Bellway p.l.c.

Good morning and welcome to Bellway's half year results. Some positive news to discuss on trading and growth outlook. But first, a few key highlights from the first half. We have delivered another credible operational performance despite a challenging market and from a significantly lower order book. Housing completions closed at 4,092 homes. Underlying PBT was 134 million. Dividend at 16 pence is around one third of the estimated full year return. and reflective of our previously guided two and a half times cover. And notably, our balance sheet remains robust with a healthy WIP position and capital to invest in land. Now, trading conditions have markedly improved since I last reported at our prelims in October. And you may recall at our prelims that I suggested FY24 was going to be tough and there was room for optimism in FY25. And that story is very much playing out, with the exception it's happening sooner than we envisaged. Improved affordability has led to an early pick-up in sales in January and ahead of the usual spring recovery. And as a consequence, that has reinforced our optimism and our prospects for a return to growth. We are seeing good levels of customer inquiries, higher reservation rates and healthy demand for energy efficient new homes. Operationally, despite the planning system, we can deliver meaningful growth next year. And the reasons behind my optimism, my confidence, we already have the land in place with the benefit of DPP. Outlet numbers and order book are both on track to grow again this year. And we have a healthy WIP position to meet the improvement in customer demand. And given these strengths and assuming market conditions remain stable, we are well placed to grow in 2025 and beyond. I'll discuss strategy and operations later, but first our results with Keith.

Okay, thanks, Jason. Good morning, everybody. So I'll start with housing revenue, which reduced, as expected, to £1.3 billion, with the lower volume output a reflection of weaker trading conditions over the past 18 months. And you will see that because of that lower demand, the reduction in homes sold has been mainly in respect of private completions, where volume dropped to 3,078 homes. As you know, since the summer of 2022, we sought to accelerate the delivery of our social housing contracts by utilising temporarily excess capacity in our construction teams. This meant that we were still able to deliver over 1,000 social homes in the first half, representing an unusually high 25% of output. And that increased social percentage was the main reason behind the modest reduction in the overall average selling price, which decreased to £309,000. In the second half, we will continue to deliver our accelerated social housing programme, and I therefore expect that we'll broadly complete around 2,100 social homes for the full year. The number of private completions will, however, continue to fall in the second half, so total volume output will be around 7,500 homes, but the reduction in proportion of private homes will have a further dilutive effect on the overall average selling price, which is likely to be around £295,000 for the full year. All of this is consistent with the guidance that we gave last October, and the weighting of completions towards H1 simply reflects construction programmes and a stronger private order book at the start of the year. The group is well positioned for growth in the next financial year, but it is worth noting that social output is likely to fall from the elevated levels that we achieved in both FY23 and FY24. And that means our recovery will be underpinned by private volume, and it will therefore require the recent improvement in demand, which Jason will come on to in his section, to continue. The anticipated growth in the proportion of private completions next year will in turn drive a corresponding recovery in the overall average selling price to over £300,000 in FY25. While discussing volume, I did want to briefly mention our Ashbury brand. It's now used in over 9% of volume output, and it is used on a similar proportion of sites. And as you know, we use this brand interchangeably with the Bellware brand, and it allows us to provide dual sales outlets on larger sites and offer customers a choice of both internal layouts and elevational treatments, all from our standard house type range. The benefits are enhanced sales rates and improved return on capital employed. And in addition, when it's used carefully, the use of multiple selling outlets in areas of higher demand allows us to bid on larger land releases while ensuring our capital disciplines are maintained. Underlying gross profit was £211 million and there was a 5 percentage point reduction in the gross margin to 16.5%. The continued use of selling incentives and higher site-based overheads due to the slower sales market played their part in the decline. In addition, build cost inflation, including that which was incurred last year and is therefore embedded within WIP, together with some more moderate cost increases experienced so far this year, also contributed to the reduction. The admin cost fell slightly to £70 million, and the cost-saving initiatives and headcount reduction we announced in October more than offset inflationary pressures, although these remain pronounced at the start of the financial year, particularly in relation to wage growth. I still expect the full year admin cost to be similar to last year's cost of £142 million. After considering overheads, the first half underlying operator margin was 11%. And this will moderate again for the full year, primarily because the H1 weighting of revenue means that overheads won't be absorbed as efficiently in H2. As a result, and as I said last October, the full year underlying operating margin will therefore reduce by at least 600 basis points from the 16% that we achieved in FY23. Assuming the market recovery continues, this sets a base for margin recovery in FY25 and beyond. As previously guided, there was a small loss from joint ventures of £1.4 million, and this loss will increase to up to £4 million for the full year as we continue to bear the initial upfront financing costs on a 1,200-unit longer-term scheme at Cherry Hinton in Cambridgeshire. The underlying interest charge was lower than last year at £4 million, and that in part reflects a reduced imputed interest charge on a lower land credit balance. For the full year, I expect a total underlying interest cost of around £10 million. Lastly, note the rise in the effective tax rate, which is now close to 29%. In relation to building safety, we've incurred a charge of £70 million in the first half as an adjustment item. This mainly relates to technical items, and the first being an interest charge of £9 million, which as previously advised reflects the unwinding of the discount on the provision at the start of the year. And secondly, there was a cost of sales charge of £7 million, and that rather dully takes into account the reduction in gilt rates over the past six months, which has resulted in an increase in the present value of the provision. In the second half, there will be an adjusting interest cost of £8 million as the provision unwinds at the new lower discount rates. Our building safety division is well established and work is gathering momentum. There are 32 buildings where initial works are now complete. We've got work underway on a further 62 buildings and we think we'll start work on a further 25 buildings over the next six months or so. We've also made good progress on inspecting properties, both reviewing external wall and internal fire stopper measures in accordance with the more onerous inspection requirements of the SRT, which often supersede any previous inspections which may have been undertaken. Complications and cost issues remain where works have originally been managed through one of the government funds or where the requirements of the SRT extend beyond the initial urgent requirement to remove potentially combustible facades. Obtaining the necessary planning permission and gaining licences to access sites can also be an impediment to progress. But despite the challenges, we are getting on with the job and we do believe that our provision remains adequate. Moving on to the balance sheet and despite our restricted land buying activity our owned and controlled land bank remains healthy at over 49,000 plots and this has allowed us to increase average outlet numbers in the period to 243. In addition the slow but eventual progress of sites through the planning system holds us in good stead to open over 40 new outlets in the second half of the year. This strong position bodes well for Belway's volume recovery and it should enable the group to outperform in the years ahead. While our strong land bank has afforded us caution in the land market, we have continued our investment in longer-term strategic land and now have over 44,000 plots under some form of contract. This will further support longer-term outlet growth beyond the current planning stalemate and the inevitable hiatus period before the next election. It also offers potential to drive future improvements in both margin and return on capital employed. Construction-based work in progress was over £1.95 billion, which is a rise of £92 million compared to 31 July. The overall number of plots in production has reduced, although we have cautiously progressed construction stages on certain sites. In addition, we have also continued to invest in site infrastructure where appropriate to underpin our ongoing site opening programme. The slower market also means that the amount invested in Port Exchange properties was higher, but it was still low at only £20 million. PortX is tightly controlled at Bellway and it was used in less than 3% of overall transactions. Our cash position remains strong, so we ended the period with net cash of £77 million, and that's after taking into consideration a cash outflow on land of £260 million. Land creditors are over £130 million lower at £239 million, and adjusted gearing, inclusive of land creditors, was less than 5%. The balance sheet is resilient with cash, low land credited debt and substantial committed credit facilities. Yes, it also offers an opportunity for future growth and improving returns with previous land and WIP investment ready to support an improving sales market and higher output in FY25. At the same time, we also maintain our ability to provide an ongoing cash return to shareholders. So you might recall our share buyback programme that completed in October after returning a total of £100 million at a weighted average share price of £21.93, which is a discount of over 24% to the 31st of January net asset value. In respect of the dividend, we'll make an interim payment of 16 pence per share, and that reflects our previously stated policy to maintain a dividend cover of two and a half times underlying earnings for the full year, with broadly one third of this declared at the half year. Now, this is a sustainable level of cover, which provides for a recurring shareholder return, although allocating which provides a recurrent shareholder return and a recovery in earnings will drive a commensurate increase in dividend payments over time. We do, of course, have the optionality to make further returns to shareholders, although allocating capital to achieve growth, if supported by the market, remains our priority. In terms of value metrics, NAV increased marginally to £28.88, driven by the accretive value of the share buyback. Annualised underlying post-tax return on equity was 5.6%, and the expected earnings rebound beyond this financial year will deliver improving returns, which remains a key focus for management. On carbon reduction, the chart shows our progress to date on the reduction in scope one and two emissions. And the use of renewable energy in our offices and biodiesel onsite has had a significant impact, even though market constraints meant that it was more difficult to procure renewable energy in some instances over the past year. We now have plans afoot to accelerate the connection of services to site to further reduce our reliance on onsite generators. Scope 3 is more complex and the implementation of the future home standard will play a big part in our reduction programme, although the legislative requirements are still not yet finalised. In addition, we continue to increase the use of timber frame construction on site, with successful trials in our North East, Durham and Yorkshire divisions, complementing the output from our Scottish businesses. Timber frame has the potential of reducing both carbon emissions and improving whip turn. I'll summarise the financial part of today's presentation with guidance for the full year. We're still on track to deliver around 7,500 homes at an overall average selling price of around £295,000. The underlying operating margin is likely to reduce by at least 600 basis points from the 16% that was achieved in FY23. The dividend cover will be around two and a half times underlying earnings for the full year. And finally, we have the cash, land bank, WIP and the outlet opening programme in place to serve as a platform for recovery in FY25. I'll now hand you back over to Jason.

Thank you, Keith. I will start with trading. During the period, we saw a steady improvement in customer confidence as the reduction in mortgage rates has a positive effect on sales activity. From the slide, you can see the contrast between Q1 and Q2, and typically we would expect the winter period to be a little quieter, but the opposite has happened as the market has begun to recover. Overall, in the first half, we achieved a private sales rate of 0.43 per outlet. Cancellation rates were lower than last year, falling to an average of 16% and notably fell to a more normal level of 13% in January. And affordability remains one of the key drivers behind housing demand. And during the first half, we saw a significant improvement with mortgage rates falling from 6% down to around 4.5%. And our experience suggests, as we saw in January, if 4% to 5% mortgage rates are available, that can support a sales rate of 0.6 per outlet. And overall, there is good availability of mortgage finance, although 95% LTV products are still in short supply. Mortgage rates have nudged up a little since January. And for a five-year fix, you can expect to pay 4.5% to 5% if you have at least a 10% deposit. Now home buyers today are getting used to the new mortgage rates, with demand being supported by both wage increases and lower inflation. There is an acceptance that that period of ultra-low rates is over. But I would stress that to sustain current reservation levels, the mortgage market needs stability. It's the volatility in rates that we saw in 22 and 23 that upsets the housing market. It affects customer confidence and people are understandably reluctant to make long-term decisions. And now for current trading. I've already mentioned that January was a good month for sales and that momentum has continued. In the first six weeks since the 1st of February, we have achieved a private sales rate of 0.67 per outlet or 163 private sales per week. And our sales success is not just attributed to that improved affordability. We also benefit from a strong outlet opening programme with around 80 outlets planned to open in FY24. Our investment in WIP and in particular superstructures, and by that I mean roofs and brickwork, enables our customers to see their homes under construction as we find many purchasers today are reluctant to buy off plan. And finally, there is simply very good interest in new homes and that's understandable given the lower energy costs and the lower maintenance costs. And as a consequence of all this, House prices are holding firm. Incentives have steadied at around 4% to 5%. And interestingly, we are beginning to see some sites in stronger selling areas that are becoming less reliant on incentives and still delivering a good rate of sale. The order book as at the 10th of March was 4,900 homes and around two thirds of that is already contracted. We are over 95% sold for the current year and our main focus now is to build the order book for July. And that brings me neatly onto positioning the group for recovery. As I mentioned in my introduction, we're planning for the next phase, recovery in 2025. And as a business, we are in a good space. We will deliver modest outlet growth this year and are well-placed to do the same in FY25. Our WIP position and recovering order book will result in a very strong start to the next financial year. And we have a high quality land bank that has strength and depth in all categories to support our growth ambitions. And remember, and this isn't guidance for FY25, but if we can sustain a sales rate of 0.6 per outlet, then that puts Bellway back on a path to deliver 10,000 homes. Turning now to production, bill cost inflation fell to around 1 or 2% in the period, weighted towards the labour element. We have good levels of availability for both materials and labour. Our focus is the control of costs and improvement of margin, which is a key strategic pillar for the group going forward. From a people perspective, we have established a commercial training academy for QSs of all levels to reinforce the disciplines of cost control. From a design perspective, we have a project underway to configure our house types for the option of timber frame construction to optimize both WIP and speed of build. Moving to land. We haven't bought much short-term land in the period, principally due to the uncertain market conditions and also our robust land position. But since the start of the new year, our appetite has changed as the outlook has improved. and we are now more active in the land market. And you can see from the chart, while the overall number of plots has reduced to 94,000, land with DPP is still a healthy 30,000 plots, as we redeployed our land buyers onto planning applications to over-manage that dysfunctional planning system. We still spend a disproportionate amount of time and money on planning processes. There are an extraordinary number of individuals, bodies and authorities seemingly wanting to and able to frustrate and challenge the delivery of new homes. And that position is unlikely to change during an election year. On a positive note, we are particularly pleased with the performance of our strategic land teams who have once again had a strong year and increased the strat land bank by a further 6% to 44,000 plots, providing an excellent platform for the years ahead. And now for Better with Bellway. It's been a good year for awards. Large House Builder of the Year Award and Best Staff Development Award at the House Builder Awards in 23. Major Projects of the Year for our Energy House at Salford University at the National Sustainability Awards. And for the eighth consecutive year, we have maintained our HBF five-star status for customer satisfaction. and I'm pleased to report that our eight-week satisfaction survey score has improved despite the challenges in the supply chain last year, with our score rising to over 92%. Our nine-month score has remained static at around 80%, but we are aiming to improve this figure as we benefit from a lower volume output this year, which offers a good opportunity to reinforce those customer service disciplines. And finally, outlook. FY24 will be a year of lower volume output as we manage and position the business to rebuild in the years ahead. Keith has already mentioned we will deliver around 7,500 homes in the current year, crucially build both the order book and outlet numbers for July. We have a clear focus on margin improvement and driving return on capital employed. And our operational strength combined with our robust land and WIP position provides a good foundation for our growth ambitions in the years ahead. Thank you. Keith and I are now happy to take questions.

Morning. Chris Millington at Deutsche Neumesse. Free Africa, please. First one's just about the growth potential of the business and practically how quick can you grow back towards that 10,000 units if the market is supportive of you? Do you want to do one at a time and that might make life easier?

Yeah, I think maybe that's one for us to come back in. In October, we've had good sales from January. And I suppose let's not get too carried away. We are optimistic, and that's a real positive. But to start forecasting when we'll get to 10,000 units from that relatively short period of time feels a bit premature. I would think two to three years feels sensible. But if we can go faster, obviously we will. And then I think a consequence of that or a second part of that is how quickly can you grow thereafter. And I think for Bellway, because of our relative size from that base, obviously the market can support it. We'd look to deliver at least 5% per annum in terms of recurring volume growth. So that's the plan. Get up to 10,000 in two to three years and then grow at 5% plus thereafter. That's helpful.

Thanks, Keith. Next one's just on the land market. It does seem as if you've changed your tone there. You're a bit more aggressive. I mean, have we seen much of a reduction in land prices, given most people are saying the opportunities just weren't applicable several months ago?

I think the only constructive thing I can say on land, last year in 23, There wasn't many opportunities available, but you could buy land at healthy margins because of the lack of competition. It seems the start of 2024, there are more land opportunities. Not many, there are more. And margins have returned to what I would call normal levels, Chris. You know, 23%, 24% gross margins. There's more competition in the market than there was in 2023.

That's great. Thank you. And the last one is just around incentives. If we do see this sales rate sustain, are you likely to take your foot off the pedal there as we move through the year?

Well, I'm glad you picked up on that. At least you was listening. I mean, what we look at closely is that incentive level. We monitor that week by week because that is... I mean, Keith mentioned earlier that volume is the key to margin recovery. If we can keep a lid on incentives or get that incentive level back to a normal sort of 2%, that's... a quick margin fix. So again I think you're early with your question. Those two questions you've asked on 10,000 homes and incentives are probably better asked in October Chris if you can bring them back then. I certainly will don't worry.

Thanks. Ainsley Lama from Investec. I think I've just got three, actually. First one, a bit more colour on the improving sales rate. Has it been sequential improvement? Has it been quite volatile over recent weeks? And any particular kind of areas or price points that are particularly strong? Secondly, just on the kind of balance sheet, as you expect, ramping up a bit more on the land acquisition, would you kind of expect to go into net debt next year? How does that impact the balance sheet? And then just a bit more follow-up on the land market. Are you seeing other players come back into the market, kind of some of the bigger listed players, or are you still quite alone in that regard?

Okay, I'll do one and three and then hand over to you for the middle one. In terms of sales rate, Ainslie, we've seen that steady improvement. And I think January we saw an average sales rate of around 0.6 per outlet. Then I've mentioned in my commentary that that peaked at 0.67 per outlet. But you've seen mortgage rates come up since then, nudged up a little. So I guess we've sort of returned to a more sort of January level at the moment. The stronger selling areas, I would suggest, for me the Midlands in the northwest of England. That's where sales are more robust. But the whole of the UK has picked up. But I think you've heard me before say the southeast and southwest of England are a little bit more sensitive to mortgage rates than other places. And on land I think most people are back in the land market. It's most competitive, I would suggest, in the middle, you know, that 100, 150 units. I'm not convinced there are lots of big land deals going on at the top end of the market. It's a bit quieter. But I would caveat it, Ainslie, that... Land opportunities are not plentiful. We're not back to where we were. There are a limited number of opportunities across the market, and that may improve as we get into the autumn of this year, I'd suggest.

Before I do the balance sheet, I just wanted to add maybe on the sales rate, because we all talk about sales rates and two decimal place accuracy now. But if you plot it as a picture and look at our quarterly sales, for the first time ever I can remember, our winter sales, and what I'm calling winter is November through to January, are stronger than the autumn sales. So that just gives you, you know, the kink in the graph has changed a bit. That recovery is coming through. So, yes, there might be moderate, and I think you should have a bit of caution that it's not necessarily going to be 0.67. But you can see that step changed. I think sometimes a picture articulates it better than a calculator. On the balance sheet, maybe if I just describe it by saying what I think the debt positions will be. So the H2 of this year will be in a slight debt position just because completions are much more weighted towards H1. So I think for the full year, average debt will probably be 50 to 100 million or so, and we'll end the period with about 50 million debt. I think that average position will most probably be similar in FY25 but I think we should end the year in a modest cash position as you go towards the end of FY25 and that's just because some of that investment we've made in WIP won't dramatically change but you'll begin to get a little bit more efficient.

Amigala from Citi. A few questions from me. One was an appetite from housing associations. How much incrementally are they stepping forward and investing in housing? Or do you think there's more budgetary constraints coming from that side on the social volumes? The second was on extended site durations and the margin impact that we've seen through the numbers over the last two years. What level of sales rate on a sustainable basis could swing the margin recovery back on that component? And the third one was just on timber frame and the trials that you're doing in your selected regions. At what scale do you think it justifies internal investment in a timber frame facility? Is that at all a scenario over the medium term?

I'll start with HA AMI. There is very limited appetite from housing associations on Section 106 housing because they're not getting grants. and HAs are minded to protect their own balance sheet. So that's a real frustration in in-house builder world. But you do see, ironically, you do see situations where HAs are getting grant and buying additional homes for PRS or different tenures. So you've got this unusual situation where we've got houses being built with no end user because no HA wants to provide them. But if you want to sell them homes outside of the Section 106 agreement where they can capture grant then there is appetite for it. And I think that needs addressing by politicians to be honest because that situation is unsustainable. And just to touch on your timber frame. And I'll hand over to Keith. Timber frame is the direction of travel in my view for house building. It's more sympathetic to future home standards. It's quicker. It's cleaner. It can be manufactured in the factory environment. The decision for us, I guess, as we move towards timber frame is do you do that manufacturing process yourself or not? And you know Bellway. We don't jump in with two feet and then work it out. We'll do a thorough research of that industry, how it complements Bellway and our scale. But certainly, we've got the scale that we can do it. We've got the money. We can do it. But we're analyzing and researching it at the moment.

On site durations, I guess I had a 30, 40 basis point drag on the margin in H1. The bigger drags, the volume absorption rate point. If you start getting sustainability sales rates of 0.5 to 0.6, which is what we're hoping for, then you'll start to see that unwind and that might start to have some benefit as you go into the next financial year, all of that won't reverse because you probably need to get to 0.6 to get back to your full level of efficiencies there. But that gives you a broad range. And then I'd maybe just add on timber frame, the benefits are about quality, they're about whip turn and speed of build, and they're about carbon reduction in the, not so much the manufacturing process, but in terms of the materials that are used. The cost benefit of having your own factory is part of it, which I think is what you're alluding to. But it's not the immediate benefit. You probably need to get to about 3,000 unit output before you begin to see a factory operating efficiently. So maybe that gives you a frame to the sort of level that you'd have to be delivering through your own factory for it to be more cost advantageous.

Thank you.

Thanks. Will Jones from Redburn Atlantic. Three, please. First, around gross margin, and sorry, two parts. Any colour on what you expect the gross margin, how it might trend in the second half compared to that 16.5 of the first? And I think you implied that social and private, the mix there can affect the gross margin. Can you remind us of any accounting policy differences with social on the gross? Second, just around the land side of things, clearly you've highlighted the big growth in the strategic land bank over the last few years.

any sense of what that might deliver you as a run rate conversion um over time um and the last one if you can just update us on your strategy in london as a business place thanks yeah on on gross margin i would i would say the gross margin in the order book is around 16 but does have moving parts so perhaps a little bit of h2 compression before it then begins to recover in FY25 is how I think it will play out. We take a similar site-based margin regardless of tenure. So if you sell a private unit or a social unit and your site has a 20% margin, that's the margin we take regardless of the tenure. On the rationale, you buy a site and it's a project, and the social is part of that project. The reason why it might fluctuate is just the average selling price might be lower. So you take a lower gross profit, but the margin would be the same.

Shall I do Strat, Will? I mean, it's always difficult with strategic land. You know, some come good and some are slow. We are planning, you know, to get some goodies out the Strat land bank by FY26, you know, somewhere between, you know, 10 and 20% of our land requirement. But it's best guess will at the moment. It depends what the planning environment looks like in 25 after the next election. That's a key to us. I missed your third question. Strategy in London? Well, unfortunately, we've seen our... Volume of homes move from about 20% in London, if you've seen, Will, down to 2% or 3% today. I'm reluctant to do high density in London. I certainly don't want to exit London. but it's expensive. So our price point means affordable London. So I'd imagine we'll continue as we are. Somewhere between 3% and 5% will be our London focus, and it will be houses and apartments at the lower end. We're sort of priced out of central London today.

I mean, believe it or not, our private average selling price in London is not dissimilar to the group average now because of where those sites are and the product that we're offering.

Thank you. Gwyneth Johnson-Jeffries. Three, if I may, and I'm going to push a bit more on strat land, actually, because you've got a lovely chart at the back on page 41. And what we can see is the amount of land sitting in allocated application and both actually has gone up, and it's sitting around 13,000. It was suggested, actually, there may be more that might come through, if we phrase it that way. So you used to classify your strat land with a much shorter time frame than some of your peers. Is that something that we should expect on a very regular basis to be giving you 20 percent at least of what you need? Or is there a bulge that might come through at a later time? Then second of all, Ashbury, can you just remind us how that differs from what classic, you know, Forgotten the, forgive me, the artisan range looks like. How differentiated is it? And will you be rolling out, do you see the opportunity to roll out on more sites? Are we going to see more dual branding effectively from Bellway? And then again, forgive me, been trailing through the back of the pack. There's a pack of the pack that talks about your housing association investors. Investors have stepped up, but your housing associations as a number has actually stepped down quite a lot. How much of that housing association is Section 106? How much of it is the other affordable? Just so we've got an idea about what is coming through that is the above and beyond the Section 106.

Shall we do those back to front? Because I can remember them that way.

Go on then. You're doing AHA, yeah?

Yeah, so the AHA, everything we disclose as social is Section 106 affordable housing. There's nothing private or open market within there. Within our investor deals... I would guess around half of those are to housing associations, effectively as a PRS deal to a housing association. So hopefully that sort of gives you what you wanted on that one. On Ashbury... Artisan is quite a flexible house type range, because you might recall we have different elevational treatments we can use. And obviously, there are a range of different sizes and internal layouts within there. So we will differentiate Ashbury and Bellway on the same site from that standard range. And you could go to a different site And to exaggerate to make a point, you can almost see the brand swapped around because it is just the Bellway standard house type range, which has lots of variants to it because of that elevational treatment, but with a different barge on it. And the point of that different barge is to give you two separate outlets and to give a perception of choice on the site because you are able to differentiate on the site from that standard range. It's about 9% or 10% of completions. It might grow a little bit, but we haven't got a strategy. We want art design to be 15%, 20%. We use it on big sites where we believe that the market supports it. And ideally, you'll have two separate accesses to those sites, so it feels like it's two distinct selling places. And the last one was on strat land.

I'll do strat. So on strategic land... Whilst I mentioned to Will that FY26, 10% to 20% to come out of the Strat land bank, I think our long-term ambition, Glynnis, is up to 20% year-on-year out of our strategic land bank. That's certainly an intention. You're right to suggest that our assessment of strat land is normally the number of plots is a shorter term view. You know, we take the view three to five year play. Unfortunately, you're I understand what you're looking at, allocated land. I've got sites with outline planning permission that it's taken me two to three years to get consent on. So you're right, we take a shorter term view, but whether it's allocated or not doesn't mean it's going to get a consent any time soon, certainly not with the current politics. I hope that answers your question.

Thank you.

Thank you. Clive Lewis at Peel Hunt 3, if I may. Just on the land pipeline, it would be useful to maybe understand there was a very big drop in the plots that you had in that category, and presumably you've bought some, and it looks like you've dropped quite a lot as well. So I'd be interested in the sort of logic and the reasons behind what's gone on there. It would be useful to hear that. And then sticking with, I suppose, sort of sites, Given we've got an election coming, are you starting to think about slightly different sort of sites and how you might approach the market given the likelihood that we might see a change in government and policy and a bigger shift towards the cheaper end of the market, I suppose, in terms of more affordable properties? And the last one was around M&A. Since we saw you last, there's obviously been a bit of an announcement. Someone had to ask, Clive. Well, yes, Messenger was winding me up. But no, it'd be interesting to hear your view on M&A and whether you think it is time for me, maybe the group to sort of break its duck and do a deal and sort of maybe jump above the 10,000 number. and sort of grow sort of quicker that way around.

Do you want to do the first one, do sites?

Yeah, I mean, the reduction in pipeline, it just reflects the fact that we haven't been particularly active in the land market. And if you think the natural progression of a site, typically it comes into the pipeline and then you get planning and it goes into that top tier. So you've just had less going in because we haven't bought as much, but it has moved up into the top tier when we've got planning and then moved out of the top tier when we sold it. So it's just that sort of natural progression of a lack of acquisitions in the period to replenish what we obtained planning on. There's nothing more to that. And I would hope that would begin to reverse perhaps in the next financial year if we're more active in the land market, which we're talking about being, and if some of that strut begins to come through.

Just on our sites approach, assuming there is a Labour government, I'm unlikely to change our business model because we've got a new government. We are already closely aligned with housing associations. We are... the affordable end of the market. That's how I would describe it. And I know lots of people are getting interested in more social housing. But what I'd say, Clive, unlock the bloody planning system. You'll get more homes. You'll get more social homes. So I think we will stick to what we're doing. It's the planning situation that interests us more than the tenure at the moment. And then on M&A, thank you for asking. As you alluded to in your question, Bellway have a history of organic growth and we are good at it. And we can grow with our current land bank for the next two years and a bit if we wanted to. But that said, we are aware and we do look at opportunities in the market because we are aware of the structural changes in the industry. I think that's all I can answer.

Hi, Marcus Cole, UBS. Three questions as well. I was just wondering on land creditors, where do you think they'll trend in H2 and where you think you'll end the year? The second one is just on the future home standards. I know the consultation hasn't finished, but where are you working on in terms of implementation and timelines? And the third one is just can you remind us on the number of buildings and the fire safety provisions? Thanks.

I think land creditors will be broadly similar at the end of the year, around 240 million or so. I'll do the fire safety provision. There are 631... buildings within the scope of the three countries and the various legislative requirements of those countries. And of those 631, we have 267 blocks which we think have got unknown issues on them. And obviously we've got provision for all of those, plus we also have an amount in our provision for as yet undiscovered or as yet unverified issues as well.

Marcus, future home standards. I mean, that subject is sort of getting a little confusing, to be honest. The consultation period closes very soon, and that consultation is two options. One... new regulations with PV and new regulations without PV. Will that decision be made in the current government? I'm not so sure. We are already trialling air source heat pumps and PV across the UK, across every division, so we're ready for the change. but we don't really know what the change is and who's going to make the decision. It seems to be pushed into the long grass a little bit at the moment, and it appears the government have got other things to worry about other than future home standards. So maybe another question for October. All done? Thank you very much. Thanks for your time.

Thank you.