Full Year 2026 MJ Gleeson PLC Investor Presentation

September 18, 2026

Speaker #1: Welcome to MJ Gleeson's results presentation for the year to June 2025. I'm here, of course, with Stefan Allanson, CFO, and also Senior Leadership Team is here, Guy Guslasson, MD of Gleeson Land, you know, and Andy Davis, the DMD of the Northern Division, you also have met before.

Graham Prothero: Welcome to MJ Gleeson's results presentation for the year to June 2025. I am here, of course, with Stefan Allanson, CFO, and also senior leadership team is here. Guy Gusterson, MD of Gleeson Land. You know Andy Davies, the DMD of the Northern division, you also have met before. Welcome to Scott Stothard, who joins us from Vistry as the DMD of Central. Also welcome in his new role to Simon, who you have met before, but now Chief Operating Officer for Gleeson Homes. I was actually going to start with my first slide as I did the leadership day that we had last month with a nice picture of the FA Cup and the Community Shield, attractively draped in their red and blue ribbons.

Speaker #1: Welcome to Scott Stothart, who joins us from Vistry as the DMD of Central, and also welcome in his new role to Simon, who you have met before but now Chief Operating Officer for Gleeson Homes.

Speaker #1: I was actually going to have as my start with my first slide, as I did the leadership day that we had last month, with a nice picture of the FA Cup and the community shield attractively draped in their red and blue ribbons.

Speaker #1: But then I remembered at least two of you are Liverpool fans, and given that you get to write the match reports, I thought shy of that.

Graham Prothero: But then I remembered at least two of you are Liverpool fans, and given that you get to write the match reports, I thought shy of that. FY25 was in the end, a bit of a dull year. A bit of a pick-up that we all saw in the spring, but nothing to write home about. Against that backdrop, I was pleased that we sold more homes and at a higher average selling price, which was encouraging. More encouraging was our net res rate which was at 0.53 across the year, and that was up by 20% on the prior year. Actually in the H2, I think we were at 0.64, and that was up by 28% on the prior year. So we were clearly doing something right.

Speaker #1: So FY25 was, in the end, a bit of a dull year, a bit of a pickup that we all saw in the spring. But nothing to write home about.

Speaker #1: And against that backdrop, I was pleased that we sold more homes, and at a higher average selling price which was encouraging. More encouraging was our net res rate, which was up 0.53 across the year, and that was up by 20% on the prior year.

Speaker #1: And actually, in the second half, I think we were at 0.64, and that was up by 28% on the prior year. So we were clearly doing something right.

Speaker #1: The result of that is that we come into the current year with a really improved forward order book. It's something like 850 or 845 units, 159 million pounds, very encouraging.

Graham Prothero: The result of that is that we come into the current year with a really improved forward order book. It is something like 850 or 845 units, GBP 159 million. Very encouraging. A good year in partnerships with four transactions concluded and in fact, another two since the year-end, and a good deal flow coming through. We have made, I think, really good progress in addressing some of those operational challenges, which we mentioned in June and July, and I will obviously talk about in a few minutes time. Great year in Gleeson Land. Seven transactions in the period. But I am actually more pleased by the progress that Guy and the team are making with the strategic restructure and that growing portfolio, and we will spend a bit of time on that.

Speaker #1: A good year in partnerships with four transactions concluded and, in fact, another two since the year end, and a good deal flow coming through.

Speaker #1: And we have made I think really good progress in addressing some of those operational challenges which we mentioned in June and July, and I'll obviously talk about in a few minutes' time.

Speaker #1: Great year in Gleeson Land. Seven transactions in the period. But I'm actually more pleased by the progress that Guy and the team are making with the strategic restructure and the growing portfolio, and we'll spend a bit of time on that.

Speaker #1: We come into the year with eight sites, with a planning consent, and we have actually already done our made our first site sale in July.

Graham Prothero: We come into the year with eight sites, with the planning consent, and we have actually already made our first site sale in July. Profitability clearly lower than it should have been, lower than we were hoping. That is all to do with margin compression in Gleeson Homes. Some of that, to be fair, is a sector-wide issue. When you have a long, prolonged period of weak demand and flat pricing, eventually cost issues, whether they are inflation or other issues which arise from time to time on site, they are going to hit you. They cannot be absorbed. You feel every bump in the road. But some of this undoubtedly was Gleeson specific. Stefan will take you through the actual bridge in the margin in a few minutes time. But it is pretty clear to me that the business was less mature than I thought when I joined.

Speaker #1: Profitability clearly lower than it should have been, lower than we were hoping. And that's all to do with margin compression in Gleeson Homes. Some of that, to be fair, is a sector-wide issue when you have a long prolonged period of weak demand and flat pricing eventually cost issues, whether they're inflation or other issues which arise from time to time on site.

Speaker #1: They're going to hit you. They can't be absorbed. You feel every bump in the road. But some of this undoubtedly was Gleeson-specific. And so Stefan will take you through the actual bridge in the margin in a few minutes' time.

Speaker #1: But it's pretty clear that, to me, that the business was less mature than I thought when I joined. We made some early changes. We took the overhead down from the nine regions to six, and we standardised.

Graham Prothero: We made some early changes. We took the overhead down from the nine regions to six, and we standardized. We improved our standardization in a lot of areas, in process, in structures, in product and customer service, and so on. It became pretty clear to me that during FY24, I could see that there were some more fundamental weaknesses, if you like. Some process weakness and some poor procedural compliance that was undermining our operating effectiveness and weakening our commercial control. This wasn't always and everywhere, but sufficient to cause us those cost overrun and margin challenges. That was exacerbated by some further historic issues which required rectification in the year. As I say, Stefan will break those out for you. It was pretty clear to me that we needed to address this a bit more drastically, a bit more fundamentally.

Speaker #1: We improved our standardisation in a lot of areas in process, in structures, in product, in customer service, and so on. It became pretty clear to me that there was, during FY24, I could see that there were more some more fundamental weaknesses, if you like, some process weakness and some poor procedural compliance that was undermining our operating effectiveness.

Speaker #1: And weakening our commercial control. And this wasn't always and everywhere, but sufficient to cause us those cost overrun and margin challenges. And that was exacerbated by some further historic issues which required rectification in the year.

Speaker #1: And as I say, Stefan will break those out for you. But it was pretty clear to me that we needed to address this a bit more drastically, a bit more fundamentally.

Speaker #1: If we're going to successfully transition this business from the very large small business that I've talked about before, that Gleeson was, into a small large business with controls systems, people that we can rely on to be confident as we grow, then we needed to address this a bit more fundamentally.

Graham Prothero: If we're going to successfully transition this business from the very large small business that I've talked about before, that Gleeson was, into a small large business with controls, systems, people that we can rely on to be confident as we grow, then we needed to address this a bit more fundamentally. About a year ago, just under a year ago now, I initiated Project Transform, which you're all familiar with that name now. I took initially a small group of our brightest and best from around the group and supplemented that with a couple of trusted external consultants just to challenge our thinking and ensure our objectivity. We've deliberated those recommendations and thoughts back and forth, and then we've acted decisively and quickly to implement those changes, some in the spring and a lot more, as you're aware, in June.

Speaker #1: And so in well, about a year ago, just under a year ago now, I initiated Project Transform, which you're all familiar with, that name now.

Speaker #1: I took initially a small group of our brightest and best from around the group and supplemented that with a couple of trusted external consultants just to challenge our thinking and ensure our objectivity.

Speaker #1: And we've deliberated those recommendations and thoughts back and forth, and then we've moved we've acted decisively and quickly to implement those changes. Some in the spring, and a lot more, as you're aware, in June.

Speaker #1: And I'm really pleased I have to say with the early signs. We are starting to see the benefit of those changes. So what have we done?

Graham Prothero: I'm really pleased, I have to say, with the early signs. We are starting to see the benefits of those changes. What have we done? We've strengthened the leadership at both divisional and at regional level. We've standardized our reporting, so we're increasing our visibility and our accountability with standard and sharper reporting and, crucially, shorter lines of reporting and communication. We're pushing hard to inculcate a culture of responsibility and ownership at regions so that our regional leadership teams are behaving more like business leaders and not just managers reporting the news up the line. Importantly, that standardized reporting is also creating greater visibility of our agreed group controls and standards. That's really where Simon's role fits into the piece. We've also taken the opportunity to combine our leadership teams in the northwest, in our Cumbria and Greater Manchester regions.

Speaker #1: We've strengthened the leadership at both divisional and at regional level. We've standardised our reporting. So we're increasing our visibility and our accountability with standard and sharper reporting, and shorter crucially, shorter lines of reporting and communication.

Speaker #1: We're pushing hard to inculcate a culture of responsibility and ownership at regions. So that our regional leadership teams are behaving more like business leaders and not just managers reporting the news up the line.

Speaker #1: And importantly, those that standardised reporting is also creating greater visibility for and yeah, visibility of group our agreed group controls and standards. And that's really where Simon's role fits into the piece.

Speaker #1: We've also taken the opportunity to combine our leadership teams in the Northwest in our Cumbria and Greater Manchester regions we remain fully committed to growing those both as independent regions they're both have great prospects for us, but it makes sense just to leverage that overhead better until we get them both up to critical mass.

Graham Prothero: We remain fully committed to growing those both as independent regions. They both have great prospects for us, but it makes sense just to leverage that overhead better until we get them both up to critical mass. All of this is designed to lay a strong foundation so that Gleeson Homes can look forward to its growth with confidence in its systems, its people, its controls, and deliver on that growth opportunity that we see in front of us. We've got a very clear idea of the areas that we need to focus on going forward. We need to properly embed the changes under Project Transform. We still have some amendments we want to make to our land buying to optimize that process. Critically, we need to make sure that we're laser focused on getting our sites open. I'll talk about that in a bit.

Speaker #1: And all of this is designed to lay a strong foundation so that Gleeson Homes can look forward to its growth with confidence in its systems, its people, its controls, and deliver on that growth opportunity that we see in front of us.

Speaker #1: And so we've got a clear very clear idea of the areas that we need to focus on going forward. We need to under Project Transform.

Speaker #1: We still have some amendments we want to make to our land our land buying to optimise that process. And critically, we need to make sure that we're laser focused on getting our sites getting our sites open.

Speaker #1: I'll talk about that in a bit. We're enhancing the house type portfolio in response to the demand that we see. And we're working hard on our partnerships strategy, which, as I say, is doing really well.

Graham Prothero: We're enhancing the house type portfolio in response to the demand that we see, and we're working hard on our partnerships strategy, which as I say, is doing really well. In all of this, we're maintaining that, for me, exciting and unique proposition of building homes, affordable, high-quality homes for those people that need them most. Just looking at how we're doing today. I'd say it's a market that's lacking conviction, but it is stable. You're seeing what the press are saying, you're seeing what the RICS are saying, press articles, and indeed, what other developers are telling you about the market. It's not strong, but there are customers there very definitely for homes that are well located, well presented and well priced. The onus is on us as a team to make sure that that's exactly what we're delivering.

Speaker #1: And of course, in all of this, we're maintaining that, for me, exciting and unique proposition of building homes affordable, high-quality homes for those people that need them most.

Speaker #1: Just looking at how we're doing today, I'd say it's a market that's lacking conviction, but it is stable. You've seen the you're seeing what the press are saying.

Speaker #1: You're seeing what the RICs are saying. The press articles. And indeed, what other developers are telling you about the market. It's not strong. But there are customers there, very definitely, for homes that are well located, well presented, and well priced.

Speaker #1: And the onus is on us as a team to make sure that that's exactly what we're delivering. It really is a market you've heard me talk before about that rewards hard work.

Graham Prothero: It really is a market, you've heard me talk before about, that rewards hard work. It rewards a granular focus, site by site, and indeed plot by plot. Against that, I think we're doing pretty well. We're looking at a sales rate since the beginning of the year of 0.54, which is up 8% on what we were achieving in the prior year. Customers need persuading. They need a deal. We're still using incentives, but not at an increased or an alarming level. We're still below 5% on our incentives. At that point, I will sit down, hand you over to Stefan to take you through the numbers. Stefan.

Speaker #1: It rewards a granular focus, site by site, and indeed, plot by plot. And against that, I think we're doing pretty well. We're looking at a sales rate since the beginning of the year of 0.54, which is up 8% on what we were achieving in the prior year.

Speaker #1: Customers need persuading. They need a deal. We're still using incentives, but not at an increased or an alarming level. We're still below 5% on our incentives.

Speaker #1: So at that point, I will sit down, hand you over to Stefan to take you through the numbers. Stefan.

Speaker #2: So thank you, Graham. So we grew group revenue by 5.9% during the year two, 365.8 million. And that revenue growth was driven by both divisions growing their top line.

Stefan Allanson: Thank you, Graham. We grew group revenue by 5.9% during the year to GBP 365.8 million, and that revenue growth was driven by both divisions growing their top line. Divisional operating performance at the bottom line was mixed, and I'll take you through the divisional performance on the next few pages. Just to highlight a few points on the group income statement. Group overheads were unchanged at GBP 3.9 million. We did incur GBP 1.3 million worth of exceptional costs for the Gleeson Homes reorganization that we announced. The numbers in this statement are all before those exceptional costs. Group operating profits were lower at GBP 25.4 million, and that was driven by lower profits, Gleeson Homes being significantly, but not fully offset by a strong performance in Gleeson Land. Interest costs reduced slightly, and that was driven by lower interest rates and lower average borrowings.

Speaker #2: Divisional operating performance at a bottom line was mixed. And I'll take you through the divisional performance on the next few pages. But just to highlight a few points on the group income statement.

Speaker #2: Group overheads were unchanged at 3.9 million pounds. We did incur 1.3 million pounds worth of exceptional costs for the Gleeson Homes reorganisation that we announced, the numbers in this statement are all before those exceptional costs.

Speaker #2: Group operating profits were lower at 25.4 million pounds. And that was driven by lower profits, Gleeson Homes, being significantly but not fully offset by a strong performance in Gleeson Land.

Speaker #2: Interest costs reduced slightly, and that was driven by lower interest rates and lower average borrowings. As a result, PBT was 11.7% lower. Sorry, a little premature with my clicking here.

Stefan Allanson: As a result, PBT was 11.7% lower. Sorry, a little premature with my clicking here. 11.7% lower at GBP 21.9 million. Tax rate's a little higher, but still below the headline rate of 25%. We didn't incur any RPDT, you'll all remember that, residential property developers tax, because the threshold wasn't triggered, GBP 25 million profit threshold. As a result, EPS was 12.7% lower at 28.9p. Turning to the divisional results. Gleeson Homes volumes, we delivered volume growth 1.2%. The mix of sales improved, actually. Open market completions were up 11.4% to 1,588 homes sold. Multi-unit sales were lower at 205 completions. Average selling price was up 4.3% on a reported basis. That was due to a richer bed mix and a little bit of a regional mix, and a small underlying selling price increase of 0.6%.

Speaker #2: 11.7% lower at 21.9 million. Tax rates a little higher, but still below the headline rate of 25%. We didn't incur any RPDT, you'll all remember that.

Speaker #2: Residential property developers tax because the threshold wasn't triggered, 25 million profit threshold. As a result, EPS was 12.7% lower at 28.9 pence. Now, turning to the divisional results, Gleeson Homes volumes we delivered volume growth, 1.2%.

Speaker #2: The mix of sales improved, actually. So open market completions were up 11.4% to 1,500 ATH home sold. Multi-unit sales were lower at 205 completions.

Speaker #2: Average selling price was up 4.3% on a reported basis. That was due to a richer bed mix and a little bit of a regional mix.

Speaker #2: And a small underlying selling price increase of 0.6%. So we got gross price increases. I think there were about 1.7% offset by higher incentives.

Stefan Allanson: We got gross price increases, I think they were about 1.7% offset by higher incentives. As a result, and including the sale of a surplus site during the year for GBP 1.2 million, revenue increased by 5.8% in Gleeson Homes to GBP 348.2 million. Gross profit was 9% lower due to the margin pressures that Graham mentioned. I will take you through a margin bridge in a few more slides. Overhead costs were very well managed during the year. Well-controlled. They increased by 1.6%. We did reduce headcounts, which offset the inflationary pay increases that were incurred during the year. As a percentage of turnover, they reduced by 0.6% to 14.4%. As a result, operating profit before exceptionals reduced by 26.4% to GBP 22.3 million. Operating margin reduced to 6.4% with a lower ROCE at 8.7%. I am going to take you through that reduction in operating margin.

Speaker #2: As a result, and including the sale of a surplus site during the year four, 1.2 million pounds revenue increased by 5.8% in Gleeson Homes.

Speaker #2: To 348.2 million pounds. Gross profit was 9% lower due to the margin pressures that Graham mentioned. I will take you through a margin bridge in a few more slides.

Speaker #2: Overhead costs were very well managed. During the year, well controlled. They increased by 1.6%. We did reduce headcount, which offset the inflation we pay increases that were incurred during the year.

Speaker #2: And as a percentage of turnover, they reduced by 0.6% to 14.4%. As a result, operating profit before exceptionals reduced by 26.4% to 22.3 million pounds.

Speaker #2: And operating margin reduced to 6.4% with a lower row key at 8.7%. Now, I'm going to take you through that reduction in operating margin.

Speaker #2: So the gross margin reduced by 340 basis points. You can see that bill cost inflation was really the most significant impact. But we had some other contributory reductions.

Stefan Allanson: The gross margin reduced by 340 basis points. You can see that build cost inflation was really the most significant impact, but we had some other contributory reductions. Build costs were 2.7% higher over the year. That took 1.9% off the margin. We did achieve some underlying selling price increases. During the year, for the purpose of this bridge, I refer to underlying selling prices on reservations which are relevant for margin recognition. They were only up 0.3% during the year. Gross prices increased on reservations by about 1%, but incentives were higher still during the year. We talked in June and July about legacy costs. We did incur some further legacy site costs, about GBP 2.2 million. That impacted margin by 0.6%. These operational issues that Graham talked about, that had a further impact on margin of 0.9%.

Speaker #2: So bill costs were 2.7% higher over the year. That took 1.9% off the margin. We did achieve some underlying selling price increases. Now, during the year, I for the purpose of this bridge, I refer to underlying selling prices on reservations, which are relevant for margin recognition.

Speaker #2: They were only up 0.3% during the year. Gross prices increased on reservations by about 1%, but incentives were higher still during the year. We talked in July about.

Speaker #2: June and July about legacy costs. We did incur some further legacy site costs. About 2.2 million pounds. That impacted margin by 0.6%. And these operational issues that Graham talked about that had a further impact on margin of 0.9%.

Speaker #2: In addition to that, to support a strongly improved sales rate, we improved the specification on plots during the year at typically now not typically, in all plots, we offer now a standard turf, fence, and an outside tap that has an extra cost.

Stefan Allanson: In addition to that, to support a strongly improved sales rate, we improved the specification on plots during the year. That is typically now, not typically in all plots. We offer now a standard turf fence and an outside tap that has an extra cost, and a few other things that had an extra cost that impacted margin by 0.4%. That strong improvement in our overhead efficiency, 0.6% offset some of that, but not fully offset the margin reduction. As a result of our strong improvement in sales rates, we did increase the forward order book, and it was up very pleasingly 51% at the end of the year. That was driven by the new partnership agreements. We entered into four new partnership agreements during the year, and we increased our open market forward orders by 10% driven by that 20% increase in open market reservation rates during the year.

Speaker #2: And a few other things that had an extra cost that impacted margin by 0.4%. That strong improvement in our overhead efficiency, 0.6% offset some of that, but not fully offset the margin reduction.

Speaker #2: So as a result of our strong improvement in sales rate, we did increase the forward order book, and it was up very pleasingly 51% at the end of the year.

Speaker #2: That was driven by the new partnership agreements. We entered into four new partnership agreements during the year. And we increased our open market forward orders by 10%, driven by that 20% increase in open market reservation rates during the year.

Speaker #2: Now, on to Gleeson Land. Gleeson Land had a Gleeson Land is really starting to fire an all cylinders and it had a much better year.

Stefan Allanson: On to Gleeson Land. Gleeson Land is really starting to fire on all cylinders, and it had a much, much better year. They completed seven transactions. Five of those were straightforward promotion agreements. One was a swap of interests that we had on joint venture agreements, and one was the sale of an option agreement. Gross profit more than doubled to GBP 11.1 million. Overheads increased by GBP 1 million to GBP 4.1 million, reflecting the investment that we made in the year. Investment in the business, we increased headcount. We opened a small office in Bristol, and of course, with that strong performance comes a little more of an incentive to our senior employees. As a result, operating profit more than tripled to GBP 7 million, delivering, I think, a rather healthy return on capital of 17.4%. Turning to the balance sheet.

Speaker #2: They completed seven transactions, five of those were straightforward promotion agreements. One was a swap of interests that we had on joint venture agreements. And one was the sale of an option agreement.

Speaker #2: Gross profit more than doubled to 11.1 million pounds. And overheads increased by 1 million pounds to 4.1 million pounds, reflecting the investment that we made in the year investment in business.

Speaker #2: We increased headcount, we put in we opened a small office in Bristol. And of course, with that strong performance, it becomes a little more of an incentive to our senior employees.

Speaker #2: As a result, operating profit more than tripled to 7 million pounds, delivering I think a rather healthy return on capital of 17.4%. Now, turning to the balance sheet, to group inventories increased by 35.6 million pounds during the year.

Stefan Allanson: Group inventories increased by GBP 35.6 million during the year. Gleeson Homes increased land WIP by GBP 20.7 million. That reflects site purchases during the year at a higher average selling price. The average cost of the sites that we purchased was GBP 18,600 per plot. That is higher than the average cost last year, which was around about GBP 15,000. We charged through cost of sales quite a lot of low-cost land, around about GBP 12,900. The impact was that the average cost per plot in the balance sheet now is higher at GBP 15,300 per plot, up from the GBP 12,800. Still remains significantly below 10% of selling price. Still very low. Build WIP was flat, up marginally at GBP 214.7 million. Average WIP at the end of the year was higher at GBP 3.2 million, up from the GBP 2.7 million we had at the end of the previous year.

Speaker #2: Gleeson Homes increased land width by 20.7 million pounds. That reflects site purchases during the year at a higher average selling price. The average cost of the sites that we purchased was 18,600 pounds per plot.

Speaker #2: That's higher than the average cost last year, which was around about 15 odd thousand pounds. And we charged through cost of sales quite a lot of low cost land, around about 12,000, 900 pounds.

Speaker #2: So the impact was that the average cost per plot in the balance sheet now is higher at 15,300 pounds per plot, up from the 12,800.

Speaker #2: Still remains significantly below 10% of selling price. Still very, very low. BuildRip was BuildRip was flat up marginally at 214.7 million pounds. But average whip at the end of the year was higher at 3.2 million, up from the 2.7 million we had at the end of the previous year.

Speaker #2: That reflects the bill cost increases. Build inflation. And significant infrastructure investment on a number of sites a number of new sites that will be delivering this year, didn't deliver last year.

Stefan Allanson: That reflects the build cost increases, build inflation, and significant infrastructure investment on a number of sites, a number of new sites that we will be delivering this year, did not deliver last year. Gleeson Land increased WIP by GBP 14.3 million in total. That reflects the cost of delivering those additional promotion agreements. Most significantly, the purchase of one site for GBP 6.9 million. That was a one-off purchase connected to the option agreement that we signed and connected to the large transaction that we expect to complete this year. We refer to one particular large site sale we are expected to complete this year. Other assets increased by GBP 12 million, driven mostly by the deferred receipts in Gleeson Land. Land creditors in Gleeson Homes increased to GBP 13.6 million, are still relatively low.

Speaker #2: Gleeson Land increased whip by 14.3 million. In total. That reflects the cost of delivering those additional promotion agreements. But most significantly, the purchase of one site for 6.9 million pounds.

Speaker #2: That was a one-off purchase. Connected to the option agreement that we signed in connected to the large transaction that we expect to complete this year we referred to one particular large site.

Speaker #2: So we're expected to complete this year. Other assets include increase by 12 million, driven by mostly by the deferred receipts in Gleeson Land. Land creditors in Gleeson Homes increased to 13.6 million pounds.

Speaker #2: Still relatively low. We still tend to pay largely on purchase. But with some of those larger site purchases during the year, we had few more deferred payables.

Stefan Allanson: We still tend to pay largely on purchase, but with some of those larger site purchases during the year, we had a few more deferred payables. Other liabilities were up almost GBP 20 million, driven by deferred payables in Gleeson Land, plus deferred income on the partnership agreements that were signed up to the end of June. Five partnership agreements. With net assets of around about GBP 200 million, net debt of only GBP 800,000, we have a very strong balance sheet. Finally to dividends. We are declaring a final dividend of 7p per share. That will bring to 11p per share the total dividend for the year. That is unchanged on last year. That dividend will be covered, or is covered by earnings 2.6 times. That is below the group's stated dividend policy, where earnings will cover dividends between three times and five times.

Speaker #2: Other liabilities were almost 20 million pounds. Driven by a deferred payables in Gleeson Land, plus deferred income on the partnership agreements that were signed.

Speaker #2: Up to the end of June, five partnership agreements. So with net assets of around about 200 million pounds net debt of only 800,000 pounds, we have a very strong balance sheet.

Speaker #2: Finally, to dividends. So we are declaring a final dividend of 7 pence per share. That will bring to 11 pence per share the total dividend for the year.

Speaker #2: That is unchanged on last year. That dividend will be covered or is covered by earnings 2.6 times. That is below the group's stated dividend policy.

Speaker #2: Where earnings will cover dividends between three times and five times. We are quite confident in suspending that policy for this dividend. That policy does remain.

Stefan Allanson: We are quite confident in suspending that policy for this dividend. That policy does remain. That is our policy. We wish to thank those shareholders that have stayed with us and have confidence in us, and we want to demonstrate our confidence in our medium-term outlook. Thank you, and I will hand you back to Graham.

Speaker #2: That is our policy. But we wish to thank those shareholders that have stayed with us and have confidence in us. And we want to demonstrate our confidence in our medium-term outlook.

Speaker #2: Thank you. And I will hand you back to Graham. Thanks, Stefan. Very good. So looking at our operations and strategy, then starting first with Gleeson Homes, just a quick capture of how I see the market right now.

Graham Prothero: Thanks, Stefan. Very good. Looking at our operations and strategy then, starting first with Gleeson Homes. Just a quick capture of how I see the market right now. As I have said, lacking conviction is probably the best way I can describe it. We saw the base rate cuts in May and August. We didn't really get the bounce that you'd normally hope for from the fizz of positive headlines. Mortgage availability and affordability is there. That's not really the challenge. That third bullet, consumer confidence is definitely still fragile. Whilst inflation is generally coming down, coming under control, if you disaggregate the elements there, food price inflation and energy price inflation is still pretty strong. Those are important for consumer perception. They're the big two that they see on a regular basis.

Speaker #2: As I've said, lacking conviction is probably the best way I can describe it. We saw the base rate cuts in May and August. We didn't really get the bounce that you'd normally hope for from the fizz of positive headlines.

Speaker #2: Mortgage availability and affordability is there. That's not really the challenge. But that third bullet, consumer confidence is definitely still fragile. Whilst inflation is generally I mean, coming down, coming under control.

Speaker #2: If you disaggregate the elements there, food price inflation and energy price inflation is still pretty strong. And those are important for consumer perception. They're the big two that they see on a regular basis.

Speaker #2: And of course, we've got there are a lot of headlines siren headlines around potential tax increases, particularly property tax increases coming out of the budget.

Graham Prothero: Of course, we got there a lot of headlines, siren headlines, around potential tax increases, particularly property tax increases coming out of the budget. We now know that that's going to persist right through to the end of November, which is pretty much unhelpful for our autumn selling season. Selling prices are steady. We are pushing them where we can, and in many places they're holding. We are, as I said before, continuing to use incentives, although not as an alarming level. Housing associations still sitting on the sidelines, really pleased with the GBP 39 billion that the Chancellor announced in the comprehensive spending review. It is real money in my view, but it has yet to fully filter through to hit the streets in terms of deals.

Speaker #2: And we now know that that's going to persist right through to the end of November, which is pretty much unhelpful for our autumn selling season.

Speaker #2: Selling prices are steady. We are pushing them where we can. And in many places, they're holding. But we are, as I said before, continuing to use incentives.

Speaker #2: Although level. Housing Association still sitting on the sidelines. Really pleased with the 39 billion that the chancellor announced in the comprehensive spending review. It is real money in my view.

Speaker #2: But it has yet to fully filter through to hit the streets in terms of deals. The Housing Association's telling us or the ones that we talk to telling us kind of would expect that money to start translating into deals in the spring.

Graham Prothero: The housing associations telling us, or the ones that we talk to telling us kind of would expect that money to start translating into deals in the spring. What that means is whilst the PRS investors do absolutely remain active, the competition in the market is soggy and that means that the pricing is pretty aggressive out there. The planning environment remains tough. As you know, we're very upbeat about the big changes to the framework that were made early in the parliament and already Guy's team seeing the benefits of those changes. Although the current noise around increasing regulations and potential additional costs is unhelpful, shall we say. The really key point is that down in the trenches, getting a ticket so that Scott and Andy can start putting a spade in the ground, that's as tough as ever.

Speaker #2: And what that means is whilst the PRS investors do absolutely remain active, the competition in the market is soggy. And that means that the pricing is pretty aggressive out there.

Speaker #2: And the planning environment remains tough. We are as you know, we're very upbeat about the big changes to the framework that were made early in the parliament and already guys' team seeing the benefits of those changes.

Speaker #2: Although the current noise around increasing regulations and potential additional costs is unhelpful, shall we say. But the really key point is that down in the trenches, getting a ticket so that Scott and Andy can start putting a spade in the ground, that's as tough as ever.

Speaker #2: And we put that down to the continuing challenge of resourcing in local planning departments. So overall, a pretty challenging environment. And difficult for me standing here now to say, well, I can see an early catalyst for a significant recovery.

Graham Prothero: We put that down to the continuing challenge of resourcing in local planning departments. Overall, a pretty challenging environment, and difficult for me standing here now to say, "Well, I can see an early catalyst for a significant recovery." But, as I said, it's a market that we can absolutely work with, and we're doing it. It's a stable market, and we're able to make our sales. So that's how I would characterize it. I showed you this just now. These are our areas. We're very clear on our areas of focus for Gleeson Homes for the current year, but also setting the position to deliver on our strategy as we go forward. We need to further embed Project Transform. There are still some tweaks we need to make on our land process from bid to build, and critically, site openings, absolutely vital that we focus on that.

Speaker #2: But as I said, it's a market that we can absolutely work with. And we're doing it. It's a stable market. And we're able to make our sales so that's how I would characterize it.

Speaker #2: I showed you this just now. So these are our areas, our very clear on our areas of focus for Gleeson Homes for the current year.

Speaker #2: But also setting the position to deliver on our strategy as we go forward. We need to further embed transform. We need to there are still some tweaks we need to make on our land process from bids to build.

Speaker #2: And critically, site openings absolutely vital that we focus on that. So I'm going to take you through each of these points just briefly now.

Graham Prothero: I am going to take you through each of these points just briefly now. Turning into our land pipeline, Stefan has already mentioned we have continued to buy land. It is still a very competitive market out there. So pleased to see our pipeline increasing to 19,600 units. As Stefan said, still with an average cost per plot below GBP 16,000, which is great. We are also, I would say, sharpening the focus for our land teams. A couple of things to mention there. We are looking to slightly push up the proportion of land that we buy in faster selling suburban areas. For that, we are looking at improving our density. There are some elements of the design of product which will assist with that, and I will talk about that in a moment.

Speaker #2: So turning into our land pipeline, Stefan's already mentioned with continued to buy land. It's a pretty it's still a very competitive market out there.

Speaker #2: So pleased to see our pipeline increasing to 19,000, 600 units. And as Stefan said, I'm still at a still with an average cost per plot below 16,000 pounds, which is great.

Speaker #2: We're also I would say sharpening the focus for our land teams. And a couple of things to mention there. And we are looking to slightly push up the amount of the proportion of land that we buy in faster selling suburban areas.

Speaker #2: And so for that, we're looking at improving our density. And there's some elements of the design of product, which will assist with that. And I'll talk about that in a moment.

Speaker #2: And we're also tightening our hurdle rates to better align our hurdles with the planning status of the land that we're appraising. Build and sale sites.

Graham Prothero: We are also tightening our hurdle rates to better align our hurdles with the planning status of the land that we are appraising. Build and sale sites. Well, it is pleasing that during the year just finished, FY25, we opened both more build sites and selling sites, at a better rate than in FY24. The average number of sites is actually lower because we also closed a number of older sites. Stepping back, more importantly, the number of sites that we are currently building and selling from is lower than we had planned, lower than I had hoped and anticipated. That is what we really need to get after. I suppose the biggest reason for that slower progress is the planning system. There is no hiding from that. We have to work as hard as we can on that, and there are things we can do.

Speaker #2: Well, it's pleasing that during the year just finished, FY25, and we opened both more build sites and selling sites so at a better rate than in FY24.

Speaker #2: The average number of sites is actually lower because we also closed a number of older sites. But stepping back, more importantly, the number of sites that we're currently building and selling from is lower than we'd planned, lower than I had hoped and anticipated.

Speaker #2: And that's what we really need to get after. The I suppose the biggest reason for that slower progress is the planning system. There's no hiding from that.

Speaker #2: And we have to work as hard as we can on that. And there are things we can do. So it's important, as well, that we look at our own process, that we make sure we're as up to date as we can with getting those being ready to clear those planning conditions as soon as we get that ticket.

Graham Prothero: It is important as well that we look at our own process, that we make sure we are as up to date as we can with being ready to clear those planning conditions as soon as we get that ticket. Then making sure that our own processes do not slow us up between getting the ticket and getting on site. That is an area that Simon, Scott, and Andy are really looking very hard at right now. We are having a great year, making great progress in partnerships. Helen and the team doing a really good job in building both our book of business and our reputation. We signed four transactions in the year, as I said, and a further two since the year end. Behind that, in fact, the second one since the year end was 6:00 last night.

Speaker #2: And then making sure that our own processes don't slow us up between getting the ticket and getting on site. And that's an area that Simon Scott and Andy are really looking very hard at right now.

Speaker #2: We're having a great year making great progress in partnerships, Helen, and the team doing a really good job in building both our book of business and our reputation.

Speaker #2: So we signed four transactions in the year, as I said. And a further two since the year end. And behind that, there are, in fact, the second one since the year end was 6 o'clock last night.

Speaker #2: So can you imagine Stefan's face when I said, "Stefan, we've got to change the presentation." It's got to be in there, hasn't it? We have multiple deals that are under negotiation.

Graham Prothero: Can you imagine Stefan's face when I said, "Stefan, we have got to change the presentation. It has got to be in there, hasn't it?" We have multiple deals that are under negotiation. But we are maintaining our approach of dealing with a small, select group of partners that we know we can rely on, who share our values and our aspirations. We continue to target a level of around 20% of the business in that diversified revenue stream. We are working towards that. Importantly, we do not have to force the pace, and that shields us from having to be price takers, from having to accept some of the more aggressive pricing that we can see out there in the market at the moment that I alluded to earlier. As I have said, we are responding to some changes in demand and opportunity that we are seeing in the marketplace.

Speaker #2: But we're maintaining our maintaining our approach of dealing with a select group, a small select group of partners that we know we can rely on who share our values and our aspirations.

Speaker #2: And we continue to target a level of around 20% of the business in that diversified revenue stream. And so we're working towards that. Importantly, we don't have to force the pace.

Speaker #2: And that shields us from having to be price takers from having to accept some of the more aggressive pricing that we can see out there in the market at the moment that I alluded to earlier.

Speaker #2: As I've said, we're responding to some changes in demand and opportunity that we're seeing in the marketplace. And that's so we're expanding our portfolio in response to that.

Graham Prothero: We are expanding our portfolio in response to that. We are seeing some demand for larger units. Who knew that Gleeson would build 5-bedroom homes? But the demand is out there, and as you can see, we have got some very elegant units designed in response to that. We are continuing with the Gleeson tradition of our roll call of house types being small villages in Ireland, and I can think of one investor in particular who will be delighted with the intriguingly named Castledermot. There we go. We are also expanding our range at the smaller end of our properties. We now have some one-bedroom units that we can plot. These are going to be really important to us in that push into slightly more suburban locations where we need the density, and we need the flexibility and agility of product to make sure that we are competitive in those bids.

Speaker #2: We're seeing some demand for larger units. Who knew that Gleeson would build five-bedroom homes? But the demand is out there. And as you can see, we've got some very elegant units designed in response to that.

Speaker #2: We're continuing with the Gleeson tradition of our roll call of house types being small villages in Ireland. And I can think of one investor in particular who will be delighted with the intriguingly named Castle Dermot.

Speaker #2: There we go. We're also expanding our range at the smaller end of our properties. So we now have some one-bedroom units that we can plot.

Speaker #2: And these are going to be really important to us in that push into slightly more suburban locations where we need the density and we need the flexibility and agility of product to make sure that we're competitive in those bids.

Speaker #2: And we're seeing good success as well with that thrust of widening the demographic of our customers and making sure our marketing is as broad as it possibly can be.

Graham Prothero: We are seeing good success as well with that thrust of widening the demographic of our customers and making sure our marketing is as broad as it possibly can be. As you can see, we are very happy to welcome you on a Gleeson site, whether you are 19 or 91. You have seen this slide before. Really important that, as I say, Gleeson is committed to this identity which underpins our market opportunity of building homes for those who need affordable quality homes, for those who need them most, and maintaining that couple on the national living wage being able to buy a material proportion of the homes on any of our sites. A couple of things I would draw your attention to on this slide.

Speaker #2: And as you can see, we're very happy to welcome you on a Gleeson site, whether you're 19 or 91. You've seen this slide before.

Speaker #2: Really important that, as I say, Gleeson is committed to this identity, which underpins our market opportunity of building homes for those who need affordable quality homes for those who need them most.

Speaker #2: And maintaining that couple on the national living wage, being able to buy a material proportion of the homes on any of our sites. A couple of things I would draw your attention to on this slide.

Speaker #2: The so our home's very much affordable for low-income buyers. And they are still seeing real income growth. But it is at a lower rate than so that real growth is at a lower rate than when I've stood here a year ago and probably the year before that.

Graham Prothero: Our homes are very much affordable for low income buyers, and they are still seeing real income growth, but it is at a lower rate. That real growth is at a lower rate than when I stood here a year ago and probably the year before that. That goes to wage increases are slowing. There was another survey out this morning that said exactly that, and that point around inflation, core inflation, still pushing on. Our customers are still aware of that cost of living pinch. I would just mention the bottom bullet there, significant piece of work for us in transitioning away from our previous independent in-house survey across to the NHBC HBF survey. It is a bigger piece of work than you might imagine.

Speaker #2: And that goes to wage increases are slowing. I noticed there was another survey out this morning that said exactly that. And that points around inflation core inflation still pushing on.

Speaker #2: So that our customers are still aware of that cost of living pinch. And I would just mention the bottom bullet there. We're significant piece of work for us in transitioning away from our previous independent in-house survey across to the NHBC HBF survey.

Speaker #2: It's a bigger piece of work than you might imagine. We expect when the our first results are published for the current calendar year, which will be in March 26, we expect to be at four star.

Graham Prothero: We expect when our first results are published for the current calendar year, which will be in March 2026, we expect to be at 4 star. But we are seeing both our survey response rate and our scores improve, and we are absolutely focused and targeted on achieving 5 star for the calendar year 2026. Just to remind you, we remain excited and convinced by the opportunity to take this business to 3,000 homes per annum in the medium term. You have seen this before, but just looking at that column on the right, how do we get there? Well, if we get ourselves to 100 sites and a sales rate of 0.6 per site per week, that takes us to our 3,000 homes.

Speaker #2: But we are seeing both our response our survey response rate and our scores improve and we are absolutely focused and targeted on achieving five star for the calendar year 26.

Speaker #2: And just to remind you, we remain excited by and convinced by the opportunity to take this business to 3,000 homes per annum in the medium term.

Speaker #2: You've seen this before. But just looking at that column on the right, how do we get there? Well, if we get ourselves to 100 sites and a sales rate of 0.6 per site per annum, per site per week, that is that takes us to our 3,000 homes.

Speaker #2: And the point of emphasizing that is that that 0.6 is only just above the 0.57, which was the completion rate that we achieved in the year just gone.

Graham Prothero: The point of emphasizing that is that that 0.6 is only just above the 0.57, which was the completion rate that we achieved in the year just gone. This target is not based on riding the crest of some phenomenal market recovery. It is all about that second point, which is making sure we get our build sites open, and that should be in our control, he said, mindful of the planning system. It is something that we can affect, we can control, and if we deliver on those build site openings, we will deliver this target. Turning to Gleeson Land. Well, absolutely primed for growth. You heard the excitement in Stefan's voice, and that is not something you hear very often, if I am honest.

Speaker #2: So this target is not based on riding the crest of some phenomenal market recovery. It's all about that second point, which is making sure we get our build sites open.

Speaker #2: And that should be in our control, he said, mindful of the planning system. But it is something that we can affect. We can control.

Speaker #2: And if we deliver on those build site openings we will deliver this target. So I need to Gleeson land. Well, absolutely. Primed for growth.

Speaker #2: You heard the excitement in Stefan's voice. And that's not something you hear very often, if I'm honest. The guys doing a great job in delivering this strategy.

Graham Prothero: The guys are doing a great job in delivering this strategy, and that is really all about the regional focus that Guy was talking about from day one. It is about really exploiting our unique capability in data research and analytics, and it is about a laser focus on the experience for our customers and our wider stakeholders. As I say, the success that that is bringing means that we are seeing more and better opportunities. We are improving the quality of our bids, and we are improving our win rate. So those benefits very definitely are beginning to be realized. As you can see, our bid rate has increased. Our win rate has doubled, now up at about a third of the bids that we make. Really importantly, this has not come from reducing our criteria or our hurdle rates.

Speaker #2: And that's really all about the regional focus that Guy was talking about from day one. It's about really exploiting our unique capability in data research and analytics.

Speaker #2: And it's about a laser focus on the experience for our customers and our wider stakeholders. We're having as I say, the success that that is bringing means that we are seeing more and better opportunities.

Speaker #2: We're improving the quality of our bids and we're improving our win rate. So those benefits very definitely beginning to be realized. As you can see, our bid rate has increased.

Speaker #2: Our win rate has doubled. Now up at about a third of the bids that we make. And really importantly, this hasn't come from reducing our criteria or our hurdle rates.

Speaker #2: We still put in the bin something like 9 out of 10 of the bids that we see. So but the portfolio the effect is the portfolio is growing and growing in quality.

Graham Prothero: We still put in the bin something like nine out of 10 of the bids that we see. But the effect is the portfolio is growing and growing in quality. Just to pick out one stat, so in the year we completed seven transactions and effectively that covered 1,200 units. We acquired some 13 new promotion agreements covering 2,700 units. So you can see that really does underline the point that I am making about the quality and quantity of the portfolio. Really importantly, as I say, a strong focus. You can feel it when you walk into the business, a really strong focus on our stakeholders and our customers, and that brings those additional opportunities. The agents community is talking about Gleeson Land in very positive terms, and we are often winning bids when we are not the highest bidder.

Speaker #2: And just to pick out one stat. So in the year, we completed seven transactions. And effectively, that covered 1,200 units. We acquired some 13 new promotion agreements covering 2,700 units.

Speaker #2: So you can see that really does underline the point that I'm making about the quality and quantity of the portfolio. And really importantly, as I say, a strong focus.

Speaker #2: You can feel it when you walk into the business. A really strong focus on our stakeholders and our customers. And that brings those additional opportunities.

Speaker #2: The agents community is talking about Gleeson land in very positive terms. And we're often winning bids when we're not the highest bidder. All of that means that there's steam coming out of the engine room in planning.

Graham Prothero: All of that means that there is steam coming out of the engine room in planning. The guys are working hard and working very effectively. You know that we touched on earlier, we are seeing the benefit of the new NPPF, the Billericay site that we sold in June and was the country's first grey belt site. We are pleased to submit six applications in the year just gone. But get this, we are anticipating submitting up to, I think, 18 applications in the H1 alone in the current year. As I say, steam coming out the engine room. We were pleased with seven consents in the year, and we come into the current year with eight consents. So the position, as we go into FY26, is encouraging.

Speaker #2: The guys are working hard and working very effectively. You know that they've we've touched on earlier. We are seeing the benefit of the new NPPF, the Billy Rickey site that we sold in June.

Speaker #2: And was the country's first grey belt site. We submitted we're pleased to submit six applications in the year just gone. But get this. We're anticipating submitting up to I think 18 applications in the first half alone in the current year.

Speaker #2: So as I say, steam coming out the engine room. We were pleased with seven consents in the year. And we come into the current year with eight consents.

Speaker #2: So the position as we go into FY26 is encouraging. We have planning consent all except one of the sites that we're proposing to sell during the year, which is a much stronger position than we were in at this time last year.

Graham Prothero: We have planning consent, all except one of the sites that we are proposing to sell during the year, which is a much stronger position than we were in at this time last year. I would just caution that among those sites is one where we have our planning permission. We have our agreed buyer. In fact, they have already signed an option on the site and can't wait to get on there. But we are waiting for one regulatory clearance from the local authority which we are anticipating soon. Should that hit some unexpected delay, then that will derail our profit targets because it is a large site. If that slips into July, we will feel the bump. I am just cautioning, it is not what we expect to happen.

Speaker #2: I would just caution that among those sites, is one where we have our planning permission. We have our agreed buyer in fact, they've already signed an option on the site and can't wait to get on there.

Speaker #2: But we're waiting for one regulatory clearance from the local authority. Which we're anticipating soon. Should that hit some unexpected delay, then that will derail our profit targets because it's a large site.

Speaker #2: And if that slips into July we will feel the bump. I'm just cautioning. It's not what we expect to happen. However, we are expecting one landmark moment, which is a sale in other site in Oxfordshire.

Graham Prothero: However, we are expecting one landmark moment, which is a sale of a site in Oxfordshire, which if it happens, will be the first site that we have actually acquired, I think, Guy, since you took the reins, which would be a landmark moment for Gleeson Land. Actually lightning quick. Sadly, as of course you are all aware, strategic land doesn't normally turn around in 2 years. We will keep reminding Guy of that one. In summary then, after what I would characterize as a bit of a bruising period, Project Transform is already delivering a more disciplined business in Gleeson Homes, and I am excited by what we are seeing from that. We have got a clear set of focuses to deliver on the growth that we foresee. I am really confident that that reorganization is going to ensure effective delivery and start to rebuild those margins.

Speaker #2: Which if it happens, will be the first site that we've actually acquired, I think, Guy, since you took the reins. Which would be a landmark moment for Gleeson land.

Speaker #2: And actually, lightning quick. Sadly, as of course, you're all aware, strategic land doesn't normally turn around in two years. But we'll keep reminding Guy of that one.

Speaker #2: So in summary then, after what I'd characterize as a bit of a bruising period, project transform is already delivering a more disciplined business in Gleeson homes.

Speaker #2: And I'm excited by what we're seeing from that. We've got a clear set of focuses to deliver on the growth that we foresee. And I'm really confident that that reorganization is going to ensure effective delivery and start to rebuild those margins.

Speaker #2: Gleeson land, as you've heard, absolutely primed for growth and outperformance. We've got a strengthened portfolio. And the future growth opportunities in that business are increasingly secure within that portfolio.

Graham Prothero: Gleeson Land, as you have heard, absolutely primed for growth and outperformance. We have got a strengthened portfolio and the future growth opportunities in that business are increasingly secure within that portfolio. So I anticipate that the current year will be in line with our expectations and we remain really well placed for the significant growth that we anticipate from FY27.

Speaker #2: So I anticipate that the current year will be in line with our expectations. And remain we remain really well placed for the significant growth that we anticipate from FY27.

Speaker #1: We will now begin the Q&A session. We've had a number of questions pre-submitted and submitted live. As a reminder, if you would like to ask a question, please type them in to the Q&A box situated on the right-hand side of your screen.

Operator: We will now begin the Q&A session. We have had a number of questions pre-submitted and submitted live. As a reminder, if you would like to ask a question, please type them into the Q&A box situated on the right-hand side of your screen. Our first question is: The housing market is slow. How are you dealing with it?

Speaker #1: So our first question is, the housing market is slow. How are you dealing with it?

Speaker #2: Yeah. It is slow. I think I described it in the present presentation. It's challenging. But it is stable. And you've heard me say before, that whilst I mean, this is not absolutely not 2008, 2009.

Graham Prothero: Yeah, it is slow. I think I described it in the presentation. It's challenging, but it is stable. You have heard me say before that whilst this is absolutely not 2008, 2009, this is not a tumbleweed moment. There are customers there for houses that are well located, well presented, and well priced. It's a market that rewards hard work, granular focus at site level, and indeed at plot level. If we get that presentation right and importantly get the price and the incentive package right, then we are finding there are buyers there. It's hard work. The buyers are cautious, but they are there and that's why we're hitting the sales rate at the moment of 0.54, which is better than this same time last year. It's not shooting the lights out, but we can absolutely work with that.

Speaker #2: This is not a tumbleweed moment. There are customers there for houses that are well located, well presented, and well priced. And it does reward a real granular it's a market that rewards hard work, granular focus at site level, and indeed at plot level.

Speaker #2: And if we get that presentation right and importantly get the price and the incentive package right, then we are finding there are buyers there.

Speaker #2: So it's hard work. The buyers are cautious. But they are there. And that's why we're hitting the sales rate at the moment of 0.54, which is better than this same time last year.

Speaker #2: It's not shooting the lights out. But we can work we can absolutely work with that. And just on those incentives, we're achieving that. But we're not having to give away spiked or increased incentives.

Graham Prothero: Just on those incentives, we're achieving that, but we're not having to give away spiked or increased incentives. They're still sub 5% running at an average at the moment about 4.7%.

Speaker #2: They're still sub 5%. Running at an average at the moment about 4.7%.

Speaker #1: Great. Thank you. Next question. How big are the sales incentives this year? And how much are they eating into profits?

Operator: Great. Thank you. Next question. How big are the sales incentives this year, and how much are they eating into profits?

Speaker #2: So well, I think I'd run into that question just now. So as I say, we are currently our incentives levels are about just under 5%.

Graham Prothero: Well, I think I'd run into that question just now. As I say, currently, our incentives levels are about just under 5%, and that's what we're doing today, and that's what really we've been doing since the beginning of the year. Nothing alarming. No sign at the moment that they're coming off, though. That's about where we need to be.

Speaker #2: That's the that's what we're doing today. And that's what really we've been doing since the beginning of the year. So nothing alarming. No sign at the moment.

Speaker #2: That they're coming off though. That's about where we need to be.

Speaker #1: Perfect. Gleeson land profit is up. What is driving that? And can it keep going?

Operator: Perfect. Gleeson Land profit is up. What is driving that, and can it keep going?

Speaker #2: So Gleeson land is getting stronger all the time. We were very pleased with the increase in profits last year. That was a consequence basically of getting those seven transactions closed it's always a little difficult to be precise on to tranche their profits into six month periods.

Graham Prothero: Gleeson Land is getting stronger all the time. We were very pleased with the increase in profits last year. That was a consequence, basically, of getting those seven transactions closed. It is always a little difficult, to be precise, to tranche their profits into 6-month periods, but we do expect a similar level of profits in the current year. The key to a strategic land business, the place you want to get to is coming into the year pretty much certainly with all your planning hurdles clear on all of the sites that you want to sell, and hopefully you are into your selling process. That is not where the business is today, but we are moving towards that. As of 1 July, we had all of the planning consents that we needed for our sales this year, all except for one, and that is not a huge site.

Speaker #2: But we do expect a similar level of profits in the current year. The key to a strategic land business, the place you want to get to is coming into the year pretty much with all your certainly with all your planning hurdles clear on all of the sites that you want to sell.

Speaker #2: And hopefully you're into your selling process. That's not where the business is today. But we are moving towards that. So this as of the 1st of July, we had all of the planning consents that we needed for our sales this year all except for one.

Speaker #2: And that's not a huge not a huge site. That's a lot stronger than this time last year. When we had our fingers crossed for several very significant consents that we needed to close the sites that we closed last year.

Graham Prothero: That is a lot stronger than this time last year, when we had our fingers crossed for several very significant consents that we needed to close the sites that we closed last year. That is what we are working towards. That is about the quality and the quantity of the portfolio and the control in bringing those through. We cannot flick a switch and make that happen immediately. FY26, the current year, is still a bit lumpy. I have cautioned that there is one transaction in there which actually has planning, but because it is a bit of an old consent, the rules around roads, the rules of the road have changed, and we have got to update the technical approval. We fully expect to get that quite soon. But if for any reason the timing of that approval slips, that could cause that transaction to slip into next year.

Speaker #2: So that's what we're working towards. That's about the quality and the quantity of the portfolio and the control in bringing those through. We can't flick a switch and make that happen immediately.

Speaker #2: But so FY26, the current year is still a bit lumpy. I have cautioned that there's one transaction in there, which actually has planning. But because it's a bit of an old consent, the rules around roads, the rules of the road have changed.

Speaker #2: And we've got to update the technical approval. We fully expect to get that quite soon. But if for any reason the timing of that approval slipped and that could cause that transaction to slip into next year.

Speaker #2: Not what we expect to happen. We're just cautioning it because it's a timing issue. But so yeah, Gleeson land is definitely getting stronger. They've had a good a very strong year in terms of acquiring new promotion agreements.

Graham Prothero: Not what we expect to happen. We are just cautioning it because it is a timing issue. Gleeson Land is definitely getting stronger. They have had a very strong year in terms of acquiring new promotion agreements. They are improving their portfolio both in quantity and in quality, and we are excited for the future of that business.

Speaker #2: The qual they're improving their portfolio both in quantity and in quality. And we're excited for the future of that business.

Speaker #1: Thank you. Next question. You ended with slight net debt. Just a timing thing? Or should we expect borrowings to rise if conditions stay tough?

Operator: Thank you. Next question. You ended with slight net debt. Just a timing thing, or should we expect borrowings to rise if conditions stay tough?

Speaker #2: Stephan, you want to pick that up?

Graham Prothero: Stefan, you want to pick that up?

Speaker #3: By all means. We did a very small 800,000 of net debt. That was a timing issue. Which reverses. However, the growth in sites that we will see at the end of this current financial year and the investment in build we're on some of those Gleeson home sites means that we probably will end up with a little bit more net debt at the end of this year.

Stefan Allanson: By all means. We did a very small GBP 800,000 of net debt. That was a timing issue, which reverses. However, the growth in sites that we will see at the end of this current financial year and the investment in build WIP on some of those Gleeson Homes sites means that we probably will end up with a little bit more net debt at the end of this year than maybe remain flat before returning, I expect, to a small cash surplus in a couple of years' time. But the levels we are talking about are very manageable. We have a strong banking facility, and those levels of net debt during the year will remain very manageable.

Speaker #3: Then maybe remain flat before returning I expect to a small cash surplus in a couple of years time. But the levels we're talking about are very, very manageable.

Speaker #3: We have a strong banking facility. And those levels of net debt during the year will remain very manageable.

Speaker #1: Thank you. Given that Scott Stothard is coming from Vistrey, how long will he take to fully embed in the role, especially in terms of understanding Gleeson's internal culture, legacy issues, and regional differences?

Operator: Thank you. Given that Scott Stothard is coming from Vistry, how long will he take to fully embed in the role, especially in terms of understanding Gleeson's internal culture, legacy issues, and regional differences?

Speaker #2: Interesting question. I don't know if any of you know or have met Scott. But I would say not that long. I've worked with Scott before.

Graham Prothero: Interesting question. I do not know if any of you know or have met Scott, but I would say not that long. I have worked with Scott before, so I was very happy that he became available when he did. He is a very high-quality operator. He is a thoroughly nice guy, very good at leading his teams, and is already well imbued into the Gleeson way of doing things and the Gleeson culture. I would say bringing some of his own insights and ways of doing things, which is exactly why we have hired him. We are excited and pleased to have him on board.

Speaker #2: So I was very happy that he became available when he did. He's a very high quality operator. He's a thoroughly nice guy. Very good at leading his teams.

Speaker #2: And is already well imbued into the Gleeson way of doing things and the Gleeson culture. And I would say bringing some of his own insights and ways of doing things, which is exactly why we've hired him.

Speaker #2: So we're excited and pleased to have him on board.

Speaker #1: Fiona Goldsmith has moved from interim to permanent chair. How will her oversight differ now, especially given recent operational issues? Will she be more hands on or maintain a supervisory versus strategic role?

Operator: Fiona Goldsmith has moved from interim to permanent Chair. How will her oversight differ now, especially given recent operational issues? Will she be more hands-on or maintain a supervisory versus strategic role?

Speaker #2: So we're really pleased actually that Fiona's taken the role. James stepped away for his own reasons. That would have been more challenging had we not had Fiona as a very natural successor into that role.

Graham Prothero: We are really pleased actually that Fiona has taken the role. James stepped away for his own reasons. That would have been more challenging had we not had Fiona as a very natural successor into that role. That has been pretty seamless, and we are currently on with hiring the new audit committee Chair that we need in order to get our balance of independent and non-independent non-execs restored. Interesting, Fiona, much as James takes, is very engaged with the business, but in an appropriate way. You do not want a Chairman seeking to run the business. That would unbalance things, and that is very much not what Fiona does. She is as a Chairman should be appropriately supportive and challenging, and that is exactly what we need. It is a well-balanced board, and I think we are in a very good place with that board.

Speaker #2: And we currently so that's been pretty seamless. And we're currently on with hiring the new audit committee chair that we need. In order to get our balance of independent and non-independent, non-execs restored.

Speaker #2: But I mean, interesting. Fiona, much as James takes is very engaged with the business. But in an appropriate way. You don't want a chairman seeking to run the business.

Speaker #2: That would unbalance things. And that's very much not what Fiona does. But she's as a chairman should be appropriately supportive and challenging. And that's exactly what we need.

Speaker #2: It's a well-balanced board. And I think we're in a very good place with that board. As I say, we're currently seeking for one more non-exec.

Graham Prothero: As I say, we are currently seeking for one more non-exec.

Speaker #1: Thank you. Gleeson Holmes, revenue up but profit down 26%. What's gone wrong and how are you fixing it?

Operator: Thank you. Gleeson Homes revenue up, but profit down 26%. What has gone wrong, and how are you fixing it?

Speaker #2: So there is a slide in the pack that talks about the margin bridge. I mean, there are two main elements to that shift in the profit.

Graham Prothero: There is a slide in the pack that talks about the margin bridge. There are two main elements to that shift in the profit. One is industry-wide. When you have a long period of weak demand and consequently flat selling prices, you will still continue to see some build inflation and any other cost bumps that you hit, you will feel it. They cannot be absorbed in the general pluses and minuses of margin with rising selling prices. That is an industry thing, and indeed, you have seen margin compression across the piece. But as I said in the presentation, some of this was undoubtedly self-inflicted. It was Gleeson specific. That was two things. A smaller element, which was legacy, some legacy hits, some old historic stuff, which we just had to rectify.

Speaker #2: One is industry-wide. When you have a long period of weak demand and consequently flat selling prices, costs you will still continue to see some build inflation.

Speaker #2: And any other cost bumps that you hit you'll feel it. They can't be absorbed in the general pluses and minuses of margin with rising selling prices.

Speaker #2: So that's an industry thing. And indeed, you have seen other you've seen margin compression across the piece. But as I said in the presentation, some of this was undoubtedly self-inflicted.

Speaker #2: It was Gleeson specific. And that was two things a smaller element, which was legacy, some legacy hits, some old historic stuff, which we just had to rectify.

Speaker #2: And some of it arose from some process weakness and some process some procedural indiscipline, I've described it as, around the home's business. And so that's really why we've taken the action we've taken in what we call project transform.

Graham Prothero: Some of it arose from some process weakness and some procedural indiscipline, I have described it as, around the homes business. That is really why we have taken the action we have taken in what we call Project Transform. We started that a year ago just to make sure that we have got short lines of reporting. We have standardized our actual reporting, so we have improved visibility and accountability. We have put more of an onus on making sure that our regional leadership teams are behaving more like business leaders, taking ownership and responsibility for their business rather than just being managers who report the good and bad news up the line. We are seeing a lot of success with that. We have changed quite a few individuals, but we are also working with our existing teams who are responding really well on that.

Speaker #2: We started that a year ago. Just to make sure that we've got short lines of reporting. We've standardized our actual reporting so that we've improved visibility and accountability.

Speaker #2: We've put more of an onus on making sure that our regional leadership teams are behaving more like business leaders, taking ownership and responsibility for their business rather than just being managers who report the good and bad news up the line.

Speaker #2: And we're seeing a lot of success with that. We've changed quite a few individuals. But we've also we're also working with our existing teams who are responding really well on that.

Speaker #2: So shorter reporting lines, clearer visibility of the reporting, and we've strengthened our leadership, importantly, at both divisional level. We've just talked about Scott and Andy's also doing a great job there.

Graham Prothero: Shorter reporting lines, clearer visibility of the reporting, and we have strengthened our leadership, importantly, at both divisional level. We just talked about Scott, and Andy is also doing a great job there and at regional level.

Speaker #2: And at regional level.

Speaker #1: Are there any expected changes to government housing grants, affordable housing requirements, that might impact your sales mix or margins?

Operator: Are there any expected changes to government housing grants, affordable housing requirements that might impact your sales mix or margins?

Speaker #2: To government grants and affordable housing so there are all sorts of I mean, prospective changes being floated amongst policy at the moment. I mean, specifically on affordable obviously, we had the significance announcement in the comprehensive spending review of I mean, 39 billion pounds was the figure that's been used.

Graham Prothero: To government grants and affordable housing. There are all sorts of prospective changes being floated amongst policy at the moment. Specifically on affordable, we had the significant announcement in the comprehensive spending review of GBP 39 billion, was the figure that has been used. And actually, there are some cynics who are saying, "Well, it is not real," or, "It is just recycled." I do believe that is, some of it is obviously recycled, but that is a real announcement, and the housing associations are rightly pleased with the new settlement that they see and with the rent settlement over 10 years. The challenge we have right now is that government is also changing the way that that money will be disbursed. So it is not just giving Homes England the next grant to get on with distributing that in the way they did before. They are reviewing the way that that is done.

Speaker #2: And actually, I'm not there are some cynics who are saying, well, it's not real. Or it's just recycled. I do believe there is that that is some of it's obviously recycled.

Speaker #2: But that is a real announcement. And the housing association's are rightly pleased with that with the new settlement that they see. And with the rent settlement over 10 years.

Speaker #2: The challenge we have right now is that government is also changing the way that that money will be disbursed. So it's not just giving homes England the next grant to get on with distributing that in the way they did before.

Speaker #2: They're reviewing the way that that's done. I understand that the local mayors and the combined authorities will have a role in that in disbursing those funds.

Graham Prothero: I understand that the local mayors and the combined authorities will have a role in that, in disbursing those funds. So the funds are there. They will come to market. But there is, at the moment, just a bit of a hiatus whilst they work out exactly how and what they can be spent on, what types of tenure, et cetera. So at the moment, the housing association is still not writing many new or large new deals, but I think they fully expect to be back in the game in the spring. So that will be important more for our partnerships business, part of the business, and also it will give greater certainty around the Section 106 houses that we bring to market. So that we know about.

Speaker #2: So the funds are there. They will come to market. But at the moment, just a bit of a hiatus whilst they work out exactly how and what they can be spent on, what types of tenure, et cetera, et cetera, et cetera.

Speaker #2: So at the moment, the housing association's still not writing many new or large new deals. But I think they fully expect to be back in the game in the spring.

Speaker #2: So that's that will be important. More for our partnerships business. Parts of the business. And also it will give greater certainty around the section 106 houses that we bring to market.

Speaker #2: So that we know about. In terms of other new grants that may come, I mean, I've seen lots of speculation. But nothing that I would personally put on.

Graham Prothero: In terms of other new grants that may come, I have seen lots of speculation, but nothing that I would personally put any great credibility on. I think what I would like them to do is not meddle with things and let us get on and deliver. The less change, the less additional regulation we have to deal with, the better. So I suppose that is what I am hoping for from the budget. And I would also like to see the budget behind us because it always brings uncertainty. Headlines around tax increases, particularly property tax increases, just unsettle people. They become another reason just to hang on. So I am looking forward to the end of November when we can put the budget in the rear view mirror.

Speaker #2: I think what I would like them to do is not meddle with things and let us get on and deliver. The less change, the less additional regulation we have to deal with, the better.

Speaker #2: So I suppose that's what I'm hoping for from the budget. And I'd also like to see the budget behind us. Because it always brings uncertainty headlines around tax increases, particularly property tax increases, just unsettle people.

Speaker #2: They become another reason just to hang on. So I'm looking forward to the end of November when we can put the budget in the rearview mirror.

Speaker #1: What is your return on capital employed target over the next two to three years?

Operator: What is your return on capital employed target over the next two to three years?

Speaker #2: You want to take that one, Stefan?

Graham Prothero: You want to take that one, Stefan?

Speaker #3: Sure. So I mean, return on capital employed was lower this year. I think it's 8.6%. It was down from the just over 10% the prior year.

Stefan Allanson: Sure. Return on capital employed was lower this year. I think at 8.6%, it was down from just over 10% the prior year. The return on capital employed is really going to accelerate when we see a big return in sentiment in the market, when demand increases, we can grow our margin and profitability. If you look at the consensus in the market, the analysts are expecting us to grow return on capital employed by between 1% and 2% per annum. That is in what we have guided as a damp and unexciting market. If the market, rather I should say, when the market turns and the housing market recovers, then we will see a big increase in margins and that will feed through to return on capital employed.

Speaker #3: So the return on capital employed is really going to accelerate when we see a big return in sentiment in the market when demand increases.

Speaker #3: We can grow our margin. And profitability. So if you look at the consensus in the market, the analysts are expecting us to grow return on capital employed by between 1% and and 2% per annum.

Speaker #3: And that's in what we have guided as a damp and unexciting market. If the market if and whether I should say when the market turns and the housing market recovers, then we'll see a big increase in margins.

Speaker #3: And that will feed through to return on capital employed. If you'll remember, in the years when we were the fastest growing listed house builder, prior to the turbulence that followed COVID, we were returning about 25%.

Stefan Allanson: If you will remember in the years when we were the fastest growing listed house builder prior to the turbulence that followed COVID, we were returning about 25%. I think we have the ability to do that, but we do need to see a recovery in the market.

Speaker #3: I think we have the ability to do that. But we do need to see a recovery in the market.

Speaker #1: How will the incentive or bonus structures for the new management, divisional MDs, COO, be structured to ensure behavior align with cost control, quality, and delivery, not just volume?

Operator: How will the incentive or bonus structures for the new management, divisional DMDs, COO, be structured to ensure behavior align with cost control, quality, and delivery, not just volume?

Speaker #3: We always think about so all of those measures. So our regional MDs, our divisional MDs, and indeed, Stefan and myself, we don't get anything for we need volume in order to achieve our targets.

Graham Prothero: Well, we always think about all of those measures. So our regional MDs, our divisional MDs, and indeed Stefan and myself, we do not get anything for. We need volume in order to achieve our targets, but volume alone won't cut it. So we think very carefully about the incentives that how we align performance pay. And so it is very much focused on profits, not volumes. And it also is underpinned by requirements around quality and of course, around health and safety.

Speaker #3: But volume alone won't cut it. So we are always we think very carefully about the incentives that how we align performance pay. And so it's very much focused on profits, not volumes.

Speaker #3: And it also is underpinned by requirements around quality and, of course, around health and safety.

Speaker #1: How exposed are you to rising build costs versus fixed sale prices?

Operator: How exposed are you to rising build costs versus fixed sale prices?

Speaker #3: Good question. And that obviously becomes more of an issue as we start to increase the proportion of our sales under partnerships. And I just remind you that we are our target, if you like, into the medium and longer term, is that partnerships we diversify our revenue into partnerships.

Stefan Allanson: Good question. And that obviously becomes more of an issue as we start to increase the proportion of our sales under partnerships. And I would just remind you that our target, if you like, into the medium and longer term is that partnerships, we diversify our revenue into partnerships, but only up to a level of 20%. We are not looking to become a small Vistry Group PLC. They have got a great business. That is their model. We are much more confident for Gleeson in our open market model. That is what we are all about. So partnerships, it is something that we are absolutely committed to as a sensible risk diversification in our revenue stream. So that is why we guide towards and are targeting a level of 20%. We are growing that. It is growing strongly, as we said in the presentation, four transactions signed last year and two since the year end.

Graham Prothero: Good question. And that obviously becomes more of an issue as we start to increase the proportion of our sales under partnerships. And I would just remind you that our target, if you like, into the medium and longer term is that partnerships, we diversify our revenue into partnerships, but only up to a level of 20%. We are not looking to become a small Vistry Group PLC. They have got a great business. That is their model. We are much more confident for Gleeson in our open market model. That is what we are all about. So partnerships, it is something that we are absolutely committed to as a sensible risk diversification in our revenue stream. So that is why we guide towards and are targeting a level of 20%. We are growing that. It is growing strongly, as we said in the presentation, four transactions signed last year and two since the year end.

Speaker #3: But only up to a level of sort of 20%. We're not looking we're not looking to sort of become a small vistry. They've got a great business.

Speaker #3: That's their model. We're much more confident for Gleeson in our open market model. That's what we're all about. So partnerships is it's something that we're absolutely committed to.

Speaker #3: As a sensible risk diversification in our revenue stream. So that's why we guide towards and our targeting a level of 20%. We're growing that it's growing strongly, as I say, as we said in the presentation, for transactions signed last year and two since the year end.

Speaker #3: But it's still a modest operation. Which we are looking to grow. So we currently got something just under 400 units sold into partnerships. Bear in mind that's across seven deals.

Stefan Allanson: It is still a modest operation which we are looking to grow. We have currently got something just under 400 units sold into partnerships. Bear in mind, that is across seven deals. We have got, as of today, the partnerships deals we have signed, we have got pretty clear visibility of when we are selling those units. Some of them, a good number of them are already build complete, and most of them well underway. Our risk of cost inflation on the units that we have sold into partnerships agreements to date is minimal. It is a very good question because it is something as we sign further deals and as those deals get larger and as the delivery of those units spread further into the future, of course we will need to take more account of the cost risk.

Graham Prothero: It is still a modest operation which we are looking to grow. We have currently got something just under 400 units sold into partnerships. Bear in mind, that is across seven deals. We have got, as of today, the partnerships deals we have signed, we have got pretty clear visibility of when we are selling those units. Some of them, a good number of them are already build complete, and most of them well underway. Our risk of cost inflation on the units that we have sold into partnerships agreements to date is minimal. It is a very good question because it is something as we sign further deals and as those deals get larger and as the delivery of those units spread further into the future, of course we will need to take more account of the cost risk.

Speaker #3: Those so we've got as of today, the partnerships deals we've signed, we've got pretty clear visibility of when we're selling those units. Some of them a good number of them are already billed complete.

Speaker #3: And most of them well underway. So our risk of cost inflation on the units that we've sold into partnerships agreements to date is minimal.

Speaker #3: It's a very good question. Because it's something as we sign further deals and as those deals get larger and as the delivery of those units spread further into the future, of course, we will need to take more account of the cost risk.

Speaker #3: But those of you that know me know that I do have a background in a partnerships business. So I understand the mechanisms that are required.

Stefan Allanson: Those of you that know me know that I do have a background in a partnerships business, so I understand the mechanisms that are required and the negotiations that have to take place to ensure that obviously we are not accepting a selling price today and leaving ourselves exposed to the whole cost risk on delivery 2, 3, and 4 years out into the future. As of today, not something that I am worried about, but as we sign further and larger deals, absolutely something we need to take account of.

Graham Prothero: Those of you that know me know that I do have a background in a partnerships business, so I understand the mechanisms that are required and the negotiations that have to take place to ensure that obviously we are not accepting a selling price today and leaving ourselves exposed to the whole cost risk on delivery 2, 3, and 4 years out into the future. As of today, not something that I am worried about, but as we sign further and larger deals, absolutely something we need to take account of.

Speaker #3: And the negotiations that have to take place to ensure that, obviously, we're not accepting a selling price today and leaving ourselves exposed to the whole cost risk on delivery two, three, and four years out into the future.

Speaker #3: So as of today, not something that I'm worried about. But as we sign further and larger deals, absolutely something we need to take account of.

Speaker #1: Margins are down a fair bit this year. What's been driving that? Mainly materials, labor costs, or more incentives? Do you see them recovering soon?

Operator: Margins are down a fair bit this year. What has been driving that? Mainly materials, labor costs, or more incentives? Do you see them recovering soon?

Speaker #3: We do. Do you want to pick that up?

Graham Prothero: We do. Do you want to pick that up? Yes. I mean for those who have looked at the presentation that we have on the website, there is a slide on there, I think it is slide 13, which analyzes the reduction in margin that we saw from the prior year. There are a couple of really significant things there. Firstly, build cost inflation has been higher than our increases in underlying selling prices. We had build cost inflation of just under 3%, but our underlying selling prices, and this is a flat market, underlying selling prices were only up 0.3%. Overall, that took the margin down by 1.6%. That was the biggest contributor. We also had some legacy site costs and some unexpected build cost increases in excess of the normal contingencies that builders put in their valuations. That contributed also to a lower margin.

Graham Prothero: We do. Do you want to pick that up?

Speaker #2: Yes. I mean, for those who have looked at the presentation that we have on the website, there is a slide on there. I think it's slide 13, which analyzes the reduction in margin that we saw from the prior year.

Stefan Allanson: Yes. I mean for those who have looked at the presentation that we have on the website, there is a slide on there, I think it is slide 13, which analyzes the reduction in margin that we saw from the prior year. There are a couple of really significant things there. Firstly, build cost inflation has been higher than our increases in underlying selling prices. We had build cost inflation of just under 3%, but our underlying selling prices, and this is a flat market, underlying selling prices were only up 0.3%. Overall, that took the margin down by 1.6%. That was the biggest contributor. We also had some legacy site costs and some unexpected build cost increases in excess of the normal contingencies that builders put in their valuations. That contributed also to a lower margin.

Speaker #2: There's a couple of really significant things there. Firstly, bill cost inflation has been higher than our increases in underlying selling prices. So we had bill cost inflation of just under 3%.

Speaker #2: But our underlying selling prices and this is a flat market. Underlying selling prices were only up 0.3%. So overall, that took the margin down by 1.6%.

Speaker #2: That was the biggest contributor. We also had some legacy site costs and some unexpected bill cost increases in excess of the normal contingencies that builders put in their valuations.

Speaker #2: That contributed also to a lower margin. We recovered a significant part of that lower gross margin with some overhead efficiencies of about 0.6%. But those were the three if you like, the three contributing factors.

Graham Prothero: We recovered a significant part of that lower gross margin with some overhead efficiencies of about 0.6%. But those were the three, if you like, the three contributing factors. What I would say about margin recovery is the analysts are expecting us to have a modest recovery in gross margin and a consequential improvement in the operating margin. We expect to deliver that. But that margin recovery, the strong margin recovery, will come when the housing market recovers and Gleeson Homes, like all house builders, can start withdrawing the incentives that we are currently providing, which at the moment are running at almost 5%. We managed to reduce those to a more normal, let's say, 1%, then that's 4% straight on the gross margin, straight to the bottom line.

Stefan Allanson: We recovered a significant part of that lower gross margin with some overhead efficiencies of about 0.6%. But those were the three, if you like, the three contributing factors. What I would say about margin recovery is the analysts are expecting us to have a modest recovery in gross margin and a consequential improvement in the operating margin. We expect to deliver that. But that margin recovery, the strong margin recovery, will come when the housing market recovers and Gleeson Homes, like all house builders, can start withdrawing the incentives that we are currently providing, which at the moment are running at almost 5%. We managed to reduce those to a more normal, let's say, 1%, then that's 4% straight on the gross margin, straight to the bottom line.

Speaker #2: What I would say about margin recovery is the analysts are expecting us to have a modest recovery in gross margin. And a consequential improvement in the operating margin.

Speaker #2: We expect to deliver that. But that margin recovery, the strong margin recovery, will come when the housing market recovers. And Gleeson Homes, like all house builders, can start withdrawing the incentives that we are currently providing, which at the moment are running at almost 5%.

Speaker #2: We managed to reduce those to a more normal let's say 1%. Then that's 4% straight on the margin straight on the gross margin, straight to the bottom line.

Speaker #1: Planning delays sound like an ongoing headache. How are you working around them?

Operator: Planning delays sound like an ongoing headache. How are you working around them?

Speaker #3: Indeed. Well, it wouldn't be a house builder presentation if we didn't have a moment about planning. The actually, it's there are two sides to that coin, really.

Graham Prothero: Indeed. Well, it wouldn't be a house builder presentation if we didn't have a moan about planning. Actually, there are two sides to that coin really. The changes that were made by Rachel Reeves and Angela Rayner to the National Planning Policy Framework, restoring the compulsion to local authorities right at the beginning of the parliament, that's working, and that's working well. It was exactly what they needed to do, and we are seeing the benefits of that in our Gleeson Land business, which remember, operates at the strategic level. They're seeking to get sites allocated and increasingly, local authorities are working with us, asking us to bring sites forward a bit in order to fill in gaps in those local plans. Because they know that they are being watched, they need those allocations in place to make sure that they have a viable up-to-date local plan.

Speaker #3: The national the changes that were made by Rachel Reeves and Angela Raina to the national planning policy framework restoring the compulsion to local authorities right at the beginning of the Parliament, that's working.

Speaker #3: And that's working well. It was exactly what they needed to do. And we are seeing the benefits of that in our Gleeson Land business, which, remember, operates at the strategic level.

Speaker #3: They're seeking to get sites allocated. And increasingly, local authorities are working with us, asking us to bring sites forward a bit in order to fill in gaps in those local plans.

Speaker #3: And because they know that they are being watched, they need those allocations in place to make sure that they have a viable up-to-date local plan.

Speaker #3: The other side is that in Gleeson Homes, whereby we are looking obviously actually for a ticket to build, to get on site and put spades in the ground, that unfortunately remains as turgid and as slow and as difficult as ever.

Graham Prothero: The other side is that in Gleeson Homes, whereby we're looking obviously, actually for a ticket to build, to get on site and put spades in the ground, that unfortunately remains as turgid and as slow and as difficult as ever. That is less about the framework at a national strategic level and more about resourcing in local planning departments. In the presentation, we mentioned the HBF research where they say that the current average time to get a Section 106 agreement, which is the shopping list of local contributions that you make, whether that's a doctor's surgery or a school or whatever. The average time to those agreements is currently, I think, 16 months, which is just preposterous. But that's what we're dealing with on a day-to-day, week-to-week basis.

Speaker #3: And that is less about the framework at a national strategic level, and more about resourcing in local planning departments. In the presentation, we mentioned the HBF's research, where they say that the current average time to get a section 106 agreement, which is the shopping list of local contributions that you make, whether that's a doctor's surgery or a school or whatever, the average time to those agreements is currently, I think, 16 months.

Speaker #3: Which is just preposterous. But that's what we're dealing with on a day-to-day, week-to-week basis. So as I say, framework level, we're happy with some real progress.

Stefan Allanson: As I say, at framework level, we are happy with some real progress at actual day-to-day operating level, as it were, in local authorities. Resourcing is still a serious issue.

Graham Prothero: As I say, at framework level, we are happy with some real progress at actual day-to-day operating level, as it were, in local authorities. Resourcing is still a serious issue.

Speaker #3: At actual day-to-day operating level, as it were, in local authorities resourcing is still a serious issue.

Speaker #1: Thank you. Pipeline is up. But how much of that is actually ready to build soon versus waiting on planning?

Operator: Thank you. Pipeline is up, but how much of that is actually ready to build soon versus waiting on planning?

Speaker #3: So we have I think how would you put this? So we have 19,000,600 units in the pipeline. I think just under half of those are owned and so with planning and owned.

Graham Prothero: How would I put this? We have 19,600 units in the pipeline. I think just under half of those are owned, so with planning and owned. I think there are going to probably a further, I think, 11 sites where we have planning and we are just about to make the acquisition. So probably of that pipeline, I would say half has consent and half we are still working on that consent. But of course, we do not buy the land until we have the planning, so they are not a dead weight on our working capital. Our model is always to acquire conditionally upon a satisfactory planning consent.

Speaker #3: I think that probably a further I think 11 sites where we have planning. And we're just about to make the acquisition. So probably of that pipeline, I would say half has consent.

Speaker #3: And half we are still working on that. But of course, we don't buy the land until we have the planning. So they're not a dead weight on our working capital.

Speaker #3: Our model is always to acquire conditionally upon a satisfactory planning consent.

Speaker #1: Thank you. Should you be operating with a very short land bank in this increasingly uncertain environment, particularly if unemployment levels trend higher?

Operator: Thank you. Should you be operating with a very short land bank in this increasingly uncertain environment, particularly if unemployment levels trend higher?

Speaker #3: Again, I'd point to my answer to the previous question. So it's a good challenge. And house builders always think about what commitments are you making into your land bank, given the prevailing conditions.

Graham Prothero: Again, I would point to my answer to the previous question. It is a good challenge and house builders always think about what commitments are you making into your land bank given the current prevailing conditions. We have to populate our land bank for 2, 3, 4, and 5 years out. We need to make sure that we have got control of the appropriate land that we need because that is our raw material. But right now, I am happy with the balance that we have. We have 100% of our land secure for the current year, and I think we are well over 90% for next year. With the rest all just finishing off the planning.

Speaker #3: Obviously, we need a we have to populate our land bank for sort of 2, 3, 4, and 5 years out. And so we need to make sure that we've got control of the appropriate land that we need because that's our raw material.

Speaker #3: But right now, I'm happy with the balance that we have. So we have obviously 100% of our land secure for the current year. And I think we're well over 90% for next year.

Speaker #3: And with the rest all just finishing off the planning. I think that and our model, again, of only paying for the land when we have secured appropriate planning shelters us from the real risk of sitting on heavy working capital for a long time in a weak market.

Stefan Allanson: Our model, again, of only paying for the land when we have secured appropriate planning shelters us from the real risk of sitting on heavy working capital for a long time in a weak market. I think we have the balance just about right for now. I would be uncomfortable with anything less than we have in our owned and controlled, in our owned and planned land bank. The controlled land bank, as I say, goes out longer, gives us good security and good visibility for way beyond FY27, but it is not costing us in terms of working capital today. I am happy with where we are.

Speaker #3: So I think we have the balance just about right for now. I'd be uncomfortable with anything less than we have in our owned and controlled in our owned and planned land bank.

Speaker #3: The controlled land bank, as I say, goes out longer, gives us good security and good visibility for way beyond FY27. But it's not costing us in terms of working capital today.

Speaker #3: So I'm happy with where we are.

Speaker #1: Thank you. We're now moving on to our final question. If we did not get to your question today, please email the MJ Gleeson team who will respond to any questions that weren't covered this afternoon.

Operator: Thank you. We are now moving on to our final question. If we did not get to your question today, please email the MJ Gleeson team who will respond to any questions that were not covered this afternoon. As you said, there are four partnership deals in the pipeline. This is very encouraging. Could you provide some extra color on these? For example, what is the bed mix?

Speaker #1: As you said, there are four partnership deals in the pipeline. This is very encouraging. Could you provide some extra color on these? For example, what is the bed mix?

Speaker #3: So I think the bed mix is similar to our own. There is quite a strong preference for the focus tends to be on predominantly on three-bed homes.

Graham Prothero: I think the bed mix is similar to our own. There is quite a strong preference for, the focus tends to be predominantly on three-bed homes. But it does depend on location. But as I say, it is pretty much bang on average. It is very similar to our own distribution, which is predominantly three beds. Our product works very well for the partnerships market. They are efficient in terms of size. The rental market tends to be driven by number of bedrooms, not square footage. Again, another reason that our product is efficient. Also, they like our locations as well. We are working with a small number of partners. We are selective as to who we work with. We want people who share our values and our aspirations, and very much the partners that we have listed in the presentation fit into that category.

Speaker #3: But it does depend it does depend on location. But as I say, it's pretty much bang on average. It's very similar to our own distribution, which is predominantly three beds.

Speaker #3: Our product works very well for the partnerships market. They're efficient. In terms of size, the rental market tends to be driven by number of bedrooms, not square footage.

Speaker #3: So again, another reason that our product is efficient. Also, they like our locations as well. So we're working with a small number of partners.

Speaker #3: We're selective as to who we work with. We want people who share our values and our aspirations. And very much the partners that we've listed in the presentation fit into that category.

Speaker #3: The other good thing about our partnerships business, as I've said, it's a great risk diversifier for us. But also, we're not under because it's we only want when we reach sort of equilibrium for that part of the business, we're only looking for 20%.

Graham Prothero: The other good thing about our partnerships business, as I have said, it is a great risk diversifier for us. Also, we are not under it because when we reach sort of equilibrium for that part of the business, we are only looking for 20% and we are not saying we have got to get there next year. We do not have to force the pace. What that means is that in a market, which for the reasons I described a few minutes ago, where housing associations are generally at the moment, not really trading, they are waiting for the clarification on how they can disperse that new grant. The housing associations are not really in the market. That means the private rental investors have really got the dance floor to themselves. What that means is you have got a weak overall market and pricing is aggressive.

Speaker #3: And we're not saying we've got to get there next year. So we don't have to force the pace. And what that means is that in a market which, for the reasons I described a few minutes ago, where housing associations are generally at the moment not really trading.

Speaker #3: They're waiting for the clarification on how they can disperse that new grant. So the housing associations are not really in the market. That means the private rental investors have really got the dance floor to themselves.

Speaker #3: And what that means is you've got a week overall market and pricing is aggressive. The good thing for our partnerships model is we don't have to force the pace.

Graham Prothero: The good thing for our partnerships model is we do not have to force the pace. We do not have to take that more aggressive pricing. We are able to remain selective both on the partners that we will work with, as I said, and on the deals that we can take. We are very excited with the way that that is working. It is building up as we intended. Our book of business is growing. We have multiple deals under negotiation now and our reputation is growing and it is still a very small team. It is not a huge investment for us. We are very pleased with the progress we are making in that area.

Speaker #3: We don't have to take that more aggressive pricing so we're able to remain selective, both on the partners that we'll work with, as I said, and on the deals that we can take.

Speaker #3: So we're very excited with the way that that's working. It's building up as we intended. I think our so our book of business is growing.

Speaker #3: We have multiple deals under negotiation now. And our reputation is growing. And it's still a very small team. It's not a huge investment for us.

Speaker #3: So we're very pleased with the progress we're making in that area.

Speaker #1: Thank you. That concludes the Q&A session. So I'll hand over to you for any closing remarks.

Operator: Thank you. That concludes the Q&A session. I will hand over to you for any closing remarks.

Speaker #3: Great. Many thanks. This is a new format for us. I hope you've found it useful. We've enjoyed it. Great questions. Thank you very much.

Graham Prothero: Great. Many thanks. This is a new format for us. I hope you have found it useful. We have enjoyed it. Great questions. Thank you very much. We look, as Tilly said, any other questions that we have not got to, I am sorry about that. Do email us and we will endeavor to get to those. In the meantime, thanks very much for your time and have a great afternoon.

Speaker #3: And we look as Tilly said, any other questions that we haven't got to, I'm sorry about that. Do email us. And we'll endeavor to get to those.

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