Vistry Group PLC (VTY) Earnings Call Transcript

Good morning, all. Good to see you all. Welcome to the half year results presentation for 2026 for Vistry. Thanks to all those who are attending in the room and online. Today, we'll talk you through our half year results, but also cover the conclusions of our CEO review that we've carried out through the summer. I'm Adam Daniels. I was appointed as Chief Executive on the 13th of April of this year. I started my career in pure housebuilding then moved into contracting housing before I joined the business in 2016 when I joined Countryside who were already doing Partnerships at that time. So I got deep expertise in mixed tenure and partnerships housebuilding. I became part of Vistry in 2022 when they acquired Countryside at the time. A bit what we're going to talk about today. So I'll have a brief introduction into what we might go through and some of the early operations I've had during my time as Chief Exec. We'll then go across to Tim, who will talk about our half year results before we cover the CEO review. After that, we'll look at current market conditions and outlook and then conclusions and clearly, Q&A. So just to open set the scene a little bit, we started to do the business in May, which is a detailed work stream with external team working alongside an external team to really look at the business in a root-and-branch way, building up from the quality of the size into the way we operate and looking at what we're doing well and what we're not doing so well. We acknowledge that the execution of our model since 2023 is not all gone as we planned, but there is very good reassurance we've done that the models worked excellently in areas despite the difficult market condition we had during that time. We've made very good progress on deleveraging the business and improving that cash generation, and we're continuing to see the outcomes of that work. And there's early actions been taken to resize the land bank and look at reinvesting new land to make sure we've got those suitable land positions for our mixed tenure model. We talked to July end about half 1 profit being impacted by exceptionals, and we'll talk about that and summarize that shortly. In very, very good news, the SAHP grant allocation was announced in August. That was a GBP 9.6 billion award across the affordable housing sector. 33 partners, 29 of which we already work with up and down in the country. We received GBP 350 million of direct grant toward, the top allocation in that award clearly showing the market's confidence in Vistry as a key deliverable of affordable housing, so a really good piece of news in August. Our refinance pursuit started in October as planned, and we'll be aiming for less borrowing in the medium term as we bring down the size of the balance sheet and make the business less capital intensive. In summary, we are taking the necessary action to make this business less capital-intensive, more profitable and more reliable. So a little bit of progress on deleveraging. First is a bit of a headline, peak debt, lower in FY '26 than it was in FY '25. So despite poor market conditions despite the continued delay in the SAHP until the end of August, peak debt did not reach levels in FY '26 as they did in FY '25, good reassurance. And we're past our peak debt point for this year. So we won't return to that peak again between now and end of the year. In relation to overall leverage, good progress on land creditors. So we reduced land creditors by GBP 1 million since half 1, and we expect to further reduce that by GBP 70 million by the year-end. So hanging on those land creditors reducing that overall leverage. Overall, in '26, I expect a reduction of circa GBP 300 million during this year. We've started some work around reshaping the land bank. We made some progress about how we reshape that to be more suitable to our model in the right areas, the right source of sites. And we've reduced them in H2 following that review to ensure that we are really focused on the schemes that work best for us. In relation to our WIP, morgan -- unsold stock continues to fall. We talked in the July statement that we've made GBP 300 million of progress in the year already, and we've made a further GBP 18 million progress since the half year. And as we talked about in July, we've exited our part exchange position, which brought in another GBP 20 million of cash in quarter 3. So egress around profit. What these things have allowed us to do is really look at the quality of the deals that we're doing with our partners. This is a business all about the quality of deals, the quality of land deals, the quality of partners feed into those. So it's allowed us to step away and renegotiate some of those deals to improve returns and improve the quality of the underlying deals that fed into the business. Because of these self-help measures that we're making very good progress with, no expectations for an equity raise, and we're very confident these self-help measures will deleverage the business as we work through the balance of '26 and into 2027. A few Vistry's fundamentals I wanted to cover just at the start. Firstly, Vistry is an excellent business. Underlying some of the challenges that we'll talk through today, we've got excellent people, excellent quality, comfortably maintaining our 5-star HBF status, great feedback from our partners, and that is giving us fantastic reassurance that the business remains in very good shape. We've got lots of highly motivated people with deep delivery expertise in what we do. What we do is different to the rest of the market and our people understand it and know it and operate it well. Clearly, the segment of the housing market, we work in, high structural demand. There is lots of need for affordable housing, mixed-tenure housing all across the country, and therefore, we're in a good place in delivering that. We can prove through some of the work I'll talk through today that when executed effectively, this model delivers upfront capital requirements, really good flexibility between the partner demands and open market channels. And we've got a wide customer base, all of our private customers, our housing associations and our PRS investors that we can sell into. In summary, we are market leaders in what we do, and we generate great value for our partners. The focus now is to increase the operational control release cash and reduce complexity. There is an opportunity to really simplify Vistry and make it more reliable as we go forward. So a bit of a snapshot of what I'll talk about later. So what is the vision as we move forward. We'll be industry-leading capital light, a specialist mixed any house builder, focused on that balance between partner backed demand and open market. And clearly, we'll prioritize cash conversion and returns over volume. The conclusion of the CEO review shows that we need to tweak the tenure mix to 60% partnerships and 40% open market and use that tenure mix in the right areas of our geography. We want a more focused and agile platform, 12,000 units is the medium-term target of the business to realize balance between volume and quality. We'll reduce the balance sheet, targeting a much smaller owned land bank position of GBP 36,000 and we'll make sure there's consistent adherence to that mixed tenure model all across the geography with an overall target of 30% plus ROCE by the medium term. As we reshape the land bank, really focusing our land teams on the quality of opportunity rather than quantity of sites bought and tweaking the regional structure to move from 25 to 12, really focusing around the quality of our site teams and project focus, something that I'll cover a little bit later on. Hopefully, that's a little bit of a snapshot of what I'll take you through the detail with later on. Before I do that, I'll hand to Tim for the financial review. This is Tim's last action with us before Tim leaves the business very shortly. Just like to thank Tim for his work over the last few years and also thank him through his time with me over the last few months. I'm very pleased that we've made very good progress with Tim's replacement, and we expect to have a new CFO imminently. Thanks, Tim.

Thanks, Adam. Good morning, everybody. So we'll start. I'll talk now about the half year position later for a bit of a recap on the financial implications of the strategy that Adam stayed through the strategic changes. So half year, we had an extensive July trading update, and we had a conference call. So I'll try and avoid being too duplicative of stuff we've said before, I'll try and waste through the old news, if you like, on half year. So in terms of the group result at the half year, back in July, we said our first half year was a GBP 30 million loss, excluding the impact of CEO review items. So that's clearly adverse to last year. Two principal reasons for that. One is that we took a lot of discounting action in the first half year to clear our stock down to generate cash. The impact of that discount was around GBP 50 million of profit in the first half of the year. And the other thing we saw in the first half of the year was that partner volumes were subdued. There was a period of hiatus as partners waited for confirmation of new grand puts we're going to offer them. And so there are less deals in the first half of the year than would normally have been expected. The other thing we reported at half year was that net debt was higher than last year, again, impacted by the lower volume of partner deals. So that's the old news. The new news for the half year is that we've now completed the CEO review, we're still in the process of working through the detail of the exact financial quantification of all of those items and also working out whether they're exceptional or otherwise and also whether they should be booked in H1 or H2. And that last bit, the H1-H2 piece is complicated by the fact that the CEO review started back in April, effectively when Adam took the reins. So what we've done is identified GBP 50 million of charges. And I'll go through the charges in a bit more detail later. But GBP 50 million of charges that should be booked in H1. So this was because the actions were fairly well progressed. They were the lower hanging fruit, if you like, a review change. So these were things like accelerating closure of sites that we knew we weren't going to proceed with on the basis of the new strategy. They were things like the part exchange decision to take write-downs of part exchange change. So that's the consoles we talked about for, 30 before and the 83.3 that you can see on the slide for profits. The other 2 things that have been booked in the half year that we haven't talked about before are exceptional items, one around goodwill and payment, which I'll tell you about later, and also an additional charge on building safety. Right. So back to H1 trading. So as we've disclosed before, the units were down 8% year-on-year and revenue down by a similar amount that was largely with -- down to the partner volumes coming down. The open market volumes were actually up because of the discounting action, but overall, net-net, we were down 8%. In terms of pricing, despite that discounting action, actually, pricing didn't drop. The average sales price went up by about 3%. And the reason for that is there's a lot of the discounting action that we took was to more expensive products. So the stuff that tend to be slower moving whether in 4 bedroom houses and putting more in the south than the north. And hence, the actual ASP of our sales went up despite the fact that we were doing this discount. A couple of other things to call out here. One is that land sales dropped in the first half of the year is something that we were evaluating. I think one of the things we've been doing over the course of the summer is pausing some activity while we identify the criteria that's appropriate for the new strategy. So I'll come back to some of the impacts of that later. So there were low land sales in the first half of the year. We expect further land sales in the second half. So land sales will be higher and not as high as the full year last year, but it will be higher in the second half of the year. And then finally, gross margin sales, the gross margin is adverse this year. If you add back the GBP 50 million of cash generating actions and you add back the GBP 50 million of CEO actions, our gross margin is a little bit above 10%. So working our way down the rest of the P&L. Overheads were down. So this is before the impact of the voluntary exit scheme and the further restructuring that Adam will describe later, overheads were down because the head count was lower from our previous action. We took steps around a voluntary exit scheme back in June, which has resulted in a large chunk of the exceptional charge within the GBP 10 million that you see there, the benefits of that will start flowing through towards the end of the year. And then quickly, net finance costs is up overall. So a few movements within there. Average daily net debt was higher in the first half than the previous year. Land creditors, the average land creditor balance is also higher in the first half than the first half of the previous year, which both drove finance costs up. It's slightly offset by the fact that our average cost of borrowings was down to closer to 6% from being around 6.5% last year. And finally, to mention tax. So the big charges that we'll talk about later will generate tax credits and hence, taxes and add back to profitability. So Building Safety, we took an overall charge in the first half of the year of GBP 79 million, which is higher -- obviously, higher than we expected. There was a surge in new buildings coming through assessment in the first half of the year. Principally, these were contracting business -- contracting projects where we've done the work back in the 1990s. So we don't have any records of some of these developments that were put together by companies that were former incarnations of parts of our business. Last year, there was a pledge signed by developers, which accelerated the need for assessments. That acceleration led to more claims coming through in the first part of this year for the buildings where we're contractors, and hence, an increase in the provision related to that. So that's the main part. 31 million of the additional 40 buildings are contractor buildings. We would expect that we're not going to see a surge like that again. Sure, there may be some other buildings that come out of the woodwork over the next few years, but we think that the volume should be significantly smaller because they should have come out by now. In terms of cash, about GBP 27 million of net cash outflow, GBP 1 million safety in the first half of the year. That's net of recoveries that we received, and we received about GBP 6 million of recoveries in the period. So goodwill, I've got 10 slides of goodwill because I thought you'd all be fascinated to know about goodwill. I haven't really. The -- so where's goodwill come from. Goodwill has come from the acquisition of 3 parts of the business, from Countryside, from Galliford Try and from Linden Homes. It all goes into one big bucket, and it gets assessed when there's an indicator of impairment. And clearly, a lot has happened in the first 6 months of the year that has indicated that we needed to look at it. So the market environment being difficult, all of the noise that's created with the Iranian conflict, our market capitalization has dropped and all of the actions for the CEO review. So all of that meant we needed to test it. And we need to test on the basis of a discounted cash flow based on our revised model. So again, I don't want to jump the gun, but we've got a different outlook for our 5 years, which got factored into the goodwill calculation. What gets spat out at the end of all of that is that more than half of our goodwill is impaired. So an impairment charge of GBP 475 million. It's noncash. It doesn't impact our covenants. It doesn't impact our ROCE. But in terms of headline profit, it's a big number. But let's walk through the half 1 cash flow quickly. So we opened the year with a net debt of GBP 144 million. We made losses of GBP 83 million. A lot of those CEO review costs are noncash and effectively reduced inventories. So while inventories dropped -- sorry, inventories increased slightly and there was a cash outflow in the first half of the year. It was -- the underlying inventory buildup was slightly higher than that. And where we're seeing that inventory build up net is in infrastructure on some of the larger sites. So that's where the inventory is trapped and that's fed into our thinking in the CEO review. More significantly, we've reduced our land creditor balance by over GBP 100 million in the first half of the year. We expect further reduction in land creditors in the second half of the year. And I'll pick up one more point in there, which is around the net investment in JVs. So while our investment in JVs picked up by GBP 30 million, a large chunk of that was the funding that we put into the JVs to pay down the debt within the joint ventures. So joint venture debt and land creditors, our share has dropped by GBP 23 million in the first half of the year. And then in terms of capital employed, so we always see capital employed jump up in the first half of the year. It's relatively seasonal, there's more activity in the second half than the first half. And hence, there's more capital employed generally in the first half. the impact was bigger than normal because the reduction in land creditors was abnormal. We don't normally see a land creditor reduction of the scale that we saw in the first half of the year. And so as land creditors goes up, or equities comes down, capital employed goes up. So work in progress. We're making good progress in terms of getting rid of the unsold, getting rid of our stock, and we'll see more of that in the second half of the year. But as I mentioned before, is the infrastructure investment that is offsetting that. So finally, giving a little bit more color in the presentation to covenants because we've been asked about it a lot, and there's no reason to hide from what is actually a pretty good covenant story. There's significant headroom for all our covenants at half year. You'll see the interest cover, which gets a lot of focus was actually way above the minimum requirement, and that's because of the way it's calculated with some of the add-backs to interest costs. So significant headroom for the half year covenant tests. One of the things we did, though, in anticipation of the impact of the CEO review was we engaged with our banks to say, look, the CEO review items that are coming out are going to impact our profitability, we can't be sure about the treatment of exceptional or otherwise. So let's be prudent, let's talk about these covenants in advance. So we're talking about the covenants at the end of this year and at the half year point next year. And we've had a very active engagement with our banks, many of people in the room here today from our banks. It's been a very supportive process and the banks have waived the interest cover covenant for the end of this year and the half year next year, recognizing that these charges are one-off and the right thing to do for the business. So grateful for the banks were taking that area of uncertainty away. And I think what that demonstrates is the sort of our banks have put free. And then in terms of going concern, again, we provided a lot of disclosure in our O&S to enable you to spend some time pulling through the assumptions and assessing them, but we've looked at severe but plausible downside case and concluded there was no material uncertainty on our going concern that's been supported by -- obviously, by the Board of Directors, but also by the auditors and a clean opinion again for going concern. And I'll come back to the refinancing activity that we expect to commence in October later on. Good. That's do for me -- do me for now.

Okay. So as I touched on earlier -- on pause -- sort out some technical issues. Thank you very much. So as I talked about earlier, we did a root and branch review of the business. This is a very detailed piece of work with external support working alongside our internal teams. And so we looked across all the sites in the portfolio, all the live sites, site by site review, and we need a detailed review of how we're operating, what's going well, what's not going so well. So the objectives were how do we get this business going -- and was quite disappointing. That's a key driver. I've got real faith that this business can perform and how do we get it into that shape. We want to understand where the model works and where it's letting us down. What scale of business do we want to create that gives us the requisite quality of returns that we want. I mean I identify how those best formats succeed, and therefore, how we replicate that and see where those worst-performing sites are and how we avoid that in the future. And then following that, we shape the overhead to ensure we've got those high-quality teams delivering on the plan. So the review assessed our geographic footprint. It looked at margin quality, capital intensity, risk profile, all across those schemes. It looked at a detailed review of the market demand for the 10 years across our footprint. It looked at the implementation challenges since we started in all parts in 2023. And I'll talk through in detail what we found in those sites. We clearly looked at capital intensity and together the balance sheet and what we talk to our stakeholders, including our partners about how we may as we move forward. So key findings. Firstly, Vistry rapidly evolved through M&A. And that gave us a differentiated mixed tenure model at the end of that. Vistry remains a high-quality business. We have got the best relationships in the sector with partners, local authorities, landowners and our supply chain. And that transition from all the business we brought together into partnerships clearly offered some challenges. And the operating culture and model didn't keep pace with that shift across to partnerships. And even though we had external market headwinds, that hasn't explained all of the underperformance in some areas of the business, and there's lots of site-by-site variability. There's been a big focus on short-term target, short-term growth, and that's compounded a misalignment between profit and cash -- in variation in site performance that I mentioned earlier, involved inconsistent commercial terms, operating processes and discipline around capital deployment, particularly into land and WIP. The product remains very strong. So excellent product for our partners, very good private product with very good quality. But all of the sites that we looked at are performing well, had a consistent set of site characteristics, which I'll talk you through. The summary is that mixed tenure model is the right model for Vistry. There are attractive structural economics and great demand for the type of sites that we will bring forward. So how do we get here? In 2020, Bovis acquired Galliford Try Partnerships and Linden, that was their first step to add partnerships into the wider group in 2020. That was followed up in 2022 by the acquisition of Countryside, and where they added more partnerships expertise into the business. And from that point for a couple of years around the business as a housebuilder and the Partnerships business sitting alongside. In 2024, we shifted the strategy to all partnerships by retiring all the regions we've got into developing all the sites on a partnership basis to try and maximize our capital efficiency. And the 2024 step has shown some very good signs but wasn't executed exactly in the way that we should have and caused us a few issues during that period of time. What it did give us is this rapid evolution in M&A is great reach very, very good people, really good capability in various areas of mix tended development, including partnerships and regen and mixed tenure. And I have some great positives about this piece of work. And since 2024, I can evidence some really good sites since then. And I can also evident some missteps. The goal of the CEO review is to simplify the platform. This business is quite complex. It's come from lots of different areas, and we can make it a lot simpler. So I'm not telling you anything new on this slide. We've had market challenges since '23. We've had high build cost inflation, high interest rates, the RPs have come under pressure with funding and how funding has flowed and we had fluctuating consumer confidence. But I do want to talk about how a majority of our sites performed well despite these market conditions and this weakness in the market. Just to talk briefly about the mixed tenure model. So on this side, we've got how housebuilder operates. They buy land, they don't bring any cash up front in land. Then they spend money, building their crops. They bring a small amount of cash in through their RPs through Section 106 units. And at the end, they bring all their cash back in when they sell their homes and hand them over to customers. They clearly want a higher gross margin, but there's more risk here and cash takes longer to come back into the business. From our perspective, we've got immediate recovery of cash upfront. We buy our land and then we bring in cash from our partner straightaway, 10% to 25% of the cash potential of the site arrives right up front. Following that, we build our units, partners acquire 60%, and therefore, 25% to 35% of the cash comes forward as we build the site out, lowering the overall capital exposure. And at the end, we have a number of open market units and they recover cash, but far less than our housebuilding counterparts. So we'll look for a lower overall margin, but clearly, easier cash conversion and that cash converting more earlier on in the process. And this graph, I think, shows very clearly the advantages to that. So if we take the purple line, this is a housebuilder, buys land, spends a lot of cash, invests in WIP and gradually over time as he sell the houses comes back to this breakeven point. We've seen that. And we see that in that model, you want a high margin because of the risk you're taking and you deliver lower ROCE. Vistry sits between this pink line and the blue line in this shaded area in the middle. The pink line at the bottom is a mixed tenure site, more balanced towards private. So it's got a small amount of booked from capital because we pay our land payment the same as a housebuilder, but we recover this element from our partners, giving us a capital light start to sign. On a mixed tenure basis, we then do invest in the site or some WIP, but that recovers more quickly as partners pay us on a monthly basis alongside our first completions. We get to this breakeven point earlier in the process. The blue line is our all partner, what you may describe as contracting schemes, all partner delivery schemes. So in these examples, we buy the land. But on the same day, we transact with a partner. They become cash positive straightaway, they're always very high ROCE and they're always cash positive through to the end. Lower margins in the blue line because ROCE is extremely high, and there's no cash investment and better margins between 12% and 30% depending on where on that scale we sit on the pink line. So I think a really good graphic to show exactly why mixed tenure should make us lower risk, more reliable and more consistent. So shorter shallower troughs, 60% of the model funded from our own partners. And earlier breakeven points versus housebuilders, which require greater capital investment. So when we reviewed the sites, they ended up in 2 areas, good sites on the left and underperforming sites on the right. And the good sites have 3 distant things we wanted to see, low peak fund requirements, greater than 40% ROCE and a margin better than 12%, all the way up to 30% plus margins in some of the sites. In the underperforming sites, we had schemes that exhibited weaker performance, mainly around balance sheet drag, so money going out the door without quick enough recovery, challenges related to tenure mix so how does the open market play alongside the additional and affordable and the PRS and poor commercial terms on the transactions. And we could sort these into those areas and create a clear and concise list of the sites that we've got in our portfolio. And what the CEO review has done is converted these site level lessons into mandatory investment criteria, which will drive the future quality of our land, meaning we get more repeatable cash margin and returns. And I think this pie chart is really interesting. If you look at the partnerships model, what I find being said is that 59% of our business as it is today, all of our active sites are performing. 85% gross margin average in the 59%. That's a really reassuring stat. So despite all those market headwinds that I'll give you at the start, despite the fact we've had those inflation environments, low consumer confidence, et cetera, a gap in funding, 60% of the business almost is doing exactly what we expect it to do. This is a picture of what this business can achieve when executed effectively. So a really, really reassuring pie chart that shows the purple is a great underlying business. The light blue shows some sites that were underperforming. And you're always going to get an element of the light blue, we're a developer. We take some risk. Sometimes things don't go as planned. So you're always going to get an element of the light blue that holds back your performance. And in the gray at the top, that's a part of the business that really isn't performing. Really is an area that's holding us back and not allowing us to show off the benefits of this -- field in -- so you can see here by the detail what we've done, the reason why we're recommitting to mixed tenure is because we have evidence that works. It works in geographies with the right tenure mixes. And with this average gross margin of 18.5%, with an estimated operating cost of around 5%. That 12% target that I've talked about in the future early in the morning is very, very achievable. I'm going to take through a couple of slides, a few really good performers and a few that are holding us back. This site is in the Northeast. It started in February 2020 and finished in September 2025. So it went through that process. It went through COVID. It went through high inflation, it went through poor consumer confidence. 325 units are good scale and a very, very strong gross margin, 25% on a mixed tenure basis, a 45% open market and 55% additionality through PRS, affordable Section 106. An extremely strong ROCE and no cash tie-up at any point through the job. So land payment went out, land monies came in from our partners, made us 0 cash, and through that the partner generative cash -- cash-generative partner work paid for our WIP investment on the private. So no cash tie-up, extremely high ROCE, fantastic margin. And you can see this is a finished site in difficult market conditions, so faced those market headwinds and yet achieved some very, very good returns. So a fantastic example of what is achievable even in difficult times. There's a second example in the Northwest. And I want to talk about it because it shows how our tenure flexibility should allow us to follow the market. And that's what partnerships business should do. Our business should follow the market conditions and not speculate. Housebuilders got to speculate, they buy a land, they hope that they're getting at the private price that they want, they make better margins. We should adjust our plans to follow the market. So we bought this site in November 2024. When we first bought the site of 250 plots we were expecting to do 50% additionality affordable and 50% private. As we got through the market conditions we've been in, we said is that -- it's private as reliable as we want in this market? Do we think we're going to sell at the rate we expect. And so we went out and we got an offer for taking 50% of the site as PRS. So we decided that in the market conditions we're in, making this lower risk all presold would be a better outcome. The margin reduced slightly from 23% to 20% to allow for that discounting to bring in the PRS. But as you can see, the ROCE went through the roof to 311 and we still maintain a very strong margin percentage with a max cash tie-up of GBP 4.1 million. So a very well-structured partnership arrangement, cash positive very early in the process, very low cash upfront investment and an attractive scale of circa 250 plots. But this is the benefit of the model. If you're at a time on private and you approach the site, you'd sell your 50% private, you make a bit more margin and it will still keep a lower footprint on your balance sheet. If you're going into a market where private is less reliable, you can move it into partnerships and tie down your risk and keep your cash investment lower and drive your return on capital employed. So a really good example of following the market with our model rather than speculating. So what are the themes of those successful sites, and I'll like to read these in the packs in detail, but I'll call a few of these out. So where we've got that strong regional demand, something I'll come back to a little bit later on. Concluding our land deals back to back with the partners. We've got to make sure that when we expense our capital and capital flows out, the partner is ready to give us that capital back and make sure those sites sit in a capital-light fashion on the balance sheet. The locations are limited to infrastructure that our partners want clearly very important and standard housetypes are clear to any strategy and manageable complexity of infrastructure. And we don't want to be spending millions of pounds on infrastructure going out unless the partner is there with us to deliver those sites. So a key set of site characteristics that are now embedded into the investment committee decisions that we make in our controls of new site delivery. So an example of a weaker site. The site is in Southern England, it was bought in April '21. When we converted to partnership, there was an attempt to convert this site into a partnership type scheme. You can see how the tenures were adjusted. So this would originally been an open market site with Section 106. When we flipped into partnerships, we had an attempt to try and move this into a partnership's tenure mix. The challenges in this part of the country are very, very high open market average selling prices. which do not sit as well alongside additionality affordable and Section 106. The second issue, we're making very substantial land payments, GBP 66.3 million of cash to on this site at one time. and that cash is going out without income coming from our partners. And so you've got a big tie-up on the balance sheet, and that's taking longer to recover. And as you see, because of market conditions, because the way the partner deal was structured because the land payment terms didn't match the outflows and because the exposure to that high-value open market sales price, margin has declined quite rapidly through that 3-year period. And these are one of those sites in that gray section of the pie chart that I talked about earlier, that it's holding us back and really not letting us show off the quality of returns that this business can make. So inconsistent site-level execution, implementing the model effectively, getting the right commercial terms with our partners and making the operating model more efficient. And one I'll draw your attention to is this over speculative land positions. We will follow the market and not speculate we will buy land that's in the right locations, and it's got the right amount of partner and open market interest. So just an example of what that overspeculation on land can lead to. So a site we bought previously. It's 2,000-plus units, purchase price of over GBP 100 million and large infrastructure costs. So a big investment for the business. It's a cracking site, very high-quality site, great location, very good price paid. But with -- GBP 2 million land payments out in the first period of time before we secured our partner deal. So we speculated that we'll buy this site and a partner will be there to take a portion of it for us, and we'll be able to back off some of that investment into a partner. We eventually have been able to. But the gap between that investment and the income has been too long. So we've had GBP 30 million investment and balance sheet drag before the time at which we've been able to bring the partner income in. So we do this exactly the same in the future in relation to this type of site, the quality, et cetera, but we would pair these land payments to stages at which we would receive capital. So you would not conclude this site until your partner was contracted on their side, you had a guarantee of inflow. And then you'd match apartments to your land payments out to keep that capital line much smoother. You still have money invested here, which is fine, but not to the scale or the values that we've seen in the land.

So the slides, if you don't mind, just so we can see your summary slide for this at 32 seconds.

Okay. No problem. Just flipped. I'll give a go. Hopefully, we'll get through it. Okay. So when I was pulling together this presentation, I asked, I wanted to pull together what was a picture perfect history. And I was going to create sort of an invented example. So I could just talk you through the sort of things will look on the scheme. But a number of weeks ago, I visited a site and crew. I think it showed off exactly what this mixed any model can do and how it will achieve this. So this is a crew in town in sort of northwest of England extremely well-located town. So this is on the motorway network, as you can see, very close to the M6, great transport links up and down the country, trains into London and trains in upper Manchester. So very well connected. So if you're in any tenure, if you're affordable PRS or open market, you get around, you can commute, you've got access to the motorway network. Let me look at crew itself from where the site is located. So our site is on the left-hand side of the corner here. You can see that it's located in the top left-hand corner. And we're very well connected to a number of areas you want to be in a mixed tenure model. It's got education close by. It's got sort of leisure facilities, very good employment opportunities and not far from the train station. And all 3 tenures would want to have some reliance on that sort of infrastructure, those semi-urban locations. So really shifting the focus into semi-urban and urban locations, less exposure to those more rural geographies we may have operated in the past. This is the site itself. So circa 450 units, other developers on this site as well. And we're going to concentrate on this parcel in the top left-hand corner, just to give you some examples. So 125 homes in this parcel, a few things that we want you to take away. Number one, the simplicity and consistency of the house types. You would not tell from this plan, apart from perhaps some detail around the roundabout as you come into the site, which tenure each of those plots were. They're all the same house types. There's 9 house types on the site, and they're the same house types that the affordable provider wants and that our private customers want. And so it gives you that flexibility to move the model as you need to, as you build through and market conditions change. The left-hand side is private. And what this means is that you can invest in this private site without too much WIP exposure. You only need to build these frontage plots, and you can get to your mixed tenure site further down the bottom. The other advantage of this layout is if you start on this site and sales aren't as good as you expect or the market changes, you could sell this little parcel to a partner, bearing in mind its same product as the second stage. In this example, in this market, this site is sold at 1 week for the last 4 weeks. And that's before opening the show on, we're selling from a cabin on the site, slightly off here. We opened a show this weekend. So you can see you can generate a good sales pace with simple product, well priced in good locations. In addition, we've got the second part of the site, which is for additionality affordable in Section 106. In this area, you can build as quickly as you can, bringing in your road and build those plots at pace. This is all time frame -- coming out of our factory not far away in Warrington. And this area is cash generative. So you get on to site, you build this pace, generate cash and that funds the private new front, which is selling very well. And in line with that, you keep this tenure flexibility, simple house types, all the same for the tenures, so you can move between them as you wish. So a really, really good example of the sites we should be targeting, right product, right location and right tenure mix with flexibility to navigate the model and the market as we move forward. So a summary of the root and branch review, very strong evidence of mix tenure works, and it can provide those excellent returns that we expect. The rapid M&A called system challenges, but things here are absolutely fixable. And although market headwinds exposed some weaknesses, we could also evidence that market headwinds we navigated well in a lot of areas of the business. Mixed tenure lowers that front capital and accelerates cash recovery. And all those site economics very sharply, we need to manage that land portfolio in a better way. The better sites align partners, funding, tenure and delivery and using a standard tenure flexible product is certainly the way we should operate. So as we move forward, we'll become smaller, more selective and capital light, improving the quality of the business as we focus on the best partners and the best returns. And part of the financial impact that Tim will talk about later, is that we're adjusting our strategies in the existing land bank to fix this -- to fit this model and to accelerate cash generation and improve deleveraging. So I'm going to move into strategic evolution. So the opportunity, the market need for what we do remain strong. there's great market need for all 3 tenures that we operate in. And the model gives us clear advantages, establish partner relationships and an integrated mix tenure delivery model gives us that differentiation proposition that we want. And we can show that attractive returns can be unlocked. We have an extremely attractive opportunity to create value by replicating that purple part of the pie chart across the business. We do not have a direct competitor in this space. There's no other organization with the relationships and the quality of teams that we have able to deliver this at scale, pace and quality. So the unique position. We've got a differentiated mixed tenure model, attractive structural economics. But I'm not convinced that the terms we've used in the past are consistently understood. What I feel we are is an expert mixed tenure house builder. So we have a wider array of customers that we can work with. We've got a strong open market sales team. We've got very good relationships with affordable providers, both for profit and not for profit. But great relationships with local authorities who buy housing and we've got great relationships with PRS providers and investors. So we can be the specialist mixed tenure housebuilder who really brings those customers through, diversifies the risk across those various areas of the market. We want strong operational performance, high quality, tight controls and consistency and importantly, greater selectivity to improve the quality of returns. So a piece of work we did to work out what type of business we want to be as we move forward. On the left-hand side, we did a detailed assessment of what the volumes could be of a model of our type. So this said, let's look at all the areas, RPs, local authorities, private rent sector in open market, and that's access how much volume Vistry as an organization could do. And we looked at the RPs and said, most RPs only want to work with one developer is 25% of their output. We looked at local authorities in a similar way and PRS sector in a similar way. And we worked out that these are the scales at which a business buyers could theoretically operate. We then looked at open market and saw how we could sell alongside our additionality what is the absorption capacity, and we assess that 7,000 to 8,000 per annum of open market. So the theoretical addressable opportunity based on the data review of our sector shows at 90,000 per annum is the theoretical addressable opportunity. We then sat back and said that maybe we could get to, but where can we operate to get the real quality of returns that we want. So we went through our partners, and we focused on the attractiveness of those partners, how they behave, how they work with us, how they treat us, the quality of the deals we're able to do. We looked at pipeline and we looked at financial resilience. And through that assessment, we said that 7,000 of the 12,000 units are really going to drive that quality of return that we want to see and really achieve that purple part of the pie chart I showed you earlier. But then look at open market selection, went through the regions, saw where the demand was and calculated that 5,000 units is a good target for us on open market, focused on the right quality areas where our product sits the best. And this has led us to this revised annual target of 12,000 per annum. But as you can see, we're focusing on the real quality part of the market. So we're taking the 2/3 of the market that we think can deliver the best of, of which 60% will be markets presold and 40% will be open market. I'll come on to sales, which is clearly a key part of what we do, and I talked earlier about a great example of effective sales that we've had. We're talking today for the first time about our pure open market sales rates. And as you can see from the side we have underwhelmed market sales. we have lagged behind the market in the last 3 or 4 years. We've had a slight uptick this year because of our discounting, but actually, in prior years, it's been less than GBP 0.4 million, which is not where you want to be, particularly with a focus on sales pace as a pre-solid mix tenure business. So we're going to change our sales strategy. We're going to target small and maximum size targeted at 1,500 square foot. Lower ASPs, maximum price point GBP 600,000, sitting better alongside that presold affordable additionality. We're going to move for those standardized house types, aiming for 35 standard house types, but really a core of 12 simple interchangeable house types, a bit like the site and crew that I showed you. And targeting the lower end of the market, so building homes that are seen as good value and high quality and lower end of the market. But to do that, we're going to simplify the sales branding. We've got 3 sales at the moment, and we'll retire Bovis and Countryside and Linden -- and create a fantastic sales brand in Linden. It's already known for the type of product we want to build, and we'll continue to improve that brand and make it a real market leader, refocused as a sensibly priced modern, affordable energy-efficient private sales offering. And these changes as we get through the next few years will allow us to get to this 0.6% open market sales rate that we would expect in a model like ours. So I'll talk a little bit about geographies. On the left-hand side of this slide is our historical geography. You can see it's relatively mixed, a bit of concentration in the center of the country, but relatively mixed. On the right-hand side is where we'll move the forecast geography to. So you can see more focus in the Midlands and the West and into the north with still substantial coverage in the Southwest and in London. And as part of this change, we'll have a reduced exposure to the areas in the south of the country that have underperformed as we may have found challenges in executing that mixed tenure model and will shift Southeast England to a fully presold partner funded model. So over the next few years, we'll exit our sales in the southeast Southeast of England, and we'll be focusing on what are some very large partners down there and doing a number of all for all PRS schemes in that part of the country to lower our risk and improve our return on capital employed in the South. I want to touch on London, as I mentioned it a little bit earlier. We have strong belief in the long-term success and demand for our mixed tenure model. We've grown that business to 2,000 units per year, and our plan now will be to hold 2,000 units per year through the next 5 years of the plan, but to really reduce the capital allocation that we've got in that part of the business to between GBP 100 million and GBP 150 million. So a more capital efficient sensibly so business in London. At the moment, London is 90% presold. And for the short to medium term, we expect that to continue. So a low risk less than our exposure to private sales, well presold, working with our partners. And to make this business more efficient for more profitability, we're going to make it more efficient from an overhead perspective, and we're going to split London into east and west and move from 3 regions into 2. So the combination of a more profitable London and a less capital-intensive London at the right size will give us a really good position in London, and it will continue to remain strategically attractive. And as we execute the model into the future, as I said earlier, we'll flex the 10 years based on the market conditions, follow the market. If we start to see open market conditions improve in London, I would expect us to drive more of the market in the future. And I'll just touch on Southeast, as I mentioned earlier. So the interplay between high-value open market and partnerships is causing a challenge. High-value open market is not selling at the pace required when you've got additionality and affordable. You've also got high land values and infrastructure costs. So when you start a site, it's very difficult to keep that capital in low and keep your return on capital employed up. The South tends to move downwards first in poor market conditions and come back last when it improves. And so exiting that part of the business will make us more reliable. When we will have a region down there focused purely on 100% presold schemes. So how are we going to achieve this over the period. We'll sell some land. We'll have some increased discount in open market sales and we'll book sales to partners. And we've taken a charge in 2026 to allow us to have the discount to achieve the things on the left-hand side. This will bring forward GBP 200 million of incremental cash generation over the next 2 years. So not only will we achieve what we'd already expected, a further GBP 200 million in those first 2 years. And once we've concluded that piece of work, we'll clearly be able to operate with lighter overheads in that part of the country. So there's circa 2,700 plots to exit. All of the sites in this part of the country are in this part of the gray wedge. So if we can exit this at pace, and move away from this part of the country that's underperforming for us and focus on the right size in this area. We expect the balance of this pie chart to change substantially over that period of time, and it will significantly reduce the group's risk profile. So we want a disciplined land acquisition. We want to have a portfolio that land strategy that looks more widely across the geographies, stronger investment discipline, using our investment committee, all the sites coming to me for final sign off and the right-sized land bank. So we can really lighten the balance sheet of this business by moving from the 51,000 plots of owned land we've got now to the 36,000 plots of owned land that we would want. And this is how the land bank migrates over the coming years. So the blue at the bottom is the land bank run off of the Southeast, and you can see it retains for a couple of years as you exit that private sale. So volume sort of stays the same for 2 years. as you convert to partnerships and exit and do that in FY '27 and FY '28 and it gradually declines. The red is the balance of those underperforming sites that on the pie chart earlier. So this section of the business is less than 12% gross margin, has lower ROCEs and ties up more cash than you would like. But as you can see, we're working through the early part of the 5-year plan and reducing our exposure to those sites. What will be assuring part of the pie chart is this purple section in the middle, land bank of 43,000 units that's performing at those margins we talked about, an average gross margin of 18.5%. You can see that, that plays a really good part in the business as we go forward. And the new land in green is the new sites we add into the plan through that period that we acquire limited exposure in '27, but clearly, that's growing in the future years. to give us this plan by FY '31 and the volume of 12,000. So this sheet really explains the evolution of the land bank and how we got confidence that we'll achieve that 12% operating margin in FY '31. A little bit of time on contracting. So you can see some of the logos of the people we work with on a week in, week out basis and we've got 150 partners currently in contract with us. A big diverse mix of RPs, PRS providers and local authorities. And particularly since the SAHP award, a good spike in conversations and negotiations with our partners with GBP 3.4 billion in further value under negotiation across 60 partners. It's a clearly huge continued interest for what we do, and we maintain those deep partner relationships. Our largest partners account for 47% of our active contract value. So what we want to focus on here is who are the quality partners, and we need to work with them on a repeatable basis consistently into the future. And so what we've been working hard on for the last few months, Stephen and his team since our July announcement where I talked about having development agreements or framework agreements with partners, is signing a number of our large partners into strategic development agreements to give us more certainty on volume delivery in the 5-year period. So we want to focus this business around a smaller number of high-quality partners. We'll still work with a very large array, but we want the bulk of our work to come with partners we can repeat business with simpler contracts, simple commercial terms, easy for us to work at pace. And we've executed 5 of those since July, so very good progress, and we've got 10 more at advanced stage that we expect to sign in the course and delivery through those partner arrangements will start in October 2026. And what this does is give 20,000 committed homes by the period with partners who really want to work with Vistry and really want to develop affordable homes, PRS homes with us. And you can split between RPs, for-profit RPs and PRS providers. This, alongside our award from Homes England of GBP 350 million absolutely underlines the quality of the business that remains. We would not be getting the support like this from our partners or the award from Homes England without continually delivering high-quality affordable housing across the country. So Vistry Works. We continue to use Vistry Works well, and it's feeding a number of our regions around the country. And it's key to living those partnership sites, mixed tenure sites at pace. We've achieved volumes this year between 5,000 and 6,000 homes, and we'll hold that volume at 6,000 as we go forward. We won't look to grow that. That will be our date for Vistry Works. That will be meaning that we're feeding half the business with timber frame, 12,000 medium-term target, 6,000 coming from timber frame. And the key shift is to make it more efficient. So we'll shift our focus like geographic locations previously, we've used timber frame all across the country from our factories in Leicester and up in the Northwest. Clearly that's not as efficient as it could be. So focusing our delivery timber frame around where the factory is based, the Midlands and the north is going to make us more efficient in our Vistry Works capability, really aligning Vistry Works to where we buy land, simplifying that product mix down to that 35 house types that I talked about earlier and ensuring there's that discipline and planning around the operations to make timber frame work very well. Lots and lots of examples where this is working excellently across the business, I say, a few that I touched on earlier on. And so to achieve this, we'll reorganize the business. We currently run with 25 regions across the country, and we will move to 10 operating areas as per the left hand side map, 2 in London and 10 outside London. The shift here is that we want more of our focus on overheads in the site-based teams. Our projects are a thing to operate with multiple partners and with fast build pace out on sites. And so improving the quality of our project-based teams and ensuring that our operational teams are collectively based on site together, working in project teams, our commercial, technical sales, customer service and build teams will really, really help support the quality delivery that we expect this business to provide. Those 10 larger operating areas, we focused as per the table on the right, and we have good evidence of regions already doing 1,000 to -- in a very good way. So this will refocus. We can pick the absolute best people that we've got in our business be part of our 12 regions and really, really deliver those great results and let these teams lead and take the business forward. One change as part of this is it will take land buying away from regions and move it into the divisional teams. So those land teams have got a wider view of the business and are really, really focused on the best quality land. Rather than focusing on volume of sites bought, they'll focus on quality support and then we'll work closely with the regions and feed them in. So these regions can become expert operators out on sites delivering quality returns, and we can buy the best quality land to feed them with. So we'll drive some efficiency from that. We'll focus the people investment at a site level and with high-quality management teams based in the regions and we're targeting GBP 50,000 of overhead savings in 2027 with further improvements by 2029 and in the medium term. And those will come from the biggest savings, regional reorganization I've talked about, clearly reduced activity kind of slimming down of our central services team in order to support the revised size of the business. And that will be a gradual piece of work over the near term in order to bring it into the right shape by the time we achieve the medium-term targets in FY '31. We're shifting to time our control, so we can manage risk effectively. So stronger governance around land, proactive CEO intervention from myself to ensure that we're controlling the land pipeline effectively and earlier involvement of the investment committee in our land decisions. Increasing that standardization and consistency, we have evidence that when we do this well, we can create great returns, and it's about replicating that all across the business. Ensuring the structure and to suit the way we want to operate, site-based teams working well along high-quality management teams and we measure most of the work using data to make sure that we manage this change and implementation effectively. Clearly, alongside that, we'll continue to build the right call. We have a large portion of the business with a very strong culture that really understands the purpose-led mixed tenure model that we operate. And we need to continue to replicate that across the business. So I understand the strategy clearly. I want to simplify what we're doing and make it more understandable, so people can really be on board -- foster that unified culture that we want all across the regions and in the group teams and ensure we set consistent expectations. I'm extremely reassured by the engagement through a CEO review. We have a huge amount of very talented people and very strong core of colleagues who are in line with our purpose and want to continue to build high-quality housing that solves the housing crisis. So I've talked a little while there and given you a lot of detail about what's gone well, what's not gone well, how we get this business to perform, but this is not as complicated as I made out in the last half hour. This is about simplifying Vistry. 25 regions down to 12, 16,000 volumes to 12,000. 100 standard house types is roughly where we are at the moment, down to 35, 3 brands to 1, Vistry Works and owned land bank of 51,000 down to 36,000. This is making this business easier to operate, more reliable, more consistent, less risky. And I want you to take a few things away. As I said, in my view, this is not complicated, and you can simplify these into 3 things. This business is the right deal structure on the land and the partner side, and we can evidence we've done that a hell of a lot of times. It's about the right tenure strategy, a complementary mix between the tenures and the flexibility to move between those tenures to suit the market conditions and it's about the right execution. And the changes we're making to the business today will ensure that we do those things time and time again and deliver a high-quality business as we move forward. And those 3 things are what I'd like to take away as how we simplify the business and how we get it performing and how we get more and more of these sites that deliver high cash back returns, good margins and return on capital employed. So the financial benefits of the strategic evolution, lower debt, higher margin, reduced capital employed and more consistent returns. If we move forward on this course and achieve the buildup of those sites that I've talked about earlier, this will come and we'll be able to operate the business in this way. And we're confirming our 5-year targets today for FY '31, so 12,000 units per annum, which I talked about the reasons behind that and focusing on the quality of those volumes, a 60%-40% mix between open market and partner, a 12% operating margin, you can see already we have got a bulk of our sites achieving 18.5% gross margin. As I touched on earlier, 5% of operating costs will be able to get comfortably to this 12%. A 30% plus return on capital employed, industry-leading return on capital employed for this model, a really key stat that we'll go out and achieve. Bringing that land bank down to 36,000 owned plots, a target of average daily net debt of GBP 300 million in the medium term, with operating profit of GBP 450 million and a capital employed of GBP 1.5 billion. So that is our 5-year targets for being by FY '31. Just to touch on capital structure. You can see the allocation hierarchy on the right-hand side, clearly focusing on cash generation and strengthening the balance sheet before we down that flow. And we're targeting 100% free cash flow conversion, supported by that tighter discipline of land acquisition and consistency of the programs. Average daily net debt we expect in the medium term, to be not exceeding normalized rolling 12 months EBITDA or 30% of tangible net assets. So we aim for GBP 300 million from FY '29. And to get there, we're targeting a reduction of GBP 400 million in FY '27 and below GBP 400 million in FY '28. Peak debt will look to make at least 20% of our total facilities, but very importantly, aim for this smoother profile. So we tend to see that we have a lot of outflowing under in July through land payments and smoothing that profile will really help. We'll continue to use land creditors where possible to help the timing of payments, but we'll manage the profile of that to move the lumpiness as I talked about earlier. And in relation to shareholder distributions, we look to reintroduce those on sufficient progress as we made on the balance sheet. And as I work with the new CFO into 2027, we'll look to review that distribution policy and update the market on that in due course. So I think a really compelling case about why mix tenure works, I think a really compelling case about how we need to move the business forward. And I'll pass to Tim now to talk about the financial evolution on the back of the CEO review. Thank you.

Thank you. Hopefully, you've still got some brain capacity for some numbers. So let's run through the financial journey then from here to the end of the year and through to FY '31, with building blocks. So the first one, there's quite a lot of information on this slide. This is the trend orientated to what we're seeing for the end of the year because it's a slightly confusing picture. Let me start at the top. Last year, we delivered GBP 260 million of profit. Back in July, we said that the excluding CEO review -- excluding the impact of the CEO review and GBP 200 million of profit. And we said that the reason for that is largely discounting of open market sales. So GBP 200 million is the starting point then for the reconciliation of today's news. First thing is that there's been trading and deterioration that, frankly, there's not anything we need to do with the CEO review. It is due to the open market conditions that were disappointing in the summer. So the equivalent of the GBP 200 million now is GBP 165 million. We're calling that normalized for the benefit of reconciling in the future page around how we get to FY '31. Within the GBP 165 million, within the GBP 200 million, we had GBP 40 million worth of profits that we see we were going to get from deals under the previous criteria that was being used to determine what sort of deals we're prepared to do. During the course of the summer, we've refreshed those criteria, as Adam has talked about. And concluded that we need to go and renegotiate those deals. So the deals are still there, but they won't happen in 2026 because we needed to look at the terms and conditions of those so we'd expect them to get them back. So there's a formally lower run rate of partner deals in 2026. So what that takes you to is a number 125. Now that 125 then is effectively maximum APT that we're guiding to this year. After the GBP 125 million, then we've got the impact of these actions that are being implemented. So there's the change in the strategy for the southeast of England, there's the reshaping of the land bank, and there's a few other bits. And the sort of things to talk about here are changing the tenure mix on our sites we review each and every site strategy to see is it the right thing to be doing. So changing the tenure mix in the Southeast, for example, would be moving more product and privates to partner sales and hence, you've got a discount on price and you need to write down your inventory or take a provision or reduce your margin going forward. Also, what we do is look to accelerate the exit from the Southeast by discounting the private sales. So not necessarily changing the tenure, but changing the pricing in order to accelerate the cash and coming out of the Southeast. There are other things we'll be doing in this year, we'll be looking at the the timing and the programming of build. So we might be accelerating some costs. We might look at some additional risk contingency that we need to be putting in to account for the transition risk that's going ahead. So all of those things go into the site-by-site calculation that will be finalized in the second half of the year. We're working through this with some -- the support of some external consultants to work through the precise numbers. And our current estimate is that the impact of those combined is GBP 470 million. Now some of those will be clearly exceptional items. Those things may not be -- meet the classification of exceptional items. And hence, somewhere -- some of the GBP 470 million will be charged against APBT and some will drop into exceptionals. So at the moment, there's a range of APBT for the full year, which we'll update on as we develop the work in the second half of the year. Then those items that we know are exceptionals and won't go into profit before tax. So restructuring where we took the GBP 10 million charge in the first half of the year, we're expecting a GBP 30 million additional charge we've taken in the second half of the year to cover the cost of exiting head count and also to reduce the office footprint that we need for our regional offices. So GBP 40 million there. I talked earlier on about the GBP 475 million of goodwill impairments. And within other exceptionals, we've got the GBP 73 million or GBP 79 million of building safety costs that, again, I covered earlier one. So all of that takes us to a profit before tax of GBP 975 million. So what about getting to FY '31? So starting with that GBP 165 million that I referenced on the previous page, add back the finance costs to get to an AOP number of around GBP 260 million for this year. So the building blocks to get in the GBP 260 million is the GBP 450 million in our targets that have got these chunks. First of all, the reduction in volumes by 3,000 to 4,000 will clearly take out volumes at standard margins, so about a GBP 90 million impact to profits from the volume reduction. We make that back by margin improvements from the actions that Adam has talked about. So Category 1, the one-off of low-margin sites, that GBP 90 million. What that GBP 90 million is, is improved performance. So that's saying we're not going to have all of these low-margin sites. Of course, there will be some, can't get everything right. But the general blend will improve because we've got a more standardized approach, we're more selective about what we're working on. And the new land, we expect to come in with high margin than the average margin at the moment. So GBP 90 million really from better site performance. The next chunk, GBP 70 million is a tenure mix change. So at the moment, we're at sort of 70-30 over the last few years, 70% partner funded, 30% private. By moving to 60-40, going to get a higher margin because of the higher open market mix -- then there's an element from partner-funded pricing. So the less we chase volume, selective we can be about the deals we do and the harder we can be about taking only those deals that work. And by moving away from the rush for deals in June and December, it will strengthen our negotiating position. So being prepared to walk away. So while most of the partner-funded deals are a good price in terms there are some that have been overly discounted that under the new structure we wouldn't proceed with, and that will lift margin. Other margin movements are more around cost efficiencies within what we build. So the more we standardize, the more mature we are about how we're doing this, the lower the unit costs we expect every house we build. And then finally, on overheads, we talked about a GBP 70 million improvement over the 5-year period. So that is the GBP 25 million that we talked about earlier, that's coming from the efforts that were underway back in July, including voluntary exit scheme and a further GBP 50 million from the additional restructuring that we're starting now. And the reasons why it's GBP 70 million is assuming we're going to get around GBP 5 million of benefit with the '26 number. So that's the conceptual bridge to get to GBP 450 million in FY '31. Turning to debt. So here, we're starting with an average daily debt of GBP 775 million for 2026. The left-hand column of the table on the left-hand side of the chart, shows a reconciliation to get to GBP 500 million of average net debt next year. So how are we delivering that? Well, the first piece is that we're expecting that we're going to start the year with GBP 140 million lower debt than we started '26 with. And that comes from the influx of a number of deals that we're doing during the course of the fourth quarter. So expecting to be, as I said earlier on, broadly net debt neutral at the end of this year. So then the trick is holding on to that GBP 140 million. And what we see in 2026 is that was a big outflow in the first quarter. We're not expecting the same level of outflows. So we should be able to hold on to that GBP 140 million through the year. Then there's going to be just the cash that adjusts from operations, lower profits profit run rate next year, some costs from building safety, but still that's going to contribute to the average debt coming down next year. And then there's going to be the contribution for starting some of this capital release, including reducing the Southeast land bank during the course of next year. So GBP 75 million from capital release next year. So that's the bridge to the EUR 500 million. Then we're saying we want to get to GBP 300 million of average net debt, daily net debt by FY '29. So still got the GBP 140 million in there. But now we've also got the 3 years of earnings contributing towards that debt reduction and a greater level of capital release. So expecting broadly GBP 300 million to come out of the land bank in that period that's going to impact the average debt. What that says at the bottom is there's a buffer actually of GBP 255 million to get to that GBP 300 million. So what is that buffer? Well, that's some mix of contingency, the option for additional investments or it's shareholder distributions. At the moment, we're keeping the optionality rather than declaring what we expect the distributions to be, but we certainly expect to be starting distributing to shareholders within this 3-year period. So then on the right-hand side, you can see the average debt profile and we emphasize that we are committing to stabilizing average daily debt at GBP 300 million by FY '29. So what are the next steps on financing in a bit more detail. So the debt expense, jumping off point for debt, as we've said, the average debt now is forecast at GBP 750 million for the second half of the year, higher level of debt than we previously forecast because of the delay of open market sales principally. And our full year debt will be broadly neutral. Our land creditors, however, will have come down to GBP 700 million by the end of the year, having started at GBP 990 million. So significant paydown of land creditors during the course of FY '26. We've got GBP 1 billion of committed facilities. GBP 100 million of that is in the form of USPP, which we expect to pay out of our existing cash flows in February next year, not expecting to refinance that. And while the rest of the GBP 900 million with our banking syndicate runs out until April 28, to ensure that we've got 18 months visibility for our going concern assessment in March next year when we report our results, we'll be looking to conclude whether it's a refinance, full refinancing or an extension with banks during the course of fourth quarter. So we've waited until we concluded the CEO review. So we've got a firm foundation upon which to go and have that discussion with the banks. As I said earlier on, we've had very productive discussions with the banks during the course of the last month or so around covenant waivers, and we expect to continue with those discussions as soon as the investor roadshow is finished. And we're confident we'll reach a good conclusion and keep the market appraised of progress as we go. I think that will do for me. Back to you, Adam.

So I wanted to touch briefly on implementation. Clearly, some change here and a clear implementation plan required. And so just the selection of the work streams needed to bring together this plan and execute it during the next 12 to 18 months. So in land, clearly, a focus around the quality of our land acquisition and the quality of the land portfolio, so optimizing that between now and the middle of 2028, bringing those sites forward that we know work and exiting those sites that aren't suitable for us, drive a real improvement in our delivery efficiency and that site standardization. We can see how much standardization helps us to deliver. The reorganization of our business, simplifying the operating model and making that organizational structure suited to, a, how we want to run the business; and b, our new scale and strengthening our leadership performance and accountability by really focusing those regions around our best management teams. So an internal team has been formed to support with this implementation, and that team will report directly to me. That team will be supported by our external consultants who we used during the review will help us to implement this change. And that transformation office will meet regularly clearly to implement across these work streams. I will provide regular updates to the Board so they can see our progress through this transformation, and we will share updates with you to the market as and when necessary. We clearly need to finalize the financial impact that Tim talked through during the balance of this year and into next year as we see the classification of those various items we've discussed with you today. So we've done a number of things already since July since we talked about the CEO review, some tighter controls around site starts and build pace, reduced that land buying that I talked about earlier. We're looking at those deals that we want to do, but don't meet our commercial requirements. We clearly have got evidence that lots of deals meet our commercial requirements. So this is not a new bar. It's just making more consistent the commercial terms that we operate those deals. reshaping and exit those transactions that don't work for us and looking at the continued targeting pricing actions on that slow-moving stock that's worked well for us year-to-date. More to do in Q3, the initial restructure starting with land and planning teams and then the wider restructuring process, continuing that entire introduction of controls, ensuring that sites that been brought forward to the investment committee have got those criteria that I talked to you through earlier, and we'll continue to take that ongoing action to reshape the land bank. So good progress so far, but more to do in the balance of '26 and into '27. So a clear delivery plan, a detailed delivery plan to bring forward the implementation of those changes, clear visibility and accountability on the progress of that work with the governance and reporting required and making sure we meet that transformation in a good time line and with sustained delivery momentum. So changes here needed, but a clear plan in how we execute those changes and bring this business into the shape that we expect in the medium term. So a brief summary. As I said earlier, we can bring this to a number of simple points, a refocused geography, a reduced capital-light land bank, site strategies revised to deleverage the group, letting us work in a lower risk profile by exiting the open market exposure in Southeast England, increasing that project level oversight that I've talked about today and enhancing our governance and controls, giving us a reshaped business to focus on the best quality opportunities across our geography. And that will give us more consistent partner deals with those high-quality partners that I've talked to you about today. So just before we conclude, I'll give you my thoughts on the current market conditions and an outlook as we move forward. So clearly, we've seen subdued customer confidence and stretched affordability in the open market, particularly first-time buyers. We're seeing some good momentum now in affordable housing following the SAHP awards, and we've got a really good pipeline of future opportunities, both to use our grant with and to take advantage of the wider award with our affordable partners and the grant they've been awarded. PRS continues currently to underwhelm because of the multi-decade high bond yields, but this is an intrinsic part of the tenure mix going forward and will certainly recover. The demand for PRS is absolutely there to go at. And as market conditions change, we expect that to dramatically improve. We've refined how we talk about the forward order book, and we're talking about forward order book of GBP 3.3 billion on those terms as we move forward. And we had very challenging market conditions through the summer. I think a lot of organizations suffered with that, and we slowed to 0.3 reservations per outlet per week, which has hurt some of that year-end profit delivery. As noted in July, H2 will see the conclusion of certain transactions late in H1, which will help us to reach that year-end number. But we have noted today that a number of those deals, we are continuing to renegotiate to provide the right outcomes and the number of those will flow into 2027. So guidance as we move forward. We've talked in detail through the FY '26 numbers today. Tim has given you a breakdown of how we got to those numbers and talked about, a, the profitability and the debt. In FY '27, we're targeting an APBT of GBP 185 million and the average daily net debt coming down to that GBP 500 million average through next year. And in the medium term, 12,000 units, 60-40 split between partner and private, 12% margin, an APBT of circa GBP 400 million and a 30% plus return on capital employed with that average daily debt coming down to GBP 300 million in the medium term. So conclusions. Here's a bit of Vistry on a page, and I will leave this up during the Q&A so you can see. But capital-light, industry-leading return on capital employed. We can show through the work we've done that, that is achievable, focused on the areas where our model works best with high-quality partners in those stronger geographic locations and a scale and size to suit the opportunity that's ahead of us. So that 12,000 units from the 19,000 I talked about earlier. Vistry will be lower risk, capital-light, a specialist mixed any housebuilder focused on that balance between partner-backed demand and open market exposure, simpler, more focused and more disciplined. That is the direction of travel. And you can see the summary that I showed earlier about the way we're going to achieve that. So thank you for your time. Thank you for letting me walk you through those slides. We'll move to Q&A. There is a microphone in the room, so we'll take questions, and Jay will bring the microphone over. Thank you.

Glynis Johnson, Jefferies. I seem to have got the mic and have a few questions. So let me just go a couple of long term, a couple of short term. Long term, in terms of the framework agreements, it looks like you've negotiated approximately half of your delivery by year 5 to come from 5 contracts. You talk about another 10 being talked about. So where would you like to get those framework agreements to in terms of the coverage of your partnership delivery? Second of all, your 2031 target is an operating profit target, not a PBT. Is there some inference there in terms of JVs that we should be thinking about? And then thirdly, on the long term, the GBP 300 million average daily debt, is that the right level of debt for a business that is anticipated to have capital employed of EUR 1.5 billion? And then short term, capital employed in the Southeast of England, how much is it? Can you give us a number? That would be very helpful. The Southeast of England, Slide 41 says 2,900 -- sorry, Slide 40 says 2,900 plots to exit. There's 10,000 in the chart on the next page. Can you just bridge the gap between that? And the last one, forgive me, last one. On the new covenant in terms of the headroom that's due sort of the last Friday of every month, how many times in the last 6 months have you gotten near to that? Just to give us an idea of the sensitivity of that covenant?

So on the partner slide where we showed the agreement with the partners, the wheel included the 5 that we negotiated and the 10 that we're negotiating. So Stephen, I don't know if you want to give a little bit of detail on progress and expectation on those agreements.

Yes. Thanks, Adam. We think that 12 to 15 of those strategic development agreements is the right volume. It intensifies our relationship with those organizations and gives both of us visibility of opportunities and visibility of committing capacity. Outside of that, we will continue to work with partners that we already work with, but we expect the bulk of what we do will be through those partners that we have those strategic agreements with. But 12 to 15 is about the right bandwidth for us to achieve what we want to within this plan.

What level of homes would that be though? Because that looks like it's 4,000 homes by year 5, and you're looking to deliver 7. That says 5 strategic development agreements. So if we get to 12,000, does that get to 7,000...

So if we get to 12, it's dependent upon the scale of ambition of each of those partners. So I don't want to call that yet because obviously, there's -- they're working through their SAHP agreements. What's important to recognize is some of those partners are strategic partners they're within those 33 and some of them are not strategic partners and rely on our grant allocation. So it's a mix of the 2.

I think the next one was on guidance in 31, Glynis. So we showed on the tiles originally AOP of GBP 450 million. This slide confirms guidance APBT of GBP 400 million. So there's no sort of -- no, it's probably presentation more than anything.

The reason why we tend to talk about AOP for longer term is because that's part of the ROCE calculation. And -- but then we -- our primary measure is APBT to try and avoid all the confusion that we have around joint ventures.

Our capital in the South, Tim?

Yes, I haven't got the number precisely to mind. I think it's somewhere between GBP 0.75 billion and GBP 1 billion. Next one was what covenant headroom question. So just so I'm clear, Glynis, you're referring to the additional covenants that's been -- so I did mention this in the presentation that within the covenant waiver, we've agreed to a minimum headroom of GBP 70 million at month end. Now we don't believe that, that is because we tend to get our income in towards the end of the month, that is not an additional constraint. So it's not something that we've got close to in the past.

The GBP 300 million in terms of average daily debt, is that the right number?

I think that gives us the right level of flexibility and investment in the business for a balance sheet that size and the profit we want to deliver. So I think it's a sensible target. We talked about keeping average net debt below EBIT as a sort of general rule. But in all the modeling we've done GBP 300 million feels like a sensible number and the right balance between debt and delivery of the business.

Sites to exit the Southeast 2,900 on Slide 14, and then it goes up to 10,000 Slide 41.

This slide for you. about the sort of graph of the land bank runoff, Glynis? This one?

Yes. Slide 40, 41.

Okay. So this here -- Yes. So 2,700 is the total private units that will exit as part of this plan. This one shows the whole entire land bank. So this is private, other tenures, joint ventures, et cetera. So this is the whole land bank in Southeast, of which 2,700 to wind down in those first couple of years.

Charlie Campbell at Stifel. Just a couple really. First one, quite a big question. In terms of the underperforming sites, you've talked a lot about them and gave us some very helpful examples. But it wasn't quite clear to me whether the underperformance is fundamentally a kind of a people problem that people made bad decisions or it was a system problem that the system wasn't picking up the bad decisions. So I just wonder if you could help me with that a bit and to understand the sort of the cultural problems behind some of those underperformance.

I think decision-making is probably the one I would lean towards a real push to grow the business at pace and perhaps an assumption that it works over here, so it will work over there and a decision that we speculate on that basis. So I'd say that was the main area. Clearly, we've done a huge amount of work on our controls, and I'm comfortable with the controls we've got. And I think with a slightly different set of decision-making principles there, we can improve the consistency of delivery across the whole business.

And then the supplementary to that, which is, are you happy then that you've got the right people in place to consistently buy new land in at the 18% gross margin that, that chart requires?

Yes. We've got excellent land teams. I'm very, very confident of that. We slimmed down those land teams to be focused geographically in different ways. We've got excellent land teams across the country. And I think that section of the pie chart that shows that almost 6% of the business is performing well shows that we've got some very good land teams out there buying very good land, delivering some very good returns.

Yes. and then on the one on the reduction in capital employed, clearly, we could do some maths on the land part of that. But can you just help us a bit on the WIP and how much of that reduction comes from WIP reduction?

So on the debt reduction slide, we just go -- it takes too long. On Slide 58, we've given a sense there of the reduced WIP element. So we're expecting about GBP 100 million to come out of the overall WIP balance to reduce our net debt.

And that's across the group? Or is that mainly a Southeast issue again, just to again help us. That's across the group...

Mine, we've already made a decent amount of progress this year on sort of private WIP. So that's a sort of further amount that adds on top of that.

It's Will Jones from Rothschild & Co Redburn. I think 3 or 4 as well, please. The first is just whether you could run us through your underlying assumptions for the 2027 target in terms of sales rates, price versus cost and so on, please?

Yes. sales rate target in '27 is 0.52 assumed. And we have in all those projects I've talked about, obviously, today's cost and today's values with the relevant allowances for inflation and contingencies you would expect. So we're assuming broadly moderated conditions between now and then.

Second was just around discounting generally. I think you gave us a figure of 7% or so in the first half trading update. Where is that trending today? Does it need to carry on for longer given the Southeast exit? And maybe just add to that, where we are at the moment on PRS discounts, just given your point earlier about bond yields.

Yes. Okay. On discounting, it's nudged up slightly to near 8% as a percentage year-to-date. It does need to continue. The southern shift has clearly been taken as a charge. And so that is sort of covered now, and we'll exit that business through that mix of open market sale, speeding up the open market sale, selling to partners and perhaps selling a bit of land. But that's -- we've taken a onetime discount and allow us to do that and then pull those levers as we see over the next 18 months in order to exit that position. And PRS, we have done a number of PRS deals through the summer. We're seeing discounts between 10% and 15% on PRS. There's a number of companies out there that are wanting more than that, clearly, and are pushing in the market conditions to do deals at lower than that. And that's part of the shift to make sure we're only doing those deals that bring us the relevant quality. So a reason why we're focusing on making sure we negotiate the correct positions on our PRS and affordable deals.

And the last one is really just high level, I suppose, clearly, the group has been through a lot in the last couple of years, and a lot of it has played out in public. Just wondering how you would assess the state of your kind of stakeholder relationships, be it the partners as customers, but particularly also the supply chain.

I mean it's probably my biggest observation since I took the role is that the external noise is very different to the internal discussions. I've been out and visited 8 regions in the last 8 weeks who I didn't work with before to meet people and see people on the ground and the supply chain are extremely happy working for Vistry. We work with thousands of different supply subcontractors, and they all very much value the relationship. The partner relationships are there to be seen by some of the framework conversations and the Homes England work that you've already -- has already been evidenced. And so I think the sort of relationships and standing in the business is not in line with what you're seeing externally in the press, not only from my experience, but from experiences across the ELT and from our senior leadership team.