Earnings Call: H2 2019

Jan 15, 2020

Earnings release

Hello, and welcome to the Persimmon Trading Update Analyst Conference Call. Throughout the call, all participants will be in a listen only mode. Afterwards, there will be a question and answer session. And just to remind you, this conference call is being recorded. Today, I'm pleased to present David Jenkinson, Chief Executive Officer, please go ahead with your meeting. Thank you, Anat. Good morning, everybody, and thanks for taking the trouble to ring in. Firstly, I'd like to have a quick look back at 2019 and move on to where the company is positioned into 2020. In 2019, I've been delighted with the progress we've made following my strategic decision to put customers before volume and with the implementation of the Customer Care Improvement Plan. Most of the moving parts of the plan are now embedded in the business, and we are starting to see tangible improvements, not simply in the SPS star rating, but across the whole business and our relationship with our customers. I'm particularly pleased that while in an improvement in customer service, we have been able to maintain Our industry leading financial performance and I anticipate the group pre tax profits will be in line with market consensus in 2019. This shows the fundamental financial strength of the business. Although it's too early To read anything into the impact of the general election on sales rates, the early signs are encouraging. We visit our levels and website activity a quarter ahead of this time last year. How this materializes into the spring selling season, we will monitor with keen interest to ensure we achieve a correct balance between sales rate and price. But to be clear, not at the cost of our customers by selling too far ahead. So we are unable to provide accurate customer movement in here and time to follow our customer control process. Customers will continue in 2020 if we put before volume. However, I believe we are in a very strong position to take advantage of any improvements in the market and build on our strong current power sales position if we do see some improvement. We have An excellent range of both large and small outlets throughout the country offering homes at all price points to all customers. With 20 outlets held back with active WIP taking place and a similar number with infrastructure being implemented as we talk. We have increased WIP underground, which is getting towards optimum level. We plan to open a further 80 new outlets during half one of twenty twenty. The business has strong liquidity and industry leading land banks, This gives us optionality, control and flexibility how to deal with the future. Most importantly, we have a very strong team of Committed and talented people. To be clear, it is too early to give any specific cadence for 2020, And I'm not forecasting any change to our previous guidance. Other than if there was a material change in the market, We have positioned the business in the best place to take advantage of it. Thank you. Once it is normal, if we want to open up any customers now, we can The first question comes from the line of Jonas Johnson from Jefferies. Please go ahead. Your line is open. Good morning, guys. Good morning to you. Just one question actually for me. Just in terms of site numbers. You in fact talked about 365 developments under construction. I just wanted to check if that number is comparable to the average 350, which you gave us back in November. I also want to check what the expectations are in terms of Sites that you'll close through the first half. I'm wondering if you can give any sort of indication where you think you may end up in 6 months' time in terms of the number of sites Under development. And then lastly, I'm not sure if I misunderstood within I didn't quite catch within your opening thing. You talked about a certain number of, I think, sites that were under construction. In addition, I just didn't quite hear. If you could just clarify what you said for the site where you're putting infrastructure in place? Yes. We've got 365 states in construction as you see it. Nathan will give a bit more color to that. We have 345 active sites with sales which are taking place. On top of that, we've got another 20 sites Where we've got active WIP, which is in a quite a developed stage where we've taken the decision not to release on them, where traditionally we may have. And on top of that, we have another Certainly, 20 sites where infrastructure taking place, where it was site remodeling, for example, where we haven't Actually, Scott, is there a unit build in place? I mean, I think just in terms of That really covers it though. But just in terms of the view forward, in terms of average site numbers, We'd expect to be with what we saw in 'nineteen, if not, see a little bit Strength a little bit of extra strength developing as we move through the year. But yes, I mean, as Dave says, we've got a good pipeline, good visibility. So specifically on your closings, I think we'll be able to keep pace Opening up new sites as they come through, and that should provide us with a stable to slightly positive platform to support delivery to customers as we move through the year. I'm just trying to see if I can tie into the number you gave us in the November update, which took an average of €350,000,000 Was that €350,000,000 a total number? As it compares to the new segment. 3.50 at that point was a sales outlet. So we've had a handful more just at that point That were active and selling. And obviously, some have shut, a few have opened. So the average for the second half of this year, I think, was about 3.47 345, 347. So as always, the exact timing of this is not exactly precise science, but it's around that sort of level. And the next question comes from the line of Norman from Bank of America. Please go ahead. Thank you. Good morning, gentlemen. Hi, Anna. Two questions for me, if I may. Firstly, do you have a first view of cost inflation for 2020? Is it and is it more like wages related Or materials and construction. That's my first question. Secondly, If we take the view that maybe the visibility on the economy is a little bit better, the consumer confidence is improving and suddenly You were to see into the spring selling season an acceleration in demand. How would you combine that in terms of strategy with your You know the fact that you don't want to rush sales, that you've held back a few sites. So would you be ready To some extent, like you did in 2019, to lose a little bit of market share, if I may call it this way, and to slightly underperform the market to keep Okay. So on the customer side. I think to deal with the first one first, I think it's important to point out that we've been seeing Sometimes that those costs have been starting to stabilize, specifically in terms of the labor element. Although we are still seeing some cost pressures around materials, Not across the board with some materials getting reasonably high increases, whether that cost is actually deflationary. There's not one simple pattern that fits everything in terms of build costs. What I would say is Looking forward, I think we're probably going to see a little bit more pressure on materials and potentially a little bit less pressure On labor, especially if we don't see any uptake in spring selling season, what we would expect to see An increase of around 2%, 2.5%, 3%, something like that for 'twenty, but a lot will depend upon the demand for sales, which drives actual demand for the construction. Sure. I think one last point on that, Arnaud, is we obviously, with the exit from the EU Impact on sterling on imported elements, which do form a part to a degree and future tariff regime, it's hard I can guess what may emerge from that, but it's something that is An aspect of how this year will develop, I guess. And in terms of volume growth, it's effectively what We are learning to. To be clear, as I said in the opening statement, we'll continue to put customers before volume. So the business is in a big different position than what we were 12 months ago. We do have more whip on the ground. We do have the opportunity to take advantage of that if we chose to. But to be clear, We would not do that if it meant that we couldn't meet the criteria that we settled and we're going to do in terms of kind of more accurate move in dates, better quality of houses And a better customer experience. So it will depend upon the demand to that effect. If it was a marginal increase, then I imagine we could absorb some Volume growth, if it was to be a material increase, then I'll be quite happy to say that to lose that element of market shares you described In the short term, what I would point out though and let's not forget, we have a nationwide coverage of 31 companies. And even if we took a conservative estimate of 600 units per company, it gives you a data what the potential would be. But my focus would be during 2020, we continue as we are, whoops at the optimum level. If the opportunity for a bit more volume comes along, of course, we would take it, with none of the costly customers. That's very clear. Thank you very much. And the next question comes from the line of Ings Zeman from Canaccord. Please go ahead. All right. Good morning. Thanks. Yes, three questions from me, if I could, please. Just firstly, consensus, obviously, staying in line. Just want to confirm And your view of consensus was around, I think, 1042 since being on Reuters for 'nineteen. And then secondly, just on land replacement, I think you replaced Around 10,000 plots, should we read anything into that? Is that a more cautious land spend in 'nineteen Given all the election uncertainty there, will that move back up? Or are you kind of just willing to shrink the land a bit? And then thirdly, just on the independent review of the account just before Christmas, any change in thoughts about as you've suggested what you saw there, whether it's in the £1,000,000,000 or just the kind of priorities you'll be focusing on to 2020? Thanks. Well, you want to deal with consensus, Mike? And I'll pick up the other 2? Yes. I mean, consensus is very straightforward. €1,040,000,000 It's where we are, and I think we're fine with that for pretax profits for 'nineteen. David, I mean, do you want to cover the land side? Yes, I'll cover the land 1, yes. As we said for some time, we believe we've got The leading land bank in the industry, which has taken a long time to develop and it gets back to us our investment back in the bottom of the cycle. That is something which we've earned, Something which we've puts us in a unique position and gives us optionality within the marketplace of when we need to go back into the market and when we're doing. It's more about for me being disciplined. If we can buy land at the right rates With the right returns, I'm more than happy to make the investment. What we saw during 2019, there wasn't quite as many deals available Is what we hope it would be available or to maintain what we were actually land replacement rates? That doesn't mean to say that's a problem. I'm quite happy to see the land bank drift back if necessary. We'll continue to be selective from what we buy during 2020, But a lot will depend upon what happens in the market during 2020 in terms of land. Personally, I think there may be We are seeing there in the market is a bit more activity from the small to medium sized players in the land market. And it is a little bit more difficult to buy land at our hurdle, yes, we look to achieve, which is why the land bank is drifted back a little bit during 2019. That could possibly happen in 2020. But I think for where we are now, I would assume that we're probably going to be slightly cash generated for an online replacement rather The independent review, Well, as we said before, before we commissioned the independent review, we weren't going to we had got to be published, and we were going to get on the front foot. If you look back to our half year results presentation in September, you will see a lot of the stuff that came out in the independent review we were already on with In terms of our customer care improvement plan, there's no doubt the independent reviews give us a bit more And give them a bit more energy and a bit more clarity and a bit more direction, which we will be accepting of, specifically the facility we are building. But in terms of cost, I don't think it signals a big material change in there. There may be some extra investment Around the fringes, but fundamentally, we do front running this independent review with all the recommendations for some time. It's pretty much covered in the guidance we've given you previously. Great. All very clear. Thanks very much. Thank you. And the next question comes from the line of Chris Mullink from Numis. Please go ahead. Good morning, Dave. Good morning, Mike. Hi, Chris. Hi. A few for me, if possible. So I appreciate that. Yes, I'll get a flinching You know me, Mike. It won't be that long. So first and foremost, we've heard a few comments around Start of the year, end of the year trend. I'm just wondering if you could flesh out a bit. It sounds like you've seen a slightly better activity. But I'm just wondering if you could put a few figures on those different numbers or something like that just to touch more detail. Next one is really just on where you are on stock levels. I presume you've got some sort of measure you're monitoring period over period, perhaps just a little bit more on that. And then I just want to go back quickly to Dave's comment on we feel we're now pretty much at the optimal width. So I'll take your point, Dave, you probably will release a bit of cash from land investment this year. Is it fair to say we're almost on kind of And even Kale will be hard to whip as well as we look through this year, obviously, depending on market conditions. Yes. I think, Chris, to be fair, dealing with the third one First, I think it links to the second one as well in terms of stock levels. I think that's right. We've almost got into a neutral position where We've made probably another £40,000,000 £50,000,000 worth of investment in the second half. As you know, my target for WIP was 32% of sales, forward sales, which Actually, we'll be around there. It's a bit early exactly because the numbers haven't come together, but we feel that sort of number will be around there, which means It gives us the opportunity to provide much more accurate gates, sell at a much further stage and means that fundamentally We'll provide much better service to our customers and better quality of homes. I don't foresee a massive increase of investment beyond where we will be at the end of this year. There may be a little bit more, but not material. And as you said with the land, I think at most, it will be replacement. However, I think we'll probably be a little bit more trust generated rather than absorbent. So I think in terms of we are going to move to that neutral Can you describe, so simply what cash we produce less tax will be free cash potentially to do what we see fit with, And that gives us options in terms of our capital returns. In terms of year end trends, it is very early to see. What we can see since Christmas, there's been a lot more website activity and it's ahead of where it was this time last year. There's levels I've been ahead of the way it was this time last year. Our sales reservation rates have been encouraging, slightly ahead of where we were last year, Okay. We counted the reduced outlets. So generally, it feels quite positive, but I think we'd be foolish if we try to read too much into something too early. I'll be misleading you to try and do that. I think we just got to wait and see. But I come back to what I said in my opening statement. If there is an upside, We've positioned this business in the best position to take advantage of it if we choose to, but we'd only choose to do that if we could do it in the right way by protecting our customers. And the next question comes from the line of Gregor Kucin from UBS. Please go ahead. Hi. Good morning. Happy New Year. Good morning, Greg. Hi. A couple of questions, please. Firstly, can you just This is just maybe a numbers question. What was the actual sales rate at the end for the year last year sort of against the 0.7 Great team. So we have that, that will be helpful. Secondly, again, a bit technical, but Social is very high. Can you just steer whether that was kind of abnormally so and therefore, we'll unwind a bit in FY 'twenty? And then I guess a question on margins. Obviously, I think you said you didn't change your And our outlook, and I think before that, you were pointing to, I think you called it a drift on margin, I believe. And I think you probably ended the year at 30.5 or something like that, if I'm not mistaken. So I just want to get a sense whether that view still holds? Did you have a drift Whether it's against the 30.5%, against the second half or how you're thinking about the margin trajectory? And then finally, this is actually morphing into 4 questions, but the landline length, How low do you think you can go? Obviously, you frankly did maybe it was very marginal, 2.1 And it was 6 last year. How low can that go? Can you be as low as 5 on that? Or just to give us a sense how much of the sort of flexibility is that you've got? You want to do the first three, mate, and I'll come back to the land bank question. Yes. I mean on the tails Roy, Gregor, As usual, it's a tale of 2 halves. Autumn is always a little bit slower than spring. That's how it panned out again this year. And just to remind you, in the first half, we did about 0.74 of a Private sale type per week. In the second half, we did about 0.62 ish, Within the full year, about 0.68. So You can see against last year, first half PD sales rate was about 5% lower. Actually, the second half panned out, almost even Steve, it's slightly ahead, if anything, Leading our full year PD sales rate of 0.68, Around 2% lower than the prior year. On the mix of sales, Yes. So sure, the housing association sales are a little bit higher this time around. It's a good question in terms of how that's going to pan out this year. I suspect it might turn out to be something similar For 2020, given the direction of planning, I mean, Dave He's obviously more expert in this area than I am, but the general thrust of Government policy, which obviously we support in full, is to deliver housing across many types. It'll be interesting to see how planning direction in terms of meeting housing need Developed. So I could see that, that may become the new norm, if you will, in terms of a bit more Affordable in our mix moving forward. But again, it's a bit early to be exactly precise about that. Margins, we still say we still advocate sort of a bit of a drift on margin not being substantial. We've got obviously the full effect of the investment we are making in quality assurance and customer care to take account of in 2020, together with the aforementioned mix effect on social, etcetera. So I think it's a bit of drift. I think the land bank is in great niche. I mean, it's of very high quality. And as Dave said, we're trying to defend the return levels embedded there, which Dave has already mentioned. Yes, I think it's important to realize what's a normal in an industry, what's historically what lenta land bank you have. The normal period of land bank, especially in this Pannon area, we've grown about 4 years. You may ask the question, why do we have 6 years? And that's because we are in a cyclical industry and we look to buy land at the right time in that cycle. And I'm particularly proud that as a business, we've invested The right times and the right cycle. We have 6 years, but in reality, that is a bit too long. We're very long on land. In reality, we'd be more than comfortable operating it for F4 if necessary. My priority is to not dilute the quality of the land bank we want to report. And if necessary, if we were to carry on where we are at the moment, then And by about 6 years' time, I think we've been on the 4 year land, which I'll be very, very comfortable with. The important other bit of the jigsaw, which is important to point out Here is also our strategic land. We have an excellent strategic land bank, which isn't included in these numbers. For example, we have another 20,000 plus allocated, which isn't in our land bank numbers yet. So Even if we almost remove completely from the land market, we would still have a good stream of strategic coming through. So, what does that actually mean in reality, Gregor? It means we have options. We can clear what we see. If we see good deals at the right returns With the right size, then we're happy to buy it. If we don't see the right deals at the right size, we're happy to see it drift back. Got it. It's really helpful. Thank you. Thanks, Ben. And the next question comes from the line of Guy Lewis from Peel Hunt. Please go ahead. Good morning, Dave. Good morning, Mike. Good morning, Clive. Good morning, Clive. So 3, if I may, as well. Firstly, on sort of selling prices and I suppose incentives as well as sort of through the back end of the year. If you could sort of sort of give us a little bit more color around sort of what you were seeing there in terms of sort of Whether you're able to move the headline prices at all and what was happening with incentives? The second one was on regional variations. I mean, you haven't Really said anything so far today. I'm just wondering, has there been any that sort of of note? And then lastly, really was on Help and Buy. I'm just sort of intrigued to hear how that has evolved in terms of sort of usage, Again, through the second half of twenty nineteen. Okay. I'll touch on 2 in a bit of 1, and I'll let Mike pick about 3 in one. In terms of regional variations, nothing has really changed yet. It's too early to tell. The market has been consistently been seen for the 24 months. In the Southeast, it's a bit more difficult. Larger four beds are a bit more difficult, but our core market area, the demand It's very robust and there's incredibly strong demand for first time buyers. There's no real change and our partner is pretty much similar across the country. If you have the right state with the right product, then there's good demand in the economy. In terms of selling prices, I think, Mike, give it more color. Where I am on this, I think it's too early to call. I'm not in a position where we're going to be looking to move selling prices yet. That to me would be a bit too much of a knee jerk reaction. I'm not seeing enough demand or we have people coming through the door to suddenly to make this thing That would remove selling prices. And the reality is it is. Selling prices are increases are a lot more difficult than what people think. You can put a sell on price. So a lot of this is controlled by valuers. So if you are going to increase prices, this idea can wake up one day and suddenly put £20,000 It doesn't work right now. In reality, what you have to do is make it small and regular if you are going to do price increases. But I don't think what I can say at the moment that the level of demand is going to be there where suddenly we'll be looking to large price increases. I think it's more likely that it's going to be a gradual thing as people become more confident in the economy and some of the investments the government's intended to make, it becomes embedded in the economy. I I don't know why you've got in certain places, Mike. Yes. I mean, just to throw a bit of a bit of data at you, Clyde. When you look when we look at our forward orders, on our PD, we've got about Just shy of 3,300 private units forward sold at December, Which is about $450,000,000 down on where we were at the same point last year as we've touched on sales rates, etcetera. So when you look at the average selling price in there, we're actually about 1.7% ahead That's just shy of £246,500 on PD against 242,250 The same time last year. So 1.7% in terms of p. E. ASP forward sold vis a vis same part last year, which demonstrates So the resilience, a little bit of growth, as Dave says, but not dramatic. And that, I think, is a fair as Dave's indicating, a fair indicator. There probably will be some modest improvement through this year, but we need to see How the market develops. On the health advice side, I think it's been a similar sort of picture for us. As you know, we have positioned the business to offer homes for all, if you will, With a weighting towards first time buyers and first time movers, and that does attract Those types of customers, which then have the ability to choose to use the government's Help to buy scheme to support that purchase. I think it's interesting. We've all been provided with Budgets for this year through to the end of the stream. It will be interesting to see how that develops given the Non first time buyers, obviously, the scheme comes to an end for that cohort of potential purchases. So It'll be interesting to see how the market activity around that cohort of potential customer Worked through this year. But again, going back to government policy, I think the discounted open market housing idea, which I know Dave has been quite a big advocate of some time, is again an interesting development and that might provide Good support for those types of customers moving forward. Just one thing to point out on selling prices, just to be clear, our numbers are not dependent on selling price increase. If we were to say that 2.5 Cost increases, 1% inflation and revenue, it would probably be in a neutral position in line with what we're forecasting and what we're guidance to. If I were some big selling price increases that would be on the upside for us. Yes, yes. Perfect. Thank you very much guys. And the next question comes from the line of Charlie Campbell from Liberum. Please go ahead. Yes, a couple of questions, really. Just this was first of all on the retention scheme. Just wondered if you could Give us an update on how widely that use that is and kind of experience so far. And then I think you can probably work it out from the impression you've given just To help us. Just to give us the volume in the forward order, that would be helpful. And perhaps you can split that out between Private and social also would be very helpful for sort of models and things. Do you want to pick up 2, Mike, and I'll pick up 1? Yes. No problem. Yes. I mean, on the forward order side, Charlie, we have Just shy of 7,700 units, new homes sold in The forward orders at the end of December 'nineteen, that is split, as I said, circa 300,000,000 on PD, The remainder on the affordable side, that compares with around about 3 7 on PD this time last year and about 4,200 on the So In terms of volumes, we're up about 450,000,000 sorry, down about 450,000,000 on driver, We're up about 200 on HSA, so net, down about 250 overall. And I've already referenced the ASPs in there. So yes, I mean, if you look at the PD forward stall position, If you take a view on, well, what could be delivered in the first half, it gives you A feature of good strong call of sales growth for the first half. So that sets us up nicely to be able to work with the market, if you will, As it develops through Brexit and the like to deliver what we'd like to deliver for for the first half of the year. So yes, I mean, we feel quite sanguine about the forward sole position at this point. And in terms of the retention, I'm now happy to say we've got an agreement from all the major lenders. And from February 2020, we expect to be in our biggest lender offering it to our customers as well. So we should see an uptick in numbers. As we stated at the moment, we've had over 2,000 customers take advantage of the retention proposal. Over 1,000 of them have been completions And the feedback has been positive. The most pleasing thing for me is that I've actually seen a change in focus in the business. It's a real change in culture People to get the right half of the houses right first time. There's a lot more focus around that time of the key release and the 1st week after to make sure we resolve any issues As soon as they're in rather than waiting for longer time and let them fester. So I think it's great that we've given them power to our customers and given them that flexibility and ability to But just as importantly, I think it's an important cultural signal in the business, and I'm really pleased with the impact and how People have accepted a bit of being within the business, and we're already seeing signs that the quality houses were handing over better pay release. Okay. Thank you very much. Thanks, Charlie. Thanks, Charlie. And the next question comes from the line of John Bell from Deutsche Bank. Please go ahead. Good morning, John. Yes. Good morning, gents. I think I've got 3 as well. Probably the number 3, isn't it? It is. It is. First up, the HPH star ratings. You talked about 31 Operating companies, I'm just interested in any trends, north versus south, the seminary versus Charles Church, anything that you're seeing there in the business? Secondly, your big factory, have you still got it? Is it still running, that kind of thing? And thirdly, capital returns. I'm guessing we're looking ahead really at February. Could we be thinking about Change in the structure of those returns in any way? Thank you. I'll let you do the capital returns and I'll pick your lead to open. Yes, I'll just quickly on the I'm going to dead back that, John. We'll update as we normally do in February. Obviously, Yes, an issue that we're currently discussing. And we'll give you the details The easy one first, the brick bucket, yes, we still got it. Yes, we're building approximately 50,000,000 bricks a year from there. We We have reviewed the detail of the bricks in terms of how they look a little bit. So we've widened the range we have available throughout the company and so we'll make a wider use of them. Yes, the BRIC pack is firmly established. We're happy with how it's working. It continues to supplement the clear bricks we buy from our main supplier. In terms of the SPF star rating, what we have seen is that the poorer companies have improved, But that's not a geographical trend. As we've always said, it's been a demand led trend. It's been where we've seen the highest demand. So in places Where the tickets come out for 1st time buyers is, and that's and then businesses are spread throughout the country, ironically, rather than just on the south, how you may have thought. But I'm really pleased the actions we've taken and then businesses where we're unable to release until the roof has made a material change and then businesses We're nearly through the backlog of the reservations we've taken previously before we changed the policy. By the time we get to quarter 1 in 2020, I think there should be no legacy costs left. It should make a difference to our rating moving forward. So, there's no real trend other than it's specifically related to where we had the highest demand. Okay. Thank you. I think as you get batted one of my questions, I might ask a cheeky additional one, if that's possible. Go on then, George. Just a second. Thank you very much. The discounted open market housing idea, you said Dave's a big advocate. Could you just talk us through How that might impact the split of private and affordable and the ASPs of affordable? I'm just going to answer that question because it will depend upon how plan and policy gets developed in terms of how much what Percentage of it is, how it comes along, if that provides additional, etcetera. But what I will say, and this is why I've been advocating this for some time and I thoroughly Support the government in it. It will provide people who can't at the moment again on the housing ladder due to their salary. It's a completely new group of people would be able to access the market. We've done quite a bit of this from the north, And it's very, very successful. What I personally would like to say, if I go a little bit further, the big problem with discounted market value housing at the moment is it doesn't qualify for Help to Buy, So you still need a reasonable deposit, which means the cost can be quite high. Personally, I believe if you want to provide discounted market value housing with Help to Buy, It could be a real game changer, Neil. There are a lot more people in society and people at the moment are just missing out to access the housing market, specifically in the Southeast, Quite heavily because of what that means for the business, but I think it will be too early to see it. What I am sharing is that it will be good for society and I think it will be good to get more people on the housing ladder. I think the basic distinction, John, obviously, discounted open market sales are Well, it said on the team in a way that those are sales into the private market, albeit there is a restriction in terms of So market value in terms of the discount attached, but It is your purchase profile, But we don't know to what extent yet. There's no doubt you got more purchases. We'll be able to provide houses, so slightly less revenue. But we don't actually know How it's going to materialize, yes. But I think it's a positive for the housing sector. And the next question comes from the line of Andy Murphy from Woodham Power. Please go ahead. Good morning, Andy. Hi, Andy. Good morning. Good morning, Mike. I'm on a break with tradition and just go with 2 questions, if I may. First of all, on the forward sales, has there been any change to the sort of The distance out that you take your forward sales up until either shorter or longer, I don't know where your competitors has perhaps changed, but I wonder How you were thinking about it, how that might change going forward given what you've done around the quality issues? And secondly, on PRS and bank sales, were there any in 2019? And how do you feel about 2020 or otherwise would be Yes. I mean, in terms of selling forward, Bambi, which I think is the essence of What your question is, if I understand it correctly, we with the discipline on sales release, We've actually shortened the period to which we would forward sell. Obviously, we want to provide greater accuracy of Active moving in days is part and parcel of delivering on the improved customer service package. So I think we've actually shortened that approach. I haven't got exact days or weeks, It is a significant change from perhaps we were in 'seventeen, 'eighteen That will be off in 'nineteen. So directionally, it is shorter. It doesn't like to change, do you think? Sorry? Is it like do you like to change that position? No, I do want to be clear, we will not be changing our pattern to take reservations early Just to give us confidence in our forward sales book, we believe we have the right sites and the right locations and 10 sites where we have the biggest problems are the ones With the strongest demand, I'm absolutely convinced that this business is the right thing to do, to hold space back to a more developed stage, to give more accurate data The only reason you would do that earlier is if you thought you couldn't sell them. And we're pretty confident with our range of outlets, the product we've got there and what history tells us and what we see in terms of demand, but there's no need to change that. In terms of both sales, it's linked to the same point, I suppose, Andy. My focus during 2019 was actually to get more whip on the ground, To have more stock in the ground rather than sell it at a discount, we see good demand for our houses. We have to get a put more whip in the ground and it just doesn't make sense for us to do book deals where we can sell them in the open market for bigger margin. No real book deals of any size to any investors during 2019. We don't see that really changed in 2020. And the next question comes from the line of John Fraser Andrews from HSBC. Please go ahead. So on the first one, the completions in half 2 came in A lot better than half 1 in terms of the decline. Is it fair to say, given what you said On sales rates, there are a few more got into the year end and that might be why The forward sales book is slightly lower. So that's the first question. The second Is on build costs, Dave. Could I ask you to clarify? I think you said labor stabilizing. So Within the 2.5% to 3% projection, is labor sort of next to nothing in your outlook and And materials, therefore, growing somewhat more than the 2.5% to 3%. And the final question is on The customer service satisfaction and service and build quality, noting your Improvements of a strong 4 star rating and what you said earlier about not seeing significant Additional costs as a result of your independent review. Perhaps you can just So to say, how much of the €15,000,000 is still to come to get up to that annual run rate in 2020? And give a little bit more color on how much more might be needed to make you fully satisfied. Just on that last Just jump in there, John. I think if you took a view that maybe a third of the 15 was Taken in 'nineteen and obviously, the full run rate would be included In 2020, the forty-sixty split is About the right sort of level. Okay. In terms of your first question, John, I think your assessment is perfect. A little bit more volume did come in half 2, we were pleased to deliver it. The business has responded, and we were more than happy that the quality was right. To be clear, if the quality hadn't been right for half 2, we wouldn't let it go over. So That did affect our forward sales a little bit, but the real driver on our forward sales business is our decision of how far forward you want to sell I know I'll just sit in about when we're releasing on these sites, and that will be continuing here in 2020. And sure, in terms of build costs, I think you're right. It would be naive to think there'd be no labor. In the industry, probably put it hard to stabilize, so maybe 1% With materials maybe to 3%, maybe touch more, touch more on there. But I think you're going to be seeing much more increase in terms of materials, maybe one 3, something like that. I've been doing around about 2, maybe a bit more than that, maybe 1.5, 3.5 or 1, 3. Not all the deals. Pretty much got good visibility on the materials yet, but the labor is much more fluid and it's not the same across the board. It depends on demand and where we are in the country. But I mean, for your gains and for your modeling, I think the gains that you previously is probably about right. Okay. Thanks, Dave, for that. Just one follow-up, if I may. All you say, John, you can. Well, it was back on the pork factory. Yes. And so what sort of levels of inflation do you think you're incurring there and how that's comparing with the wider market? Well, in terms of the brick value, I think our costs have been pretty stable. We don't think the The input cost is going to change very much at all this year. In fact, as we produce a few more, we think we may get a little bit more operational efficiencies. In terms of the outside world, I'm not going to go into commercial deals we're doing, but we're happy with the deals we've done in terms of bricks. I don't think there are big pressure points In terms of the materials and in terms of fixed, it's in other materials where you're seeing a lot more pressure. Thanks very much. And the next question comes from the line of Will Jones from Redburn. Please go ahead. Good morning, guys. I'll really go back to 2. The first is just exploring the just some of the numbers on the We can see, I think since you last spoke, we've seen by the HGF the 12 months or completions, I think, for the province June, I think you're at 82.9 for that measure, having been at 80.1 for the 12 months to March. So there's quite a big difference basically for an annualized score in only a 3 month period. If you could argue from that, it implies that actually In that latest quarter, the next 3 months, you were probably close to 5 star and 4 star. I don't know if that's how we might read the kind of the change in the maths on that Figure that we see externally. And then, I was just coming back to an earlier comment around if you were to reduce the land bank length over the next Number of years, how would you encourage us to think about the possible impact on active site numbers? Obviously, it hasn't Yes. Discount prior to last year, at least, didn't really move upwards as you grew the land bank. So should we expect the active Sites might be down against that plan over the next number of years. Or would you maybe buy smaller sites to, I guess, offset that issue in terms of sales fronts? Thanks. I think if we deal with the first one first, It's impressive how we got to the numbers quickly. And it is quite right. I think it's a bit of both. I think the period we had previously for that quarter, I think the June wasn't So we had a big material movement, which did make the number increase quite a lot in that period. And it is quite we're probably closer to the 5 star than we are to the 4 star. Not massively closer, but we are trending closer than the 5 So, encouraging thing for me, since we've taken over in January, we've seen a step change in the business. Now obviously, the HBPF rating is only one indicator, But we have been seeing material improvement. I'm pleased with where we're trending. We still have more to do. We'd like to get to the 5 star builder, But it's not the day end and end all of everything. It's more important for us to be a quality builder and provide a quality service and provide all the things we set out in our customer care Improvement plan back in September. So we are pleased where we are and we started pretty well in terms of the recent The new ones will come out for October, so encouraging. So, it is positive, and we have made good improvement. In terms of the land bank length, You have to remember, we still have the ability to bring other safety, and I don't think it necessarily follows because we're not buying more land, but we'll have less outlets. If that was to happen, then we have options. We could top up 1 or 2 smaller sites. As we sit here at the moment, even with our land bank We don't believe there will be a material change in outlet numbers. I think it's more that because we still have the opportunity to grow If you choose to, if 21 business is 600 units per company. So Alarm Bank length supports and and that turns our optionality and what we choose to do. And I think just giving you a sort of a general feel For the recent data, I mean, the issue with outlet numbers, they do take quite a while to come through, obviously, if you're promoting it as strategic, etcetera, etcetera, And getting them through into production. But yes, if you look at 'nineteen, we've Quite over 9,900 plots in 60 locations. So simple math, about 160 plots Per site on average, this is very much an average, which is actually a bit lower than last year. My Figures here told me around about 200 lots on average for last year. So we have, On average, we've done a few more small sites actually in 2019, which actually helps Outlet volume, we're not becoming overdependent upon a lower volume of larger sites, Switch, you raised an important point, Bill, because you do have to remain focused on that because You can find that your sales activity becomes polarized or concentrated, Which means that you have to adopt perhaps a slightly different approach in the market than having a wider distribution footprint, Which really refers back to Dave's early comments in terms of having the 31 businesses across the regions, Which puts us in a very strong position balanced position, if you will, across the market. I suppose the key thing, Will, is how far you're looking ahead. What we do know and more than what we've done and what we've seen in the land bank, which we've got. We're very confident In our position for 2020, 2021 for our outlets, if I was to be a material change in the market, For example, when we were only buying 3,000 pots a year, there's potentially you're right, when we have to buy some smaller seats and top that up. That Extremes will not be seen at the moment. We're seeing a reasonable landmark and where we're able to get what we need. If there was a material change in the landmark, then We'll have to look after as we sit here at the moment, we don't see there's a particular problem. But also, I think we'll just I mean, it's a good point because it goes to the very heart of strategy. We're in a cyclical industry. We're a cyclical business. And as Dave says, we filled our boots back in The early part of the recovery phase more than anyone last time around. And as you can see on the balance sheet, We're in a great position to be able to take advantage of market opportunity should those policy conditions arise, Which is great for building sustainability into the business. And the next question comes from the line of Sam Cohen from Berenberg. Please go ahead. I guess, when you in the release, you talked about kind of going beyond the a focus on the HBS satisfaction survey. How are we meant to View that from outside the company and are you going to be releasing kind of other metrics for us to look at and track how you think you guys are doing? How are you guys thinking about that? Well, I think that's obviously we'll have to look at that and I still need to digest what it is. But customer care to me has always been more than just about For example, we were really proud to be the 1st people to empower our customers. Maybe just the retention scheme, we give them rates that other people aren't prepared to give them. We're really proud that we've just what we're doing around LRT. We're really proud in terms of the independence, breadth and proven safety and quality in the houses. We're really proud that we offer more people opportunity to get in the housing ladder than anybody else, 52% of our completions. So To me, it's a 2 narrow indicator to assess your relationship with and your customer just to personally understand it at any one particular time. Seeing that, it is important and we are focused on it and we're pleased with the improvement. But what just as to you also, the changes we're making within the business, Some of these things are subjective, qualitative assessments rather than quantifiable assessments. But we We're digesting some of the stuff on the independent review and one of the advices on that is maybe it will indicate us to assess how we're changing rather than simply using the star rating. That's something we will be looking at. And as there are no further questions, I'll hand it back to Dave. Thank you, everybody. Finally, I'd just like to say how proud I am of the whole Kissimmee team I'm making a step change in the direction of the company, while maintaining the enthusiasm and commitment the company expects from pursuing staff. I'd like to put on public record how much I appreciate all the men that they have been to the change in this important part of the proximity evolution. Thanks everybody for bringing in. Thank you. Thanks very much. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.