U.S. Markets open in 19 mins

Edited Transcript of PSN.L earnings conference call or presentation 26-Feb-19 9:45am GMT

Full Year 2018 Persimmon PLC Earnings Call

Fulford, york Feb 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Persimmon PLC earnings conference call or presentation Tuesday, February 26, 2019 at 9:45:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* David Jenkinson

Persimmon Plc - Group Chief Executive & Executive Director

* Michael Hugh Killoran

Persimmon Plc - Group Finance Director & Director

* Roger William Devlin

Persimmon Plc - Chairman

================================================================================

Conference Call Participants

================================================================================

* Ami Galla

Citigroup Inc, Research Division - Senior Associate

* Aynsley Lammin

Canaccord Genuity Limited, Research Division - Analyst

* Christopher James Millington

Numis Securities Limited, Research Division - Analyst

* Clyde Lewis

Peel Hunt LLP, Research Division - Analyst

* Gregor Kuglitsch

UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst

* John Fraser-Andrews

HSBC, Research Division - Global Equity Head of Building Materials and European Building Materials Analyst

* Jonathan Matthew Bell

Barclays Bank PLC, Research Division - Director

* Kevin Malcolm Cammack

Cenkos Securities plc., Research Division - Building and Construction Analyst

* William Jones

Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Roger William Devlin, Persimmon Plc - Chairman [1]

--------------------------------------------------------------------------------

Good morning, ladies and gentlemen. I'm Roger Devlin, Chairman of Persimmon. You will be relieved to hear it is not my normal practice to speak on these occasions, but I felt it was important this morning to introduce the team, and more particularly, to congratulate Dave on his appointment as Chief Executive after 22 years of service. As you would expect, we did conduct an exhaustive external search, and the board unanimously concluded Dave was the best candidate. He is the continuity candidate. This company has an extraordinary record of financial outperformance, and we would jeopardize that at our peril. And I'm delighted, of course, that we have Mike, who will keep Dave in order.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [2]

--------------------------------------------------------------------------------

I'll try to.

--------------------------------------------------------------------------------

Roger William Devlin, Persimmon Plc - Chairman [3]

--------------------------------------------------------------------------------

But it is more complex than that. Persimmon is changing. In fact, it has been changing for the last few months. Dave is leading that, and I will believe he will be an agent of change, most obviously in the area of customer care.

At December '18, we were at 79%, 1 point off of 4-star. That is not good enough. But I'm pleased to say, although it's early in the year, we've already improved on those scores.

So ladies and gentlemen, I hope you forgive me the political analogy, but welcome to new Persimmon. Dave?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [4]

--------------------------------------------------------------------------------

Thank you, Roger. Good morning, everybody. It's good to see we've met again. I've met you all before as Group MD at the Capital Markets Day, but I stand in front of you today as the new Chief Executive of Persimmon Homes. There's 2 things I'd like to pick out in my presentation. The first is I'd like to pick out how the company has performed in 2018. And secondly, I'd like to set out my priorities as the new Chief Executive for the future evolution of Persimmon.

This slide is just a summary of the items I intend to focus on and I intend to cover in the presentation. But in particular, I would like to pick out the fact and draw your attention that 2018 has been a year of disciplined high-quality growth again for Persimmon Homes.

This is the agenda we'll be covering today. And I'd also just like to add, I've got 3 of my colleagues with us today sitting in the front row. Richard Stenhouse, who's our -- the Group Treasury Director; Paul Hurst, who is the Regional Chairman for the Central Division; and Peter Jordan, I think you all met at the Capital Markets Day, who's the Group Planning and Land Director. Feel free to ask them any questions afterwards. And if there's any particular questions I may have struggled with, I'll probably give it to Peter.

By all financial metrics, 2018 has been a good year for Persimmon. But I'd like to pick out 2 main facts of this slide. The first one is we are the first company to make over GBP 1 billion profit in the sector, almost GBP 1.1 billion in profit. That is something our whole team is very proud of. However, I do understand that achieving these types of returns comes with responsibility. The second point I'd like to pick out is the return on capital of 52.8%. In any sector, this is a fantastic metric. And importantly, it's not been achieved by not investing in the business. We have the longest land bank in the industry of over 6 years. It's been achieved by the quality of the resource this company produces. I would also like to draw your attention to the strong forward sales position, which is very similar to 2018, as this gives me confidence looking forward towards 2019 of a similar level of performance. And I'd also like to bring your attention to the operating margin of 30.8%. And I'd like you to keep that in your mind because I intend to come back to that later in the presentation.

And the third item I'd like to pick out is the company returned GBP 732 million in 2018 to the shareholders. We've all seen this next slide before, and the strategy remains consistent. The only thing I would like to pick out on here is that I don't believe we've yet reached our optimal scale. And one of the focuses I will be focusing on in the medium term is to continue to strive to reach that point and to grow the business.

You've all seen this next slide as well before, which sets out our clear operational priorities. This was the slide we presented to you on the Capital Markets Day. But as Chief Executive of Persimmon, I want to bring additional energy and focus to 2 items, and that's on Page 11 to 15 in relation to our customers and Page 18 and 19 in relation to our communities.

As a business, we continue to have strong market coverage across the country. And in particular, I would like to pick out the fact that the Suffolk office opened in January 2018, and you'll see later in the presentation how that's starting to improve the growth and also the operating area of the business. And I'd also like to pick out the point that in Persimmon, a key differentiator for us is that we focus on all parts of the market. We aim to hit all price points. 39% of all our private sales are priced below GBP 200,000.

We are in a strong market position. And as you can see, and I think that's supported from having a lower average selling price compared to our peers. That is not something we are disappointed to see, but it's a function of our desire to target all areas of the market, and it's something I'll highlight later in the presentation. And the other thing I'd point out is the stable prices. That is something we'd rather see, a stable market. But more importantly, it proves the point that Persimmon's results are not based on sales growth. They're based on the performance of the business.

And the point I was picking out about Suffolk, you can actually see in this slide. The Persimmon South division's completions have increased by 8%. I know we've historically been seen as a Northern-based company, but in our strive to meet optimal capacity, that is where we see a decent opportunity. And most importantly, if you look at the end of that column, you can see we've made considerable investment in the land bank in the southern part of the country, a 10% increase in the land bank in that area. I'm particularly pleased to see that.

The other best thing you'll pick up on this slide is that the completion change in custom on Charles Church and the average selling price. Once again, this is a strategy of the company. This hasn't just happened. This has also to do with everything to protect the brand. We don't want to sell small houses at low average selling prices which will affect the perception of the brand.

As CEO, I recognize we have work to do on customer care. We're not going to hide from that issue. It's something we picked -- outlined in November. It's something we outlined to you in January, and it's something I intend to rectify. We intend to improve our customer satisfaction levels in 4 key areas, supported by increased investment in IT and digital tools.

The first area we intend to focus is increased investment in resources. Even though since 2014, we've only had a 22% increase in legal completions, we've had a 93% increase in customer care resources. The second area we intend to focus on and in fact are already focusing on is better customer communications. We have already the 11 stages during the customer journey. But what becomes apparent is that the quality of the information is much more important than the content of information. In particular, at Persimmon, we've had an issue around completion obtained and accuracy of moving dates, specifically in those areas where we see the highest demand. We have examples where we sell too far ahead of ourselves, and the site resource in a number of sites find it difficult to meet the demand for the product. Therefore, what we've done is took the conscious decision, and we outlined this back in January, that we will hold off with the later release of sales to improve the accuracy of anticipated moving dates for our customers to allow build to progress. What does that mean for the company? What that means is that the shape of our reservations has a potential to be different, but our legal completions should be similar.

The other area is the IT. We announced at the Capital Markets Day that we're working on our customer portal. That is well in process, and we hope to have that in place by the end of the year. And this is an image of what it intends to look like.

The third area of the business we intend to focus on is better quality control. We do have a 7-stage pre-completion inspection process in place already, and we know that works. At Persimmon, we have a number of businesses that are already 4- and 5-star companies. And when they follow the process religiously, we know that works. The other thing we have done is reviewed the specification of our product from top to bottom, and that review is 2 parts. The first part in relation to those items where we have recurring faults. We've identified what they are such as things like taps and bath panels, and we've changed the specification on there. The second level of that review of specification is we've also looked at those items where our customers have a poor perception of the product, still searches our tiling specifications in the bathrooms and our fences specifications. Once again, we've changed our specification already.

The fourth area of focus for me is to enhance the post handover completion process. What we've done, once again, we've improved the escalation process, so we're able to track and respond to complaints much more quickly and efficiently. And secondly, something where we're trying to get on the forefront and be market-leading, I believe we are the first people to offer weekend and evening close to our customer's standard.

The thing that makes me most proud about Persimmon is our people. These results don't just happen. You need a committed, talented, dedicated team of people. And at Persimmon, I believe we have that. But that, once again, just doesn't happen. We've promoted 570 of our colleagues in the last 2 years. We've carried out 11,000 training days in the year. The group is taking the lead in tackling the acknowledge skills shortage in the industry. We have over 630 trainees in our business. I believe that is the most in the industry. We have more than 381 traditional apprentices. Once again, I believe that is the most in the industry. And something that makes me proud is that we've now agreed in something I particularly was keen to see happen, we've adopted the Living Wage Foundation payment criteria from January '19. We want everyone in Persimmon, everyone in the Persimmon family to benefit from the success of the company. I want us to be the employer of choice.

The second point which is a particular focus of mine is our relationships with customers and stakeholders. We have over 50,000 people's livelihoods and jobs that depend on this company. We have a duty of care to these people and something I do take seriously. Also, it is important to me and it's important to the company that we deliver houses to meet all ends of the market. It is particular focus of Persimmon. Over 52% of all our houses are sold to first-time buyers. It makes me particularly proud that we are giving this people the opportunity to get on the housing ladder that will otherwise wouldn't have that opportunity. 14% of our private sales are priced at less than GBP 150,000. We're doing our best to give these people the opportunity.

My staff constantly tell me what makes them proud. The thing that then makes them proud is the work we're doing on local communities and charities. We supported over 900 local charities in 2018. We've increased what we intend to support in 2019 through our Building Futures campaign with over GBP 1 million to support these -- support children education and sport. We became the official team sponsor of Team GB. And to be clear, that isn't just a straightforward sponsorship. Why we were keen to engage with them as that they agreed to work with us to help work in the lot of community to make a difference in those areas where we build our homes.

The wonderful thing about Persimmon is we just don't wait for things to happen. We make things happen. We have a commitment to self-help through innovation. For example, we couldn't get enough bricks to build our houses, we'll build a brick factory. We can't get enough tails to build our houses, we'll build a tail factory. We can't get enough blocks to build our houses, we've got a timber frame business. We can't get enough tradesmen to build our houses, we'll train more people than anybody else. We can't get our Internet at the day of move-in for our customers, we have our own FibreNest companies to ensure that our customers have Internet in move-in dates. We make things happen in this business.

There's 2 things I'd like to pick out on this slide, and the first one is the 13.2% plot-to-cost ratio in the land bank. A consistent question coming across from the Capital Markets Day was, yes, you've got great results. Yes, you've got a great land bank, but how are you going to maintain that margin moving forward? We know our margins are built on the quality of our land bank. I'm particularly pleased to prove when I said the margins we're taking in are hitting our hurdle rates, and we're confident we can maintain the margin in the land bank. That's exactly what we're going to do in 2018, exactly the same plot-to-cost ratio.

The second point I'd like to pick up is at the bottom of that slide where you can see we acquired 17,000 -- over 17,000 plots, which is a little bit more than we actually consumed. I'm very comfortable with that figure, and I'm very comfortable with the land bank. But as you all know, at Persimmon, we've earned that position where we can pick and choose what land opportunities we choose to desire. And if the market was to turn and the opportunities weren't there, we'd be more than happy to see the land bank move to a traditional length of around 4 years or moving towards 4 years.

Peter and his team have continued a great success with strategic land through the year with an average size of 171 units with a good spread across the country. And as outlined in the Capital Markets Day, the margin in our land bank, it grows 34.2%. And keep that in your minds, I intend to come back to it later. Strategic land investment is a fundamental element of the group Persimmon model and will remain a focus of mine moving forward.

So how's current trading? As discussed in January, and as expected, the private weekly sales rate is approximately 4% lower over the first 8 weeks of 2018. So why is that? The first one, as we outlined, we're against some pretty tough comparables in 2018. The second one is and what we discussed earlier, the delay of plots and delay of sites, which is going to change the shape of our reservations. That's something I believe is the right thing to do for the company, and it's something that which will drive improvements in customer care. And the third thing is we are still seeing a little bit of resistance around the larger-for-bid properties in certain parts of the country. But in the round, we are very comfortable with what the market we're operating in and what we see.

In terms of site activity, we've seen a little bit of a change in this area. The labor costs have eased off a little bit. We've historically driven inflation while material costs have moved up a little bit due to supply is looking to take a little bit of advantage of Brexit. But in the round, they eased a little bit. However, we do acknowledge we have to accommodate 2 extra costs in 2019. We can't hide from that. The first one is the cost associated with our review of the specification. We know that is the customer prepared to absorb. The second cost is we know there's a cost associated with supporting the Living Wage Foundation. We believe that is the right thing to do. The great news for me is we've also continued to make some savings in certain areas. I outlined at the Capital Markets Day that we were -- while I don't want to give too much trade secrets, but we've focused heavily around the externals, which we list have nothing to do with the house itself, and we're making good progress in making some cost savings in that area and on professional fees. And also, in 2019, I think we are going to see the benefit, some of the cost savings coming through from the brick factor and the tail factory. So in the round, even though we're increasing our focus and spend in investment on customer care, we're pretty confident that the inflation for 2019 will be between 3% and 4%.

Selling prices remain firm. But on a positive, what we do see is when we release a new site, we're getting good price growth, which is supporting margin over our [BOVA] intake rate and against our viability.

We have a strong forward sales position. It's a business I'm comfortable with, especially as we will roll out plots to launch into the spring selling season.

So we have a great platform for future returns. We have a motivated, talented and experienced team. We make efficient use of core house types and site layouts to meet customer demands at all price points. Importantly, we have a strong culture of self-help. When we see a problem, we deal with it and identify with it. However, the single biggest thing that gives me confidence on the future of the company is not the 30.8% margin you've seen on the page earlier and for 2018, which equates to a 33.2% margin growth level, but the land bank that supports that margin. The forward land bank margin of 34.2% is 1% higher than our current gross margin. That, associated with our ability to mitigate market risks through strong capital discipline and our track record in that area, gives me very much confidence to face 2019 whatever may come along at Persimmon is a great position and a great platform to deal with it.

Okay. Mike, do you want to take over?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [5]

--------------------------------------------------------------------------------

Thanks, Dave. Good morning, everybody. What I'm going to do is have a look at 1 or 2 of the key features of the trading performance of the business through 2018 and maybe think about how that's going to pan out through the next 12 months or so. We're going to look at the balance sheet, 1 or 2 key features in the balance sheet, understand a little bit more about the cash generation of the business and the returns from the business.

So as Dave has already touched on, 2018, another year of robust trading, delivering further profit growth, 13%, increase in pretax profit based on the improved profitability and some top line growth there of 4%. In terms of understanding the key components that come through to deliver that improvement year-on-year, you can see the top line growth contributing well. And this is all about our drive to deliver sustainable growth, disciplined growth across our regional markets. So we're very conscious that we don't want to push our businesses too far. We've seen that in the past in terms of our blueprint around the operating model. 600, 650 units per annum is probably a bit of a sweet spot for each operating businesses, each of our operating businesses across the regions. When they get too big, then the management of all the key areas and the disciplines become a bit strained. So that's what we mean about sustainable growth across our regional markets, and this disciplined control that we have over growth helps us with better quality outcomes.

We've seen firm pricing through 2018, and I think that it's reasonable to have a modest outlook on pricing as we move forward. We had about 1% growth in the ASP year-on-year, and I would suggest something approaching that for 2019 would be a sensible view forward given the uncertainties that markets face given the Brexit situation, et cetera.

As Jeff (sic) [Dave] has already touched on, the gross margin improvement is key. That is based upon the quality of the land bank and the land cost recoveries. There is a bit of sales mix benefit in there in terms of the build cost recoveries, which we'll see a little bit more detail in a second. There's been a further mix change in 2018, less Charles Church units, obviously bigger units, highly specified units and more affordable housing in the mix, a couple of percentage points increase in affordable housing delivery, together with a move forward in the Persimmon core house types as well, which are typically a little smaller. So just bear in mind that, that sort of mix change in terms of the build cost recoveries.

So looking at a bit more detail around the margin. 200 basis point increase in new housing gross margins to 33.3% in the year. I've already touched on lower land cost recoveries, roundabout GBP 31,500, delivering support to those margins. And we'll look at how the land bank sits in relation to that GBP 31,500 recovery in '18 in a second. And then a bit more support coming through the build and other direct costs in there, and that's influenced by this change in mix that I pointed out a couple of minutes ago. So you can see the point that Dave actually touched on earlier, the position and the quality of our land bank gives us great confidence about our margin outlook. And I know that's something that we've continued to talk about over recent years, and I think that you've continued to see that come through year in, year out. And I think moving forward into '19, I think it's realistic to expect some further improvement along those lines to support what we're trying to achieve for 2019.

Obviously, running an efficient business is important in terms of our cost efficiencies. The operating margin delivered by the business in 2018 at 30.8% is a very strong outturn for us, the -- but I would make the point that the net operating expenses are a little bit flattened in 2018. We did have a bit of an accrual release relating to the share option-related payments because we've been tracking the share price moving in terms of trying to accrue the right amount of cost with respect to the employer's national insurance contributions that we've paid to the government on participants in the Home Change scheme exercising those options. So there's a bit of a benefit there, 30 basis points for the full year of '18 coming through.

My view forward, our view forward, as Dave's already touched on, he's very keen to invest in the business for the future. We're going to push hard on customer care. That is going to require further investment in the OpEx line. And I think viewing that forward, I'd expect maybe 3.3% of sales. Well, we've seen the business before, it's not unusual. And I think that's probably a fair view forward based on what we expect to take caption on moving forward.

So having said that, sales and marketing costs at 1.1% of sales is still tracking at a quite a low level. And perhaps, we may see a slight tick-up in incentives. I think Part Exchange is an interesting opportunity that we have. We all realize that the second-home market is a little bit slower and has been slower for some time. And I think that providing our customers both Part Exchange and Home Change facilities is a big benefit to them if they're minded to move, and we can offer that opportunity for those customers moving forward.

So just taking a quick look at how the land bank sits at the end of 2018, 13.2% cost to revenue percentage for all our own plots, just shy of 76,000 plots in the land bank. It's a very strong position. It's a very high-quality land bank spread across the U.K., serving the different regional markets according to the housing needs that we obviously are here to do. And I think that provides us with this confidence in terms of our future margins.

I think the other point that I'd want to emphasize here is the land replacement activity that the business undertakes, that is critically important. And the deployment of our capital across the housing cycle, the timing, the judgment around that remains critically important. And we'll -- as Dave's already mentioned, we'll continue to be very selective, if you will. We've won that opportunity through the recent years reinvestment. We're in a very strong position, so we can be increasingly selective in the current circumstances, which I'll just say that, I mean, we've got a lot of discipline around this area of the business, obviously. We've got very rigorous controls associated with the viability assessments that I think we've talked about previously. And obviously, Dave scrutinizes all those deals with the rest of the team around the business to make sure that we're confident that those investments will stand the business in good stead moving forward.

Looking at the quality of that land bank. We saw this slide or a similar slide back in November at the Capital Markets Day. Dave has already referenced the blended margin of just over 34%. Again, that -- the quality of the land bank that we own and control is obviously -- is there to be seen and gives us the confidence moving forward.

Land replacement. Looking at the balance sheet, we spent just over GBP 600 million on land in the year. Some of that was land creditor payments, about GBP 300 million of land creditor payments within that number, which was around about GBP 30 million higher than last year in terms of the land spend, which was, just to remind people, just over GBP 600 million last year. So the land market continues to be pretty good. And obviously, we can explore that in Q&A a little bit later. We've invested in the business, in the work-in-progress platform moving into the new year at the end of -- as seen at the end of December. We've put quite a lot more investment into external infrastructure of the -- around about GBP 160 million increase in work in progress that you can see there year-on-year. About GBP 105 million, GBP 110 million has gone into external infrastructure on some very attractive larger sites. Obviously, these are enabling works that allow us to get on to site and get on with the plot and unit construction, which enables us then to deliver the finished units to those markets. So this is necessary investment that we have to make to make sure that we can get on to those sites and start delivering product to those markets.

And I think that -- sort of just thinking about Dave's earlier comments in terms of what he intends to do on customer care, et cetera, I think the -- as we improve the visibility of our construction with this sort of investment, then that should allow us to deliver some of those customer care improvements as well.

The cash generation of the business is strong, just over GBP 1 billion of cash held at the end of the year. That's after making the capital return of just over GBP 730 million, together with just over GBP 200 million paid to the government in terms of both the net settling of the LTIP exercises in '18, together with the national insurance contributions that we've paid on those exercises as well. The split, that's about GBP 160 million on the net settlement. The rest is on the employer's national insurance contributions. So cash generation is strong, but we have invested in working capital, GBP 290 million invested in working capital. The bulk of which has gone into the land, GBP 67 million, year-on-year movement. And as you've seen earlier, GBP 158 million on work in progress.

As we've seen before, the cash generation of the business is a combination of the trading performance of the business in any year, together with that balance sheet management. And we're investing in the future to support the future growth of the business that Dave touched on. We see opportunity for further growth in a sustainable way. We want to invest to deliver that moving forward so that we can do our bit in terms of increasing the output from the industry.

However, we've got to remain mindful of the -- of market risks that we're faced with, the challenges that are out there. A key point is that we continue to minimize financial risk through the cycle for the business. Obviously, we saw a different cycle last time with the financial crisis back in 2007 and '08. The industry was in a very different position then to now. The industry is a lot more financially sound, if you will. The balance sheets are in a lot stronger position. And I think we've got a leading position within that in terms of the strategy that we've pursued over recent times to minimize these financial risks to make sure that our delivery -- yes, it can scale up and down depending on markets in terms of business scale because obviously the economic cycle will largely determine that. But what we can demonstrate and looking back, we can demonstrate in these numbers that the cash generation from the business remains strong. The biggest pieces we've seen is how much do we invest in land. The bulk of that is discretionary, which is within our control. And therefore, we can protect the balance sheet in terms of liquidity to make sure that we're minimizing this financial risk through the cycle. And indeed, we rehearsed at the Capital Markets Day last November in terms of what a down cycle might look like, et cetera, and those materials are published on our corporate website.

Capital return considerations. Obviously, it's a feature of the strategy. We don't want to carry too much capital in the business. It is a drag on returns, but you've got to balance that with the ability to reinvest in the business moving forward. And I think retaining that flexibility to invest, reinvest in the business in terms of land replacement and work in progress is critically important. But obviously, we need to manage that as markets change, which we did rehearse, again, back in November last. So the timing and scale of capital deployment through the cycle is -- remains very important. The capital return that we have scheduled out, we're maintaining. we paid the GBP 1.25 and the GBP 1.10 in 2018 on schedule. We plan to do the same this year, subject to shareholder approval on the GBP 1.10. We're paying the GBP 1.25 as an interim as we did last year. And obviously, we'll continue to assess the level of surplus capital in the business as we move forward. But obviously, the board took the view that, obviously, the current situation, it's better just to see how markets develop. And we can continue to assess the -- firstly, the requirements of the business, and secondly, therefore, perhaps what is the right surplus level and capital return moving forward a little bit later as we move forward and understand how market events unfold.

So just thinking about those market events in terms of a bit of a market outlook very briefly. In our experience, consumer confidence seems resilient. Obviously, we watch the external indicators on this very carefully. It's very important for the housing market as we all know. Sales rates in line with our expectations currently. And actually, when you reflect on the circumstances that we're living through, it's quite a positive situation given those challenges. So we're encouraged by that, albeit we're mindful of the wider risks. And I think the -- if consumers start to have increased concern over job security and interest rates perhaps, then we may see a little bit more caution coming to the markets.

And we have the key challenges to growth in industry output. The trade resources is still tight. We are doing a lot of trading in the business, as Dave outlined, and we'll continue to invest in that activity. And I think the other issue is making sure we get outlets through planning as best we can. It's still not easy. It is subject to planning delays and complications in terms of reserve matters, clearing those down, et cetera. So timing of 1release is still a challenge. We're up for that challenge, obviously, but we need to continue to work hard as a team to achieve the -- bringing forward these -- the land that is released into consented site, so we can crack on with construction and deliver the units moving forward. So those key challenges remain to be addressed, but we're working hard to do that.

To that point, I'll come back to you, Dave, to summarize.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [6]

--------------------------------------------------------------------------------

Okay. Just quickly, the summary. They will get the questions and answers. 2018 has been a year of good progress path for Persimmon by any financial metrics. We've got disciplined high-quality growth. We are on a very strong financial position with excellent liquidity. We have a high-quality land bank across all our regional markets. But looking forward and is important for me as the new CEO to acknowledge that we still have work to do on enhancing our customer care. I am also very committed to further investment in the business as we strive to reach the optimal scale for the company. And finally, I'm placing greater emphasis on our wider responsibilities as a leading U.K. house builder.

So that's it for the presentation, you'll pleased to hear. I will not bother going through the appendix.

Okay. We've got the questions and the answers in the usual process. Got the mic?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Unidentified Analyst, [1]

--------------------------------------------------------------------------------

[Gwyneth Johnson], Jefferies. I have 3, if I may. The first one, just in terms of the question of scale. How many of your divisions are at that 600, 650 completions? How many are over that? What about the 7 that you've opened in the last 4 years, where are they? Second of all, in terms of the customer satisfaction. Do you have any color or perception of how much of that customer satisfaction upside will come through better accuracy of moving in dates? And how much is about the snagging specification? And then lastly, just the margin, the gross margin on Charles Church, not only is the highest, but it actually has seen the biggest increase as well. It's a huge number. Congratulations. But how? Is it about house price inflation at that higher price level? Is it about location? Is it about build efficiency? How do you get those margins on those bigger homes, which I think is contrary to what we would have thought within house builder?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [2]

--------------------------------------------------------------------------------

Well, I'll deal with the first 2 questions, Mike. You can pick up the one on the Charles Church one. I'll go straight to customer satisfaction one. It's a bit of a moving target. We don't have that level of detail to be able to dictate exactly where the problem sits with the customer. That's why we're trying to deal with all the issues we see. What we do know is, and if I can see myself going through the complaints that I received, going through the management meetings, going through the maintenance issues, that the completion date is a big issue. We've got a number of companies -- not a number. We have companies that have problem with dates, and then dates are driven by trying to meet the demand, specifically for the first-time buyer type of combination. What we've tried to do is give them dates and maintain the product choice. However, we've made that conscious business decision we're going to hold back to give us better accuracy of dates. That has to have traction from us, and we'll make improvement, I'm sure of that. In terms of snagging, there, again, it's remotely what our plans there are, but I couldn't pick where -- which one is going to have the biggest impact. I mean, gut would tell us it would be the data actually. In terms of scale are all in different stages. We've got businesses of different sizes. The business, what we've got, we do and try enforce optimum scale. If we don't see land and then businesses where we have the opportunity to meet the margin, we wouldn't simply buy a site to get to that scale because we know a business can run very efficiently from 500 to 750 units. It's more about deciding to buy the land and seeing where we get the opportunities, and we're quite happy for that to change, for example. In the Northeast, 1 year, I know I don't -- 2 years ago, I don't know, 750 units. This year, it's going to drop back to 650. That's something I'm very comfortable about doing because in other parts of the country we're actually seeing businesses grow. It's about seeing the opportunities and take advantage of them where we see them. Mike?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [3]

--------------------------------------------------------------------------------

Yes. On the Charles Church, yes, you're right, [Gwyneth], we're pleased with the margin improvement. I think it's the same sort of story, really. It's in the land recoveries. The average number of sites that we're off -- or we have been off for Charles Church has reduced a little bit in 2018 as we've traded off some and threw some older sites, and new sites have come on. So we've gone from around about I think it's 72 sites down to 62 sites in Charles Church. But there is the change in mix there, so the land recoveries have dropped in a similar way. So that is the major step forward or the reason for step forward in the Charles Church margins that we've seen.

--------------------------------------------------------------------------------

Unidentified Analyst, [4]

--------------------------------------------------------------------------------

Sorry. Can I quickly follow up on these divisions? How many of these...

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [5]

--------------------------------------------------------------------------------

Will you get that microphone?

--------------------------------------------------------------------------------

Unidentified Analyst, [6]

--------------------------------------------------------------------------------

Wrestle it away. How many of those 7 divisions that you've opened in the last 4 years, where are they at? Is that where the growth comes from?

--------------------------------------------------------------------------------

Roger William Devlin, Persimmon Plc - Chairman [7]

--------------------------------------------------------------------------------

Various schemes, depends which business we want it to move under. Wouldn't start giving the volume for each individual businesses, but there are different schemes.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [8]

--------------------------------------------------------------------------------

I think the -- excluding the South Yorkshire business that we've just opened, I think the other 6 businesses have delivered in '18, I think it's 17%, 18% of our legal completion. So that sort of gives you a feel for the combined contribution from those businesses. And as Dave says thatthat they will naturally grow into their land bank as the construction progresses. So I think that's the key for us. We've got to -- I mean, that's where the external infrastructure comes in to get that opportunity to get on to sites and deliver the volume that we can from those businesses. Gregor?

--------------------------------------------------------------------------------

Gregor Kuglitsch, UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst [9]

--------------------------------------------------------------------------------

Gregor Kuglitsch from UBS. So 2 questions. The first one is just on margin kind of maybe summarizing what you were saying. I heard growth could go up by 100 basis points considering where you are in the land bank. So a bit of over 34 but then you have a headwind of around 60 bps from OpEx, which is customer care plus the one-off. So just to be clear, that's what you're saying.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [10]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Gregor Kuglitsch, UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst [11]

--------------------------------------------------------------------------------

And then the question is, just to come back on this customer care issues, maybe two-part question. Firstly, are you speaking to the U.K. government? Obviously, there's been some press reports over the weekend. Are you speaking to them as regards to your plans? And can you perhaps comment at all on what they've indicated to you? And then secondly, perhaps a question for the Chairman in terms of remuneration. What are you targeting as a -- for Persimmon to achieve in terms of the Star rating or any other metric that you're targeting that we can externally verify that this progress is being made? And are you planning to change bonus allocation? I believe there is a element of the Star rating that features in the bonus, but I think it's a relatively small part. Are you significantly increasing that to rectify the issues that clearly have become quite distracting, particularly from an external perspective?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [12]

--------------------------------------------------------------------------------

Well, I'm hoping to take questions 2 and 3, Roger, unless you want to specifically raise issue on question 3. The first -- the second point you raised, if you can take question 1. Yes.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [13]

--------------------------------------------------------------------------------

I'll be guided by you.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [14]

--------------------------------------------------------------------------------

Yes. The first thing is the discussions with the government. We're in discussions with the government all the time. I think what you specifically make a reference to is the article that was in The Times. In relation to that, we've had no direct communications with the government on any of the issues that was raised in that article. However, we are in constant dialogue with the government on these issues, and we already have meetings in place to go and see them on a number of issues, and we'll be taking a ship when we go to visit them. That's as much comment as I can really give on that point.

In terms of remuneration, I think it's not for me to say in some respects. But what can I can say is that the company is being -- the metrics and targets for remuneration for the senior staff has been relooked at, being refocused. And it is now being focused and targeted at a 4-Star business for across the business. But a good 4-Star business in the short term. But in the long-term, obviously, we want to aim to be 5 Star. The remuneration is a consumer package, and it's something that the rem committee were pleased or encouraged the company to take up and was something I was prepared to accept and is being welcomed by the staff.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [15]

--------------------------------------------------------------------------------

Yes, on the gross margin outlook, which is really what you're asking.

--------------------------------------------------------------------------------

Gregor Kuglitsch, UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst [16]

--------------------------------------------------------------------------------

Well, the gross and net, sort of plus 100 less (inaudible).

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [17]

--------------------------------------------------------------------------------

Yes, I mean, I think we saw in the second half of '18, a gross margin of about 34%. And we've said over recent years that, at some point, we're going to see margins plateau. And I think that we're seeing that in the second half of '18. But having said that, it does depend where you take your legal completions from. Going back to the slide that had the circles on it, if you were fortunate enough to be just having active sites in the top circle, then obviously, there's an opportunity to do a bit more. Unfortunately, we don't dictate where -- which sites we take our legal completions from. That is dictated to us by our customers. So I think being realistic, I think the -- our growth is topped out, if you will. But we're very pleased with the level we're achieving. And I think the margin, the embedded margin in the land bank supports that sort of outlook.

However, I would say that we are faced with some build cost inflation. Dave referenced 3% to 4% earlier on in the presentation. And we have to take that into account as well in terms of what the business delivers. So I think that -- when you think about -- I mean, I mentioned in my presentation a modest outlook on pricing, somewhere -- I mean, personally, I think between 0.5% and 1% this year, depending on mix, is a reasonable position to take, given the challenges that we face. But a drop in land recovery, which as I said earlier, I think is a reasonable expectation. But then we have to accommodate the investment we're making across the business, both in the growth on some direct costs, perhaps a tickle up on incentives and, obviously, in the operating expense line, as we referenced earlier. So I think that you got to put those moving parts together, and I'll let you do that perhaps after this meeting.

--------------------------------------------------------------------------------

Gregor Kuglitsch, UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst [18]

--------------------------------------------------------------------------------

You've already started there.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [19]

--------------------------------------------------------------------------------

And we can maybe talk about that again at some point, but those are the key moving parts I would suggest. Will, yes?

--------------------------------------------------------------------------------

William Jones, Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research [20]

--------------------------------------------------------------------------------

Will Jones from Redburn. Three if I could please. Just going back to that comment around 3% to 4% build cost inflation. Just to be totally clear, that includes the extra investment costs and things like spec that you've highlighted.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [21]

--------------------------------------------------------------------------------

Yes, yes.

--------------------------------------------------------------------------------

William Jones, Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research [22]

--------------------------------------------------------------------------------

Is that including also the mitigation measures that you've opted. And will that actually bring that number potentially back down a bit?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [23]

--------------------------------------------------------------------------------

I think there is the opportunity to mitigate. I think the -- Dave referenced the brick plant being at optimal levels of production, getting tile works up and running, et cetera, to mitigate that. So to what extent, it's difficult to say. But just as we're saying, well, build cost inflation growth could be 3% to 4%. Will our build cost be, I don't know, 2.5% to 3%, it's hard to say at this stage. But when we'd hurdled it, we'd be able to mitigate a bit from that underlying inflation effect in terms of cost push.

--------------------------------------------------------------------------------

William Jones, Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research [24]

--------------------------------------------------------------------------------

Great. I think the comment you made about price thus far, I think, have been almost at the group ASP target level. Obviously, if we just drill down into the private order book, I think GBP 238,000 was sold, which I think is a -- is that 3%, is it pure like-for-like? Or is there a bit of mix helping there?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [25]

--------------------------------------------------------------------------------

Yes, I mean, in terms of forward order book, in the announcement, we identified our private sales just over 6,000 units in the forward order book sold into the private market at a price of around about GBP 238,000 -- GBP 238,800, which is about 2% ahead of the same point last year. And on Housing Association forward sold plots, we've got -- sorry, the PD is about 400 down on the same point last year in terms of volume, whereas on the HA, we're about 400 units ahead, just over 4,800 in the forward order book compared -- as I say, that's 400 ahead of where we were at the same point last year.

On pricing on the HA, we're about GBP 119,000 per unit forward sold, which is between 1.5% and 2% ahead of where we were this time last year. So -- but when you look at the mix, obviously, having a few more HA in the mix, the overall ASP is down by 0.5 point, if you will. But I think, thinking about the legal completions for '19, again, it's hard to say what the exact mix is going to be. But perhaps I could see a few more HA units in there, given the forward order position. But we've got to get to those units through construction. It's not -- you've got to -- as we all know, you've got to build the units to deliver them. So...

--------------------------------------------------------------------------------

William Jones, Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research [26]

--------------------------------------------------------------------------------

Sorry, just on that 2% private ASP, do you think -- is that pure like-for-like, kind of it's a small number but -- or do you think there's a little bit maybe of mix within the 2?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [27]

--------------------------------------------------------------------------------

I think the general trend is there. But again, the exact mix, we'll need to see how that develops. Because we've got a lot of -- we've got decent visibility on new sites opening as well, which we need to see how those go against viabilities. Dave said earlier, too, and that will determine where the year lands. So I wouldn't expect any major changes from what we've seen in '18. But...

--------------------------------------------------------------------------------

William Jones, Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research [28]

--------------------------------------------------------------------------------

And sorry, the last one was just -- like it's a two-part question around cash. Firstly, just to what extent you think the investments in WIP. And I guess, general working capital, so the GBP 290 million or so, how do you think that plays out in '19 compared to '18?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [29]

--------------------------------------------------------------------------------

Yes, I mean, that's a very good question. I mean, you've heard us talk about the desire to put more money in the ground, so we can get the build in a good place to support what we want to achieve in terms of customer care. So I guess, that we wouldn't be disappointed to see a further increase in working progress. But obviously, we're going to be very mindful about the market risks that we face as well in terms of sales rates. We don't want to get, as we say in the industry, too much horizontal build because it can become slower moving, should we say. The sales rates start to decline a bit. So we're always mindful of that risk in the round, and we manage our sites plot by plot, as you know, where we put a lot of control into this area there.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [30]

--------------------------------------------------------------------------------

I think in terms of risk though, the risk is more still not having enough build rather than having too much. If I go through all the sites and -- we have in the group, I think I'd rather see more build on the ground, and I think that's fundamentally what's driving our customer care issue, we haven't been able to meet the demand. Meeting the demand is still more of a challenge than having too much work.

--------------------------------------------------------------------------------

William Jones, Redburn (Europe) Limited, Research Division - Partner of Construction & Building Materials Research [31]

--------------------------------------------------------------------------------

Brilliant. I'm sorry, wrapping that all up, it was just, obviously, a year ago when you changed the capital return policy. You talked about something about somewhere in the order of GBP 800 million being your best view for what the year-end net cash might be for the cycle. And I appreciate that's for another day, given Brexit and all the rest, which is totally understandable. But high level, is there any change to how you perceive that number?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [32]

--------------------------------------------------------------------------------

No, I think that's still a reasonable position to think about. I wouldn't want to be change -- I mean, given they were saying our overall output is going to probably be similar, then I think it's a reasonable position to take in terms of the sort of GBP 750 million to GBP 800 million.

--------------------------------------------------------------------------------

John Fraser-Andrews, HSBC, Research Division - Global Equity Head of Building Materials and European Building Materials Analyst [33]

--------------------------------------------------------------------------------

Three for me, please. It's John Fraser-Andrews, HSBC. First one is on the land flowing through into the P&L. Is there any reason why that 13.2% won't flow immediately into 2019? Or is that a phased entry into the income account? And perhaps within that, where does the Charles Church mix stand going forward? Are we seeing -- see the gross margins slightly higher? And is that slightly higher in Charles Church in the land bank as well as what you just delivered? Second question on the sales rate, the 4% dip in the sales rate in the first 8 weeks. Is the site release policy influencing that? So is it slightly better underlying? And are there any regional variations in that dip in the sales rate? And the final question on outlets. Would it be fair to see a few more outlets given where the sales rates fall and where you're guiding completions to?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [34]

--------------------------------------------------------------------------------

Can I take the outlet?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [35]

--------------------------------------------------------------------------------

Okay, yes.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [36]

--------------------------------------------------------------------------------

I think -- yes, I mean, the desire to provide more accurate moving days is one of the key points that we identify where we can improve customer satisfaction levels. And one of the self-help measures that Dave is pursuing, he's already taken decisions and action on this, is to -- he's already explained delay site release and delay some plots on active sites. Those have the effect of reducing your active sites on sales release. So for the first 8 weeks, which was your question, John, we would say that our average outlet numbers are about 9% down because of those features, somewhere between 350 and 355 sites actively selling for the first 8 weeks this year compared with between 385, 390 same point last year. And I think regional variations within that, well, there's always some variation in terms of speed of sale going to the 4% point.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [37]

--------------------------------------------------------------------------------

I think it's an important point now, that's not just regional differences. It's teams, it's more about the product what we're seeing. We're specifically seeing problems with the larger 4-bed, detached houses in certain parts of the country. So even in areas where we may be strong a little bit more compared to others, we're still seeing good demand from our core product in most areas. It's too simplistic just to look at regional areas. It's more about product.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [38]

--------------------------------------------------------------------------------

Because I -- what Dave's saying, you're not releasing an active site, a currently open and selling site, you're not releasing plot 8, 12 and 17 because we know there's very good demand for those units. And these might be small units in that particular location. But we need to get to 50%, 55% build complete roofed so we can say to the customer, well, we would estimate a moving in date of this day, which they can rely on.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [39]

--------------------------------------------------------------------------------

Well, on those assumed sites, you might still have 2 or 3 larger 4-bed, detached houses, which are 80% complete, which we can turn over very, very quickly. It's not a simplistic message. It's a bit more sophisticated in terms of managing these individuals sites through its own merit, and that's what we've done. We've reviewed every single site.

Land flow through? I don't know if you want to deal with that one.

In terms of that, obviously, it's easier margin so probably shouldn't make much difference when it does headed. And it will depend upon which stage they are and what capital investment has been. I don't think it's materially going to change because the margin recovery is the same as what's in the land bank. And both are 13.2% and I think in 17, '18, '19.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [40]

--------------------------------------------------------------------------------

Yes, and I think it was Charles Church you were particularly.

I think we have seen a step up because of the drop in -- as Glynis asked the question earlier. We have seen a drop in land cost recovery in the Charles Church business because of that mix, the site mix change. But again, I reference Gregor's earlier question where it depends where you take your legal completions from. It depends which sites are selling a bit better than others and as -- do those sites carry a bit of a better margin or lower margin, for that matter, in terms of the overall outcome. So -- but there's nothing structurally different that we would expect to flow through that would change things from that sequence. But it's hard to predict exactly what your sales mix is going to be across the site portfolio.

--------------------------------------------------------------------------------

John Fraser-Andrews, HSBC, Research Division - Global Equity Head of Building Materials and European Building Materials Analyst [41]

--------------------------------------------------------------------------------

Is Charles Church at the right level of volume? You're just reporting 2018. Is that sustainable?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [42]

--------------------------------------------------------------------------------

I think it depends what sites we see. If we see opportunities to buy attractive sites, where we could sell larger 4-bed and 5-bed, detached houses, then no. If we don't see them opportunities, then probably yes. We look at every individual site on it's own merits, and then depending what the market responds. And what we do know at the minute, the market's a bit more difficult in that area. Therefore, it is probably at the right level. If the market was to change in 12 months' time or 6 months' time, then we're quite happy to change that balance within the business and react to that change.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [43]

--------------------------------------------------------------------------------

I suppose when you think about the cycle, stepping away from the detail, it's interesting to know the -- as a country, we're confronted with these challenges. And naturally, there's an extra note of caution perhaps at higher price points. It's more discretionary as we understand in terms of the approach that customers bring to those larger commitments. And I think that we're demonstrating, in a way, the Persimmon model, the Persimmon group model is that we've got brands that deliver to particular customer need across markets. And in a way, we're not shy of seeing a scale back in terms of Charles Church for the right reasons. And indeed, if the whole market becomes more difficult, well, we've got a smaller scale of business for a while. And that's all baked into our strategy. We're not going to continue to bang away, delivering lots and lots of completed units if the demand isn't there in the market. So we've got to judge that, the timing of the cycle very carefully to make sure -- the work in progress point is a good point. You don't want to build too far in front of yourself, nor do you want to sell too far in front of yourself, because it gives you other issues. And it's getting -- trying to get that balance right as the cycle develops and unwinds. So that's the job that we have to do, and we'll continue to try and do our best on that.

--------------------------------------------------------------------------------

John Fraser-Andrews, HSBC, Research Division - Global Equity Head of Building Materials and European Building Materials Analyst [44]

--------------------------------------------------------------------------------

Just the last one then on outlets going forward. As you sit here today, are you planning to increase those slightly to achieve a...

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [45]

--------------------------------------------------------------------------------

We'd like to. I think that's what we wanted to do.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [46]

--------------------------------------------------------------------------------

Yes, we'd like to. Obviously, it's in the git of the planning department, to some extent. What we do know is the sites we've identified ahead our budget needs for 2019, and them sites have all got planning permission. And we're on with them sites and about to start them sites. So we're pretty confident in 2019. If we could bring some other ones forward, opportune plots or opportune outlets as we would call them, then that make a little bit more opportunity. But it is incredibly difficult to get on site at the moment, the planning system makes it very difficult. I don't know if you want to provide a bit of detail on that, [Peter].

--------------------------------------------------------------------------------

Unidentified Company Representative, [47]

--------------------------------------------------------------------------------

I think it continues to be a complicated system to get on. But right away through the process, my team balance the planning components, the commercial components, the marketability components to get all our ducks lined up for when we can get an early start. But as Dave said, it's challenging and it continues to be challenging. But we're good at what we do and get on with it.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [48]

--------------------------------------------------------------------------------

Thank you. Thanks, John. Aynsley?

--------------------------------------------------------------------------------

Aynsley Lammin, Canaccord Genuity Limited, Research Division - Analyst [49]

--------------------------------------------------------------------------------

Aynsley Lammin from Canaccord. Just 2. Firstly, could you tell us what your Help to Buy use was in 2018? And just going back to the press article, obviously, you haven't spoken to the government. But it seems the assumption is being a 4-Star house builder, that seems to be the criteria of the government would look if they did review participation in the scheme. Is there anything contractually kind of stated to that effect in the agreement you have with the government? Or do they monitor -- I mean, what's the criteria that they would use if they were to differentiate between house builders? And then secondly, just on the capital return, obviously, again you mentioned that you don't want too much capital on the balance sheet. It's a drag on returns, et cetera. If the kind of working capital flows and the macro risk around Brexit kind of developed oddly as we go through the year, could you revisit that in the summer in terms of you may get back a bit more capital. Would we have to wait till this time next year for the next review?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [50]

--------------------------------------------------------------------------------

No. Well, I'll look after the first one. You can deal with the second one then.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [51]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [52]

--------------------------------------------------------------------------------

The first one, the Help to Buy usage in 2018 was 40% of all our completions. It's important to make the distinction between the current Help to Buy scheme, which we're under, and the government's extension in 2021. The current scheme has got criterias in there. And obviously, we've reviewed them criterias and we're comfortable. We're satisfied with them criterias. What the article was particularly talking about was the extension in 2021. We don't have any detail whatsoever. There's been no information submitted on what criteria is in there, so we'd be second guessing what would be in there. However, my job as the new CEO is to make sure that we'll meet what them standards are going to be by 2021. And regardless of that article, we intend to -- dating back to November, we were already on and knowledge we had work and opportunity to improve our customer care. It's not something we're hiding from. We acknowledged this in November, and we will deal with it.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [53]

--------------------------------------------------------------------------------

Yes. On the capital return, it is something that we'll continually review. We've got various opportunities to update the market with those views. I wouldn't want to commit the board to saying something in August, particularly. But hey, that is one of the opportunities, isn't it? I think we'll keep it under review and just reflect on how markets are developing.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [54]

--------------------------------------------------------------------------------

I think there still be touch points. You've obviously got the April.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [55]

--------------------------------------------------------------------------------

We've got the AGM. We've got the August result. Well, we've got July trading update. We've got the August results. We've got the third quarter review in November.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [56]

--------------------------------------------------------------------------------

As soon as the mist clears, then sooner we have the opportunity. I just want to be sure we're doing the right thing.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [57]

--------------------------------------------------------------------------------

Clyde?

--------------------------------------------------------------------------------

Clyde Lewis, Peel Hunt LLP, Research Division - Analyst [58]

--------------------------------------------------------------------------------

Clyde Lewis at Peel Hunt. Three, if I may. I think on Slide 31, Mike, you talked through the land bank. And the one number that jumped out a little bit for me was the plots proceeding to contract. There seems to have been a material improvement in that cost. Is that just a mix thing? Or is that, again, better opportunities in the land market and your ability to be even more selective in terms of what you can buy? That was the first one. The second I had was go back to the 5-Star rating. Obviously, great target to get there. Has the business ever been there historically? And what's the mix across all your divisional results? How big is that spread. Because I'm sure you've got divisions already at 5 Star, and you may well have some 2 Star, I don't know. But maybe you can give us a little bit more information there. And the third one I had was really going back to Gregor's point and, I suppose, government interaction. Do you think, as a business, you've done enough to get your story over in terms of the product mix and what you're doing and making sure they really understand that the margins are 20 years in the making, not something that you're raping and pillaging in terms of the customer base and force them to pay too much for the product? So just been pretty -- whether you think you're spending too much time with civil servants or not enough.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [59]

--------------------------------------------------------------------------------

Well, I'll deal with questions 2 and 3. I'll deal with the third one, which is something which is quite close to my heart. The truth in the matter, I mean, I don't think we've told our story particularly well. I would like to think you've seen a change, and it's going to be a particular focus of mine. I think you'd seen a change in our presentation today.

Persimmon do a lot of good stuff in our sector. We train more people, we promote from within, we invest in our communities. We help more first-time buyers than anyone else on the housing ladder. 52% of all our purchase are first-time buyers.

Have we got our message across to the government? No. However, that doesn't mean to say we can hide from the issue. We have to improve the customer care. There's no ifs or buts about it. It's nonnegotiable. We'll have to get to a minimum of a 4 Star. But obviously, we'll aim for 5 Star. Have we ever been a 5 Star? I don't think we are, have we?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [60]

--------------------------------------------------------------------------------

Not as a group.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [61]

--------------------------------------------------------------------------------

Not as a group. The second question is, do we have business, which are the 4 , 5 Star already? Of course, we do. If I was to move to give you a feel, I'm not going to go in a lot of detail. But if I was to take the 2 bottom businesses out of the numbers, we'd be a 4-Star builder. So you can imagine where my -- most of my efforts and focus has been directed at. So I hope that just gives you a feel of where we are. Do you want to deal with Slide 31?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [62]

--------------------------------------------------------------------------------

Yes. I think the proceeding to contracts is more in line, I would say, with, obviously, the own plots. We have seen an improvement relative to last year. I think it is more of a mix issue. I think also referencing early comments on sale activity, I think that we do walk away from deals. And if we don't want to progress, okay, we might be proceeding to contract, which means that you've got terms agreed. You got your head-to terms, but for whatever reason, your objectives or desire might change a bit on both sides. And we do see opportunities disappear as well. So I think it is more of a mix issue, Clyde though.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [63]

--------------------------------------------------------------------------------

But coming back to your point, every single land deal that gets sent up, goes across my desk. I scrutinize every single deal personally. And we are seeing some really good opportunities, which we're pleased with, especially some strategic stuff that's been in gestation for some period of time. We're expecting some good sites to come through in the next 12 months. I don't know if you want to parade but (inaudible) Peter? The sizes and scales.

--------------------------------------------------------------------------------

Unidentified Company Representative, [64]

--------------------------------------------------------------------------------

A lot of the major projects that my team have bought through have now cleared the allocation hurdle, have now cleared the planning hurdle. But we're now into the very complex process of the price negotiation and ensure that we can purchase the site on the right terms to maintain the return on capital. And the teams are working really, really hard. We've got 2 sites. They're [Garindon] and [Lupreth], 3,200 units, which is permissioned now, which we hope to proceed to purchase in the next few months. And Darlington Grange, which is for 3,200 units, we jointly own -- control with [Barrett's], apologies for that. And that should gain its planning permission probably by the next 3 or 4 months' time. Again, these massive sites, we're very good at them, but it takes a long, long time and lot of experience to bring them to fruition in a way that they can be profitable and we can maximize them. So yes, we've got some great opportunities coming forward in this year.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [65]

--------------------------------------------------------------------------------

Thanks, [Peter].

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [66]

--------------------------------------------------------------------------------

Jon? Jon?

--------------------------------------------------------------------------------

Jonathan Matthew Bell, Barclays Bank PLC, Research Division - Director [67]

--------------------------------------------------------------------------------

Jon Bell from Barclays. I think I've got 2. They're probably both for you, Dave, actually. The first one, a lot of your buyers, I guess, are exiting rental contracts when they buy your homes and, therefore, handover dates are really critical to them. Would you consider compensating them for late handovers? Is that something you do already? And would that appease them perhaps when they eventually take the property? And then secondly, again, one for you, Dave. When we sit here again in a year's time, what percentage customer satisfaction score would you be happy with?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [68]

--------------------------------------------------------------------------------

The first one is a good observation. I think you're right. That's why we've focused on completion on time and is consistent theme that comes across. But I think it's important that you understand how we give these dates to the customers. So a lot of the time is the dates we've given the customers will be within the initial window we've given them because we give them a 3-month window for when the completion is going to happen. Unfortunately, a lot of the time, the customer picks the first one. So if I give them the July, August, September window, they're focused on the July date while -- so that we're still within the original window we've given them. Well, the reality, they're focused on the first date, and they serve notice when they get wind that we've a problem when we don't hit the July date. However, in certain parts of the country, where the demand is so high, we have had problems meeting even dates even within the windows that we give them. And then in them circumstance, we have looked to support the customer to try and compensate them for that delay. Where we're going to be, I'm not going to give you an individual percentage target. What I would say, I'd be extremely disappointed if we're not a 4-Star builder.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [69]

--------------------------------------------------------------------------------

Ami?

--------------------------------------------------------------------------------

Ami Galla, Citigroup Inc, Research Division - Senior Associate [70]

--------------------------------------------------------------------------------

Just one question for me. I mean, on Space4, could you give us some color as to what is the current utilization level? And in the release, you've mentioned that you've increased capacity for that unit as well as you are building -- using room in the roof as well. I mean, to what extent that is currently under production?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [71]

--------------------------------------------------------------------------------

Okay, Mike, you want that?

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [72]

--------------------------------------------------------------------------------

Yes. In 2018, we've delivered round about 6,000 units, which -- it's about 500 drop in terms of timber kits. But we've actually increased our output of the room-in-the-roof systems. So we've swapped some of the production within the factory there because we're quite keen to support the group's use of our roof cassettes, because it's offering the customer more space because it's a 2-, 2.5-story dwelling, typically, removing the roof trusses and putting the roof cassettes in. So that's a way of providing more accommodation, which obviously -- I mean, you can see on the front cover, we've got just a glimpse of a Souter, which is a house type for us. Over on the left-hand side, which is a 2.5-story product there, which is supported with the Space4 system. Yes, so I think the developments of capacity in the Space4 factories, both for the timber frame, the close panel insulated wall system that goes inside the timber frame, together with the room in the roof cassettes. I mean, we are looking at doing roof joist production as well to supplement the supply chain capacity we have on that. Because again, this is all about security of supply. We've not pressed the button on that, but it's potentially a logical extension of what Space4 does for the group in terms of producing engineered joists that we use in the roof truss systems. So we'll see how that goes, but that's something for the future really, Dave, isn't it?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [73]

--------------------------------------------------------------------------------

Yes. Thank you, Ami.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [74]

--------------------------------------------------------------------------------

Thanks, Ami. Chris?

--------------------------------------------------------------------------------

Christopher James Millington, Numis Securities Limited, Research Division - Analyst [75]

--------------------------------------------------------------------------------

Chris Millington at Numis. I've got 1 quick 1 and 2 probably a little bit more in depth. But first, average net cash in '18 might -- if you could there. Second one was really something you touched on, Dave, at the Capital Markets Day, and that was senior staff churn post the [L2] payments. I wonder if you could just update us on that. And we've also heard from a few other people in the industry that the shape of sales rates this year were quite slow at the initial part of 2019 and have progressively strengthened. I don't know if you can give us some comment on kind of what your experience has been for this -- the 8-week period. I appreciate it's a small window there.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [76]

--------------------------------------------------------------------------------

Well, I'll deal with the staff churn point, if you want to deal with the sales rate and net cash maybe? I presented that slide up. Since then, we've had, I think, 8 new people indicate their intent to leave. None of them have left as yet. That was pretty much in line with what we expected to have, and most of these people are choosing to retire of very late. Seven of them, I think, sorry, 6 of them we have internal promotions already in place and identified. In total, we'd look for external replacements.

--------------------------------------------------------------------------------

Christopher James Millington, Numis Securities Limited, Research Division - Analyst [77]

--------------------------------------------------------------------------------

Would you mind just stating why that was when your (inaudible)

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [78]

--------------------------------------------------------------------------------

Similar. I think it's similar in terms.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [79]

--------------------------------------------------------------------------------

Similar. It's very similar. So it was obviously, the ones in the top who have left. And since then, there's another 9 indicating their intent to leave.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [80]

--------------------------------------------------------------------------------

Average cash, you got me there, Chris. I'm not quite sure what the average cash was in '18. But I'll have to dig that out, and I'll let you know. But I think it would've been similar to last year but a different shape. Obviously, last year, we started low and finished higher. Whereas this year, it's been the opposite: started higher, finished lower. So off the top of my head, I'll be guessing it be around the 800 mark. But I'd have to dig that exact number, which I'm sure we've got somewhere.

--------------------------------------------------------------------------------

Christopher James Millington, Numis Securities Limited, Research Division - Analyst [81]

--------------------------------------------------------------------------------

And the sales ratio at the start of the year.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [82]

--------------------------------------------------------------------------------

Yes, sales rates. We're certainly slower at the start. I think that's absolutely right. I think the -- it's hard for us to see exactly what the shape of this year is. But I think there has been a bit more confidence as we'd move through, as we'd expect. But given the action Dave is taking on the customer care side in terms of progressing build and delaying sales release, it's masking it a bit for our sale. I mean certainly, in terms of other lead indicators, in terms of visitor traffic last week, very good. These other indicators, yes, cancellation rates are still pretty low. All of those other data points are pointing to a confident spring season.

--------------------------------------------------------------------------------

Christopher James Millington, Numis Securities Limited, Research Division - Analyst [83]

--------------------------------------------------------------------------------

So it would just be ahead of this one.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [84]

--------------------------------------------------------------------------------

Yes, I mean, certainly...

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [85]

--------------------------------------------------------------------------------

This week will soon be, yes, I mean, pretty similar but this week actually ahead.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [86]

--------------------------------------------------------------------------------

Yes. So that's it. It is -- it's more perhaps more positive than you would first expect. But yes, given the backdrop we've got. Kevin?

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [87]

--------------------------------------------------------------------------------

Two questions, really, but there's probably about 5 in the first one. So...

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [88]

--------------------------------------------------------------------------------

Everyone said no.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [89]

--------------------------------------------------------------------------------

I must admit, I'm slightly struggling with this advanced stage of release and the relationship to the working capital movement. And I'd just like a little bit more help to understand what exactly the mechanics of that are, and what the system actually is. And you'd sort of touched on it in an earlier answer where you were saying, the policy at the moment is to give a 3-month window. And you explained naturally why everyone will go for the first. It's just sort of human nature, isn't it? And if that's a big element of it, then without having the working capital commitment behind it, the simple answer presumably is not to give a 3 month, but to give -- instead of it being July-September, you just give September. Are there -- I'm sort of struggling a bit.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [90]

--------------------------------------------------------------------------------

I think we're dictated to a degree by the Consumer Code.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [91]

--------------------------------------------------------------------------------

By the mortgage offer, is it?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [92]

--------------------------------------------------------------------------------

By Consumer Code. You have to give a window in the Consumer Code.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [93]

--------------------------------------------------------------------------------

Yes, yes. So this 3 months, 2 months, what. So there's a bit of a...

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [94]

--------------------------------------------------------------------------------

So you're tying in that build completion. To some degree, you're tying it to...

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [95]

--------------------------------------------------------------------------------

Partly that. But to be clear, that is -- the 3 month's a conservative figure. We should be getting the earlier moves anyway. So really, we're disappointed with that when we get the 3 months, 3 months. And as we go through the process, it's 3 months, it's that. When we get the roof in, now we're down to 2 months; and then we get the plaster, we give them a month.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [96]

--------------------------------------------------------------------------------

So is there a hard rule? At what point do you release units? I mean, can you release...

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [97]

--------------------------------------------------------------------------------

For sale, not offer build. It depends on the sale.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [98]

--------------------------------------------------------------------------------

It depends which company it is, whereabout it is in the country. For example, we've get some companies -- and I've got a straightforward greenfield site, where I can get straight enough to work. I've a sophisticated company, where I can get on and do it, and I'm more than happy for it at least with the virgin. If it's a difficult site, it's built on a side of a cliff. We've got to put grout in it. I've split-level houses. The business has a record of struggling to hit their dates, then the sites, we'll be looking to hold back. It's not as simple as one shoe fits all. Each individual site is being looked on at its own merits.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [99]

--------------------------------------------------------------------------------

All right. If we accept, therefore, that in '18, there was a sort of somewhat structural shift, which has cost you that working capital, bulk of that working capital movement. And if we look at this year and you're sort of implying there's a further element of that to go.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [100]

--------------------------------------------------------------------------------

I think the bulk of the investment, as I said earlier, the GBP 160 million that's gone into WIP, GBP 105 million, GBP 110 million of that's gone into externals. So this is off-site infrastructure work. So it's an enabling investment to allow us to get onto site so we can get on with deploying unit build, which is all about delivering the product for the customer. So it's the investment earlier on in the development process that we have invested quite heavily in 2018, which puts us in a great position for '19 in terms of bringing forward visibility of the plot construction, the plot-focused construction across these sites. So we are -- you've got to make that investment. We can't avoid that investment. We have to make that investment.

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [101]

--------------------------------------------------------------------------------

We'll be making that net investment at the same time. The only thing is it doesn't make any difference to the time and the WIP spend whatsoever. It just when you release the plot. So we're not stopping building it. We're continuing to build it. And when it gets to the certain stage, we say, yes, I'm going to release it, so the working capital difference is nothing.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [102]

--------------------------------------------------------------------------------

Can I just, therefore, just one final element of this. Why -- I think I heard you rightly saying that there could still be a further outflow in the current year. Could you talk about the basis for that? Because intuitively, given what you've said about sales and volumes, and one assumes in a more -- a tighter market, your sort of natural reaction would be to sell further out, not sell further in, I'd like to think. What's driving...

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [103]

--------------------------------------------------------------------------------

Yes, I mean, I think if we've got similar -- if we assume a similar market to what we had in '18, I still think we've put the external investment in, and obviously, that's an ongoing story. It doesn't stop -- it doesn't on one particular site, but we've got a number of sites, obviously. But what we still have to do is invest on the on-site infrastructure plot unit build. And as Dave said, we need to provide more visibility of plot construction, firstly, to support sales. People can see the product and what's available. So we'd still like more money in the ground on the plot unit build to bring greater visibility. That enables us then to release the sale at a more appropriate time to hit the dates. So it's sort of linked really in terms of putting more money in to work in progress. It's just that, that later stage, I mean, obviously, the number of outlets that you've got at any time, if we see a structural increase or drop, then the absolute amount of work in progress tied up will change because of that structural shift. But we're not saying it's a structural shift. We're saying it's a phasing issue, really, in terms of getting the external works done, which allows us to get on-site and get into the plot construction so we can offer product, which then allows sales release and some customer care benefit from the action we're taking.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [104]

--------------------------------------------------------------------------------

Okay, that's clear. Second question I had, and apologies to the -- partially going over old ground.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [105]

--------------------------------------------------------------------------------

No, that's fine.

--------------------------------------------------------------------------------

Kevin Malcolm Cammack, Cenkos Securities plc., Research Division - Building and Construction Analyst [106]

--------------------------------------------------------------------------------

The sort of media comment and all the rest of it, when you look through your business, is there any evidence whatsoever that you've been disadvantaged at any level by what's being said or government, I mean, local government in terms of planning? Or is there any -- can you point to anything in the business that would make you feel that you're actually being disadvantaged?

--------------------------------------------------------------------------------

David Jenkinson, Persimmon Plc - Group Chief Executive & Executive Director [107]

--------------------------------------------------------------------------------

Not from anything -- not with government or anything. Saying that for local level. I'd be honest with you, and say I do think all the furor around the noise that was happening in last year, a little bit possibly. But no, the results speak for themselves. If we were having such a problem, that was causing them, well, we wouldn't be the first house builder producing GBP 1 billion of profits. I think that's the best answer to the question really.

Is there any other questions or -- good. Well, thanks for coming, everybody. I really appreciate it, and I'm pleased that -- you've got Mike now sleeping now on that question on average capital employed, so we'll keep reminding him on that. Thanks, everybody. And I look forward to seeing you again soon.

--------------------------------------------------------------------------------

Michael Hugh Killoran, Persimmon Plc - Group Finance Director & Director [108]

--------------------------------------------------------------------------------

Thank you very much.