Persimmon Plc

Good day and thank you for standing by. Welcome to the Persimmon PLC Trading Update conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star, 1, 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press star, 1, and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Dean Finch, CEO. Please go ahead.

Good morning and thank you for joining Andrew and I today. As usual, I'll say a few words by way of overview and then hand over for the Q&A. As you can see from our statement, we have delivered a strong end to the year with 12% growth in completions. This means that we expect to be reporting an underlying profit before tax at the upper end of expectations, this also being double-digit growth, as well as growth in margins. We believe that this organic growth in completions is one of our strongest on record. I would like to thank my brilliant colleagues at Persimmon, as well as our supportive subcontractor base and supply chain for this fantastic result. Our people went above and beyond in the final quarter of last year and I want to place on the record my grateful appreciation of this. This growth in completions is made up of 30% growth in affordable, 20% growth in PRS and 6% growth in private, with the private growth largely driven by growth in outlets. We also saw 5% growth in private ASP, and 4% growth in affordable ASP, giving us a blended growth in ASP overall of 4%. We also make good progress in opening outlets over the year, ending at 277. Forward sales are up in value terms by 2%, with the value of private forward sales up by 4%, but the value of PRS forward sales down as we saw a quieter Q4 clearly impacted by budget uncertainties. As we look ahead to 2026, whilst we are only a few days into the new year, we expect, other things being equal, another year of growth as a result of another year of growth in outlet numbers. albeit we expect the overall level of growth to peb back from what we have just delivered as a result of slower growth in affordable and PRS sales. We have an excellent pipeline of land opportunities ahead of us that will convert into growing outlet numbers towards the end of 2026 and into 2027. But obviously we should be carrying the cost of opening these outlets and the finance costs of buying the land and progressing the WIP in 2026. Taking all this together at this stage means that we expect, other things being equal, that 2026 will be another year of good profit growth, but that profit will lie in the current consensus range. We also update on cladding. During the year, we were notified of three more buildings that require remediation. so we'll need to make a modest adjustment to the provision accordingly. Overall, we expect the provision at the end of 2025 will be less than at the start of the year. To give some reassurance, we are now completed, contracted, or have an agreed tender price for 90% of known developments. So in conclusion, we do have some headwinds in 2026, Landfill tax comes in from April, and that sees our cash costs rise this year from £10 million to £20 million. Thereafter, and mitigated, it continues to rise. And just to remind you, we think it goes from £4 a tonne to £25 a tonne by the end of the decade. And, of course, the building safety levy comes in from October. But overall, I think the business is in great shape. As I've just said on remediation, we have 90% of known buildings completed, contracted or costs agreed. We have a fantastic pipeline of land opportunities that will convert into outlets towards the end of 2026 and into 2027. We have a great range of products from the affordable end right the way through to Charles Church, but throughout we design our build costs to keep our costs low, our bill to keep our costs low, giving us more routes to market, which I think is incredibly important in this environment. All our house types are supported both by New Build Boost and Reside, and of course by our brick and tile and timber frame factories. And finally, I am supported by a fantastic team of individuals at Persimmon. We are looking forward to another year of solid growth in profit. And with that, thank you for listening to me. I'll turn it over to Q&A.

Thank you, dear participants. As a reminder, if you wish to ask a question, you need to press star 1, 1 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 1 and 1 again. Liz and Bob will compile the Q&A roster. This will take a few moments. And now we're going to take our first question. Just give us a moment. And it's Countryland of Ainsley Laman from Investec. Your line is open. Please ask your question.