Earnings Call: H2 2019

Oct 15, 2019

Good morning. Good morning, everyone, and welcome to our full year results. I plan to take you through a short introduction. Keith will then present some detail and some numbers, and then I will close with an update on operational matters. Firstly, to pick out a few highlights, record volumes at 10,892 units, an increase of almost 6%. Operating profit up by 3% to 675,000,000. Our margin also remains strong at 21%. Our dividend increased by 5% to 150.4p. And we also had a strong net cash position of 200,000,000 at year end. And I'm also pleased to report that we maintained our 5 star rating as a house builder for the 3rd consecutive year. Turning now to market conditions. Demand remains robust at our price point. And by that, I mean that the affordable end of the market Our most popular homes tend to be 2, 3, and smaller four bedroom properties with the London market most active in the greater London boroughs such as Bromley, Bexley, and Havering. And notably, Our reservations are up year on year, and that's a product of having more outlets driven from our land buying program. Now I can't talk about the market without talking about Brexit. The whole Brexit debate hasn't had a material impact upon volumes. Yes. The uncertainty has made us work harder for sales, and, yes, it has led to higher incentives as savvy customers demand better deals. But what Brexit is doing is just dampening our growth prospects a little. The rate per sale per outlet is just a little slower on some sites. And that has an impact on how much we can deliver or grow each year. That said, there are a couple of things to note. Firstly, the residential market remains heavily focused on the new build sector. Principally driven by competitive mortgage finance, particularly the help to buy offer, but also stamp duty benefits at the lower end of the price scale. However, stamp duty can be a real issue in London and the southeast. Where transactions can often attract charges of over 10%. And whilst we're not exposed to that end of the market, it does create a jam or a barrier to people moving home. But what we need is a a stamp duty system that's less complicated, that's less expensive, and one that encourages a healthy housing market. And secondly, Help to buy changes planned for April 21 are influencing the way we operate the way we approach developments and the way we invest. There are different schemes in Scotland, England, and Wales, and we're very mindful of the rules. And whilst the schemes are used more modestly in Scotland and Wales, probably around 15% or so is still a very strong selling tool in England. So to comply with the new regional price caps in England, We scrutinize each land acquisition for product mix and selling values to best ensure that each of our divisions has a good percentage of homes that falls within the caps and are suitable or attractive to first time buyers. As a consequence, our land buying criteria has changed a little over the past 6 months to accommodate this profile, something I'll talk a little later on this morning. Now just to touch on our strategic priorities, One of the key challenges facing the industry today is the absence of house price inflation which has historically helped to increase returns. And this coupled with continuing cost inflation puts inevitable pressure upon margins. These these issues together with the underlying demand for new homes influences our strategic priorities. And the key themes to our strategy are simple. Deliver growth, drive down costs, appoint the right people, and strengthen the brand. So our long term strategy, coupled with a focus on margin and dividend growth, is still the best way that we can add value for our shareholders. But I'll hand over to Keith who is better placed than me to discuss these issues. Keith. Okay. Thanks, Jason. Good morning, everybody. So I plan to take you through the results balance sheet and cash flows in the usual manner. So I'll start off with the results you'll see that the 5.7% increase in volume, together with a 2.5% increase in the average selling price, which rose to just under £292,000, resulted in housing revenue rising by over 8% to £3,200,000,000. And since the low in 2009, housing revenue has risen by a factor 4.7x. Other revenue rose to 1,000,000 with the increase simply due to the timing of the usual commercial sales and other minor items. In addition, In H1, we disposed of a portfolio of freehold reversionary interests on apartment schemes for consideration of £14,000,000. Going forward, the sale of ground rent portfolios will not be a recurring source of other income. Overall, gross profit rose by £33,000,000 to £790,000,000 With the prior year figure, we stated to exclude losses arising on part exchange properties as required by IFRS 15. Operating profit rose by 3.4 percent to £675,000,000 and the operation margin was 21%. PBT rose by the same percentage to £663,000,000, earnings per share also rising by 3.4percentto437.8p. As indicated in March, the growth in volume was driven in part by additional social housing completions, following a modest reduction in FY18. We also completed the sale of an additional 179 private homes, which is a solid performance and follows the growth of 9.2% achieved in the previous year. In addition, the completions on fully owned sites, our share of output from joint ventures, was 41 units, and I expect that this will increase further in the summer of 2020. The overall average selling price rose by almost 3 percent to £292,000. And the average selling price for private homes rose by a similar percentage to £334,000. The modest improvement was due to the location of sites rather than being due to any underlying house price inflation. The rise in the social average selling price, which increased to £149,000, was more pronounced at 15%. And this follows growth in social completions, which was driven by Southern divisions such as Essex and North London whose operations are in higher value areas. Help Dubai continues to be important and it was used in 36% of completions. And the bar chart shows pricing brands and demonstrates that our exposure to the slower upper end of the market is limited. With only 4% of homes above the current health device threshold of £600,000. I expect this to moderate downwards in the year ahead but not the standard net, I still expect the overall average selling price in FY 'twenty to be in excess of 285,000 ounce. London still performs well for Belway, representing 9% of completions, And if you take out apartments from our scheme at 9 ohms, the average selling price in London was £413,000. And we continue to find that demand is robust at this affordable price point. If we look in more detail at 9 albums, we completed the sale of 214 Apartments at an average selling price of £820,000, which means that this one site alone represented almost 6% of housing revenue. A meaningful and nonrecurring contribution to the business. Going forward, our strong investment in outlets elsewhere in the group, means that even though this site is now largely traded out, we still expect to be able to grow housing revenue in the current financial year, albeit the margin and selling price benefit of 9 elms will not be repeated. Our Ashbury brand continues to be used successfully accounting for 564 Homes or just over 5% of completions. And this provides a valuable resource in order increased sales rates and enhanced return on capital on some of our larger sites. There remains a balance splits between home sold in the north and the south of the country, and we don't have too much exposure in any one particular region with a widespread geographical presence providing a solid platform from which to deliver future growth. After making further investment in the overhead to deliver this growth, we were able to report a strong operation margin and of 21% and an operating profit of 1,000,000, representing a year on year increase of 3.4%. In terms of the increased profit, volume remains the main driver, adding a total of £43,000,000 in the year. With this driven by higher output in our 8 active newer divisions, which we've opened since August 2013. The ongoing margin normalization had a moderate effect on the reported profit, and this was mainly due to a continuing upward trend in terms of bill costs, albeit the rate of increases broadly consistent with the prior year and reducing house price inflation, which is close to flat. On most sites. Looking forward, there will be further normalization in the margin in the year ahead. 9 ohms added around 80 basis points compared to the prior year. And as I've already said, this will not be repeated but instead, London is expected to generate returns, which are comparable to elsewhere in the group. In addition, the land bank margin is being press slightly is a result of industry wide build cost increases, which are no longer being offset by house price inflation. Also, there'll be further more modest dilution as ground rent sales come to an end and the overhead base nudges up slightly. Overall, the moderating effect will be more pronounced than that experienced during FY19 and it's too early to give firm guidance, and as I'm sure you'll appreciate, a range of outcomes are clearly possible. However, as we sit today, I expect that we'll end the year with a margin percentage somewhere in or around the mid-nineteen. We're working exceptionally hard to mitigate cost increases, and Jason will touch on this soon. I've included the balance sheet for reference and the investment in joint ventures includes our sites at Broadly And Ponton Road. But moving on to more material items and the total amount invested in land, is £2,000,000,000 with some 1,600,000,000 of this relating to the 26,000 plots which have the benefit of an £60,000 and an average selling price of around £280,000. The overall average plot cost of this section of the land bank is just under £62,000, and the average selling price is approaching £290,000. Our exposure to particularly high value units is low and is reducing. Only 3% of plots with DPP had an average selling price above the current health buy threshold of £600,000. Our pipeline of owned and controlled land where DPP is expected within the next three years has risen to 16,300 plots. And taken together with the DPP land, this provides alarm bank length of 3 0.9 years with good balance between providing a visible throughput of land without compromising return on capital employed. In addition, our strategic land holdings have risen to 8800 plots in our stress This includes only those that are allocated in local plans or other subject of current plan applications. But to provide some additional detail, this, I'd estimate we have the potential to deliver a further 16,800 plots on our longer term strategic land interest, I. E. Those with a higher planning risk. This gives a total interest in strategic land of around 20 6000 plots. In total, the owned and controlled land bank, together with our investment in strategic land, provides Delaware with access to some seventy 1000 plots, a solid platform from which to continue our growth strategy. The investment in construction based WIP has been a major driver for growth and has risen to almost £1,300,000,000. Otherwise, customer demand is still strong, The absence of house price inflation means that many customers feel less urgency to reserve a new home. Consequently, WIP turn is just a little slower, and in addition, sales tools such as further investment in show homes are important to showcase our product and therefore, give customers the confidence that they need to buy. The amount invested in part exchange properties is closely monitored and remains similar to last year at just under £50,000,000. The group is financed by retained earnings, bank debt, and land creditors. We're significantly cash generative, producing £662,000,000 from operations before paying down land creditors and making further investment into land and construction based whip. After paying down land creditors by £68,000,000 and investing in site based construction to achieve growth, The cash generated from operations was 1000000. Overall, after paying the dividend, tax, interest, and other minor items, we ended the year with net cash of £201,000,000. And inclusive of land creditors, which have reduced to just 1,000,000, adjusted gearing was only 3%. Average net bank debt during the year was around £165,000,000. In the year ahead, I expect we'll average a modest net debt position throughout the year. Our plans for further land investment together with a 50% rise in the cash tax bill due to a change in government legislation mean that we expect the cash balance in July 20 to be a little lower, perhaps 30,000,000 or so or less. And just for clarity, that increase in tax payments does not change the effective rate of tax in the income statement. And again, as I'm sure you'll appreciate, the forecast year end cash balance does, of course, move easily, so we'll give you a further guidance and respect of that as the year progresses. The final dividend, if approved to arise by 5.3 percent to £100 per share, and this will bring the total dividend to 100 and 50.4p, an overall rise of 5.2 percent, which represents a dividend cover of 2.9 times earnings. The compounding effect of reinvesting earnings to achieve growth means that the dividend per share is now actually higher than the earnings per share which we achieved in the July 2007 pre recession peak. Going forward, our operational capacity and the ongoing demand for new homes still provides further potential for future growth. And this combined with the short term uncertainty of Brexit and the longer term objective to retain a flexible capital structure in order to maximize value for shareholders means that it's not right to commit to a long term dividend promise. That said, notwithstanding the ongoing margin normalization, and the effect that this will have on earnings in FY 20. Our lowly geared derisked balance sheet and our confidence in the medium term growth prospect of the group mean that I still expect will be a further increase in the ordinary dividend in the year ahead. Our approach to growth requires an ongoing focus on return on capital employed, and this has remained high at 24.7% but slightly lower than last year, principally because of the margin dilution and slightly slower whip turn. Post tax return on equity was also high in 19.8 percent, with this achieved from a low risk balance sheet. Beyond FY 20, we retain the ability to deliver further earnings growth. We've got a strong culture of cost control, which is supported by a number of medium term initiatives. You can also invest in land and have a proven track record of successfully in new divisions and outlets, with this resulted in outperformance of sales rates in FY19. So whilst margin normalization and Brexit uncertainty may dampen FY20 prospects somewhat, I see no reason why the group cannot continue its trajectory of earnings growth in FY21 and beyond. In addition, we're highly cash generative, and that provides for further scope to continue increasing the ordinary dividend. Jason. Thank you, Keith. Starting with growth, The majority of our increased volume comes from our newer divisions. Scotland, the East, delivered 273 completions in the year in FY19 with our newest divisions, Eastern Counters, and London Partnerships both able to contribute in the year ahead. And our partnerships division has made a promising start we have over a thousand plots already contracted and a further 600 plots agreed with heads of terms. And should market conditions permit, we also have plans to open a new office in the northwest of England, probably towards the end of the next calendar year. And this generates a capacity of just over 13,000 homes, and we have a longer term ability to expand beyond this. That said, it's all very well having the infrastructure in place, but we need the right land in which to feed the divisions. In the year, we contracted on 13,100 plots. And while sufficient for today's volumes, To continue with our growth, we need to just gently increase that number as we progress in the years ahead. And our strategy of driving the number of selling outlets through our land buying program is clearly paying dividends as both outlets and sales volumes increase year on year. But as mentioned in my introduction, we are applying a strict focus to both product mix and selling values to ensure our divisions are best to be best positioned to accommodate the, the Help to Buy rules planned for April 21. So to complement this approach, we're also invested in some larger sites For example, we recently acquired a site in church down near Gloucester for 465 units, and we also have a further 3 sites agreed, which combined total a further 1500 units. And the group is big enough to buy a handful of these sites each year to provide that certainty of supply without probably necessarily changing the risk profile of the business. And our strategic land department also continues to make good progress. In the year, we contracted on 29 options and converted 1700 plots to our owned and controlled land bank. Turning now to cost initiatives. As Keith has mentioned, The primary focus of the business today is control of costs. In FY19, we experienced cost inflation of around 3% and to mitigate the impact of these costs. We have a number of initiatives that our new group commercial director is driving through the business. 1st and foremost is our artisan standard house type range which has made considerable progress since we launched it over a year ago. To give you an idea of the success and speed at which it has been adopted, we now have some 12,000 plots in various stages of the planning system across the group. We expect to complete 500 Artisan Homes in FY20 and close to 3000 in FY 21, and we're already starting to see the benefits. Faster planning applications, reduced design fees, and lower marketing costs. And going forward, we expect to see reduced build periods reduced maintenance costs. And with the adoption of our optimized roof pitches, our drainage systems and our heating designs, inevitably, there will be further procurement savings in the years ahead and notably all of these benefits can be delivered without compromise to our build quality. And similarly with procurement savings, the economies of scale are obvious to our buying power Oh, whilst the majority of our supply costs are fixed for the current financial year, we are seeing signs of better deals. Blocks have only increased by 3% in the current year, whereas that was 6% in FY18. And many timber products are now starting to hold prices firm for longer periods, and the same applies to the labor market. Belway 2020 something Keith mentioned is another cost internal cost saving initiative, and this is very much a culture or a message to our staff to be more frugal and more efficient, individually within their workplace. And Keith has set every division across the group across saving target. It could be something as simple as energy saving, in the office or something more significant like reviewing engineering levels of pre planning stage on the development. And finally, our coins valuation system. This has now been adopted or installed in 50% of our divisions and this will give us better visibility and the opportunity to better benchmark costs across the group. Now for a few bits on HR appointing the right people, We have always had a strong culture of developing people through our business. Particularly with senior managers and directors, and that's what gives us that strength in-depth to our management teams. But our HR team have done an excellent job in developing our new Belway's career website, providing opportunities for young people in house building. Our new Bellway Acote Academy offers a more structured approach. For apprentices, graduates, young people, but also provides specific training for site managers. In 2020, we plan to appoint 40 new graduates, 50 new apprentices, And we're also planning to recruit over 50 young women into our construction departments across the UK, and it's proving to be very popular. For our graduate program alone, we've had we've had over 1000 applications for just 40 positions. So if your sons or daughters don't want to become overpaid analysts and they want more I don't know why I'm looking at you, Chris, but They want more excitement in their life. So, you know, tell them to log on to our new careers website, and they can come and work for Belway. Now just to finish off on ops strengthening the brand. The key thing for me on brand is delivering a higher customer service level. Whilst I'm really pleased with our new website and new social media hub, it's customer service that has got my attention. And I'm very conscious of that negative house builder image in the wider market, and I want Bellway to stand above that. We are a 5 star rated house builder, and we seem to do the hard work well. With 92.2 percent of our customers saying that they would recommend us. But if you ask those same them as, what do you think some 9 months later? That figure drops to 79%. So my focus is post moving. How do I better look after our customers following legal completion? We need to go further. We need to communicate better. We need to complete snags more quickly. So in 2020, we we plan to start a more structured and focused approach to customer service. Which in essence means we want to be a 5 star house builder at the point of legal completion and a 5 star house builder in the early years of homeownership. Now for trading, as Keith has mentioned, HPI is flat in the main, but there are some pockets of good news. Despite this, reservations were up by 5% during the year, and notably our private res were also up by the same amount. Average outlets also increased by around 8%. So overall, the market is strong. I'd say our best performing areas are Scotland, Manchester, and Northern Home Counties, based in Milton Keynes. London and the south seems to be a bit more sensitive to the whole Brexit narrative than elsewhere in the UK, and you can often find that the rate of sale per outlet is a little slower, but that shouldn't be unexpected given the current political environment. And I have to stress It's the investment in those new divisions. It's the investment in those new outlets that's driving our sales volumes. Now for current trading, sales in the 1st 9 weeks, it's the 1st August have been good. And I'm pleased to report that sales volumes are up by 4% to a 183 Homes per week. And whilst that order book is slightly down year on, year. That's simply a product of having more completions in the 1st 9 weeks than the comparator period in FY18. And finally, to close on outlook, our new divisions are delivering our long term growth ambitions. That said I think our growth this year will be less pronounced, probably a best guess, an extra 300 homes as opposed to the usual 600. And my reasoning is I simply don't feel confident enough about the economy to push the business any harder at the moment. And whilst I don't think Brexit has had a material impact upon volumes, general elections often do. So my focus this year will change a little, and it's very much a long term approach to running the business. I want to concentrate on building the order book I want to lay the foundations for a new division. I want to focus on that new customer service level. Dryer through those cost saving initiatives, and I'm also keen to further increase the dividend in FY 2020. Thank you. Now we're happy to take questions Good morning. I have a number of questions. I'm just gonna keep going till you tell me to stop, I think. The first one is in terms of your whip. Your whip versus forward sales actually looks substantially higher than the majority of your peers if you can just give us a little bit of color about that. Is that just the point of time at the end of the year or is that something in terms of actually more investment than, for example, your peers in show homes and so on. The second one, page 20, the margin bridge that you give us Just to be very clear, where is 9 elms in that? Is it in the other gross margin, negative? I the underlying negative is more because 9 elms is positive. Number 3, you talk about HPI. I'm wondering, are you talking HPI including that step of incentives that you're referencing? And I wonder, is there any sort of regional difference within there? And lastly, the artisan range, if it gets to 3000 completions by the full year 21. That's still only just over a third of your product. Is it limited by where the site you can roll it out onto about planning? Why aren't we seeing it being rolled out in a faster way in order to drive those cost savings? Do you want to do the first 3 or not? Yeah. Okay. So so look, WIP WIP is about 106% of the order book. It is something we look at. There's a large proportion of the order book is contracted. We just feel that it's right to get the balance between investing so people can see the product. And therefore, encourage further reservations. You see the reservations are strong. We kind of set ourselves an internal limit. If you get to say 120%, that that's perhaps we don't particularly want to go above that, but we feel comfortable where it is based on the reservations we've got in the return that we've got, Venice, In terms of the margin on, page 20, well, that's, the the FY19 result, obviously. So any any margin movement is is encapsulated within the the gross margin movements, including anything on 9 arms and any any other site scores within there as well. And when we talk about, house price inflation being flat, that's a net result so that takes into account any movements on the incentive line. So it's not you don't add on incentives on top of that. Just on the artisan rate, Glynis, I mean, I'm probably a little bit more positive than the the new on the summary. We we've spent decades without a standard house site range. To so to to have one so quickly adopted across the group, we see it as, quite successful. It takes a year to plot it and put it on the, to get planning for it, and then you need another year to build it. So there's always that 1 or 2 year leading period be before it, comes through on Keith's legal completion line, but when you say a third of it, we expect it to be adopted on the majority of our housing sites in the fullness of time. It an exception rather than the rule that we find it's not it doesn't fit on a particular development. And the reason for is quite flexible and efficient. So we can address different local vernaculars in different regions of the country because you can have weather boarding. You can have brick. You can have render. So it's very flexible and Ian's with us today in Gowcea Regional chairman. He's the author of the artisan standard house type range. So, you know, in in many respects, it's getting the divisions used to standardization. But I'd expect that pickup to to accelerate even further in years ahead. Morning. John Bell from Deutsche Bank. I've got 2 actually. We see the same HBI trends as you do talked a little about cost, initiatives. But if those HPI trends worsen, what what levers do you have to pull to protect your margins from further erosion. And then secondly, on on dividend policy, you've contracted cover already. A touch that you've indicated that you're happy to do the same again this year. I wonder where are your red lines on dividend cover how far can that go? So under both of those. Yeah. Yeah. Okay. So on on house price inflation, I think it's the initiatives Jason was talking about in his speech really or or our best mitigants. It's having a greater focus on costs throughout the organization, just reinvigorating some of those disciplines, which have always been there, but it's just right at the beginning we were fought before again. So For example, our Belway 2020 campaign is a cultural thing going throughout the group where, you know, Jason gave an example in presentation, but you know, we've even introduced things like a a spiral register across the group, so we can look to move spoil between sites to save costs and those sorts of things to print it on double sided on PayPal, it's it's a wholehearted review of costs throughout the organization. Artisan will in due course help us protect the margin. And also as coins gets up to speed and improves our benchmarking, that will lead to improved procurement. But frankly, if you have a period, if flat house prices and continued industry wide cost increases, for for continued period of time that then that is a threat to anybody, but it tends to tends to be the case that whatever happens in the house price index costs lag maybe 12 months or so. So that's where we feel where we feel we probably are On the dividend, I suppose I said in the speech, we don't want to commit to a dividend promise. I'm I'm not going to commit to a dividend cover cover level. I think, look, 1st and foremost, we still see potential for growth And, you know, I made the point about the compounding effect. That is still, what our strategy is to reinvest earnings to deliver further growth in the years ahead. You're right. We'll see if you're likely to see a further contraction in the order in the cover this year in terms of the, of the ordinary dividend. And thereafter, let's put cash back into the business to continue growing, but I'll come back to what I always say. If you sustainably don't see those growth opportunities, over a longer term period of time, then we will look to reduce the cover, but we don't want to get reposition where you feel that's not sustainable and almost in all, but the most severe scenarios. So it kind of avoids the answer, but it's the sentiment, which is within the business. It's John Fraser Andrews, HSBC. Two questions for me, please. The first is the sales outlets, what's growth do you envisage this year? And what was the increase assuming there was an increase in the current trading in sales outlets. That's the first one. The second is build cost inflation the 3% last year, Jason, you referred to, some factors that that are are diminishing cost inflation perhaps you can flesh those out and, perhaps make a prediction for the current year on bill cost inflation. Thank you. In terms of, the outlets, in in this new current financial we expect to open around a 110. And if trading, goes in line with what we plan, we expect to close around 98, which will result very broadly than average numbers increasing sort of 3, 4% that that sort of order throughout the year. In the 1st 9 weeks, if you just take a simple point average, I'll let you maybe up 6% or so. In that first 9 weeks? Just on the bill costs, John, without making a prediction, but I guess, history tends to repeat itself, a little. So in terms of sentiment, when I talk to our MDs around the country, You just tend to get the belief that they're working within a budget now as opposed to exceeding budget costs because they're getting more competitive prices back on their tenders. It seems to us, John, that a number of contractors now wanna lock into Bellway and get some, longer term workload on their books due to the uncertainty. So we're getting prices in that regard. And certainly from our suppliers, you know, bricks excluded, you know, we're getting better deals. There are better deals on the table than that there there have been some 12 months ago. And as Keith has mentioned, you know, when when revenues go up, you know, costs go up a year later and the reverse happens when revenues come back down to a flat line, costs will follow it. So it's inevitable that that cost line will soften this year whether it's 1 or 1 a half percent, you know, it's a guess. But, certainly, all all the indicators and all the feeling I get on the ground is that, you know, we're starting to work within budget now. Morning. It's Gavin Jacob at Peel Hunt. Just a couple of quick ones, please. The first one's just, could you give us a feeling for what the cost if any there will be of getting to that 5 stars in the 9 months post completion, just sort of what extra boots on the grind you need for that. And just back onto the ground rents, Keith, the 14,000,000, I think you said, was that effectively a full drop route to profits in the year? Well, you said high margin, but how high was it? Well, we took 10,000,000 profit on the ground rents in in the year. So it's about 20 bips on the, on the overall margin. And the cost Do you want me to do the Gavin, when when Keith asked me that question, I say, no, it won't cost any extra. But, you know, it's very much changing the culture, you know, saying yes more than you say no. And I think inevitably there will be costs on that line. But it's very much, being more responsive. Sometimes I think the house building as a sector is a little bit more primitive to maybe the car industry or the retail sector in terms of customer service. I'm I'm just conscious of that negative image in the press sometimes, and I just want to improve that customer service level. And sometimes it's it's as simple as responding quicker to an email. But sometimes it's picking up the phone more quickly than a week later. But sometimes it will cost a little bit more because, you know, we've said, you you're just outside your warranty period, and we're gonna say yes anyway. You know, it's that of approach. Thanks. I'm easily Lamma from Canaccord. 2, please wondered if you could give a bit more color on the kind of sets your autumn selling season, a few of the peers a couple of weeks ago, so they've surprised how resilient it's been. Have you seen a deterioration the last few weeks and in that context, kind of what do incentives look like what you're having to use? And then secondly, just on the land market, you've seen any of the caution that you were talking about general election, a bit more caution going into this year. Feeding through to the land market? Have you increased your hurdle rates, the land price is easing off a bit? Thanks. Can I I'll do both of those, Keith? In terms of, The selling period, the ultimate selling period, Ainsley. I I I've been a surprised or pleasantly surprised as most, I guess, and the market's been quite resilient, even in the last, couple of weeks. So I haven't seen any downturn, and I I would almost described some parts of the UK, certainly Scotland and, Manchester completely immune to the whole Brexit debate, you know, it's strong in those areas. So, no, I haven't I haven't seen any downturn, and that's what's given us the ability to grow volumes year on year. In terms of the land market, the only noticeable change I could say, and I think it's short term is that where you've got this period of Help to Buyer changes planned for April 21, you can see a lot of competition in that space where people are encouraged to go and buy those site of smaller mix, the twos and threes and fours. So there is competition in in that area because people wanna land in the spring of 21 with the right product mix. So I'd say more pressure, Ainsley, on margin, you know, probably down at 23% on those type of sites as opposed to 24% where I've reported previously. But where we're investing in larger sites, there's less competition than the margins a little bit stronger. That's how I describe it, but I guess when I come back to see you in March, you know, it might change a little because we've gone through that period. Amikala from Citi. Just a couple of questions for me. You've touched upon the scope for adding more divisions over the next 2 2 to 3 years. I was wondering if you could out outline what is the the longer term scope of where you see potential growth in this country. And the second tie to that is the sort of land investments that you need to make on over the next two 3 years, what is the overall run rate that we should be assuming considering the medium term growth that you're projecting? Do you wanna do that? Yeah. Well, yeah. So in in terms of, divisions, 22 at the moment, Jason's alluded to one in the north west, which would take us to 23. As we sit today, we can at least think of a couple of other areas, where we think the scope for investment without having to go into secondary locations. So that's going to take you to a capacity the 14,000 plus you might argue, which is sort of 30 to 30 odd percent higher than where we currently are such a potential for growth remains there as we sit today. And in terms of the rate of land investments, look, all of the things being equal, I expect will be an increase this year. So whereas last year, we spent cash out the door just over 740 our budgets today suggest that might be 8.50 plus in the current financial year. Now, obviously, it depends whether you get deferred terms and all of the sorts gives you a sort of a sense of the size of the increase in in FY 'twenty. David O'Brien from Coopani. Just one for me, please. On page 22, just your bridge of margin normalization. Can you give us a sense of or quantify what cost mitigation you put in place yourself to get through 19.5 percent? It's not it's not so much about trying to factor in and break it out into even even even more detail. I mean, I must be honest, I thought was reluctant to put that in because I felt it was particularly precise anyways without without getting even more, more more granular We've revalued all of our sites based on current costs and current prices. The majority of our orders are left for the next 12 months for the last material or subcontract costs. So the risk is if there's further cost increases, it's FY21, where they're likely to have a more pronounced effect. But that said, we feel with the mitigants that we've got in place and the fact that the rate of cost increases be linked beginning to slow, and it tends to follow HPIs, we said, that that margin of the in or around mid 19s feels like a sustainable level in FY 2021 and beyond. Thanks, Will Jones from Redburn. 3, if I could please, just tying up on the 9 Elm site and obviously going back to the bridge and the 90 basis points, I think the maths of that site being 6% of revenue last year implied that it did about a 15% to 20% or percentage point better margin than the group of gross, is that right for for 9 ounce? Yeah, it's high thirties with the margin we deliver the 9 ounce. Got you. Second one was just around land creditors, which obviously came down in the year. And I think about 15% of land value at the moment, which is quite a low ratio compared to others in the sector. Is that something you see as an opportunity to help on the cash flow front going forward? Well, I don't I don't think we need to bolster the cash flow. I always I suppose it's what I always say, will it? It's, we genuinely view it as a source of financing. So if you don't have conditionality, if it's If it's a mandatory payment, which you can't wriggle out of, then then it becomes, how do you get the best financing deal? Do what do you borrow from the banks? Or do you borrow from a, from a land creditor, and it depends what their current position is. So we always try to defer where it makes sense to but equally, if we can get a decent discount for paying upfront and it's more than our cost of finance, you know, constrained by capital elsewhere, we'll go down that route. It's very much on a contract by contract basis. And then I guess the last one was just touching on the comment around larger sites that you mentioned a couple of minutes ago, Jason. Historically, you've been a bit more reversed the bigger sites as a business compared to say the pack. Is that something you're kind of reconsidering? I think Keith's always been a bit more cautious. Well, the the main No. I I think, on on the serious point, I think we've the size of the business today, we've got to make those investments because some of our divisions need that certainty of supply going forward. And what often we do, Will, is that we'll dual out that those type of site So we'll have either 2 billway outlets if it's different product mix or we'll have a billway in the Nash Ashbury. But we'll only do them in locations that we feel are a good long term bet. We'd only do them in locations where or we'd only do them with product mix that we think is sellable. So we're we're not we're not taking big, big risks as we see it. So all the locations that we've if either what I'd call strong, affordable, smaller mixes, and in divisions that are that are large that can accommodate sort of size of site, really. It's just odd. It's it's partly it's partly a function of size. The the bigger you are, the more you kind of accommodate if you, you know, you've got net almost 3,000,000,000 handful of extra large sites doesn't dilute the risk profile or increase the risk profile rather. So you can accommodate a few more without changing the risk of it. You get to that point, Will, where you're buying 13,000 plots a year. And because we've had this big focus wheel on outlets, which is delivered for us. We're really pleased with it. But when you're buying a 100 sites at a 130 units each, you're buying 2 sites every day of every week. And that's quite a load to put through the business because we do it all at head office. So if if I wanna gently increase that 13,000 to 15,000. I need to compliment it with some bigger kit, to just give us that boost in volume because all of those plots you buy, sometimes you get a bit of bad news and you know, whether it's legal or planning, some will drop out the system. So there's always a bit of comfort that you need in in the figure. Morning, Chris Melitzman. You missed I just wondered if we could push you a bit more on incentives and just find out kind of what level they are maybe versus this time last year. Quick comment on PX policy, you know, is there a point you wouldn't want it to go beyond? And also, can you just remind us quickly on the benefits of the artisan I vaguely remember you did outline that in a previous presentation. I just can't recall exactly what the figure was. Yeah. So so in incentives You're I always take the incentive figure with a little bit of a, pinch of salt because it's quoted as a percentage of our release price, which might be different in every dividend and every size. But on average, it's probably just over 3%, for FY19 and in FY18, it was close to 2.5%. So you're talking about a sort of 60, 70 basis points movement, which, as I said earlier, is included in that house price commentary we we gave. And that feels like it's sticking today through the start this year. We're not seeing it no joke. No. No. I mean, every side's different, obviously, within there, but we're not we're not seeing it a moving trend on that. And on PX, policy, it's it's almost a, a divisional policy. So every division has a limit. And those divisions which perform well, I either have a good turn of PX, they're not trading at loss. We'll give them a little bit more. And those divisions which don't don't perform well, because they're not buying it incorrectly, we'll give a little bit less, and we'll try and get it under under control. That it's out of the control, but we'll try and, you know, run them back in. Broadly speaking, that works out, it's been around about 3,500,000 per division, which gives you scope to get up around about 80,000,000 or so. But we're, look, we're turning it quite well pre x, Chris. It's about 8% of completions. The holding time similar to what it was last year, it it had around 15 weeks or so. The loss you see through the income a lot of that relates to the servicing costs of PX. You've got to pay a lawyer. You've got to pay an estate agent. It's kind of an incentive, but on a different part of the P and L. So it works well for us. You wanna do Artisan? Just on Artisan, Chris. I think as, Glenis alluded to it, you know, we we believe we've got embedded savings in the artisan range going forward, and we're we're always reluctant to promise you something we can't deliver. And because it's only in its infancy, we think those savings will come out in the fullness of time, which will enable us to maintain our sort of 19 a half percent margin going forward. The obvious, cost benefits that we're experiencing at the moment is savings on professional fees because we're designing it once. Savings on marketing costs because the brochure's done once, so we haven't got 22 divisions doing a new brochure. We think build periods will become shorter, which will save on-site overheads because there will be familiarity in terms of building the same units. We believe there will be reduced maintenance costs in in the future. And also the specification, which is now standard, you know, from new newcastle to Bournemouth to Cardiff. You know, that improves our buying power. It gives us consistency. We could show customer in Milton Keynes, the same home as in Gilford in Surrey. You know, it just gives us that flexibility. So the the the the the opportunities significant, but we wasn't inefficient to start with. So I'm always reluctant to say, look, Chris, I'm gonna save, you know, 50 bips on the margin. Because we the divisions weren't inefficient somewhere, but the majority weren't. So it's just, you know, it's the it's the right direction of travel as Keith would say. It's a good message and it will will improve the numbers going forward. Thanks. Gregor Kukuje from UBS. Maybe just a final question, on think you've been quite explicit on the sort of margin trajectory also in the midterm. I guess from our side, and I guess the market's perspective is how do you factor in the kind of changes to help to buy. So, obviously, in the short term, you still have the support, but then 21 steps down a bit. Obviously, 23 and beyond is is is is quite in the distant future, but how do you budget for that when you think about, do you do you are you kind of saying that as the artisan range, maybe ramps to whatever 70, 80%, you're gonna give some of that back through pricing through incentives, perhaps help to buy expires? Is that kind of the the big picture thinking? Or or Could I start? And then you do the guest work with Help to Buy? I I always get excited about margin because I get we get more, conversations about margin than anything else. But where Bellway are in the system in terms of London And you can see in our presentation that as as 9 elms comes out of the system, our margin comes down. There are other house builders that are coming out of London you know, new and old, where their margins going up because they've got impaired land in London because they were too exposed to a particular market. Know, I'll take our position all day long that we've we've had the good profits at 22%. You know, we're coming down, which is understandable, and we can maintain that margin going forward. Can you just do the bit on Help to Buy and what's gonna happen? I was hoping you would do the Help to Buy it and I could do that. But look, I think the reality is when we're buying when we're buying on now is Jason the Attorney's presentation. It's more important to get the right product mix, a salable product mix on there. And to be frank about it, I think we'd rather have a site which we think sells and, it has got robust assumptions on it. It it had a tad lower margin than pretending that it's 25% having a load of houses which don't sell. So that's more important for the health of the business. It's getting the interchange between sales rates, which you need as a volume house builder, in in trying to squeeze out the last pips of a margin on a site which wouldn't sell. So we're trying to factor that into alarm buying. You can see what we're trying to do on the cost initiatives going forward. We talk about replacement products to help the buyer. We're working with our peers to come up with what the top up might be, certainly in 2023 and whether we can do anything in 2021. So there are other things that we can do there as well. What will the margin be in 3 years time but I don't know is is your honest answer, but we're doing what we can to maintain it at that sort of level. Thank you. All done. Thank you very much. We're here for a while if anyone wants a chat. Thank you very much indeed.