Pete Redfern - CEO Ryan Mangold - Director, Finance

Olivia Peters - RBC

Good morning, thank you for joining us. Ryan and I presenting, this morning I will cover the performance and just where we are with landing, including some land capacity points first of all, and then Ryan will pick up the financial delivery, both costs and quality.

And then I'll come back to sum up where we see the market, what trading has been like over the course of the last few weeks, and the outlook for the balance of the year into next year. Starting with the main financial measures that we've set out over the last few years and you will remember, 15 months ago we released set of three year, set of three targets on operating margin, return on net operating assets and asset value and then added the cash conversion.

So I noted here on all of those, we're clearly very pleased with this performance over the last, sort of six or seven years we've had the operating margin target has been the key driver of asset quality and returns on the business, they are seeing another 300 basis point increase, it's a huge step forward, we'll come back to where we see the balance of this year and the future later on, the 19.2% particularly for our first half performance is another record operating margin performance for the business. But particularly seeing the return on net operating assets, which is probably where we see the biggest upside over the next two to three years, I'm staffing up by around 500 basis points to 23% is a huge step forward for us.

And on the cash conversion, 45% for the rolling 12 months, up from 27%, it will be a very significant in the second half which we again will come back to. And of course, probably the main new news of today and that we've announced our 2016 cash return to be paid in early July next year of $300 million, up from $250 million this year.

So operating statistics and just picking out some of the key highlights, I think probably main large surprise and actually it's been a surprise to also over the last six month of the scale of the sales rates, that's about 10% up on last year and it remains strong into July. Again, we'll talk a little bit about that - what's driving it, where we see going in the balance of the year but bringing also another 5,700 plus through the strategic land bank and we're seeing pretty strong performance in the second half coming as well on that, and particularly into 2016.

So a continued outperformance on the strategic land conversion which has made us significantly less dependent on the short term market, and as we'll talk about quite a lot gives us some good choices about where we want to invest and what we're trying to achieve. Now stepping back and looking at the market for the first half, and this graph does come upstage, you've seen this chart before and the red line is sales rise and you can see the extent to which the first half of this year has been from the beginning, not just after the election.

I'm slightly ahead of last year, particularly last year second half. And then the blue title is our overall measure of customer interest which includes website enquiries, brochures and sort of things, it gives you a sensible snapshot of how we see customer demand and confidence.

I'm just sort of highlight couple of bit from this, particularly the blue one where you get significant spikes, they tend to be because we are driving very conscious website traffic. Now we aren't increase the overall level in the period but it will give you that sort of spiky performances.

So when you see in July that summer email blast that drives significant levels of that traffic and we become far more sophisticated and effective of getting that sort of process right. But even if you stripped out those sort of elements, you would still see - as you can see pretty clearly from the chart, a significant step up in customer interest throughout the first half of the year.

And particularly since the general election, if you look at all of the sales stats I think it was interesting as we've seen - almost no meaningful summer slowdown at all, which again we'll come back to. So pretty solid market and which we've been operating, and so running ahead of where we would have expected.

Before those and just sort of numerical numbers, again, you see the 0.78 sales rise, though our outlook numbers are slightly below in absolute terms where we would have expected to be, you can see our outlook openings are at a high for the last seven years about 20 high than any of the last six or seven years. So it's not really about outlook openings, it is about that higher sales rates and faster closings, then you can see in the very strong order book roughly $2 billion today, that's reflected in where we are - so it isn't a concern for us.

We still think Atlas will probably be up even with that trend towards the balance of the year but we're fairly relaxed about whether we have higher outlook numbers or a stronger order book, the balance between the two of them is just timing. So in many way the strength of the market doesn't actually drives stronger order book but slightly lower outlook numbers.

This will be the last time that I talk about the south division and our north division structure this way, and in few slides time I will talk about management changes and also just how we treat the structure at a regional level. And we've only done that in the last sort of week or two so the data we're presenting is on historical level looking at it, we'll give you a bit of a sense of what it would look like on a new division operating areas that we have.

When you see in the south, a small step up in sales rise because you're seeing the second, the bigger drive has come from The Netherlands in the north. You see a strong step up in average selling price.

But probably the most positive statistic sitting average, the average selling price on land - the cost of land of sensitive average selling price in the loan bank, for that still to be falling at this point in the cycle with the strength of market we're seeing, it is a function of the high levels of strategic land and a function of the quality of the land buying and the quality of locations. In previous cycles, roughly at this point you would have expected that number to be well into the 20s and peaking around the 30%, even higher in the south, maybe in the 35%, so it's fundamentally a very different balance, I mean where value is being driven by the business.

If you then look at the north, as I said, so much bigger year-on-year step up in sales rise, sort of - wasn't quite a strong last year in the north as it was in the south, so it's obviously at slightly different comparative but we've also have seen very strong performance from a lot of the Midlands in northern regions. Again similar dynamic on land as a percentage of average selling price falling slightly at a time when you expected it to be rising, still having strategic land but at least clear of waiting of our strategic land is towards the southern half of that geography.

Just standing back and looking at the short term land bank, we've grown it by just over another 2000 plots that you can see and probably the most significant sort of signal you pick as the waiting towards strategic land conversion being over 60% of the new additions into the short term land bank. We continue to be active in pretty much all of that geographies in short term land but not feeling like there is a need to push that hard.

We're very comfortable with where the land bank sits, it's within the target range that we set out. As I've said in the last couple of presentations, we'll probably end up slightly higher than the sort of 72,000 to 74,000 plots that we originally thought, largely because their strategic sites are larger, they don't have a high carrying cost.

And obviously that falling cost of land means that cash flow wise it is less expensive for us to hold, this is slightly larger land bank but our focus remains on adding great quality locations and great quality deals. The land market is still very stable and attractive.

Nothing has changed over the last six months, I think we all continue to be presently surprised that the market - the land hasn’t stepped up, but that doesn't mean it is uncompetitive and you shouldn't take that as a signal as there is some hope and dynamic, but we're worried if something is going to get more difficult in the next 12 months. There are few things important for contact, every piece of land that we buy, there is - or almost every, there is some degree of competition.

So just having mind, yes, it is an attractive market from which we buy land relative to what we've seen over the past 15 years but that doesn't mean that we don't have to compete. I'm having that ultimate land bank means our competition can be more so let fit the most.

And our particular focus at the moment is on making sure we get the allocation of capital that we are spending right although we see our land investment is very neutral, that still means we are investing about 700 million pounds a year in new sites and how we allocate that is particularly cain [ph], we'll talk about that a little bit when we look at the geographic versus the business in a moment. But our priorities of maintaining that high margin position - growing the returns on capital - and Ryan will show you the balance margin on returns on sites we've acquired this year growing that return on capital and the capital efficiency of business is where we see, as I say, the biggest upside.

But it is also managing risk, we think high quality location help us do that, deal structures getting deal structures right, particularly on the big land deals is important. It's not generally about growing sort of land credit significantly because though they improve your cash flow, they don't necessarily improve your risk profile but it is very much focused on getting the location quality right.

And we're particularly focused on the moment at that insights with slightly different deal structures, we're actually - we're not taking for land risk, particularly when we look at London in the Southeast, looking at sites where there is significant potential upside but we're not always going to be the full outright land owner, slightly downside in inflating market, sorry, slightly at upside in an inflating market but a lot less risk. And so as we look at sort of where growth comes from in future it will be weighted that way, particularly in higher value markets.

We have set up a new business unit as part of our overall structure, that looks at specifically deals with different structures, they are generally large, and a lot of them are government sourced, not necessarily through the HCA, this one we've talked about in the statement today, in Bolden & Hampshire, we have a half share of 2400 units but we're actually acting as the development manager and are at the auctions one land at a time. It's crazy short term land, strategic land but it lets us be very capital efficient and balance the risk.

You may remember this chart from about 15 months ago, and we showed you how we're assessing the quality of the land that we were buying and the quality of the sites that we had. And at the time we've been doing it for about two years and we haven't got revenue tightly comfortable dated because it is clearly subjective.

So every site before we buy it, we put into one of these 16 blocks in the metrics and on its macro location, so the quality of the town, city of village in the context of region, so if you're in the northwest you would put Chester quite high, over the edge quite higher, you put other cities which are outnamed. Some of the slightly lower down your list, you always got to be careful because they forget very [indiscernible] because there is always somebody in the room who lives in state.

One of our Board of Members are in the state. And then we assess the micro location, the quality of the particular site and the context of that particular village, town or city, and that gives us a really good comparative measure of one side next to another.

We're not trying to be an AA business, you've tend to find they are the most competitive sites, you tend to find that if you chase them to hard, that's where you can overpay but we are trying to be heavily weighted into those for green blocks and reasonably weighted into those for those five yellow blocks. And only to buy site in the weaker locations when we have very different deal structure, whether it is very significant outside because of the land deal and the cost, and that tends to be exceptional.

The main thing is we force our original teams to really challenge themselves on the nature of the side that they lie, and you actually put some sense and discipline into it because it is very easy without a process like this to convince yourself that a particular site is B when actually it really isn't. It's a subjective price but having been doing it for four years, we think we've driven that a lot of the subjectivity, so the first time we think that is a high end of quality to show you.

So the next slide gives you a sense of where we map those sites today after four years of going through. And you will see we are very heavily weighted towards the green and the yellow, you can see there is a book in the background, it is significant but it is not the biggest part of what we do.

Most of the sites in red are either historic or fit to - just that we talked about and only make up about 3% of our total land bank. It's very hard for you to look at this and judge whether it's fair but it's the data that we use internally to assess site quality and the main message is, this we see is being a big driver of the businesses, it's a big part of the strategy, it's a big part of the capital allocation because whether the market be very strong or very weak, these are the sites that tend to be most resilient, this is that places where people choose to live, perform best in almost all market conditions.

So we're very pleased with where we are at the moment. We have wondered whether we could go back and recreate this data for the 12-13 years ago but I'm not sure we'll be brave enough to show this if it could actually matter because I think to be a very high proportion of the reds and yellows.

The most important thing is that we really challenge people to think about the sign where it is and whether that pricing is realistic. Then moving onto the management team, you will - I think all know that Peter Scott has left us to Galathroy [ph] and we wish him luck, he has been with us for a long time, he has been in his current job for 11 years and he has made a huge contribution.

It's also there an opportunity for us, we've had very good strengthened depth at our operational management team and in many ways we have held on to a slightly deeper senior team knowing that sort of a change like this would come somewhere around now. And so for many of you, you will know the individuals that we presented and such of those roles.

So we've replaced Peter with two divisional Chairman, we've divided that business and I will show you whether the geography of that maps in a second. Nigel Hollander I think is in the ring, Nigel's at the back.

Many of you know Nigel, he's been running a division in the southwest for some time before stepping up to this bigger role, originally he was in sales but we don't hold that too much against it, but has great depth of knowledge of our business to people, the land market and this geography. Chris has been with us for about nine years, he is on holiday today so he isn't here but we will getting both Nigel and Chris to present to you over the course of the next 12 months.

Chris has been running our business in Southwest for the last four or five years. Chris is a finance guy by training, I won't hold that against him but Nigel probably will.

But both of them are people we know well who know the market and know our business, and it gives us a chance to look in detail of those regions and work on how to approach each of them and they are slightly different in terms of their priorities. I'm really focused on them.

I said we searched of new business looking out slightly different ways of buying land, that's led by Lee Bishop. Lee has been with us for about 25 years, and I'd be very surprised if the room have sort of been trying to following us for a while, you haven't meet Lee in that process.

Lee is a land buyer by nature, and what we have asked Lee to do is really look at way we buy those bigger south, sticking the southeast and work on how to get more value, particularly higher capital returns out of them. To state the opportunity to find to new joiners out, and Bill Sanderos who is also in the room, sitting next to Nigel, who joins us a year ago as a HR Director.

Jannie Daily has been with us about a year, she was with Red Drive and Steve Morgan before that, she ran states for about five years and sort of member of Steve's Team for about 11 - she is a very strong planning professional which is also a very commercial land person to move drive. That's really squeezing the value out of those big strategic land size sitting on that, and management team replacing Peter Andrew.

So reasonably significant change but actually older from people internally. The vast majority of veteran have been with us for a long time and two new recruits have been with us a year and are already starting to add some real value.

This last slide which you got in pack gives you a bit of that background I've covered most of it as I gone through that, this is an overall chart. And then as I said, now I've just finished with this, the new operating areas.

And rather than divide the south into east and west, we've divided it into areas where we see similar constraints and issues. So we're looking at very much at our London and southeast division which in capital terms is broadly similarly to our other businesses but in terms of number of business units is less.

While these businesses tend to share more complex product and sort of slightly different customer mix, different market dynamics and particularly has become more scientific at a capital allocation between divisions and this is really focus of that divisional Chairman level on how much capital we want to put into that patch relative to the central and southwest division or the north. The central and southwest division which Nigel will run is again broadly similar in terms of overall capital scale, more business units, slightly simpler in many ways than that southeast business, slightly lower planning risk, slightly more sort of tendency to be out of buy land on conditional contracts for our non-conditional.

So a slightly different set of issues that has scaled, and is more effective by London price movements and sort of the price impacts in the southeast and say the north. So a reason for choosing those divisions is partly about that good solid sizes that enable us to manage capital effectively but also about having quite similar characteristics and we will generally be reporting on those businesses to you, giving you a sense of that performance that scale and way we see the investment and probably more debt than we turned into historically.

I'm just saying that stretch is a better way for us to run it but it is also a better way for you to understand the regional dynamics of our business.

Thanks, Pete and good morning, ladies and gentlemen. I'm going to be covering the continued good progress we've made against our medium term targets that we set out back in May 2014.

And hopefully you're going to get a good sense of the value creation that we've delivered in the six months as well as the sustainability of the returns which points to the quality of the business. In the half year, revenue was up 12.2% to £1.34 billion and most of that is driven by pricing growth, yet a small amount of volume growth in the UK of about 2.6% but most of that revenue growth is by from pricing.

And then I'll come to talk about that later in the presentation. Gross profit of £350 million is up 27% driving a gross margin of 2.9 percentage points up to 24.7%.

Further overhead efficiency from the scale of the operations from a revenue perspective, so overheads as a percentage of revenue in the half of 6% compares to 6.5% in 2014, and clearly with a greater volume waiting to the second half is going to be further recovery from overheads to drive margin improvement into the second half. Overall margin growth 3.1% to 19.2% and we delivered £256 million worth of profit in the period.

The operating result included Spain which was marginal profit positive at £1.9 million versus a £1.9 million loss in the previous year and the strength in the quality of the order book in Spain, as well as the new locations that they’ve acquired, that they are trading from positions in well to continue to deliver positively against us. And interest in the period benefits from the amended extent that we signed in February of this year to reduce bank borrowing costs, that does include some one sort of charges, non-cash charges into the P&L in the first half and with settlement of a legacy issue that we've been dealing with, as well as slightly higher loan creditor unwinds and offsetting.

Debts driven profit before tax, an exceptional of £238 million which is up 33% in the prior year. The effective tax rate in the period is 20% and it largely reflects the statutory rate and we clearly will be a business that's going to benefit from the announced corporate tax reduction down to 18% by 2020.

This is meant that EPS on an adjusted basis of 5.9 pennies per share is strongly up in the period, 37.2%. Tangible net asset value per share was 82.1 pence and this is before the accrual of the dividend that we paid in July to exclude the £250 million is up year-over-year by 11.5%.

We completed a net realizable value review as part of the half year and that results in a small charge to the P&L of £0.8 million on specific legacy sides which remain challenging. And that's not expected to make a material impact to the trailing results on a go-forward basis.

From the UK perspective, we've got year-on-year marginal growth in volumes by the 2.6% but we are positioned very strongly for the second half delivery with the order book and a like for like basis that have 8000 plus versus 7500 at this time at the end of June last year. The value focus is pricing growth has meant that average selling prices are up and private average selling prices are up by 10.7% to £248,000 and this is benefited somewhat from the markets dynamic and year-over-year but also most importantly by the mixed impact from the quality of the locations as you saw from Pete's earlier chart on the land bank.

And this has driven a 31% increase in operating profit in the UK business and a margin of 19.3%, 2.9 percentage points up on the half. This is a reconciliation which is an indicative reconciliation of our margin progress year-on-year so this is the percentage operating margin delivered by our UK business that doesn't include Spain, where we look to judge ourselves as how we performed against the marketplace, and for the marketplace we're just using the average of the industries of nationwide and helifacts and trying to draw those down to the submarkets that we operate it.

So it's a relatively scientific way of doing things but not a precise way of doing things. It's the best indication that we have got.

And we also try and compare ourselves how we are performing against the inflation in the marketplace and the only indicator we've currently got is from business but that unfortunately goes to the second quarter of 2014 which is being maintained at 6%, I think they are duty published fairly swing but this gives us a broad sense of where we think retro marketplace is any event. So from a market perspective, we think that we've captured about 5.5% growth in price and we've lost about 3.2% in terms of the impact of bulk cost from a market perspective.

And net result of net economic benefit captured effectively of 2.3%, if you're just purely looking at market fundamentals. The market inflation on selling price and impact slightly below the market is due to the kind of timing of when the order book progresses through to the P&L.

But one thing we've added this year which is slightly new is the market impact of land bank evolution, so following three years of passing growth in the marketplace, you can just imagine the site that was acquired to in 2012-2013 that is a benefit from the number of years of incremental market growth from a pricing perspective, as well as sites come off and are replaced by newly acquired sites because the average trade on for approximately three years and it's on average in our land bank for approximately six years. As we trade through those longer dated sites of benefit from compound market pricing growth, those are replaced with sites that are acquired more recently, that don't have the same benefit and so this is slight negative that comes as a consequence of that land bank evolution of 0.5%.

I'm sure that this is going to be something that's going to create a great deal of debate, we look forward to having that with the analysts, it might be slightly more sophisticated than ourselves but that's also the broad taste in terms of evolution of the land bank. Then on the provision release is a low and lower consequence year-on-year.

You might recall we had a relatively material right back to the P&L last year which takes a little bit of the glass surface, that's slightly higher land if cost comes through of 0.3%. So the overall market impact we think we've captured in the half is 1.5%.

We think that we've got some efficiencies in our build cost relative to the market from a construction perspective, and deliver perspective of 0.4% improvement to margin, as well as improvement in the land mix coming through the P&L from the slightly lower quantum of previous legacy sites we traded through in the P&L, as well as the fact that this is better quality location off sites coming through and strategic land as well as which makes land improvements of 1.6%. Small amount of benefit on affordable housing pricing, which comes through the P&L in the period, clearly the government part of summer budget has announced some slight changes in terms of pricing for affordable housing on a rental perspective.

We don't think if that's going to make a material difference to the Taylor Wimpey result but clearly it will have an impact, and when it comes to affordable housing on a go forward basis. Module increase in overhead year-on-year on the half £3.7 million or 4.9% but this is despite a 11.5% increase in revenue and in the period so that reflect better recoverability and there is clearly still more to get down as we get to optimal scale.

On a UK plus analysis perspective, we've got a trend of reducing land cost to average selling price, this is a combination of better quality locations, driving down prices as well as the impact of improving contribution from our strategic part which is the lower average broadcast. Build costs is little bit impacted by mix in terms of quality of locations, most of it going to be London coming through in a bit more anger, but also and to just underline market inflation, and clearly with a great proportion of strategic land sights coming through the P&L, there is generally good slightly high infrastructure cost if it was slightly higher build costs as a consequence which we do need to bear in mind as well.

Selling expenses broadly static and as I speak to, has been becoming more sophisticated as how we access the market and through the interest and for direct marketing but those are slightly higher in the half than they were in the previous first year half and that's primarily a result of a greater number of outlets opening in the first half of 2015. Gross margin per unit up to 24.9%, and that's up 2.9 percentage points on 2014.

The level of apartments trading in little table below the chart and 11% is quite a little bit lower than what we expect relative to the number of apartments in our land bank. So we expect that to increase ever since likely in the second half but it's never going to be a huge contributor to the P&L based on our current loan bank.

And the level of investor sales currently also remains very low at 7% and we expect that also to continue so not too much of an influence or dependency on that following the budget announcement changes on the market. Our total build cost per square foot has increased to £116, and we think that there is an underlying increase of roughly about 5% in half and half, and there is a bit of a marginal impact from mix and continuing to impact the build costs, as well as the improvement in specification where we think we probably took a little bit too much out of our houses through the downturn and that will contribute a little bit to the build cost as we improve the specification to meet customers' demands.

For us centrally procured commodity items, so these are the items that we buy through our central procurement function run out new markets on a forward looking basis, those have increased by approximately 2.4 percentage points, and so most of the additional build cost pressure is really coming through the subcontractor and labor market. While it's still positive trend in terms of inflation, it is significantly low as more capacity comes back to the marketplace as they react to more stable sector that we are operating in.

We still believe that both cost inflation for this year will remain roughly about 5% year-on-year better on declining balance which is positive. Our growth in net assets, very good progress in this regard, at 15.6% if you take out the different distribution which is how we are judging ourselves and almost all of this is driven by operating profits and profitability in the period.

There is a small impact from pensions with actual assumptions have gone against us over the 12 month period, slightly higher inflation assumption with the discount rate not quite reacting at the same pace but offset also by some cash contributions we've made in the period. In total growth, as I said 15.6% is slightly higher than our medium term targets that we set out and search very positive to be in such strong position.

So really - and that's almost three year target. We have announced and contemplated, and we have announced the £300 million capital return for next year July, and if you add to that our maintenance dividend policy which is 1% to 2% of net assets and we're currently paying at 2% of net assets, which means we are going to be returning approximately £355 million to shareholders during the course of 2016, and that's approximately 14.7% of our current net assets which is going to be all funded out of profitability with a small amount reinvested back into the business.

Our short term land bank has beat us slightly from a slightly higher than optimal scale but obviously the timing of completions into the second half is going to be slightly most long awaited but at £77,000 plus gives us absolutely line of thought strategy for the business and we've got £2.4 billion invested in our short term land bank and that covers £18 billion worth of revenue with most of the growth in the land banks we've funded through equity. A small amount has been funded through land credit, it's approximately £40 million, and the continued quality of locations is improving the mix in the land bank and our average selling prices increase to £237,000 per unit and at a plug cost ratio of 16.4% which puts us in a good position to continue to deliver positively into the future.

Our strategic pipeline remains at roughly about £107,000 plus and this covers now £22 billion worth of revenue, so we either got under our ownership or our controlled over £40 billion worth of revenue at very attractive margins if it's in their own land bank but also very attractive margins as the strategic land bank comes through to the P&L. And then in the UK, land creditors are up to £500 million, it's approximately 19% of the land bank fairly, and land creditors will be continued to be used on a deal-by-deal basis what makes most commercial sense for us to do so.

In terms of quality of the land bank, the evolution and the heritage of the land, be it all land will be strategically sourced, continues to drive margin growth in the period from delivery perspective, that was continues to drive our confidence and delivery into the future from inherent margins contained in the land bank and is more than 75% of our land bank at the end of June has been sourced post downturn which the majority of being come through our strategic pipeline which is a great underpin to our confidence in delivery of our future operating results and our medium term targets. We have a small number of legacy sites in the UK and that are impaired with a total NRV provision carried on the balance sheets at £139 million with a carrying value of that inventory of £253 million but a significant proportion of that is on sides that are not currently open and are under Board.

In terms of our disciplined approach to capturing value from an investment perspective, we are very critical to judge ourselves how we're performing against the investment thesis that supports the investment in land in the first instance. And as you can tell here with the gold and circle, the operating margins are a fraction soft year-on-year by about 0.5 percentage point, a significant increase in the return on capital employed expectations from the investments that are being occurred in the first half of 2015.

And this kind of reflects the dynamic of every single site that we acquired, which is a balance between returns as well as operating margins. In the first half of 2015, we completed about 62% of homes on sites that we acquired post downturn and with that performed the investment thesis on those particular sites is about 3.8 percentage points in the period which is a great underpin for us in terms of having certainty of delivery of the margin from our land bank.

Turning profits into cash, this is looking back over 12 months, so it's a trailing 12 months to June 2015. We have invested £231 million in work in progress, partly some of that is funded by trade payables, by about £105 million, and we expect capital growth in our pits [ph] to continue as the pace of inflation, as well as the scale of the business continues to increase with a small amount of net investment continuing into the London business.

Make land investment including payments of land creditors and the impact of land that has to be extensively sold, and we have a net investment £176 million into the balance sheet and we expect to a net investor going forward in land is the dynamic we're maintaining the balance sheet scale ever it's slightly higher cost. We have sold £7.4 million worth of our shared equity in the 12 months and all of that above original land value, we've paid £25 million into the pension scheme resulting in a cash generation of operations of £244 million which beats it before 45% conversion rate and between well placed for the second half.

We've been deployed £100 million into dividends and we've paid £30 million in interest. We've paid no tax in the period and although if we started to pay tax now as the deferred tax asset is going to be fully exploited during the quarter of 2015, and will be more substantial cash tax pay in 2016 as always a direct flow from profit before tax and the P&L through to the cash flow statement.

And that results in a net increase in cash of £124 million in the period. We ended the half year net cash of £88 million and adjusted gearing including land creditors of only 17.3% which underpins our flexibility and our business options on a go-forward basis.

That is very good, that's a Standard & Poor's have recognized the quality of our trading performance, as well as our funding strategy and balance sheet strategy and have returned us to investment grades after the full year results which is very pleasing. So overall in summary, we've made good progress on our medium term targets that we set out last year.

We've exceeded the round of targets over general net operating assets by 3.2 percentage points and we continue to expect to continue to make good progress and operating margin of 19.2% is slightly below the 20% average that we set ourselves out for 2015, 2016 and 2017 about the quality of the land bank that is in very, very good state from a trailing perspective to meet that. We expect to make good progress on our cash conversion in the second half of 2015 and on a comparative basis the second half of 2014 we converted about 76% of our operating profit into cash and so we're well positioned to meet those targets.

And we entered a phase of most sustainable to shareholders, the £300 million announced just as well as the maintenance dividend policy of roughly £55 million for next year committed, and - which is still set to shareholder approval. Now I'll hand it back to Pete for the markets outlook.

Thanks, Ryan. Now just to bring you an update on the market during the course of July, I'm conscious that this year we didn't do a trading off late around the close as well, so I may spend a little bit longer.

But the sales rights in July to be at 0.79 is fairly unprecedented, it's for we are sort of a sign of a very strong market with a high degree of confidence again, the quality of those locations. Through that same environment, back end of the first half and in that month we've seen slightly more meaningfully price inflation than we saw in the first three or four months of the year.

So we're not talking about a 10% sort of annualized levels but more like 5% annualized, 3% annualized that we are seeing in the first quarter. So definitely a more positive environment.

We, as we've said in this statement, will be surprised to see that continue through the air, in fact it will give us a practical problem in terms of customer service and delivery of product if it were to continue at that sort of levels right level, so our focus will definitely be on price as we go through the balance of the year. Our order book at the moment is touching £2 billion which again is pretty unprecedented, particularly at this time of year, so in a very strong place.

And you can see although this sort of volume increase in the first half in terms of completions is relatively low, you can see the strength of the order book, a high levels of work in progress. We expected pretty consistent even full of completion through the second half, so we're not dependent on a very strong December for instance to deliver this sort of level of overall completions we expect for the year.

Until our guidance to completion for the year as a whole is an increase of about 7%, it hasn’t changed from the beginning of the year but again finishing with a stronger order book, and hopefully finishing with a stronger order book with surprise growth and therefore a stronger growth in margins than we might have originally thought going into 2016. If you look at selling price, also for this year, our guidance is similar but perhaps to this, a little bit more upside, 7% to 8% profit growth, since year-on-year completion but as a site slightly more upside on that along the completion numbers.

So we saw at the middle of the area a very good place in a stronger market than we anticipated, but without the ramp in price growth we saw in the 12 months to this time last year, it will concern as if we saw that and in that case it's - sort of a context on interest rates as well, which I will come back to. Standing back and looking at that marketplace overall, and not just the sales environment, we're clearly in an environment where government has an implanting policies are positive.

If we saw today for the first time, £200,000 annual and this sort of new planning approvals, and it is sort of early for us to have fully absorbed the impact of the more recent government changes to planning but they are definitely incremental positive adding up to significant positives to planning environment that we operated. There are not meaningful negatives within those changes, there are something's that we think will have more meaningful impact than others and there are some changes particularly resulting to local authorities which we think has been messed and should have been keep out, it's one of our biggest challenges in guessing new sites open but generally, it's a very positive environment and the dialogue with government is positive since there were risks coming into the election around government views of - around the industry, I think since for both major political parties coming into the election, however, there was a sense of yes, we want more but kind of can only push the existing industry so far so we got to look at how we create an environment for new competition.

So we sit in a very positive place in terms of those kind of dialogues and the environment that has been created. It is from a government point of view, a real opportunity to create more stability if we don't push it too hard in a short time that create a much more positive planning environment than you can afford to invest far more carefully.

As I say land availability remains good, those planning policies are helpful in that land market, we're not expecting that to change in the near future, we're not seeing significant new competition or sort of big hotspots of competition, I'd say in London particularly, the land market is little bit more balanced than it has been, those who are obviously concerns about future strength of London market, we cover that. The non-strength as you can see from the July stats is very good, mortgage availability has continued to improve, mortgage cost is good, we don't worry significantly about the sort of interest rate rises that have flagged.

There are two main reasons for that, one the strength of the demand is so solid that actually it can absorb some cost strives and probably needs to, otherwise there is a risk we'll see more significant inflation over the next 12 months than we would like to see and that I think will pose a risk for us, and therefore we can't argue with a signal of some interest rate rises with every back end of this year or halfway through next year, the signal is almost important as it arise itself. I think the other reason we are more relaxed about interest rate rises is, that time business is far less dependent on selling price inflation than it has been historically, we start from a higher margin based on our land acquisitions, we're delivering that higher margin base through to completions, far less of our profitability is coming through market inflation than it was in the course of the last cycle.

And so of course, sort of a significant rise in interest rates and a significant downturn in the market affects us but our resilience to it is better than it's ever been. And then moving onto costs, as Ryan says, our absolute guidance for this year still remains about 5%.

I've said at the beginning of the year we'd say that was 5% with a bit of risk because we were still seeing pressure in some markets. I would say that risk is reduced and sort of during the course of the last six or seven months, particularly in London and the southeast where we've seen more meaningfully shift in the second quarter in terms of reduction in the upward pressure, there is still is upward pressure but it's not as significant as it was sort of seven months ago, and 12 months ago, labor and materials remains a challenge to a point that the supply chain and the industry's investment in paper is making a difference and so those pressures are easier than they were historically.

I think the key for us is recognizing that there is an opportunity and that as well is a risk, our development skills particularly around bringing forward those big size remain in short supply and that gives us an opportunity to use those scales without always using our balance sheet. Moving onto cash, Ryan has covered it so I won't spend too much time, but we expect to exceed the 65% in the second half quite significantly.

For the year as a whole, we think we'll probably be around the 60% level, we never thought we'll get to 65% during the course of 2015, we're still highly confident of getting to it and probably exceeding over the three year period. The high margins, improving return on capital employed will lead to growing cash generation over the next two to three years.

You know the cash return numbers are - Ryan sort of pointed them out, assets, we have make sure is likely to be £350 million in total order of magnitude with a maintenance dividend brought with the same level as this year. So overall going back to those financial targets, we are getting very close to the operating margin target, I said that with the full year results that we didn't quite expect to get to 20% this year, we might, we might not.

I think today with no more positive market environment, we're confident particularly and the selling prices, we're slightly more confidence in the cost, I think we would now be disappointed if we didn't get to 20%, I don't think you should go too much above 20% because we are 90% sold for this year, so there is not a lot of upside to that for this year, the upside goes into next year. The return on net operating assets, we do see the biggest upside to the target that we set, we knew it was the easiest of the targets where we set them 15 months ago, and that's why we've sort of broken through it already.

We will be disappointed overtime if that didn't have a three in front of it at some point. They are not ready to give you a guidance on quite that one as yet.

And a good progress on asset growth and on the cash conversion, a very good pull off and I think the election result has helped stabilize the market and we've seen a step up from there, most of the value impact of that probably goes into next year but we sent a very strong position in the end. Questions?

Well, just want to kick off and then we're going to work down that side and then down this side.

Thanks. I have three, if I could please.

Firstly, the slide, I think where you talked about the new land buying, the margin of new addition

I'm going to get my pen so that I can write through.

The margin of the new land buying, I think it looks like a step back about 50 basis points or so first half on full year last year. Is that a tactical move because of the increased Rocky, Europe is to be on-site, is it less strategic or anything around competition just to bear in mind on that one.

Secondly, just on the zones, you mentioned for the land mix, I think you said you've been doing that analysis about four years, can you give us any broad indication to what extent the completions are either up to speed with the land mix and the zones will still have something to catch up with? And the last one just around the value of strategic land on the balance sheet, I think in the slide Ryan showed 1-3-4 from 2-4-3 last year, I apologies I missed it but it's quite a big step down just to understand that number.

Thanks.

You want to take the last one Ryan and I'll do the first two.

Yes, on the value of strategic lands is mostly promotions will out of our owned strategic land bank if you - in the back of the presentations for the granular detail on that in terms of where the changes principally happen, and that's really just taking advantage of more blunt land market we would have taken the capital risk before during the course of 2013 into 2014 which has driven that change. And on the land margin, you shouldn't take that as a signal that we're sort of reduced our hurdles or sort of tactical kind of view of margins being slightly lower, it's just mix.

So it's sort of you have one side or drive that difference and it's just as likely that the second six months will be sort of 0.5% higher than the first offering, 9% higher than that. And we're consciously focusing on higher return on capital and making sure we move out - use our money carefully is more of a strategic shift, and we would expect to see that running at higher level than it has historically on new deals and that's starting to fade through the balance sheet but there will be operating margins.

If it's around that kind of 19.5% to 20.5% level with filled out about right, so it's unlikely to significantly change from that. And then on the zones, a lot of its confirmed and you've seen that in the selling price rises relative to market, since you can see with - we think the selling - the market impact for selling prices in the first half of the year is about 5% yield, that sort 4.3% is all sort as to do with that shifted locations.

But there is still more to come and that's we sort of say there will be more price inflation in the second half without any market inflation and there will be more price increases into next year without any price inflation. And when does it tapper off, certainly not next year, year after or year after that with sort of - its continually surprised us with the focus on quality and the less aggressive growth strategy, how much difference we can make to that dynamic so that they may run for longer than we've expected.

Thanks.

[Indiscernible] You mentioned obviously you were placed to cope with that increased delivery in the second half of the year from a sales point of view in the order book, but can you just give us an update on where you are on the delivery because it is going to be quite a ground popping completions on a year-over-year basis. The second one really is, what exposure do you have to sites which you haven't secured, HA provider in light to the changes there?

And the final ones really, if you could just give us an update on where you can overhead aspirations up a useful step down in this period, if you can just give us an update on that?

Again, do you want to take that final one.

I don't think overhead recoverability perspective and it weigh that you could look at that Chris as we're going to have a step up in completions in the second half to get to the sort of 7% volume growth year-on-year. And we'll continue that trend into 2016 as we sort of head more towards the optimal scale roughly by the 14,000 units from a delivery perspective and that's going to be done on a better quality occasions.

From a mixed perspective, we have just been talking about which is going to drive price but at a fairly similar overhead cost and someone expected recoverability to continue on a downward trend, and probably 50 basis points to margin or so thereabout.

And home bill delivery, I think if you would have asked me the question three months ago, there was a degree of tension and nervousness about that, today - and you can't see it in the work in progress and a lot of that angry to work in progress is in build in the ground, you know some of these houses have completed in July. That's why I say, we expect December actually to be quite a lot easier with June even with the sort of increase.

We have focused very hard, and not just the last six months but 12 months, it takes about six months for it to impact on getting that delivery right in a market which has changed in terms of getting the right people on site at the right time with the right materials. And so we see a key measure of that as being customer service and customer service goes.

About two years ago we were running about 90% in terms of our overall customer service goes, at the worst point in the back end of last year about a dip to about 85, we're not prepared to accept that, it's not how we want to run the business. We were getting it slightly wrong.

The last three months have been back up to 88, 89; and a loss of that is sort of factored into that view we build and where it come through. So we've both - a bit more time and how they deliver to make sure they absolutely get it right and also that they can really set out clearly for the customer in house is going to be delivered.

So speaking here today, very confident of that second half delivery but there has been a process to make sure that we - not just that we're building a pace because that's easy, but we're building a pace and we're building well which is a little bit more difficult. And then on HA providers, can't give you an absolute sort of quantum, there will be some deals that are successfully signed up and negotiated, I mean you can see that the order book in the scale of the provision so you can actually work out the math of what is secure and you can work out what the gap is compared to what you [ph].

It's not huge, the only sites that really worry us in terms of the pricing impact of those government changes, the ones between pricing the land and doing that deal. There is - there has been upside that is already by 10 and it will be some additional competition for units, margins on HA units are quite high if you look in the order book at the moment.

I don't think the downside impact will be at a level that you will be able to particularly see and measure from the outside. There will be individual deals where the price isn't quite as good but I don't think it's going to massively change the overall economics of how it will differ with housing sort of business work.

And of course, once it's worked through probably 9 to 12 months of pipeline deals, the impact is sort of negligible focuses build into land pricing. And also just further to that, there will be continued shift towards home ownership as opposed to through affordable housing which you should continue to make the private side of the business more buying in those decision [ph].

So I don't think you should just look at that as an observation. Thanks.

Olivia Peters from RBC. My first question is really around your three year targets and I mean it seems to be that you're almost achieving the margin one, you've achievement returns one, you're about the achieve the cash conversion one in the second half, what's your - what's stopping you upgrade that guidance going forward?

I don't think anything is stopping us upgrading the guidance, say for instance, the guidance on return on capital that I've given you today is different to that target, we certainly don't expect to get backwards from the 23.4% in this period and you know we see the potential but we're not quite sure what the timeline is going to be. And to be growing that to 30, and I don't think really setting new targets over 6 or 12 months is desperately helpful.

So where we see meaningful sort of potential above those targets, particularly that sort of return on capital, we will tell you and we will sort of flag it. Welcome a point whether six months away or 12 months away where I can virtually like to re-examine the targets as a whole but that was set for three years and we are only six months into that four year period, the environment has been more positive, such a track of that location quality change has given us more upside on pricing margins more quickly than we thought.

So we're ahead of them but we will tell you where we think they are easy to beat. I think the bit on - sort of the cash conversion, we always knew that over three years it will grow, it will probably get a bit closer than we thought this year, so probably into the very late 60s.

Margin, we should get to 20 this year, and there is upside on that in the following two years but it is not - we don't think the new number is 25/26, the growth is slow as you get to a point well and is coming through a steady state and as you get big selling inflation that we don't want to see.

And then just on land buying trends, you said that although the markets are quite helpful and positive, there is competition on the side. I'm wondering are you seeing new players come into the market, given the returns that you are making, has that dynamic changed substantially?

No, not really at all, and as you will know the areas where we tend to see the most new entrants tend to be London and the southeast and that's the area where those new entrants who aren’t totally in the market are less certain about being the guaranteed one like that than they were maybe two or three years ago. So, if anything, we're probably seeing slightly less rather than more but not a major change either way.

And as we've said many times, the smaller house builders that everybody would argue in principal should be growing more quickly, should get the support to enable them to go quickly which I wouldn't argue in principal don't really exist in any scale with results. While anything that's a challenge for us in terms of they are old or the processing outside through the planning system will result in 10X bigger challenge for us.

So it will be wrong to think that's easy to execute all of that.

Thank you. Thanks.

[indiscernible] Just couple of quick ones actually. First, on the dividend, 200 million you originally set out last year was up to 250 million, is a 300 million setting stone, the company sees it as a new base level?

And have you seen anything from the mortgage value as on time valuations, any pressures happened with underlying process?

The 250 million, sorry, the 300 million for next year is setting stone, yes, you can say it's a new base level. So we wouldn't have increased it to that level thinking that there was a material risk then we be reducing it the following year but we're not going to get into the cycle every year changing it, last year it was the first year we've done that and we were still going through the phasing of where it stops.

So you should feel as the right number but as a good baseline for future years. And no, we haven't seen a material shift in anything on valuation on the London market or anywhere else.

In fact, I wouldn't say, just we haven't seen the material shift, we haven't seen any shift. The London market was definitely cooler and it run up to the election, it's probably the bounce back most notably but really just recovering to where it was sort of the end of last year in terms of sort of traction.

It's not running with the heat of sales rates and price growth that it was 18 months ago but it's pretty healthy. There are of course some spots rather you weren't heavily invested in but then particularly material in terms of the overall coverage of the market.

Good morning, Emily Bill, JP Morgan. I've got two please.

The first one is the ASP and the private order book, it's up 10.6%, is there anything in there we should think about sort of mix in London, having a different effect year-on-year roll? Can we think about actually the ASP growth year-on-year getting sort of the difference between the growth and the growth in the order books of stock being sort of widening year-on-year and actually maybe getting a little bit closer.

And then it might be a bit sort of big ask at the moment but that 50 bips strategy you talked about because of the mix of old sites where you have a big uplift on price inflation coming through. If we think about that 50 bips for H2, is it likely to be materially different or should we think about single or manage it?

I think on the average selling price and the order book, it is a significant gap, maybe that was back end of the location quality and that sort of comment early, it's that forward look - what's happening in the mix. I don't think there is any material shift in the proportion of London trials in the order book compared to a year ago, in fact if anything just goes, the market that was slightly quitter in the back end of the year is probably just slightly lower but maybe offset by around the line growth but definitely not a fundamental difference from where we have been historically.

It's always impossible to tell you what the second half view of that 50 bips might be, and inevitably the point when lands that was bought sorts of during the price rises of 2013 and early 2014, that's 12 month period of roughly double digit price rises, and as we said consistently at the time, land margins were stable through that but that doesn't mean that land was inflating as it was sort of balanced. You will see that number sort of where it will increase, and that's one of the factors, doesn't means it will plateau, we don't know for sure whether we plateau in margin terms of 21.5% or 22.5% or 23% but that's what won't cause us to go down but it's one of the things that will cause that blathering [ph].

You know the math's, if you had a 3% inflation remark, then your margin is going to start 3% every year, you can soon relate to a drop off year of inflation before it was the land that you currently brought. It's just seeing that because we've been doing that reconciliation for 2 to 2.5 years, 3 years is about where you start to see the impact and it's always going up which you know it doesn't work in practice.

Thank you.

Thanks. It's to know that sort of less and the overall inflation is still driving that.

[Ends Abruptly]