Hello, and welcome to the Persimmon 2021 Half Year Results Presentation. My name is Jess, and I'll be your Coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. I will now hand you over to your host, Dean Finch, Chief Executive, to begin today's call. Thank you. Thanks, Jess. Good morning, everybody. As usual, I'm joined by Mike. I'm also joined by Martyn Clark. Hopefully we're prepared for anything you're going to ask us. Can I just say, I'm sorry if you had difficulty accessing the webcast first thing this morning. We're still looking into the reasons why. Hopefully, you now have had chance to have a look at it. Maybe if I just start by picking out one or two key highlights. Then we can, sorry, open as usual to questions. With that, what I would point to is, it was a good first half. We were pleased with the performance. We have delivered a robust performance against the backdrop of COVID and Brexit. We saw completions of 7,406. Within that, we saw private completions of 6,104, which is about 2%-2.5% up on 2019. The order book is strong. We'll reference back to 2019 given all the to-ings and fro-ings of 2020, which makes it a difficult year to compare to, but order book up 9% on 2019. Sales rates up 20% on 2019. There's real strength in the market we saw in the first half of the year. I would point to the fact we're continuing to see that strength in the market. Obviously, we're beginning to see a return to a more normal season pattern. Nevertheless, I think we would all say that we're seeing maybe a stronger August in terms of sales rates than we would normally expect to see, which is obviously very pleasing. I think reflects that there is still strength in the demand, even though we're seeing some government stimulus coming out of the market. Particularly pleased to see the quality of the build in the first half. I think we all rightly expect that these are hygiene factors. We are now delivering these. I'm really pleased and grateful to the team for their hard work in delivering what I believe is a good quality product. We've made very good progress in terms of additions to our land holdings in the first half of the year. This really is across the breadth of the country from Scotland down to the south, east to west, strategic and spot. Persimmon is able to continue to buy land well. We have a great team, now strengthened by a group land team. Those disciplines remain very focused within Persimmon. As you maybe have picked up from Mike's presentation this morning, we've now got nearly 90,000 plots at cost to revenue of 11.9% compared to 12.4% at December 2020. Really strong embedded margins there in the business, which continues to improve, and we're obviously delighted with that. On top of that, look, we've got 25,500 plots under option and proceeding through planning and a further 13,700 plots controlled and allocated in local plans. We're in very good shape. The strength of demand has seen that we're something of a victim of our own success, and so outlet numbers are a bit below average at the moment. In the first half, we saw outlet numbers of about 285. As you've seen from the press release, we're opening 85 new outlets subject to planning in the second half of this year and a further 85 new outlets are planned to be opened in the first half of next year. That will take our average up. We'll be getting a bit ahead of 300 in the first half of next year, maybe 310, and that will continue to proceed during the course of next year on a fairly gentle glide path and then continuing into 2023. There's really good momentum, I think, in the business. Much talk, of course, about build cost inflation. Of course, we're seeing that, but I think we're managing that very well. Pricing is positive, net positive to the business, and on top of that, we're seeing that we're continuing to buy land well, and indeed, we've done some great deals in the first half, which puts us in a really good shape. In terms of completions, for the full year, we're expecting broadly a second half that will be similar, maybe slightly better to the first half. Next year, we're looking towards targeting back towards 2019 levels of performance. Again, subject to planning. The strength of the market is there for us, and we just need to get after the build and deliver it. Pleased to see an improvement in gross margin from H2 of last year, at 30.8%- 30.9% in the first half of this year. Continue to see improvements there as we look ahead. Overall, I think the business is in very solid shape. With that, I'll open up to any questions for Mike and I. Thank you. The first question comes from the line of Rajesh Patki from JP Morgan. Please go ahead. Yes, thank you. Morning, Dean. Morning, Mike. Three for me, if you don't mind. The first one is on the outlets. You had mentioned the H1 average was at 285. Can you help us with the exit rate for the first half on the outlets? Also the 170 new additions, 85 in the second half of this year and 85 in next. Do you expect this is sufficient to get you towards what you'd set out as 350 target by next year? Or would you need further beyond this? The second question is on build cost inflation. If you can provide some more color on whether you've started to see any early signs of moderation on the material side and if there are any differences in trends by geography. Lastly, one on the land bank. The cost to revenue ratio has decreased while the gross margin remains unchanged. Is this just a rounding difference, or are you looking at slightly more complex sites with a relatively higher proportion of build in there? Thanks. I think the last point is just timing difference, isn't it? Because they're not delivered into production yet. Yeah, I think on the cost to revenue, it's down to the mix of sites and as Dean says, the timing. Obviously, we're selling through sites all the time, bringing new outlets through. There's always a different balance of bare land value to build cost, development cost. I think the key thing is that the analysis we provide of our own land in terms of the embedded margin, if you do the blended calc on that, Rajesh, you'll see that the gross margin's around about 33%, which is pretty much the same where it was in December and the year or two before that. As Dean referenced in his opening comments, I think that we're in a really strong position in terms of the embedded quality of returns that we've got in that forward land bank, which obviously provides great visibility. Is that okay? I'd look to the blended margin indication that we've provided in the slide deck, rather than the cost to revenue percentage on the land bank. That's a little bit one-dimensional. It's still important, and it's nice to see that continued trend downwards. I think on inflation, look, it's still pretty tight. We're dealing with material issues all of the time, but we are dealing with it. I think we're all We're beginning to see some moderation of the pressure, but that's moderation of inflation. That doesn't mean prices are coming down, obviously. Maybe we could see our way to some potential cooling off in the second half. I don't know. We'll just have to see. On outlets, we'll be picking up numbers during the course of the year. The average will be increasing towards maybe an exit rate of 300, 305 by the end of the year. Of course, it all depends on the strength of demand, doesn't it? As we see strong demand, well, that consumes more of the outlets. The point we're trying to emphasize is that we see really good visibility of good land opportunities. Disciplines remain in the business. Business is really focused on it. We're able to, I think, compete in the markets that Persimmon are rightly interested in. We'll see growth in those numbers during 2022 and beyond. It's building momentum, really. All right. Thank you. The next question comes from the line of Will Jones from Redburn. Please go ahead. Morning. Thank you. Three as well if I could please. Morning, Will. Morning. The first was just understanding the build cost ratio, I guess, within the first half margin, if that's okay. I think about a 40 basis point slip in the recovery there compared to last year. I guess all else equal, given the lift in revenues, you might have expected some help to that ratio because of the fixed cost component. Presumably the balance back the other way is price versus cost on a 12-month view, or is there anything else, I guess, in the mix just to be aware of? I appreciate we're talking small numbers there, though. Second one was just around, I guess land buying needs, land buying intentions, 10,000 approved in the first half. Just as you, I guess, deliver on your growth agenda over the next kind of couple of years, is that a decent proxy, do you think, for the run rate around 10 per half? Maybe you have a view on the land bank length, however you want to, I guess, answer that. The last one's really a question for Dean just around management, if that's okay. I guess since the July update, we've had news of Mike's retirement, I think early next year. I guess at that point, that'll complete some fairly big changes in the senior management lineup over the last few years of the group. I guess just wondering, A, any insights on the, I guess, succession program for Mike and, B, just I guess that personnel just below the top rung, perhaps you can just give us some insights into how you see, I guess, the stability and continuity amongst those kind of key individuals? Thank you. Will, can I do that, the build cost question first? Yeah. Take it in the order that you've asked the question. Yeah. There's been a tickle up in recoveries there. It comes down to the site mix to a degree, we would point to the continued strong performance of the business in terms of achieving a consistent feedback from customer, that obviously they are increasingly happy with the service and quality that's being delivered, as characterized in the eight-week survey ratings that we're getting, which we reference in the announcement. Obviously that does require support. We're continuing to invest in that area. As we've said before, it's not a massive investment. This is incremental improvements. I think The Persimmon Way that obviously features in the slide deck and in the announcement is at the heart of that. It's really interesting to see how the benefits of the investment that we're making as part of implementing The Persimmon Way, for example, the quality inspection teams, how that starts to feed through, not just in the customer appreciation of the strength and control there, but actually the payback in terms of cost improvement as we move forward over the next two or three years. We do firmly believe there is a return to be had from that investment that we're making in strength and site supervision, quality control, and the improved tools that we're providing to the team. I think all of that is a bit of a longer answer to. Just to bring life to the numbers, that little tickle up in build cost recovery does reflect that investment that is being made in the business. As I say, it's not a major issue in terms of turning the dial on the numbers. I think the key thing to take away is that we do anticipate a return on that investment and continued focus, in terms of reduced perhaps reworking on site and the need for levels of aftercare service. Dean, I don't know if you want to add anything to that. Yeah, look, I think Mike is spot on there. I agree with him completely. We are investing in the product, and we're seeing the benefit of that investment coming already. I think I pointed to an improvement in gross margin from H2 of last year into H1 of this year. We might see further progress. I also completely agree with Mike in terms of, we will, in time, get a dividend back from building right first time. As we improve the quality of the work we're doing, it really is helping on the ground, and it will lower cost of duplication, it will lower cost of remediation through time. Also, I think, the value of the product. We'll always be pricing a level which makes our homes as affordable as possible to as many people as possible, but we'll also be recognizing there's a value in that. Long run, I'm optimistic. In terms of land buying, look, we remain disciplined. We want to grow the business, but first and foremost, relating back to what we just said, it's about the quality of the profit. We are very focused on the quality of the land we're buying and the margin of that land. First and foremost, that's what we're focused on. We do see an opportunity to return strength. I think as we continue to develop our products, they are ideally suited to the market we see ourselves in now. There's a great deal of demand there. Persimmon is building a quality product, and we'll expand our capabilities to build five-star homes that will enable us to grow more. We'll be buying as we see those opportunities, and we've got ambitions for disciplined growth. In terms of management, well, obviously, All great things must come to an end. Martyn has given fantastically great and loyal service, over many, many years. He's given a lifetime of service to Persimmon, and your share price and the performance of the company really reflects that. We're incredibly sorry to see him retiring. I need a rest, Will. We can all entirely understand why he's doing that. Look, he's not gone yet. We'll have a picture of him up in the boardroom. He'll be staring down at us whenever we're cocked up. You can have me wired up. Look, I've got a hotline into the boardroom, Will. Mike has drilled us all incredibly well and schooled us and the team around him incredibly well. There is great strength within Persimmon, and not without diminishing in any way Mike's great, and fantastic service to Persimmon and the strength of what he brings. The business is more than one man, or one woman indeed. We have a very strong finance function, and we have a very, very strong regional management function throughout the business. You will see the benefits of that strength for years and years to come. Great. Thank you. Bye, Will. Perfect. Thanks. The next question comes from the line of Arnaud Lehmann from Bank of America. Please go ahead. Thank you very much. Good morning, Dean. Good morning, Mike. Morning. Morning. Couple of questions on my side. Firstly, on the recent demand trends, because on the one hand, you seem to imply that the last few weeks have been as good as the spring. At the same time, you're talking of a more kind of normalized demand pattern, more similar to 2019. Have you actually seen a softer summer, let's say? Or are things still going strong on the demand side? That's my first question. The second question is on the capital return. I think your net cash position is as high as it's ever been, at the end of June in the last few years. It's great that you've already committed to the 235p, at least, the regular payment plus the top-up, depending on market conditions. We could start to make a case that the top-up payment could have upside, like say, to GBP 2.10 if you continue to operate in a strong environment like you are today and considering you seem to give a good message on the 2022 outlook. Any color there would be helpful. Okay. Well, look, let me have a go at that, Arnaud. To begin with, I think, look, we saw eye-popping strength in the early spring, quite frankly. As some of our sales rates, they softened a little bit towards end of June, early July. They're strengthening again now. For instance, we just had a very strong week. I think it's as much about availability and build as about anything else. There's nobody in the regional team that is saying anything to me about anything other than very strong demand. Martyn, do you want to? No, it is very positive, and we're just trying to make sure that we don't sell too far ahead. Yeah. That we go back to the problems that we've experienced before. Yeah. We're very focused on build quality. That's a strong control in the business. Look, the market is still very good. I think, obviously there's the external stimulus out there, but I think Persimmon has brilliantly positioned itself to be in absolutely the right place in the market for the times we're currently in, and we're taking full advantage of it. I think on net cash look, I couldn't have guessed that this question might be coming our way today. I've got to say, look, for me, I recognize the point entirely. First and foremost, what I see in the balance sheet is Persimmon. Again, to give Mike his credit, a brilliant, I think, capital return policy and brilliant placing of the management of the business in terms of its financial strength. We have a ferociously strong balance sheet. I completely recognize that. We want to grow in a disciplined way. We want to invest in work in progress. The strength of the balance sheet for me says that first and foremost with the promise we have at the moment, I think that underscores the dividend for the foreseeable future in almost any scenario. What a strong place to be. I don't particularly want to meddle with that at the moment. Let's see what the future holds as opportunities present themselves to invest in more land, to give us great returns, and to build more width in the business. Wait and see, I think is the answer on that one. Thank you very much. Your next question comes from the line of Chris Millington from Numis. Please go ahead. Thank you. Morning, gentlemen. I'll continue with the... Hi, Chris. Hi. Morning. Can I just firstly ask you about absenteeism? Whether it be the pandemic or holidays, just how's that impacting you at the moment, and how do you expect that to trend over the year? The next one I just wanted to ask really was around the nine months HBF score. I know some people don't like looking at this for lots of different reasons, but perhaps you can give us a feel as to how that's trending, because you've done a great job on the eight week, but clearly that's a number we don't get visuals on. The last one I just wanted to ask was about the general competitiveness of the land market. We've had quite a few of your peers talk about how it's stepped up more recently. Is that proving to be a constraint for you on intake? Is that the thing which is stopping you growing the outlet number harder or the intake harder? Is it just getting the land at the right margins for you? They're the three questions, please, gentlemen. I think, look, we've suffered from the pandemic like everybody else has done. At times it's been a bit sticky. We have suffered from absenteeism, and to some extent, that has reflected in build performance. Certainly in the first couple of months of the year. When I recall speaking to you back in January. It was tough. It was very tough back then. We got the situation right again March, April time, build started to get ahead of sales. We have seen the pandemic affecting us in the summer months. Holidays also. I think that's more of a general cycle, I would say, at the moment. Labor is tight at the moment. I do think we feel generally as a business that, not quite sure why construction has been furloughed, maybe that should have come to an end sooner. However, we are where we are. We anticipate that when furlough comes off later in the year, maybe some of the labor situations will even a bit. Yes, we're affected by all of those things. As you can see, we are managing through it. On the nine months, we made progress. We're up over 10% year-on-year. We've got ambitions to get ourselves back up to where we need to be on that. We do look at it on a regular basis. We're making really good progress. Obviously, there's a lag effect with the nine months. As you improve the eight week, it necessarily over time improves the nine month. That is something we're seeing in the business. Look, we obviously have the New Homes Quality Code coming in that we are going to register with and comply with. Standards are rising in the industry and Persimmon will aim to be at the forefront of those standards, as it is and as it needs to be. We're going after it. In terms of competitiveness, I think yeah, people are right. I read in the paper a whole raft of views about when is the right and wrong time to buy land. Persimmon has got a good strategy and is very disciplined. I know that sounds boring, but it's entirely right. It's why it's got the margins it's got, which will continue for the foreseeable future. I think Persimmon's strength is, look, it can occupy parts of the market that others find harder to compete in just because of its scale. That definitely helps Persimmon. I think the outlet situation at the moment, we're not chasing volume. We're protecting the margin, protecting value. That's not going to change. Though we do see opportunities to continue to grow, and you'll see that growth coming through over the coming years. Hopefully that answers your questions. It does. Thank you, Dean. Are you willing to give a number on the nine-month HBF score? We're just about 70 at the moment, around that at the moment. Well, I'm very pleased with the progress we're making there. It's not where we want it to be. We've still got much progress to make. We're making that progress and I'm confident in, somebody asking that question in six months. In 12 months time, you will see continued progress. Very good. Thanks for the answers. Thanks, Chris. The next question comes from the line of Glynis Johnson from Jefferies. Please go ahead. Morning, gents. Morning. I have three, but I think they're all for Mike. Dean, I think you get to take a rest. In terms of Average Selling Price, given the Average Selling Price you put in the half year, given what's in the order book, is there any guidance you can give us in terms of what we should be thinking about for the full year and into next year? I'm particularly thinking in terms of, is there a mix effect in terms of HA versus PD and how that might translate through? The second one is in terms of margins. I just wonder if you can maybe sort of give us a bit of color on the moving parts in terms of that Plot cost to ASP in the land bank and also the gross margin that's embedded in your land that's owned. What has been the influence of house price inflation over build cost, and what has been the influence of the new land incoming? Lastly, just in terms of the WIP build up, it's been talked about builders now ahead of sales, looking to invest in the WIP on sites. I wonder if you can talk about maybe how we should think about builder covered units for the end of the year and what position you need in order to give you the completions for 2022 that you might be targeting? Also, just to be clear, when we're talking outlets, are we talking selling outlets? Does that give a good stature to sites which might be under construction but not yet selling? Yeah. Okay, Glynis. In the order that you asked, I can't give a guarantee on price. I wish I could. Why not? Come on. I think that as Dean referenced earlier, we've positioned the business in what we think is very attractive locations at very attractive pricing. That's not to say that we don't expect some improvement because obviously the market at the moment is pretty supportive of achieving better value for the homes that we're delivering. Indeed, as you know, the improvement in activity in the secondhand market helps enormously in terms of generating greater confidence in terms of the clearing value of residential property, which obviously in turn helps the new build market in terms of its pricing and confidence around pricing, particularly in the eyes of the mortgage lenders. I think that that sets an environment that is supportive and continues to be supportive. We've all seen the lenders coming in with higher LTV product. The government has stepped in to support market with the Stamp Duty window, which has particularly supported the secondhand market. Doesn't make a huge difference for ourselves, but is beneficial overall. I think that the industry, and particularly ourselves, we have been able to move our pricing forward, and we don't see at this point in time a reason to believe that that trend is going to change anytime soon. I think that it's a positive prognosis in terms of pricing. I can't guarantee, obviously, which units we're going to sell off which sites, which, as you know, every six, 12 months, the sales mix dictates the average. I think it is a positive prognosis. I think in terms of the overall mix PD/HA, I think that is an important point you touch on. We expect to return to a more normal mix of maybe 81%-82% PD, the remainder HA. Just to remind you, last year we did have a bit more HA in the mix. We got up to about 84%, sorry, PD in the mix, which was a bit higher than normal. When you're looking forward in terms of the overall pricing for the group, you just need to recount the 2020 base year on a normal sort of 82%/18% mix to give you that overall average, which if you do, it's just over GBP 228,000 for the group as a whole. That's the 2020 normalized sales mix base ASP that I would suggest you need to be thinking about in terms of your future years forecasting. I'm not going to give you the answer. I'll give you the moving parts, and you can obviously come up with your own answers. In terms of margins, it's great to see the continuing trend of reducing cost to revenue percentage, as Dean referenced earlier. Down at 11.9% now. That's as low as it's ever been for the group, which is fantastic. It's an indicator. That's not necessarily a proof perfect in terms of future margin expectation, because as we all know, for example, if you've got a brownfield site with a lot of remediation, the land value can be very, very low, and it doesn't mean necessarily that the margin will be higher because you've got obviously all the extra costs of remediation, et cetera, to deal with. It's a bit of a one-dimensional view of quality, but I think that it is important given that we're continuing to source our land from multiple sources as we usually do. That trend is important. In terms of the margin, we do provide the overall analysis of what's embedded in our own plots, in terms of the blob graph in the slide deck, as it's known. That is as strong as ever, which provides us with a great deal of confidence in terms of future delivery and reassurance around future returns. Yes, land recoveries have been a bit higher in through the income statement, around the 14% mark. That's just the sites in production at this point in time, which has been, surprise, consistent with the last 12 months as sites continue through that timeframe. Incoming land margin, you can see the embedded margins have been highly consistent, that implies that our incoming margins are very similar to what we've seen over the last two or three years, which is fantastic. In terms of build, yes, the number of active outlets that we have has been a little bit cramped over the last 12 months, given our management of market risk. We would continue to argue that we're not out of the woods yet. Yes, we've gone through a bit of a mini boom for the various reasons that I think are reasonably well understood, but obviously there are challenges in front of us. Caution is the watch word. As Dean's already said, we continue to be selective. We have brought a lot of excellent land through into the business in the half year of varying parcel size, but overall slightly larger than perhaps would be the historical norm, which reflects the competitive landscape and land market that Dean touched on earlier. The build, we hope to invest more in build. Getting the outlets open, 85 for the next six months and another 85 for the first half of next year gives us a lot of confidence we'll be able to do that. We got around about 40 sites under construction that have yet to go on first sales release, which again bolsters that confidence. Indeed, we've got about a dozen sites where we're holding back further sales release so that construction can catch up a little with an eye on service levels, delivery dates, and quality. That active management of construction program is continuing. We see great support there in terms of our build. We expect to deliver strengthening EUC numbers moving forward from the end of June this year as these outlets come through and as we continue to invest in the work. We expect, obviously, Dean's suggested that labor may become a little bit easier with the end of furlough and hopefully, vaccine becomes or wins the day against the virus. We're positive. I think it has been a difficult time for everybody in the industry, but we hope that that's in the rear view mirror. We've got a lot of confidence about the future of the business over the next two or three years, given the visibility we have today. I think we're pleased to be in the position we are. Can I just clarify? The embedded margin in your owned land, the moving part of that to when you last gave us the update, is that only the incoming land coming in and the completions going out? Or have you revised the underlying assumptions in terms of selling price and build cost on all the sites that go into that analysis? What we do with that pro forma calculation is we try and keep it current. What we try and do is provide If we were to deliver all those new homes, 67,000 new homes or so today in one go, that's the sort of gross margin you would get out of it. It's still stated on a reasonably cautious view. It's informed by our bimonthly valuation processes that, as you know, Glynis is updated for current build cost issues in terms of cost pressures, but also some price growth in terms of the sites that we've currently got active that are part of that valuation process. It does reflect a cautious view on pricing. It doesn't take us up to our current price point, because we don't want to get in front of ourselves. I think that we don't need to do that. We're very confident about the quality. If we see a continuing or a continuation in the market conditions we have, we're confident that over time, those margins will be delivered in a six-month trading period or a 12-month trading period. It's a cautious view of where we are, but we do try and keep it current in view of the challenges that the industry is wrestling with. In terms of that margin being relatively flat from the last update, is there a difference between the revision of the land that you owned previously and what margin has been there versus the incoming land? Has the incoming land been at the same margin as the underlying land bank? Well, I think the balance of inflation, we are managing that well. I think that's a very important point to touch on in that, we're not just covering the on-cost of the build cost inflation, on a per unit basis. We're not just pound for pound in covering that build cost increase in terms of price increase, because that would lead to margin dilution. Yeah? What we're doing is, we're saying that we're being successful in maintaining our margin rate by controlling our build cost in relation to the selling prices we're achieving. We're very mindful that we want to protect the value that we deliver, as Dean mentioned earlier, and all the management teams are evaluating, on the back of the bimonthly valuation routines, what needs to be done, both in terms of cost management and pricing in the market. There's a lot of intensity around that, as you can imagine. Obviously that reflects through into the sites that are currently in production and delivering new homes within that margin outlook, but also the sites that are currently under construction that aren't on first sales release within the owned land bank. I think it's important to remember that every parcel of land where we've got a detailed planning consent is under construction. We don't sit on land twiddling our thumbs. We crack on and get after the build. Time is money. We're very keen to deliver the growth in new home output, to meet the needs in the market. I think Glyn, investors should take great comfort and great heart from the policy of the land, first of all, that's in the land bank and the quality of the land we bought in the last six months, because it's been really good. The heart that I take from it is that, yes, half of that's strategic and half of that's the guys have been able to buy it on the open market. There's great entertainment when we buy land because of the great battle there is,, internally between what we see as costs, as we see as revenues that we can achieve at current price, and you can imagine the tension there is between those two forces. We remained ruthlessly disciplined, and we think the quality of the business is as high as it's ever been. Thank you. Your next question comes from the line of Charlie Campbell from Liberum. Please go ahead. Morning, all. Thanks for taking the question. I've got a couple of questions here. First of all, just wondered, you've given us guidance for build cost inflation between 4.5% and 5%. Just wonder if you could split that out between labor and materials, and whether labor is something we should be worrying about more. Obviously, you've made some comments about materials. Secondly, just on first-time buyers. Clearly, first-time buyers, a lot of them have been helped by the pandemic and have been able to save faster than they have in the past and maybe get onto the housing ladder quicker. How are you seeing first-time buyers on the ground now? Is that still a very strong area? Any signs of that slowing at all? Just to get an idea of the strength of that side of the market. Thank you. By just doing it in reverse, first-time buyers are as strong as ever, isn't it? Yeah. In business. No. Yeah, it's interesting because, the Help to Buy element within that has decreased a bit, but we're still seeing good, strong demand, aren't we, Dean, on that? Yeah. The business remains buoyant in that regard. Labor? Yeah, I think the build cost, the bulk of the increase that we've seen more recently is in the materials area. Obviously we're all aware of commodity pricing, timber, steel, plastics, et cetera, with the recovery in global economies, and the knock-on effects of that as the supply chains find their feet. Indeed, haulage is an issue. We're fortunate just on that side, just to mention in passing, that's almost a sort of unintended benefit in a way that given our offsite manufacturing with brick and roof tile, we do work with a lot of local hauliers. We feel that we're in a decent position to work with that team of local hauliers in terms of supplying brick, roof tile, and for that matter, timber frames and roof cassettes to group operations around the country. It just gives us accessibility of a pool of talent on haulage that we've been able to use increasingly effective, for example, to reduce empty return journeys, et cetera, which has helped us optimize material accessibility site to site. We've had to move materials on occasion from one site to another to assist build program velocity. As always Charlie, we try and optimize our positions. Mostly on materials. I think labor has become a little bit tighter, as Dean Finch referenced earlier, over recent weeks, particularly with the later effects of furlough and dealing with the pandemic. It has accentuated labor availability on occasion. Again, it's patchy. There's not a single trend that you could point to across the country. Some of the businesses are fine. Some of the businesses are a bit tight from time to time. Hopefully, with the end of furlough, we would hope that the labor position becomes a bit easier, through Q4 and into next year. We just need to see how the pandemic unfolds from here. We're not complacent. We continue with our COVID-safe protocols on site. We're maintaining our 2-meter distancing rules, and our COVID enforcement team on site, and in offices, et cetera, which is obviously a bit of extra cost that we're carrying. Reference back to margin question, hopefully, that will drop away eventually, which we'll see a little bit of benefit coming back. Obviously, it continues to be a priority for the business on that side. Yeah. I think, look, as Mike points to, there is a regional variation. Martyn's probably seeing quite a lot of heat in the southeast on labor costs, and we have to up the rates we're paying to get brickies to site, for instance. There is a view that's been expressed to me more than once that no matter what you pay them, they've got an amount of money in their heads and, once they get that, then they go down to the pub. We are very mindful of that and we are controlling our costs. Again, I think it goes to the strength of Persimmon, very long established relationships, with some subcontractors up and down the land who know we'll be there for them when situations change again. We're managing it. Thank you very much. Charlie. Yeah, it's great. Thank you. Cheers. Thanks. The next question comes from the line of Andy Murphy from Edison Research. Please go ahead. Thank you. Good morning, gentlemen. Morning. Morning. As is customary, I've got three. Just want to follow up on Will's question on customer satisfaction. Obviously, the scores are rising, which is a great result. I was just wondering which one or two, or three points you could point to in terms of what you've introduced through The Persimmon Way that have been the key drivers of that improvement in the satisfaction. Secondly, on the FibreNest, you have 16,500 homes. Can you give us a flavor for what revenue that's now generating and what the retention rate is, if that's the right way to think about it. Finally, on the sort of Paris Agreement emissions targets, which you talked about in the statement. Obviously, a lot of people, including myself, will applaud any initiatives to reduce carbon emissions. It's obviously the most important issue that we face. I was just interested to understand how and where in your targets the emissions from clay bricks that you're buying and concrete bricks that you produce in-house fit into those carbon reduction targets. Thank you. Look, I think, The Persimmon Way is a composite of quality assurance. I think having the inspection regime in place now is critically important and is driving up build quality. You definitely see that in the scores across the businesses. That's one part of it. It also runs through the entirety of our policies on build quality from the standards we're expecting to be delivered, the tolerances we're building towards. All of those are rising through the business. I think, over the course of the last two years, I think Persimmon has achieved a fantastic turnaround in that. It continues to deliver that. Look, 92% in terms of recommend is a very respectable score. It continues to improve month-on-month. Other key components of that are improving the skills of site management, and the quality of the subcontractors we're using and what we expect of them. Those have all driven up standards within Persimmon. We've got future improvements to look towards in terms of Well, Martyn, you were about to roll out the site manager app across the south of England. We are, yep. Do you want to say something about that? Yeah. The site manager app is just a way of recording electronically all the snags that are picked up pre-completion to ensure that when customers move in. We've dealt with them properly, and we know they're all cleared down. That way we have the confidence of handing over as perfect a house as we can do. It will give us a digital central oversight of actually what we're building, I think, which is going to be also a big step forward. An audit trail. Yeah Things that go wrong. We can make sure they don't go wrong again. Excited to see what that brings and the further value it adds to the business. Of course, as Mike alluded to earlier, an investment in customer care as well. A big step up in that across the businesses, and a real focus and attention across the business to closing down customer issues. On FibreNest, well, I think the retention rates are about 90%+, aren't they? Yeah. The penetration, if you will, the customer participation is very healthy. It's gone beyond 90%. I think in terms of the approach we're bringing to it's all about delivering plug-and-play on moving-in day, that day one connectivity. We believe, it is the fourth essential service, in the current environment. Hey, the pandemic has reinforced that view, with the ability for people to work from home, which is very important. I think that the development of the FibreNest business, is very important for us, in delivering top-class customer service. We do provide a unique offering in the new build market in terms of day one connectivity. Revenue-wise this year, maybe around GBP 5 million, overall. It was about GBP 2.5 million for the first half. It's that sort of trajectory at this point. It's still relatively new and young. We're, if you will, looking at an internet service provider. We are a young, embryonic service provider in that context. If you compare us to the majors, the Virgins, the BT Openreach, and others in the market, we are very much a young, small ISP. As you know, we've got a full fiber network around the country now, independent data centers, with this ambition for top-class service in support of what we're delivering to our new home buyers. Yeah, it's an interesting and exciting opportunity to support customers in the future. Moving on to the carbon emission side, I think it's got a part to play there as well, in terms of integrated solution for customer. That interface between the customer and what living in a home will cost in the future. You can see opportunity. It's already in the market in terms of retrofit, in terms of energy management facility, and other services. The Internet of Things is upon us, and I think that broadband connectivity of a high service class and reliability, it's the fundamental foundation upon which everything else will depend. I think that, we are keen to continue to develop the FibreNest business for those and other reasons as it develops over future years. Dean, I don't know if you want to take on the carbon emission question a bit more. Will do. I think just building on that, directly to answer your question, our targets cover all three scopes. Obviously, our concrete brick is within Scope 1 direct, and clay is in Scope 3. The various contributions that we expect they'll make to reduction targets are embedded in those calculations and those commitments. Look, more broadly, we are experimenting with three developments at the moment where we're building zero carbon homes, Germany Beck, Whittlesey, and Lawrence Weston. Like everybody else we are committed to deliver this critically important contribution to U.K. reduction of emissions from housing and heating. We're learning as we go, as we work on these developments. We'll be able to report back as each time we come back to you about the progress we're making. Okay, great. Thanks for your answers. Andy, can I just point you at, a bit parochially maybe, but in one of the footnotes, we do point to a link there to the Financial Reporting Council site. The Lab has identified our disclosure around these areas as an area of good investment practice. You can find out a little bit more if you take advantage of that opportunity and click on the link in the footnote that we've provided. A shameless plug there from Mike. Great. Thanks, Mike. Cheers, Andy. The next question comes from the line of Sam Cullen from Peel Hunt. Please go ahead. Hi. Morning, guys. Hi, Sam. From me. Just on the price growth, I just noticed that the Charles Church price growth in the half was, I think, 7% versus core at 4%. Is there anything in that? Is it a base impact, or is there something about those properties or the mix impact that we should be aware of? The second question is just, could you remind us, because you guys have pulled out the tile works and the brickwork numbers in the presentation. Can you remind us or give us a broad idea of number or percent of homes you're supplying from those two factories? Just quickly on the pricing, Sam, it's really down to mix. I wouldn't read too much in that differential between Persimmon and Charles Church. Overall, our private pricing has increased period on period by around about 5% in line with the group average. I wouldn't particularly differentiate between Charles Church. There is a bit anecdotally, I know in the market around people searching for more space because of the pandemic effects and what have you. Maybe that is true and indeed, it's great that customers are choosing Charles Church product to satisfy that need. We come down to the fact that Persimmon has always been a broad church in terms of offering a good range of choice on every site, to try and fulfill the needs of communities where we're building. We're going to continue to do that. As the drivers of market conditions change, then we feel that we will pick up advantage by that broad-based offering, as perhaps you've seen in Charles Church. We wouldn't want to overemphasize that particularly, in terms of Charles Church vis-à-vis Persimmon. On use of bricks and tiles. In terms of bricks, it's very much down to local planning and local variation. I'm not being evasive. Any overall number is meaningless. You'll see a lot of take-up in certain parts of the country and very little take-up in other parts of the country, which is very much down to the local vernacular and the local planning requirements. As we point to, they are an essential component of our capability, and that has been demonstrated very clearly to me, for instance, during the course of this year, as we've struggled to get clay bricks. I also note that nobody complains to me about shortage of tiles within Persimmon. There is an increasing take-up within the business of our own tile. We continue to develop and improve that product. They are very strong assets to have within the business and I'm very glad to have them, to be honest. Great. Thank you. Cheers, Sam. The next question comes from the line of Emily Biddulph from Credit Suisse. Please go ahead. Morning, guys. I hope you are well, and thanks for taking my questions. I've got two, please. The first one's just on work in progress. I think you said that you were looking to invest in work in progress, but I don't think you've given us a target, be it a revenue number or absolute GBP millions investment for the year. I wondered if you could share that with us. Secondly, I just wanted to come back on this question earlier on management churn or scopes for churn. I think I appreciate it's before your time, Dean, but at the Capital Markets Day in 2018, there were similar questions about management churn post the end of the LTIP. At that point, we were given some quite nice disclosure on the absolute number of people leaving the business and the proportion of those that were being replaced with internal appointments. I wondered if you could give us some sort of updated disclosure there for the last five years, like what proportion of the top five people in the business have churned in that time, and how those are being replaced or any data that you have on that would be really useful. Thanks very much. I don't think we've seen any churn in senior regional chairman in that period. No, I think the bulk of the senior management team is still in place, Emily. Obviously, one or two I can think of, maybe one or two MDs that were at the, just as myself, the other end of the wrong end of their careers, perhaps. Right end, Mike. The right end of your career, mate. They have retired. As an organization, as you know, Emily, you do need a certain amount of movement because to hold on to our great young talent, you've got to give opportunity. Persimmon, we're not in the business of just creating job opportunities just out of thin air. They've got to be real opportunities to make real contributions. That requires a certain amount of movement. When people retire, we wish them well and thank them for their contribution. There's always great young talent looking to take that opportunity on. That's the name of the game. I don't think that just as we look at the business as we've discussed today, it's in great shape. Yes, there's a bit of a war for talent. This year is no different to any other year. Mike, obviously, look, as a newcomer coming in, I am very impressed by the strength of talent within Persimmon and particularly in the construction and the management teams in the businesses. Any changes that have happened since I’ve been here have been 95% internal promotion, I would say. Now, that’s not to say that we should have a closed mind, and like all businesses, we don’t have a monopoly of talent. Look, we will look outside as well as in. I am confident I’ve inherited a very strong operational team, I’m delighted to say. They mostly seem happy. It depends on which day of the week you’re talking to them. As always, they get frustrated by the challenges of professional life, as we all do. I think by and large, what I'm seeing is our management teams are thoroughly enjoying the business, are excited about the future, and indeed, some of them have done very well out of previous LTIP schemes, and I ask myself, why are they working? They continue to love Persimmon and throw themselves heart and soul into the business, and we, all the shareholders, are benefiting from that. I don't think anybody needs to run off and be concerned that we've got a vast amount of management churn just around the corner, because I don't see it happening. On the WIP side, Emily, yes, we do have the ambition to invest more in work in progress. We'd love to see us consume cash through the second half of this year. If it was GBP 50 million-GBP 75 million additional WIP carried over and above June position, that would be fantastic. We'd like to apply some of the liquidity we have. The challenge at the moment is the sales rates are particularly good, and the challenge is with build to keep pace with that in the right way. As I said earlier, we've got 40 sites under construction that we've not exercised the first sales release on, and we've got another 12 where we're holding back further sales release, to allow build to progress to the right stage. We're being pretty measured about delivery to get the balance right in terms of quality service, and the position in the ground. Also, we don't want to, in this sort of market, again, it's one of the building blocks of running the basics of running a housebuilding business. Where you've got a market that is receptive of price growth, you don't want to sell too early, because it's an opportunity lost, in being blunt about it. We have to be measured in terms of the pace of what we do, both build and sales, to make sure that we manage the best outcomes that the business can deliver. As a cash-centric business, that's one of the essential truths of managing the Persimmon business. Great. Thanks, guys. Thank you. The next question comes from the line of Ami Galla from Citigroup. Please go ahead. Morning, all. Just one question from me. It was really on operating expenses. The first half number looked slightly higher, and I was wondering if there were any one-off costs within the overhead figure that we are looking at, and if you could give us some guidance or color on how we should think about overheads as you drive a higher volume growth over the next couple of years. Yeah. If I have a first go. Ami, just on the note, I think obviously the volume, we are on a growth trajectory, hopefully we've laid out the building blocks to think about there in terms of your prognosis about Persimmon's future. Indeed, part and parcel of that is obviously overhead efficiency. I think that unfortunately, because of the market that we're working in with the pandemic measures, et cetera, we have deployed quite a lot more IT, et cetera, out there. That does blunt our overhead efficiency a little. I think the net OpEx in the first half was about 3.6% of revenue. Anything sort of 3%, 3.5% we would point to as sort of normal. With a bit of further growth in output, I think you'll start to see a return to that improved efficiency. There's no one-offs or anything in there that we would want to point to particularly. It's more about the challenges that we're wrestling with currently and general overhead efficiency, which should improve as we move forward. Yes. Thanks, that's helpful. Thanks, Ami. We have no further questions in the queue. I'll hand the call back to your host for some closing remarks. Thank you all very much for your interest today. I think we've had a pretty comprehensive run-through, as I hope you can tell. As a management team, we think we're in good shape. Pleased with the first half. I think we've got a good second half ahead of us. We're excited by the investments we're making and the opportunities they will bring through to the business in the coming years. We will build momentum into 2022 and 2023, where we're investing in the business, but we're convinced that we're getting payback on that investment that will protect the margin. Persimmon is in good shape, and we look forward to future delivery. Thank you all very much for your time this morning. Thank you for joining today's call. You may now disconnect your line.