Thank you. Good morning, everybody.

Thanks for joining us. I'll apologize in advance because I've got a bit of a cold.

So if I start coughing halfway through it and have to stop, you'll understand why. And I'll give you an overview of current trading and the statement.

First of all, I'll pick up some of the strategic areas that we've been focusing on, which I think are important and perhaps going to a little more detail than usual at this stage of the on some of those moving parts. So I think it's an interesting time, I think to see sort of differentiation in the sector and I think obviously see an uncertain and external environment so it's worth exploring a little bit more.

You will understand I'm sure is also difficult environments in which to give longer term forward guidance and is also a trading update. So happy to talk about where we see the moving parts, but with the general election only a few weeks away, it's a particularly unusual time.

I'll focus on the market first obviously main priority of trading update, but to touch on the cost environment, landline conditions and then move on to those strategic programs. Standing back and looking at the housing market in 2019 from a broad perspective, I think you're still very fair to say, an amazing degree of resilience given the market backdrop, usual factors, things I've ever paid like low interest rates and good lending how to buy, how to create an environment by price and volumes remain broadly stable.

But as you think it gets more interesting, when you look geographically and look to sort of a closer areas of time, I think you can say that statements and your perhaps sort of in probably slightly more negative search for one or two is London and the southeast remains softer, particularly high price points. I think sort of, I wouldn't want to be a London focus development moment.

I think it is particularly sort of fantastic. You haven't got choices across the UK as a whole.

I do think though, and it goes color that comments in the statement, that actually the noise and the pressure in London and the sad face in the market was at its worst a few weeks ago. If you think of the political rhetoric commentary and uncertainty in September in October early October it was at its greatest.

And actually, I think the environment has settled again a bit more recently and that that leads to a comment a comment in the statement, which are actually perhaps slightly organized then you seen elsewhere. I do think relatively in that very resource and price pressure in that part of the market not huge.

But sort of I guess a sort of more difficult local market dropped off you can see why it's put pressure on us to say a very London centric sort of developer. I think elsewhere, as the markets remain pretty steady small rises or falls depending very much on local conditions individual size that quality where they competition sets.

I will come back to this, but we do continue to challenge ourselves on whether we're operating at the optimum balance of rising and price. We think we are but as you see the incident statement is not a kind of one way street and we're certainly as we look at 2020 going to keep challenging that and sort of it will depend on the market environment as what we think the right the right balance will be.

On build cost you can see quite strongly, I think in the statement, we see the periods of increased pressure that we saw in quarter one and quarter two ease. That started to be true in the summer, but fairly small way.

But I think and again I'll put it back to the period of uncertainty in September and October that here in a positive way, I think we have seen since then particularly over the last few weeks and much more material shifts in both labor and materials as pressures east. It's not the time of year when we do lots of material related deals that there is a sign for 2020 price pressure on materials are quite a lot softer than they were.

I think personally it's too early to call an analytical forecast, but definitely environments a difference what we saw six months ago and also sort of more benign than we saw sort of 12 months ago. And for the first time we've also seen some softening on forward rates on labor and again it's early days is particular trade, but it's the kind of trade particularly ground workers first sign of changing conditions.

And I think if you look at what was happening in the RNN sector in September not what's happening in more general construction market, which is soften than house building as you can see volume of the generally see pressure. And we did not say that it has sort of potential of Brexit in October the same kind of stocking pressures that we saw earlier in the year.

So, it's a supply chain build out. And so as we look again, I think the risk of seeing that again is lower than we would said perhaps 6 months ago.

I mean, we're done about 4% to 5% cost inflation for this year, but reducing into next with other I think early put a number on it. On land, I think there is less new to say.

But, its worth addressing overall market more or less in line with the recent past. You do see some localized changes in bidding that I be able to wouldn't say that, that's more or less aggressive, I think you seeing more companies already testing and challenging whether they got their land bank strategies right at the local level.

So, you still have to see more basically in local business so think that work back or generally a high price that the make it all the way to the final land deals. So, you get a little bit of apparent pressure but actually when you get to the final deal price actually has been pretty stable.

And as you can see from a statement, sort of our land buying this year will be broadly neutral as it will replace more or less what we use. I think earlier in the year, we could have seen that growing to build sort of potential growth and outlook numbers for next year with the uncertainty in the second half of the year, politically without the right balance exact number and exact cash balance will depend on timing of land sort of deals around the year itself, but broadly neutral position.

On track trading against that general market backdrop, as you can see the sales prices remained very strong for the year, 19% ahead of last year, and if you strip out both I'll touch on a couple sort of specific shorter-term line but small but I think important sort of from a signal point of view, actually the underlying sales rates is about 18% ahead of last year. So, it really is all new sales to private customers to describing that difference, but sure simple and small potential of the practice but not that sort of solid balance slightly more volumes, slightly less margin comes a little bit from small amount of stock at a relatively high price point from Central London given the continued uncertainty in the London market is the bright place to be.

That leaves us with the Central London business that has three large size with a long time with very solid margins which is joint venture deals and all of which we get a pretty solid in the business. So, that is based on our market but not fair enough to do anything sort of particularly risky to stay in the London sort of that business in the Canadian turn.

And just to touch you on the sales metric and really nothing to say other things like booking cancellation rates remains solid. Overall, this stays us with a record order book.

I think uncertainty of general election, uncertainty of new Brexit the very good place to be of 10,400 units. The growth is not heavily weighted sales, so it's not artificially inflated by change in affordable housing, again in certain sales right and you see the way the volumes becoming trends of business that we are able to get behind sales rights and with our production rights as well.

On costs and by margins of course scenario you'd question whether we're getting the balance quite right and so lacking some of that competitor. I think you can see some of the comments to that margin pressure and cost inflation that we talked about earlier in the year coming through the other part of the sector and I think the standpoint will tell you what we see and too much people saying exactly the same thing at the same time, but we are also challenging ourselves.

I think there are areas in our controllable costs where we can push out some inefficiencies with a lot of things with the business over the course of the last 2 to 3 years, lots of new investments, I'll touch on a couple of days. And we don't want to all those investments back we think that the right thing for the short-term but also, more importantly for the long-term.

But that doesn't mean there's a lot going on in the business and it means there's other areas where I think we can make and targets and savings over the course of the next 6 months. Just touching briefly on some of those investments, I point particularly for 644 instances.

A year one and a president, not very much in year 2, but not very much in year 3, they are close to doing a full day's work. I think that that number is 650 underpins long-term and investment that takes us to more than half of our bricklayers and join us coming from apprentices being intellectual that's a very meaningful shift states way ahead of where we've been, it's way ahead of where anybody else in the sector as they.

Give you a sense of the level of cost investments in 2019 in that number that's already in the guidance for giving you it's about £10 million incrementally to 2018. So it's material.

And there's a few other areas where we're doing similar sorts of things. But the industry faces a long-term shortage in trays, and it faces a long-term challenge in the quality and flexibility of those rates.

And people talk about modern methods of construction and probably more interested in having a flexible workforce that actually can adapt to different methods. And on the exact details about the negative construction is.

I think there's a lot of things that are more appropriate for results presentation, and we'll come back to it then. But I was just lastly draw your attention to the distinction withdrawing on customer service between finishing quality, service and communication, which is a thing that we talked about a lot and others are also focused on, which drives things likely and HPC customer, sort of by accelerating for the underlying their quality, which frankly has no impact on that rating.

But it's just as important long-term for customer satisfaction for our reputation, for our further cost basin for delivering something to our customers that is right. And while we continue to focus on the first, actually in 2019, we've been really focused on is our underlying policy base.

We think, the CQR measure that we told you about before is the best way of measuring it. We now read the industry in that we started off in a good place, but we aggressively built on that.

That gives us the confidence that we can step up build rates to match those higher sales rates, we have compromising on that quality and storing up problems for the future. I think there will be a lot of pressure over the next few years on the industry on those sorts of issues.

I think it puts us in a strong place and to deal with it. I'm not ignoring the fact that we slightly swept under the 5-star rating, but it is only half of the story.

And I will continue to focus on that but we focus on quite a broad range of measures. So look forward, we remain in the strong position, strong balance sheet, slightly cautious on landbank, but a similar landbank at the end of the year last year and 60% plus of that coming from strategic landbank with 113,014 and that strategic pipeline going forward.

Record order book and the step of build capacity mean that we can manage that and still deliver strong customer service. Political and environmental backdrop is uncertain.

We see 2019 in line non-profit, as I touched on slightly different next with slightly lower margins and give you a clearer stare on that. We'd guided you to about 20.

I think, I would say at the moment, 19.6, 19.7 is about the right sort of level. But we've gotten more volume and unusual in a year particularly with such uncertain market speeds to be stepping up volume.

As we look at 2020 strategy today, I expect us to target a slightly lower sales rate. But just to be clear, that will still be an industry leading sell right whether had about 2018, so it's right it still expected to start with the nine.

But we don’t want to be in a position where we’re chasing something we were able to focus on making sure we squeeze out the optimum pricing and the optimum sort of cost base. So that everyone to get ourselves to flex to do that probably next year and not be chasing something but that isn’t quite right.

But as we look at next year, it’s a very environment I’d say there’ll be still some cost headwind going into, but a lot of trends we can do within the business on squeezing out a bit more value to offset that. Chris.

The other thing I’d could be everything that probably worth moving on questions.

Okay. Thank you.

Can we open up for questions please?

Thank you. Good morning, Pete and Chris.

Two questions from my side. First one is on operating margin guidance.

You’re guiding to 30 basis points on year end reduction on the H1 level. What actually driving that and want dealer saying to cost inflation is kind of stop a bit in the second -- in the recent weeks.

And you are again guiding for a higher volume growth than what you’ve guided in H1, so that’s my first. And second one, if you could elaborate a little bit on the pricing pressure especially in London and South Australia.

Is it more size specific or in more general you would think it just high price market or are you seeing some weakness in the what it call a more mass volume region, range around 400,000 to 600,000?

So, can I just check on the first question, it was the specific question relating to operating margin the change from half onto half two?

It's more specific to the full year guidance of 20% coming on by 30 basis points or which you kind of guiding now. Is it more related to build cost inflation or slightly more cost price pressure?

So what exactly driving that number down?

Okay. So on the pricing pressure in the Southeast first of all it is very much side by side and it is currently rated towards the largest side.

And it also as I say sort of and it's probably a few weeks old now, so I’d say right now it’s for plan and it’s actually more about á few more incentives inevitably in the September, October period of the year you see competitors –feeling that order books final give a numbers, but tends to be compared to year when there is a little bit more pricing pressure you have to that the political backdrop and it’s not hard to understand, it’s not huge if I have to put a number on it the London and the Southeast that would be 1% to 1.5% on average for that part of the market that heavily weighted to higher price points in Central London. On the operating margin, sort of look at the full year and the movement year-on-year we do that quite a lot in both sort of April and in the half year.

So I’m really sort of just over that and the movement incentives have been small. I think there are two main areas, the first is seeing cost inflation where we haven’t seen material sales price inflation and I would say that is order magnitude 1% movement.

Such that we see cost inflation averaging probably about 4% for a year-over-year impact, the softening and cost inflation has almost no impact on 2019. So the day is cast on that it's about 2020 and beyond.

We have made movement year-over-year and the investments that we have made in underlying build quality which is heavily weighted towards site management resources on side. And things like broker which I touched on earlier I think that’s short 1%, if its not sort of territory if you added all together.

The difference between what we might have expected at the beginning of the year is that we have not any price offset against that and we continue to see that inflation. The investment we're expected to make but we didn’t expect to have quite sure, such an environment much to be making them.

Just two for me, first if you could comment a bit more generally on an any changes to incentives or part exchange use in the second half and secondly your comment on the land bank keep broadly as it was at the end of 18. Should we read from that, site number at 2020 at this point kind of expected to be flat year-over-year with 2019.

Thanks.

Thank you for taking the second question because I meant to mention that one in my view comment forgot. I think that’s a fair sort of assumption going into, you know we have, we're waiting towards larger size.

So the outlook numbers and the site numbers are pretty resilient with a flat we don’t expect it to grow materially so pretty much where we are at the moment. I think on incentives specifically about exchange, from a shorter term pace in London, slightly more incentives that been in September and early October.

I don’t think any overall net change in a general sense, so I think as we go into next year, we will be pushing on price but we don’t know where the market will allow it, I think we sort of seen the flat pricing and we taken this out. But have to incentivize in any meaningful way so to get there.

I think on products exchange very small moment I would say, we probably do slightly more but the concentration one or two businesses such as been, movement in the north with higher price point, so just making sure we get liquidity and if anything see that is not over the next three or four month, rather than increasing and the movement, if you looked at it at a national, I don’t think he knows the different we don’t expect that, we have a particularly meaningful perfect book at the end of the year or anything like that. It's not relatively small changes as local size.

Just a few for me. Firstly, I just wondered if you could just comment about the move down in net cash this year.

I assume it's kind of a timing of land spend point. But would we expect a bit of a bounce back as we go into 2020?

I understand it's quite a difficult one to call. So that's the first one.

Second one is I just wonder if you could just detail a little bit about what you're actually doing to improve the underlying build quality. I agree it's an important point for the set, but just a bit more clarity there.

And the final one is just really about the medium-term margin target of the '21 to '22. And I apologize I was away at the interim.

So maybe you touched on it then. But is this still a valid target going forward in the environment we're in?

Or do we need to see somewhat more inflation to kind of get back to that level?

I'll definitely give Chris the cash question. And actually there, I'll touch on the bill quality in the cast, Chris, if there's anything you want on that, please do so particularly on the margin side.

On the quality, Chris, I think as appose to, the main thing we're doing the biggest change is to do with the amount of resource we're putting on two sides. It's, not just in the finishing area, it's giving us right managers the tools and sometimes that can be, we have a model, whether an ordinary size, if there is such a thing runs with a site manager and assistant site manager, and we're giving them more results from that.

And that is to manage the quality base to actually properly do inspections and not rely solely on spot inspection by the NHBC, which I find when they happen, but that are only ever going to pick up broader issues. But it's also about a balance of consistency across the business.

So as I touched on in the statements, we've introduced a national build and quality standard across all areas and I'm not saying may seem very basic, in most industries that would be normal, but it's hard to express how much of a shift that is for an industry which has placed on local site conditions and local standards and expectations. So we don't just operate the NHBC standards, we operate to what a broad generally a slightly higher level of standard but also a specification for foundations of specification for fire stopping, how that that inspected, all have been rolled out with a standard format that say absolute minimum level, and in most instances is your maximum level as well because we've had, Yes, if I look back, we have such a wide range of standards.

It will be very hard to run go back and say, actually consistently, everything should fit at this level. And not, whereas I think the whole industry is started to think about that from a customer facing obvious what does the customer see when they walk through is it all the paperwork and all things finished.

It's deeper than that. And I think such as the move of filled regulations that will save the next two or three years, we'll make those sort of moves essential, being able to deal with a combination of a new homes ombudsman, who will have a standard build quality, sort of set of expectations, and sorts of a changing environment on social media and sort of change build rate.

So, I think it will be those will have those thoughts of both resource levels and consistency outside. And, yes, we've been working on it for a while, but I think 2019 is where you see most of that investment, particularly onsite resources change.

I think, we're focusing on the cost side some of the earlier investments we've made on the more customer facing side, while as we still think that arise, actually you can start to see the benefits of those and there's some efficiencies on numbers that we can get out of those and still deliver that same service. But without, when you're catching up slightly as we were in that area two or three years ago, so it's about, you need slightly more results, get over the hump, and then maybe a bit around build quality in a couple of years time, but right now, is getting efficiency back into the service side of the process, and making sure we've got a level of quality, that we can really rely on that, even though the customer right now about it for 5 or 10 years.

And then on medium term margin targets entirely fair question. I am going to hit the trading update.

I'm not going to drop the question, but I'm not going to give you an absolute answer. We obviously have thought about it.

What I would say is there is nothing we have seen over the course of the last 12 months, not the investments that I talked about, or land line, that would leaders to feel that it's the wrong target. And it has always been, and every guidance we've ever given has been sort of based on broadly getting pricing and cost of setting each other they've never relied on net integration between the two.

But inevitably, if we saw a long term environment where same prices such as we're flat and cross continue to inflate materially, then we would have to really question that guys, but we have never felt nothing about the last year as sort of change this year, we've never felt that particularly like the environment to say you can get it for a year, but you can already see cost pressure starts sort of ameliorate and one of the reasons is because then crisis and also strong, so industry demand is more of sort of questioning. So, I don't think anything recent changes that, we've got some investments that we've made that aren't yet paying off, we've got some efficiencies that I think we can squeeze out because we've been doing a lot of things in the business and we need to get better, a little bit more simplicity and we got a sort of an area where we've not seen any sort of price inflation.

But as I say, I'm not going to say his name tell you here is the bridge. This is the year we get that that's the debate for prelims and, sort of through the course of 2020.

But I don't think and I will tell you if I did and I think I'll give Chris the chance to comment as well at any we've been anything that says now, that's just not the right guidance that's just that's it right now. I don't know where to change that much.

We said, we expected to see two or three years where things will be choppy, choppy means to be good and read the various and I don't see my view on that has changed. So Chris?

Well, just following on from that, I guess it's worth bearing in mind that last year we were we were well within that range between 21% and 22%. And that was of contribution margins that were between 25% and 26% and obviously you see in the data that we disclose that the half year that since around 2016 we acquire land at margins for like $0.27.

So there's nothing that says that that sort of leads us to believe that as long as those house price inflation and build costs inflation offset over the medium term that the target shouldn't be achievable. On the cash, obviously, there's a lot of completion still to happen between now and the year end and a number of land opportunities which are in progress and good crystallize either side of the year end depending on how they proceed and while that 500 million remains on going, I would see slightly more risk of full of performing on that than then funds are performing.

The only things surprising in 2020, which I think will be a surprise is obviously there is a slightly new regime in terms of corporation tax payment so we will have six quarterly payments. So that's to all the normal in 2020 and that adds up to about 70 million.

Just a couple for me, please. The first one, just following from Chris' kind of point that just around the build costs and HPI, just kind of rolling the clock back, I guess, to when the last time we did have a prolonged period of, I guess, flat to down house prices.

Can you just remind us, Pete, kind of how typically or how long it was taken before if the build cost moved into flat to negative tariffs, just to get a sense of what that lag might be? And then second one is just around kind of focus on the customer quality of we've quite a couple of others kind of in the space about not just the -- would you recommend this particular high spend, but what the 9-month survey kind of shows.

I'm just wondering if you'd be happy to share with us what the differential between your kind of rating 8 weeks versus 9 months is given that focus on quarter you've been talking about?

Yes. I think on the cost and house price inflation relationship historically, I will answer question.

I think because the environment we're looking at is slightly different and not necessarily quite the same degree or let's say 5% timing. So, I think and that's environment.

I mean degree over the last time is probably quicker. So, if you look at a major housing market down and I say in that regard it probably takes sort of 6 months before you see a meaningful change prices and that means it sort of 12 months before you see that coming through the P&L and the remaining I actually think in this environment, its slightly quicker.

It's just because not such a big movement. And you we look at account, at the end of the day there is no guarantees but our expectations is not for major housing downturn, its drop to where the sort of affordability pressure on prices and prices sort of remained sort of inline with underlying inflation, the wage inflation.

And so, actually in that environment the fuel cost movement we have see, we've moved to an environment in the very short-term where we still seeing inflationary pressure on cost, but its just a lot less then it was sort of six months ago backing up quite quickly. It literally can be particular vendor sales about affordable in the very short-term.

So, I think that 2% to 3% movements either way, not the 10% to 15%, so to say these are low cost in a major downturn. So, I think that's is going to move more quickly.

So, I think you comment back on 2020. I think it is too early to call a putting a number on that.

I think we have a lot of confidence but it's lower than 2020 and probably lower than we thought lower than 2019 or probably lower than we thought going into 2019. But, is that 1% to 2% or is that flat.

You know, it's really not by the back end of next year net savings to make, we don't know at the moment. And I think you know sort of that will depend on general election, Brexit, overall confidence, the confidence in our construction sector as well as the voting.

So, it is early to call, but I think we could see impact in the second half of next year, there is no doubt.

Okay.

But it does take time.

Thank you. And just on the custom side, you know, at the half you and the full year, we actually disclosed those numbers in our KPIs so at the half year, the eight was 89 and the nine month was 77.

I don't have the up-to-date numbers/

And that would be a steady normal spread and Chris is right. We disclosed because we think that that is useful customer service measure to talk about as well.

I would say, but don't actually they're not long-term and some of the things we're talking about. There are couple of moves in the initial impression on moving which is what is very focused.

And so, I think its we're looking at it just look on underlying built quality by the way we are talking about. So, I think at the end of the day for example you spoke on measure we get look at several things.

I'm just making the point that all of you measure alone.

First one is on the bulk sales. Can you tell us which London schemes you did those out and how many units there were.

Maybe you could also isolate the margin affect there as well isn't such a big number given your previous comments, but just be interested to know. And the second one really is around.

We take a step back from your business, you've got very high sales rate, we can see some of the pressure on outlet numbers, and we can see some of the pressure on margins. How can we be sure that you're not trading?

Try some volume for margin here?

On bulk sales and I'm not, I don't want to get to the specifics on exactly what sound status. It doesn't sound right.

Not that I'm sensitive from a company point, but there are specific sales and specific people. Yes, we're talking about sort of about 70 units just to give you a sense of scale.

And I'm happy to talk about the margin that the total impact of Central London both sales on margins about $0.42, I give you a sentence is that slightly related towards the second half. So that's why I say that the sort of main movement between the first half and the second half is not enormous.

I think you would understand that the logic of clearing stuff out, they are not I would say they want three larger took longer term sites like Mount Pleasant and something Postmark. So you really work it out, but it doesn't quite feel right to be so specific when it was individual sales.

I think how can you be sure that we're not trading sort of volume for us? There's always Jon, sort of say, I don't think we'd ever say to you, we're not, I don't think everybody in the set resistors walk that trade is exactly where it says and I would say assisted, if you said there is a 1% trade off.

And not, I'm absolutely sure there isn't a 1% net trade off on price, but a 1% trade off on built on cost invested in build capacity and price for sales rates that are 18% better. Is that a trade off, we should take in this environment or not?

And I would argue that's a pretty balanced judgment. If it was a 3% trade off with absolutely not be doing it.

Because I think, we still think that high margin business is generally a better quality business, but there is a balance to say that. I go into next year and it's why you see the flag in the air.

\ I do, I suppose that balance or at least have a choice of us that balance a little bit for towards price and volume. But we've just been through budget reviews with 24 businesses and some of them we said, no, we don't want you to do that volume.

We think you have to give up too much. And you'd be stressing that site and you haven't got the stocks of land to replace it.

And some of them we said now that balance feels about right, with those slightly towards taking volume out of what they would choose to do rather than putting it in. But there is always a trade off.

And we wanted to imply that it wasn't the trade-offs is not very big. And we are testing it.

So we will go into next year on the 1st of January, increasing our process, and we will see what happens in the marketplace. And we will test those high sales rates against, sort of that balance.

So the question is not, are we trading volume for prices? Everybody doesn't, it is the trade off the right one at the moment in this environment for mix, so I've got until the large size that we got.

And I think it is, but you can take from very good comments sort of in the statement that its borderline and other guys next year when the choice to switch it back the other way a bit, but in the last.

Can I ask one additional question as well? Just on the margin outlook for next year.

I know that there are some moving parts that we're not sure of yet so there will be cost inflation house price inflation. If I take those off the table, what about the impact some of the legacy London gains dropping out of the mix.

Is there a positive benefit going into 2020 from that moving part in isolation?

Yes, I mean John you’ll know that I’ve touched on this a couple of times of the course of the year. And yes, at this point in time and its here in London pricing phase exactly where we think it's at the moment.

Then that shift in sort of the Central London business its probably about 40 bps year-on-year.

Thank you, guys. Just two questions for me, the first one is if you could talk a bit more about, are there any further investments and cost that we should be thinking about when we look into 2020.

And the second one really is on buy, have you seen any shift in the demand or sentiments that have to buy in the last six months. And to what extent the customer mix also have shifted across the customer base that you see?

So, I think there hasn’t been any main potential out buy. The percentages that display geographically and sort of cross probably is broadly as the same and I don’t think I could point to any meaningful shift in, sort of the customer base, nor I think we expecting any meaningful shift product size and customer basis we look into 2020.

Could you just repeat the first question? Sorry.

My first question was just on the cost side, are there further investments into 2020 when we look at, if that upon the efficiencies that you’re expecting. But are there any further projects that you’re looking into in terms of investment?

I think the simple answer is, no I think at the moment we are sort of looking at making sure we bet in and really see throw and add some comment about both on efficiency and the project that we’ve already done. I think the one sort of single just noted if you take it trends space as I say the cost in 2019 was about 10 million.

I think if you look at a full year cost out run rate which is more or less probably next year that would be about 14, sort of where we expect to take a bit of efficiency and some of the sort of more process side of face a bit of an offset there to remain. So I wouldn’t flag any particular new investment as well as where we’re just saying through the things that would, that we’ve already done.

A couple of questions, if I can. Just on the politics and the forthcoming election.

Do you foresee any material changes should be consider probably retain talent and sort of same question in the event layer was the coming. What sort of the changes that are housing part, and housing market would you anticipate potentially in the current market.

And then secondly just given what’s happening in the High Street. And that was run that retail real estate whether that’s throwing up any opportunities for you to think about investing in brownfield sites in central areas as opposed to perhaps -- more positioning going forward?

Yes. I think on the election first of all, you didn’t have to state that, but we haven't really touched on it.

So, I'll sort of cover it as well. I don’t expect to see any meaningful short-term softness from the election, forget the result of the election as your question I will come back to.

But at the moment we haven't seen survey any particularly changing customers sentiment is there I would say in the last couple of week, sort of speak of start to think about the excess going to be better on the bit worth simply because people are saying to focus on as you say move but the political but father down the right. So this thing about sales right, so that matter softer more.

A, we're coming into a period of the year when partly year when they you would anyway. And B, they never tend to in all action and we haven't seen a different pattern.

I think and I've been trough and I don’t remember to be honest where as four or five, but there are decent numbers of election in this job and to me I will charter where we are at the moment, pre manifesto, as a point of maximum promise and minimum deliverability. And so if you talk in any general election what each party has sort of it was actually implemented, you know that we're extremely scared and both of them in reality maybe turn out to that been, matter overstated.

I think you will see never to be true and the manifesto process, policy promise is narrowing a bit and then reality I think we have six months, whoever wins and even longer probably any kind of coloration parliament and where the focus is not on policy initiatives the focus is on Brexit uncertainty and how you take logical decision in sort of new and different world. So I think it would be wrong to get to it, it’s the best election from particularly from different policy basis.

Then going on to the individual parties, I think to the certain extent the conservative policies around housing are more or less that you should go, there are some things on build rigs that I think will happen in terms of timing of build rig in the process with regardless of which parties in power and we already touched on that. But on the more economic side, how they added a big change.

I hope you seen but any conservative government more investment in the affordable housing but thank you its necessarily for long-term, housing in a more general sense but lack confidence in that. I think a labor majority as oppose to labor additional is probably the hardest one to actually call, you have call, sort of very strong promises of assessing some of those change and developers as the time goes on but it is the hardest one, and it doesn’t, this could draw things in anything that is a very untested directions, I think there is a long way to go because all we should be saying that primary risk.

On the high street, if you pick to the high street, we generally picture small picture and just over for our model but I don’t mean that sort of changes that there is underlying interest sort of changes we absolutely continue to be interested in size and having sort of big enough for us to out of run our model, it is not that they have been 300 units but 25 unit size do not work for us, we sort of have been there before in the past and actually we look back at the value generating it, it is a significant if they need to be scale size to the 100 unit or more for us to be interested. But absolutely interested in size and changing.

I guess I just want to come back to the margin trajectory. I appreciate the comment on the midterm but this year obviously the down year, the neighborhood of 200 bids.

How confident are you that you can stable next year, I appreciate there's lots of variables up down of some tailwinds, some headwinds. But when kind of explore your confidence there?

And then on cash again, you flag the additional tax, which I think is widely known, but just to confirm where you suggesting cash will draw down the stable next year or I didn't quite catch what they should have bottom line message was obviously considering the fact of your committing to around $610 million of dividend payments?

Yes. I'll let Chris.

I can't pick up the cash question. I know, don't imagine margin for next year.

I think I'm not trying to give you sort of false confidence Gregor. We haven't given a strong margin stare for next year, because there are so many moving parts, we expect this still to be some cost headwind, we don't know what the standard price environment will be like, you should take a signal, that our focus will wait slightly in order to sort of margin on the basis of price, particularly, rather than volume, but it's slightly more, we want to be in a position strong order book in the old days of delivers, where we can make the most of the market does that.

But it would be sort of artificial to say, we think there is margin pressure across the sector. We think you haven't seen the end of that for the sector generally.

And we think that's materialized over the last six months and we told you that was likely six months ago. So I really mean what I say, it's not the right time to give you the strong guidance.

I'm not trying to give you an artificial conference. What I'm trying to, sort of explain to you what the moving parts are, what we're doing about it, and that we're in control of that and the choices that that we make and other things that we also can't do much about it the external half price environment.

And on the cash, Gregor, I wasn't really sort of tell you whether it was going to be pulled down, because obviously, as we all know, it's a massively depends on the amount of land investment, but you're quite right the £610 million of dividends, the extra 70 million in terms of tax payments. And obviously, we've still got.

The two exceptional provisions of unwinding and we expect that to be in the region of 50 million of cash for next year. So they're all things you have to take into account but the biggest single sort of lever and decision that we'll have to make next year is on land spend and it's too early to make that call.

Just a couple more, I guess a conceptual question around the decision to become afraid for margin and volume. What confidence I guess you got in stepping back on the sales rate, you'll actually be able to achieve high prices without high material reduction in your volumes and leave yourself kind of broadly in a more positive?

How more profit contribution position? I mean, just kind of give them from coming from the view that, I think most people would think that the ability to generate price takers in the market given the relatively small attention to the overall market that he represents?

To be honest, I like to congratulate you because you're the first person I remember on one of these calls is asking one question and I was so ready right so readily waiting to make on the second or third. I was waiting, I was waiting for it.

And I think in a way your question is and it is an interesting one but it's actually almost exactly the same as John's but phrase in the opposite way and in attempts my answer is the same. It's always there is always a trade off and that's why we have that confidence, what we've been doing through the year and what we're always doing to some degree is permanently testing that balance, side-by-side business-by-business and across the board.

And sort of having and our biggest challenge ourselves right this year was not sales or price, so that's why I say the most to try to find the biggest challenge I mean, US will be the case of thing we were trying to test and we fail we proven and internally you can say real shifting confidence of April is the you can get the build right behind yourself, right?. Because if you can sell it that right but can't build, then you end up with an order book the grocery store where it's a pointless beer sort of exercise, you need to be able to follow up.

And so that's been what we've really been testing that we will continue to test that balance that balance of price. And it will depend on the environment sort of this, it's a very weak housing market, which is not what we seen this year is in our kind of stable year with a bit of softness housing market this year, this is a very event suddenly become significantly more price sensitive and that balances and so and it's different on every side.

So I think what we see at the moment and where we see a bit of price pressure and just say sort of that little bit of the volume the lack of those sort of central London kind of old sales, those sorts of things. Give them the confidence that next year and go into it with just edging the balance back the other lies, but it will depend on the environment.

It always does. And so it's the same question it is it's what we do, it's what we do with our business units, product business units do day in day out when they release them as a cyber this accepted particular offer or put a particular incentive on side.

And we can do lots of little things that just don't that balance services that will go into next year with just a slightly different might've incentive on price versus value. So that management teams, I'll have a margin measure in their source of annual incentive scheme and the guidance we've already given them is just to add to that way, and it's, the end of the day patriots are rarely right, but it depends on the environment is like what we think is the right balance and how much we can push it a bit more towards price, what we want to do and why we put it in statement and why we're talking about it.

It makes it clear to you that we are not trying to become a volume driven business, so we're pricing margin doesn't matter. We never we never were but we thought it was necessary to be explicit on that.

And actually showing that we can sort of tweak it both ways and take what we think is the right strategic decision in different environments with a different mix of land, it gives you the strength as a business. So just assuming that celebrates can only have 8.7, I think is very limiting when you have the mix of large size that I think are natural for larger house builders in the current land supply.

Yes, we want the tools to know that we can operate those in different ways depending on the environment and the build capacity and quality to back it up as well. So going into next year and it's mark is probably supposed to tweak it the other way and talk to you about that you'll understand how, we can we can play that balance.

Just on me if one of them is falling on from the last one really in the just the danger obviously sitting outside is we're looking at averages, but when you think about that step-up in sales rate two things really. One, behind the averages particularly the numbers I there challenge there in some of the smaller sub-average site is there a full out of kind of complete size next year.

So, just wondering just in terms of about against the context of kind of flat buying this year, just to come back on it? And then the second one is, your point about build, clearly, is there some kind of measure you look at in terms of stage of completing unit to give you confidence that going through kind of an 18% hike in what you need to building out on site again on the average challenges is that something that again you're feeling pretty comfortable and confident that, that order book for next year looking at London and maybe some longer term completions in it.

That is all I guess should cycle in the first 6 months in terms of being built out and to complete it. So, just what are your feeling already around those aspects?

And then, second one, with just a year ago, one of the ingredients in your built cost inflation was some pretty good deals in the past and I think some slightly longer term supply arrangements while we seat here and take a view about cost inflection next year, can you have an idea off your materials, some of those on two year deals or is everything kind of for review going into next year in terms of material costs of what you might have to sign half of your deals will be re-negotiated or is it all of them? Just have an idea of what you could actually do help the P&L next year.

Yes. Okay.

I'm going start pick up one by one basis. [Multiple Speakers] I don't mind for your question.

I was genuinely listening for next one. So, it's really challenges smaller and average sizes in a sense how we trading through the opportunities to get those right during 2019 and if that holds up that get commensurately harder in 2020.

That is a different to think.

That's a much better way.

Yes. So, I didn't mean to say that bed.

Yes, I don't think there is. I think it's very valid question because I think there could be and there is a bunch of reviews on individual businesses.

There are certainly one or two businesses and inevitably that don't have the largest and that will should be adopting that sort of model and then not you guys, you need to sort try through those sides to be able to sort of add sales, but that was really in 2019 as well. So, I don't think we have traded through a short-term opportunity to increase sales from larges sites and then we get.

You can see that inherently and just the overall land bank number, land bank structure you give to me. You could still at a local level but it will hard for that to be true systemically because our average size is larger.

I mean, given the behind that that's pretty right. If there is a lot from size to size ensure we will sort of learning our business is on its way and good thing to do and it can be done right and when it comes because if you haven't got on that site, it's a long forward land you know sort of bank or in a particular business level where that business is short land and absolutely they shouldn't be racing at a pace not balances and products and volume should absolutely change, and it does.

But, not, I don't think we have sort of trading through an opportunity and then got a problem to deal with. I think on you're absolutely right as to say it was business we believe sure about coming into the year.

It can be delivered and our business is lacked by 18 months. I think through this second half of 2018 that confidence started our build.

We view to measure paying out best a best independent view of build quality. And it's been really encouraging that that has sort of ticked up even as we've been stepping up, right.

So we can see those rates stepping up consistently. And we've looked quite closely at making sure that happens on the right sites in the right way.

It has cost us because we've made sure we put the resources in. And that's what we promised our businesses that we're not just going to ask them to increase production by 20%.

But I spent you today with the same team that was struggling to keep the quality right sort of at the level you're operating at before. So we lead with the resources slightly to make sure that we can manage it.

I think, just if you look at the HPC would you recommend score? I think it would be fair to say, we are low for it was December 2018.

And that was as we have been stepping up the build and it wasn't about quality. Actually the quality majors in those schools remain very strong and that's CQR measure.

But there's no doubt we were getting our timing lined up then. So we have more people moving in December 2018 was expected to move in earlier.

And that does impact on the score. So there's no doubt that that's part of that just it's not huge.

And just to put it in perspective, we will probably be in this sort of customer care years, October, a full star builder, but at about 89.5% rather than the 99.5%. So you're talking about very small movements, and it's that December timing, I think, it's a meaningful shift here year-on-year.

And actually, as long as we're getting the quality, right, and the finish, right. I think we have to live with that sort of just a little bit.

And now, sort of our teams have got like communication ready, you can see that that's coming back. And so it gives some challenges, but I think we're pretty confident that those challenges have been dealt with properly rather than just sort of race through it and focus on delivering in it.

And it's the same exact way we're talking about it. So certainly we spent a lot of time talking about and analyzing and trying to make sure we get that balance, right.

And also that on order books, I am, I don't think it changes the quality of the order book in any sense sort of into. I think, you've seen a lot of people and across the sector and I understand this, because in the short-term, it's true.

A long order book makes it harder to manage customer service, because you are less about the delivery time when you take the reservation, that's the single biggest shift. And I think, what we're trying to do is not say, well the easy thing to do is just because that cause all sorts of other problems is the better thing to do is get better at managing, sorts of your bell timings.

And we've talked about before get more verses theory and take it think about size of more of a production line, and a factory that that takes the resources to do it properly. And so, it's not free, but we feel we've got that balance about right.

And so the next step, so test it and tweak it and try and optimize it and get better prospect out of it, make it as efficient as possible, but it's quite a big strategic shift. And then going on to the second question on sale cost inflation, you're awesome to your sales, you can seek him in the cost environment we see today, sort of good and bad if you see this amazing.

Do we want to go back and renegotiate a few things are slightly more benign environment also would rather have different prices effects. I'd say, sort of probably slightly more than half or sort of 2 years.

We probably sort of just over half will be in a renegotiation this year to give you a sense. I will probably, I am sure.

I'm sort of sat down in February. So he's really how we see that in a lot more detail.

So I think we'll have a pretty good feel for it.

Okay. And so, that CQR that you talk about, Pete.

Is there an industry benchmark or what is the industry turned out? And is it score out of five sort of half year pack?

It isn't score out size, it is else -- sorry, it isn't score out six and it is a half year and -- sorry, I mean it is an industry standard but not industry publishing that. So, we can say without names on it, where we sit in early table of our peers.

So we know our relative performance is sort of year-on-year relative performance. Some don’t publish it all, one or two don’t use it, but they don’t that there is a cost that actually having the assessments done and wanted to most to use it now, but not many public it.

And it's I would -- you always have to be careful. We push quite a hard a few years ago to get focus and more attention on -- because of the survey.

And we’re not going away from that and we’re certainly not going away from it just because absolute goals, 89.5 probably the 90.5. But sort of it is important to understand there is that broader pace.

And if you look at some of the regulatory three pieces, if you look at some of the things that people get challenges and reputation in the press and on social media, actually all the things that we’re never ever been paid on that within that five star rating, because its social, it's how people fell when they move in, that’s the important thing to understand but isn’t our story.

Good morning, gents. I have to apologize for my voice and my coughing as well.

So hopefully you can still understand me. Two questions if I may, as far as this concern of the reference the 50 million of cash outs of exceptional of kind of double check?

Is that including the pension top up? Or is that about the cash items of the provision that you've taken for cladding and leasehold?

And then the second one is just clarifying something you said, Pete. I just wanted to make sure I understood it properly.

We've obviously only seen 12 months rolling of the HPF rating. Did you say on October you will anticipate being 4 stars?

Cautiously, October is what's published in March of the actual star rating, so I just want to make sure I understood what you said?

Yes. I’m going I’ll pickup that one and then Chris can take up the cash one.

Yes, that is pretty much what I said it is a 12 months pace. We haven’t got the results, but you can say statistically there aren’t too many that's come in.

As we say, we're an 89 point something at the moment. And it's not impossible, but I think our last two months scores at the moment both 92 point something but ask you statistically at this point we’re probably grow anonymously just under 91, just over 90.

Yes. On the cash flow initiatives we have related to the lease holding clouding provision unwind expected to cash flows in 2020.

And you’re quite right the pension contributions will be continue at 40 million per annum, but we’ll see the end of 2020 to found any new relations. Today is the end of the 2019 but obviously it takes a number of months to finalize that valuation and then agree the new funding process.

Good morning, gents. Two for me as well please.

The first one, if you could provide some color pit on the 1% to 1.5% price reduction that you’re reciting in London Southeast. Is this across your whole product in London Southeast?

Or is it the higher part? And you mentioned that it got better in recent weeks compared to September to mid October.

So now year-over-year is that price reduction gone, so that’s the first one. The second is one volume reservation sales right up 20%, down 8% so far this year.

So when are we going to see the impact of that on your volumes you sited higher than half one guidance perhaps you could give a little bit of color on volume growth this year or next year. Thank you.

So on the price, little bit in the Southeast, it’s a bit of, I think if you took out London and Southeast division then that price is 1%, 2.5% the average across that pretty more London comment but it's also slightly take that on the individual side, as it quite focus. So as give you a sense of the broad movement.

So if you take a 1% to 1.5% on average on London side that will probably a reasonable estimate. Gone, I think that pressure has reduced but I do think if you look at London and particularly central London I don’t think this is sort of about I think prices are lower now than they were three or four months ago.

So the pressure has reduced but prices are slightly lower after that pressure, so I think sort of with the more stability again, I think London is same pressure in the short-term. I think in terms of volume guidance, I think it sort of back to 2019 or we were slightly clearly on our guidance and in the where I don’t know we been specific today but we probably talk about roughly 1% more volume then we were sort of the half year give or take.

Sort of we sort of 4% this year give or take Chris, is in that sort of range. I think it's early for next year, in our other number, we have strong order book, I think the messaging on just a slight shift in balance towards focusing on margin over volume relative to this but also to my comment we expect sales rates clear in the market.

So you should expect to say volume growth next unless the market is meaningfully better than that, any year enough for us to shift that balance. So flattish I think is where we sit so, but it's early for us to guide with a general election and Brexit.

Thanks for that, just a quick supplementary on that price full. So the Southeast is been better than 1% to 1.5% contraction I’m assuming from what you said.

That I would normally give you price guidance on individual market. I just think there is enough of moving part wants one try to.

So apologies if it's less clear. What I’m trying to just avoid is somebody extrapolating that sort of price whole of the Southeast because that being an exaggeration but it goes to the over simplification, so for London there is a softness around the Southeast is generally that is no mark in London.

If you are trying to working out mathematically and you look to that London business sort of give or take 900 units of business than 1 to 1.5 that's reasonable guidance against that?

Thank you for joining us and thank you for lots of question, I just want to make clear I don’t object to having more than one question from anybody. I was just particularly impressed that Sam managed to keep it to one because the temptation to ask more is always great.

But I think yes, sort of, been good to get into a lot of the detail around the choices that we're taking in the decisions in the business. And it's going to be an interesting few weeks with a general election, but looking forward to testing what we can do in 2020.

Thank you very much.