Hello, and welcome to the Persimmon trading update analyst conference call. My name is Ben, and I will be your coordinator for today's event. Please note duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Mr. Dean Finch, Group Chief Executive, to begin today's conference. Thank you. Thank you very much. Good morning, all. I'm joined this morning, as usual, by Mike Smith and Julia Nichols. Can I begin by apologizing for being 12 minutes late? We didn't make this up. The operator who's handling the call is short of staff and has suffered delays in patching you all in. Apologies for that. Anyway, thank you for listening in this morning and tearing yourselves away from the drama of Westminster. It does, I guess, make being CEO of Persimmon feel perfectly mundane. As I drove in this morning, I was reminded by the radio of Proverbs chapter 29, verse 18, "Where there is no vision, the people perish. He that keepeth the law, happy is he. My wife subsequently reminded me in verse 11, "A fool that uttereth all in his mind is a fool." Anyhow. I am pleased with our progress as I think we are building an all-round excellent business against the backdrop of difficult circumstances. While completions are lower, our profit is marginally ahead of our expectations and gross housing margins are up. We are rebuilding our outlet position. As guided back at the start of the year, we should be down on the first half. As previously indicated, we started the year with a low number of outlets. Back in 2018 and 2019, we were running at over 400 outlets. At the start of this year, we were selling from well below 300. Low outlet numbers have been compounded by slow planning. It is clear that the regulatory environment is no longer in our favor. Despite this, we have beaten our profit expectations in H1 with an improved gross margin compared to last year. Operating margin will of course be down because of volume, but this will recover as volume recovers. We are rebuilding our outlet position and are opening some superb sites, for example, at Garendon, Felixstowe, Wellingborough, and even in Amble. All are opening at great margins and at first budgets that are ahead of the land appraisal, which is fantastic. We have also some great sites coming through, for example, Didcot, Sittingbourne, Trowbridge, Warminster. These will be superb sites with excellent margins that will be the mainstay of the business for years to come. Since I joined the business, our Land Committee has approved the purchase of over 44,500 plots, deploying well in excess of GBP 1 billion of capital at industry-leading margins and at ratios of cost to revenues that are historical lows. We are building at rates that are faster than ever before at much enhanced levels of quality. I'm delighted that we're carrying forward much greater levels of WIP into the second half of this year, which is a first for me since I joined the business. We're also selling at rates that are at historical highs and at excellent prices. Our customer satisfaction scores are at an all-time high, not just the eight weeks, but now also the nine months, and our RIs are an all-time low. This is very much reflected in what customers are telling me. I make a point of trying to get to site every week, and when I'm on site, I always try and ring doorbells. Just last week, I was in East Calder in Edinburgh. I rang a doorbell and spoke to a lady that had just moved in. She told me that she worked in customer service, but our service was the best service that she'd ever experienced. A few weeks back, I was in Cheadle in our marketing suite when a customer walked in. They had just canceled with a competitor across the road because of customer service and reserved with us. In Exning, I came across two sisters who had bought two Charles Church 10 years ago. Excited by our new development in Exning, they came in and reserved four, one each and one for each of their children. We are winning on service, beating the competition, and growing our lifetime customer loyalty. We are investing in our brick and tile factory, and this is delivering results. We are producing a new range of bricks that are better quality and look much better than our previous ranges. We have installed a new ridge line in our factory, and we are now self-sufficient in this. This is giving us a cost advantage, as previously we paid GBP 3.50, and now we're paying GBP 0.69. We are progressing our new timber frame factory, and this will give us an enormous boost in a few years' time. We reckon that we can build seven weeks quicker using timber frame than trad based on current build times. In the meantime, we are also extending the use of timber frame within the business and are trialing timber frame in the north of England, where previously we just focused on trad. We are also raising our design bar to improve the curb appeal of our houses and give both planners and communities developments that are a pleasure to look at. Get it right first time just doesn't apply to construction, but also planning. Anything that accelerates our consent time will help us build and sell more. We are also investing in our people with more apprentices and with more training, especially for our site staff. People want to come and work for Persimmon now. There's a lot of good things happening in the business. We shall continue to grow our outlet numbers this year, and I expect us to deliver a material increase in outlets over the course of the year. We are, of course, targeting to deliver over 15,000 completions this year, but recognizing how tough it is and how slow planning is, we are prudently guiding in the range of 14,500-15,000, albeit we expect decent profit growth. We have great visibility of H2, with 75% sold for the year at great margins. We expect the margin to remain secure. As you can tell, I'm really excited about the business. We have carried out a root- and- branch review of the business over the last two years, and we are building a fundamentally better business. Although there are a great many challenges out there, businesses that change are the ones that thrive and prosper. Persimmon is a fantastic business with great people and great assets, and I'm certain we have a great future ahead as we continue to focus on building a great quality product with great service on attractive and appealing developments at excellent prices that deliver and will continue to deliver industry- leading margins and dividends. Thank you very much. I'll now turn it over to any questions. If you would like to ask a question, please press star one now on your telephone keypad. You will be advised when to ask your question. The first question comes from the line of Rajesh Patki calling from JP Morgan. Please go ahead. Two questions for me, please. Firstly, on the completions guidance and the planned outlet profile, does the guidance revision for this year have any bearing on what you can deliver for 2023? Just related to that, based on what you've seen on planning delays, do you think the plan to add seven new outlets in the second half is realistic or an ambition still? My second question is on the sales rate evolution. Do you think the evolution we've seen in the trend for May and June compared to the first four months of the year driven by underlying market or there are any exceptional factors in there? Thank you. Good morning, Rajesh. We've got the land coming through the pipeline to easily grow next year. What's critical is we secure planning consent. It's all in the hands of planning consent now. Some of it is more difficult to secure than others. You know, we pointed in the statement to nutrient neutrality, which is causing not just us a problem, but the whole industry a problem. We've got about 1,500 plots over the course of the next three or four years affected by nutrients. You will recall back in March, Natural England announced another 27 SPAs impacted by this across England, and that affected some of our sites. It's a pretty complex environment at the moment. I'm confident that we will eventually secure planning permission. Other things being equal, I think our volumes will grow again next year, providing the market remains benign. You're right, it is a risk. It's not completely in our control. There's lots we can do about it, though. You know, we need to make sure that we're giving local authorities the developments and communities the developments that they want, that are a pleasure to read and look at, and then develop. As I said in my opening comments, we're doing a lot about that. I'm pretty confident, you know, we'll open of the order of the number of outlets we've indicated in the first half. It will be plus or minus a bit. That's life. You know, we're not helped by the, I think, the general macro political instability at the moment. Nevertheless, we will continue to open sites, and I'm confident that we will have more, substantially more sites open and selling at the end of this year than we did at the end of last. Sales rate evolutions, to be honest, you know, we've not seen any material change in the last few weeks. It remains remarkably strong. It's gonna be difficult to tell over the summer now because I think, you know, summer has clearly started with the school holidays. That does impact sales rates. We see that we are trending back more towards seasonal norms. I think we won't really know what's happening now in the market until the autumn, when, you know, we normally see a secondary spike up in demand in September and October time. I'm afraid I can't give you much better guidance than that. It's a question of waiting and seeing. We haven't really seen any slowdown, particularly in the business. Our problem remains, not selling, but building. We need the land on which to build on. We bought the land, we need to get consent to. Great. Thank you very much. Coming from the line of Aynsley Lammin, calling from Investec. Please go ahead. Thanks. Morning. Just two questions from me, actually. Just on the first half, obviously, volumes are lower, but you're expecting, you're seeing better gross margins, pricing is strong. Just wondered, when you look at the full year lower volume guidance, but are you kind of more confident or seeing better kind of gross margins and ASP for the full year? I guess just trying to work out how much of that would offset the kind of lower volume guidance or the PBT level for the full year. And secondly, you mentioned labor and material shortages. I mean, I've been hearing that material shortages actually are easing across the industry. So just interested to hear, is that specific to Persimmon or is it, you know, getting worse across the industry in your view on both labor and materials causing a constraint for your volume delivery? Thank you. Well, if I can answer the second question first, I mean, fairly prosaically, we were 12 minutes late this morning because they didn't have enough staff. You know, I think it's a common feature of Britain at the moment that there's not enough staff, isn't it? Whether it's the airlines, the railways or whatever it is. I would agree that I think material shortages have generally eased, but we have found labor challenging. Having said that, as I said, since March, we've built on a per outlet basis faster than we've ever built before. We're clearly overcoming the problem. Some of the material challenges I referred to, you know, what did we see at the start of the year? A shortage of blocks, then March, April time, we saw problems with windows and boilers, but we were able to source that. It's tougher, but I think there's always some sort of sporadic problem, it seems to me, in our supply chain, and that probably affects the industry in general. I just think the environment, the operational environment in the U.K. at the moment is extremely challenging. Mm. What that means is, as I said, we are being able to deliver new output. We're currently building at 30-40 more than we were this time last year, with now roughly the same number of outlets. I'm really pleased about that. I can't fault the guys. They were working incredibly hard. What there isn't, I think, is no elastic in the system, so that if you have got a planning consent delayed by two, three, four months, which is typically what we're experiencing, there is no more labor out there to go and build even faster to catch that up. Doesn't mean we're gonna lose the sales, they're gonna come, but you just can't catch that period, that three, four months up in the evolution of a year. In terms of the full year, look, you know, you can see from the trading update, I mean, we've got some excellent prices coming through. Build cost inflation is high. I would put it in the 8%-10% range. It's probably higher than some people else are saying, but certainly that's what we're experiencing. I think materials are coming off. I don't think we're seeing quite. In fact, we're seeing some prices coming back now. I think labor cost inflation is high, and I think it's gonna remain stubbornly high for some time to come. From that, kind of, your ambition is to maintain margins maybe for the full year? Well, I hope we're gonna do better in PBT margin in the second half. You know, could we see a tad more in gross margin in the second half? Yeah, it's possible. It's possible. I think it will be small numbers. I think it would be possible, though. Okay. Thank you very much. The next question comes from the line of Will Jones, calling from Redburn. Please go ahead. Thanks. Morning. Just a few from me, please, mainly around outlets build and volume, I think. Just going back to the outlet number position of circa 300, am I right in thinking that includes. That's the build number. Could you help us with the difference between that and the actual sales number and maybe how the sales outlets evolved through the year and how you expect that number to trend into year end, please. The second one, just come back to the volume guidance for the second half, which I think the midpoint of which implies something like a, you know, a low double-digit percentage increase on last year. The order books at the moment down versus last year and equivalent units I think are down versus last year. Is it maybe the balancing item for the second half is the outlets grow and that gives you the increase or perhaps it comes from the year-end order book, but just trying to marry up those two apparent differences. Then maybe just if you could give a view on where you think the equivalent units might head through the second half. I think you built about 7,000 homes, give or take, in the first half. Do you think you'll be matching completions maybe in the second to hold the equivalent units? Any thoughts there would be great. Thank you. Morning. We've got about still 50 being built out at the moment. The balance we're selling from, that number will grow in the second half. I mean, look, I often get into conversations with you about all of you about it. It depends on how fast outlets grow as well. With the very high rate, sales rate we've seen in the first half, we've been selling out faster than we expected. I have confidence that we will grow our outlet numbers and continue to grow them in the second half. They're open now as we speak, or they're being built on services provided, roads, sewers and services are going in. They will be opening very soon. We will see an uptick there, and that will provide us with further sales opportunity, but that will mostly now impact next year. In comparison to the second half of last year, you know, I think our build is in much better shape. We've got the work in progress coming through. I think we will be building at a faster rate than the second half of last year from a higher number of outlets. I can see it as I walk around the sites as we speak. I think that is what's gonna give us the modest growth that we're pointing to over last year's numbers. We certainly are anticipating aiming to grow EU carry forward again at the end of the year. That's a big ambition of ours. It does, of course, depend on how quickly we can get consents and get outlets opened. Thank you. Just to be clear, the 70 outlets you expect to bring into the business in the second half, is that 70 to start building or 70 to open for sale? Both. Right. Got you. Thank you. The next question comes from the line of Chris Millington from Numis. Please go ahead. Thank you, and thanks for taking my question. I just wanted to ask about working capital movements in the second half of this year and how you see the cash position moving over 2022 and 2023, just in light of higher land spend and also the build investment. That's the first one. Second one's just on Help to Buy usage, just where you are and kind of your thoughts as we travel into 2023 there. Perhaps you could also comment on how you're feeling about the sustainability of the dividends, you know, just in light of the lower cash balance, higher tax coming through, and obviously the risk around volumes with the planning environment. Thank you. Okay. Thanks, Chris. Mike, do you wanna talk about working cap? Yeah, sure. I think, yeah, we've seen that we've came into the year at GBP 1.2 billion. Yeah, we've consumed some cash during the period. We've invested heavily in land and we've spent GBP 416 million securing that. We've paid a dividend of GBP 400 million at the start of April, with another GBP 350 coming out at the end of this week, actually. I think Dean's already pointed out, we've got a lot of strong pipeline of land coming through where we've been through the robust approval process. There will be further land investment through the second half. Dean's also just pointed out there that we have the ambition to grow our outlet, so that will involve building more and building that outlet position, as well as then bringing those new outlets through with infrastructure spend. I think in terms of the cash position, I personally am expecting it to be somewhere where we are about now. I think if the volume comes through, that will generate revenue receipts. I think our focus is that we will leave this year with a very strong land and outlet position, which will then take us through into 2023 and 2024. I don't know if you just want me to pick up on the Help to Buy point there, Dean. Just roughly in terms of the percentage of Help to Buy volume, it's around 25% of our private completions in the first half were on the Help to Buy scheme. Our sales rates are running around the low 20%, so there is a little bit of Help to Buy left in the order book. We will see where that goes through the second half. Thank you. Thanks, Mike. On the dividend, I think we're done for this year as usual. Look, the board constantly keep the dividend under review, as we always say. We're very conscious of the importance of dividend to our shareholders. We always keep that front of mind and realize that is one of the big USPs of holding Persimmon stock. This is something that the board takes incredibly seriously. We keep it constantly under review. I have a new Finance Director that starts on Monday, who will no doubt arrive with his own views. We shall be making further comment about dividend as we progress through the year and look at where we're going with it. I mean, obviously, we do want to invest in the business, which is what you're seeing in the cash balance at the moment. I am confident that Persimmon has the capability to continue to grow and to continue to sustain margins. Obviously, we are in a cyclical industry, so if there's a slowdown, it affects the cash balance, but that's the point of the structure of our dividends. We will come back to you on that subject later in the year. That's helpful. Can I just have a quick supplementary? Just on the cash guidance, which was very helpful, actually, those working capital moves. Do you think they unwind a little bit in 2023, and so all things being equal, the cash balance starts moving back up, or is this a more kind of elongated investment profile? Look, I think, as I pointed to at the, in my opening remarks, when I came into the business, it was pretty obvious that we were gonna run a bit short of outlets. You know, as I said, back in 2018, 2019, we were operating from over 400. You know, I got to a position at the end of last year, beginning of this, where I was below 300. We are rebuilding that, which is where a load of the cash has gone. I'm absolutely confident that we bought those extremely well. As I said, look, you know, also in my opening comments, what we're actually finding is that typically when we're opening on first budget now, opening site, our margin is beating land appraisal, which is fantastic. I think, you know, what's implicit in your comment is right. Yes, because once we get back to a reasonable number of outlets, I'll stop pleading for cash from Mike. And we'll get the WIP back to where we want it to get to. But having said that, you know, I suppose I come from a mindset that where I see that we're capable of deploying capital and earning 30%+ ROCE, that seems a good use of shareholder money to me. You know, we're obviously not daft and mindful of recession, but given the margins that we're operating at, there's a lot, hell of a lot of wool on our back. You know, who can see through the crystal ball? You know, if we get into a bit of a downturn, that might be a further land buying opportunity for the business, and I'm pretty sure that the board will want me to deploy our capital to give us best advantage for the long term. You know, look, that's what this business is really about now. It's about long-term sustainability of the excellence of Persimmon. That's what we're focused on, both with shareholder margin, shareholder return, and product we're building for customer. Understood. Thanks very much. The next question, Ami Galla with Citigroup. Please go ahead. Yeah, thanks. Just a couple of questions from me. My first one is on the land market. If you could give us some comments on what are you seeing in the land markets right now and the sort of intake margins that you're achieving on land acquired in the first half. My second question is more on your targets of volume growth for 2023. What sort of sales rates are you assuming for next year in that assumption? This last one is a follow-up. In terms of the house price inflation that you've achieved in the first half, are there any differences emerging in your market in the north versus the south? Thank you. Thank you. Look, that market's pretty tough. I think everybody's experiencing inflation in the land market. I think I was hearing 7%-8% as a general average the other day across the country. I think it's the strength of Persimmon that we've got, you know, so much strategic land, and we're continuing to develop our strategic land, which we see as being an incredibly important part of the business. That underpins our long-term margin. We have not dropped the hurdle rate. In fact, we are probably now operating at as high a hurdle rate when we buy land as Persimmon's ever done. Our margins, we are confident remain good, and we're able to buy at historical ratios, historically good ratios of cost to revenue. Yes, the land market is tough, but look, as I said, I've deployed over GBP 1 billion of capital, 44,500 plots on top of, you know, an extremely good land bank. It's tough, but we don't chase volume. We focus on margin, and that's what this business is about, and we've got an excellent pipeline of excellent margin opportunities coming through. We do expect sales rates will moderate next year. We'll have more outlets, so we'll be able to compensate for that moderation in sales rates, as a result of opening up more outlets, planning permitting. Are we seeing a difference in North and South? It depends where you go, you know. You know, I've heard this comment that it's getting grimmer up north. No, I don't know. Maybe in patches. Market still seems pretty keen to me. I think the market is such a local market, it depends where you are. It's true on average that you are going to continue to get better HPI in the south as opposed to the north, but then you've got lower build cost inflation to offset it. Margins are still excellent. Thank you. The next question comes from Arnaud Lehmann, calling from Bank of America. Go ahead. Thank you very much. Good morning, Mike. Good morning, Dean. The first question, I'm sure you can't give me much details at this stage, but I'm sure you've seen the headlines about the U.K. government and obviously the housing minister now is gone, and we don't know if there's gonna be one. I guess as far as the industry is concerned, we had the Building Safety Bill in the pipeline with some potential implications for your cost base. Do you think it's likely will be delayed or even potentially never implemented at this stage? That's my first question. Sorry, Arnaud. Yeah. Was that the Building Safety Bill or the Levelling Up Bill? The Building Safety Act. I mean, any bill, I guess. Yeah. Yeah I was asking about building safety. Maybe you started to adjust according to this bill, and now you might have to readjust. My second question is an easier one on build cost inflation. You've addressed this a little bit already, but are you starting to see moderation in some materials, better availability? Could that help with completions into the second half or into next year? Related to that, what's happening with wage inflation? Thank you very much. Okay. I think the Building Safety Act, given that it's got royal assent now, I doubt that's not going to happen. However, so much of the detail of the Building Safety Act was still to be worked through through secondary legislation over the course of the next couple of years. I mean, you've got to expect now, and I don't know who, maybe you guys know, but I haven't heard who the new secretary of state for housing is. Even if you've heard, you know, we might find they've gone by the end of the day. Yeah, I think, yes, you're right to point to the fact that personality is gonna matter an awful lot there. We've just got to see. If nothing else, you've got to bet that it's going to slow everything down even further as a new set of ministers. I mean, I think I heard this morning that my department's got one serving minister left in it, and maybe he's gone now, she's gone now already. I don't know. Britain's not governed at the moment, is it? That's- That probably means we're gonna do better, but there you go. We'll just have to see. It's difficult, incredibly difficult, to tell. Look, in terms of our commitment to what we're gonna do, it's not gonna impact us 'cause we're just gonna get on and do what we said we were gonna do. Obviously what it might impact is Building Safety Levy, and further measures that were within the act. I think, you know, a follow on question, which is relevant, is what does this do to the Levelling Up Bill? You know, I am moderately concerned about that. I think that it's about, you know, that bill is about not just stopping you building on green belt, but stopping you building on greenfield if a local community doesn't want it. We'll have to see where that goes. However, you know, on the other side of that equation, we just have to get better as a developer at giving local authorities and communities developments they want built, and we are doing that. We just have to rise to that challenge. On build cost inflation, yes, we are seeing a moderation in general on materials. I mean, timber prices are coming back now, for instance. It really does depend because there's other factors going on in the supply chain, and I think we've yet to understand how the Ukraine conflict will play out in global supply chains. I mean, we're doing a lot of self-help. Just even the internal restructuring on having one U.K. MD in the business has helped us miraculously find 10 million bricks across fields in the country. You know, there's an awful lot of self-help Persimmon can do. That's why, you know, we are expanding our timber frame capability and while we're expanding brick and tile. You know, the small example I gave in my opening comments about the ridge tile line. I mean, we were looking at GBP 3.50 and rising for ridge tiles if you could get ridge tiles. Now we've got our own line set up, it's costing us GBP 0.69. We don't have a shortage of brick and tile. Other things we've experienced shortages of, as I said, windows, blocks at the beginning of the year, boilers. We're also getting sharper at spotting these coming and getting better at overcoming the problem. It is a problem. It's really hard work. I point to the fact we're building more homes at a faster rate than we've ever built before. Clearly, we're being able to manage it. I think as I said earlier, I don't think wage costs, we should expect wage inflation to abate anytime soon. Very clear. Thank you so much. The next question is from Gregor Kuglitsch from UBS. Please go ahead. Hi, good morning. Maybe a few questions. Perhaps I missed it, but I just wanted to sort of confirm what your average sort of sales site count actually was in the first half and kind of what you're targeting to end the year by, and sort of as we think about next year, I'm appreciating that there's obviously sorts of uncertainty around that. Maybe a follow on to that, compared to what you sort of thought you could deliver back in, I think it's a couple of months ago, end of April and now, what would you say is sort of the big difference? Is it labor shortage? Is it material shortage? Is it just simply planning consents that were delayed, nutrient neutrality, that sort of stuff that sort of accumulated into that sort of cut to the volume guidance? The second question is going back on pricing. I mean, maybe one sort of simple one. I was looking at the order book that you kind of cited and I think up 12% in private, I think you're citing. Are we talking sort of 5%, 6%, 7% price increase, sort of on a blended basis for the years? Is that what this is heading towards? Maybe sort of more, anecdotally, are you seeing any sort of evidence that pricing is leveling off in the market? I mean, I appreciate that it's very strong. We see all the numbers, but is there any push back to pricing and customer obviously seeing increased mortgage rates, affordability is getting impacted. Any evidence of that or not really? Thank you. Average sales rate's just under one, which is an historical high for us. Though, as I said, I do expect that to moderate next year. We will continue to review that and take a view of that as we go into the autumn when we see what the market looks like as people come back to work. What's the biggest challenge? Without doubt, the biggest challenge is getting planning consent at the moment. In some instances, where there are problems like nutrients, you've just got an absolute block. You know, there are some local authorities that are gonna go nowhere on that, and without government guidance, they're gonna go nowhere on that for years. Others, we are working hard. Other authorities have taken a more robust approach. Teesside is one that sticks out, for instance. In terms of ignoring government guidance on this and actually challenging the legality of it. I think I've seen some other developers also challenge the legality of some of the stop notices that have been put upon them. I think for us, the biggest number one challenge is we bought the lands. It's getting that through the consent process, the regulatory process to get them approved. You know, that is incredibly slow at the moment. Look, as I said, we are buying a lot of land. We're experiencing a lot of uncertainty and delay as we bring those through the pipeline. Yes, we've got challenges with materials. Yes, we've got challenges with labor, but I think they're secondary to planning consent. I mean, clearly, nimbyism is being played out at large at the moment. What I do agree with is, look, we have to build better quality houses on better looking developments, and that is what we're all about, and that's what we're delivering. We've got to help ourselves here, and we are very focused on that. I'll ask Mike to come in in a moment on the overall blended rate for the year. Do I see any evidence? Not really. I mean, some of the MDs when I go see them, you know, tell me how terrible it is because they've now had two down valuations and they haven't experienced one for some time. Really, the down valuations are very few and far between still, in our business. You know, we continue to see very strong demand and very strong sales rates. They continue at historical highs for the business. We have very low stock availability across the business because we sell out so quickly. The thing that is not concerning me at the moment is sales rates, or for that matter, pricing. Mike, do you wanna come in on that? Yeah, sure. Yeah, I think we've seen in the first half, the blended ASP has gone up 4%. I think, Gregor, in your Your question you pointed to a blended maybe 5% for the full year. I personally don't think you're too far away from that. I think that's where it's pointing to at the moment. Thank you very much. The next question comes from Clyde Lewis from Peel Hunt. Please go ahead. Morning, Dean. Morning, Mike. Couple of questions, if I may. I think one is probably around how you are thinking about what a significant drop-off in sales rates would lead you to do, I suppose, into next year. 'Cause clearly the market's very concerned about the economy, consumer confidence, higher mortgage rates, et cetera, et cetera. We're all sat here wondering how difficult it's gonna be next year. As you've alluded to, you know, you're expecting sales rates to slow. What are you thinking you would do, you know, I suppose particularly around land buying, WIP investment, if sales rates drop 20%-25%? That was the first question. The second question was, I suppose coming back a little bit to prices, and you've sort of said you're pretty relaxed about pricing at the moment. Have you stopped trying to increase prices across the business and are you, I suppose the attached to that, are you seeing incentives starting to increase at all? The last one was whether you're seeing any real variation around product demand by the product, i.e. the smaller units versus the bigger units, really. Two is the easiest one. No. No to both. We're continuing to increase pricing because we see an incredibly strong demand. No, we're not having to increase incentives at the moment. In product demand, no, not really. I anticipate, though, as Help to Buy comes to an end, in the autumn, as current guidance has it, although clearly we've got a new chancellor of the Exchequer for a few days, and we're about to have a new secretary of state. You know, we may even get a new prime minister that recalls that the Conservative Party's fortunes are about satisfying the housing, the country desperately needs. Should all those things come to pass in different variations, you know, you could see that product demand will change if and when Help to Buy comes to an end. I think there, you know, our product is just right. You know, we're the Lidl of the housing market, aren't we? You know, where I want us to get to is great on quality and Lidl on price or Persimmon on price. I think our product is the right place to be in the event that that comes to pass. If we see a drop-off, well, I think we'll see a ton of cash coming back into the business because, you know, if Of course it depends because it also could be an opportunity for us. If land prices remain high, then we'll slow down on land buying 'cause we've got a ton of opportunity coming through the pipeline now anyway. If we see the opportunity in land, then we'll press forward with it. Look, our model enables us to slow down pretty quickly if we have to, and then the business will throw off pots of cash. I think. Look, to my mind, what we'll see. I mean, we've seen some absolutely crazy rates, subcontractor rates, eye-watering. They will ease and, you know, the subbies know they'll ease and that's their model. That will provide a lot of, you know, support for our margin, which is already ahead of the competition anyway. If a slowdown comes, it's our job to turn it into an opportunity, and I'm sure that we'll do that. Perfect. Thank you. The next question is from Andy Murphy, calling from Edison Investment Research. Please go ahead. Thank you very much. Good morning. I just have one question, really. It's mainly for you, Dean. You mentioned about the review of the business that's been going on for the last 18 months or so, and you seem to be suggesting that you've seen opportunities where the business perhaps wasn't run as well as it could be run, and therefore opportunities to make it better. I was wondering if you could give us a bit of color around what those opportunities are and what they might mean in terms of magnitude or perhaps, say, margins or returns. Thank you. Thank you. Look, I inherited an incredibly well-run business, but we have a broader focus now, which puts a lot of focus on customers. I think as the world changes, our focus on customer needs to change. What I'm seeing as a result of that is that we're beginning to see a lot of good customer goodwill. I think a happy customer does give you the opportunity to sell more product at better prices. Clearly we need to invest, and we are investing to give customer a better product. First and foremost, we are very focused on delivering that. I think if, you know, if and when Help to Buy does end, you know, house builders are gonna probably have to work a bit harder on selling to customers, whereas maybe in the past, they could take them a bit for granted. Sharpening up our act and giving a better product for the customer is front and center of what we're about. I think it's evolution, not revolution in Persimmon. 'Cause we've got an enormous set of great assets and people within the business. It's our focus of making them run better together. You know, instead of being 31 fiefdoms, our focus is to make them more cohesive, more working together, sharing the know-how that exists within the business. While also, you know, investing in our staff. If you build right first time, you do get lower remediation costs. You do get lower customer complaint. That gives you opportunity. As well as investing in some of the assets we've already got, and investing in new ones. The investment in brick and tile, for instance, has and the expansion we've done this year in brick and tile, you know, new lines, new products like ridge tile line, but also expanding our own brick range. We are producing now a much better quality brick that frankly looks so much better than 1st- and 2nd-generation brick. On our sites when I go around them and you see the contrast between 1st- and 2nd-gen brick and 3rd- and 4th-gen brick, it's like a different builder. That is helping ourselves, in my view, in securing, you know, more planning consents, which is what we're very focused on doing for all the reasons we've discussed on this call at the moment. Because local authorities are beginning to actually like what we're building, which I think is really important. You know, building on new capability, like the new timber frame factory that we're progressing. That's just got to help us. New panelized products, a new range of roof tiles. All of those things are helping, I think, Persimmon improve and give a better value to a customer and ultimately to shareholder to, you know, the increased brand value that brings. Okay, great. Thank you very much. The next question comes from John Fraser-Andrews from HSBC. Please go ahead. Thanks, yeah, good morning. Two for me, please. The first is, if just relating to the completion. Oh, I can't hear you. I'm sorry. Your line's a bit wobbly. Is this better now, Dean? Yes, it is. Yeah. The first one is just a yeah, I think as we've seen, you know, material costs when we came into the year were strong. As you pointed out, they have eased a bit and labor is continually pushing. So I think it's 8%-10%, as we sit here now, is more pointed towards the labor element of it. The cost-of-living crisis that we're seeing, and competition of the constrained labor pool is pushing us towards that. I think it's more of a, we're moving towards maybe a 40/60 split of the labor of that. Thanks for those. Does that imply that, I mean, materials, given the pickup during last year, you'll be running into a higher comparative base so that, if anything, that should potentially decelerate that 8%-10%. Is that fair? I think it depends what happens on payroll costs. Yes, but it depends on what happens to, I mean we're all expecting passport costs to go up in the next few months. Can't think why, but it all depends on what happens. Broadly, I think you're right, but it all depends on what happens to, you know, certain key causes of Just one quick more follow-up. The 12% in the forward order book in pricing the increase, how much of that do you think is underlying inflation? We have been very tough on pricing. We've had to be to absorb build cost inflation, and I think we're giving a better product. There's obviously a mix effect in there, obviously. You know, we are building a better quality product and we're focusing on getting value for it. Understood. Thanks, Dean. Mike, thank you. The next question now comes from the line of Glynis Johnson calling from Jefferies. Please go ahead. Morning. It's actually two follow-ups just on the land and more clarification there. You referenced the strong strategic pipeline. I'm just wondering, in terms of the intake that you had in the first half, and I'd expect second half, what is the proportion of strategic within that? Is it different from normal? Then just you said upon opening you're beating budget. Given that the intake margin is as high as it's ever been, I think is the way you phrased it, when you say opening, do you mean actually the selling rate you're achieving versus what's in the budget? Morning, Glynis. Hope you're feeling a bit better. No, we've not seen a material change in split. I think it's about 50/50, isn't it, Mike? I think what we've seen in the first half, it's around 40% of the extra ex-strategic that's come through, which is probably more in line with what we usually see. It's the imbalanced estimation of the balance of cost and selling price. Typically, what's going on is selling prices opened higher than we put in the original land valuation. That's what's driving the improved margin. Okay. It's established once you've established the selling price and known build cost on those sites. That's where the budgets coming through. Yeah. Okay. Yeah. The process is obviously you go through the land valuation. Different team's done that. You hand it over to construction. They have to do a budget. We do a compare and contrast to the original land valuation, and typically we're opening up much better than the original budget. The original land valuation, sorry. Thank you. Next question comes from the line of Sam Cullen calling from Peel Hunt. Please go ahead. Morning, everyone. Hi. I've got, I think there are actually three, but hopefully all kind of clarifications. Just coming back on the hurdle rates, what are the intake hurdle rates of the land you're buying at these kind of record levels that you've indicated that the land you're selling is at? And are you kind of pushing them up? I know, Dean, you mentioned you weren't, they weren't coming down, but are they going up in the current environment? Second question is, I think you mentioned at the top of the call that your build cost inflation is probably higher than some have been talking about. Why do you guys think that is? I'll guess on the material side, you're probably better placed given the vertical integration of the business. Kind of just interested on that front of why they are or why they're probably slightly ahead of others. Then lastly, when you talked about the kind of capital allocation within the business and the keenness to continue to invest in the land bank, in the context of the dividend, which is pretty clearly generous, why would you not look at a share buyback with the share price at this level? Hurdle rate, we're not relaxing it, that's for sure. We will keep a very close eye on it as we go into, if we go into a slowdown. I think now is not the time to be reducing hurdle rates. Build cost inflation, you gotta ask them, you know, I don't know what they're seeing. I think my margin beats their margin. Hey, happy days if they've got lower cost inflation than us. They must be doing something right. I don't know, but it's not what we're seeing, so maybe you should go back and ask them that. On capital allocation, on share buyback, you know, we have a very clever chap turning up on Monday, and I will defer that question to him. My own view of it is that you're damned if you do, you're damned if you don't. You've got a whole range of views of what our different clientele or shareholder like, and for every one of them that prefers a share buyback, another one tells me they hate me if we ever do it. As I said, I'm gonna leave that to a much, much cleverer person than me to work out. Okay, thanks. There are no further questions, so I will now hand you back to your host to conclude today's conference. Thank you. Well, look, once again, I'm really sorry that we delayed you at the start. Apologies for that. I gather we no longer have a prime minister, so I don't know if any of you have had the call on that. I hope we've been able to answer your questions. Thank you for your interest. I think, look, Persimmon is a fantastic business. It's got amazing strengths. It's getting better and better. We are overcoming our difficulties, and you know, I think the margins and returns will continue to be really, really great as we continue to build a better business, better product. Thank you very much, and I look forward to speaking to you again very soon. Thank you for joining today's call. You may now disconnect.