. We can see how much standardization helps us to deliver. The reorganization of our business, simplifying the operating model and making that organizational structure suited to, A, how we want to run the business; and B, our new scale and strengthening our leadership performance and accountability by really focusing those regions around our best management teams.

So an internal team has been formed to support with this implementation, and that team will report directly to me. That team will be supported by our external consultants who we used during the review will help us to implement this change. And that transformation office will meet regularly clearly to implement across these work streams. I will provide regular updates to the Board so they can see our progress through this transformation, and we will share updates with you to the market as and when necessary. We clearly need to finalize the financial impact that Tim talked through during the balance of this year and into next year as we see the classification of those various items we've discussed with you today. So we've done a number of things already since July since we talked about the CEO review, some tighter controls around site starts and build pace, reduce that land buy that I talked about earlier.

We're looking at those deals that we want to do, but don't meet our commercial requirements. We clearly have got evidence that lots of deals meet our commercial requirements. So this is not a new bar. It's just making more consistent the commercial terms that we actually operate those deals. Reshaping and exit those transactions that don't work for us and looking at the continued targeting pricing actions on that slow-moving stock that's worked well for us year-to-date. More to do in Q3, the initial restructure starting with land and planning teams and then the wider restructuring process, continuing that introduction of controls, ensuring that sites that brought forward to the investment committee have got those criteria that I talked you through earlier, and we'll continue to take that ongoing action to reshape the land bank. So good progress so far, but more to do in the balance of '26 and into '27.

So a clear delivery plan, a detailed delivery plan to bring forward the implementation of those changes, clear visibility and accountability on the progress of that work with the governance and reporting required and making sure we meet that transformation in a good time line and with sustained delivery momentum. So changes here needed, but a clear plan in how we execute those changes and bring this business into the shape that we expect in the medium term. So a brief summary. As I said earlier, we can bring this to a number of simple points, a refocused geography, a reduced capital-light land bank, site strategies revised to deleverage the group, letting us work in a lower risk profile by exiting the open market exposure in Southeast England, increasing that project level oversight that I've talked about today and enhancing our governance and controls, giving us a reshaped business to focus on the best quality opportunities across our geography.

And that will give us more consistent partner deals with those high-quality partners that I've talked to you about today. But just before we conclude, I'll give you my thoughts on the current market conditions and an outlook as we move forward. So clearly, we've seen subdued customer confidence and stretched affordability in the open market, particularly first-time buyers. We're seeing some good momentum now in affordable housing following the SAHP awards, and we've got a really good pipeline of future opportunities, both to use our grant with and to take advantage of the wider award with our affordable partners and the grant they've been awarded. PRS continues currently to underwhelm because of the multi-decade high bond yields, but this is an intrinsic part of the tenure mix going forward and will certainly recover.

The demand for PRS is absolutely there to go at. And as the market conditions change, we expect that to dramatically improve. We've refined how we talk about the forward order book, and we're talking about forward order book of GBP 3.3 billion on those terms as we move forward. And we had very challenging open market conditions through the summer. I think a lot of organizations suffered with that, and we slowed to 0.3 reservations per outlet per week, which has hurt some of that year-end profit delivery. As noted in July, H2, we'll see the conclusion of certain transactions delayed in H1, which will help us to reach that year-end number. But we have noted today that a number of those deals, we are continuing to renegotiate to provide the right outcomes and the number of those will flow into 2027.

So guidance as we move forward. We've talked in detail through the FY '26 numbers today. Tim has given you a breakdown of how we got to those numbers and talked about, a, the profitability and the debt. In FY '27, we're targeting an APBT of GBP 185 million and the average daily net debt coming down to that GBP 500 million average through next year. And in the medium term, 12,000 units, 60-40 split between partner and private, 12% margin, and APBT of circa GBP 400 million and a 30% plus return on capital employed with that average daily debt coming down to GBP 300 million in the medium term. So conclusions. Here's a bit of Vistry on a page, and I will leave this up during the Q&A, so you can see. But capital-light, industry-leading return on capital employed.

We can show through the work we've done that, that is achievable, focused on the areas where our model works best with high-quality partners in those stronger geographic locations and a scale and size to suit the opportunity that's ahead of us. So that 12,000 units from the 19,000 I talked about earlier. Vistry will be lower risk, capital-light, a specialist mixed tenure housebuilder focused on that balance between partner-backed demand and open market exposure, simpler, more focused and more disciplined. That is the direction of travel. And you can see the summary that I showed earlier about the way we're going to achieve that. So thank you for your time. Thank you for letting me walk you through those slides. We'll move to Q&A. There is a microphone in the room, so we'll take questions, and Jay will bring the microphone over. Thank you.

Glynis Johnson, Jefferies. I seem to have got the mic and have a few questions. So let me just go a couple of long term, a couple of short term. Long term, in terms of the framework agreements, it looks like you've negotiated approximately half of your delivery by year 5 to come from 5 contracts. You talked about another 10 being talked about. So where would you like to get those framework agreements to in terms of the coverage of your partnership delivery? Second of all, your 2031 target is an operating profit target, not a PBT. Is there some inference there in terms of JVs that we should be thinking about? And then thirdly, on the long term, the GBP 300 million average daily debt, is that the right level of debt for a business that is anticipated to have capital employed of GBP 1.5 billion?

And then short term, capital employed in the Southeast of England, how much is it? Can you give us a number? That would be very helpful. The Southeast of England, Slide 41 says 2,900 -- sorry, Slide 40 says 2,900 plots to exit. There's 10,000 in the chart on the next page. Can you just bridge the gap between that? And the last one, forgive me, last one. On the new covenants in terms of the headroom that's due sort of the last Friday every month, how many times in the last 6 months have you gotten near to that? Just to give us an idea of the sensitivity of that covenant?

So on the partner slide where we showed the agreements with the partners, the wheel included the 5 that we negotiated and the 10 that we're negotiating. So Stephen, I don't know if you want to give a little bit of detail on progress and expectation on those agreements.

Yes. Thanks, Adam. We think that 12 to 15 of those strategic development agreements is the right volume. It intensifies our relationship with those organizations and gives both of us visibility of opportunities and visibility of committing capacity. Outside of that, we will continue to work with partners that we already work with, but we expect the bulk of what we do will be through those partners that we have those strategic agreements with. But 12 to 15 is about the right bandwidth for us to achieve what we want to within this plan.

What level of homes would that be, though? Because that looks like it's 4,000, homes by year 5, and you're looking to deliver 7 that says 5 strategic development agreements. So if we get to 12, does that get to 7,000?

So if we get to 12, it's dependent upon the scale of ambition of each of those partners. So I don't want to call that yet because obviously, there's -- they're working through their SAHP agreements. What's important to recognize is some of those partners are strategic partners there within those 33 and some of them are not strategic partners and rely on our grant allocation. So it's a mix of the two.

I think the next 1 was on guidance in 31, Glynis. So we showed on the tiles originally AOP of GBP 450 million. This slide confirms guidance APBT of GBP 400 million. So there's no sort of -- no, it's probably presentation more than anything, but...

The reason why we tend to talk about AOP for longer term is because that's the part of the ROCE calculation. And -- but then we -- our primary measure is APBT to try and avoid all the confusion that we have around joint ventures.

Capital type in the South, Tim, do you recall?

Yes, I haven't got the number precisely to mind. I think it's somewhere between GBP 0.75 billion and GBP 1 billion. Next one was for covenant headroom question. So just so I'm clear, Glynis, you're referring to the additional covenants that's been -- so I didn't mention this in the presentation that within the covenant waiver, we've agreed to a minimum headroom of GBP 70 million at month end. Now we don't believe that, that is because we tend to get our income in towards the end of the month, that is not an additional constraint. So it's not something that we've got close to in the past.

The GBP 300 million in terms of average daily debt. Is that the right number?

I think that gives us the right level of flexibility and investment in the business for a balance sheet that size and the profit we want to deliver. So I think it's a sensible target. We talked about keeping average net debt below EBIT as a sort of general rule. But in all the modeling we've done GBP 300 million feels like a sensible number and the right balance between debt and delivery of the business.

The sites to exit the Southeast 2,900 on Slide 40, and then it goes up to 10,000 Slide 41.

Yes, I will try and find this slide for you. Are you on about the sort of graph of the land bank runoff, Glynis, this one?

Yes. No, yes, the slide before that. Oh, no. Slide 40 and 41.

Yes. Okay. So this here...

Sorry, 2,700.

Yes. So 2,700 is the total private units that will exit as part of this plan. This one shows the whole entire land bank. So this is private, other tenures, joint ventures, et cetera. So this is the whole land bank in Southeast, of which 2,700 to wind down in those first couple of years.

Charlie Campbell at Stifel. Just a couple really. First one, quite a big question. In terms of the underperforming sites, you've talked a lot about them and gave us some very helpful examples. But it wasn't quite clear to me whether the underperformance is fundamentally a kind of a people problem that people made bad decisions or it was a system problem that the system wasn't picking up the bad decisions. So I just wonder if you could help me with that a bit and to understand the sort of the cultural problems behind some of those underperformance.

I think decision-making is probably the one I would lean towards a real push to grow the business at pace and perhaps an assumption that it works over here, sort of work over there and a decision that we'd speculate on that basis. So I'd say that was the main area. Clearly, we've done a huge amount of work on our controls, and I'm comfortable with the controls we've got. And I think with a slightly different set of decision-making principles there, we can improve the consistency of delivery across the whole business.

Yes. And then the supplementary to that, which is, are you happy then that you've got the right people in place to consistently buy new land in at the 18% gross margin that, that chart requires?

Yes. We've got excellent land teams. I'm very, very confident of that. We slimmed down those land teams to be focused geographically in different ways. We've got excellent land teams across the country. And I think that section of the pie chart that shows that almost 60% of the business is performing well shows that we've got some very good land teams out there buying very good land, delivering some very good returns.

Yes, and then on the one on the reduction in capital employed, clearly, we could do some maths on the land part of that. But can you just help us a bit on the WIP and how much of that reduction comes from WIP reduction?

So on the debt reduction slide, maybe we just go -- it takes too long. On Slide 58, we've given a sense there of the reduced WIP element. So we're expecting about GBP 100 million to come out of the overall WIP balance to reduce our net debt.

And that's across the group? Or is that mainly a Southeast issue again, just to help us.

That's across the group. But bear in mind, we've already made a decent amount of progress this year on sort of private WIP. So that's a sort of further amount that adds on top of that.

It's Will Jones from Rothschild & Co, Redburn. I think three or four as well, please. The first is whether you could run us through your underlying assumptions for the 2027 target in terms of sales rates, price versus cost and so on, please?

Yes. Sales rate target in '27 is 0.52 assumed. And we have in all those projects I talked about, obviously, today's cost and today's values with the relevant allowances for inflation and contingencies you would expect. So we're assuming broadly moderated conditions between now and then.

Second was just around discounting generally, I think you gave us a figure of 7% or so in the first half trading update. Where is that trending today? Does it need to carry on for longer given the Southeast exit? And maybe just add to that, where we are at the moment on PRS discounts, just given your point earlier about bond yields.

Yes. Okay. On discounting, it's nudged up slightly to near 8% as a percentage year-to-date. It does need to continue. The sudden shift has clearly been taken as a charge. And so that is sort of covered now, and we'll exit that business through that mix of open market sale, speeding up the open market sale, selling to partners and perhaps selling a bit of land. But that's -- we've taken a one-time discount and allow us to do that and then pull those levers as we see fit over the next 18 months in order to exit that position. And PRS, we have done a number of PRS deals through the summer. We're seeing discounts between 10% and 15% on PRS. There's a number of companies out there that are wanting more than that, clearly, and we are pushing in the market conditions to do deals at lower than that. And that's part of the shift to make sure we're only doing those deals that bring us the relevant quality. So a reason why we're focusing on making sure we negotiate the correct positions on our PRS and affordable deals.

And the last one is really just high level, I suppose, clearly, the group has been through a lot in the last couple of years, and a lot of it has played out in public. Just wondering how you would assess the state of your kind of stakeholder relationships, be it the partners as customers, but particularly also the supply chain at this point.

Yes, I mean it's probably my biggest observation since I took the role is that the external noise is very different to the internal discussions. I've been out and visited 8 regions in the last 8 weeks who I didn't work with before to meet people and see people on the ground and the supply chain are extremely happy working for Vistry. We work with thousands of different supplier subcontractors, and they all very much value the relationship. The partner relationships are there to be seen by some of the framework conversations and the Homes England work that you've already -- has already been evidenced. And so I think the sort of relationships and standing in the business is not in line with what you're seeing externally in the press, not only from my experience, but from experiences across the LT and from our senior leadership team.

Ami Galla from UBS. A few questions from me. The first one is slightly similar to Charlie's question. Why do you think open market in Southeast cannot work? Historically, I can understand it was a function of the land that you bought or the sort of price points that you locked into. But as you think about new investments, is it because the intake margins are not there with the sort of land opportunities that you see in the Southeast? Or is it the sort of product type that you're offering is not something that you think fundamentally doesn't work?

Yes. So a combination of issues. Firstly, land values in the Southeast much higher. So pound investment out the door and capital tie-up is greater in that part of the country than it perhaps is in the Midlands and the North. Secondly, more difficult in the Southeast from a planning perspective to get to that standardized product that you expect, more expectation in that part of the world, a slightly different design code, et cetera, et cetera. So bringing that standardized product is more tricky.

And the third issue is the difference in value, even if you're achieving the same discount percentage between your private product and your mixed tenure product. So at the moment, we're trying to sell very expensive private houses on sites that are predominantly mixed tenure, and that is proving a challenge. It's an even bigger challenge in this market. But my view is in a normal market, that will still continue to be a challenge. In other parts of the country, that gap between the values of open market and presold are smaller. And therefore, we tend to see that sales paces are quicker and are maintained even in poor market conditions.

Second was just a clarification of a couple of points. I think in your outlook slide, you've kind of said FY '27 guidance, assuming stable market conditions. Do you mean stable versus the market that we see today? Or is it largely a year-on-year comment that you're making?

A stable versus the market we see today.

To build upon that one, I think what we're talking about there is open market conditions. We are expecting that the partner market will be better in '27 than '26 as we see some of the benefit coming through from the affordable housing program. So that's part of the uplift in '27.

Okay. Another clarification is the land write-offs incrementally in the second half. Is that GBP 345 million that you had presented in the FY '26 -- 26 slide in terms of the land adjustments as well as the Southeast runoff?

Yes. So that includes land and WIP adjustments, the land and WIP and inventory adjustments. So yes, the form of those adjustments is partly is land inventory, it's partly provisions. If you haven't got any inventory left, you're making some provisions, but it's mainly balance sheet related yes.

Capital employed in London, I think you touched upon one of the slides that you expect it to reduce. But can you give us a color of where does that sit today?

I probably can't give you the exact figure today. It's fluctuated between GBP 200 million and GBP 300 million in previous years, and we brought that down quite a lot in recent times, and we'll keep between GBP 100 million and GBP 150 million as we move forward.

Okay. And the last one, just a clarification. In terms of your supply chain and the sort of discussions that you've had in light of the sort of profitability that we see in the market so far, have you had to change credit terms with them?

No, no impact on any sort of payments to subcontractors or the credit terms. There was some noise externally previously, but that hasn't impacted any of the pricing or the payment terms we've got with any of the supply chain.

Adrian Kearsey, Panmure Liberum. Two questions from me. Probably one for Tim. On Slide 58, you've got your -- the bridge. How much cash tax are you assuming with regard to that sort of profit after tax number?

Yes. In doing this, it's a fairly rough calculation. We're assuming about a 20% tax rate. And the reality is we've got a nice big tax credit from all these write-offs that will reduce the amount of tax going out. So if anything, I think we're erring on the conservative side, but 20%, you can assume.

Okay. And the second question probably relates around to Slide 46, where you've given the breakdown of the regional offices. You're taking the number of regional offices from 25 to 12 -- and at the same time, imposing greater discipline, what kind of day-to-day functions are you going to retain in the regional offices? How much goes to the site and then how much it goes to the center?

Yes. Okay. So land moves out of the regions into divisions. So different sort of geographical oversight of the land teams. Those people are looking wider across geographical patch really focused on quality of opportunity. All the other functions, build customer service, commercial, technical, sales, et cetera, finance, still stay in those regional management teams. But what we'll see is a shift of the operational-based teams out to sites. So I expect the commercial teams, technical teams, customer service teams, sales teams out on site supporting those construction teams on a day-to-day basis. So we'll get an enhanced level of control at a site level. And therefore, I think that will improve on that basis.

And those regions more focused taking land away from them on the operating quality of the business. And so I think historically, there's been a view that if you're in housebuilding, you need lots of regional offices around the place. And my view and the work we've done on the information is it's the quality of the project teams that really made the difference here. And the management teams need to oversee and provide strategy and steer the business. But if you get the quality of the project teams right and the quality of the project returns right, clearly, the add up across the board will give a good quality business.

Alastair Stewart from Progressive Equity Research. A couple of quick questions, I think. First of all, a couple of questions ago, you said the market assumptions for FY '27 were stable open market and better partner funded. Within the partner funded, how do you see the PRS market just for completeness? And secondly, on Slide 36, you've got 8,000 to 9,000 sales of registered providers, 0.5 to 1 with local authorities. With the emphasis in government now on council housing, I would have imagined that would have shifted a bit from the RPs to local authorities. Any thoughts on that?

Yes. Okay. So in PRS, not an assumption that PRS improves through the first half of next year, assuming some return of the PRS market in the second half of next year, but I wouldn't say that next year's wider improvements are based on a huge bounce back in the PRS market. We've got very good confidence in the sort of medium term of PRS demand. The demand is huge, lots of interactions with PRS providers, but just want to wait for those quality of offers to be in the right place on enough schemes to bring that forward.

In relation to the mix between RP and local authorities, they've announced the SAHP, which is focused around RPs. They're clearly considering what to do with the balance. But I don't think there's confirmation either way of how that will work, how that might flow out. They're clearly reviewing how they might be able to make that work a bit more locally. But our view is that the slide we put up about sort of volumes is based on the fact they've given out this SAHP to RPs rather than through local authorities. I think interesting, and I'll come to Stephen shortly, but interesting that when they announced the SAHP, there was some local authority awards in there, but also they linked together how much of that investment came through mayors and through devolution.

So there's clearly a view that they wanted to invest in the right areas. But currently, no sort of official step to say we're not going to give it to RPs, -- we're going to give it to local authorities. That may change, but there's a lot of work to do before that becomes the case. Stephen, anything you'd add?

Yes. The SAHP, the GBP 9 billion that has been distributed has gone primarily to registered providers. There are 3 local authorities included there that have received funding. What we know is that the government's position is very clear, Andy Burnham's position is very clear that they're looking to provide funding back through particularly the established combined authorities, those strategic mayoral authorities. And we're already engaging with all 11 of those authorities. We already have some -- a number of schemes with some of them, and we expect the relationship with those combined authorities to deepen over the course of this plan.

So in theory, over time, that balance could shift a little bit between RPs and...

Yes. I think there will be a central role for Homes England in the way that those funds are distributed and in overseeing how that coalescence of investment works. But undoubtedly, as well as our relationship with Homes England, our relationship with those combined authorities is going to be important because they will be directly commissioning schemes going forward.

Rebecca Parker, Goldman. I just wanted to ask more about the shift to open market tenure, just given that, I guess, if you exclude the south of England, that would probably be even a little bit higher. I also wanted to just clarify on one of the slides, you said new joint ventures only undertaken where the JV partner brings the land. Just some more color on that. And thirdly, how confident are you in that GBP 470 million charge? If we were to see a further deterioration in market conditions, could we see that increase? And what's the likelihood that we would see further charges in '27?

Okay. So the shift to open market, previously, we talked about mix 35% to 65%. So overall, not a huge move in the mix between the two. You're quite right. If you take out some counties, it becomes slightly more in the balance. But when you focus on lower value, lower land price open market, the impact on the balance sheet is therefore lighter. So you can afford to do a slightly higher percentage of open market to protect your margin for a similar amount of capital investment. So because we'll be moving to those areas of the country where sales price will be lower, it will allow us to do that additional open market without any more capital and continue to lighten the business.

So yes, outside of some counties, you probably have a slightly higher mix than 60/40 as we talked about, to get the overall balance, but all focused on those areas where we'll be able to keep the capital light and on those sites that I talked about where max cash tie-up is low and ROCEs are high. On the GBP 470 million, Tim, I don't know if you can comment.

Well, at the moment, it's still being worked through. Obviously, we're not putting loads of optimistic assumptions in there to give ourselves a big risk that you have to top it up later. The exposure within that GBP 470 million to open market assumptions isn't that significant anyway. A lot is around getting the costs right and making sure that we're looking at the timings of sites right. So sure, GBP 470 million won't be the final number, but it will be because it will get trued up to a more accurate number, you could see they're very big buckets, but we wouldn't expect it to be significantly different. In terms of FY '27, to the extent that there are elements within there that are site margin reductions rather than just impairments, there will be some flow-through to '27, which is taken account of in arriving at the GBP 185 million guidance for next year.

Yes. And then just the clarification on new JVs having to tender their own land.

So it's a shift towards the fact that when we do joint ventures, we want parties to all bring something to the table. So we've used joint ventures in different ways in the past. We're very good at working on JVs with our partners. We can create very good returns that we, therefore, share, but we want the partners to bring something along as well. So the land being one of that pieces, but also perhaps the acquisition of the affordable plots on that side as well. So it's just trying to make sure the joint ventures are focused around the balance between our expertise and the house association's expertise as well and land is a key contributor to that.

Emily Biddulph, from Barclays. I've got two, please. Firstly, I just wanted to come back on the guidance for next year of GBP 185 million PBT. Just see if you could help us sort of bridge that a little bit more. In your list of potential exceptionals for the second half of this year -- sorry, I don't have the number in front of me, but I think it was about GBP 250 million, GBP 300 million of potential write-downs on -- resulting from the CEO review of sort of reduced future profitability. It sort of feels from that like you should have a whole chunk coming through in the relative near term that's sort of effectively at 0 margin. So am I wrong on that? Or is it the phasing of that really long? So the impact on next year isn't actually huge? Or are there other sort of big offsets against it that I need to bear in mind?

No, I think within the GBP 470 million of total, the area in the pink here, which we're talking about -- most of that is impairment and provisions. So a large chunk of this relates to the Southeast, where already the margins are very slim because of some of the issues we've experienced in the past. Hence, most of the pain is taken in year 1 rather than carried through. I think our rough estimate for next year is the GBP 470 million has about an GBP 80 million impact in '27. So that's the ongoing margin implication of that write-down.

Then it takes you to the bridge question. So if we take the GBP 165 million here on this chart as the starting point, we'd expect that you take off the GBP 80 million of the pink stuff that goes through for next year, takes down to GBP 85 million to get to GBP 185 million. That GBP 100 million then of improvement half of that, around GBP 50 million comes from restructuring savings and the overhead savings. The other GBP 50 million will come from overall trading and overall performance. So less bad news, better partner market and better overall mix.

Perfect. And my second question was just on the covenant. I appreciate you've given us that new covenant of GBP 70 million headroom and sort of said you've cleared that really comfortably in the past. But I remember at the start of this year, you said that average net debt was relatively high in the first couple of months of the year because there were various outflows like there were land creditor outflows, et cetera, in the first few months. As we look through to the first few months of next year, if we're mindful that the GBP 100 million USPP needs settling, are there other outflows we need to sort of bear in mind? Or sort of as you look at cash flow forecast for the early part of next year, how does it look?

Yes. I mean the difference between this year, '27 and '26 will be that due to the reduction in land buying through this year, you've got a lot less land payments coming out in January. So January '26 had a large amount of land payments coming out, which float us down into that debt position. As we've not bought forward land through this year, we tend to have those land payments in January as well. There's a huge amount less of those in January. So we wouldn't expect to see that trough down in January as we've seen in the past, and therefore, very confident that we sort of in good position ahead of the PP rolling off at the end of February. And that GBP 70 million at month end was clearly used as part of the going concern review and everyone absolutely comfortable that, that's not a challenge for us. Our month-end positions are never anywhere near the sort of top of our facility. So very comfortable with the cash flow modeling as we go into next year.

Lewis Roxburgh from Goodbody. Three questions for me, please. First, just to confirm if all of the GBP 470 million future special charges are non-cash as well. Secondly, just in the bridge you've given to lower average net debt, what sort of broad assumptions are embedded in the profit line? And how much confidence do you have generally given average net debt has been quite difficult to lower historically and the market outlook is obviously quite challenging? And then the last question is just on some color of the drivers of underperformance in the open sales rate and how do you expect to improve that? I know you mentioned in the Southeast, people are reluctant to pay high prices alongside other tenders. So I know you're exiting that area, but just some other measures you can do to help potentially.

Can you take the first couple?

Yes. So noncash is a term that we've deliberately avoided using in the RNS and today because it's open to interpretation. The GBP 470 million that we're taking this year is effectively non-cash this year. In other words, there's not a cash outflow this year. But you might argue that over time, that is GBP 470 million of profit that you're not going to get, which would have been in the form of cash. So effectively, it's lower cash than was previously forecast from here onwards, but it's non-cash in the year, if that makes sense.

The second one -- your second question was around what's in the profit assumptions. Well, this is built on a steady profile of improvement from the GBP 185 million that we're talking about of PBT next year to the PBT of GBP 400 million in FY '31. So there's not a great hockey stick in that flow. And so this is built from our models that get from that, as I say, from the GBP 185 million through to the GBP 400 million. Third question is around why we have more confidence around average net debt. Adam, do you want to take this?

Yes. I mean I think you've seen in recent periods, we've continued to invest in the business, even though talking about lowering net debt, and we've changed that behavior 180 degrees in the last few months. And therefore, that's why the confidence on net debt coming down is there to see lower investment in land, we're buying land, but only in the terms that I talked about earlier, where you've got that back-to-back partner deal coming in. And therefore, the business is naturally generating cash from the big forward order book that we've got. And so the behaviors in the last 6 months are very different to what you've seen before. Hence, the confidence to really reduce that net debt as we go through the year-end and into next year and then continue that sort of journey into years beyond.

On the sales rate, so yes, a slightly different mix away from the Southeast will help. That said, really focusing around one sales brand and investing in the product, the quality of that sales brand and making sure that the teams really are well versed on the benefits of that product and the brand is a piece of work we've got to do as part of the implementation. I'm very confident that if we invest in that brand, we'll have a real industry-leading sort of product there that we can sell on those mixed tenure sites. So there's a piece of work to do to refocus those sales team around that one brand.

Peter Ajose-Adeogun from Morgan Stanley. Three questions, all land related. First was just quite a bit of color on the owned land bank today. I was just wondering if there was any additional information just around the strategic land bank, any shift there in terms of strategy? Any shift in terms of how you expect strategic land to convert into owned land going forward? The second was just around -- I think you mentioned being less speculative on land purchasing, not wanting to hold land for too long before having a partner in place.

I just wanted to ask whether that was kind of like a definitive stance so you would still be maybe nimble in terms of attractive opportunities that came by on an ad-hoc basis? And then the third was just around selling land. I know that a lot of your housebuilding peers have talked around walking away or reducing land purchasing at this point in time. I'm just wondering if in this environment, you're finding it a bit more difficult to sell land, what land buying appetite from you has been like and perhaps what corners the appetite in terms of who you're selling to where that demand has been coming from?

Okay. So strategic land bank, expect it to still play a good part in our future land delivery. It's geographical focus. We've got to shift over years to come. So historically, a lot of the strategic land focused in the sort of east of the country, particularly out of Countryside legacy, which is focused over that side of the patch. And over recent years, we've really tried to refocus the strategic land teams more into the Midlands, the North and the West. So we expect to see those opportunities start to flow through, and they are doing, which is positive news. So continue to invest and focus on strategic land book, right locations and right sites that align with what we've talked about today.

In relation to a definitive view on that sort of arrangement of back-to-back, definitely definitive in the short term, bearing in mind the push to deleverage the business. If in 3 years' time and the leverage is in a very good place and very consistent and a great land deal came along for a sensible level of investment, smaller numbers than maybe I showed on the screen, you would probably have some flexibility if it was the deal of the century as it were.

But in the short to medium term, certainly really want to be robust about those rules that I talked about earlier. And just on land sales, I mean, we talked at the half year about looking to get ourselves out some land positions. I've talked about it today. We've been working through quarter 3 on quite a big piece of work around reshaping that land bank. We've had excellent interest in that land. And I think the difference is between maybe our experience and some of the things you're hearing in the market, our asset base is of high quality. We bought a lot of land, but we bought some excellent land as well.

So we had a huge number of very high-quality bids on the land we have taken to market. Interest is coming from a few of the PLCs in various different locations, a couple of the larger privately owned businesses as well. And we are only selling that land where we think we're getting the right value and return because we know it's of high quality. But I've been very reassured about, A, the interest; and B, the quality of offers we've had on any land that we've taken to market.

Yes. I don't think there's any more hands anyway. So we're at 10:30. We've kept you for a couple of hours. Thanks very much for your time. Thank you.

Good morning, and welcome to today's Vistry conference call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand you over to Adam Daniels to begin the call. Please go ahead.

Good morning, everyone. Welcome to the call, and thank you for taking the time to join this morning at short notice. For those who don't know me, I am Adam Daniels, the Chief Executive of Vistry. I took over in that role on the 13th of April, but have been with the organization through the last decade, which is allowing me to work at pace in assessing the business and chart a course for us as we move forward. As such, alongside a run-through of the trading statement we have released this morning, I would like to give you some early thoughts and conclusions on the CEO review. We will then open the line for a short Q&A session to which I'm joined this morning by Tim Lawlor, our CFO.

Since taking the role, I have been continually reassured by the fundamental strength and quality of the business. Despite clear market headwinds and external uncertainty, alongside consistent external focus on the business, our core KPIs remain extremely strong and robust. We are operating at scale across the country, delivering over 6,000 homes in the first half with more than half of them being affordable. We continue to deliver with great quality, including retaining our highly talented people, delivering strong customer service scores, obtaining very good partner feedback and maintaining an excellent health and safety performance. Alongside this, we continue to build industry-leading relationships with our partners and great relationships with our suppliers and subcontractors.

What I have observed during the first 3 months in this role is the business that is absolutely capable of delivering the capital-light, cash generative and profitable outcomes that we expected when we moved across to the partnership strategy with large areas of the business performing well and generating returns we would expect. That said, it is clear that we have taken some missteps during that time, which we are appraising and addressing through my CEO review to ensure we do more of the things that make us a great business and less of the things that currently hold us back.

As a group, we are completely committed to the partnership strategy. As we were clear about in May, the greatest near-term focus has been on taking action that will reduce our debt. I'm fundamentally of the view that if we are going to deliver the outcomes we expect from this model, we need to operate with a much lower average net debt than we have in previous years, and I'm very pleased with the progress we are making in that regard. We have been decisive and effective in taking actions to free up capital from inventory, land and other initiatives. The extent of this has been significant and has had a clear impact on the first half profit, but will have an equally significant positive impact on reducing debt in the coming weeks as these convert into cash. I'm also very confident that the refocus on this point and the change in behaviors within the group will deliver sustainable improvement beyond 2026.

One of my main takeaways in the early time of my tenure is that too often our capital outflow has become too detached from our capital inflows, which leaves the business exposed to excess cash consumption in periods of market weakness. We have built ahead of our sales rate and therefore, increased WIP, which we are now working hard to reduce and have purchased land that we have hoped to conclude deals on that have not yet transpired. Ensuring that we more closely align these positions as we move forward will ensure we deliver a less capital-intensive business.

Our initial initiatives to date have included pricing actions on slower-moving stock, reducing our exposure to higher ASPs, reducing the amount of private WIP and targeted reductions in our land bank. These initiatives are well progressed, which positions the business to achieve a significant improvement in profitability in H2 as well as a stronger cash position.

Turning to the H1 outcome. The group expects to deliver a modest profit before taxation of GBP 20 million, excluding the impact of specific actions taken to reduce debt levels and any actions related to CEO review. Cash generation action has resulted in an adverse impact of circa GBP 50 million in H1, including one-off impairments on low or no margin sites. Including the impact of these cash actions, but before the impact of any action relating to CEO review, the group expects to deliver a first half loss before tax of approximately GBP 30 million. As expected, indebtedness was behind the prior year in H1 due to higher land expenditure and lower volumes of part transactions.

We have also actively sought to normalize period-end working capital, including payment time scales to our suppliers and subcontractors. And as such, the group's net debt at the 30th of June was GBP 407 million (sic) [ GBP 470 million ] and average daily net debt in H1 was GBP 799 million. Within this figure, land creditors are expected to have reduced by over GBP 100 million (sic) [ GBP 150 million ] during the first half, reflecting a focus to reduce the overall leverage of the business. The majority of the cash benefits from the actions being taken will be felt in H2 due to the lag between the action and cash realization. We expect to deliver a significant reduction in average net debt levels in the second half and cash position of full year in excess of GBP 100 million.

I'll talk a little now about the CEO review that we are partway through ahead of a wider update on the 24th of September. We have made good progress with the review, albeit clearly, there are a number of things still to conclude, and so we won't be able to give all of the detail today. We are moving at pace. And while I am excited to deliver the results of that review in September, my early view is that there is a significant opportunity to develop a more focused Vistry with improved profitability, a stronger balance sheet, higher returns on capital and more consistent delivery. As I said, the partnership strategy is the right one for the business but can be delivered more effectively and sustainably in a number of areas. These encompass our operational delivery and capital efficiency together with a firmer commercial approach.

Firstly, under operational delivery, we know there is a significant variance in profitability and return on capital across our regions. I believe there is a sizable opportunity for moving to a more focused footprint, allowing us to optimize profitability and improve operational execution. We have done some of this work already, which has proved successful and has allowed us to put our high-quality people in positions to best support the success of the business. This will ensure that the future development activity is focused on specific sites and relationships that are best suited to our business model. It was encouraging that we have already been able to implement an annualized overhead saving of GBP 25 million, and I believe there is more to do as the CEO review progresses.

Secondly, on capital efficiency, I see 3 sizable buckets of opportunity, which will contribute to a net cash position through the second half and beyond. On our land bank, we will reshape and reduce land to better align our land ownership with our differentiated partnerships model, which will allow us to generate significant cash opportunities and improve margins by developing more of the mixed-tenure focused sites that we do best. Albeit the land market is subdued for larger sites, there remains a strong market appetite for smaller parcels of land that is well progressed in planning, of which we have plenty. I'm of the view that our own land bank is too large, and we need to reduce this in order to lighten the balance sheet, and we want more land sit in our controls as we move forward so we can better manage the interrelationship between outflow and inflow that I mentioned earlier.

We started 2026 with some GBP 600 million unsold private stock, either wholly owned or in JV, which is fundamentally too high for a business of our size, and we have a clear focus on reducing it and maintaining a lower position for the long term to permanently reduce debt requirements. The actions we have taken have already reduced this number by half with around GBP 190 million of this reduction still to flow into the business during H2. Furthermore, we have substantially exited our part exchange portfolio, which historically locked up around GBP 50 million of our capital at any one time. An element of this GBP 50 million upside was secured in H1 with the balance to follow during Q3. We will continue to offer alternative sales products to ensure we maintain our sales rates while reducing our debt position.

Finally, on commercial approach, I believe, among other things, we can optimize our returns through refining the mix of our business with smaller, more affordable private houses better suited to our mixed-tenure sites. Going forward, there will be greater flexibility on the mix of private sales on each site, and we will flex the model regionally buying sites in the right locations best suited to our model. So hopefully, this just gives you a flavor of some of the work streams under the review. There is an immense amount of work going on. We are treating 2026 as a transition year to reposition the business to operate with significantly lower financial leverage and healthy profitability going forward.

Turning now to trading. After a positive start to the year, it has been well documented that open market conditions deteriorated in the second quarter, reflecting increased uncertainty and lower customer confidence triggered by the Middle East conflict. And while the outcomes of SAHP for individual RPs have remained uncertain in H1, the demand levels, therefore, remain constrained. That said, we have encouragingly been able to complete a number of transactions across the country where the terms meet our commercial requirements. In addition, we are seeing our partners preparing for the award of grant later this year by looking at their development pipelines and continue in detailed discussions with many partners as to how to support their delivery moving forward.

We, therefore, believe the near-term prospects for the partner market remain very attractive and registered providers demand should be stimulated by the completion of the grant allocation under the strategic affordable housing program in September. We continue to operate in a challenging trading and uncertain political environment. However, we expect the decisive cash actions taken so far this year and those yet to be taken during the rest of the year, the expected improving partner-funded transaction activity and higher volumes to result in a materially improved H2 performance. As a result, the Board expects that adjusted profit before tax for FY '26 will be in line with the current market consensus of circa GBP 200 million.

This forecast excludes any impact from the ongoing CEO review, the findings of which will be detailed on 24th of September in the half-year results. And finally, before I open for Q&A, I would just like to say a few words regarding this morning's news about Tim's departure. We are sad to see Tim go, but Tim has decided to move on to work for a private company outside of the PLC environment. I would like to thank Tim for all his significant contribution to Vistry during his tenure of over 4 years. He has played an important role in the integration of Vistry and Countryside and transition to partnership strategy. He is around until October, and so we will support the balance of the CEO review and will finalize the interim results, so I'm sure we can keep it busy during that time. I personally thank Tim for his support since my appointment I feel that we have made some very good progress in a short time. And I know that whoever succeeds Tim will take on a business in the right shape to deliver moving forward. We have started a search for a replacement, which will be an external appointment to add the relevant experience to the role and the executives and be best placed in order to support me into the future, and we will update further on this in due course.

To close, Vistry remains a high-quality business. We are taking important steps now to enable more consistent performance in the future, but the long-term value of the business is undeniable. The demand for housing in this country is growing by the day. The long-term supply deficit has been growing, not declining over the last year and the fundamental undersupply of housing is evident and at the forefront of the national consciousness. 1.3 million people on the housing waiting list, over 175,000 children in temporary accommodation and many more adults and a private housing market that has a huge desire to buy, but needs a more supportive market backdrop to do so. These are all clear indicators of the opportunity that lies ahead. We will ensure over the coming months that we are well placed to play our part in the delivery of that housing for customers and partners alike. So operator, back to you, please, to take the Q&A. Thank you.

[Operator Instructions] Our first question comes from Aynsley Lammin with Investec.

Two for me. I just wondered if you could give a bit more detail around the kind of nature of the possible one-off impacts on the strategic view. I mean, is it land asset write-downs, change in accounting policy? What should we expect in terms of what's driving those one-off impacts? And then the second question, just on the banks. I don't think I ever saw anything in the statement just regarding kind of how the banks see things, how you see the risk around banking covenants and maybe a bit more color and context around that, that would be great.

It's Tim here. So I'll take those 2 questions. So in terms of the content of the CEO review and the impacts. It could come in multiple areas, and I don't want to be too specific at this stage of exactly what those impacts will be. But as you say, there could be some -- as we review some site strategies, that might mean that we need to look at the margins of those sites going forward, particularly if we're accelerating or taking a different sales strategy on those sites. There will be some margin impacts, potentially some land bank impact if we are changing the mix on sites. There could also be some costs around the restructuring as we look at how we might organize differently. And then as you say, there could be some accounting policy tweaks.

I don't think anything too substantial, but just some reviews on accounting policies to ensure that we've got accounting that best aligns with the commercial behaviors that we're trying to drive out of the business. That's probably all we can say at this stage, and we'll give full detail on that with our results in September.

On the second question on the banks, we've got really positive relationships with the banks. Adam has been around and we met all of the banks in our banking syndicate over the course of the last couple of months. And they're very supportive, of course, wanting to stay close to the business. So we're keeping them close to all of our developments, and we'll keep them very closely aligned as we go through the CEO review process.

In terms of our future plans, we are talking with them about what we might do about the refinancing or otherwise of our GBP 900 million of facilities. They're not due until April 2028, and we've got options about either a full refinancing or amending and extending by a year to give us more time. So various options under consideration. But generally, the banking discussions are all very positive.

Sorry, just one follow-up, if I could, on that. In terms of the kind of potential impact from the CEO review and if H2 trading is a bit weaker than hoped for, I mean, what's the risk of a breach of banking covenants? Is that a high risk or something that you're fairly comfortable that you can avoid?

Well, I think the first thing is that we've got significant headroom. The covenant that is most of interest there is our interest cover ratio, where we've got significant profit headroom, probably over GBP 100 million of profit headroom based on our latest forecast. And then the interest cover ratio is based on adjusted EBITDA, so it excludes exceptional and nonrecurring items. And we need to work through during the course of the summer, the nature of those CEO review adjustments, but we'd expect that the sizable one-off nature -- one-off adjustments would be considered nonrecurring or exceptional so would fall outside the covenants.

But again, we'll work through with the banks to make sure and the auditors to make sure that we are monitoring that as we go. But no expectations of a covenant breach as a result of any CEO review actions.

Next question is from Glynis Johnson with Jefferies.

Yes, cognizant of time. So just one question. You committed to the partnership strategy. What gives you the confidence that, that actually is the right strategy? And within that, you talked in your statement about large areas making good returns. What are those areas? Are they regional? Are they certain site mixes? Is it regeneration rather than greenfield? What are the elements that are making good returns where you think actually the business should be focusing in on?

Thank you. So we've done a lot of work since April 13. So we started the review. We've got some external help in doing that, and that's allowed us to review in detail a very large number of sites across the group. And what gives me confidence in the strategy is that a large proportion of those sites are delivering returns in line with our expectations that we previously talked about. And so that gives me good strong reassurance that those -- as those schemes are delivering those returns, we can do that across a wider footprint if we change some behaviors and we change some decisions as we move forward.

The returns where we're seeing strong returns are focused for a number of different reasons. So there is some regional differences, particularly as the market has been subdued, the North and Midlands has performed more strongly than those sites for the South. So there's some regional differences in some of that performance. But I think a lot of it is down to site mix and the execution of the types of sites that we buy, the mix of which we put on those sites and therefore, the delivery of those sites return. So I think it's a combined picture between geography and site mix that is differentiated between successful sites that fit our model and perhaps those that have been less successful.

Sorry, just a follow-up. So what sites have been more successful? Is it the ones that have more additionality, more forward sold? Is it ones that have more private? Is that how we -- is that the difference between what's successful and what isn't?

No. So I think as we review the mix positions, the variability of the mix is one determining factor. Another factor, for example, is how we pay for land. So if we pay a lot of land upfront and then we've traded through the scheme, clear those sites tie up more capital and deliver lower returns on capital. And so that will be another element of either performing or performing. So I don't think it's as simple as saying that it's all about the mix or it's all about the geography. The partnership model is sophisticated and you have to execute it in a sophisticated way.

In large, the sites that have performed better have been a mix in line with our previous assumptions, so around 30% to 40% of private with the balance being additionality. They've been in locations that support private sales and additionality and they've been areas where we've been able to pay for the land alongside our capital inflows. So we've more closely kept together those capital outflows, capital inflows I mentioned earlier. So there are some themes that I think we're working better. I wouldn't say the determining factor between regeneration and greenfield, I wouldn't say determining factor that you subscribe for all, but there are some of the themes that mean that we can see the better performing sites versus the less successful sites.

The other point I made in what I said earlier is where we focused on lower ASPs, more affordable private housing to sit alongside our mixed-tenure product, that has worked better than when we are focused on higher ASPs. So I think that is a theme that will continue.

Next question is from Chris Millington with Deutsche Bank. Chris, we can't hear you. Can you please check if your line is on mute.

Yes. So I just wanted to ask on the capital structure and whether you think there's any justification for Vistry running a more levered position than the traditional housebuilders, given we have seen quite a lot of volatility in recent years. So that's one. And the second one is whether you think there'll be any diseconomies of scale on build as you slow the business down, given that was one of the reasons put forward by your predecessor, how you were getting better build rates than peers.

I'll pick up the second question first, Chris, if that's okay. So just on scale of build, that's more of a site-by-site benefit than it is a more wide benefit. So clearly, the overall volume supports the business, but no matter what the volume is still a business of scale. So we're still going to be able to drive those better returns by having that scale across the business. The benefit of the pace and scale is on a site-by-site basis. So if I give you an example of a 400-unit scheme, we pre-sell 60% of that scheme, so over half, 200-odd plots. When we are talking to our supply chain and subcontractors and making that site efficient, we are be able to concentrate on building those plots of pace alongside an element of private, which is a very different approach to a standard housebuilding site.

So the efficiencies you gain from going at pace in that way, the pricing of the supply chain, the pricing of subcontractors, the leanness of the prelims, et cetera, is on a site-by-site basis, not just on a sort of national -- what your volumes are. So we'll continue with those sort of focuses and we'll continue to deliver that presold at pace, which gives us a good element of efficiency. Tim, I don't know if you want to pick up the first question, please?

Sure. So capital structure is one of the things that we're looking at as part of the CEO review process from which we want to understand what our balance sheet options are. So for now, I think we can clearly state that we're looking to reduce our average daily debt, but it's premature to be talking about exactly what that level is. So we'll give more information in September.

But to second the question, to give you a sense on, I guess, our thinking. The first is that with our partnerships model, we should have greater certainty of income. And we should also -- once we have a stable platform and certainty going forward, we should have more visibility and confidence in our cash flow profile during the course of the year. And our focus is going to be very much on the average debt or the debt profile during the course of the year rather than the traditional view of what we've got levered at December 31 and June 30.

I think what that means is the partnerships model should allow for greater leverage than traditional housebuilders where there's greater uncertainty of those income streams and there's more volatility in the market. We also need to look at the cost of debt, and we need to look at the appetite of lenders to lend to us for the business model that -- or the business that Adam will lay out at the end of September. So summary to all of that is I think we can be more levered than the traditional house builder, but the precise level of leverage that we're aiming for is too early to articulate at this stage.

We will extend today's Q&A session by a short period. And our next question comes from Clyde Lewis with Peel Hunt.

I've got a couple of questions, if I may as well. Adam, on the SAHP program and the timing of that, obviously, we're going to have a new face in # 10, and he certainly seems to be talking about a bigger focus on social rent. Are you worried that there could be a delay in terms of allocations and consequently, projects being sort of signed up to by the registered providers over the balance of this year and that it kicks into '27 at all?

That was the first one. The second one was really around incentive levels. And obviously, you pushed very hard to move some of that slow-moving stock. Do you think you've now got to a point where those incentive levels across the group start to drift lower?

Yes. Thank you. So on SAHP, the sort of process for the SAHP being worked through is well progressed. So they've had their bids in, they've done some clarification work, and then they're working through quarter 3 to confirm to partners the values that they get. And when that would arrive, which is due to happen in September, noise we continue to hear is that they're on track for that date in September. And I think we've got to understand that the RPs have made progress already on readying for that funding. So they've got their pipeline ready. They've started to do some of the groundwork. So it will be a very, very big shift if suddenly we move completely away from that.

Is there a chance that the balance of that SAHP, maybe some of the future funding is reshaped because of perhaps a move towards more social rent, who knows. But a lot of what is to come is known. We've not seen any policy. We've not seen any sort of definitive. We've seen some opinions and some views. So my opinion at the moment is that the timescale is tracking to the September date that we previously anticipated. And that's what we hope will happen during quarter 3. So I think that's where we are on SAHP.

We're certainly seeing the sort of noise and movement from the partners getting ready for that day in any case, in my view. On incentive levels, yes, pretty strong in the first half. We expect to see them winding down through the second half. Clearly, the market conditions are underwhelming. So we will have to continue to keep that under review. But the expectation is that, that will wind down through the second half and become more normalized.

Our next question comes from Cedar Ekblom with Morgan Stanley.

Cedar, Morgan Stanley. Just 2 questions. First, I just wanted to ask around what the business might look like in the future. While I appreciate we get more details in September, when I read the statement land purchases and selling land, would it be fair to assume we are probably looking at a lower capital employed position, but with a lower margin if private units are a much smaller part of the business. So potentially a higher return on capital but on a much smaller book value?

Maybe in other words, Vistry is a much smaller business in future, but more profitable business? And then the second question is just around to get from net debt to around GBP 100 million of net cash, you talked about some of those levers. Could you help us understand perhaps the expected contribution from each lever so we can better assess the execution risk around the different mechanisms?

Okay. So I'll take the first question and probably pass to Tim for the second question. So just on what it might look like in the future, I think I would use the words much smaller business, et cetera. I think there is a chance you're looking at a leaner, smaller, more efficient business as we move forward. Clearly, we'll not finally conclude all that during quarter 3. And in relation to margin, I still think private sales is a big core part of the business and a core part of that mixed-tenure model. I think the challenge is we want to try and make that private sales more reliable.

So a shift to a focus on smaller ASPs, more affordable private products will make that private element of our business more reliable as we move forward, which will support returns. So I don't think it will be an offset of driving for more ROCE and less profit. I think we'll be looking to improve returns by focusing in the areas that we do best. But I think that a more efficient business as we move forward is probably one of the end goals. And on cash bridge, Tim, on to you, please.

Yes. So I think there's 3 chunks really to drive us from the half-year net debt of GBP 470 million to over GBP 100 million of cash at year-end. The first is that we're expecting a highly profitable second half of the year, which will be cash generative. The second part is the WIP release. So we talked in the update about how we have significantly reduced the unsold private homes WIP and a lot of that cash comes through in the second half of the year. So it's sold in the first half, but it completes in the second half. So that's part of the cash story. And we'll be looking at other areas of WIP as well in the second half of the year.

And then the third is the wind down of the land bank. So the reduced spend on land will take another couple of hundred million out of land in the second half of the year, slightly offset by the fact that we do expect our land creditors to continue to come down in the second half of the year. So actually, we're expecting land creditors to be over GBP 150 million down at the half-year within -- and we're expecting a further GBP 100 million reduction in the second half of the year. So yes, the combination of those 3 sort of similarly weighted numbers, land, WIP and profit are the key drivers of that cash improvement.

And maybe just a quick follow-up in terms of maybe just a guide on future kind of private versus affordable mix, what that would look like?

Yes. I think we won't want to commit to a percentage at this stage. I mean, if in a mixed-tenure model we're looking for, you're trying to pre-sell more than half of what you build, the flexibility beyond that is there to be used. So what I would want to create is a more flexible delivery model that depending on market conditions, geographic locations, consumer confidence, you flex the balance of the private depending on where you are.

So perhaps in some areas, we're targeting being more like 50% and in some areas, we will reduce the risk to take less private. So I think it's trying to balance the private delivery versus the risk profile, but I don't want to commit to an overall percentage at this stage, but we'll be doing that when we get to September.

Our next question is from Adrian Kearsey from Panmure Liberum.

Two questions from me. There's been a well-publicized redundancies or sort of exit program. Would you be able to give some numbers in terms of how many people have exited the business in terms of headcount? And the second one is in terms of your expected cash contribution into joint venture structures. Do you envisage that will change going forward? And/or do you envisage that joint venture commitments will mean that the cash commitment from Vistry will remain broadly unchanged on a like-for-like basis?

Yes. Sorry, I'll take the first question. We didn't quite hear the second question. So I'll ask you to repeat that in a minute, if that's okay. Apologies. Less than 5% of the business applied. And so therefore, less than 5% of the business that will sort of leave under that process. That's been a successful process. It's worked well with the teams to ensure that those people who perhaps want to start can do so while we've been able to retain all our highly talented staff that we wanted to. So less than 5% of the business through VES and a successful outcome and around in line with our expectations. I'm sorry, if you could repeat the second question, we'll take that.

No problems. The cash contribution that Vistry make into the joint ventures, do you envisage that on a like-for-like basis, that cash contribution will stay the same? Or do you see an opportunity for less cash to be put into those joint ventures going forward?

Adrian, why don't I have a go at that? So I think the commercial models for the business are part of the CEO review. But again, to avoid dodging the question and putting it out to September, I think JVs will continue to be a core part of the business. They work well for risk share, for capital share and for access to land and perhaps other assets as well. So there will be a share I think it's unlikely that we're going to define a particular proportion of the business we want to go into JVs. We want to leave our options open because we'll look at it on a case-by-case basis, depending on the individual sites and individual location.

We do, though, in terms of the cash management, manage JVs in the same way that we really manage the wholly owned stuff, but we don't want cash to be sitting there redundant in bank accounts because it's trapped in JVs. So what we have are a series of complicated loans in and out to ensure that both ourselves and our partners don't have cash trapped in there and have unnecessary debt and drawings outside the JVs in order to fund JVs. So we don't really see that JV is a cash -- JVs are a particular cash tie-up, but we'll continue to focus on ensuring that as we set new ones up, we don't allow that to become the case.

And I think just to add to that slightly from an operational point of view, in my opinion, we're an excellent JV partner. We've got great access to land, got a great skill set in developing and building houses. And so we just want to make sure we're doing the right JVs that add value to the business because that's the value that we can add to the joint venture partner on the other side. So JV will remain a core part of the business, but we'll ensure we're doing the right JVs with the right partners for the right returns, bearing in mind the value that we can add into those relationships.

Our next question is from Will Jones with Rothschild & Co Redburn.

Just a couple, please. First, just in terms of the kind of H2 reliance, is there any way of pulling together what you require on the sales rate in the second half compared to that roughly one mark in the first? And also related to the second half, could you confirm what you're budgeting for in the way of grant funding coming in, in that period? And then the second one is really around the balance sheet. And obviously, you've talked about the various levers you're pulling today, but one that would obviously get you to where you need to be quicker would potentially be an equity raise. I just wondered to what extent that is being considered as an option.

Okay. So on sales rate, we had a very good start to the year on sales rate. That's declined as we've gone through sort of quarter 2 really following the Middle East conflict. Second half sales rate is lower than our average sales rate in H1 the requirement because if you balance out very good strong sales rate in Q1 and a decline in sales rate in Q2, the sales rate to go is less than what we've achieved so far year-to-date, albeit we still need a supportive private backdrop in order to deliver that.

But we're not assuming a sort of huge pickup in conditions in order to achieve that sales rate on a to-go basis. On grant funding, so the forecast assumes that the ground funding is announced and rolled out as per the previous plans set out through the SAHP. So we're just assuming that, that happens in September. Clearly, we get grant funding ourselves, but that is not sort of all of the picture because the bigger picture is how much ground funding our partners get. So we're just assuming that the grant funding flows out as per the previous announcement and is confirmed in September so that people can move on with spending it. On your second question on equity raise, no plans for an equity raise something I think we can be clear on.

Our next question is from Rebecca Parker with Goldman Sachs.

There's been a couple of reports that Homes England has imposed annual caps on project spending of the SAHP. I was just wondering if you could comment on the impact to the business and your partners there? And then second question on land sales, what's the expectation for the full year? And could we expect this to increase in coming years just given that you're aiming to, I guess, decrease that capital employed in the business?

Yes. Okay. So just on the SAHP. So during the period in which they were sort of analyzing and querying the bids, Homes England went out to partners and requested some remodeling based on slightly different funding profile. which the question was answered. So we've had no confirmation as to whether they stick with the prior funding profile or the revised funding profile. In the revised funding profile, what it means generally for part of growth is that it takes slightly longer for that affordable housing to be delivered.

Still a very big injection in grant funding, but a slightly extended period in which it's delivered over. So we haven't seen the outcome of whether they go with their first sort of assessment or their clarified assessment, that will be confirmed in the next 3 months. It still means that there'll be a big injection of funding into affordable housing. But in scenario 2, it flows at a slightly slower rate. In relation to land sales, so we have heavily invested in land in the business in the last year or so, bought a lot of land in quarter 4 of last year, bought a lot of land in quarter 1 of this year. The advantage of that is we bought a lot of very high-quality land, which is good. And some of the land sales that we do are a core part of the business because we buy big sites and we section them off and sell a bit, et cetera.

So some of that is core part of the business. That said, there will be some additional land selling during H2 of this year and perhaps as we move into the first half of '27, focused on reshaping the land bank that I talked about earlier. And so there will be some additional land selling outside the core business in H2 of this year and perhaps as we move forward with that end goal of having a smaller owned land bank, but trying to control as much land as possible just to keep that balance sheet light as we can.

I just put some numbers around that, Rebecca. So last year, we did GBP 180 million of land sale revenue. Previously, we would have expected this year to be slightly lower than that due to just the business as usual core stuff that Adam just talked about. I think now we would expect it to be slightly higher than the GBP 180 million, but not massively so as we go through some of the more strategic land bank actions in the second half of the year related to the CEO review. So slightly higher than last year, but not massively so.

We've extended slightly just because we were slightly late starting. So just one more question, if that's okay, please, and then we will close.

Our last question comes from Lewis Roxburgh from Goodbody.

I'll just do one question. Just some further breakup on the current period special item charge of GBP 50 million, whether specifically that includes the price discounts that you've applied to housing. And you mentioned the delay between WIP and sales or land purchases. That just sort of seems like a rather a timing issue and some cost. So just interested in some color there.

Sorry, I didn't catch what the second part -- the first part of the question I got, I think, which is asking about the GBP 50 million of cash recovery actions. So there will be -- so that's the impact, yes, primarily of the discounting, also some asset sales where we've taken a different view in order to accelerate cash. So there's been some impairment there. So that's the GBP 50 million recorded in the first half. In the second half, it will be a lower number, but there will still inevitably some impact related to the cash recovery in the second half as well.

But that's factored into the guidance that we've given for the full year profits. Do you want to try again just with the second part of the question about the WIP, I didn't quite catch that.

Yes. Just sort of when you said about the special item charge, you mentioned it's related to cash initiatives. And you mentioned in the release that there is a delay between WIP and sales and lower land purchases. But that just seems rather a timing issue, you will sort of get that money eventually. So just interested to see incorporated into the special item charge.

So yes, the GBP 50 million includes some profit impacts where the profit impacts us in the first half of the year, adverse profit impacts in the first half of the year, but the beneficial cash of that is largely in the second half, particularly in the third quarter. So as you say, it's a timing issue.

Okay. Thank you very much, everyone. Thank you for joining. Have a good day.

This concludes today's conference call. Thanks, everyone, for joining, and you may now disconnect your lines.

Good morning, everyone. So welcome to our Full Year Results Presentation for 2025. Delighted to be joined today by our Finance Director, Tim Lawlor; and our Chief Executive of Partnerships, Stephen Teagle.

So the agenda. I will do a very quick introduction. Tim will follow up with the financial review. Stephen will talk about the markets, and then I will go into a few -- quite a few slides on strategy and operational update, finishing off with an outlook. And then, of course, we'll have the Q&A, which we all can't wait for.

So the 2025 headlines. So 2025, profit before tax in line with expectations, which included a very, very strong 2025. And just on that, thank you to our team because there were a lot of skeptics around following the issues we had at the end of 2024 that didn't think we would get to the numbers, particularly when we said it would be dramatically second half weighted, but we did. And the important thing there is showing the resilience of the business and the model is we had absolutely no help whatsoever from the market. So I've been around for 45 years, and quite often, you see a housebuilder get into trouble and the following year, it's boom time and they get out of jail because the market has been quite good. We had no help whatsoever last year from markets. And we're all very proud of the fact that we are producing 1 in 7, that's 15% of the total affordable homes being constructed in the country.

The group following massive reorganization is lean, efficient and incredibly stable. We were probably along with Persimmon, I would suggest, the only active housebuilders in the land market last year, which was incredibly soft. And we bought some great land last year, taking advantage of those soft markets, which will help the company dramatically over the next few years.

Net debt reduced down to GBP 144 million at the end of '25. And Stephen Teagle and I would both say we're very delighted that during the year, and it was not start coming through at the end of this year, the GBP 39 billion affordable housing program, '26 to '36. Stephen and I have been around for, as I say, a long time, have never seen an injection of capital in affordable housing of that nature ever.

So we're positioned for growth. So just going off script slightly, there were 2 announcements this morning. The first, obviously, about our results; the second, announcing my retirement. I'm told by Tim that some of the feedback as people were surprised. I'm not sure why people are surprised. It's been -- it's all planned. The Board have been expecting it. I've done 45 years. I'm 62 in June. My wife is older than me, and she's very lucky, of course, but she is older than me. And I just want to enjoy myself. And as some of you will know, I've got 1 or 2 spare sets to clothes. So I'm in a pretty good place, and there's nothing more to it than absolutely that. But I will be around. So it's very much business as usual. That's the message within the group for quite some time to come. So no issues, nothing -- no second guessing. It's just me. It's coming up to that sort of time.

The business is in good shape. There's a new social housing program coming forward. It's the right time for all concerned. So as I say, where are we? The business has stabilized. The new organization structure with the executive chairs that we've got is working exceptionally well. We are differentiated from our housebuilding peer group, and we're completely aligned with the government, and we'll keep coming back to that, Stephen and I during the presentation.

We've got some great long-term relationships with the largest housing associations and Homes England. And these relationships aren't over the last 2 or 3 years, these are relationships that kind of Stephen and I have had since before 2000, years and years and years of doing affordable housing. And don't forget, your average housing association is generally wary about your average housebuilder because they know they only really want to deal with them when the markets are poor. When the markets are good, they drop them like a stone.

We're positioned ideally to capture the social grant program that's coming up now 2026 to 2036, and we've started the bidding process. And this last point, not to be underestimated, and I'll come back to this time and time again, we are very vertically integrated with our Vistry Works operation, so -- which has got 3 factories, incredibly good. The product that they're producing is excellent. And what I would say, timber frame is generally net more expensive than -- well, not generally, it is more expensive than building traditionally. Where you gain is speed, reduction in prelims.

I'm not sure timber frame works for pure housebuilders. It does when they're going hell for leather and they're building quickly. But when they're not building quickly, as is the case at the moment, you're not getting that speed because what's the point of building when you can't sell as quick as you want. So timber frame works very, very well for a partnership business where you've got the visibility, not so well for a housebuilder. And just a little quip on that, Cala Homes, private equity are pulling out of timber frame because it's more expensive because they're not selling quick enough and they're fed up with the prelim overruns without that coming through. So just something to bear in mind, it is vital with a partnerships business and the government and housing associations also like the MMC. So it really, really works well for us.

So looking ahead, we're absolutely set to benefit from the Partner Funded growth. Now rent convergence and rent settlement have both now been announced, which is great. And I'll just remind some of you that at least one housing association in London has said that rent convergence is as important to their balance sheet and building going forward as the 2026, '36, GBP 39 billion. So rent convergence for housing associations, it repairs their balance sheet is huge and also don't underestimate the 10-year rent settlement.

We're 15% of the market. So you just need to look and do the numbers. We'll obviously be looking to increase our market share, but even maintaining our market share at 15% shows that we've got a fantastic opportunity ahead of us. And that opportunity is now coming at the end of this year. Are we disappointed with the delay since it's been announced? Yes. But the process is happening. It will all be announced in September. We'll have visibility before that. It's coming.

Open Market growth in the end is inevitable. It's highly cyclical. I just don't see it anytime soon. And what's going on at the present moment in time in Iran is making that even more uncertain because not only will we potentially see prices going up, which we've made a little line in our forward projections, which we're talking to analysts about, but early days, and it could all end tomorrow. The longer it goes on, the more those prices will start to come through, but don't underestimate consumer confidence also being hit by what's going over there as well.

So we're reducing our inventory, and that will give us more options with capital allocation. And we absolutely, with our 25 business units and our Vistry Works operation, which is capable of doing 10,000 units a year just from the 3 factories, we are very, very able and willing to respond to the opportunities that are ahead of us. So on that, I'll hand over to Tim. And I'm just dying to see what Tim's joke is going to be with this. Always changed it. I'm looking at my screen, sorry. Something's gone wrong there, isn't it? It's probably me, but -- there we are. So I'm very much looking forward to the joke that inevitably has got to come from that photo. Every dog has its day.

So we've got a picture of our sites in Tottenham and the Meridian site. And in the foreground there, we've got members of the Vistry management team watering the green shoots of recovery. There we go. It's pretty pause. let's move on from that. So the year-end numbers are old news. We went through most of these numbers with you back at the trading update in the middle of January. So no surprises really within here. As Greg said, profit before tax came in, in line with our guidance. We had a strong second half of the year, where we saw a tick up in op margin and a strong proportion of the full year growth in '25.

Revenue-wise, we were down 4% despite being down 9% on completions. So we had a slight increase on ASP, which I'll come to in a second. And it's worth noting that EPS growth is greater than the APBT growth because we're starting to see some of the benefits of the share buyback program coming through there. So that's the principal reason why EPS grew at 6% rather than PBT at 2%.

In terms of net debt, we reduced it during the course of the year. We did see a tick up in average net debt. So we went from GBP 698 million of average daily net debt, and it's important that it's -- remember it's daily net debt rather than what most people talk about, which is month end net debt, average daily debt of GBP 698 million to GBP 734 million during the course of the year.

And ROCE is obviously still some way away from where we want it to be. We want to be a high ROCE business and hence, some of the actions that we're taking this year to try and release capital from the balance sheet.

Okay. On to revenue. So as we've talked about, the total units were down 9% year-on-year, hit by a couple of market forces. In the first half of the year, there's a fair degree of uncertainty in the partner market, particularly in anticipation of the uncertainty around what was going to get announced in June with the GBP 39 billion program that was eventually announced. So we saw some pickup in the second half of the year, particularly around affordable, albeit the PRS, the PRS market remained pretty moribund during the course of the year. A lot of the POS providers were going out for funding or reaching the end of their funding allocations. There are some signs that, that might pick up this year, but we still expect more growth to come from the affordable side of Partner Funded rather than the POS side.

And then Open Market completions, this is largely driven by having fewer sales outlets as we've migrated away from the former housebuilding sites, so fewer sales outlets. There are clearly some self-help measures that will help us improve the sales rate, but it would be nice to have some market tailwind as well to push up Open Market completions.

And there's no really underlying theme, I think, around average selling prices. I think most of our movements are related to mix factors. So in the partner world, we sold more in London and the Southeast where the average cost of a unit is higher than in the north. And in Open Market, we had more large products being sold during the course of the year, which again was a higher ASP. But the underlying theme was that generally house prices were pretty flat during the course of the year.

We did have higher land sales in the year, as we mentioned back in January. So our land sales were about GBP 180 million of revenue. We'll continue to have land sales as part -- a core part of our strategy. So when we buy a site, we will identify parcels of land, particularly for large sites where part of our capital strategy is to sell those parcels. And that's in a main what happened last year. The margin that we take on those is not exceptional margin. We just take the blended site margins of the rest of the site. So you can assume that it's around sort of 20% gross margin on those land sales. So it's not the exceptional driver that some thought it might be of the profit growth in the year.

Not a lot to say on tenure mix year-on-year. It's pretty similar to '24. And we saw a mix within affordable, as I mentioned before, from POS to additionality. I think during FY '26, we'll probably see a similar overall mix between Partner Funded and Open Market. And there are 2 forces there. One is the push that we'll talk about during the course of the presentation on Open Market, which will push up Open Market volumes. And then the arrival of the affordable housing program will push up on the Partner Funded side. And at the moment, we're expecting they'll be roughly equal. Obviously, the timing of both how long the Open Market push goes for and when the affordable housing finds its way through will impact the mix. But at this stage, we'd say it's probably about the same for '26 as it was for '25.

Okay. Into operating profit. So the margin went up in the second half of the year. We had overall for the year, 100 basis point improvement in gross margin. What we're seeing is the new sites coming on at higher margin. We're buying sites on a higher margin and a higher ROCE. And as we had the tail off, particularly the southern -- the South Division issues from '24, we're seeing some margin improvement coming from that.

Overhead is up a little bit year-on-year. In light of the South Division issues of '24, we invested more money in assurance activities. So that contributed to additional overhead. And there was also more a return to some variable pay again with all bonuses ceased in '24 in light of the issues we experienced.

So what about '26 margin? Well, the underlying margin of the business will continue to tick up as we get efficiencies and we get operation -- we'll get economies of scale and operating leverage. There will be some reduction as a result of the sales push activity. So covering that briefly.

At the start of the year, straight after the trading statement, we gathered together to say, look, the sales at the end of last year weren't good enough. Also, the capital and the balance sheet is proving to be too sticky. And we recognize that we need to give some push into sales in advance of the spring selling season. And there was a feeling that there was some constraint on our selling within the business because people don't want to -- they love the value -- they love the houses. They think there's intrinsic value there, and it's quite hard for a salesperson to offer the discount if they think they're going to sell it later at a higher price. And the other thing is that there were some constraints in people's minds about not touching the margin.

And so what we've done is say, look, we need to get the sales going. We recognize that, that may have some margin implications, but it will give us good momentum. And crucially, it will generate cash and reduce our WIP. So that was the driver behind the change. And so far, so good. We've seen this 40% year-on-year improvement in sales rate in the year-to-date. So that's really encouraging. We'll start to see the cash come through from that in the second quarter. What it does mean is that there's going to be some margin tightening, particularly in the first half of the year as we see the impacts of that on those sites.

I think the other thing we'd say in terms of margin for the year is we keep being hit as we all are by international surprises, international events. We don't know exactly how they will play out. I think this time last week, we might have been slightly more bullish and we're perhaps slightly more cautious this week, given what's happened in the last week in the Middle East. We don't yet know what impact that's going to have, if any. Is it going to impact our build costs? Is it going to impact cost inflation? Is it going to impact customer confidence? It's too early to call it, but we're probably slightly tempering our expectations for '26 in light of the uncertainty that, that brings. So that's operating profit.

In terms of build costs, so we continue to get the benefit of the scale of operations and the fact that we keep building. So our build costs came in at during '25, about 2.5% up year-on-year, which is pretty much as we guided throughout last year. We have framework arrangements with all of our material suppliers or 90% of our material suppliers, and we contract in advance, which gives us some protection against short-term volatility in pricing. And subject to whatever happens coming out of the Middle East, then we're expecting minimal material cost increases during the course of the year.

And just in terms of what's the impact of the higher fuel costs are and the higher gas prices are, in terms of the direct impact, it's not that significant, but it's obviously what happens with our suppliers and the supply chain and what they do, particularly those suppliers that are heavily reliant on gas that I'm sure there will be some discussions at some point if this price increase is sustained about our material costs.

The labor supply is good. The fact that others aren't building helps us. It makes -- puts us in a stronger negotiating position and our subcontractors continue to like the certainty that our business model offers to them. So that enables us to hold prices pretty flat in some places, in some parts of the country, we are seeing some reductions in subcontractor costs during '26. So overall, minimal impact on build costs subject to whatever happens as we go through the year.

On Vistry Works, Greg mentioned this before, really good progress in terms of production. So up 60% year-on-year in terms of the timber frame units. And the roof trusses, it was the first year of production, and we did over 3,000 units in 2025. We're expecting further growth in '26. So as we see on the slide here, 6,000 timber frame units in 2026, and we still got capacity for more. We can probably find a way to deliver up to 10,000 units without having to buy or take a new factory on. And so we've got a couple of years to see how things develop before we expand our factory footprint.

Working through the rest of the P&L. So overall net finance costs were down by 9.7% year-on-year. In terms of bank interest, although the average debt went up, the impact on interest costs of the increase in average debt was offset by better daily management of cash balances. So we've got these new mid-month facilities, which is slightly cheaper and enable us to be -- give us more levers to pull in terms of making drawings. So that's offset the daily debt increase. And then the average cost of debt reduction from 7% to 3% -- to 6.3% is the driver of the reduction in net bank interest.

The land creditor discount unwind was flat year-on-year. But you may have spotted that land creditors has gone up during the course of the year, and that was largely due to land being bought towards the end of 2025. As a result of that, there will be higher land creditor discount unwind in '26. So we expect finance costs overall will go up slightly with the land creditor impact probably slightly higher than the benefits we've got from the reduction in average net debt. And the net JV interest is down there. There's lower average cost of debt and lower average cost of borrowing as well, finding its way through to us as well.

Tax. Our effective tax rate was 27.9% compared to 28.3% last year. We just find some more benefits coming through in terms of claims and reliefs. So 27.9% is probably the number to put in the models going forward. And then in terms of the exceptionals, we talked before about the GBP 12.8 million settlement with the CMA. Unfortunately, there were also some eye-watering fees, legal fees and IT fees that went alongside that as we had to stop deleting everything, saw everything off-site and spend a lot of time with lawyers. So that contributed a bit to the restructuring costs as well. But exceptionals were down significantly year-on-year because last year, we had GBP 100 million hit on the building safety provision that went through exceptionals. So that's why the reported profit for the year has jumped significantly because we haven't got that big exceptional.

So turning to building safety then. So we're making good progress. We've worked our way through 21 buildings, spent GBP 46 million on those buildings in the year. I think it's fair to say progress still isn't quite at the pace that we would like it to be. We know that building safety regulator are taking steps to improve the sign-off process and get us out on site faster. So we are expecting a pickup in '26, albeit it's still not at the full sort of rate of efficiency that we would like. We identified a few more buildings or probably better to say we had a few more buildings identified to us, principally sites that we worked as the contractor on years ago that came up through claims that we weren't aware of.

We're expecting -- so that's 11 buildings. We added GBP 14 million to the provision for those 11. We expect that those will tail off. I think it's with each year that goes by, less likely that buildings come out of the woodwork to add to the provision.

So then against that, we've had recoveries. So recoveries are ahead of where we expected it to be. We've got GBP 17 million of recoveries identified, GBP 13 million of which we got the cash for in year. And the other movement on here is discounting where we have to discount our provision and unwind that discount each year and move the discount rate each year. So that's an GBP 11 million charge, noncash really to the exceptionals during the course of the year.

So in terms of next year, to say at the bottom there, the ramp-up in spending. I have said in the past, it's one that I've got consistently wrong and I've overestimated how much money we spend on -- we're going to spend on building safety. I think we're always expecting that it's going to speed up. So I'd say now it's going to be roughly GBP 70 million of gross spend next year, probably around GBP 60 million of net spend in '26 on building safety.

In terms of land activity, so we secured over 11,000 plots in the period. A lot were towards the end of the year. We were opportunistic in the buildup to the autumn statement when there were a few nervy landowners who wanted to sell quickly, and we had some good deals that we could take there. So that's good. The overall size of the land bank coming down, we probably expect a similar sort of level next year. So we'll continue to wind down to have a land bank of somewhere around 3.5 years of coverage in the land bank.

In terms of strategic land, that continues to be a good source. It's probably not provided as much into the business over the last couple of years as we'd like. Planning is -- getting planning is still slow from the time of planning application to actually getting full planning is still 18 to 24 months, which is longer than we would like. But that still feels like the right source, a good source of 25% of our land, particularly with some of the NPPF announcements that are going to make it easier to free up that strategic land.

Right. So in terms of the cash flow. So overall, during the course of the year, our cash flow was about GBP 130 million better than the previous year. So an inflow this year of GBP 36 million compared to an outflow last year of GBP 92 million. Walking through this bridge from left to right from the opening to the closing. Obviously, we made GBP 270 million of profit. There was a net decrease in inventories. This has got some constituent parts, which I'll come to on the balance sheet in a second.

Net outflow on payables and receivables. So the big bit was probably in receivables where the receivable balance has picked up during the course of the year. We've got land sale debtors has gone up by GBP 55 million year-on-year. Again, land sales were towards the end of the year. And we've also had a pickup in Partner Funded receivables, again, really from year-end activity not coming in. And most of that cash will be received in the first quarter. The other side is on payables at the end of last -- at the end of '24, we had a higher deferred income balance. In other words, we had cash in advance, which we've not yet recognized in the P&L at the end of '24, which has unwound slightly and reduced that balance down during 2025.

Not much to say on net investment in JVs. Building safety, we've covered. Restructuring and others where those -- the costs of the reorganization. Some of that cost was taken in '24, the reorganization following the South Division issues. We've also got in there some CapEx, particularly around Vistry Works, where we've added some more machinery into the factories during the course of the year.

So in terms of capital employed, this is not where we wanted to be yet. We've said a couple of years ago, our rough target is to get to capital employed of around GBP 2 billion, and we're significantly above that. And the principal area is WIP. So we know that -- we knew this time last year that WIP was higher than we wanted. We set an expectation that we try and reduce WIP by GBP 200 million. But for some of the reasons I mentioned earlier, it's proved to be stickier. I think particularly in London. So London has had a very poor sales year. I think that's widely known. And WIP can be lumpier in London because we're building apartment blocks. So you can't sort of stop halfway through and sell -- start selling flats. You've got to build a whole lot if you're going to sell anything. So you end up with lumpier WIP there.

We've also had WIP impacted by the end of year deals. So there were some build-out, which we expected to sell at the end of the year and the deal slipped into '26. So we'll get the money for that in '26. There are probably a few sites where the infrastructure is higher than we would like it to be. And some of the build programs would have been from quite a while ago, and we've had to -- and even before the partnership strategy change. So you end up building out some infrastructure. You've got a build program that relies on putting infrastructure in place for the private and the Partner Funded at the same time. So while a Partner Funded is selling, we've got infrastructure embedded that will only recover when the private houses are sold.

And finally, on a more positive note, it wasn't that the action we took last year didn't reap some benefits. So our heavy focus on unsold stock did reduce the unsold stock balance by more than half outside London. So GBP 50 million of unsold stock reduction during the course of 2025.

On the JV side, so the JV overall hasn't moved particularly much year-on-year. But within that, there is just like on our own fully owned balance sheet, there's more WIP than we would like, and we're working closely with our joint venture partners to try and find ways to accelerate some of the slow-moving stock in our joint venture sites to release capital for both us and our partners.

And finally, I think I've covered the other asset movement, which is around the rise in partner receivables and the land debtors.

And finally for me, in terms of capital allocation, so we've got GBP 30 million to go on our share buyback program that we announced back in September '24. We'll continue to plug away at that, and we'll complete that in the year. I think previously, we said we'd completed it by the AGM. It may now be slightly slower than that. And then come the half year, we will, as a Board, look at where we are with the progress we've made on sales, the progress we made on debt reduction and determine if there will be an interim distribution announcement. And if there isn't, then we'll continue to consider that during the second half of the year. So I think that does it for me. Over to you, Stephen.

Thanks, Tim. Good morning, everyone. Good to see everyone. That's a great picture there of our scheme at Ledbury, that's some Section 106 plots with a small rural housing association or local regional housing association called Connexus. So just exemplifying our diversity of partners that we work with. So we've just been looking back over 2025. What I'm going to do is look at how we drive value going forward through the market conditions that we've got, and we leverage our strategic assets of our long-term relationships with our partners and our vertical integration, as Greg mentioned, and importantly, our ability to work closely with government on applying grant.

So let's just look at the opportunity at the moment. It is very much undoubtedly a strengthening opportunity. So we see our position within the market and our long-term engagement with partners, really encouraging partners to engage with us as they build their programs and as we go forward with delivery. The government has done what the government is going to do on the demand side for affordable housing. So we now have visibility of all those changes, and we'll touch on those in a moment, feeding through. So those government commitments are now writ large, we can see all of them. And that's resulted in a step change in partners' ambitions. And in a moment, I'll refer to that as an inflection in the market. It is undoubtedly a time that we have not seen before, as Greg mentioned. This is a moment when we can really start to work with our partners and deliver on the homes that they're trying to invest in.

And we've seen early part of the spring season, although it's rained a lot, we've actually seen some very positive movement in the open market in terms of what's happening at our outlets. So we'll touch on that. First, though, our alignment with the government strategy, which we've mentioned before, is both strengthening us and also very profound. So Greg said 15% of affordable housing market last year, 15% of the delivery of new build homes was via Vistry. The total expenditure annually is around the GBP 15 billion mark in terms of investment in new affordable homes, and that covers Section 106 and grant funded.

And we've been very successful in moving up our Section 106 homes, partly because we engage with partners early, so we haven't had the problems that others have had, but also partly because we are able to align that with our grant-funded delivery, what we call additionality, which has allowed us to work with our partners on delivering that. So that has not been a problem for us.

And we've been able to, therefore, deliver an increase in the grant award over the last year. So we saw a 37% increase in our grant award from Homes England last year. That's not just because of 1 year's delivery. That's because we've delivered consistently across the 5 years. And that delivery performance is one of the things that gives us confidence in our bidding under the SAHP.

We've been able to also do additional schemes where we've captured funding from partners who have needed to finish off their program commitments or where there's been slippage. So that's allowed us to deliver more. And our total grant level has risen to GBP 252 million. Now the reason that's important is we'll be talking about a new program in a moment. So over the life of that 5 years of this program, we've seen a threefold increase in our allocation to GBP 252 million. Again, that demonstrates our ability to deliver with partners and the fact that we've deployed those funds very quickly.

And it comes as no surprise that we anticipate the national housing strategy, therefore, to focus on mixed tenure and the partnerships model as one of the ways that the industry should be evolving towards delivering the government ambition. So what do we see in our customer and partner markets at the moment? So on the Open Market, we've had a mixture of external and internal factors. Externally, we've seen an increase in the availability of higher loan-to-value mortgages, and we've seen rate reductions and some more positive customer sentiment before the events of last week. That's resulted through our contact center, we've been able to see higher levels of inquiries and interestingly, higher levels of appointments than any week in 2025.

So not only are people digitally looking at what we've got offering, they're prepared to come and meet with us in our sales outlets as well. And that's resulted in a very positive start to the spring selling season. So we have -- sales are 40% up year-to-date on where we were in 2025. So that's a stat that's extremely important. Now we've been focused on targeted discounting and also using tactical use of enablers in order to get people into our marketing, but that is really giving us momentum.

On the PRS side, and Tim described it as moribund, I think there's a structural weakness in the PRS side. So we've certainly seen a transition to more single-family homes from multifamily. That's an interesting occurrence over the last 12 months. But there remain a paucity of players who have got the ability to commit volume consistently and engage with us where they've got both the funding and the operational platforms aligned. And the people that we've worked with most frequently over the last 2 or 3 years have been refinancing. So that's caused a pause in that market last year, and it is a market that needs to mature before it will really deliver on what the government's ambitions are for it. But of course, working with Vistry is a great opportunity because we give standardized product, we can optimize yields by giving forward visibility to partners.

And affordable housing, where partners now cited on that improved financial capacity, now cited on the ability to bid for funds, a really important moment for affordable housing. So I'd just remind you of our 3 submarkets that we operate in. So those traditional registered providers are the ones that had a lot of the headwinds and have had stock liabilities. Interestingly, the regulator described there then receiving robust investment for new homes over the last quarter. So GBP 4 billion raised by traditional and registered providers to go into investing in new homes.

Local authorities, this is an interesting fact. '24, '25, there was the highest level of local authority delivery of affordable housing for 40 years, 16% of all affordable homes was local authorities. And it's interesting today to think back 40 years ago in a field somewhere in a place called Newton Abbot, somebody did a deal with the town council about delivering on some public land there, some affordable housing. So there you go 40 years ago.

And for-profit registered providers who we refer to increasingly as institutionally backed registered providers. And we have one of those within our group called Linden First, and we're at the final stages of confirming who we're going to work with as a partner to capitalize Linden First. And we see entering a framework with Linden First as a way of our routes to market amplifying, not displacing, but amplifying the work that we already do with registered providers and bringing capacity into the sector. Those 3 markets, the wheels are turning. It's beginning to come through, which is great.

Now we've added this slide because we thought it would be helpful at this point in time to give you some idea of how grant enters the ecosystem. So 3 things here. Firstly, you can see on the left-hand side there, grant accessing grant funding from the government, we are able to bid for that directly as Vistry or our partners obtain the funding. Either way, we'll be delivering homes, whether we get the grant direct or whether our partners get it, that allows us to both bid for grant from Homes England, and that bidding has now opened.

On the right-hand side, on one level, we can be agnostic who gets the grant, whether it's our partners or whether it's Vistry because the P&L effect is the same. The P&L takes valuations, and we take that through on regular, hopefully, monthly or sectional completion valuations throughout the life of the scheme. So there's no difference in the P&L. Where there is a difference is in terms of the cash. So when we get the grant directly under the new SAHP, the proposals are that you would receive 40% of the grant when you buy the site and 35% when you start on site. So on the basis that we obtain the grant for schemes that we've already got, you can see how that would benefit our cash flow in terms of accessing that grant at that stage.

The third thing, which isn't on this slide, but is really important for our business as a mixed tenure platform, but also extremely important for the government is the leverage that grant provides across the whole market. If you've got a presold model and you're preselling and you're using grant funding to deliver affordable housing, you're more likely to open that site and deliver on the PRS. You're more likely to open that site and deliver on the open market. So one of the things, and I don't think that government measures this and captures it, the leverage from that grant funding across all tenures is really significant. And I think you'll see that flowing through as the grant funding dynamics in the future.

So I said it's an inflection from funding policy to delivery. And that's what we've seen. The government, I think, very quickly has stepped up and delivered on its -- came out with its policy. Translating that to funding has taken a bit longer than we would have liked. But the reality is now the SAHP is open. Bids need to be in by April. Homes England has already received bids through an alternative route for funding. So the wheels are turning. People are beginning to receive funds and get siting on allocation. I suspect allocations announcements will be in the late summer, but we'll have an indication of how successful we are with our bidding then.

Really importantly, though, partners are not waiting to receive allocations. They're talking to us now. So they're pricing schemes for us at the moment. They're wanting to talk to us about having frameworks in place that give them visibility of forward delivery. They're looking for what land opportunities they can come in with us on. So people are building their programs, and I expect that to really be a consistent theme over the next 6 months.

So what does the net effect of those reinforced demand side elements have? It's improved capacity. I think there will be an absolute focus on early delivery. So we know that grant awards measure, they will be weighted towards early delivery. So I expect an uptick in the first 3 years in that. And obviously, that will be one of the things that informs our bid. And if you take together collectively, those policy changes by government, the rent settlement, rent convergence, GBP 39 billion and a Section 106 environment, which is encouraging higher levels of affordable housing. Even with an increase in social rent, I would expect to see the average long-term affordable housing move from around 55,000 new build, this is new build per year to around 70,000. So that's a 30% increase in volumes.

So we've already got 15% of a market. That market is growing, and we have a platform and an operation that allows us to respond to the opportunity. So what are we doing with that opportunity? Well, we're bringing together 2 elements. That mixed tenure platform is what we think will drive value for the business and also in terms of the growth. So we're taking those elements on partnering, the ability to have frameworks that give visibility to us and our partners, bidding for direct grant awards. We know how beneficial that is.

We've been receiving direct grant in different forms since 2008. We were a very early player in that particular space. Doing more work with local authorities. We've got precedents to work with local authorities, both in joint venture and directly commissioning. And we are focusing on being best-in-class as a partner, really important elements when you're looking at long-term relationships with partners.

And then fusing that with that developer ethos of being able to offer successful Open Market sales. Self-help there around our branding and our use of the contact center, which has definitely driven a more successful engagement with prospective purchasers earlier, focused on sales excellence. And I'm really pleased to see we've -- that's been reflected in some improvement in our Trustpilot scores.

So bringing that mixed tenure offering of Open Market sales along with presales is really important. Put that together in that delivery Venn diagram, that allows us to increase our platform of work in joint ventures with local authorities and RPs. Really pleased to see us off and running with PlacePoint, our joint venture with Homes England, the bid and Linden First and our position in terms of public sector land, which is extremely strong, and we intend to focus on more of that in our engagement with local authorities and combined authorities.

Right. I'm going to pass over to somebody who is in the field in Newton Abbot.

Thanks very much, Stephen. Great presentation and a good presentation from Tim as well. Good to see him talking about roof trusses. If you close your eyes as I did, you can nearly believe that he actually knows what one is. But great to see.

So our strategy and our competitive advantage. So strategy on land and planning, a 3.5 year or thereabouts land bank, and we've got more than that at the present moment in time. We are exceptionally competitive in the land market with our strategy, particularly on larger sites. As far as I'm concerned, if we're bidding for a large site, we would be favorites to win it with our strategy end of.

From an actual competitive advantage perspective, we have a great relationship with our partners. Our partners have land. The government have land. We are very, very good on bidding for public land, where it's not just price that counts. So land 3.5 years in a strong place on public land and our model makes us very, very competitive.

On build, frankly, nobody is building cheaper than Vistry. I would put my reputation on the line on that by some distance. Just look at over the last 2 to 3 years, what the others have been talking about with regards to build inflation and what we've been talking about. Subcontractors absolutely love our model. They treat us as paying the mortgage. They work for the other housebuilders on the back of that might pay for a holiday, but they need the visibility. They do not want to get the phone calls as they're getting at the present moment in time on a Friday afternoon. I only need 2 guys next week, Fred, because we're slowing right down because we're just not building quick enough.

The vertical integration that Vistry Works gives us is absolutely essential to the model. If you have visibility, you know you're going to build 200, 300, 400, 500 units on a site. That's when Vistry Works comes into itself. If you've got a timber frame manufacturing facility and you don't -- you've got lots of sites, but you don't know how quickly you're going to build, that whole benefit goes out of the window. So Vistry Works works incredibly well from a build perspective as a partnerships business.

When -- if you look at sales, when we start on site, we basically market test up to 75% of what we're going to do because as you've seen from the stats that Tim put up there, 75% of our model is either Section 106 or presold. So it's only 25% or thereabouts percent that we're actually taking a risk on, which is the private sales within the market. So our relationships with our competitive advantage, if as I'm sure they are, and we know they're all looking into it, it's not straightforward to get in with Homes England. As Stephen touched on a number of times there, to get into and get a really strong position in the '26-'36 program, you've got to have a track record, and we're the only housebuilder, Persimmon to a little bit and maybe McCarthy Stone, but that's a different model that has got a track record for the last 20 years on dealing with a program.

And if you look at the '21-'26 program, the best-performing partner, strategic partner within Homes England, and there's 32 of them is Vistry. Hence, we're very confident with the outturn of what we'll get from the '26-'36 program. Housing associations have been around for a long time. They know how cyclical housebuilding is. They know housebuilders come are calling sometimes and then they drop them for dead. I was recently at a big meeting with the government, Chancellor Exchequer, Housing Secretary, Housing Minister, Chief Secretary to the Treasury in a room with some contractors and some large housebuilders and the Chief Exec of the National Federation of Housing, which is the body that deals with housing associations rather embarrassing me just came out in the room and said, the problem, sir, talking to the Secretary of State of Housing is there's only one company that treats housing associations as they want to be trapped with, and that's with respect ongoing relationships. And she said, and that's Vistry.

I got over it quite quickly. I was sat next to David Thomas, and he didn't enjoy that as much as I did. But these things are built on years and years and years of experience. It's a real barrier to entry. So we've talked about -- I've got 3 case studies. So last year in November, we bought a very large site, 2,200 units in Worcester. We took massive advantage of the fact that we completed the day before the government's budget, as Tim talked about last year and did very, very well out of it, I have to say. So we were about to enter into a JV with a top 5 housing association because the housing associations, they're not just waiting for the grant to come through. They know the grants coming in. They've got the rent settlement. They got the convergence. They are now active, as I'll come on to in 2 or 3 slides' time. So housing associations are now talking to us again with vigor about entering into JVs and what opportunities have we got. But this particular housing association in the next 6 weeks will enter into a JV on part of this site. But also to enable us to get the return on capital plus 40%. And in fact, it's way over 40% on this site.

We've also built in some land sales. So these are planned land sales that we will do during the course of this year going into next year. So land sales are a part of the everyday operation, not a fire sale to get to a half or full year position. 45% will be partner funded and the brand, I'm not sure whether we'll use 2 brands, Bovis and Linden, we might even use a third brand on that. But a great example of what we've done last year and a great example of one being competitive in the land market, that is a prime site, by the way. That is a prime, prime, prime housebuilding site, and we're the ones who have bought it. It's not a site that no housebuilder would want. That's prime.

Strategy case #2, innovation. So on top of Vistry Works, timber frame and all the rest of it, we've got the Mauer Brick Cladding system. So this is 3D computer generated, built a lot quicker. Now again, would we be doing that at the present moment in time on a new build house that we're going to sell to Mr. and Mrs. Smith? Probably not. That's a bit of a risk for the minute. We'll work with our housing association. Places for people. This is a site we've got with Places for People, one of, again, top 5 housing association up in Bradford.

What do you think about this? Yes, we'll work with you, and we're doing it on their site. It will be their risk. I don't think there is any risk with regards to selling the units. But the housing associations in Homes England love this kind of stuff. So that is going to -- we're going to roll that out to 10 sites during the course of this year. And if the government want to build 300,000 homes a year, guys, this is how things are going to have to be done because there just aren't enough tradesmen out there in the industry. And the average age of a bricklayer is 54. So we'll do well to replace the number of bricklayers, let alone get more into the game.

Our timber frame apprentice program is going incredibly well. And standardization, again, we've now got 50 standard homes, future homes house types, which have been designed specifically with timber frame in mind to reduce that cost time and time again. And that's a great photograph there. Some comedian in the business has put down a bit of career development for me. I didn't fix all of the panels there. I just fixed that one, and I have to own up immediately, I fixed it. It was taken off and put into the skip as a very, very poor job.

Strategy case #3. So partner journey. This was introduced in the summer of 2025, would you believe we're the only housebuilder that goes out to our housing associations and asks how are we doing on a proper standard format and the housing associations love it. We all do it through the HBF. So we're a 5-star housebuilder on the HBF, and we're also a 5-star housebuilder with regards to -- and this was done independently, a 5-star housebuilding with our housing association local authority customers.

We have a simple framework of 16 steps to ensure the highest level of service. 21 of our 25 businesses are 5-star, the other 4 are 4 star. And 97.5% of our partners responded indicated that they would like to work with Vistry again. So again, long, long-term relationships. We're always trying to improve, and it's bizarre that we're the only people out there that actually canvas and get their opinion on how we're doing. We do get some comments as well about how we can improve, which we obviously take on board.

So current trading and outlook. Well, headline here is we have started the year exceptionally well. So Tim talked about what we're doing with regards to sales. So we announced the snapshot of our results, I think it was on January 14. A week or so later, I'm about to start doing business unit reviews where I sit down with all the individual business unit boards and go through state of the nation on a quarterly basis and what we're looking for.

And yes, as you get older, you use a yard of pace, but I know where the ball is going. And I actually -- in all of those meetings, and this is from week 5 onwards, and we're in week 10 now, I didn't ask, I demanded that each business unit go forth and double their sales rate, because I am concerned about what might happen to the private market during the course of this year with regards to housebuilders just not building enough units, and that will start hitting them at some point. So I like to get one step ahead.

The business units, I've said to them, you tell me on your individual prices, you're going to double, you tell me what you need to do to get those sales through. And that initiative has gone exceptionally well. So the fact that we're 40% ahead hides the fact that after week 4, we were 9 units ahead of 2025. That 40% has come from 5 weeks, basically over a 10-week period, if I'm making sort of a sense. So that is really, really, really worked well. And with what's going on in Iran at the moment, which obviously I didn't know was going to happen, we're very, very pleased with what we're doing.

So the current order book stands at GBP 4.5 billion. And again, at the end of a program, that is when you're going to have the lowest order book. At the start of the new program is when you have the highest. So it's great to see that our order book is GBP 4.5 billion. That is up on GBP 4.4 billion 3 weeks earlier than when we announced our results last year. And 67% of this year's units are in hand against 65% in 2026, again, 3 weeks earlier. So we're in a great place on that. So reflecting the phasing of sales in early 2026, as I've said, we've introduced this tactical. On some sites, there's no discount. We're just -- we're doing very, very well. But I just wanted to make sure on every site, we absolutely get the desired sales rate.

So if you look now at our sales rate -- overall sales rate, 1.42 last year, 0.59. So this is private sales and deals we're doing with housing associations and the like. So housing associations have woken up. They woke up towards the end of last year. They know what's coming. They love the rent convergence. They love the 10-year rent settlement, and they want to get ahead of the game. The other thing that we're benefiting from in the first 10 weeks and will continue for the next few weeks is a lot of housing associations also want to go into the bidding round for the '26-'36 program with a good record on the '21-'26 program.

So there's a lot of running around at the present moment in time, and we're getting lots of calls from housing associations over the last 4 weeks. Actually, what we thought was going to happen by the end of March, their year-end and the end of the '21-'26 program hasn't happened. Can we do a quick deal with you, Vistry. And a lot of that is happening. Hence, we've got a 1.42 sales rate, which we've not seen since the start of -- since announcing the strategy back in 2023 in September, and that includes a 40%, as I say, increase in the private sales rate.

So we expect to deliver -- even with all of the discounting, we expect to deliver an increased profit on 2026. The margin will be lowered because of the sales incentives, as we said. But the big news is we're now targeting and confident and have bottom-up budgets from the 25 business units, we're targeting in excess of GBP 100 million of cash at the end of the year. And those initiatives that we put in place are working exceptionally well.

So our priorities then. So first one, cash generation. So we're absolutely 100% laser-focused on that. And can I say that since asking the business units to double their sales rate, on average, I'm doing 5 calls a week with a Managing Director and a Sales Director of a business unit who hasn't done what I asked them to do. And it's a very, very uncomfortable meeting for the Managing Director and Sales Director. They don't want to do it 2 or 3 times. So we're absolutely laser-focused, very hands-on on making sure that happens.

We're positioned for growth. We've got 25 business units that are capable of doing with their same geography in excess of 20,000 units. And Vistry Works with the 3 factories that we've got is capable of doing up to 10,000 units and probably in excess of 5,000 units for roof trusses, and I do know what a roof truss is.

And maintaining our operational excellence. Again, when I joined Bovis, which in 2017, which was a 2-year gig, they had some financial issues. But what happens normally when you have financial issues is everything else goes -- excuse my French to rat s***. So at the time I joined, their star rating was 0. The NHBC were about to kick them off because their build quality was absolutely hopeless. Everything followed on. The business last year has maintained all of our KPIs. We're a very good builder. Customer satisfaction 5 -- star, everything is good. We're in a great position to actually move this business forward with this wave of affordable housing grant that is coming through. So we're on track to get to our margin progression targets of 12% and return on capital of 40%.

And I -- in summary then, I would have loved to have come up with this quote, but I have to put this one down to Stephen, Vistry, a partnerships business aligned to the scale of the opportunity. And you'll all have your own idea of what the opportunity scale is, we would say it's huge, and it's about to come through in the latter half of this year as that program gets announced and housing associations get busy with spending.

So on that, we will take any questions, Kate, wherever you want to go.

Rebecca Parker from Goldman Sachs. Just wondering on your guidance for year-on-year improvement in volumes and revenue. Are you still expecting that 17,000 units that we talked to at the trading update?

Yes.

Yes. And then also in terms of the incentive levels that you're offering, can you provide us some quantum on what those are and also what types of incentives that you're offering in the market?

There's been no real change to the incentives with regards to carpets, turfing, bit of landscaping in a garden. We were doing that anyway. So the incentives that I'm talking about over and above that, which we announced or which we asked the business units to get into on week 4 would be to do pretty much with pricing. I can't give you a number because, as I say, it is -- on some sites, it's nothing. On some sites, it's more. So what I can tell you is the numbers that we are guiding include for that level of discount, whichever it is, and it's different on each individual business unit as well. And that guidance has come from the individual business units absolutely knowing that they've got to double their sales rate and they're absolutely put into their forecast the price they need to do that at. But there isn't a simple -- I'd love to say it's X percent, it's just not as simple as that, I'm afraid.

Yes. And last one as well. I think I saw in the presentation that you've become a strategic plus partner as you talked to in the trading update. Can you just remind us of how much increase that allows you to apply for direct funding?

We haven't -- I don't know where that's come from. We haven't become -- we're bidding and we'd like to become a strategic plus partner, but we're not yet. We're hopeful. From what I understand, a strategic plus partner would get around GBP 700 million. And if you go back to what Stephen said, our first bid for the '21-'26 program was about GBP 85 million, and we ended up over GBP 250 million. And if we are successful with being a strategic plus partner, the initial bid would be, Stephen, I got this right, about GBP 700 million.

[indiscernible] funds become available. And Greg is quite right. We haven't -- the bids are in for April. It would be preemptive to think that we're a strategic plus partner.

But we are the top partner on the '21-'26 program, if that's helpful. I'm just letting Kate put it wherever you want.

Three questions from my side, if I may. So first, because you mentioned several times on the Middle East. So can I ask if there's going to be an impact, what kind of impact should we be expecting? Is the labor, raw material or energy price?

Yes. I mean all -- I mean, if you take our ground workers, I mean, they are heavily into diesel. So there will be -- every time there is increases in fuel prices, ground workers will come and knocking and look for increases. Plastic comes directly from it. So if this was to continue, and that's an if, none of us actually know. So we've got a line within the forecast that we've -- or the guidance that we put out this morning. We think there will be an impact, but that impact will have to be seen as we go forward. But you could easily -- these sorts of things could be a 5% increase on your build costs. Now you've already spent some money, you're in fixed price contracts, but these sorts of things can come through. So we will just have to wait and see.

But at the moment, we are confident in what we're saying, but we will watch with interest, as I'm sure everyone will, how long this goes on for and what [indiscernible] out there. But what I can be confident of is, I think we're building cheaper. I think if there's an increase, we'll still be building cheaper, but we might be building more than building at a greater cost than we are at the moment.

Great. Maybe I can just add one thing to that. So that's the supply side.

Yes, there's also consumer confidence as well...

We haven't had -- just to be clear, nothing has come up yet. This is just a recognition that things are changing fast. So we need to put something in there and be cautious. On the demand side, we've been encouraged that there's been probably greater customer confidence. So much of our Open Market demand comes down to customer confidence. It does feel like that's moving in the right direction. Of course, it's fragile. And there could be knock-on impacts just on customer confidence, whether it's cost of living, people having to pay more for their fuel at the pump or whether it's potentially mortgage rates or rates not coming down as fast as we expect. We don't know really, but it could be a demand side as well as the supply side impact.

And at the flip side to all of that as well, which would be a positive to us, if those sorts of things happened, that means that housebuilders will be building less. We're already in contract. So we would expect to get some benefits from that as well because a lot of what we're doing is already in contract. So we should benefit from that to an extent.

Second question is on the land sales because I think Tim just mentioned it remains to be a core part of sales. So what kind of level should we be expecting this year versus last year? It's going to be higher, lower?

We're not entirely sure what it's going to hold out. I think it would be -- we would expect to be 3 digits again this year. But whether it's as much as GBP 180 million, we don't know yet. It will partly depend on where we are with planning processes and how quickly sites go through the planning.

But I don't expect the land market to be anything other than soft, and that will come into it as well.

Okay. Last one from me is, I think you also mentioned on this inventory reduction effort, you will be working together with the JV. So I wonder, does that mean your JV partner is also happy with the strategy that probably the margin will be lower, but...

Yes, because we've discussed it with them, and they're a valued partner, and we're saying we need to sell quicker than we currently are, and they absolutely get that. So yes, they're on board, and we have -- and we would obviously have to get approval to do that where we're on a JV. And I don't think we've had any -- I'm looking around the room, I don't -- no, I don't think we've had any pushback from any of our housing association partners.

Aynsley Lammin from Investec. Just 2 for me, please. Maybe just coming back to the question on kind of average hit to -- or reduction in prices, average hit to margin, however you want to look at it. If you look at the full year and your guidance, kind of what's acceptable in terms of the margin hit in terms of your discounting on pricing? And would you expect the margin to be versus that 8.5% as we kind of sell today?

So what's acceptable is whatever the answer is. And the answer is from the 25 business units is a profit greater than 2025. So we want to sell units, and we want to sell units at pace and get a step ahead of what I believe the housebuilders will follow. And there is some instances of you can see that already around about the place if you study the website. So we want to get ahead of the game, and that's what we're doing in the second part of that. But the actual discount level, again, it's how long is a piece of string. In some places and in some businesses, it's very little. In other places, it's more.

Okay. And then I guess, so the motivation -- because the other housebuilders are talking about kind of improving sales rates, yourself seem to also be saying that the private Open Market has actually been quite good. So the motivation for that increase or discounting, is it more kind of balance sheet and cash? Or is it because you believe the market is about to fall over and the other housebuilders will be chasing sales? Not quite clear on that.

It's balance sheet and cash, but I also believe that on the basis of no Help to Buy coming in during the course of this year, I've been around for a long time. If you're a public housebuilder and you're selling at 0.5, 0.6, that doesn't really work. Your prelims stop, start. So I think there will be pressure on the housebuilders. And again, if you look at the housebuilders, their balance sheets have -- they might -- it wasn't that long ago, they're all operating or a lot of them with GBP 1 billion in the bank. Those days have gone. Most of them are borrowing money now from banks at various times of the year, maybe not at the period ends.

So at some point, I think they will have to look at things and go, how do we -- we're hanging around for Help to Buy. Is it going to come in? Yes, no. Maybe it will in due course, but I don't think it's anytime soon. And I think that will drive pressure for them to actually sell units quicker. That's my -- that's what I'm paid to do. That's what I think rightly or wrongly, that might turn out to be the case. So it's twofold, what's going to happen and balance sheet.

[ Emily Biddle ] from Barclays. I've got 2, please. Firstly, you talked about margins on newer sites coming through being stronger. Can we just understand the price assumptions you have built into those margins? Do they assume that the current discounting that you're doing is the ongoing spot price for the duration of projects? Or that you're assuming that current pricing is a sort of short period of discounting that unwinds to support the margin?

We will. It's the latter. We're assuming -- we've been very prudent with the prices that we put in. So we generally start a site at a higher price than what we allowed at the time of the land acquisition. So that's the first thing I would say. But yes, we are assuming that over a period of time, we will push prices back up, but that will be sometime during the course of this year and certainly not in the next 2 or 3 months.

I think it's also worth pointing out that the incentive impact is more likely to be on more mature sites, so sites that are nearing the end rather than sites that we've just started. That tends to be where we've got the slower moving stock that we particularly want to focus on. So that's where the more margin that would come.

Okay. So just to be clear, the discounting is mostly focused on particular sites with slower moving stock and therefore you...

Definitely, yes. Where they're selling quickly, there's no need to. No concern.

And then secondly, if the outlook for this year is worse and the market is weaker, sort of what other levers are that you can pull on cash? Like is there more that you can do on WIP? Because if you're doing that already, like is there -- can you go lower on WIP? Or is there anything else that can come out? And if affordable funding does start to flow, is -- will the business consume working capital? So does the current debt position constrain growth into a slightly better affordable market?

No, because the affordable housing market is forward funded. So it would affect growth if we were a pure housebuilder because obviously, that's where you put your money. But with housing associations, we would like to think we are paid when we buy the land, and we're paid more than we've actually done during the course of the month, which helps then offset some of the private stuff on the same site where that's an investment. And as Stephen just said earlier, we would expect to do well on the '26-'36 affordable housing program. And I think Stephen has just said, when we buy the site, we would get 40% of the grant upfront and then 35% when we actually start on site. So that is cash helpful.

Okay. So those sites you talked about where you currently have infrastructure that's sort of tied up where you've had to sort of fund the private infrastructure....

Yes. I mean during the course of last year, I wanted to bring -- Tim has made the point, and I'm very happy to say we wanted to bring WIP down last year, but we -- it didn't dramatically go up, but we certainly didn't bring it down because the private selling market just was not that good for anybody, including Vistry. And of course, we didn't have -- we were hoping to get a much more injection from housing associations, we thought there was going to be some really good numbers on the '26-'36 program, but -- which there has been. But the delay in announcing it and the delay in it coming through has been slightly disappointed.

So yes, they did bring forward GBP 2 billion of the GBP 39 million as a bridge to add to the '26-'36 -- sorry, '21-'26 program. But -- and we've got some money due, but they're not giving any of that GBP 2 billion out until April. So we will get and be able to draw down what we -- a decent sum of money in April from stuff we've already spent because that bridge funding, it's there and it's going to be paid for us, we've got that acknowledged, but we would have liked to have had that during the course of last year. We'll actually get it April and May onwards.

Sorry, just one more thing. So addressing your point, Emily, about cash levers in the downturn. Obviously, we can choose how long we go with the discounting side of things. But one of the levers that we've got that housebuilders don't have is that we can flip from private selling into more affordable selling. And that's actually cash advantageous because they give us the cash upfront. There may be a profit impact -- but I think -- so it's more likely we're probably putting more emphasis on the impact being on profit rather than on cash because we've got those levers on cash that we can pull in either scenario.

The other thing I can say to everyone about being practical about this, when I said I want to increase the sales rate, the actual words I use to the individual business units is if you go back to 2024 and 2025, week 1, we didn't sell as many units on the private side as we wanted to, not because they're not very good because of the market. Week 2, we didn't sell as many. Week 3, we didn't sell as many. Week, it's a bit too late. We still haven't sold as many. I know what we'll do. Let's do a bulk sale, and we'll sell a bulk sale to a PRS provider or to a housing association.

What I can assure you is what we're doing at the present moment in time, whatever the discount we're giving away will be a lot less than we would inevitably got to by doing a bulk sale at some point down the year with all the pressure that comes from that to half and full year. So this is using experience, let's crack on and deal with it now rather than kidding ourselves, kicking the can down the road as other housebuilders are. Being no doubt, we're getting calls all the time from our partners saying, oh, I've just said so and so on. They're doing a Vistry. What do you mean? Well, I've never heard from them, and they just want to do a bulk sale. They want to sell their show homes. They want to do this. So everyone's at it. I'm just trying to beat that. Whatever we sell to Mr. and Mrs. Smith will be advantageous to doing a deal with a long-term partner or a PRS provider.

Glynis Johnson, Jefferies. Three, if I may. The first one, just in terms of land, your controlled -- sorry, your owned land as a percentage of your land bank has actually gone up slightly. And you've obviously referenced some of these bigger sites. Can you maybe just talk us through -- you gave us an example on the big sites. When does the return on capital employed start getting to the 40%? You talked about being very confident getting above so the 10-, 15-year sites. So when...

We haven't put a time to it, Glynis, but it will be -- if you're asking me, I would say '29, '30.

Okay. Second one, just in terms of oversight on the incentives. You've talked a lot about wanting to double the sales rate. But what is the oversight on the discount? When does it come across your desk, across Tim's desk? Does it get tied into margin?

It doesn't come across my desk. It will come across the -- we've got 3 executive chairs, and they will sign off everything.

I guess what I'm looking for is some reassurance that it's not going to impact the site margins and therefore, previously accounted profits.

Yes. And we've just gone through an audit accordingly.

Last one...

So just to be clear, so the site margins will be impacted if the expectation of the overall revenues from that site are going to drop. So there will be -- now that's all reflected prospectively, and that's how our accounting works. So you don't go back and review what's happened before, but you're constantly changing the site margin up or down depending on your expectations of revenues and costs. So -- and this is why there will be a slight reduction in the margin this year because our absolute revenues on those sites will drop as a result of the discounting.

But have you, for example, taken land sales on those sites previously at a margin, which is not going to match the revised view of site margin?

I would suggest on 95%, no. So the land sales were predominantly on planned new sites as we bought them.

Okay. And then the last one, 50 standard housing types seems like quite a lot, but you have a whole range of brands. Can you maybe just give us a little bit of context about why 50 is the right number, why that works from an efficiency standpoint when you kind of got a Ford Model T, you need in a factory of just repeatability?

You're right, Glynis. It is more than I would have liked, but you've got different housing associations. So we've discussed it with housing associations. They have different requirements amongst themselves. We've got 2 brands, Bovis, Linden and Countryside, which adds to it. And then on top of that, you've also got future home standards coming through, and you've got different local authorities from a planning perspective, interpreting that in different ways. So it's 50. I would very much hope that -- and I'm looking over there, I'd like to think that less than 20%, will make up 80% of everything we do going forward. So that would be our assumption, but 50 is there.

Will Jones at Rothschild & Co Redburn. First, just returning to the flexibility around price and margin. Is this just limited to Open Market? Or are you being flexible...

Yes, limited to open market.

Yes. And sorry, partly linked to that. But when we think about the difference in gross margin between PRS and additional affordable as you shift your mix, how would you frame that to us?

I would say that PRS providers are buying a product that they will eventually and in not-too-distant future, sell, and they are very commercial people. A housing association or local authority is buying a product that they will never sell. So I'm pretty happy with being diplomatic doing more with housing associations than PRS providers, but we'll continue to work with both, obviously.

Second, just around cash flow and the moving parts for this year, whether you'd call out anything to us on that front. I know from the back, I think there's GBP 250 million more land creditor obligations this year than last. So that's obviously one negative start, but presumably WIP and others...

Yes, and not necessarily a negative start because on the land creditors, it's our strategy to defer payments. So we will continue to defer payments this year. So we'll pay for last year's land, but we won't pay for this year's land. So -- but I think probably the land creditor balance will come down slightly during the year. There will be a slight headwind in terms of cash generation from land creditors, maybe GBP 100 million, something to that sort of level.

Then obviously, in cash, we just sort of broad bridge, we've got the profit coming in. We've got the WIP reduction coming down. And then we've got against that, we've got the tax. We've got the share buybacks. We've got the fire safety, and we've got that land creditor. Overall, to get to growth target of GBP 100 million, that's a GBP 250 million reduction in WIP and lands to deliver that.

And just to check as we think about the shift -- modest shift in strategy maybe today against the balance sheet. Is there any signal here that your comfort levels around the balance sheet and what you want average net debt to be have changed at all? And are you happy that the operational focus and the lack of distributions can get you there?

So I think no change. And we've said before that we want to bring down average net debt steadily over time. I think what these actions signal that we're not satisfied that we're making enough progress. So the end game is still the same. We just want to get there quicker and cognizant that we didn't make as much progress last year as we wanted to.

Chris?

Chris Millington at Deutsche. Firstly, I just got to ask really about succession planning and kind of what's in toe at the moment? What's the expectation of timetable for both the Chair and the CEO role? I'll go one at a time.

Okay. Well, the CEO role, I'm -- will be definitely here until March next year. If it goes on a bit longer than that, I would, of course, be flexible on that. But the process has started. We've been discussing it for quite some time. This is not a shock to the Board. This has been on the cards for some time. So that process is well on, started and moving in the right direction, and we're very confident we'll be able to do it in those time scales.

And I've said I'd like to do things orderly and a Chairman should stand down at an AGM. The AGM is in May. The next AGM then will obviously be May 2027, which by then, I will be a special adviser as opposed to being on board full time. That's the expectation. And on the Chairman succession, we have a number of options, and we just wanted to give ourselves another week or 2 to get that right. But again, it's all in hand, nothing to say here.

Got you. Very clear. Next one is just about affordable housing funding. It's kind of -- it slips like a lot of things with this government. Do you think there's much of a danger it doesn't land in Q3? I mean what could happen to kind of slow the progress there?

So the bidding opened at the end of February. And there are 2 routes that people can bid for funding. You can bid to be a strategic partner and a strategic partner plus a second category that's just been introduced this year. The outcome of that, there will be a process of discussion, all bids having to be in by the second week of April. This is where you're going for this sort of GBP 700 million total would be the maximum anybody would be awarded. That will then prompt some discussions with those bidders. And I would expect in June and July, we'll get some citing and there will be an announcement in late summer. But we move forward with confidence, I think it's fair to say.

The second aspect of looking for funds is you're not a strategic partner, you go for individual, what's called continuous market engagement grant awards. So that's essentially, you can knock on the door and say, I'd like you to fund this scheme, please. That process takes 6 to 8 weeks. Homes England have already received bids under continuous market engagement at the end of April. So you can work out the chronology of that. So people will be getting funds -- sorry, at the end of February, people will be getting funds during March and April under that continuous market engagement route and looking to commit them.

So my view is it will all wash through over the next 4 or 5 months, and everybody will be able to share the visibility of what they've been awarded and that will start to be implemented. But the interesting thing for me is -- and my point with the slide of inflection, we are past the point of that dampening progress, yes. So whilst the visibility of what everybody is going to be awarded as funds is not yet there, housing associations have reworked their business plans, putting into effect the -- introducing the assumptions following the government's policy decisions. So they're already now out there looking to trade, looking to commission. So that process is underway.

That's helpful. And last one is really just about -- but I suppose it relates to previous questions, and I may get a similar answer. But what's the right capital employed? And kind of what do you think the right WIP balance is? Last year, you were talking about GBP 200 million release. It went up a bit. Where do you think you could get to there?

Well, over time, our direction is to get to 40% ROCE. So really to get to that in the time period that we're talking about in the next 5 years or so, we need to get capital employed down sub GBP 2 billion, right? So how are we going to get there? We're going to keep acquiring new sites with that 40% being a minimum hurdle rate for new acquisitions and others will work their way out and we'll start to leverage some of these economies of scale as the volume builds up. So that's the sort of level. And it's the areas we've got to try and take it out of is WIP, land and joint venture investment.

Clyde?

Clyde Lewis at Peel Hunt. I think I've got 3, if I may. Stephen, you put up the sort of or I think maybe, Greg, did the sort of mix for affordable homes. Obviously, your share went up with PRS going down. What happened within local authorities within that part as opposed to housing associations? Are you working now with more local authorities? And is that starting to ramp up as a share of the total?

I'll deal with that part. Yes. So yes, local authorities, we are engaging with more. We are doing more work. We have sustained a pretty good platform over the years, particularly our footprint in London has been nearly all with local authorities as hugely beneficial long-term relationships for delivery with local authorities in London. And outside of London, we're working with local authorities in Cornwall. We're working with local authorities in Manchester, working with local authorities in Gateshead. So the geographic distribution is good. Those local authorities, of course, benefit from the policy changes the government has made. So rent convergence, 10-year rent settlement, ability to bid for grant, those are all benefits that local authorities will have within their business plans for their own stock and their own commissioning. So I do expect local authorities to play an increasing role going forward because they've got that -- the additional capacity within their business plans to do that.

Okay. Greg, the 40% uplift that you're talking about for sort of year 1...

Sales, yes.

For the sales rate. How is that built? Is that still very much got more momentum in it? So is that 40% going to continue to increase? Or do think that?

No, I think 40% is about what we are looking for. So there or thereabouts. So yes, it was 35% 2 weeks ago. So it's building momentum because obviously, marketing and everything takes a little bit of time, but 40% will be about the level that I'm happy with and the level I would expect to go forward. I don't -- it doesn't need to get to 50% or 45%, 40% is absolutely fine. So we're selling at -- and we don't give private sales rates, and we're not. So we said it's up, but we're selling at sales rates I've not seen in the 9 years I've been at Bovis, Vistry.

Okay. And are you expecting to see a competitive response that might dull that 40%?

I'm expecting to see it, and we've allowed for that because if we're in Vistry East Anglia, and we're doing what we're doing, that might affect a few sites in East Anglia, but we are Vistry and we're everywhere. So yes, I would expect to see some increases in competition. So it's no different than GT back in 2008, '09. We're selling aggressively, others weren't. In the end, they did.

Adrian Kearsey, Panmure Liberum. A few, if I may. In terms of the GBP 39 billion of affordable homes grant, getting clarity for September, what proportion of that GBP 39 billion will it be allocated? Will there be presumably a proportion sort of left floating for later allocation?

Continuous engagement, yes.

Yes. We don't know, put simply. That's a conversation that Homes England will be having with the Treasury in terms of the rate at which that is deployed. Certainly, they will be making allocations across the 10-year program, yes. How that's then structured and how that's pulled down and how that's annualized is a conversation that each of the bidders will have with Homes England and then Homes England have a corresponding conversation with Treasury. So we're not aware of that yet.

But we do know that the weighting in the bids. So there are several things weighted. Are you using MMC? Are you able to deliver quickly? Are you supported by local authorities? There's a range of things that contribute to nonfinancial appraisal of your bid. And one of them is the ability to deliver within the lifetime of this parliament, i.e., over the first 3 years of the program. That is given a positive weighting with Vistry, with our land bank, with our relationship with RPs, with our frameworks and that forward visibility. As you'd expect, we will score highly on that. So that would -- I would expect a significant amount of what we bid for and receive will be deployed within 3 years.

And linked to that, the ability to deliver, when you look in terms of the number of your average sites, you're going to be building on this year next. Can you perhaps sort of give some guidance in terms of the number of individual sites? And I'm thinking of triangulating it back to that 1.42 unit sales rate that you currently got.

Well, we've got -- we're on -- in terms of outlets, we're about 180 outlets at the moment. So...

In terms of build units, we're about 300.

300, yes, over 300, yes.

So build units significantly above the sales outlets, obviously, because we are building after we finished selling and building before we started selling and there are also sites where we don't sell because they're fully Partner Funded.

Okay. Sorry, I can't hear that.

Sorry, Ami Galla from Citi. A few follow-ups from me. The first one was on the discounts. Can you give us some color regionally, if that is concentrated in a few locations? Or is it across most of the sites across the country?

Yes. It's concentrated, I would suggest, in a few places.

And can you talk regionally about where should we look at in terms of the sort of [ biggy ] points?

London, Southeast would be the biggest areas.

Okay. That's helpful. The second one was on the land bank margin. Can you comment a bit about where does the current land bank gross margin sit? And how has that shifted over the last year?

Tim, you got that?

Yes. So the land bank margin is slightly above the overall group margin, still lower than we would like it to be because we still got the impacts of some of the legacy sites working its way through. So it's sort of mid-teens.

And maybe just a technical one on the forward sales position. Assuming that step-up that you've seen from December is largely driven by the Open Market sales...

No, no, it's not. It's helped by Open Market sales, but it's also housing association entering into the market again for 2 reasons: One -- 3 reasons actually, rent convergence, rent settlements is reason 1. Reason 2 is housing associations can see and they're talking to Homes England, the GLA, and they know what kind of money they're going to be getting and the government putting huge pressure on them to actually start building. And three, shortfalls in their programs. So they've actually now gone -- March is their year-end. That happens every year, obviously. But this is not only a year-end, it's the end of the '21-'26 program and Homes England have been specific saying the people that will do the best in the '26-'36 program are those that deliver well in the '21-'26 program. And a number of housing associations out there are a little bit short, and that's caused a huge amount of activity for us over the last 6 or 7 weeks. So 3 areas, but it's not just private.

And is that -- and maybe in terms of the technicality, is that largely tiered for 2026? Or is that -- is there a tail into '27?

No, that's mainly targeted for '26, yes. I'm getting told to do that by Kate unless it's just me. Okay. Thank you very much. Have a good day, and thanks for coming. Cheers.

Hello, and welcome to this Vistry Trading Update Call. Today, we will hear from Chief Executive Officer, Greg Fitzgerald; and Chief Financial Officer, Tim Lawlor. [Operator Instructions] I'll now hand you over to Greg Fitzgerald. Greg, please go ahead.

Thank you, Oliver, and good morning, everyone, and happy New Year to you all. I'll start with a brief introduction, if I can, before we open the lines for your questions. And as usual, I have Tim Lawlor with me.

So in 2025, we delivered our market expectations with profits ahead of 2024. This required a particularly strong second half performance delivered despite ongoing subdued market demand in the private sales market. This is absolutely a testament to the incredible hard work of the teams, but also a recognition of our differentiated market positioning. We start 2026 in a fundamentally better shape than a year ago, a leaner, more efficient business. The pent-up demand for housing is greater than ever and the affordable market, in particular, should take off in 2026.

We had a well-documented difficult year in 2024, and this required us to stabilize, simplify and reorganize the business in the first half of 2025. These steps were successfully completed and helped us position -- helped position us for a strong second half. Demonstrating the resilience of our strategy and in the midst of challenging private sales market, revenue in 2025 was encouragingly pretty flat, and that's the most important thing, with a fall in total completions, largely offset by higher average selling prices and higher land sales revenue as we continue our strategy of selling surplus Housebuilding land.

Out of interest, there is still circa GBP 80 million of cash to be received from the land sales predominantly over the next couple of years that we did during the year. The lower volumes can be put down to the economic uncertainty we all experienced last year and in particular, the hiatus ahead of the budget in late November, together with a weakening demand picture in the private rental or PRS sector as a number of active PRS partners paused delivery as they refinance. However, and this is important, there was a 30% growth in the second half in additionality units from housing associations, which more than compensated for the shortfall in PRS volumes.

And going forward and for the first time since our announcement of our partner strategy in September 2023, I expect this trend to continue, which will be very positive for us.

Strong margins enabled us to mitigate the top line headwinds and reflect the focus within the business on driving improved site mix and cost management over the last 12 months. Margins have improved from the commencement of new higher-margin developments, a better tenure mix and also the benefit of resolving the cost issues in the South division. This has resulted in a strong second half operating margin performance and a full year margin of 8.4%, the half 2 margin was 9.6%. I'll say that again, 9.6%, and that was comfortably ahead of the 6.7% we reported in the first half. Again, this demonstrates that the company is absolutely moving in the right direction.

Low single-digit build cost inflation was guided and given the benefits of the scale inherent in our Partnerships model, aided by increased use of timber frame construction and further standardization and efficiency through Vistry Works, which saw record manufacturing volumes during 2025, and we believe they are the highest in the sector.

Group adjusted profit before tax for 2025 is to be around GBP 270 million, which is both in line with our guidance throughout the year of year-on-year profit improvement and consensus, of course. In November, Homes England released the guidance for bidding under the Social and Affordable Homes Programme, brackets if you like, SAHP, 2026-'36 confirming bids will be invited from February and seeking an increase in volumes and pace of delivery of affordable homes. I can confirm that our bid will be submitted in February/March.

The group is strongly positioned to work with Homes England, the GLA and partners on delivering this GBP 37 billion investment with an identified very important pipeline of opportunity. We are currently, as most of you know, a strategic partner, one of around 31 on the basis -- and on the basis that we have performed well over a number of affordable housing programs, we are aiming to become one of only a few organizations in a new category called Strategic Plus.

The prospectus from Homes England says a Strategic partner can bid up to GBP 350 million, while a Strategic Plus bidder can bid up to GBP 700 million. So putting that into context, our first bid for 2021-'26 program was GBP 83 million. And with additions, we have now been allocated GBP 253 million. So we are looking and we will be bidding to become a Strategic Plus partner and looking to get nearly 3x as much as we actually had at the end of the 2021-'26 program, and that's at the start.

As a long-standing and reliable partner of Homes England, we would expect some visibility, and that's been confirmed to us on the program starting to come through in quarter 2. The 10-year rent settlement, together with clarity on rent convergence, which importantly is expected this month, will further add to the funding capacity of our partners. Vistry is uniquely positioned to benefit from this unprecedented government commitment on affordable housing. And let's not forget the government is behind target in one of their flagship policies. And only in the last couple of weeks, we've had 2 national housing associations talking to us very seriously about joint venture opportunities. They weren't doing that in the first half, even the third quarter of 2025. There is renewed vigor and ambition within the affordable housing market.

Now unlike the majority of our housebuilding peers, we were very active in the land market in the second half, continuing to do the right thing for the business by investing for our future and taking advantage of an incredibly soft land market. In the second half, we secured 9,500 plots. I think it's over 12,500 plots in the year. This included GBP 25 million of opportunistic spend on the day before the budget on November 26 last year, taking advantage of some growth opportunities presented by keen sellers and buying on exceptional terms, albeit requiring some upfront cash investment.

In the statement, we call out 3 particularly large sites we purchased in the second half at Worcester, Rugeley and Bury St. Edmunds, which will underpin regional delivery for years to come. We also come into the year with well in excess of 10,000 plots with terms agreed and solicit in structure, which demonstrates both the weakness in the land market as well as our competitive in the land market, particularly on larger sites with our new strategy.

So turning to our debt position. We achieved our guidance of reduced year-on-year net debt position at December '25, closing at around GBP 145 million compared with GBP 180 million at December 2024. The higher-than-expected land purchases in part explains the net debt position being marginally higher than consensus at GBP 109 million as we took advantage of opportunities that present themselves, as I just said.

Our lower year-on-year net debt position was also despite the impact of delayed timing on certain of our partner deals, not helped by the late November budget, which overall could have generated over GBP 150 million of additional year-end cash. We now expect most of this to complete in the first half of this year. That's not -- which wasn't included in our budgets. And I can already tell you that GBP 15 million has been received in the first -- just over a week of this year.

So let me be very clear. This slightly higher debt position and consensus is more than covered by circa GBP 25 million worth of land spend, which are sanctioned the day before the government's budget in November, some of the GBP 50 million of grant that we're not expecting to be paid until April and most importantly, over -- in excess of GBP 150 million of cash from deals, and we've already received GBP 15 million of that in round numbers.

I also want to share with you that in December, we passed a significant milestone with Vistry's joint venture, unique joint venture with Homes England [ PlacePoint ], completing its first site acquisition, and we anticipate further engagement with newly formed National Housing Bank, which is a subsidiary of Homes England as it becomes operational and publishes its investment perspective, seeking to deploy loans, equity and guarantees to accelerate delivery.

The group enters the year with a GBP 4 billion forward sales position, which is a strong carryforward position, in fact, much higher than we were expecting, particularly when you consider we're at the end of the current affordable housing program. So we're at the low point of a forward order book because as you'd expect, as the new program comes through, that will rise. But importantly, the current percentage for 2026 is better than a year ago than we came into 2025. So we're in better shape coming into this year on a forward order book than we were coming into 2025.

Whilst market conditions remain uncertain in the very near term, further benefits of our cost, productivity and mix enhancement initiatives will support the delivery of good year-on-year financial and strategic progress. And as a result, I'm looking forward with confidence more than ever for this year and certainly more than I did this time last year. So with that, Tim and I are happy to answer any of your questions. Back to you, Oliver.

[Operator Instructions] Our first question is going to come from Aynsley Lammin at Investec.

Two from me, please. Just in terms of the completions for FY '26, just would appreciate a bit of guidance there. I mean, given on the open market side, obviously, what you do with site numbers have a big impact. But if you assume kind of stable markets, do you still expect to grow from that 4,100, and on the partner funded, which is a bit more difficult to predict from outside against that 11,600, I mean, should we be expecting group completions to be up more like 5% rather than 10% for FY '26? And then just the second question, on the land sales, GBP 200 million during the year, if you could give us a profit number that was associated with those sales, that would be helpful.

Okay. Do you want to take the land sales first then, Tim?

Yes. Okay. The reason why we call it land sales, been asked about this for a couple of e-mails that have come through. The reason why we call out land sales is because it's one of the areas that explains why our revenue is broadly flat despite the fact that our completions numbers have dropped down. And that's because we don't take completion numbers. We don't take any units on land sale revenue.

When we talk about land sale revenue in the main, what this relates to is selling parcels of land on big sites that we acquire where if we buy a big site, we will -- the site strategy could be we buy a site with 1,000 plots, and we may say we want to presell 600 of those, sell 200 under our flag, sell them privately and parcel out 200 to be sold to another housebuilder or somebody else to buy and they can develop it themselves or sell it under their flag. So that is the source of this land sale revenue.

The margin that we take on that is consistent with the margin that we take on the site as a whole. We still take a blended margin. So the margin on that GBP 200 million of land sale revenue is equivalent to the target margins that we have across the rest of the group. So you probably associate GBP 30 million to GBP 40 million of profit with those land sales. That's a fairly long-winded answer to question.

Yes. But it certainly wasn't Tim, a plot number. And then unit numbers, we would expect to be over 17,000 units. We'll get further into that as we get into March. But there's well in excess of GBP 150 million that 6 weeks ago, we expected to come into last year, which will be added to this year. If you look at last year on January 2025, we were not expecting the new program to come through. We were hoping that there would be some additional funding to come through and that additional funding did come through GBP 2 billion, although we haven't been paid any of that yet. We'll get that money, which will further enhance revenue and our cash position in April.

So I would expect [ 5500, 6500, 7000 ] units to rise by over 10%, taking us back into 17,000 this year as the new program comes through. And that new program will come through. We are aiming, hopeful, confident that we are going to be one of only a handful of Strategic Plus partners our initial bid and Homes England are absolutely aware of this, will absolutely have the full weight of our land bank behind it, and we would expect our initial bid to have in excess of 1,500 plots that are ready to go straight away as we go into around the half year.

Our next question comes from Clyde Lewis.

Three, if I may. Greg, you sort of talked about '26 obviously for -- I think you described as takeoff for affordable housing. In terms of sort of key dates, obviously, we've got sort of rent convergence this month. What are the other key dates that we should be looking at for the balance of this year, I suppose, to kick off that...

You're right, rent convergence that was confirmed to me a couple of days ago will be this month. I think the National Housing Bank, they're intending to get that up and ready, and we'll be taking advantage of that, particularly in a number of our JVs. That should be up and running with announcements from us and others by the end of March going into early April.

We will submit our bid. And when you submit a bid with the relationships that we've got, we're working with Homes England as we speak with that bid. So the bid will be submitted in February, maybe the first week of March. And we will expect as we get into April and May to be told what we're going to get. The government has said that they will make the official announcement, which includes all small housing associations and small bidders in September with regards to here is the result of what the bidding round has come through.

But we would absolutely expect and have had it confirmed from Homes England that we'll be on with our program, which, as I say, will be submitted in February, March, long before that September announcement. So we will have confirmed funds coming through to us before that date. We've also been told by the GLA as well as Homes England that we will have -- so I've just said Homes England there. The GLA have confirmed that before the summer recess, we will have visibility on our funding.

Second is around, I suppose, your view on the sort of capital-light model of partnerships. Has that changed at all over the last 6, 12 months in terms of how much land and capital you're going to need to sort of grow the business in the way you want?

So back to the basics, Clyde. In September 2023, when we announced this strategy, it was all about a labor government coming into power and it was all about a labor government following through on their promises of absolute investment in affordable housing, all of which has happened, I'm pleased to say. right.

You then got a situation in September '23, we were at the end of the '21-'26 program. Most of the money has been spent or allocated. So we were -- we have been up until, I'd say, the fourth quarter of last year, looking at scraps with regards to the affordable housing associations who were already struck for cash with mould and building safety, et cetera, et cetera, they were struck from a financial perspective as well as from a management perspective.

So that led us to a very strong in the last part of '23 going into '24 and even the first part of '25, a strong PRS market. And the deals you do with PRS providers, I mean, the best thing I can say is a PRS provider is buying something from us and it happens to be a house, it could be a car, it could be a washing machine that they are looking to turn as soon as possible. They're looking to sell it on. Of course, the housing association never sells what we're giving them.

And we are very confident that our model is more suited to working with housing associations and PRS providers. We will continue and have great relationships with PRS providers but our model is more suited to housing associations. And I'm delighted to say that in the last quarter of 2025, that has now started to come through. So the PRS market has subdued and it's been more than made up by a 30% increase in the previous period with housing associations coming through.

The payments and payment profile that housing association will do entering into joint ventures, which PRS providers don't do either is far better. So basically, going forward, we're going to do more with housing associations than we do with PRS providers. That's already starting to come through and is here yesterday, we -- last night, we exchanged contracts on a large scheme in the Northeast of England 900 units with a presold deal to a housing association. So it's all starting to be business as usual.

And the terms and the money that are paid upfront are better than we've seen in the last 18 months because housing associations are better to deal with, frankly, than PRS providers are from a cash perspective. But the market hasn't been there until the last quarter. And the last quarter not only is it the GBP 50 million worth of -- sorry, the GBP 2 billion worth of money brought forward from the GBP 39 billion into this program, but not being -- but no cash is going out the door until April.

But the last quarter has -- we had the usual scenario where housing associations were let down, they've done this and all of a sudden, they thought they spent the money. And in some instances, they had a shortfall. So there was a lot of scrambling around, and that's a lot of where this in excess, it's near GBP 200 million, if I'm perfectly honest with you, in excess of GBP 150 million worth of deals that were coming through has fallen into the first half.

And the majority of this money will come through in January and February. We said the first half, but the majority will come through in January Feb's come from them being behind. I didn't think they were, but they're behind on their program, and housing associations like Vistry are absolutely paranoid to absolutely benefit from a once-in-a-generation spending spree by the government on affordable housing, which is a '26-'36 program. You've got to have demonstrated that you're spending the money in the '21-'26 program.

So we have, and that's why we're confident we are going to be a Strategic Plus going forward. That will mean more deals with housing associations, which will more than -- long answer again, Clyde, sorry, more than underpin our capital-light model.

My last one was on the open market, private sales. How do you think that evolves for you this year?

We're assuming that it was a challenging year last year. Then we throw in the hiatus of a month of the budget. So I don't think we'll have any hiatuses. We hope we don't during the course of this year. Interest rates are moving in the right direction. I think we're budgeting no difference in the private sales market. If you push me at the margin, it might be slightly better with interest rates coming down, but we're hoping to come down. But we're assuming a flat private sales market this year.

And as I said, we've got around -- I don't know if that's come through in anything. Yes, so it's an unspectacular housing market, but we've got around 60% forward sold across all the tenures coming into this year, which is slightly up on last year, and that's without the benefit yet of hopefully being a Strategic Plus partner and a GBP 700 million grant funding allocation to us.

Next questions come up from Rebecca Parker.

I was just wondering how you expect margin progression into 2026 to play out, just given some of the phasing of those lower-margin sites and perhaps that push out of the GBP 150 million into early next year.

You want to take that, Tim?

Yes. So I think -- the full year margin for this year ended up at 8.4% for '25 and '26, which is actually this year, for '26, we'd expect to see some margin progression, perhaps not to the extent that we saw in the second half of the year, but we'll be edging up from 8.4% this year because some of those lower-margin legacy sites will start rolling out. And we're seeing with each period that goes by, less impact from the South Division issues that we identified back in 2024. So we expect to see margins go up, but not to the same extent as we saw in H2.

And just adding to that, Rebecca, and I think it was -- I'm sure I think it might have been talking about land sales. Of course, we're driving for cash and we are trying to target the book. There were at least 2 land sales that we did last year where we lost money, but we thought it was the right thing to do to clean the book.

And so do not -- please any of you go away with the fact that we've plugged a gap with land sales. The land sales are all planned. And the ones that we -- the ones that weren't planned the ones where we thought, well, do we move on from this scheme or land that we bought years and years ago and take the hit and bring in the cash, and that's what we did. So the land bank is far cleaner than it was 12 months ago than it was 24 months ago.

Our next questions come from Chris Millington.

Sorry, I couldn't quite hear the intro into the question. There's a bit of an echo there. Well done on H2 and a good outcome for the year there, guys. Just wanted to ask a few really. First one is just really on kind of how we should be thinking about debt as we go into 2026 and what remaining kind of surplus land and work in progress assets have you still got? Should I go one at a time, and then I can chip in with the other ones afterwards.

Do you want to take that?

Yes. So too early to give specific guidance on '26. So we're working through the implications of how we finish the year. But first of all, of course, we start with a lower opening debt position, which we will be maintaining during the course of the year. And it continues to be a priority focus for us to release capital from the balance sheet. Now some of that capital probably in '25 was a bit more stubborn than we had hoped it would be, and we were not prepared to sell stuff and destroy value in doing so -- in doing some sales.

But we've got a program of capital release that we're working through to reduce debt steadily during the course of the year. So we're still looking to reduce closing debt and reduce our average debt during the course of the year as we work through the Housebuilding land bank and some of those developments that just don't work for us. So yes, further debt reduction is expected in '26.

Thanks, Tim. Next one I just want to ask is, obviously, a big jump in the second half margin here. How much of an impact was the new schemes falling in? I mean from your perspective, are they kind of adhering to your 12% margin target, 40% ROCE target? And obviously, you've been dragged down by the legacy issues. Just curious about the new stuff coming on stream.

Yes. The new stuff is coming on stream at 12% and probably better than 40% return on capital. The land we bought -- I wouldn't even want to say the margins and particularly the return on capital that we've secured land in the second half of last year because if I told you the numbers, you wouldn't necessarily believe.

So the return on capital and the land we bought in the second half of the year, including the day before the budget were exceptional. The 10,000 -- in excess of 10,000 plots that we have with -- this is not just we've made offers. This is terms agreed, so this is instructed. So 12,500 plots bought last year. And we actually spent -- so let me get this right. I think we spent over GBP 100 million, if I got that right, in land in '25 more than we did in '24.

So included in all these numbers, and let's be clear. I could have quite easily have sat and saying, why do I want to buy all this land guys? This is all for the future and medium term. I just want to look good on January 13 when we make this announcement, and I could have done all of that, but we decided not to. So we spent more money on land. And a year ago, one of the questions from the floor was, do you think you can buy land? And do you think your model is competitive? And here we are now.

Of course, yes, we can. We've probably bought more than most people. And if you take into account what we got with terms agreed, this is we most definitely have. So yes, long answer again, Clyde (sic) [ Christopher ] it was profits coming through on the new sites, which are performing incredibly well. We set up an investment committee in early January, which has put a lot more vigor into the land buying process. I still sign up every piece of land, but that's after a land committee -- investment committee have gone through everything in incredible detail.

So that's now coming through incredibly well. But the land we bought particularly in the second half, the 9,500 plots in the second half of last year is margins and particularly return on capital, incredible deals.

That's great. Just one final one for me is just considering your comments earlier around affordable versus PRS, you think PRS needs to be an integral part of this model going forward? Or the terms on affordable and the weight of money mean it is becoming, well -- periphery.

It's integral. But whereas in the end of '23, all of '24 and the first part of '25, it was the biggest part of the Partnerships market with the affordable being slightly better than the periphery. That is now and is flipped. We are now in a situation where the affordable will be the predominant part of our Partnerships strategy with the PRS being very important, but not -- but it will be the minor player.

And again, when you're doing Section 106 deals, if you're doing the Section 106 and you're doing your additionality with a PRS provider, that -- you're splitting it. If you're doing the additionality with the same person or the same organization that will do the Section 106, you're getting a better deal on the Section 106 as well as on the additionality. For the last 18 months, we have just been dealing with what is the market forces, and that is an affordable housing provider reluctantly in some instances, looking at the Section 106.

And then a PRS provider driving an incredibly hard deal on the additionality. And we're now in a situation where we're dealing with the 2, which makes life much easier, one contract, one organization to deal with rather than 2. And we will -- we work close, let's leave no doubt about it. We are really -- we have no joint ventures with a PRS provider. We have lots of joint ventures with now Homes England unique and housing associations.

And I'll repeat what I just said a minute ago, we're going to enter into some very large deals with housing associations, one on a site for 2,200 units. Have they got their grant yet? No. Why are they doing it? Well, they're doing it, and they're going to do it in the next couple of months on the basis that we know it's coming. We've got visibility as we have with Homes England. It's coming. And we know -- and we've just got this rent settlement, and we've got a good idea where we're going on convergence. Our balance sheet is that much better.

We're 3 years on from dealing with [indiscernible] . We're 3 years on from dealing with build safety. We've got far better management capabilities now. we're up and running. So if you were to speak to our 25 business units, all of a sudden, they're all reporting the same thing. The housing association movement is alive and kicking and is woken up. And that's not a criticism against them. They've had other things to deal with and no funds. We are up and away and the affordable housing '26-'36 program coming through will be important. But a quote from a CEO of the London housing Association, "Rent convergence is more important than the brand."

And you think rent convergence is going to happen later this month is the expectation?

Yes. As of 2 days ago, that's been reiterated.

Next, we will go to Will Jones.

Just 2 or 3 to tie up if we can, please. First, just double checking on the charge related to the Southern Division in 2025, what -- roughly what that number was? And just confirming that's pretty much all done. I think a little bit of a tail for '26, but any color there would be great.

Second was just on outlet. I don't think you've had a number yet, but just where you are roughly around compared to that 190 mark previously and expectations from here. And then the last just tying up on fire safety and your take on the latest situation for the group as we kind of wrap up the books for last year?

While Tim is busy writing away, on the build safety, we are in the upper quartile of doing the right thing [ of ] other developers. So we're not in the bad books of the government. We're out there doing what we're supposed to be doing. That's the first thing.

We are surprising ourselves we did last year, and I suspect we will this year. We will obviously be spending money. There's no change to our provision, but we continue to surprise ourselves with an excellent team of recovery. So we are continuing to recover monies from suppliers, from housing associations, from insurers, even from -- in the past, the NHBC as it were. So we're continuing to get money back from those organizations.

So -- and again, we start the year in our cash forecast with a high number that we're going to spend, and we continually surprise ourselves with actually how much that cash actually turns out to be by the time we get in the recoveries. So we are in a much better place, obviously, as time goes by in the housing associations with regards to build safety, very little new buildings coming through, as you would expect, because they haven't come through yet, are they really? We've got it tried and tested practices as to we know what we're doing more than we did 2 or 3 years ago because it's 2 or 3 years ago, it was what do we do here.

Now we know exactly what we're doing, and we remain confident with our provision that we've got out there. And more and more confident that we're going to keep -- continue to surprise ourselves on the upside with regards to what recoveries we will get. So that's that. On the other 2 questions. Tim?

And just to wrap up on the fire safety. So there will always be a couple of smallish claims that come in that are immaterial that add into the provision. But as Greg said, higher-than-expected recovery. So in terms of our guidance for ongoing cash outflow for fire safety in the next few years, it's as we were, it will be around sort of net GBP 80 million in 2026.

In terms of the South Division issues, so no change in terms of the overall impact. In terms of the profile of that working through, probably slightly less hit in '25 because the impact hits as the revenue hits and some of the sales were a bit slower than we expected when we put the timing together our first estimate of the timing of the impact. So it's probably like a GBP 40 million hit to the numbers in '25 and it will be something like GBP 10 million, GBP 15 million in '26. So it's one of the drivers of an improved profitability in '26.

And then final question in terms of sales outlets. Yes, at the moment, we're expecting sales outlets to be similar sort of numbers in '26 to '25, no significant change. It will depend on the timing of some of the site starts of the stuff that Greg mentioned that we are looking at signing up to in the next few months. But I think broadly, we should assume for now the same sales outlets in '26 as in '25.

The first 10 days of private sales and over Christmas have actually been pretty good. So no very early days, and we wouldn't make anything of it. But yes, pretty good. And just as a general comment at the end of what Tim said there, the fact that having read some of the notes that have come through with regards to guidance, we're just being cautious. We're still off the back of what happened in 2024.

Our position at the present, I'm feeling incredibly bullish about 2026 and going forward. We're just not going to come off the fence a little bit with regards to guidance. So don't take the fact that we're not giving guidance as a weakness. The guidance will come out in March.

We're in very, very good shape with carry forward. The deals -- the land deals that were coming through at the present moment in time are -- [indiscernible] only yesterday, a massive smile face, over 10,000 plots, and that means in our model, that's 10,000 deals because we don't buy land going forward without having back-to-back deals with housing associations coming through. So we're in pretty good shape here.

The South Division I don't even -- we don't talk about the South Division. We don't even talk about that. That's gone. The South Division has been incorporated around. The new reorganization has captured all of that. And we haven't had any downsides with regards to the South Division throughout this year.

Our next questions come from Ami Galla.

Three questions from me. I'll go one at a time. The first one was just on pricing on PRS. I think in the outlook comments, you mentioned that you expect that to improve. Can you give us some color as to how much discount do you offer currently? And what are your expectations ahead of how that evolves?

Some of the deals we did with PRS providers during '24 and '25 were in excess of 15%, that's the market. The deals we're doing in the second half of last year are much more -- were better than forecast, hence, the improvement in margin, and we're anywhere between now 5% and 11%, I would suggest. So the deals are dramatically better because we're doing less with PRS providers. And then those deals that we do, we're getting more cash upfront.

My second question just was on build cost inflation. Any color as to how should we think about that into 2026? And what are the sort of pressure points that you're seeing in the market currently?

Okay. So we -- with our -- I'll use this saying quite internally at Vistry. The subcontract fraternity that we use, unlike the Vistry, I would suspect, love our model because the subcontractors, what they want is certainty. And when we say we're going to start on site and do 200, 300, 400 units, whatever it is, they know it because it's presold.

So the deals we get from subcontractors are far better than -- and it's not a criticism to housebuilders because we give the certainty to the subcontractors. So during the course of this year, if you take suppliers and subcontractors, we have seen very little, if any, build cost inflation. Internally, going into next year, going back to one of the reasons why I'm feeling bullish, we are seeing, as we sit here at the moment, some pretty substantial subcontract reductions on the schemes that we are bringing to them now.

So openly, outwardly, we're saying we're expecting single -- very low 1%, 2% build cost inflation. Internally, we're pushing for negative build inflation during the course of this year because of our model and what's coming through. And we don't expect the private selling market to be any better. Therefore, that's not good news.

But from not good news, there must be a positive somewhere. There's less work out there for subcontract fraternity. They are desperate for certainty, and we are taking full advantage of that. So internally, our target is to have negative build inflation during the course of this year. Easier with subcontractors and suppliers. But on suppliers, most of our 140 to 160 group supply deals come up for renewal in January and February, and we will be looking to be incredibly robust in our negotiations with them.

And the last question I just had was a follow-up on the forward sales point. Can you give us -- of that GBP 4 billion, can you give us a color as to how is that split between, say, '26, '27, '28? How far is that sort of tail there in terms of the orders that you have currently?

In round numbers, if we've just done GBP 4.2 billion of revenue in '25, and '26 will be kind of maybe a bit more than that, and I'm saying [indiscernible] So I would say GBP 2.4 billion, GBP 2.5 billion of that is for this year, '26 with then I haven't really, to be perfectly honest, you looked at what that goes into on '27. But I would say about GBP 2.4 billion for this year, '26 and then '27 will be greater than '28 and going forward.

But we do have within that GBP 4 billion some very, very large schemes in London, which will be going out for in excess of 10 years. The best I can help you with is around GBP 2.4 billion for this year, which if someone said that to me 6 months ago, [indiscernible]. So again, just reiterating, we're in a good position for 2026. I think I've read a few notes around '26 not being certain. Well, it's not, of course, but it's more certain than it was in '25.

Our next questions come from Allison Sun.

Just 2 questions from my side. So first one, I apologize if I missed your conversation earlier. So on the net debt for 2026, I know you are saying the net debt reduction. So does that mean we do not expect to return to a net cash position yet for 2026? This is my first question.

And the second one is on the market momentum because, I mean, obviously, you guys had a very strong second half market coming back. And now you're expecting a strong second half '26 as well. So I wonder how about first half '26? Do you expect the momentum to be, I don't know, stronger or flattish versus what you have seen in the past 6 months?

We expect -- the first half of '26, we expect to be better than the first half of '25. That's the first thing we'll say. Every business like ours and particularly housebuilders always has a second half weighting, so 60-40. So we'll have a second half weighting, but it will nowhere near be as pronounced as it was in 2025. The bottom line is we've produced a GBP 190 million profit in the second half compared to GBP 80 million in the first half, 2x GBP 190 million is GBP 380 million. So we're not expecting anything like that, of course.

But it will be more pronounced in the second half as it always is but far more normalized, and that will be helped by -- you may have heard it or not Ami (sic) [ Allison ], earlier in the call, I said we had in excess of GBP 150 million of cash and deals coming from -- going into this year that we were, frankly, in November, hoping would come through in December last year for whatever reason, mainly just run out of time and they come into this year.

So 2000 -- we've come up with, I believe, a great result, particularly on a strong second half in 2025. And that hides the fact that a lot of what we were hoping to come through has now gone into this year. And all of that what we were hoping to come through, the vast majority of it will come through in the first half. So pronounced second half, but nowhere near as much. Your point about net debt, we would still expect to be in cash at the end of this year.

Yes, absolutely. Just to back that up as we go into the -- I referred earlier on one of the answers to the fact that we're working through a capital release program over the next couple of months. And so we'll be able to provide a bit more color on that in the March results. But absolutely going into that, our target is to say how -- what do we need to do to get to net cash at the end of this year.

Our next question comes from Charlie Campbell.

A lot of the more obvious questions have gone. But just one last one for me. Just on the open market sales, this is a smaller part of the business. I'm just wondering if there's anything to say on incentives towards the end of FY '25 and whether that maybe leaves margin erosion on the open market side given you're quite well forward sold.

Yes, I'd say there's no change to what we said before, Charlie. It was up to 6%, but there certainly wasn't any increase in the latter months of the year. We're holding firm on that. And our hope would be that we can reduce the amount of incentives required in '26. Obviously, we're hoping that the interest rate reduction that we saw at the end of last year, the reduced uncertainty that clearly was casting a cloud over all of our markets from the budget at the end of last year, that will dissipate. And so we're hopeful that the incentives requirement comes down. But I think for the moment, probably the prudent thing to do is to assume same level of incentives in '26 as in '25.

Thank you very much for all of your questions today. I will now hand back to Greg for some closing remarks.

Okay. Thanks, everyone, for listening. I think all I want to say is we were delighted to get to where we needed to get to in 2025, incredibly difficult, but we did it. And we are in a great position going into 2026 with an affordable housing market absolutely starting to wake up, and we're in a great position to take advantage of that. On that, thanks very much, and no doubt speak soon. Thank you.

Thank you for joining today. You may now leave the call.

Good morning, everyone, and welcome to Vistry's Half Year Results for 2025. So I'm joined today by Tim Lawlor, Chief Financial Officer; and Stephen Teagle, Chief Executive, Partnerships and Regeneration.

So the agenda, very quick introduction from myself. Over to Tim for the financials. The highlight of the day is going to be Stephen going through where we are with the markets. So hopefully, Stephen hasn't used all his energy chasing down the one taxi outside Paddington Station this morning, knocking out of the way all lots of old people, but we had to get here on time. So hopefully, Stephen is okay for that. I'll give an operational update and then an outlook. And of course, we'll take questions at the end. But we won't be just taking questions from the floor for the first time. We will also be taking questions from people watching on the TV for want of a better word.

So the headlines. Delighted to say that the half year performance was very much in line with expectations. We are very confident, as you'll see as we go through the presentation that we are on track to deliver increasing profits for 2025 over and above 2024. And a good testament to that is the serious share buying I've done in the first 6 months of the year. Half year debt was down to GBP 293 million. We say significantly lower than expectations and putting that into some numbers, that's over GBP 100 million less than we were expecting. So a fantastic performance on that.

We successfully completed refinancing on exactly the same terms with our 8 banks. Tim and the team did incredibly well there. And not to be underestimated, the banks, of course, did extensive due diligence on the company to do that. And that takes us out to April 2028. Excellent partnership and open market customer satisfaction. And as Stephen always reminds us, we're the only company -- well, we're the only national company anyway in the partnership space, but we're the only company that gets feedback from our housing association and local authority partners and both the private HBF scores 5 star, but we're also 5 star with our partners.

The government's unprecedented GBP 39 billion affordable housing program provides a long-term level of funding and visibility. But just as importantly, the 10-year rent settlement, rent convergence and equal access to the building safety fund add to this funding capacity, and Stephen will be talking a lot about that during his section. So Vistry, as you all know, is uniquely positioned to maximize on this huge opportunity and play a key role in delivering the step-up to the much-needed affordable housing that this country so desperately needs.

Tim?

Thanks, Greg. Good morning, everybody. So I've been encouraged by a number of people to speed through the finance slides, so we can get to the more exciting slides that Stephen is going to be presenting later. But as Pink Floyd once said, you can't have your pudding if you don't eat your meat. So on with the meat.

So headlines of the group results. A lot of this is relatively old news. We reported a fairly detailed trading update at the start of July, and I'm very conscious that it's been 2 months since then. Next year, we're going to aim to get our reporting done in early August. So prepare your summer holiday schedules next year for an earlier announcement so we can crack on with the second half of the year without the distraction of a later results announcement.

So the headlines in terms of the group results. As Greg said, it was a slower first half than we've had in prior years, but it was as expected. We've stabilized the business, and we've created the foundations for H2 delivery. So we retain the confidence in the delivery of the full year numbers after H1. Within the numbers, we've restated H1 '24 to reflect the South Division issues from last year. So the impact of that is a GBP 65 million impact to gross profit and to PBT from the numbers that we reported at this time last year.

Revenue down 6% year-on-year, largely driven by Partner Funded volumes, which was impacted by the just expected uncertainties ahead of the spending review. Stephen will talk a bit more about that later. And our margins for the first half of the year were the same as the gross margins for the second half of last year at 6.7%, hardly impacted -- the operating margin partly impacted by the lower volumes, so lower operating leverage, but also we had a higher proportion of low-margin sites in the first half of this year, and we expect in the second half, part of our margin recovery story will be that the proportion of higher-margin sites will increase as new margins come on stream and some of the older legacy sites starts to disappear.

Point out the EPS position relative to the profit after tax position. So we're starting to see some of the benefit coming through from the buyback program. Since the start of January last year, we've spent over GBP 220 million on share buybacks. So that's starting to create a differential between year-on-year EPS movements and year-on-year profit movements of about 3% so far. And the final point I'll bring out from this slide is the net debt position. So as Greg mentioned, significantly ahead of where we expected to be at the half year and ahead of last year despite the fact that we opened with a significantly higher opening net debt position.

So turning to revenue. Year-on-year volumes down 12%. As you can see from the table on the left that the biggest drop was in Partner Funded, again, due to the market uncertainty, but we're expecting that to recover back in the second half of the year. In terms of Open Market units, the market was pretty similar to last year. The drop in units year-on-year is more attributable to having a lower number of sales outlets in the first half than last year, and the sales outlets numbers are increasing again in the second half.

Although the average selling price was up 3.7% year-on-year, that was largely due to mix factors. I don't think there was an underlying price movement in the Open Market. What we saw in Partner Funded was that ASP went up as a result of a higher proportion of southern-based delivery where prices are slightly higher in the South and the North. And in the Open Market, the mix change was more due to product mix. So slightly more larger houses being sold in the first half than the prior period. But I wouldn't read too much into that. That's probably a temporary fluctuation. The other thing to say on pricing is that the discounting and incentive levels were similar in the first half to the previous year of up to 5%.

In terms of the mix within the business, Partner Funded was 73% of the units in the first half of the year. We expect that, that will change to be above 75% in the second half of the year. Within Partner Funded, there was a mix shift. So there was a lower proportion of PRS sales in the first half of the year than the previous half, and that was partly due to the large transaction that we did, a large portfolio deal that we did in 2024, which didn't repeat in 2025. But having said that, going forward, we do think that there will be a slight shift in emphasis from PRS towards additional over the course of the next few months and maybe the next couple of years even because of the relative attractiveness of the additional market, additionality market, the affordable market compared to the PRS market. And again, Stephen will touch on that later.

Working our way down through operating profit. As I said before, the H1 gross margin was consistent with H2 of last year. Build cost inflation is, as we previously reported it, low single digit, slightly higher on labor than on materials, but low single digit overall. We're not seeing any significant change there. Overheads is up in absolute terms from last year. There was some additional investment in assurance resources as part of enhancing our control environment. And there's also a slight increase from pay rises and national insurance contributions.

So that margin increase from H1 to H2, which supports our higher growth in the second half of the year or higher profitability in the second half of the year, 3 main things that comes from: number one, the new developments that were starting in the second half of the year that we'd expect to be at higher margins. Second, the affordable housing market is becoming more attractive, and we should expect to get better terms and more competition for our support. And the third is the operating leverage that comes from those higher volumes.

Working our way all the way down to reported profits. So finance costs, we saw the benefit of lower interest rates. Average net debt went up slightly year-on-year, up to GBP 695 million from GBP 659 million last year. We expect the average net debt in the second half of the year to be slightly higher than the average net debt in the first half of the year because we're building in the third quarter and our income is more skewed towards the fourth quarter. But the average cost of debt fell as the interest rate cuts came through. That was offset by an unwind on discount of land creditors. So you know about this accounting funny, but we're still seeing the impact of the higher discounting as interest rates went up a couple of years ago, working its way through the land creditor system. So that should plateau soon, but that was a GBP 3.8 million impact for the half year.

In terms of tax, we report an adjusted effective tax rate of 27.9%, but a reported tax rate of closer to 23%. The adjusted effective tax rate is effectively the corporation tax plus the RPDT, but we don't get hit with all of the RPDT because it doesn't apply to all of our business, in particular, the 100% Partner Funded stuff isn't -- doesn't attract any RPDT.

The exceptionals were up. The prime driver on that was the voluntary contribution we made to the CMA, which we reported back in July. Our contribution there was GBP 12.8 million of the GBP 100 million total across the 7 housebuilders. And so we're recording that as an exceptional item that is expected to be paid and settled in the second half of the year. And we've also got an incremental building safety cost of GBP 3.5 million, which I will come to now.

So building safety, pretty as you were. We had a significant increase at the end of last year. In the first half of this year, there were a few buildings that were added, 7 buildings added in the first half of the year, more than offset by a good level of recoveries that we had from insurers and others in the first half of the year. So GBP 6.7 million of recoveries in the first half of the year, GBP 4.9 million of additions. We're making good progress working through the provision with 20 buildings completed and cash outflow in the first half of the year was GBP 18.3 million. We'd expect that in the second half, as we get on to more sites and really get momentum that the cash outflow will be up to GBP 40 million in the second half of the year. And that sort of run rate will probably continue into next year.

In terms of the cash flow, so year-on-year performance, significant improvement year-on-year. So last year, we had a net cash outflow of GBP 233 million. And despite having GBP 40 million lower profit in the first half of the year, our net cash flow actually improved by GBP 120 million year-on-year. And you can see the constituent parts of the cash flow here. So first of all, WIP. Now we -- during the course of the year, we've implemented much tighter WIP controls, much to the chagrin of some of our site managers, but we are managing WIP extremely tightly. You'd always expect a seasonal increase in the first half of the year, probably more so than ever this year given the weighting of our second half delivery. So the GBP 99 million of WIP increase is largely driven by that seasonal trend.

However, that masks some improvements made in the finished stock levels. So we've been targeting reducing our finished stock levels. Outside London, where it's a slightly different market and London is more constrained, more challenging sales environment. Outside London, our finished stock levels are down by GBP 46 million, which is more than half from where we were at the end of last year. So good progress there in releasing cash from stock.

Land, Greg will cover land in more detail later. We're running down our land bank a little bit. There's a net GBP 20 million cash release from land. So land down by GBP 40 million, but we have reduced our land creditor balance by GBP 20 million as well in the first half of the year. In terms of payables and receivables, both payables and receivables are down. So we're collecting our cash faster in terms of the receivables. Payables is down partly due to lower levels of deferred income.

The net investments in JVs causes a lot of head scratching when people start trying to reconcile to reported and statutory numbers. Statutory numbers are hugely confused by all of the technicalities of the form with which money moves between us and the joint ventures. But the substance of the cash movements for the joint ventures is this, that we put GBP 33 million of net cash into joint ventures, largely to fund WIP in the first half of the year. The form of that investment can take the form of operating, investing or financing flows, so it appears in different parts of the statutory cash flow, which causes, frankly, unnecessary headaches for everybody.

I covered building safety and the restructuring costs are as expected and net tax payments were GBP 10 million. Capital employed is very similar to this point last year, driven by the same sort of dynamics that we just looked at on the cash flow, so up on the year-end position, continuing to buy land selectively and increases will support the increases in WIP and JVs will support our second half delivery.

As Greg mentioned, we had a very smooth process. We've got a high quality of banking teams that support us, some in the room today. We're very grateful for their support in running a very smooth process during the course of the second quarter to get the refinancing complete by the start of July. Everything on the same terms with the same banking group and the same shares. But the maturity has moved out, as you can see from the table here, out to April 28, which gives us a little bit more time to stabilize and to capture the opportunities that lie ahead in the affordable space.

We've also got a couple of uncommitted facilities, the trade cycle loan and the money market line, which add GBP 125 million of facility. We tend to use those, as I've explained before, we tend to use those to manage short-term cash fluctuations. You can ensure that we're not sitting with too much money effectively on deposits by using these facilities. And then finally, on this, the headroom against the covenants. So we've got significant levels of headwind against our covenants at the half year. The 3 covenants there are reported and explained in the RNS if you want more details.

And last for me, capital allocation. So no change to the capital allocation policy. We're making good progress with our share buyback program, which we announced this time last year, the GBP 130 million, GBP 71 million of that has been spent. We expect to complete that program at some point in Q2 next year. We remain committed to shareholder distributions. It's a core part of our strategy. At the time of our results next year, we'll provide an update on our expectations for distributions in 2026.

And that's it for me. Over to Stephen.

Good morning, everyone. Good to see you all, and thanks, Tim. I've never been introduced as a pudding before. It's very good. So right, an awful lot has happened since we -- our last statement in our operating environment and our market. And I'm going to cover 4 key aspects, and I want to give you 4 key messages that demonstrate what a unique and compelling opportunity there is in the partnership space to contribute towards the government's delivery of housing and contribute to the value within the business.

So I'm going to cover our market-leading position and how that's contributed to momentum in the first half despite the fact that it's been a subdued market. We're going to focus on those unprecedented, as Greg said, government commitments to housing investment. And then look at an interpretation of how that will contribute and build capacity within the sector and allow us to deliver an increase in affordable housing. And then finally, look at the impacts for Vistry both in the near and the medium term.

So looking at how our scale, which is the key thing here, it's contributed towards delivery momentum. So you can see there, we are working with 156 partners. No one else is working with that range of partners in this space. And during that half year, we've transacted with 36 partners, more than 1 transaction with some of them, but 36 different partners, and that included 6 new partners, new partners who were PRS providers, new partners as housing associations and new partners who were local authorities. And Greg will be particularly pleased because one of them is from Wales. So that's good.

That has helped us contribute towards having a forward sold position of 89% for the full year. But one of the real things that has helped us maintain momentum is our proximity to our partners, and our proximity to Homes England as a strategic partner within their program of delivery. We're the only listed housebuilder who is a strategic partner. We're one of 32, and that gives us proximity to partners, proximity to partners capacity to be selective and continue to work and deliver. And when you look at all of our contracted position today, and this does include those schemes that are in the defects period, we're actually in contract on nearly 58,000 homes. That's a very, very significant number. And that scale is important. And as you can see from that map, we have managed to transact across all regions. So we're not having any regions where we are not very busy.

And this graphic here gives some sense of that scale and our market position in the partnership space. And you can see there that we are 5x -- we're the only scalable national partnerships business, 5x the size of Keepmoat's output. This is affordable homes in a 12-month period. And you can see the relative market position. And that's really important because that allows us to work with our partners in an effective way in planning future developments. But it also has allowed us to quickly deploy funding as we receive it from the government. So we've already received an allocation from the government following the autumn statement last year, GBP 20 million, and that's been immediately deployed immediately put on to site immediately into contract with partners, generating new homes, generating employment and achieving exactly what the government wanted to achieve.

And what we find is that early engagement with partners as have helped us avoid having Section 106 problems. So unlike others, we are not going through clearing to place our Section 106. We are able to work with our partners, put our Section 106 homes that are required under the planning system alongside the additionality that comes by applying grant, and that allows us to deliver and continue to deliver as a result of working with partners. So those assets of having framework relationships with our partners of an unrivaled position in terms of proximity to grant and our knowledge of the right product in the right place and having upstream conversations allows us to have the sort of testimonials that you can see on the right-hand side of that slide, which again is a circular contributes to our position. So despite the headwinds in the market, we're managing to maintain that momentum.

But as a mixed tenure partnerships business, Open Market sales are obviously a key part of our business, absolutely fundamental. And we've been focusing on self-help during this period. How can we improve our sales activity? And so we've invested in a number of ways. You'll remember last time I talked about us introducing a contact center. This is the first point of contact for our customers. So they leave a digital signature. They are contacted within 24 hours, many of them within 4 hours to have a discussion about what sort of home they're looking for. We've got an internal in-house contact center now and that is now operational across the business.

We've introduced training programs across the whole business, and that is now actively supporting the level of inquiries and the level of work that we're doing with our partners. And we've reviewed our customers, and we've reviewed our enablers. So we already sell a good number of shared equity homes. We already use all of the enablers that you'll see on our web page, but we've also introduced a key worker enabler, and we are in negotiations on a further shared equity product that we hope to bring to market over the next few months as well, really helpful in us engaging with customers during a period where affordability is difficult.

And we've seen more mixed tenure sites coming through that have been designed as partnership site, and that's important in terms of the product mix and ensuring that we have that differentiation. And importantly, I hope within the next few months, some of you will be able to get out to our sites to have a look at our brand refresh. There's some excellent work that has taken place in looking at creating more brand definition between Bovis, Linden and Countryside. So we've got Countryside Homes. So we've got more brand differentiation, but also that will allow us to have incremental pricing points across a whole range of homes, and that will certainly support us in our future sales.

So as Greg said, this is an unprecedented environment for us to be working in. We've seen an unprecedented government commitment to delivering homes. Yes, somebody said, it's a bazooka. It's an absolute huge impact on the marketplace. So why is it unprecedented? Let's deal with those 2 boxes on the outside for a moment. Firstly, never before has the government provided bridge finance. We asked for it as a sector. We said you're moving from one affordable homes program to another. We need some form of bridge finance. And the government on an unprecedented basis brought forward the Chancellor announced GBP 2 billion to bridge that gap.

Never before have we seen that level of funding into affordable housing, GBP 39 billion over 10 years. That's a 69% increase year-on-year. But most importantly, it's a 10-year commitment. That is unprecedented. We've only seen 5-year commitments previously. So what we've now got is a view for a sensible, sustainable delivery program that we can engage our partners with and deliver, and that supports a whole range of aspects for our business.

Also unprecedented is the announcement of the housing bank and the creation of the public financial institution. Now Homes England already offer and have a very successful investment team and investment division that is contributing and provides a range of products, guarantees and loans and equity placed into the market. But what the National Housing Bank will do is it will devolve powers to Homes England so that they are able to implement those initiatives, engage with the sector and support further leverage coming into the sector to deliver their homes. And it's expected that, that will deliver significantly 60,000 homes over the course of this parliament.

So those are the 2 significant demand-side elements. Why is it transformational? Well, that's where the central box here comes into play. It's transformational in terms of its impact on the capacity of partners. That combination of a 10-year rent settlement, so partners can put their rents up by CPI plus 1 over the next 10 years, together with rent convergence being implemented is really important. And I'll just explain what we mean by rent convergence. It's quite possible for 3 homes to be sat next to one another. Imagine the terrace of 3 homes. The home on the left is vacant. It's about to be let. It will be let at GBP 105. Next to that is a home, which is currently let has been let for, say, 5 years at GBP 100. And on the right-hand side is a home that is let has been occupied for 15 years, that might be GBP 80 rent.

What rent convergence allows housing associations and local authorities to do is incrementally by charging either an extra GBP 1, an extra GBP 2 or an extra GBP 3, the government is out for consultation on that, increase the rents each week or increase the rents each year, but obviously, the impact is each week so that they reach this common level. Now the impact of that, if you were to take that over a 10-year period, at GBP 2, the expectation is that 87% of homes would have reached convergence within that period. So it puts back into the sector a considerable amount of capacity.

That then contributes towards the ability of restoring capacity amongst our local authority and housing association partners, incrementally reinforcing their spending power. So a key measure for housing associations, particularly, but also local authorities, is interest rate cover. It's a key measure, a key metric for the regulator, and it's a key measure for the credit agencies and to some extent, their lenders. And therefore, it is the thing that drives a lot of capacity within the sector.

Now the combined impact of the rent settlement, rent convergence and access to building safety fund supports a growth in that from a median of 102% today over that period to 137% on a basis of GBP 2 a week rent convergence. So it's a bit technical. This is great work that's been done by Savills and the Chartered Institute of Housing, but it demonstrates how there is an improving position across the sector. And it's important to recognize this is sectoral. I know some of you like to look at the sector as a whole. From a Vistry perspective, of course, this is not a homogenous group of partners. Some of the partners we work with currently have interest rate cover 70%, 80%. Some of our partners have interest rate covers north of 150%.

So it is very different across the country in different parts. It's particularly difficult in London, and that's why in London, rent convergence will disproportionately have a significant impact, and we'll really put additional power into London Housing Associations. In fact, one of the CEOs of the London Housing Association came up with that phrase there, saying it was an absolute game changer. The GBP 39 billion is great. CPI plus 1 for 10 years is great, but rent convergence when you've got really significant historically different rents makes a huge difference. So that is a key element of that contributing towards capacity.

So how does that capacity get converted? And again, I'm thankful to Savills and Charted Institute of Housing for doing some analysis here. This graphic combines housing associations and local authorities. And you can see quickly visually there the difference between increasing rents at the rate of GBP 1 a week to GBP 2 to GBP 3. So let's take that middle assumption of GBP 2. That could contribute depending upon your assumptions of how that is deployed between 43,000 and 60,000 additional homes. And when I say depending upon your assumptions, it depends upon the extent to which that additional capacity is spent on new build supply rather than investing in your existing stock. Savills and CIH understandably have taken a reasonably sensible and conservative view in terms of how much of that would contribute to new supply, but those are -- that's the sort of range that you get.

And here's the rub of this. That has a disproportionate impact in the near term. So that's a 7-year graphic. So if you're increasing your rents and you know you're going to increase your rents, you have the ability to borrow against that, you have the ability to translate into new delivery. And that's why we can see that, that will start to come through fairly quickly during that first 7-year period. And for local authorities, some, not all, it will be a game changer for them because they will move from business plans that are in deficit to business plans that are in surplus. And we've got 2 or 3 situations across the country now where local authorities are saying to us, "We would like to talk to you about us giving you an offer for your affordable housing. You were going to go down that route with a registered provider, we'd like to talk to you directly and see if you'd work with us."

So there is clearly a sense in which that is coming through already. And that capacity conversion is really importantly on top of the current spend for housing associations. So the current spend, despite the headwinds, the regulator reported GBP 14 billion being spent this year on new supply by registered providers. GBP 14 billion, a lot of that is committed. I think just over GBP 4 billion of it is not or wasn't at the end of June. So a significant amount of that is committed, but that gives you a sense of the scale. So this is on top of that current expenditure.

So then how does that follow through to an overview of the market? What can we expect? So translating that policy to funding and what's importantly the time line. So if you take into account that additional grant program, if you take into account the additional capacity that I've just explained and you take into account political expectation, which is not listed on that slide, but is incredibly important. And you take into account the additional homes that are almost inevitably going to come through Section 106. I think you can see our market space grow from an average across the country of 55,000 affordable homes a year. If you look at the long-term run rate, that's about what it is, to 70,000 to 75,000 homes -- affordable homes delivered each year.

Still nowhere near enough, still nowhere near enough to satisfy demand. You can look at the requirements for 90,000 social homes being -- social rented homes needed a year alone affordable homes as a whole. So that unfortunately does not tap into the full demand, but that gives a sense of a growing market and the opportunity that sits behind it. Now it needs all of those levers to be working, but that will start to deliver an increased market size.

Now the time line set out there, the bit on the left, you don't need to concentrate out the rearview mirror. The important thing here is looking forward. So we would have hoped -- we haven't got it today, but we would hope that we'll know the outcome this month, possibly this week for a further bid that we put into Homes England for part of that -- the first allocations under that GBP 2 billion bridge. We're very hopeful that we will get that. We will be able to deploy that very quickly to start working with partners during the second half of the year. And that will really allow us to also have that conversation with partners about program delivery as we go into the prospectus. So we expect the prospectus to be issued by Homes England in October.

That's not just important for us bidding for our own program. That's important for our partners who are bidding. Because don't forget, whilst it's great, we're a strategic partner and we gain grant directly, we work with partners who have their own grant to deploy. So there's the ability for us to deploy both and to be working with partners on delivery on both. And that prospectus, we expect to come out in October with bids submitted by the end of year with allocations in March '26. So that will really give us a burst as we go into '26. We're already talking about funding frameworks, which I'll come on to again in a moment with partners, but this will certainly support us in lifting what we're doing in '26 even further, which is great news.

So what's the impact for Vistry? So in the near term, as I've said there, we're already seeing increased partner appetite in expectation of stepping up to deliver the government's agenda and in the response to the additional capacity that they can see coming down the line. It isn't uniform. It's absolutely key that you are working with partners who have that capacity. And we expect to be able to continue to deploy grant very quickly. We have a considerable number of plots that we've identified that have consent and will deliver starts before March '26. So we're very keen to be deploying grant on those and working with our partners.

And we are very well sighted because of our performance as a strategic partner on our expectations of being successful in a future bid for the prospectus over the next 10 years. That's really important. If we have a 10-year program, and I don't yet know what's in the prospectus. But if there's an opportunity for us to not only receive funding during a 5-year period, but to have some confidence over a 10-year period, that will really support longer-term regeneration projects. It will really support what's happening in London with the long-term gestation working with the GLA as well.

So we would hope through our delivery program in the medium term that we'll be able to secure even more funds and put our strategic assets into play. So a key element there is it gives us certainty, it gives us forward visibility for our manufacturing facility. It gives us the ability to be cost efficient in our transactions with partners by working within frameworks.

And it also allows us to continue over the medium term, we would expect to work even more with government on placemaking and delivering at pace. And a great example of that, we were able to announce this week, which is the formation of Hestia, an investment joint venture with Homes England, where we're jointly committing GBP 150 million of equity in a structure that allows for that to be leveraged. So don't take GBP 150 million and divide it by plot values. That is a leveraged vehicle.

And that will allow us to support delivery fairly quickly. It will allow us because of the scale of it, to work with SMEs. We want to use it as a platform for diversifying the sector. And in fact, I think Adam said to me since we made the announcement, we've had a number of contacts, where Adam is. We've had a number of contacts asking us if we would -- they would like to introduce themselves to us to work with us. Great.

The rationale for us is relatively straightforward. It's set out there. But key to this is if you're the largest leading partner in this sector, you not only have an opportunity, you have a responsibility. And it's that fusion of opportunity and responsibility, which will drive what we want to achieve with Hestia working with Homes England as our joint venture partner. And we already expect to submit to the Board for consideration opportunities that will deliver starts and some completions in 2026.

And it's not our only joint venture. We're working with others already on frameworks. We're in advanced stages of negotiations on a number of frameworks, multisite deals that will allow us to work on a successive basis, investing in supply. And one of those, importantly, is with institutional finance, and we expect that to be able to drive delivery of thousands of homes within London. And that will be really important, and we hope that, that we'll be able to announce that before too long.

So in summary then, a unique and compelling opportunity for a Partnerships business in this space. We have never had an environment that is as positive as it is now since our pivot to a full Partnerships business, we have not had the best conditions to thrive as a Partnerships business, but we've been successful. Going forward, using our strategic assets, our relationship with our partners, our manufacturing capacity, our proximity to Homes England and our commitment to deliver responsibly puts us in an absolute fantastic position to generate more homes and support earnings growth going forward.

Over to Greg.

Thanks, Stephen. Incredibly compelling. That's how I would summarize that. So operational update then. So the group's strategy is ideally placed to maximize a significant affordable housing strategy and the near-term market for the Open Market sales remains constrained with -- we don't see any particular catalyst that's going to make that better.

So if you just take those 2 points and you go back to September '23 when we announced our new strategy, if somebody would have said the new government is going to come in and announce GBP 39 billion, bring forward GBP 2 billion, you're going to be signing a joint venture with Homes England, basically the government. I would have said, no, I'm not that bullish. What thing to come through following on from that strategy? It's absolutely fundamental and it underlines the move we've made, whether it's from a private housing side or where the market is going, which is very much partnerships.

So we expect to see, and this is important, we are seeing already, as Stephen said, stronger growth in the affordable delivery in the near term, resulting in a higher percentage of Partner Funding going forward. So we originally said in the strategy, 65/35, 65% Partner, 35% Open Market. We haven't achieved that in '23 nor '24, nor were we in '25. So we think going forward, it probably will stay. We'll amend our strategy to be more like 75/25, even potentially 80/20.

And importantly, of that Partner Funded area, we are expecting to see a drop-off in the PRS. So we'll still do PRS, but it will be less because the affordable market and the amount of funding coming through and the activity levels we're already seeing are getting stronger. So the Partner Funded will come more from affordable than from PRS going forward. The group's current land buying and development pipeline reflects these near-term expectations and completely underpin our robust thought -- our bust statement on 40% return on capital and a 12% operating margin with our focus on land values, which we're seeing higher affordable ASPs, build cost efficiency and capital release.

So first of all, that's -- I'm not sure that's the best photograph of me, but you can tell it's a recent one because as you can imagine, October, November, December, January, February, March, April this year, there wasn't too much smiling going on. There's been an enormous amount of work done in this organization. And I'm pleased to say we're through that. There's smiles back on people's faces, and we can all now see the opportunity, and we're looking forward rather than looking back, an important point to say. The senior management team now, which has completely changed, are all Partnerships people. There is no housebuilding people at that level. The executive chairs all sit on the individual -- on the ELT, sorry. Individual reviews with me and other members of the ELT are taking place on a quarterly basis with every business unit Board. And the South Division, sorry, is completely now restructured.

Tim talked about the increase in overhead. So tighter controls and assurance is now bedded in. We have an investment committee, which looks at all land opportunities in a much more organized way than before. All financing, pleased to say, reports through to Tim. A new group assurance commercial team has been established, which reviews all of our CVR monthly reporting. And we've got a system enhancement, which tracks what we call life of site, all in place. So an enormous amount of work has been done over the last 12 months.

Talking about land. So activity levels in the land market have stepped up over the last couple of months. So as you would have seen from the statement, 3,000 or just over 3,000 plots secured in the first half. We've secured 3,000 plots in the first 2 months of the second half. And would you believe we've got 20,000 plots at the moment with terms agreed. Securing larger mixed tenure sites, which form the backbone of our delivery is going to be where we are going forward, particularly, and there's a good example on the right-hand side there, which we announced the Rugeley Power Station or previous Rugeley Power Station. Land acquisitions with 100% presale are increasingly attractive given the market backdrop. So that's where we buy the land and flip it immediately to a local authority or a housing association for a decent margin, not using any cash. In fact, it's generating cash all the way through.

The framework deal that Stephen has just talked about, Hestia, we won't make a more important individual announcement on for the next 5 years. That is absolutely huge, a joint venture with the government, government putting its trust in Vistry. And of course, we're already getting lots of phone calls, not just from SMEs, as Stephen said, from local authorities and housing associations, should we be doing the same. And the framework that Stephen made note to at the end of his presentation regarding London and the framework, that deal was actually signed last night. So that should be bringing thousands of homes into the capital. So we've got London, which is the GLA, of course, and Homes England pretty much covered.

Vistry Works. Now this is fundamentally important to us. So our investment capacity from our 3 factories has the ability to construct 10,000 units per year. In addition, we're already manufacturing a good number of floor joists, cassettes and roof trusses. We're on track to deliver 4,500 timber frame units this year. We expect that to rise to over 6,000 next year. We've just launched in the last month a New Timber Frame Installer apprenticeship program because there is a lot of work going to be coming out from this. And frankly, there isn't enough people to do it at the present moment in time. So that's important.

And one of the most important bits of this entire presentation is the Mauer Brick Cladding solution, which you can see there. This is at our East Midlands factory. So first thing to say is that is 3D computer-generated brick cladding. That whole thing was built there, those 2 semi-detached houses to water tight shell in 2 weeks. And because we are a Partnerships business, 50% less carbon than brick, and now if Mr. or Mrs. Smith buying an individual home, don't really go into that. Housing associations, Homes England, grant funding, et cetera, et cetera. This is a huge, huge player for us going forward.

So much so, we're going to be the first of any of the other housebuilders that are actually going to be starting on site within the next month in Yorkshire, building 4 of these homes with this computer-generated brick for a very, very large housing association, having now just got LABC warranty approval. So this is huge for us again in this particular sector and will massively reduce our reliance on subcontractors, particularly bricklayers. And we expect to launch 10 more sites using this system during the course of 2026.

And of course, timber frame, this sort of thing only works if you've got certainty. So if you're a pure housebuilder, it's all very good and you've got a big scheme of 1,000 homes. But if you don't know if you're going to sell them all and you don't know what the rate of sale is going to be, that factory is still going to be there and it's still going to be producing and still costing you. If you're Vistry and you've got 1,000 units, and we're just going to build them, it really does come into itself because we've got the certainty of it. So therefore, we can actually get the benefits of those prelim savings through.

So current trading. So as I've said, we're very confident of delivering a year-on-year increase in profits for full year '25 as we've been throughout the year. Of this, 89% of the Partner Funded sales for 2025 are forward sold. We've got a strong pipeline of Partner Funded H2 deals to be completed, which more than covers the balance. So we're currently looking at more than we actually need, and we're actually looking at which ones we want to do as opposed to last year trying to find and feather our way through to the period end. So we're in a pretty comfortable position on that front. The injection of grant funding for affordable homes, particularly the likes of Hestia and joint ventures will also support this delivery in the second half of the year.

Sales and marketing, it's a tough and challenging market. I wouldn't say it's a disaster. It's at the bottom end of satisfactory, but we're doing all we can to generate sales and sales through the summer held up relatively well from a relatively low level, I must say. And the group's focus on cash performance, including the management of work in progress, has been transformed, and we are expecting a dramatic reduction in debt at the year-end.

So I'm going to just finish and put it into my own words, the same slide that Stephen went through. Without doubt, we have a clear market-leading position. We're 5x bigger than any of our competitors and can scale up on that with, for instance, our Timber Frame Mauer Brick capability. Unprecedented government commitments to housing funding. Stephen and I have been around for over 40 years in this industry, and we've never seen anything like it.

And don't underestimate the pressure the government are putting on housing associations saying, "We've given you what you want with your rent settlement, your convergence, your access to the building safety fund, you best be getting on with giving us what we want, and that is getting on with building homes, particularly for affordable rent, which is actually happening in front of us." That step change in partner capacity, I don't think can be -- and I think it has been maybe by you guys, underestimated in the -- it's not just the GBP 39 billion, it's all about this 10-year rent settlement access to the building safety and convergence.

Convergence is huge. I've had it a number of times from Chief Executive of Housing Associations. That's just as important to them as the GBP 39 billion. So please do not underestimate that. And that will, of course, add all that together, drive our earnings going forward. So we've got our numbers for '26. I think consensus for -- sorry, for '25, consensus for '26 sees us going up by over 20%. The real step-up after that will come in 2027 as we start seeing this funding program starting to materialize, which it is in front of our eyes at the moment.

So on that bullish front, we will take any questions. So we'll do from the floor first, and then we'll go on to the actual television as it were. Do you want to start as the nearest one with Will?

Will Jones from Rothschild & Co. Redburn. Just a few, I think, reasonably high level. But first one, just around that change in mix of sales, potentially the 35% Open Market becoming 25%. How do we square that, I suppose, with an unchanged longer-term operating margin view? I think the Open Market elements were at least on the gross margin doing a slightly higher.

We're starting to see an uptick in the Partner Funded margin, particularly with the greater amount we're doing in the affordable space as opposed to the PRS space. And all I can say on that is the land we've been buying pretty much since the start of this year throws off that margin. So a reduction, better prelims because you're building out quicker and less reliance on the Open Market, better subcontract prices as well.

And on that move as well from more additional and therefore, less PRS. Is that really about the positivity of the additional? Or do you think that the PRS market in its own right, might become tougher in terms of terms?

No, I think the PRS market is there. It's needed. It's still operating. We're working with more PRS providers this year than we did last year, but a lot of them are going through their own funding, trying to get increases in funding. Their existing funding has finished to speak. But I think it's more to do with the amount of activity we're seeing from housing associations and local authorities at this precise moment in time. They're all being pushed by the government. They've all got these benefits, rent settlements that keep going on about, and they're all looking to get ahead of the game with regards to the GBP 37 billion program for the next 10 years.

And as Stephen said, the GBP 2 billion, we're expecting a very good grant, which we should hear in the next few days as with our partners. They are already looking to spend that money and they'll spend that money in the second half of this year going into next year. So the activity levels from September 2023 when we announced our strategy, we knew, absolutely knew that we pretty much come to the end of the '21-'26 affordable housing program. Pretty much all the money was spent. We knew that. We were happy with that. The change in strategy was for labor getting into power and hopefully, them coming up with something along the lines of we never thought it would be GBP 39 billion.

So we have, for the last 18 months, been scrambling around trying to use our relationships and find money with housing associations pretty much where they've already spent it. And we've done incredibly well with that. '24 was very, very strong with PRS. '25 is less strong with PRS. We think it will be less strong going forward. And now our land teams and our affordable housing teams are now back to normal insofar as they're dealing with a new program. And I would very much hope that we will spend the biggest part of the GBP 39 billion or whatever it relates to the first 5 years of that in the next 3 years as it always has been with the '21-'26 and the program before that. So it's the uptick in affordable housing providers' appetite, which is making it harder for PRS at the same time as PRS have got their own issues with funding as well.

The last one, you mentioned the importance of political expectations. I just wondered in your conversations with Homes England and government, what are you saying to them you can do medium term around growth? And are their expectations of you realistic in the context of delivering that comfortably from your side?

Okay. So I'll pass that to Stephen because I used to be -- Stephen is seeing Steve Reed tomorrow to talk about all of that. So maybe you do that. I used to be called in, but I'm yesterday's man now. Stephen is the face of the business now. Go on, Stephen.

So we've been very open with Homes England about what we can provide and how quickly we can provide, which I think is the substance of your question. So we've shared with Homes England the quantity that we can provide over the next 6 to 9 months in terms of site starts. We've -- we're able to annotate that between schemes that we would do with partners directly. So they've already got their own funding and those that we would be seeking funding for to deliver ourselves.

But as you can imagine, we're talking thousands of homes that we're able to consented sites -- consented plots, consented sites that we are able to put into delivery by March '26, and throughout '26 as well. We've got that forward visibility of a program to deliver. Our program currently with Homes England is in excess of 3,000 homes. So that's what we've been delivering previously. What we're hopeful of is that when the prospectus is issued in October that this longer-term 5- and 10-year position will become clearer, not just for us, but for all bidders so that we can be looking at a longer-term delivery, which will really support that. But we're very open and [ hanging ] and are very aware of what we can deliver as are many of our partners.

Chris Millington at Deutsche. First one, Stephen, I wonder if you can help us on how the GBP 37 billion is going to land in timing? I think we've all struggled to understand the ramp-up of that. So that's the first one and perhaps when you think the cash will start flowing there. Next one, I think, maybe for Tim, is the phasing of these low-margin sites. Perhaps you could just put some numbers around that so we can understand the roll-off of that.

And the last one is really about WIP release. You mentioned, Greg, that you expect a decent amount of WIP release by year-end. Perhaps you can give some detail. I'm going to throw in one last cheeky one. You mentioned about labor being in power about the sort of genesis for the change. They're not polling particularly well now. If we look forward 3 years, would that necessitate a change? Or do you think we're kind of on a road to affordable delivery regardless of government now?

I think -- the numbers we're nearly spending GBP 3 billion a year of taxpayers' money on temporary housing. So I think the numbers -- so this isn't labor going down the road because they feel like it. This is labor going down the road, we've got an affordable housing crisis. So I think once it's in place, you never know, and I completely agree with regards to the polling and everything else. And some of the WhatsApp I'm getting at the moment, you couldn't possibly forward. But I would say that, yes, I think a new government would find it, if that was to happen, incredibly difficult looking at the numbers and the need to change things around, particularly once it's in place.

Stephen, do you want to -- the GBP 37 billion...

Yes. And on that point, I would just say that you don't -- if you look back historically, there has been as many affordable homes being delivered under a conservative government as under labor government in actual fact. But -- so the GBP 39 billion and when it's deployed, I wish I could give you the exact answer. But it's a judgment, isn't it, for all of us. And I've seen analysis where people have said, well, the Chancellor said GBP 4 billion in '29. So if you cast forward with inflation and eat up the GBP 39 billion and then cast back to next year, it's going to have a 2 in front of it. I don't buy that. I just simply do not agree with that. And that doesn't resonate with any of the discussions that I've had with government or civil service either.

If you -- it would be more accurate in drawing a straight line across GBP 39 billion over 10 years. Again, that won't be right, of course. But my view is that there is absolutely no way that the government is going to see a dip in capital funding and grant funding to which would then moderate the market. They're going to want to grow from the position. So I would work on an extrapolation from a figure of GBP 3.3 billion and cascade the GBP 39 billion over 10 years from that point. That's what I would do. That's my assumption.

But there's 2 other things to say. The first is we are dealing with something that is very opaque because what's happening in terms of the output, output and funding do not exactly marry and it's opaque because some of the output this year is coming from a program from '15 to '21. Some of the output this year is not just in the '21-'26 program. So what you've got is layered programs contributing to output in individual years. So it's very difficult to take that simple exercise and extrapolate that across. And I think that's the bit that we tend -- it's tempting to do that, but I think that isn't the true position. The true position is people are committing to an uptick in delivery, and you'll see that cascade across.

And Tim?

Yes. So we've done some analysis just on the low-margin sites in the first half of the year. Roughly, roughly, I would expect about 20% of those sites that were low margin in the first half of the year to complete in the second half of this year. Then something like 30% of them will go during the course of the following year. And the remaining 50% will be skewed more towards the front end of '27 and '28, but will disappear over time. But there will be some tail going out to sort of '29 and '30.

What proportion of the total are those low margin?

I would say it's something around 1/3 of the first half year, yes.

Aynsley?

I've just got 3 actually. Just interested, obviously, just coming out of summer, but your thoughts on the autumn selling season, a bit more color around kind of Open Market sales and how you expect that to trend into the autumn?

And then second question, just obviously still got quite a lot to do in terms of build and output in the second half, how that feeds through to average net debt? Any guidance there, Tim, on reported end of year net debt and average net debt for the full year?

And then just on planning, again, interested hear your thoughts how that's easy and are you seeing that better on the ground yet? And is it just easy -- I mean lots of the other housebuilders talk about frustration, it's slow to come through. Is it just easier for affordable homes, how that kind of dynamic plays out?

Okay. Do you want to take the question for you, Tim?

Yes. So in terms of the debt, our reported position at the end of the year is as it was. We expect it to be high double digits, that sort of level of net debt, so a significant reduction year-on-year -- year-end. The profile within the second half of the year means that the income is slightly more -- Greg's getting a call coming through...

No. It's Stephen himself. He's making sure he's being recorded for all the good stuff he's saying.

So back to average debt. So the average debt in the second half will be dependent on the profile, particularly the timing of the partner deals, which tend to be more year-end loaded or Q4 loaded. We always see the second half average net debt slightly higher than the average in the first half because of the work in progress buildup during Q3 with the income in Q4. So I'd expect the second half average to be slightly higher than the first half average. Putting some numbers around that. So first half average was GBP 695 million. We probably see the second half the other side of GBP 700 million. So full year maybe slightly above GBP 700 million.

Okay. With the planning bit. Strategic land, getting strategic land through is just far more straightforward fact than it's probably ever been in my time. When you actually then get down into the local planning environment, some local authorities are listening to what the government is saying, we want a presumption to build as opposed to presumption not to build, but not all. And funnily enough, not all of the ones that don't are conservative, some of them are still labor councils. But definitely, there is a trend that we're getting planning through even at local level quicker than before, but it's still not easy.

There's still more work to do on it. And we can never put a number on it, but turning up for a meeting with the planners and leaders of councils with the housing association or even Homes England next year saying this is much needed with their own housing offices in the room. It's got to be more straightforward than just turning up as a pure housebuilder. So I think it's more straightforward, but still difficult for us at a local level at a high level from a strategic land, it is definitely more straightforward, and we're seeing more land allocated. And let's not forget, we do have circa 70,000 plots in our strategic land bank still to come through.

Stephen, do you want to just talk about the sales through the summer and what we're expecting?

Yes. Okay. So in terms of sales, I think you described the market as the sort of lower end of satisfactory, wouldn't you, in terms of it being constrained by affordability, interest rates coming down has helped. But affordability remains a real constraint on the market. The use of enablers is really important to us. So about 22% of our sales involve a form of enabler. So that includes shared ownership, includes deposit assist. As I said earlier, hopefully, that will be supported by key workers.

So there's a range of things that we're using in order to propel those sales. But the market remains constrained, constrained by affordability, and it's very similar as you will have heard from the other housebuilders in terms of what we need as an injection into the marketplace. I particularly -- I favor a form of do-it-yourself shared ownership as a product that could be used across the whole industry to support sales for first-time buyers, particularly. I think if we saw that, that would be a really positive step.

But our forecast for the year, I mean, we've just continued what we did in July and August, even though September and first half of October because we'll be pulling up steps on private sales middle of October, week 42. We've assumed pretty much the same run as we've had during the summer period. So we went into the summer period with below satisfactory.

And funnily enough, in my experience, when you haven't got a very good market, you don't get those seasonal variances because people are buying because they need to buy. So whether it's July or whether it's April, doesn't really matter. So I'm pleased to say for what it's worth that July and August, we didn't really see a drop-off that you would normally see in a more stronger market. So it was okay. But we're assuming -- we're not assuming the next 6 weeks are a huge uptick within our year-end forecast, anything but.

Lewis Roxburgh, Goodbody. Two questions, please. Just on the pickup in the Partnerships activity coming through in the second half. Just interested as to whether you're starting to see that now with the June spending review ahead of us? Or are you expecting more in the last quarter with the budget and top of affordable coming through? Maybe some color on the other drivers there and whether the sort of H2 swing is a one-off in Partnerships or more structural?

And then the second question is a little bit long term and philosophical. Just your view on your long-term outlook of your place in the affordable market. At the moment, you're obviously a clear leader. But given the supply stimulus, the grant funding, the rent settlement and conversion, the other pieces you mentioned, do you expect the bidding environment to become more aggressive? And I guess, how do you aim to keep that position and match that scale? I guess, it amounts to how do you balance growth with maintaining those sort of quality margins and risk frameworks.

I'll take the latter one, but Stephen will obviously take the -- where we are with affordable. But if you read a lot of the analyst notes out there, despite what Stephen has just said, this isn't a compelling opportunity. So why would other housebuilders want to come into this as far as I'm concerned, no-brainer of a sector. So the facts are we fully expect and they are other housebuilders have bid to be a strategic partner. We're 100% aware of it. They haven't got there yet, but that doesn't mean they won't going forward.

We'll be very happy maintaining our market share as opposed to growing it going forward. That's what our numbers assume. So -- and we couldn't possibly do it all. So there will have to be some other national entries into the space, and we would welcome that. We do feel a little bit alienated in the housebuilding market at the moment, whereby models are all based on housebuilding. And we're not housebuilding, we're partnerships. It's very, very difficult. So the more housebuilders that come into this, and I think 1 or 2 probably will at the end of the day, it will make it more compelling that you guys, if I can use that expression, maybe have to change your modeling and outlook a little bit.

Stephen, on the first point?

Yes. So I think your question was about affordable activity over the next 6 months. So there are 2 or 3 things that are driving that. The first is the commitments that housing associations, registered providers and some local authorities have already made to delivery. So we have a pipeline of over 100 deals where we have partners identified and we are moving forward with heads of terms ready to bring those forward to conclusion to convert.

In addition to that, partners are receiving top-up funding. So I mentioned our top-up funding. It's not just us. So partners, not all of them are strategic partners. As I said, only 30 or so are strategic partners. Some of them have to bid for funds on a scheme-by-scheme basis. So they'll be putting up an opportunity in Swindon or Middlesbrough, and they will be seeking grant funding confirmation within a 4- or 6-week period to then proceed. So there's top-up funding being deployed in that way in this second half.

There is also an element in that partners have -- still have funds that they haven't deployed within the existing program. Now some of that may be taken from them and redeployed where it can be delivered. That goes to the earlier question, we've got opportunities to deliver it. But some of it may just be that those partners need to have only just got planning and they're able to go forward. And then the third thing that we're seeing, which is very positive for next year is we're seeing partners wanting to, as Greg said, commit now with a view that it's going to give them a head start in delivery into the new program.

So we're discussing a number of schemes with partners, and we have converted a number of schemes with partners, which are designed for delivery over the next year. So all of that is giving us impetus in the second half. Will there be even more momentum in '26, Q1 and Q2? Absolutely, but we're seeing considerable momentum now in terms of moving towards the end of this year as people want to get ahead and also spend that money.

And we've also seen since probably June -- before June, the program is -- I'm not sure what that's about. The program is spent, and we spent all of our grant. Since June, we're absolutely noticing what I would call the local authority roadworks when you get to February and March, an awful lot of road book seems to take place as they're out there spending that money. Local authority -- so housing associations are in the same place. Actually, we haven't spent it all or actually, we've just been let down on this particular scheme over there.

So we are benefiting a little bit now, which we can see for our year-end with housing associations realizing for whatever reason, they've got some money to spend. Because nobody, including Vistry, wants to not spend their '21-'26 program because that will impact -- they will give the housing -- Homes England will give the money to the best performers, particularly with this government where they're absolutely focused on delivery, delivery, delivery. So if -- where are we, Stephen, in the 32 strategic partners ? The -- so the money will go to those that perform and less will go to those that don't. So everyone is desperate to make sure they're in a good position to get the benefit of this GBP 37 billion.

Clyde?

Clyde Lewis at Peel Hunt. I think I've got 4, apologies. Vistry Works, you have talked about a further plant in the past. What are your thoughts around that at the moment?

We're probably -- we've got 10,000 capacity. We're looking at just over 6 for -- between [ 600 ] and [ 700 ] for next year. So I would say we're going to go into probably '27, but we will still need a full factory, but '27.

London, a couple of times has come up has been the worst market. It's a fairly consistent message across the whole sector. Do you think the GLA and the Mayor are doing enough at the moment to sort things out here? I mean, obviously, the building safety regulators probably caused more of a bottleneck here, but interested to hear your comments as to how quickly do you think London may get back to a more normal rate?

Do you want to take that, Stephen? We've signed a big framework last night, which will help the council.

Yes. So I think it's not just the Mayor. I think there's a sector-wide and government and the Mayor responsibility for delivery weighs on us all. I mean we absolutely have a disastrous problem in London in terms of supply. I think in '23, '24, I did some analysis that showed that Vistry was responsible for something like 46% of all the affordable housing starts in that year, but that come down from 20-odd thousand down to about 3,000. So it was a huge fall, but it just shows the scale of the challenge that exists in London for supply.

The GLA will be allocated some of that GBP 39 billion, and you know how that's been -- that will play out. So we'll start to see what that allocation is as part of the prospectus when it's issued in October. Homes England only operate outside London. GLA are responsible within London. We are actively talking to the GLA about initiatives to bring future grant to bear. But the problem that has been in London, as I mentioned in the slides, has been the capacity of partners. So there has not been a number of housing associations available to transact even if the grant had been there because of the headwinds they've got in investing in their stock.

So what I'd expect to happen is that registered providers as they grow that capacity will now be able to step up. So I think you will see a change over the next 12 months. Most schemes in London have a longer gestation period, and they're not going to deliver completions in the lifetime of this government as quickly as the government will want. So if I was the government spending GBP 1 and wanting a completion, you're going to get it more quickly outside London than in London generally. So that needs to be factored in, in how that's deployed.

But we've developed the initiative that Greg has mentioned that will allow us to work with essentially a for-profit registered provider and institutional finance to deliver capacity into London, and that will help us deliver. A lot of our work in London recently has been with local authorities and some PRS providers, but a lot of it has been with local authorities. So I think it's got to change. It's not going to change immediately, but I think over the next 12 months, you will see that capacity start to return.

But we have -- but we got 3 business units in London. We had 3 business units 18 months ago. We did the restructure. There's still 3 business units, not because of what was going to happen in the last 18 months. Without doubt, London has got the acutest affordable housing issue in the country. At some point, that has got to change. It is pretty much a breaking point. Am I not right, Stephen, that local authorities in London are spending GBP 4 million a day on hotels? I mean it's huge sums of money. So it's got to change. And we've deliberately kept 3 strong businesses in London to capitalize on that.

Third one was on the housing association on the RP sort of interest cover chart that you put up, which is fascinating to see. And obviously, the rent conversion is driving the revenue. What's happening on their funding costs? Because it's hard for us to see, but that's the other side of that equation.

That is another headwind, absolutely. I mean I think housing associations are faced with an increase in their borrowing costs as well, and that factors into their viabilities. So that has also been a constraint on capacity. It's not just been spending it on stock. But that has been taken into account those projections that Savills did and CIH have done, they've taken into assumptions on a mix of affordable housing, so social rent as well as affordable and shared ownership on the mix that we expect in the prospectus. They factored in the cost of funds into housing associations.

55%, I think, of the housing association debt is long term. So it's already there at the historic interest rates. And there's uncommitted facilities that housing associations have as well. So they've got -- yes, they're very strong. They've got strong liquidity at the moment. But they have factored in that extra cost of borrowing in those assumptions that we've seen in the interest rate projections.

The last one, I suppose, was around the guidance for the full year and the unchanged view on it. And you've talked about, again, a big pipeline. What -- if there's a best and a worst-case outcome, how wide could that be for this year, I suppose, in particular? And what are the -- if everything drops, clearly, you're going to get to the top. But if you don't get to the top, what are the reasons, why, I suppose, for not getting there?

As I said in the presentation, we've got more offers and more opportunities than we are forecasting for the year. So a disaster can always happen. We absolutely can't see that happening. And I feel much happier that these offers are from housing associations who are -- these are people we've been working with for years and years and years. And once they basically say they'll do it, they will. A PRS provider is not averse to a little chip or something at the end of the day, a housing association, pretty straight. That's the offer. That's what we're going to do, and that's what the time lines we'll do it in.

So I think the quality of the offers that we've got on more than enough for the year-end are important. With regards to the [ Gulf ], I don't see the benefit of making too much more than guidance. I would rather go into the following year. So I'm very confident, sat here, we all are, including Tim, of getting to the numbers that are out there for this year when we look at the facts as are our 25 business units. So we're confident that, yes, you would want a small beat, but I don't think we would be looking for a big beat. We'd be looking for more of a great start to 2026.

Yes. Maybe just -- sorry, speaking for me. But I reiterate it's not just Greg. We remain confident. The single biggest risk is timing. So it's not a question of if, it's more a question of when and those -- there will be some things outside our control. But at the moment, we're managing it very closely. We have much greater visibility on what needs to happen between now and the end of the year than we had at the same time last year. We're managing it extremely tightly. So that's what gives us the confidence that we're going to deliver those numbers by the end of the year.

I thought we were going to get away with nothing from Glynis, but there we go.

Glynis Johnson, Jefferies. I'm not even going to send them to you, Greg. Tim -- actually, they're really target ones. You talked about the mix influence on price. I wasn't quite sure, are you guiding that mix upside comes back next year? Or are you guiding that that's the new norm, so to speak? And then you talked about finished stock in London. You sort of excluded it from your stock. What is the finished stock in London? And more importantly, I guess, where do you anticipate it going? Is it still going to rise through the second half?

Okay. So 3 things. In terms of the ASP, I think it will return pretty much to where it was before. I mean the move is relatively small. It's only 3%. So is it going to go up 1% or 2%? We don't know. I've said before, the ASP is a fairly meaningless number internally because we look at each individual site. It's only when we go under this sort of forum, we aggregate it all up and look at average selling prices. The fundamentals are that the underlying pricing is about the same.

In terms of the finished stock in London, the reason why we look at that differently is because they're more apartment-based buildings. So you end up with lumpier type stock available. And I'm not going to give an absolute quantum, partly because I might not get the number right, but also because I don't really want to get into breaking down all of our stock by divisions. We're not expecting that number to go up in the second half. We've got some prospects actually for some deals to sell some of those in the portfolio deals in the second half of the year.

So we would expect the London stock to be coming down in the second half of the year. But -- and actually, we probably could have brought it down in the first half of the year, but the deals that we offered at the start of the year just weren't on attractive enough terms. So we thought we'd hold our nerve and sell them in the second half.

If you can tell from the tone now, we are not where we were at the end of last year. We're in a -- that doesn't work, let's not do it. Confident mode.

Two for Stephen. Again, more sort of tied up. You've talked about shared equity products and do-it-yourself homeownership that seems to be capital heavy. So I'm just wondering if you can just talk a little bit about what you are willing to do in order to get sales and how much risk there is in terms of that you have to hold capital on the balance sheet?

And then the second one was about the -- you talked about the 100% forward sold sites and they're a bit more interesting. I think we used to call them partnership delivery. What proportion of Vistry going forward do you think might be that sort of partnership delivery? And kind of going back to Will's question, how does that impact the margin? Because that's very high return on capital employed, but tends to be a lower margin.

Should I do the first part?

You can do all of that.

Okay. So in terms of shared equity in DIYSO, so I see them entirely as enablers. So we've got Open Market stock. There was -- Help to Buy was a shared equity product. And what exists in the market, what is being developed in the market, not just for us, but with others. So I think others have announced that they're looking at it as well, is a shared equity product that is a private sector shared equity product, which obviously has some cost to it. It mean you would -- you're not going to apply it to displace your affordable delivery, you're applying it to assist with your Open Market sales, and that's how that would work.

On DIYSO, I'm seeing that as exactly the same. Now this is an idea that hasn't -- I'm just promoting if I'm being honest. So no -- looking around the room, nobody here is old enough to remember Norman Lamont other than me, unfortunately. So Norman Lamont with the housing market package. Thank you very -- who looks like it -- anyway, there was -- at that time, one of the interventions from the government was do-it-yourself shared ownership, which was a product that allows the consumer to go to a housing association and qualify as a shared ownership purchaser. And they would then receive endorsement from -- they qualify, they've received the endorsement from the housing association who would have grant funding, and they would then be able to go out into the marketplace, find if they qualified for it, a 3-bed home and then the housing association would buy it. And then they would own part of it.

So it never comes on balance sheet. It's a straightforward shared ownership product. But instead of shared ownership all being built together on an estate, you had dispersed shared ownership. It was hugely problematic for housing associations. They ended up with lots of street level secondhand properties. The EPC would have been horrendous, the cost of management -- sorry, of maintenance really problematic.

What I think would really help the sector is a do-it-yourself shared ownership that's only focused on new build. So that would allow housing associations to acquire assets that have good EPC, B or A outcomes, very good quality product like they do now, new build, and it would allow the consumer, the purchaser to go to any site from to a Vistry site, Barratt site, [ Simons ] site, anywhere to look for a shared ownership and be able to support. That's the product that I would like to see more evidence of in the marketplace.

And your second -- I've forgotten your second question now, Glynis.

The 100% forward sold sites.

Yes. 100% -- no, I'd expect us to still be involved in 100% forward sold sites at decent margins, but most of those will be subject to us negotiating with the partners. It's not something that we competitively bid for those schemes. That tends to be not our position. What we tend to do is we find partners who are interested in 100% schemes, and we will work with them and have a sensible margin on that basis.

The margin, you're right, Glynis. If we were to just buy the land and flip it, the margin would be less than a 12% operating margin because that would mean it would need to be a gross margin of 17%. So it would be less, but it will be in the mix. So we're seeing -- so obviously very, very good for return on capital, and it would generate cash. So what we're saying is going forward, we will be flexible in certain parts of the country. We might buy the odd site that's pure housebuilding to compensate for that move because we're doing 4 sites over here that are completely generating cash, et cetera, et cetera.

So we'll be flexible. But we've definitely looked at it in and around. So that in itself would be a lower margin, infinite return on capital, but that would enable us to do 1 or 2 other things in different parts of the group, particularly maybe in the Southeast where it's harder to be a Partnerships business in the Midlands and the North at the moment.

Good. So on that, we've -- no time, I'm afraid for -- yes, we are running short of time. No time for any questions from the phone. So I'll just say thank you very much. Hopefully, you enjoyed that. And hopefully, you got the tone of what we are saying. So thank you very much, and have a good trip back in a taxi, no doubt. Thank you.