Persimmon H1 2025 Earnings Report

Persimmon EPS Results

• Actual EPS: GBX 36.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Persimmon Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Persimmon Announcement Details

• Quarter: H1 2025
• Date: 8/13/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 13, 2025
• Conference Call Time: 4:00AM ET

Persimmon (LON:PSN), together with its subsidiaries, operates as a house builder in the United Kingdom. The company offers family housing under the Persimmon Homes brand name; housing under the Charles Church brand name; and social housing under the Westbury Partnerships brand name. It also provides broadband services under the FibreNest brand; and timber frame, insulated wall panels, and roof cassettes under the brand Space4. Further, it offers concrete bricks and roof tile. Persimmon Plc was founded in 1972 and is headquartered in York, the United Kingdom.

Persimmon H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Persimmon delivered 11% underlying PBT growth and 13% higher operating profit in H1, supported by strict cost controls and robust pricing.
• Positive Sentiment: Private completions rose 7% to 3,987 homes, outlets increased 4%, and ASPs climbed 8%, driving a 12% revenue uplift and a 9% rise in the forward order book.
• Positive Sentiment: Land bank strength remains a key enabler with plots up 4%, a 7% rise in owned sites with planning, and ambition to expand to 300 outlets within 18 months.
• Positive Sentiment: Building safety remediation is ahead of the industry at 80% of developments on-site, reducing the provision to £208 million and freeing capital for future deployment.
• Positive Sentiment: Significant investment in factories and vertical integration—automated timber frame, 24/7 brick and tile lines and the new Space4 line—is driving cost savings and supply security.

Presentation

[Dean Finch, Group CEO & Director at Persimmon]

Good morning, all. Thanks for joining us today. I'm joined by Andrew, Ian and other members of the team are around as well if you want to catch them later. So the theme of these half year results is that we've continued to grow the business and at the same time, enhanced our capabilities for the future. As I pointed out in our statement, our focus on self help has continued to deliver.

[Dean Finch, Group CEO & Director at Persimmon]

We've grown in several key areas: completions, ASPs, sales rates ex bulk, outlets, consents and profits, and all whilst reducing our exposure to cladding. This differentiated performance is a product of our strategy and execution, and that's been brought about by the skill and expertise of my colleagues at Persimmon, whom I want to thank for this great performance. Persimmon's strategy involves choosing where to build, what to build and how to build, and that approach enables us to provide exceptional homes at attractive prices to our target customer base. We continue to double down on our clear strategy through our investment in land, in our brands, in our build quality and customer service and our factories. We're doing this whilst continuing to maintain a secure and strong balance sheet.

[Dean Finch, Group CEO & Director at Persimmon]

Our strategy and our execution are enabling us to deliver profitable growth in contrast to a challenging market. And I believe it will enable us to continue to grow in the coming years. So our strategy is consistent and is clearly delivering as the next slide, which I presented to you in March shows. These five enablers, Land, Brands, Quality and Service, Innovation and Vertical Integration and Balance Sheet, support and enable the delivery of our strategy. Our high quality land bank and industry leading planning success combined are driving outlet growth.

[Dean Finch, Group CEO & Director at Persimmon]

Our three strong and distinct brands are well positioned as attractive and very good value products in their respective This brand diversification is undoubtedly driving sales and growth. Our significant and sustained progress on build quality and customer service is enabling us to better compete for customers, and that improves sales rates in a challenging market. Our investment in innovation and vertical integration is enhancing our build efficiency and our delivery now with much more opportunities to come. Finally, our balance sheet remains a key strength. Our strategy and these enablers, coupled with our experienced teams, are both helping us to outperform now as well as give us the confidence we will continue to do so in the future as we build our differentiated platform.

[Dean Finch, Group CEO & Director at Persimmon]

So now I'll turn to what we've achieved in the first half. As you can see, we had a good first half. Our underlying PBT is up 11%. I think that's a great performance and reflects our strong pricing and rigorous cost controls. Outlets are up 4% against industry trends.

[Dean Finch, Group CEO & Director at Persimmon]

Our weekly sales are up year on year. And together with more outlets, that's driving more completions. We continue to invest in our excellent and growing land bank, and we've maintained our HBF five star and are now rated excellent on Trustpilot for both Bessemer and Charles Church. Our underlying EPS is also up 3%. As Andrew will explain later, the reason EPS is not up more is because 2024 benefited from a prior year tax credit.

[Dean Finch, Group CEO & Director at Persimmon]

What I'm really pleased about is that our current total forward order book is up 9%, with private up 11%, giving us excellent visibility. So it's been a strong performance despite the continued challenges in the market. Andrew will now take you through the results in more detail, and then I'll say more on how our strategy has delivered and gives us confidence for the future.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Thank you, Dean. Good morning, everyone. So I'm really pleased that we have delivered further growth in volumes and in profits in the 2025, which is an excellent performance in the context of a very challenging market backdrop. New home completions were up 4%. Our blended average selling price increased 8% to $284,000 and I'll come to the detail of this in The combination of volume and pricing drove housing revenue up 12% to over $1,300,000,000 and gross profit up 11% to $262,000,000 Gross margin was maintained at 20.1%, which is a good performance given the change in cost base over the last few years.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Underlying operating profit increased 13% to £172,000,000 and I'm pleased to report a 10 bps increase in our margin to 13.1%. Underlying PBT is up 11%, and this is after a £4,000,000 increase in interest costs because of our lower cash balances as expected. And although not on the slide, statutory PBT is flat after allowing for a £16,000,000 exceptional charge in relation to the CMA commitments that you're aware of. Our tax rate is close to the statutory 29%. And if you remember, the first half in twenty twenty four had a lower tax rate because of some one off items, and that boosted last year's underlying EPS.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And putting all this together, underlying EPS this year has increased 3% to 36.8p. We generated cash of £183,000,000 before movements in working capital, and our return on capital employed has increased to 11.2%, reflecting the improved profitability and our continued balance sheet discipline. And I think this is a particularly good metric in the period. So I'll now come back to sales mix and ASP in a bit more detail. Of the total new homes delivered, 3,987 were private, that's 7% higher than last year.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And this increase reflects our strong sales rate and an increased number of outlets, which has meant that our total sales per week, including bulk sales, has increased to 191 a week. Private completions includes five ninety bulk sales, which is 13% or 66 houses higher than last year as we continue to engage strategically with this sector. 34% of private sales were to first time buyers, and this has always been and it remains a very important market for us. And Charles Church increased in line with our planned growth to 11% of private sales or 10% of total completions. Partnerships output fell to 13% of total completions, and this continues to reflect the acceleration of delivery in 2023.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Importantly, all of our affordable delivery is signed up for this year. The blended ASP on completions in the period was up 8%, and private ASP increased strongly, even allowing for the increase in bulk sales. There's a couple of things to just draw out. Firstly, pricing has been robust, particularly in the North Of England and in Scotland, and we've pushed it on where we can do. And secondly, the pricing on our bulk units has also been strong, reflecting our more strategic approach.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Overall, our product remains affordable with our Persimmon Homes average selling price well below the new build national average and with over half of completions below £300,000 And across the period, average incentives on completions were around 4.5%, which is similar to 2024, but of course, of higher pricing. So putting this all together, the combination of increased volume and increased ASP drove revenue up 12%. This slide provides the normal bridge showing underlying operating profit movements, And you can see the positive effect of increased volumes, increased average selling prices and the mix of more private units. The movement in the cost line is small, and we remain focused disciplines and managing our costs closely. Net operating expenses have increased by £7,000,000 which is a 9% increase, less than the 12% housing revenue increase despite our ongoing investment in capabilities for the future.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

This bridges on an underlying basis. The only exceptional item in the period is £16,200,000 in relation to our proposed contribution and the cost to date of the CMA investigation, and this is shown within administration expenses in the income statement. So I'll now turn to the balance sheet. Our strong balance sheet is a platform that allows us to invest in the future growth of the business. Land and WIP has increased £292,000,000 since the turn of the year.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

We've invested in more land than we've utilized, and we've also increased our work in progress. And there's three things to mention on WIP. Firstly, there's seasonality. We have more WIP at June than at December because we'll deliver more units in H2. Secondly, as we are opening new sites, there is increased WIP in relation to infrastructure spend.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And of the increase in WIP, about half is related to external infrastructure, including on new sites. And thirdly, we held £164,000,000 of PX stock at the June, and this is an important sales tool for us, and we're focused on recycling these units back into cash quickly. Land creditors are a little bit lower than the start of the year, but the key thing is that we're still able to agree appropriate payment terms in the market. We reported net cash at June of GBP 123,000,000. And taken together with land creditors, that means our gearing is about 8%.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Our building safety provision stands at $2.00 8,000,000, which is down in the period, and I'll come back to this in a moment. Net assets are up 2.4% since last June. Net assets per share are 22p higher than this time last year. And return on average capital employed is 120 bps higher than this time last year. These are all showing good progress.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So this is the normal cash bridge with the reduction in cash reflecting our investment in land and WIP as we grow the business. And this is an important point. To grow the business, we need to invest cash. And we've chosen to make this investment, and we can make that choice partly because our fire safety obligations are relatively smaller than for others. So on the graphic, you can see cash inflow from operations was £183,000,000 That's 11% more than in H1 twenty twenty four.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

WIP and other working capital movements of £163,000,000 include the investment in new outlets and in H2 delivery that I referred to earlier. We spent £46,000,000 on interest and tax and £25,000,000 on capital expenditure, including on our new Space four line. So before building safety remediation and investment into land, we had net cash of $2.00 £4,000,000 We had net investment of £50,000,000 into new land, and that's the net of land spend and land utilization in the period. And we spent £31,000,000 on our safety remediation program. So I expect net cash at the year end to be between 0 and £200,000,000 which is in line with previous guidance, depending, of course, on the speed of investment into new land.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Before I get to land, I'll just cover two other capital allocation matters, the Building Safety Remediation and our FibreNest disposal. So Building Safety provisions and the progress of remediation work is a very important topic, and we are making good progress as we expected to do, and that is the right thing to do for everyone involved. We're on-site or completed at 77% of known developments or 80% of buildings, and there's no change to the total number of developments in the period. We've assessed all known developments, and we expect to be on-site at all of these developments by the end of the year. That is well ahead of the overall industry position.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

You can see that there's 19 sites still to start. And of course, there is some cost risk on these sites until they're completed, both cost inflation and scope changes. And that's another reason that we've been pushing on to complete our work. So far this year, we've spent £31,000,000 and that brings our total spend to date to around £150,000,000 And we'll spend close to 100,000,000 across the whole of 2025. The provision at June 30 was $2.00 £8,000,000 with the reduction being the £31,000,000 spent offset by some imputed interest.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

The bulk of the remaining spend will be made over the next eighteen to twenty four months with a tail of spend beyond then. But importantly, completing this work quickly will create capital allocation opportunities for us. In May, we announced an agreement to dispose of FibreNest, which was a noncore operation for us. And I'm pleased to say that this sale completed last week, So congratulations to everybody involved. This will provide our customers with a larger choice of Internet service providers, and it will free up significant cash for redeployment into our business, both the consideration received and the annual saving on capital expenditure.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

We'll reinvest this money into the growth of the business, including new land opportunities. And in doing so, we'll create better returns than would have been generated through business. And so I'll move on to Land. Our disciplined investment into Land has allowed us to grow our outlet base again this year and to grow our business. Dean will cover this in more detail in a moment, so I'll just draw out some key metrics.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Total plots owned and under control at 82,500 is up four twenty since the start of the year, and owned plots with planning are 7% higher than this time last year. The land bank continues to be well proportioned across the country, as you can see, and this provides confidence that we'll achieve our ambition of growing to at least 300 outlets. The cost to assumed revenue in the land bank is about 12%, a very good indicator of future margin potential. These land holdings are high quality. Building on the point from the previous slide, you can see that land cost to assumed revenue has remained very stable over the last few years, and that's really pleasing.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

The average embedded site margin within our owned landholdings still around 29%. And within this, nearly 80% of plots will deliver a site margin in excess of 25%. This is site margin. So there are some other costs within statutory gross margins, such as maintenance spend and some of the fixed selling and construction cost base. But the important thing is this is shown on a consistent basis to previous years.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And taken together, provides the confidence that we've got the land in place for our growth ambitions. The structure of our capital allocation policy is unchanged and it's proving successful. We're maintaining a strong balance sheet whilst prioritizing dealing with our building safety remediation through this year and next. Secondly, we're continuing to invest in the business to deliver our growth objectives, and this has allowed us to return to growth ahead of the sector. And we're paying a sustainable dividend well covered by profits.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And today, we've declared an interim dividend at 20p, in line with last year. And we'll look to review this policy again as we deliver our growth plans and as we progress through remediation works. So to summarize, these are very good first half year results that are showing good growth. Assuming that conditions remain stable, we're on track to deliver growth in 2025 to a volume of 11,000 to 11,005 as previously guided. I said in March that our medium term margin growth wouldn't be straight line, it would be back ended, and that's still the case.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So this year, I expect some margin growth on the 14.1% that we achieved last year, which is probably near the lower end of the range shown depending on market conditions in the next few months, but I'm comfortable with our 2025 consensus operating profit and PBT are currently. 2025 will be our second year of growth since the downturn. And although not expecting any significant improvement in market conditions, we're looking to grow again into 2026. And this shows the strength of our operating model and our ability to address the challenges in the market. So looking to 2026, the pace of margin growth will be impacted by various factors, including embedded inflation and customer affordability, and none of these points will be new to you.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Embedded inflation is still an important feature. As you would expect, over half of our delivery in 2026 will be on-site as acquired before inflation normalized. And of course, average build costs were up 30% in that period. We now have relatively normal inflation, but on a higher total cost base. And so that will restrict margin progression before the effect of embedded inflation begins to diminish.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

On sales, there's likely to be some uncertainty ahead of the budget, and that could affect consumer confidence during our autumn selling season and could also affect build to rent sales for next year. And real income increases are uncertain with persistent affordability challenges, and this makes driving further ASP growth more difficult. And the costs of doing business are increasing across the industry. For example, regulatory costs, dealing with nutrient neutrality, the cost of discharging planning conditions in order to open new outlets and so on. And these are all points that I know you're well aware of.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

But taken together, it means I expect the margin progression in 2026 will be perhaps 50 bps lower than the current consensus, although that's probably about £15,000,000 before interest costs. So as an early indication, building on our growth in 2024 and growth in 2025, I expect further volume growth to around 12,000 units in 2026 and further margin progression at a similar rate to this year, which will bring us within the lower end of the range of current estimates for 2026. And you can work out that will mean further mid single digit percentage profit growth again next year. And that will make 2026 our third successive year of profitable growth. So with that, I'll hand back to Dean.

[Dean Finch, Group CEO & Director at Persimmon]

Thank you, Andrew. I said in March that I was pleased we achieved a rapid return to growth in 2024, and I'm very pleased that we're sustaining that in 2025. Our strategy to focus on self help is securing results. On all of our five enablers, we've made real progress and they continue I'll now describe this in more detail. Our investment in Land, coupled with industry leading planning success, is driving out that growth.

[Dean Finch, Group CEO & Director at Persimmon]

We've also strengthened our strategic land bank. With private sales in all three brands growing, our diversification is selling more homes. Our sustained reputational improvement is seen on our HBF and Trustpilot scores, and that reputational rise is improving inquiries, sales and partner relationships. Our state of the art Space four line and brick and tile factories are delivering more products. Automation and digitalization are securing further operational and cost efficiencies.

[Dean Finch, Group CEO & Director at Persimmon]

Unsurprisingly, we're resolute in maintaining a strong balance sheet. As Andrew said, we expect our progress on Building Safety to provide capital allocation opportunities from 2027. As I said earlier, we're delivering growth despite a challenging market. I'll now say more on how and why. We've continued to invest in our land bank.

[Dean Finch, Group CEO & Director at Persimmon]

We added more plots than completions. Our own plots with detailed planning increased by 7%, and we're outperforming the industry on planning because we do it differently. We treat an application like a political campaign. We engage early and understand local priorities. Ultimately, we aim to provide the local politicians a reason to say yes to our plans.

[Dean Finch, Group CEO & Director at Persimmon]

Too often, planning applications rely on telling politicians why they can't say no. As the graph shows, we're outperforming our peers. The industry wide data looks similar. Our 22% increase in full or reserve matter applications over the last twelve months compares to a 3% decline in the industry. Our investment in Land, combined with our planning success, means we have more outlets and have good momentum.

[Dean Finch, Group CEO & Director at Persimmon]

And I think that's reflected by our 4% growth in outlets compared to a 3% decline in the industry, and we're confident there's more to come. The government's planning reforms are presenting opportunities for acceleration of applications. We've now identified 50 potential sites in our land bank, up from 38 in March. 31 of these are already proceeding with an application. So we have a good pipeline of outlet openings this year and remain on track to deliver 300 outlets within eighteen months.

[Dean Finch, Group CEO & Director at Persimmon]

That's a good platform for future growth. If I turn now to our Strategic Land Bank, you'll see how we're strengthening it further. Persimmons' high quality Strategic Land Bank is a real source of strength. That's reflected by the fact that 41% of completions in the first half came from Stratland. Building on that, we've been investing in our teams to grow our strategic land bank yet further.

[Dean Finch, Group CEO & Director at Persimmon]

Adding over 6,000 plots in the first half means our Stratland bank is now 8% larger this year. Plus, it's really well spread geographically as the pie chart shows. That larger land bank supports our three brand strategy as examples such as Cheltenham Show. It's a great piece of land that I've referred to before. We bought it after many, many years of delay, ahead of last November's budget.

[Dean Finch, Group CEO & Director at Persimmon]

Since I mentioned this last time, we've secured outline planning on over 1,000 plots. That's a great sight for many years to come. With margins typically 300 to 500 basis points higher than open market land, our strategic land bank is really adding excellent opportunities to our growth platform. But it's not just about Great Land Bank. Our improved reputation means we're better able to capitalize on it.

[Dean Finch, Group CEO & Director at Persimmon]

We've sustained our progress on build quality and customer service. We retained our HBF five star for the fourth consecutive year. As the graph shows, our consistent progress on Persimmon and Charles Church Trustpilot scores means both are rated excellent. And our NHBC CQR score has improved further this year, and this is being noticed. Customer trust in our brand is up 17% since December 22.

[Dean Finch, Group CEO & Director at Persimmon]

More BTR partners are working with us. And we've grown our affordable forward order book despite the well publicized challenges in the sector. The combination of more outlets, an active and expanding pipeline our we've working of customers, We've lot of we've business, customers now considered buying from us, up 26% since December 22. And we've been innovative to make it easier for our customers to buy our homes. For example, our exclusive partnership with Generation Home is the first shared equity product since Help to Buy. As well as securing additional sales, it's also bringing customers to our sites. So far this year, our website visitors are up 20% and website inquiries are up 12%.

[Dean Finch, Group CEO & Director at Persimmon]

As you can see from the graph, recent weeks have seen a further uptick. And I'd emphasize that the strong growth has also been across the country. As the graph show, we've shown consistent growth in recent years. We're investing in our teams. Our Mystery Shopping scores have shown 7% improvement, helping drive performance and sales conversions.

[Dean Finch, Group CEO & Director at Persimmon]

And as a result, we've grown our market share in the first half of the year. And a new customer website and a marketing platform to accelerate this progress are in development. Our improved reputation and investment in enhanced sales and marketing with new programs means there is undoubtedly more opportunity to come. So if I turn to our brands, I'm really pleased with our brand diversity, and we've grown private completions in all three of them. And the next slide shows the breadth of progress we've made and the size of the opportunity we have.

[Dean Finch, Group CEO & Director at Persimmon]

All three brands are well placed as a good value product in their respective markets. Persimmon's traditional strength, of course, has been price, but we're now also great value. Our quality and service improvements mean we build homes our customers can trust at a price they can afford. Indeed, as I tour our sites, I'm struck by how good they now look in comparison to their major competitor, the local secondhand market. With our growing outlets and stronger sales and marketing, core Persimmon has a real opportunity for further growth in the years to come.

[Dean Finch, Group CEO & Director at Persimmon]

Turning now to Charles Church. I'm excited by the difference already seeing. We've relaunched the brand earlier this year, and we're investing in our teams to drive its growth. Of the 53 Charles Church sites we now operate from, 35 are dual branded. This demonstrates the opportunity to drive returns through a diverse market offering.

[Dean Finch, Group CEO & Director at Persimmon]

We think there's a real opportunity now to grow Charles Church across the country, and we've identified many local markets where this affordable premium product is highly attractive. Our ambition remains to double Charles Church's output. A 20% increase in completions and a 30% increase in revenue in the first half, I think, is a good start. Turning now to Westbury. We've also improved our reputation with our BTR and Affordable Partners.

[Dean Finch, Group CEO & Director at Persimmon]

Build to rent is a growing feature of the market. Recent Savills data shows investment grew in the 2025 compared to 2024. We delivered 13% more completions in the first half compared to last year. And we're securing targeted deals, employing clear discipline to improve returns. We're working with more partners and targeting further growth.

[Dean Finch, Group CEO & Director at Persimmon]

Turning to our affordable housing. We've already managed to fully secure our order book for the year. While challenges persist for RP financing, we'll build on our improved reputation strengthen our relationship in the years to come. These three stronger brands with better reputations should provide more resilience and underpin growth into the future. I believe this growth will only be supported and secured with more off-site manufacture, innovation and vertical integration.

[Dean Finch, Group CEO & Director at Persimmon]

And it's to our factories where we've significantly invested that I'll now turn. Our factories are already supporting our growth by contributing more of their high quality, cost efficient products to our business. Indeed, I think they're essential to our future growth. That's why we're investing so they'll contribute even more. A state of the art automated line is now operational at our timber frame factory.

[Dean Finch, Group CEO & Director at Persimmon]

You can see the photos on the slide. We've also expanded our product range to include roof trusses. This investment is providing a broader range of industry leading quality products, consistently and cost efficiently. All regions have plans to use the product with seven new regions starting this year. Our second factory in Loughborough will help meet this growing demand and expand the products we can offer even further.

[Dean Finch, Group CEO & Director at Persimmon]

We're starting an on-site trial of the Mauer Brickford side combined with our timber frame this month. I've spoken before about the significant benefits here, and we've identified additional sites to roll this out further. Our brick and tiles use continues to grow. The brick factory is now operating 20 fourseven, and we're also investing in an additional line next year to meet demand. In a similar vein, the Tar factory is planning a third shift next year to meet its own growing demand.

[Dean Finch, Group CEO & Director at Persimmon]

As well as getting more from our factories, our use of on-site digitalization is really driving cost efficiency. Granular management of materials is reducing lost dolling and damage costs as well as day work costs, with the results dropping straight to the bottom line. My vision is that within a few years, for a large proportion of our houses, we'll be able to provide all the main components of the super structure from our own factories: timber frame, roof truss, joist, brick or brick facade and tile, all Persimmon manufactured. The output opportunities as well as the cost efficiency benefits are really exciting. So if I turn to what's been a good start to the second half.

[Dean Finch, Group CEO & Director at Persimmon]

I'm really pleased with our sales this year. Our current forward order book is up 9% on last year. Within this, our Private Forward order book is up 11% and Affordable up 4%. In the last five weeks, our sales have been encouraging, with total sales up 3% and ex bulk sales up 17% year on year. Pricing is robust.

[Dean Finch, Group CEO & Director at Persimmon]

Private ASPs in the forward order book are up 1% compared to a year ago. In the last five weeks, ASP on private reservations are up 5%. We continue to remain disciplined with incentives currently around 4.5%. It's a good performance gives us good visibility for the rest of the year. And it's to that future that I'll now turn.

[Dean Finch, Group CEO & Director at Persimmon]

Our strategy is delivering growth. It's done so in a market that continues to be constrained by affordability. I'm pleased to say that we're on track to deliver our guidance of 11,000 to 11,500 completions, reflecting a second year of strong outlet volume and profit growth. As we look ahead, we're not expecting a demand stimulus from the government or a significant improvement affordability, other than through real terms wage growth and modest reductions to interest rates. So growth remains dependent on our own self help measures.

[Dean Finch, Group CEO & Director at Persimmon]

I've set out today that there's more investment and innovation to come to build on the success and progress we've already seen. An enhanced reputation, together with improving sales and marketing, are crucial to selling more of our attractively priced good value homes, and our expanding factories and vertical integration are crucial to meeting demand in an efficient way. We're creating a growing platform with diversified brands, selling more homes and then building them more efficiently. We expect to see further growth in 2026 as we keep opening outlets and increasing sales across all our brands, building volume, key drivers of growth in this market. As Andrew originally set out in March, the pace of margin improvement will be gradual, uneven and back end loaded.

[Dean Finch, Group CEO & Director at Persimmon]

Historical build cost inflation is still working through our sites, albeit as we look ahead, it's a diminishing headwind. That, coupled with constrained affordability and the challenges and increasing costs of opening sites, including in particular between outline and reserve matters, means there'll be a drag on margins. Nevertheless, I'm confident we'll still grow volumes, profits and margins next year. As we expect we expect volumes to grow broadly in line with outlet openings, and we anticipate margins to grow at a similar pace to this year. Assuming a stable market, the combined effect of increasing volumes and margin expansion will produce robust profitable growth in 2026.

[Dean Finch, Group CEO & Director at Persimmon]

Looking beyond 2026, our ambitions remain to grow our operating margin and return on capital employed to 20%. With the bulk of our building safety works completed by the 2027, we'll have a flexibility to deploy the capital how we choose. As you saw on Andrew's slide, work has started or finished on over 80% of our buildings compared to the industry, which is at 48%. This is a real competitive advantage. As a result of the division decisions we've taken, we have a growing company with growing prospects and growing ambitions, and we're seeking to build a structural competitive advantage for the business.

[Dean Finch, Group CEO & Director at Persimmon]

The business is in a really good place, and we're really looking forward to the growth to come. So on that positive note, I'll take some questions. Thanks.

[Will Jones, Equity Analyst - Construction & Building Materials at Rothschild & Co Redburn]

Will Jones from Rothschild and Co, Redburn. First, if you could year, of And the then the the second second was really just exploring the point around land a mix, quite active in the first half on new land buying. Do you think you're achieving margins akin to the embedded land bank you've currently got? And when we think about the feed through of that, I got half numbers a 21. Then of

[Andrew Duxbury, CFO & Executive Director at Persimmon]

We'll take those. Okay. Good morning, Will. So yes, so look, ASP, we are pushing I mean, clearly, there's a whole raft of things in there, whether it's about the mix of product, Charles Church and so on. But as I said earlier, we're seeing opportunity to push on prices, particularly in the North and in Scotland more than in the South.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Affordability is just a more acute challenge in the South. But we are we don't forecast a kind of ASP inflation or ASP growth, but you can see in the order book that the ASP has continued to be robust, so which is encouraging. And build cost inflation in the current year is where we said it would be. We said it would be low single digits, and that's really still what we're seeing. So just jumping to your third question, just whilst we're on inflation.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So yes, of course, that will diminish, but it diminishes over time. So as we get through into 2027, 2028, that will continue to diminish as a feature. What you have to remember and the reason I'm kind of telling you what you all know, but it's just useful to sort of articulate it out loud, I suppose. When you buy a large site, you might buy a site on outline with detailed planning for Phase one, but then Phase two and Phase three will come through in due course. So that's why when you see inflation a couple of years ago, it does take time for that to wind its way through the system.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So it's just a kind of mathematical factor of that. But yes, that will reduce beyond 26, and it will gradually taper off. And land buying, I think the key thing is there is a lot of opportunities. There's lots of opportunities to buy land, lots of opportunities to buy land at the right hurdle rates with the right cash profiles. And there is a lot of opportunity that we're seeing, and we it comes across our desk.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So we are making sure that we're trying to buy the right sites for the future. So absolutely, pleased with we've been able to do in the land market.

[Aynsley Lammin, Equity Analyst - Building & Construction at Investec]

Ainsley Lamyran from Investor Day. Just two questions, please. I was interested a bit more color on recent trading kind of into the second half. It doesn't seem to be as incrementally negative as maybe some others have said, just what you're seeing there, yes, pricing, sales rates. And second question, I guess, on the FY 2026 outlook, it seems quite early to be speaking about FY 2026.

[Aynsley Lammin, Equity Analyst - Building & Construction at Investec]

Is that just a reflection you just stated the facts of what you see in the land bank and the cost embedded there, as you said? Or when you look at the macro outlook and The UK backdrop, are you just incrementally less hopeful of any HPI coming through? And what's driving the timing of that comment for today?

[Dean Finch, Group CEO & Director at Persimmon]

I'll have a go. You can correct me if I get it wrong. The trading is good at the moment. We did see, as others have commented on for about three weeks in May, a bit of a decline, but then it bounced back. And it's continued to be pretty good.

[Dean Finch, Group CEO & Director at Persimmon]

I mean we always see a decline in sales at this time of year. It's just seasonal. But relative to last year, our performance is good. A few weeks ago, I thought pricing was maybe going a little bit softer. That seems to have bounced back.

[Dean Finch, Group CEO & Director at Persimmon]

So I think as well, it's important to remember, when you're growing a business, you've got more choice. So you can afford to take different decisions, and we haven't quite got that pressure to sell a constrained and declining base. So I guess we've got more opportunities. And look, the product is really good. We're also seeing kind of renaissance of Charles Church, which the whole business is incredibly excited about.

[Dean Finch, Group CEO & Director at Persimmon]

But actually, I much as I love what we're doing in Charles Church, I just think what we're doing in Persimmon gets better and better. I think we're building as I roam around the business, causing mayhem, I see we're building fantastic products in locations where the real competitor is a secondhand market. And what we're building actually is in those niche markets actually aspirational for people in those markets. So I'm just delighted with the progress we're making, and we're seeing that strength come through. So I think that's really important.

[Dean Finch, Group CEO & Director at Persimmon]

On '26, do you want to cover that? I think we just wanted to get across the point about this embedded inflation that it's just going to tip over. Actually, it becomes over time, it will go from a tailwind headwind to a tailwind as it drops off, which gives us the confidence to reiterate our margin opportunities. But we just thought this was the right moment to to set our views, and we depend on self help, don't we?

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Yes, we do. So I think to the point of your question, Ainsley, we're not expecting the market to change. We're not trying to make a call on the market. So we're looking in the current market and what we're doing around self help, around outlets, what we see as opportunity in the business. But I think it's also just a little bit of tidy up on the margin progression, it's just the pace.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

I mean it's just a nudge on that, which I think is just to try and give you an early line of sight. It's just trying to be straightforward on it really is what we're trying to do.

[Dean Finch, Group CEO & Director at Persimmon]

I will come to that side in a moment.

[Analyst]

On this cost inflation, which you mentioned was quite high a couple of years ago, I guess, since COVID. Can you remind us what's the driver of that? Is that raw material, labor, maybe land cost perhaps? And the second is on this capital allocation opportunity you mentioned. I mean after we've done this building safety work, what kind of capital allocation are you thinking? Could share that back be an option? Thank you.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Okay. No problem. Well, if you I mean, if you cast your mind back, Arsen, 2022, you had energy spikes going into material pricing. You had inflation running in double digits for a prolonged period of time. And of course, where you have bought a piece of land, that the feature of that period was that, that inflation was not mirrored in house price inflation.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And hence, that cost inflation became a margin squeeze in that period of time. So that's all sort of the matter of fact as it was at the time. The point that we're just flagging is that those site land is a clearly, it takes a long period of time between agreeing terms and buying a piece of land until you have finished trading out on those sites. So and so that's the point that we're flagging that, that impact will continue to be felt this year, next year and then starts to diminish. I think on the capital allocation points, I mean, I'm not going to give you the answer to what we'll do with the policy review. The point is I'm spending GBP 100,000,000 a year in round sum at the moment, so that's 30p a share cash cost. So clearly, once I'm through my fire safety work in a couple of years' time, that gives me £100,000,000 of opportunity, if you like, to think about how I deploy that money, whether that be around growing the business, whether that be about shareholder returns, there's a whole raft of pieces. But the point is, it's a at that point, it becomes an opportunity for us to make that decision positively as opposed to us having to deal with the remediation work. So it's good that we're dealing with this, it's the right thing to do.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And what we're doing is pointing out this is a cash opportunity for us in due course.

[Dean Finch, Group CEO & Director at Persimmon]

Better go this side, to be fair.

[Mark Howson, Director - Equity Research at Dowgate Capital Limited]

Mark Howson from Dowgate. Just a few questions. Just obviously, the bulk of the story, the first question, bulk of the story is obviously about the SIM and the product, getting that land right, etcetera. But can you just shed a bit more light on Charles Church, why that's a better margin product going forward, how you positioned it? That's the first question.

[Dean Finch, Group CEO & Director at Persimmon]

Okay. So in each of our segments, we're very much focused on the affordable end of it. So it's an uptick from Persimmon. It's bigger, but it's still very much premium economy. But we're finding I mean we're building bigger products, and naturally, there's a bigger ASP associated with it.

[Dean Finch, Group CEO & Director at Persimmon]

But what we're finding is that if you pick your markets well and there's some good markets out there, there's real demand. So I can think of one of our sites in Bristol, for instance, where it's a really good development. We're building it well. We're continuing to improve what we're building, the appearance of what we're building. And the demand gets stronger and stronger because it's really again, it's competition.

[Dean Finch, Group CEO & Director at Persimmon]

It's not really the new build around it. It's competition. It's secondhand houses up the hill in Westbury on Trim, and it's doing really well. So we're getting downsizes coming to it. It's the right size for people, and they're willing to pay a premium for that product.

[Dean Finch, Group CEO & Director at Persimmon]

And we're seeing that in other locations. I can talk to others at Litchfield and elsewhere. If you choose your markets well, and we've got plenty of opportunities, demand is really strong.

[Mark Howson, Director - Equity Research at Dowgate Capital Limited]

Just a second question for me. Just on the Mauer, the product up in Castle Bromwich. Yes, we could get that watertight within five days as opposed to eight to ten weeks. Can you just say how what the early feedback is on how the construction teams are finding that product on-site? That's the second question. Thanks.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Well, so why don't I cover so there's two bits. So the MAO product itself, Mark, is still early. So we're doing a trial on that product in a situation with a customer this half year, but that is still that's still very early days in terms of taking it into production on-site. But it is exciting because it gives us an opportunity for both speed and delivery with fewer resources required. So that particular piece is early still, but is showing the continued progress that we're making in terms of innovation around vertical integration.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

But the timber frame product itself, I think the important thing is that we are using that now more widely around the country. So it's for whatever reason, it's always been used in some regions extensively and in some regions have just stuck to traditional build. So what we're looking to do, particularly with the new line in Casabrovnich with the new factory that we're looking to develop is to make sure that our take up of timber frame is more consistent across the country. And so we're now trialing and using timber frame in those regions that haven't had the experience previously, and that's actually working well. And some really good examples when you talk to the teams, actually, they've been really pleased with how that's worked.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

I think probably the timber frame products, more generally in the industry, is better now than it used to be. And so some of those sort of legacy concerns actually have proved not to be the case anymore. So I'm really pleased with how our local construction teams and managing directors have lent into that and taken that on board as they look to extend the use of timber frame.

[Dean Finch, Group CEO & Director at Persimmon]

Kind of perversely as well, actually, where the market is strongest for us at the moment is where we're slowest to build. So if we can get the adoption of timber frame through the business, and it is a particular skill which teams have got to learn to get used to, then you've got the compounding benefit of there's a really strong market out there, so we can sell them as fast as we can build them still. Stay this side for a minute.

[Adrian Kearsey, Equity Analyst - Construction & Support Services at Panmure Liberum]

Morning. Adrian Kirsty, Panulubram. A couple of questions, if I may. One on dual branded sites. 35 of the 53 Charles Church sites are dual branded sites.

[Adrian Kearsey, Equity Analyst - Construction & Support Services at Panmure Liberum]

Is that a similar kind of proportion that you'd expect going forward as you grow the business? And related to that, when you look at a dual branded site, are the sales rates for Charles Church similar to single brand sites? And then a third question, if I may. You're increasing outlets or plan to increase outlets by 5% in 2026. You talked about the changing WIP dynamics coming through from the investment in infrastructure.

[Adrian Kearsey, Equity Analyst - Construction & Support Services at Panmure Liberum]

How should we think of the evolution of WIP in relation to that infrastructure investment sort of going into 2026?

[Dean Finch, Group CEO & Director at Persimmon]

Really there's plenty of opportunities for us to continue to roll out dual branded sites across the business, and we'll continue to do that. So over time, I would hope that we increase that proposition. But of course, it really does depend on every single individual market and other opportunities of land that come through. So it's as well as a strategy, there's also opportunities It depends just where the land is.

[Dean Finch, Group CEO & Director at Persimmon]

Charles Church, being a bigger product, inevitably has a slower sales rate than Persimmon, but what it is doing is overall accelerating the sales rate and therefore the asset turn on a dual branded site. So it's doing the job. It's we're asking it to do, really.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Yes. And then Adrian, on the outlets and the way I mean, obviously, it depends site by site because they're all so different. But I'm probably thinking you're at GBP 10,000,000, 20,000,000 of WIP to get a new outlet open. Clearly, it depends on off-site works. It depends on access.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

It depends on a whole raft of features. But clearly, is investment. And I think what we're probably also finding is that and probably particularly on Charles Church, actually customers want to see the product. So again, as you open the site, there's probably a bit more width because you want to be a bit further through on the build so that the customers can see the products. And that maybe is a different feature to a decade ago when you probably sold more from plan.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So I think and particularly, I think at a higher price point, we're seeing that is undoubtedly a feature.

[Chris Millington, Equity Analyst at Deutsche Numis]

Chris Millington, Deutsche Numis. First one I just wanted to ask about is the shape of the balance sheet. Obviously, you're looking forward the end of the fire safety. What would you like to see adjusted gearing in this business? Obviously, land creditors are potentially quite a big moving part in that. I'll go one at a time. It's probably better.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So Chris, we haven't set a target for adjusted gearing. I think what we have said is at this point of the market, then we're happy that we are using the balance sheet strength more, which is why our gearing has increased a shade. So but 8% adjusted gearing is still yes, I think it's still entirely fine. And I think then as we progress, probably not in 2026, but certainly through 2027, 2028 as the fire safety piece comes back and as the business is growing, then I think you'll see that starting to come back the other way. But I'm happy that at this part of the cycle, investing for growth is the right thing to do.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So I think that adjusted gearing just increase a little bit is fine. That's very helpful.

[Chris Millington, Equity Analyst at Deutsche Numis]

Next one I've got really is the 20% target margin plays the 14.5% at the moment. What are the components together? I presume there's a land mix and overhead recovery. I'm not asking for specifics, just a general sort of build there.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Yes. So it's a rough two pieces in there, Chris. So overhead recovery, so clearly, as we continue to grow volumes, and that will be a big piece there. We've already talked through the Q and A on Charles Church, which clearly we've said will grow faster and that is delivering a higher margin. Clearly, the land mix and in particular within that, the embedded inflation as that starts to come off, that will also feed in there.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And then as we deliver more volume with that vertical integration piece and that speed of build that we just talked through with Mark's question. So those are the key pieces. But we set out in March, we said at the during the presentation, it will be back ended and it will be bumpy and there will be pieces coming towards us, whether it's, say, on regulatory costs and so on, which we will need to deal with as we go through there. So I think it's not we always said it wouldn't it's not just a kind of straight line trajectory up there, but those are the key building blocks.

[Dean Finch, Group CEO & Director at Persimmon]

If I may just come in, think when you think through the consequences of us suffering 33% build cost inflation and flat to modest ASP growth, that's a hell of a thing to absorb. And inevitably, we are working through sites that we bought suffered we bought ahead of that, that suffered that build cost inflation, and nobody prices that sort of level into the market. So for instance, last week, we got a ticket on a piece of land up in Teeside. That was one of the first bits of land I was asked to sign off when I joined the business five years ago.

[Dean Finch, Group CEO & Director at Persimmon]

So two things in that. You can see what's happened there, and you can see how long it's taken us to get planning through. But that is still, nevertheless, a good piece of land that I wouldn't turn away. Is it as high as our historical margins? No, it's not.

[Dean Finch, Group CEO & Director at Persimmon]

But is that going to create shareholder value going forward? Yes, it is. So we're going to transact and buy that piece of land. So you can see that impact, but that is actually quite a beefy piece of drag on the margin, which will impact us for the next few years. But when that comes off and rights itself, then it has a really positive impact.

[Dean Finch, Group CEO & Director at Persimmon]

So I think going land going forward, as we're buying land adjusted to new costs, it really does help our margin story. And also, I think the benefits of vertical integration will help us as well. There's a margin uptick coming from that as we build faster.

[Chris Millington, Equity Analyst at Deutsche Numis]

Final one. And it's about whether the government allowed you to give us anything in the sector rather than take away, at the moment. Are you hearing anything on demand side stimulus? I could go on about the government

[Dean Finch, Group CEO & Director at Persimmon]

So it's not our central case that we think that there's everybody can see that fiscal pressures are really tight. What I think the we've seen real positivity on panning and getting consent, so that's a really good piece of news. I think though we need to see a focus brought further down, if you like, the pipeline of bringing a site from consent into production. So the logjams that were there on providing consent have now gone, but we're now seeing it can be quite challenging to go from where you've got the ticket, well, to getting on to it because you've got discharge conditions or you've got water problems, you've got to deal with nutrients problems, you've got to deal with and so on. So there is still blockages there.

[Dean Finch, Group CEO & Director at Persimmon]

As you can see, we're knocking them over because we're growing. So if there was a plea from me to the government, it would be please unlock as you've unlocked planning, can you unlock our discharge conditions as well so we could move faster. So our strategy, though, is about self help, and that's what we're really focused on. And you can see in these results, I think, that it's working. We've grown ASPs, we've grown completions, we've we've grown consent, we've grown outlets, we've grown profits. So it's working.

[Ami Galla, Director at Citi]

Ami Gala from Citi. A few questions from me. The first one, follow-up on the margin evolution next year. Can you give us some color as to the sales and marketing investments that you've been making? Has that spend normalized now or you touch upon a new marketing platform next year?

[Ami Galla, Director at Citi]

So is there sort of an incremental OpEx investment on that bucket? The second question was on planning. You've given us some helpful color on your approach to planning. On the successes that you've had so far into this year, is there a regional bias or has it been broad based? And the last question was just on the CapEx spend, your ambitions on investment in Space four across the Brick Dial as well.

[Ami Galla, Director at Citi]

I mean can you give us some sort of guiding post as to how to think about CapEx in the business over the sort of next two to three years?

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Do you want do the planning one, Dean?

[Dean Finch, Group CEO & Director at Persimmon]

No. Planning across the country is pretty consistent. So there's no regional bias.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So then, yes, sales and marketing, I mean, there is, I guess, a couple of things. So we've invested in the teams more generally, so whether that's training, we've talked about mystery shopping on the slides. So just so and that is a, if you like, a permanent investment. So I think if you compare the cost of sales and marketing now and in this cycle to the cost of sales and marketing five, ten years ago in the previous cycle, there is a step change up because it is more competitive. It's hard to sell houses.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Customer expectations are higher. The requirements onto our sales and marketing teams are higher. So there's a step change there. And then we are spending at the moment on, as Dean said, a couple of things, the new website, which will come through and then more broadly, our new CRM platform, I suppose, bluntly. So that and that be spent through this year and next year.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And then in terms of CapEx, so we've also spent some money on the Space4 line that you could see on the photographs. We will be spending a little bit of money on the new line in the Brick factory up in Doncaster. And then I guess the bigger piece of CapEx will be as we start to build our second timber frame factory. But the important thing is this is a good use of capital because the returns that we get both in terms because of the volumes that we get off there, the cost of delivery and the speed of build that we get from the timber frame. So these are good capital investments for us.

[Dean Finch, Group CEO & Director at Persimmon]

Can we go next on?

[Zaim Beekawa, VP - Equity Research at J.P. Morgan]

Zaima Gowan, JPMorgan. Thanks for taking my questions. A couple here. One on the BTR market, you mentioned 14 new partners. What's exactly driving that?

[Zaim Beekawa, VP - Equity Research at J.P. Morgan]

And why they what are doing to attract them? Then secondly, I think you mentioned the land market seeing good opportunities. How does it differ in terms of size? Do see you some appetite for large land? And then maybe squeeze one in on the land market, are you seeing sort of opportunities for larger plots of land versus smaller ones?

[Zaim Beekawa, VP - Equity Research at J.P. Morgan]

And then maybe squeezing one on the bricks work factory, just how much the new line in terms of capacity will give you? Thank you.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Well, why don't I start and you jump in, Dean, if that's fine. So in terms of BTTR partners, so I think this is a this goes back to the work that the company has been doing over the last three, four, five years around the whole piece on quality, on customer service, on the products. And if you go to our sites and it's not just Charles Church sites, it's Persimmon sites, they look good. The sites look good. They stand well.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

The environment they're in is good. So the customer journey is I think is I wasn't here, so I wasn't as closely involved in them. But I think it's a step change in terms of that quality journey and the quality of the product. And that's why we've been able to now start to work with more partners as well as then the way that we try to do business. I think we're straightforward.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

I think we try to deliver what we say we're going to deliver and so on. So we are a business and because we're growing, we've got new sites, there's opportunity. So all of these things kind of come together. And I suppose if you put the question the other way around, if you were a build to rent provider, actually, Persephone is now looking like a pretty attractive partner for you. So I think it's a whole raft of these features and the improvement in the business and the platform is now allowing us to work with that broader range of partners.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

In terms of land opportunities, I mean, I would say it's across the pieces. So some large schemes, small schemes. And of course and again, now that we have the Charles Church opportunity, it doesn't, of course, work in every single locality, but in some locality, that gives us opportunities to look at different size pieces of land as well. So I think we're seeing, I would say, good opportunities across the country and across the whole breadth of size of pieces. So I think the land market is open to us at the moment.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And again, it comes back to capital allocation, having a balance sheet to be able to play in that market. And I think that's an important piece and something, again, that Persimmon is able to do. I don't know whether you want to say anything else on land.

[Dean Finch, Group CEO & Director at Persimmon]

I'll just say one more thing on land. We talked about a lot of impact to a better service and quality on customers, but actually, it's really important to the land market as well. So I've sat this year in front of a number of new groups of landowners to us for whom actually reputation for them is really important. And as they can see our product improving, they want to talk to us. They wouldn't have talked to us in the past.

[Dean Finch, Group CEO & Director at Persimmon]

And we the developments in Charles Church are really, really important. And I can think of one site that we've just exchanged on in East Anglia, where showing that our build quality and service was much improved was absolutely vital, but even more important was the appearance of the sites that we're now building. And in a competitive market, we didn't bid the highest price, but we won that land because we were seen as a good partner, and now they can trust us to build. So I think the work we're doing there is not to be overlooked, and it is opening up opportunities for us.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And just then mopping up on the brickworks. So I mean, last year, we were I can't remember the exact percentage, sort of 60% or so of our delivery was with our own bricks. The factory there is working 20 fourseven. Now we're obviously growing outlets, and I want to continue to be able to deliver that volume, mid-sixty percent of bricks. So that's why we're putting the extra capacity in that capacity will come online.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

We'll build that through next year, and that will be online later next year.

[Dean Finch, Group CEO & Director at Persimmon]

Bit towards the back, think, and then we'll come back, if we may.

[Alastair Stewart, Construction & Property Analyst at Progressive Equity Research Limited]

Alastair Stewart from Progressive. A couple of related questions on, new build boost. Can you, give a bit more, sort of detail on, what that will entail and how many of your buyers could end up using it? And also, Dean, I was interested to hear you prompted in your, closing remarks saying you don't expect, a demand stimulus, from government. You seem to have broken ranks a bit with your peers in that, that they've they're still banging on about that.

[Alastair Stewart, Construction & Property Analyst at Progressive Equity Research Limited]

Is this a viewpoint you've had for a while, or have you had the heads up from, any civil servants of late?

[Dean Finch, Group CEO & Director at Persimmon]

Sure. Shall I answer that in your new new bill post? If you like. Yep. I mean, look, obviously, if if if there was a demand stimulus, we certainly wouldn't turn it away.

[Dean Finch, Group CEO & Director at Persimmon]

It's just that we're not expecting it, And it's not our it's not I don't think hope is a strategy. So hoping that there's going to be a demand stimulus tomorrow when it seems to me, given the fiscal constraints the government are under, it seems a pretty low probability. So we're not waiting for that. That's why our strategy has all been about self help. Look, if we do get a demand stimulus, then that doesn't negate what we're doing.

[Dean Finch, Group CEO & Director at Persimmon]

Actually, it will give us, a tailwind, so happy days. But our central assumption is not is that there's not going to be a demand stimulus anytime soon. Happy to be proven wrong, I think.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And so seguing beautifully into New Build Boost is an example where we're not waiting for someone else to do it for us. Actually, we're looking at what can we do to try to get that incremental assistance ourselves. So New Reloost is a good example of the self help strategy in action. And it's incrementally helpful. By the way, so is the fact that interest rates are a little bit lower, so is the fact that the banks are lending at slightly higher multiples of income.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So these are all incrementally helpful. I don't think any of them individually are an absolute silver bullet, but I think it's all helpful. And what New Boost is doing, I mean so clearly, we're funding the 15% element of New Build Boost. But what it's doing, as Dean said earlier, is it's driving more people to sites, so it's driving interest. And some people who are coming to site, I think, through the New Build Boost and through the marketing from that are then finding actually there's a traditional mortgage product which suits them, and that's entirely fine.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So but actually driving customers to site and then driving interest is what it's all about. And New Build Boost is helpful for those people who actually their salary multiples just can't allow them to borrow enough to purchase the house, and that's where the new build boost with a 15% interest free element is really helpful. So it's but it's a good example of, as we say, not waiting for a government demand stimulus. And then if we get one, then that's great.

[Alastair Stewart, Construction & Property Analyst at Progressive Equity Research Limited]

Do you have any indication whether some of your peers are thinking along similar lines?

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Well, there are so we're looking at other similar products as well. So I don't know Barrett referenced something in their statement in July. So but I think it's good that we were first to market. And again, think that says something about the platform that we're building, that

[Dean Finch, Group CEO & Director at Persimmon]

we're first to market again with this product. Think if I may just come in, there's no one silver bullet. There just isn't. It's a whole raft of things, I think. And whilst I think new build boost has been good for us and has helped drive people to sites, it is not what's underpinning the growth we're seeing here. There's one up front, sorry.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Hi, thanks. It's Marcus Cole at UBS. I've got two questions as well. Just thinking about Charles Church, how should we think about the mix impact to ASP at group level for 2026? And the second one is just on vertical integration.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

You've spoken about the margin benefit on multiple occasions. Could you quantify this? Yes. Well, I'd pick both of those. So I mean, Marcus, without it's quite hard to give you that sort of ASP mix of 2026 already.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So clearly, we're looking to grow Charles Church and grow for Charles Church faster than the rest of the business. So clearly, that is helpful to the overall blended ASP. I think what's helpful perhaps just by background is that in our private ASP growth in the first half year, which was up seven percent, both Persimmon Homes and Charles Church ASP grew. So we saw growth in both. The ASP growth in the first half year wasn't purely because of mix of Charles Church and but presumably flat.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Actually, we saw growth in both markets, which is helpful, and we'll continue to look at that. But I think as we grow Charles Church, clearly, all the things being equal, it will have access a slight drag to ASP. On the flip side, of course, build to rent is still going to be 10% to 15% of our business. And arguably, that goes the other way. So there's kind of various moving parts.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

In terms of vertical integration, there is I think we talked about this earlier in the year that across the whole piece. So if you use our own tiles and our own bricks, we know there is cost saving there, which is in the order of GBP 2,500 per plot compared to the open market. And then if you put the timber frame in and if you include the speed of build, the overhead saving, the premium saving because of the speed of build, then you're moving a cost saving plot up into somewhere between GBP 5,000 and GBP 6,000 probably all in. So it could be significant. I mean clearly, there's some work for us to do there in terms of making sure that we drive the take up of that, as we said earlier to Mark's question.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

But there is real opportunity. But I think the other piece, which is cost is clearly important, but I think the other piece which we should also just reference is that it gives us security of our own supply chain. So it gives us control. So if you think about on bricks or tiles, 80% of our products use our own roof tiles. So that means that we're in control of our own destiny there.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

And again, with timber frame, you need fewer people. So again, as you're growing the business and as the sector grows, actually, if we can deliver the same volume or more volume with fewer people on-site, then that is again is very helpful. So it's a cost benefit, but there's a whole range of wider benefits, I think, well. There's two over this side.

[Glynis Johnson, Analyst - Building & Construction at Jefferies]

Glynis Johnson, Jefferies. Just a few sort of almost just following ups. One, just in terms of cost controls, you mentioned it sort of almost in your first statement about the commercial control of costs. A bit more elaboration, what are you doing? Why is it maybe different?

[Glynis Johnson, Analyst - Building & Construction at Jefferies]

Land intake, can you split it between strategic land conversions, that's actually what's been brought in the open market? Your 300 outlet count, can you remind us how much of that is coming from Charles Church? Are dual branded sites counted as two? Are they counted as one? Just so we can understand the numbers.

[Glynis Johnson, Analyst - Building & Construction at Jefferies]

Previously, you referenced bringing forward some of those longer sites with its partnerships. You've talked about in terms of your completions, but maybe you can talk about in terms of sites, how many of those sites have you actually done that on? And can you remind us of the difference between the site gross and the reported gross? You referenced the site costs, but what actually should be there? And lastly, you referenced it just a couple of questions ago in terms of changes in lending criteria.

[Glynis Johnson, Analyst - Building & Construction at Jefferies]

Are you seeing that actually at the coalface right now? Or is that something you're anticipating to come through?

[Dean Finch, Group CEO & Director at Persimmon]

Well, that's a lot of questions.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Just a few.

[Dean Finch, Group CEO & Director at Persimmon]

Shall we try and divvy those up between us? So look, Simon's taken over Group Commercial and he's having a real impact. And at the same time, through both his expertise and frankly, sheer force personality, he is driving a consistency in the business, which is absolutely fantastic. There is an opportunity for us there. Possible preventable losses are running in the business about between GBP 40,000,000 and 50,000,000 as we would measure them.

[Dean Finch, Group CEO & Director at Persimmon]

And I am confident that Simon will make a real inroad into that over the course of the coming years. And he's doing that at the same time as driving digitalization in the business. So he's now playing around with AI in that space. And as you can imagine, I think that area is actually quite perfect for AI. And I'm quite excited about the benefits.

[Dean Finch, Group CEO & Director at Persimmon]

I can't give you a time line. I can't tell you where and how much, but kind of watch this space because I think there's real benefits both in terms of his expertise, his standardization and what AI might bring us. So I am actually quite really, really excited about that. So if I dot about a bit, if that's all right with you, Andrew. Think in terms of changing I think we have seen some benefit from the relaxation of from 4.5% to 5.56% lending during the course of the year, and I think that has clearly helped us, helped by our customer base.

[Dean Finch, Group CEO & Director at Persimmon]

Very hard to put a precise number on it. We frankly just don't know. But I think, as Andrew said earlier, it's one of the things that is in the mix that has helped us achieve the results that we are now achieving. And look, you can see quite clearly in our results. We are pleased with the progress we've made on pricing, and that's really been the strategy this year to help us deal with embedded cost inflation and helping to drive the margin forward.

[Dean Finch, Group CEO & Director at Persimmon]

So I think that's really important. Partnerships, I think we've probably got across the group at the moment two or three, and it's at that level at this stage. That may grow, but it's very much on a case by case basis. It's useful where it works and where we have a large site. And just your dual branding bit, that's probably contributed about two or three outlets.

[Dean Finch, Group CEO & Director at Persimmon]

Net, mean we talked about GBP 53,000,000, I think, in terms of Charles Church now. That was at 49 at the start of the year. So that sort of level. But it's also valid. They are it opens up a new market for us in the same place. Those are the easy questions.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

I think the other so I think there's two others. So Stratland, still about 40% or so of our delivery is from sites that were sourced from Stratland. In terms of the pull through in any one period, of course, it's lumpy just because of the nature of them coming through. But we have pulled through from Stratland in the first half as well. I'll have to come back to you with the exact number of plots.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

But the completion percentages stay pretty stable in that forty percent forty odd percent. And then in terms of the margins, so yes, as I say, it's consistent with where we've been before. So between site margin and gross margins, also our gross margins in the half year, about 20%. And there's probably somewhere between four hundred and eight hundred bps of difference. It depends a little because some of those costs are fixed costs, some of those costs are variable but not related to deliveries and things like in terms of customer care and maintenance.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

It's that's why there's quite a wide range. I guess it's also why I drew attention to the chart of the land cost to revenue. So because, I guess, different you might have different companies who will put different things in different buckets as they go down the P and L, but your land revenue is probably very comparable across different companies. So I think that is a useful measure as well. But it's those the differences are between site margin and gross margin are, as I said, things like maintenance costs, your fixed construction base, fixed sales and marketing cost teams as well as the variable elements of those as well.

[Glynis Johnson, Analyst - Building & Construction at Jefferies]

Just to be clear, so there's some sites have double the costs as percentage points impact between sites and direct site and embedded. So going from your embedded margin that you talk about to actually your gross, what you're saying is some sites have 400 basis points, some have 800

[Andrew Duxbury, CFO & Executive Director at Persimmon]

basis no. I'm saying that's across the group depending on what you said because some of those differences are fixed costs. So as we move through as the volumes change, then the leverage of that, that difference will reduce through leverage. So things like the fixed cost of my sales and marketing teams are not related to individual sites. Clearly, I'm absorbing that at the moment over fewer units than I absorb it over as we grow.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

So that's why I'm saying there's a range. Because it's not based on individual sites, it's based on through the cycle.

[Glynis Johnson, Analyst - Building & Construction at Jefferies]

What are you buying sites for? What is when you're putting what is the long term assumption in terms of difference between the sites and the

[Dean Finch, Group CEO & Director at Persimmon]

heard all right, which is why we have an industry leading margin. Right, these two here.

[Sam Cullen, Equity Research Analyst at Peel Hunt]

Morning. Sam Cullen from Peel Hunt. I've got two. They're both related to the first integration piece. Think you've mentioned that you want to improve the take up.

[Sam Cullen, Equity Research Analyst at Peel Hunt]

Okay. What is the take up now? At what point does it really start to make a difference on cost saving? What's the tipping point? And then secondly, related to the cost savings, you've those, but is it truly margin accretive from where we stand?

[Sam Cullen, Equity Research Analyst at Peel Hunt]

If we forget the unwind of the build cost inflation over the last few years, net net, is this will this actually improve margin? Or is it a relative advantage that the counterfactual HPAL grow at 1% or 2% and build cost inflation might grow at 3% or 4%, so it's just going to offset that negative spread medium term?

[Dean Finch, Group CEO & Director at Persimmon]

So I'll let me divide your first question in two parts between brick and tile and between timber frame. So when I started five years ago, actually, the take up of our brick was less than 10% within the business because there were it was an unpopular product within the company. Now it's well over 50%, and it's growing. And two things have happened there. We've invested in the BRIC itself to improve its policy, so that's dealt with concerns.

[Dean Finch, Group CEO & Director at Persimmon]

But also, we've improved its aesthetics, which means now that when you go to planning authorities, it's a more attractive product and is taken up. And frankly, I think for many of our developments, it's now it's really pretty good, and it sits very well, and it's as good as many clay products. So I'm very happy with what we've done with bricks. And the problem we've got at the moment is we've got an excess of demand over our production capabilities, which is why we've moved to '20 fourseven and why we're going to have to put a new line in. It does give us cost savings, and they do contribute to our margin, and I think they will continue to do so in the future.

[Dean Finch, Group CEO & Director at Persimmon]

It's not just about security of supply, although I think that's really important. It shields us from cost increases and contributes to the cost advantage I think we have. In terms of timber frame, we've got, at the moment, just over half the business takes up our timber frame. As we said in the presentation, another seven are within the business, another seven regions are taking it up this year and another seven, I think, will take it up to next year, which means it will be across the business then. And there, I think it will contribute to not it will do both of what you said.

[Dean Finch, Group CEO & Director at Persimmon]

It will shield us from cost, but I believe it will contribute to a real accretion to margin as well because we'll ask it turn. You can build faster by about ten weeks. And yes, there's an incremental cost, although actually very interesting. If you do it right, that incremental cost is pretty marginal now. And I think we can bear down on that further.

[Dean Finch, Group CEO & Director at Persimmon]

So I am really excited about the opportunity that will bring. And as I said to you earlier, it's we've got this problem at the moment in the business, it's actually where we can sell fastest, we build slowest. So if we can pivot into that, which is what we're doing, I think that's really, really, really good. Just one here.

[Charlie Campbell, MD - Equity Research at Stifel Financial Corp]

Very much. Charlie Campbell, it's T4. Just two quick ones, think. Of your two seventy seven sites, how many could take a Charles Church outlet? Just give us an idea on that.

[Charlie Campbell, MD - Equity Research at Stifel Financial Corp]

And then just could you say something about part exchange that's gone up in the first half? Just wondering kind of what trends look like on that side.

[Dean Finch, Group CEO & Director at Persimmon]

It ticked up a little bit, but I mean it's not huge, the PX. I think it's about 24% of what we do now.

[Andrew Duxbury, CFO & Executive Director at Persimmon]

Yes, it is. And the important thing, by the way, Charlie, most of those units that were on the balance sheet as of June 30 were already reserved at the June 30, so they're working through. So we are turning it quickly. And it is an important tool. And so it's moved a little bit, but I think it will bubble around that sort of 20% low 20%, so that's fine.

[Dean Finch, Group CEO & Director at Persimmon]

And we sort of break even on it or make a modest cover our costs. So it's consumes cash, but you have to do it. It's the way it is. And I guess on Charles Church, it's not so much on what we've got at the moment.

[Dean Finch, Group CEO & Director at Persimmon]

It's what are the opportunities because I think they're probably pretty well established. It's what are the opportunities for what's in the land bank and new land opportunities that come to us on the market as well. And that's what is underpinning our ambitions to double it over the course of the next few years to go from 10% of the business to 20% of the business. No more hands up. So thank you very much for your time and interest this morning.

[Dean Finch, Group CEO & Director at Persimmon]

If I can just say a few words to sum up. Look, I think the business is in really, really good shape, and it's good fun. We are pushing on with our plans, and we're not waiting around for events. We're looking to build structural benefits for ourselves, some of the benefits I think you can see coming through in these results. We're other things being equal, we're good for guidance in 2025.

[Dean Finch, Group CEO & Director at Persimmon]

We'll see good profit growth in 2025 and good profit growth again in 2026. And finally, our cladding position, I think, is really important. As you start ripping these buildings apart, it's not pretty, and there's lots of costs. So getting through it is really, really important as quickly as possible, and I think we're in a good place. Thank you very much.

Participants

Executives

• Dean Finch, Group CEO & Director
• Andrew Duxbury, CFO & Executive Director

Analysts

• Will Jones, Equity Analyst - Construction & Building Materials at Rothschild & Co Redburn
• Aynsley Lammin, Equity Analyst - Building & Construction at Investec
• Analyst
• Mark Howson, Director - Equity Research at Dowgate Capital Limited
• Adrian Kearsey, Equity Analyst - Construction & Support Services at Panmure Liberum
• Chris Millington, Equity Analyst at Deutsche Numis
• Ami Galla, Director at Citi
• Zaim Beekawa, VP - Equity Research at J.P. Morgan
• Alastair Stewart, Construction & Property Analyst at Progressive Equity Research Limited
• Glynis Johnson, Analyst - Building & Construction at Jefferies
• Sam Cullen, Equity Research Analyst at Peel Hunt
• Charlie Campbell, MD - Equity Research at Stifel Financial Corp