Hello, welcome to the Persimmon Trading Update Analyst Conference Call. Throughout this call, all participants will be in listen-only mode. Afterwards, there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I am pleased to present David Jenkinson, Interim CEO, and Mike Killoran, FD. Please begin your meeting.
Thank you, Marilla. Good morning, everyone. Thanks for ringing in. It is David here, by the way. I do not intend to keep you very long, but I want to pick out a few key points from our trading update for 2018. Firstly, the housing market in 2018 has proved to be very resilient and has continued to benefit from robust employment levels, low interest rates, and a competitive mortgage market. This has supported confidence and sustained customer demand across our regions. This has been reflected in our results with revenues up 4% to GBP 3.74 billion. Legal completions increased by 3% to 16,449. We expect pre-tax profits for the full year to be modestly ahead of the current market consensus. This is a position we are really pleased with. We also expect to have a very strong cash position balance.
We have generated over GBP 700 million worth of free cash in the year, and this obviously gives us options moving forward. We have acquired over 17,000 plots in the year at margins which at least meet our current expectations. At present, we are being very cautious with any new commitments. Finally, we will be entering the 2019 spring selling season in a strong position with an excellent range of outlets and products to meet housing demand with a strong forward sales position. We are not complacent. We are aware that the potential for trading to be different over the next couple of months, especially against the tough comparables of last year. We have plans in place to meet whatever shape the demand is in 2019. I now pass it over to open up the questions anybody might have.
Thank you. Ladies and gentlemen, if you do wish to ask a question, please press zero and then one on your telephone keypad now. If you wish to withdraw your question, you can do that by pressing zero two to cancel. There'll just be a brief pause while we register questions. The first question is from the line of Aynsley Lammin from Canaccord Genuity. Please go ahead. Your line is open.
All right. Thanks. Morning. Just two from me, please.
Good morning.
Morning. How are we doing here? Just in terms of trade in kind of last few weeks into the end of the year, did you see any noticeable signs of increased caution? Just a bit more color, if you could give it on that, maybe regionally and what you saw on the ground. Then secondly, you haven't commented on margins, but just wondered what they looked like versus the H1. Are they kind of ahead of what you reported for the H1 for operating margins? Thanks.
Okay. I'll deal with the first one on trading, then I'll get Mike to provide a bit more color on the margins. In terms of trading, sales rate did drop off a little bit earlier than we'd seen previously, probably around about the middle of November, compared to the normal Christmas slowdown. It did hurt sales a little bit, nothing material as such. There was a couple of specific factors in play in that final quarter. The first one was there was some difference in the phasing of our new outlets coming online compared to our older sites.
In particular, in 2017, we did release a lot of new sites into the November period, while this time we've held quite a few back which are for a later stage of construction, which has the effect, obviously, you can either take the sales rate to November or hopefully we'll pick them up in the spring selling season. The other thing to point out was in 2018, we did have a number of tail-end sites with a small number of remaining larger four-bed houses left on them. That was basically linked to the issue you're asking on the marketplace. What we did see in the market in 2018 was some of the larger four-bed properties sticking, specifically in the southeast area, but sometimes across the whole of the country. However, it is important to point out our core first-time buyer and first-time market housing proved incredibly resilient.
We're really pleased with that. We've seen very little dilution even in that later Christmas period, and we're pleased with that. Also, our margins and revenues held up very well, especially on our newer developments. We're quite pleased with what we've seen in the last end of the year because some of it was down to us.
On the margin point, Aynsley, obviously we'll provide a lot more color in the prelims in February. I think directionally, we've pointed to a further improvement given we're saying that the PBT expectation is slightly ahead of consensus. Our consensus, just to remind everybody, is GBP 1 billion and 70 for PBT in 2018, and we expect to, as we said, be modestly ahead of that. That is largely there. Given that you've got now your top line, it's largely down to the margin performance. Obviously you can run your own numbers effectively to give you a feel on that, and we'll give more color at the prelims as normal in February.
That's great. Very helpful. Thanks very much.
Is that clear, Aynsley?
Yeah, that's very great. Helpful. Thanks.
Okay. No problem. Thank you.
Next question is from the line of Will Jones from Redburn. Please go ahead. Your line is open.
Good morning, guys. Three if I could, please.
Sure.
Just touching on pricing, I guess on a like-for-like basis. Perhaps you could just give us a feel of how the experience went on that front through last year. If possible, if there was any differentiation H1 into second around like-for-like pricing. I appreciate we're talking small numbers probably, but any color there would be great. The second just, I guess continuing with margins. You've talked in recent periods about still making some modest margin progress. I appreciate this year has particular uncertainties, I guess if we were to paint a picture of stable trading, would it still be the expectation that you could make some slight margin progress in 2019?
Just to come back to the issue of capital returns, I think again, in previous updates, you talked about looking to review that schedule, I guess, as you go into the full year results. Is that still the plan, I guess, would you maybe put that on hold given the uncertainties around Brexit? Thanks.
Okay. I'll deal with question two on margins, and Mike will give you a bit more detail on the pricing and a bit more details on the capital return. The margins, all things being equal, we're pretty confident will be pretty stable, maybe moving forward a little bit. The new sites we're seeing, which we've bought, we're very pleased with the margin performance we're getting on them. The current sites we were on, we're seeing them move forward a little bit, but not much. We still see good opportunity in my new land, which is supporting our margin moving forward. We're not naive and a lot depend upon what happens with the spring selling season and what happens with the market in general. We're eagerly looking forward to see what's going to happen in the spring selling season.
I think that sort of links into the pricing view as well, Will, to a degree. In that I know you're sort of looking back on pricing, and I think we are pleased with the resilience on pricing through the year. For the full year, we've seen on our average private selling price, we've seen a 2% increase year-on-year to the over GBP 238,300 mark. 2% is in line with what we'd have expected to see given the current market conditions on private sales. Indeed, the legal completions we've had on our housing association units delivered for the full year an average price growth of about 1.5%. A pretty consistent picture there. Looking forward, obviously, it is as Dave says, it's going to be interesting to see how the market develops from here on pricing.
Common sense, I guess, would seem to indicate where in uncertain times, perhaps, we're going to see a more modest pricing environment where there's less opportunity. As Dave says, we're opening up new sites and our experience is that we've been pleasantly surprised in terms of the pricing that we've achieved in those regions. We're still positive. We've got a positive outlook about that. In terms of incentives, if you bundle incentives with pricing, I think again, through 2018, once we get to the prelims, I'm sure we'll be saying that our sales incentive burden, if you will, is pretty low, has been pretty low, and we've got the capacity to support sales through further incentivization should we feel that is required.
Again, as Dave says, the offering that we typically make to customers at the lower price points with the range in choice, with the emphasis on smaller product, as Dave was saying, I think we found that to be pretty resilient and robust through 2018. Dave, do you want to mention capital returns or?
Obviously, we're pleased with the amount of cash we've produced in the period. Obviously, that gives you options. At the heart of the Persimmon strategy is that we can produce dividend through the cycle. Hopefully not quite there yet at this stage, but we're very confident that we can continue to produce the cash. We'll review that at appropriate time and update you in February, Will.
Okay, that's great. Thanks a lot.
Cheers, Will.
Next question is from the line of Jon Bell from Barclays. Please go ahead. Your line is now open.
Morning, Dave, and morning, Mike.
Hi, Jon.
Morning.
Morning. I think I've got three. Firstly, could you tell us the private sales rate in the H2 of the year, please?
Yeah. Just to jump on that, Jon, before you ask your other two.
Yeah.
I mean, the sales rate in the H2 was about 0.61 against around about 0.63. About 3%, 3.5% lower than.
Yeah.
The previous year.
Mike, just on that point before I come to the other two.
Yeah.
Is that probably towards the upper end of the range of the normal H1, H2 variation?
As you say, Jon, there is that quite notable seasonal difference. Spring is always the best time to sell. Indeed, it tends to be the best time to achieve a bit of price growth as well if history is to go by. When you compare, and we've talked about this before, when we compare autumn with spring sales rates into the private market, you'll always find a notable difference. Anything between high teens, 17%-18%, and maybe 22%-23% lower in autumn compared with spring. That is the normal seasonality of the market. In 2018, that panned out according to those expectations. If you will, the market was pretty robust. As Dave's already said, we started the year last year very well for the first eight to nine weeks, which probably in the current context is going to be a challenge.
I think we're going to probably see a different shape to trading this year, albeit, maybe that seasonality differential might be more like, I'm just looking back, 2016, autumn was just 10%-11% lower than spring in terms of private sales rate. We had a pretty strong autumn season in 2016. As Dave said already, if we see a bit of a relief rally after all this uncertainty around Brexit, if we as a country reach some sort of conclusion on that, I think that will probably influence the shape of not just housing market trading, but perhaps the shape of other markets as well perhaps.
Okay, thanks, Mike. My second question might be partly related, actually. I wonder whether you could just update us briefly on customer satisfaction scores and how they've been trending. Then third and final question is, I think you mentioned this in passing, hurdle rates on new land, whether you could just remind us where they're currently set.
Hurdle rates. We're not going to give you our hurdle rate. We're not going to do that. What I can say is that the hurdle rates we're getting, we're at least exceeding on everything we're bringing in and when we release new sites, we are exceeding them. That is the general trend. We're very pleased with the land we've bought, we're being extremely cautious at the moment what we commit to new commitments. We're being very careful on that. We're very pleased with the land bank we've already got, which gives us the position to pick and choose, that's what we're doing at the moment. In terms of customer care, as you know, we went through the Capital Markets Day, we talked about a lot of new initiatives that we plan to do.
Them initiatives are starting to bed in, but it's too early to tell whether there's going to be an uplift yet from where we were previously.
Okay, thank you.
Thanks, Jon.
Next question is from the line of Gregor Kuglitsch from UBS. Please go ahead, your line is now open.
Hi. Good morning. I've got a few questions. The first one is just on the order book, I think you said it's up 3%. Looking back, I think in November it was up high single digit. I want to understand whether you think that order book growth is a reasonable expectation for the revenue trajectory this year, or is this something we need to consider on site openings? I think you mentioned some delays or perhaps postponement, rather, into the spring, at a later stage of build. I want to understand that. The second is on cash. Can you help us a little bit on some of the moving parts? Obviously, the profit you've guided, but if you could help us how much you've actually paid as regards to the LTIP tax settlement. I think you talked about GBP 220 million or in that neighborhood before.
I don't know if that's what actually happened. Similarly, whether my analysis suggests there's been significant buildup in work in progress. I just want to understand if that's correct. The final question is just to go back on margins. Working through the math that you've given us, we obviously can conclude margin somewhere north of 31%. Is that the reference point you're talking about when you're talking about kind of holding the line or maybe growing it a bit? Just for the avoidance of doubt.
Just on that margin point, Gregor, if I can just jump in there. As I say, we'll provide detail in February. I think that your view in terms of a continuum from the lead that the H2 gives you is, I think, in the right area. As I say, we'll give more color on that at the prelims. I think that, as Dave's already said, we are pleased with the quality of the land bank that we have. We went through this in some detail at the Capital Markets Day. We think that the margin rates that we're delivering are sustainable, everything else being equal. Life obviously tells you that everything doesn't remain equal all of the time. That's why Dave was saying that it's always difficult to look ahead at this time of the year for the next year.
It's probably a bit more difficult than in recent times at this point with the challenges that face the country. I think that we are very confident about the quality of the land that we have to support. If we see a stable market, then we'd expect similar performance in terms of the profitability. As Dave's already said, hopefully, a little bit of improvement coming through as fresher land matures and comes through the legal completions. I think we are very confident about our margin trajectory based on the recent year's work in terms of embedding the quality land in the land bank that we provided quite a lot of color at the Capital Markets Day.
In terms of the stage of build, that has been as much about trying to improve our completion on dates for our customers. It's proved to be a little bit of Achilles' heel for the company. We missed dates, unfortunately. What we made the decision to do was try and then some companies that are struggling a little bit, just to give them a bit of relief by delaying the release date so the build's on much further on, so we're more confident on the dates we can give them. It's more about customer performance and meeting customers' objectives rather than any trading difference in terms of why we've held the sites back, Gregor.
Yeah. I think the order book growth. Well, if you look at the pattern of where we are, say mid-year to end of year, because legal completions, certainly on private sales, are always higher in the H2 of the year. Your forward order book is always a little bit stronger mid-year because of the better spring sale season. Again, that is linked to the seasonality of the marketplace to a large degree. I wouldn't read into too much. When you look at the forward order book at December, our PD volume is about 2% down at about 3,750 forward sold units. It's about 70, 80 units down on the same point last year. Yes, it's slightly down, but that really reflects that we've been tracking 2%-3% down on private sales rate through the whole of last year, really, compared with the previous year.
Yeah, I think that we've still got a very strong forward order position to take into 2019. Obviously, it's important to see how the spring season develops from here.
In terms of the cash, Gregor, it is correct. Yes, we did settle the LTIP.
The cash effect on the LTIP in 2018, because just to remind everybody that the board separately evaluated the opportunity to net settle LTIP against issuing more shares. We've reported on this previously in some detail. We concluded that it was the correct thing to do, looking at the surplus liquidity the business had, and to use some of the cash, the liquidity, the surplus excess liquidity that we had, we've got to net settle the LTIP. In 2018, we've actually paid GBP 160 million with regard to net settling the exercised options in 2018. Obviously, there's still an expectation that there's about three million outstanding options at the end of the year that still have to be exercised, and that is likely to give rise to another, say, GBP 40 million-GBP 45 million of cash net settling in 2019, should all those options be exercised in 2019.
There's a bit of a timing difference there. Slightly lower in total from the number that you mentioned earlier. That's because obviously the share price fluctuations.
Yeah.
It's more or less in line, but slightly lower. There's a little bit of a timing difference there between 2018 and 2019, with another GBP 40 million-GBP 45 million to pay out likely in 2019.
Excellent.
We've also paid employers' national insurance contributions on the LTIP as well in 2018, which amounted to about GBP 47 million. That's gone to the treasury as well. That was a cash outflow through 2018 as well.
The land creditor. Is that it, Gregor?
Land creditors. Well, again, we need to cut the balance sheet, which we're on with at the moment. The indication now is that the land creditor is going to be slightly lower. Maybe GBP 15 million to GBP 20 million lower than where we closed last year. Yeah, that is one part of the working capital movement. Yep.
Excellent. Thanks a lot.
Thanks, Gregor.
Next question is from the line of Charlie Campbell from Liberum. Please go ahead, Charlie, your line is open.
Yeah. Thanks, Lauren, and good morning. Three from me, please. You've talked about 15 sites opening in the spring with sort of more advanced build programs. I guess that's to kind of try and offset potentially weaker markets. Do you think that will widen beyond 15 outlets? Should we be thinking in our cash flow numbers for 2019 that there might be sort of quite a lot more work in progress as we go through the year? Obviously, it depends on the market, but is that something we ought to think about? Second question on build cost inflation, just sort of what it was in 2018, what you think it might be in 2019. Lastly, just on mortgage availability, just sort of if you've seen any changes in Q4.
Firstly, I think in terms of the WIP question, I don't think we will see anything. It's more about we've identified those companies which are struggling a little bit to meet our requirements in terms of completion dates. What we've done is to try and provide more certainty to customers, is not released the plots till are much further on. Obviously, the further on with the build date, the much more reliable you can hit the dates for the actual customers. It's as simple as that, really. There's nothing more material which would probably spread to the rest of the companies. It's only them specific companies where we've identified a little bit of a problem.
Yeah. Okay.
In terms of build costs, we're pretty pleased with what we've seen in 2018. We've been able to control it between, what, roughly 3%-3.5%, which is pretty much in line with what we forecast. There's a lot of things we've done in that. We've been very successful at mitigating labor costs, as you know, and various other costs. We do see a little bit of potential for a bit more costs around materials. With coming into Brexit, potentially people are looking to take opportunities on that. As you know, we've had a bit of self-help with that, with things we've done ourselves. We're pleased with where the brick factory's going. The tile manufacturing should be starting very soon. We've also got our own Space4, so we have plans to mitigate that.
With all that plans, where we're spending a lot of time on concentrating on things outside of the fabric, more to do with externals and abnormals, which has seen some good savings for in 2018. We plan to roll that out more in 2019. What we probably think is it'll be similar for 2019, maybe edge up a little bit depending upon the materials. In terms of build costs, I think probably similar to what we've seen in 2018.
Yeah.
What was the third question, sorry?
It was on mortgage availability. Just any changes in the Q4 just to.
No, nothing
Behavior anyway. No.
Nothing at all, no.
Yeah. Okay. Thank you very much. Thank you.
Yeah. Thanks, Charlie.
Next question is from the line of Andy Murphy from Bank of America Merrill Lynch. Go ahead, your line is open.
Morning, gents. Two quick ones, if I may. Just following up on the original dividend question. Your special at the moment lasts until full year 2019. When do you anticipate, assuming that Brexit doesn't upset the apple cart, when do you make a decision or announce a decision about what you would pay in terms of a special for full year 2020? The second question was on just average sales outlets for 2019 versus 2018. What sort of level of growth would you anticipate on average for the year? How was it? Thanks.
The first one, in terms of dividend, obviously, as we've said, the cash position gives us options. We always review this at the February board meeting, and we'll come back and update you on at the February trading account, where we think we're going to do. We do have options, as we've said. In terms of outlets, we probably think they're going to be quite flat, maybe tick them forward a little bit. I don't know if you want to add a bit more color on that, mate.
Yeah. It's always difficult, isn't it, Dave? We do get continually frustrated in opening new outlets to time frames that we'd like to. Clearing up reserve matters and the like is a continuing frustration to a degree. We do have good visibility of outlets. We opened just over 180 new outlets through 2018. We'd be hoping to deliver, I guess, a similar number through 2019. Again, it's always the dynamic between the rate at which you can open outlets and obviously the sales rates from the existing in terms of when they close. The sales rate that we achieve through 2019 will be important in determining the overall outlet position as well. We are pleased with the spread and quality of the outlets that we've got.
Indeed, we think that the Q1, we'll be opening about 55 new outlets or so, which is quite strong for that period, maybe 5%-10% ahead of the rate that we opened last year. It's going to just be a little bit more back-ended, perhaps late February into March, to make sure that we've got good availability of the products as we've already touched on. In terms of clarifying the capital returns, well, Dave's really already answered that in terms of we look at it continually, obviously, but we conclude on the run-up to the prelims and the announcement in February. We're not planning to break from that frequency of communication at this point. Is that all right, Andy?
Yeah, it's fine. Thank you.
Okay. Thanks, Andy.
Cheers.
Next question is from the line of Kevin Cammack from Cenkos Securities. Please go ahead. Your line is open.
Thanks. Happy New Year to you both.
Happy New Year, Kevin.
Hi, Kevin.
I think I've got two. Firstly, just in terms of clarifying the later release in production terms. Obviously, you've talked through how that impacts the WIP you carry at the year-end, et cetera. Is there also an element of that which is reflected in your slower forward sale? Is that something that structurally would take a full year to stay in the number, or does it actually work its way out quicker than that? Basically, is that not a factor behind the PD sales rate? The second part.
No, I think just to answer that, Kev, I think your observation is bang on. Obviously, if you're not on release, you're not on release. You can't take a reservation to add to your forward sales position if you're not on release. I think that has been an element, in terms of the forward sales position, albeit we're quite pleased with the strength that we still have there. We took the view that to advance the build for release in probably late February, early March, on a number of those sites was the right thing to do, to ensure that, as I say, we've got good availability and good support sales at that time. The spring season will then have matured and be in the right position in our judgment to support our activity at that point.
That tactic, if it
Yeah.
Continues, will that have a further impact in the H1 of this year and then start to unwind in the H2 of last year or not?
I think that for some time now, we've wanted to get our work in progress more advanced. Because we've been selling quite well, it's been a fine balance. I think that generally speaking, I think the trend hopefully will be to carry a little bit more work in progress. We wouldn't want to see that particularly unwind, in a steady state. If we've got stable outlets, stable sales rates, I think generally speaking, Dave, we'd want to be seeing a bit more width on the ground to support sales.
I think it's about where it is in the company and the nature of the sites.
Yeah
the sites are and how complicated they are. We'll look at each one of its individual merits. If there's a company which we think would benefit from delaying the release to give them more time to build, and it's particularly complicated, we'll do that. If it's a one which is a greenfield, pretty straightforward, and it's a business which has got a good track record of hitting its dates, we probably would release them. I think it would be too simplistic to think we're going to just carry one approach across the whole company. We'll look at each individual site, its own merits.
Yeah. Okay. The other question I had was really, in your introduction, Dave, you mentioned the word more cautious approach to land buying currently. I wonder if you could define that in practical terms, what that actually does mean for your land buying.
Well, you know at the heart of Persimmon, we've got ourself in a really good position in terms of our land bank. It's at the heart of everything that Persimmon does. It gives us optionality. It gives us optionality that when opportunities are there, we have the cash to go and buy land. If compelling opportunities came across our desk, obviously we'd buy them. If the opportunities were there and in the current market, we're being very cautious, we don't need to go and buy. At present, we're still taking opportunities forward, but being very careful what we commit to before the smoke clears a little bit on Brexit. As for our current commitments, there would be an opportunity to take advantage of one or two of our stakeholders, landowners. That's not something we're looking to do.
We consider our landowners to be important stakeholders to the business. We have a good relationship with them over a long period of time, we wouldn't want to jeopardize that by maybe an extra 1% of margin by going to renegotiate, especially as we're happy with the deals in the first place. We think we bought them right, we think on the right location. I think to summarize on our existing commitments, we'll stand on to our existing stakeholders, to the important landowners. New commitments, we're being very cautious before we commit. That isn't to say we're not going to commit in six to eight weeks' time when the smoke becomes a bit clearer, but we're being very cautious what we commit to in the short term. Is that clear, Kevin?
Yeah. No, that's very clear. If you had to place a bet at the minute. Would you anticipate spending less, the same, or more on land in 2019 than 2018?
I'm not a betting man, Kevin. I only like to win, you see. Sometimes when you bet, you lose. You probably asked the wrong person. I think it all depends what we see. If we see great land opportunities, I can assure you, Kevin, we'll take them. If the smoke doesn't become clear at the moment, it probably could be less. It all depends what we see in the marketplace. We always play what we see at Persimmon, we'll do the right thing and the right deal and on the right terms.
Okay. Thank you.
Thanks, Kevin.
Next question is from the line of John Fraser-Andrews from HSBC. Please go ahead. Your line is open.
Good morning, gents. Two from me.
Hi, John.
Morning, Mike. The first question, is there any regional patterns in that 2%-3% sales dip that you referred to, Mike? Also in the outlet openings, as we heard, that there's sites to come. Is there any regional flavor to those? That's the first question. The second is, I know it's early days, and we've probably only had one full week in January, but are there any signs so far, any lead indicators or sales even, of how the year started? Thank you.
I'll deal with the easiest one first, the current trading. Obviously, we've only had one week's trading, it's almost impossible to tell. I can't really provide you much color on that. As for 2018, in terms of regional pattern, to be fair, I think it's been well documented that the North and the Midlands have performed a little bit better than the South, I think that's maybe is a bit simplistic. The South has performed a little bit worse. There's no doubt about that, it's more to do with the product choice and the product range you have on the site. Even in the South, where we had to have the right product mix and product choice, the market's proved incredibly resilient.
What we see is those one or two discerning buyers, which is possibly the second and third time movers, that will be a little bit careful before they move. That's not where we've positioned the company, it hasn't really manifested itself as a problem with us at the moment. Does that make sense, John?
Sure.
In terms of outlet openings, do you want to deal with that one, Mike?
Yeah, outlet openings. I think as Dave says, we look at each business separately and each site separately. I think the outlet needs, the land replacement needs of each business are assessed on its own merits according to regional sales rates and land opportunities that are there and indeed the strategic land that is sat behind each of the businesses and the teams that are bringing those through. I think there's no systematic change in terms of the pattern of outlets coming through and the land that we have bought coming through. I think that is in line with each of our operating businesses' business plans, which obviously we continue to review, as you'd expect, and we acquire land.
Dave principally allocates capital across the 31 operating businesses according to need, to make sure the capital management of the business is aligned to the market opportunities that are there. I wouldn't say that there's a specific regional pattern that is any different to what we've been. We've been selling pretty well across the regions through 2018. Yes, there are differences across the regions, but the pace of new outlet and land replacement reflects the performance in each of those regional markets, really, as it always does, Jonathan Bell. I wouldn't say there's no standout feature there, really.
Great. Thanks very much.
Thanks, John.
Just as a reminder, if you have a question, please press zero one on your telephone keypad now. Next question is from Chris Millington from Numis. Please go ahead, your line is open.
Morning, Dave. Morning, Mike.
Morning.
Morning.
A few quick ones from me. Just firstly, on the order book, I just wonder if you'd give us a figure of how much of that is exchanged and maybe a quick reminder on what deposits you generally take across sites. Second one is just whether or not you've seen any increase in preponderance of down valuations towards the back end of the year, if the surveyors have been a bit more cautious. Then the final one is just on a comment you made, Dave, just about the tail end size of some larger product on them. Just wondering if they flowed through into the year this year and therefore, the outlet number is kind of boosted a little bit by some size, just with a little bit of product on it.
I'll deal with the first two, and I'll let Mike deal with the order book. I think your observation is perfect, Chris, to be honest, on the tail end, I think, which is pretty why we're pretty neutral on outlets, because the 15 we probably missed from November were flattered a little bit by the ones with the tail ends which came across. The observation is perfect on that, Chris. Yes. In terms of down valuations, we haven't seen any material change at all. Exactly the same as cancellations, no material difference at all.
On the order book, Chris, we've got about between 40%-45% exchanged in there, on PD. On the HA, they are on exchange contracts with our housing association partners. We're in a pretty strong position. Deposit wise, it tends to be around about GBP 500 deposit for reservation that we take from private sale customers. Where, again, we've been pretty consistent with that over the years.
Got you. On exchange, I presume it's five to 10, is it, Mike?
On exchange, it's, yeah, five to 10. Principally 10. That's what we typically would look for.
Got you. Sorry, just one quick follow-up is, the 40%-45% exchanged on PDs, is that any different to what you saw coming into 2018?
Not really. That doesn't really move that much because, again, it's the rhythm of the sales and the time it takes to exchange. As a business, we've been trying to improve and shorten the period from reservation to exchange. It is difficult. We have made some improvement on that. Obviously with subject search and the performance of the legal advisors supporting the customer, et cetera. It's something we continue to work on and push hard on for earlier exchange. We'll continue to do so. We have made some improvement over the last couple of years. No, it's pretty consistent, really.
Got you. That's very clear. Thank you, gents.
Thanks, Chris.
The next question is from Sam Cullen from Berenberg. Please go ahead, your line is open.
Thanks very much. Morning to you. Just one question.
Hi, Sam.
If you look at the mix between private and affordable, it seems to have kind of shifted up a couple of percentage points towards affordable or partnerships to 19% in 2018.
Yeah.
I guess, A, what's driving that? B, do you expect that mix shift to continue in 2019 and 2020?
No. We've got a very strong housing association, be it affordable housing business. It's when the build progresses and when the deals are completed. I don't think there's any particular systematic change in how we're approaching the affordable business. I think obviously planning policy and the developments of planning policy, and Dave, you are the expert in this, seems to be moving the industry to perhaps deliver a bit more social housing perhaps over time. Our numbers will reflect the general planning policy as it develops from here. Apart from that, I wouldn't expect our affordable volume in a steady market. If we get the same in 2019 as we've had in 2018, for example, I wouldn't expect a big step up in the affordable content.
The big benefit we've got was the length of our land bank. Our land bank is already secured at much lower affordable requirements. If I was to be material in affordable policy moving forward in, say, 18, 24 months' time, it would take a long time before it had a big impact on our affordable percentage. It has moved forward a little bit. I think that's more about.
Timing.
Timing and having the ability to get at the affordable. It's about timing as much as anything. I know some of our peers' affordable requirements is a lot higher than that, but I wouldn't say I was moving towards the 23%, 24%.
That probably reflects we've got a bit more of a southern bias in the mix, where under the planning agreements, the affordable perhaps is a slightly higher content. Because we see that ourselves. Yeah, for our position in the market, I don't think it's something we'd expect to.
In terms of your funding modeling, I wouldn't assume that there's going to be a big increase in affordable.
No.
Requirement.
Okay. Thanks very much.
See you, Sam.
Thanks, Sam.
Thanks.
Next question is from the line of Clyde Lewis from Peel Hunt. Please go ahead, your line is open.
Good morning, and happy new year to you both.
Morning, Clyde.
Morning, Clyde.
I think I've still got three, if I can. One was, can you just say a little bit about what sort of website traffic you saw over the Christmas period? I know you don't want to talk about the current year, but just maybe give us an idea as to whether you've seen up or downward trends in terms of people looking at what you've got for sale. Second one was on changing patterns in Help to Buy, whether there's anything to report on that front. The third one, coming back again to the land purchase. I know we've talked a lot about it this morning.
In your slightly more cautious view on things, are you shifting the sites that you're looking for to maybe ones with a cheaper mix on them or even smaller sites at all as you look at the sites that are up for sale?
I'll deal with the land purchase first. No, I wouldn't say a lot. We tend to concentrate on sites where there's population. Population's a big driver for where we want to be. We believe population sells houses. Our land purchase, that's at the heart of our land purchase strategy. It's nothing materially different. We look at every single deal on its own merits. If a deal is compelling, then obviously we'd buy it. If a deal we're uncomfortable with, then we'll not commit to it. It's as simple as that. There's nothing more complicated to it than that really, Clyde, in terms of our strategy. We'll look at everything on our merits. In terms of websites and visitors to the sites, I think it'd be fair to say that has tickled back a little bit. It's probably what you'd be surprised to see in the present circumstances.
Although the volume has ticked back, actual people we're seeing on site, the quality has actually improved. Although it maybe has come back 10%, actual impact is a lot less than that because we're getting a better conversion rate.
Okay, great.
On the Help to Buy, in 2018, it's been about 48% of our total sales, which is similar proportion, if you will, to total sales last year. In terms of absolute volume, it's about 7,900 units, 7,900 or so customers taking advantage of Help to Buy mortgages to buy our products. Yeah, we're pleased with the support obviously the government continues to make to first-time buyers, to give them better access to the market.
Okay. Perfect. Thanks, gents.
Thanks, Clyde.
Thanks.
Currently no further questions registered. I'll hand the call back to the speakers for any closing comments. Please go ahead.
Thanks, Marilla. I think we had a good go at the questions there. Seems there have been quite a few, but never mind. Just thanks everyone for your time. I'd like to reiterate how pleased I am with the company's performance in 2018, and I'm confident that we are fully prepared to take opportunity and face any challenges that 2019 brings. Thanks for all your time.
Thanks very much.