Earnings Call: H1 2018

Jul 31, 2018

It's a slightly different presentation this time because with the, launch of a new strategy back in May, we've been through all of our slides, all of our information, tried to just make sure we're providing you with things that we think are most relevant in that context, but I hope, and our intention is that we haven't taken away anything that you, you know, have come to rely on that gets a lot of usage. And actually, I think even if it's not in the main body of the presentation, every slide that we've ever been asked a question about is at least in the appendix. So that's the all the information you want should be there. If there is anything we've taken away that you say actually that was really useful, sort of like the margin reconciliation slide is still there, for instance, which I know everybody liked. But if there is anything that you did verify, it really helpful for us to talk about, and we just got you won't tell us because we'll we'll bring it back, but what we try to do is make it a bit more relevant to where we are today. So it's a bit more rubber refresh than usual. Think it will probably move on again when we come to the full year because it's a bit of a learning curve of working out what the right things and where your interest lies and how best to set things out. So it's a bit of a sort of a test of a few different things that we're that we're using. My presentation is in two parts, and the first of those two parts is in two parts. So, yeah, I'm going to talk about operating performance, both financial and pick out some of the non financial, sort of elements of the first half performance. Then I'm going to go on and talk about current trading and outlook altogether in that, the second half of that first half. And then I'll come back on business improvement, strategy and just a bit of a summary at the end. So it's a slightly different sort of mix, but as I say, the sort of first half, the first section is very much on the performance over the 1st 6 months. Financial, 1st of all, I think sort of should be no surprises there. The way we see the first half of the year, you know, we'd have liked a little bit more volume, you know, sort of, but, you know, as we said to you back in April, May, weather at the end of the first quarter sort of held that back slightly. That's the only thing that's any different to what we would have expected back in January. And I'll probably say this about three times, and then I'm sure the questions on it anyway. Our confidence in our 2018 numbers is strong, and we are in pretty much internally in exactly the same place we started the beginning of the year. So the impact we saw in weather in February, we probably caught up a little bit more than we expected, sort of in terms of functional build, not some completion numbers because of timing, but sort of in where we are, so I think we feel more confident that we did then, yes, and we felt reasonably, reasonably happy then that the full year was on track So looking at the financial performance, clearly a very strong performance, but clearly we're at a point where, you know, there's significant growth in numbers that we've seen over the last sort of 7 years or so. Has slowed, but we've still finished the year with 500,000,000 in net cash or a bit more strong cash conversion and operating profit margin of 20% and a return on capital, of 31%. I won't talk about the specific cladding provision. It's not there in those numbers. Chris will pick up on it, but either of us are to, yeah, sort of take questions on at the end, but I'm not gonna gonna cover it because I don't think we need tests to cover it twice. Then some operating highlights, I'm gonna come back to a number of these because what I'm particularly my my main goal from this presentation overall, is to try and give you a some some sense of how some of the things we think are very important on some of the non financial measures actually will link to financial performance over time, because I think that's maybe what we've not giving you as clearly as we could have done in our strategy day. So a lot of these, I'll come back to you and just give you a sense. So for instance, I will talk in a a couple of minutes about the cost of customer care where it sits and, you know, sort of why we see that as something that we can work on. Think we still think they're the right thing to do, but we think we can do a better job of helping you link link them to the underlying performance of the business medium to long term. But picking out some of those highlights, On the 8 week survey, which is the one we tended to focus on, the one that drives the star rating, the first half of the year was back above 90%. And for the first time, when we told you we would do this, we're just going to start talking about the 9 months survey, which we actually think gives better data in terms of really understanding what customer performance is like, and I'll talk about that in a little bit more detail in a second. On the land side, still a very good land environment and the land cost percent of new approvals still low at 17%. And the revenue in the land bank has continued to grow, even in a set of sort of uncertain economic conditions with a reasonably stable land bank, our view of the selling prices in the land bank has improved and we're close to 1,000,000,000 of potential revenue. And our strategic land bank has gone over 120,000 plots for the first time. If you look at production, and again, we'll sort of expand on this a little bit during the presentation more than we normally do, the construction quality review, which is an external assessment of sites done by the NHBC performance has improved from 68 to 74%. That site rated, good or better. That all gives us a sense that we can show where we're getting the underlying improvements from the work that we're doing. And a number of directly employed trade staff is over 1500. And about 1000 of those are true full time trade staff, about 500 are site management staff that we would have had historically. So so meaningful, meaningful growth there. On the people side, our voluntary turnover rate is still low at 14.5%, And we were we'll spend again a little bit of time on this, but again, what I'm trying to do is relate that to current performance and future performance Weber Glassdoor's 15th highest rated employer in the UK. Nobody else in our sector was in the top 50. On systems and efficiency and Chris, we'll talk about this in more detail. I won't spend too much time on it, but just a couple of specific things. My Taylor Wimpie, which is a customer facing website where people you can get the information they want on their house move direct from the website rather than going through through site offices. Pilot is complete and it's being rolled out. Project Management, the IPF's improvement plan, which I will spend some time out, time on, the rollout is complete. And as Chris will talk about, we've completed stage 1 of our cost and efficiency review. So going back to customers and communities, yeah, so getting over that 90% is important to us. As you'll see on the next slide, we're over 90% in all three of our regions. We've never been over 90% in all three of them. The last time we were hit 90% company, our Southeast business was well behind. And so the underlying, you know, sort of performance is much stronger. Said I'll try and relate some of these things to, sort of financial performance. And all I've done is just giving you a view of the costs over the last sort of 18 months, so in 6 months, sort of brackets. And you can see they're starting to slowly come down. Most of our investments in this area was in 2015 'sixteen. And we always said getting to a point where we get the performance right will cost us some money. We think it's the right thing to do. Actually, we're confident as, you know, that beds in, that will start to come down. You start to see that trend. It's not a huge huge numbers. I'm not trying to sort of give you a big cost saving target here. But it should hopefully give you confidence that when we look at some of these areas and say it's right for us to invest in these areas, But once we get there, then we'll get some of that cost back out that we can actually deliver that. We believe particularly on the remediation side of it, the actual physical cost, what we're doing on the site quality reviews will make a huge difference over the course of the next 3 to 4 years. We don't think anybody else is looking at it in the same way. The industry tended to be very reactive for these things and not get good data across different problems occurring on, you know, sort of sites across the country, those sorts of things. So we have a far more structured approach, that cost, you know, you're talking about a million per annum cost roughly. That cost could significantly come down and deliver a better service to customers more certainty, lower risk, faster build times. Getting to all of that in one go is tough, takes time. At the bottom of the slide, you see just a snapshot sort of a further trend on our community investment by planning obligations. Historically, when we've talked about this, you know, sort of in in this sort of room, it will be, that's how much it's gonna cost us, you know, sort of, have we got the best deal? Actually, we think that we kinda need to turn that on its head. And just think, yeah, be a bit more prepared to shout about what we are investing over the course of the time you see on that slide, we spent 1,000,000,000 on community obligations. And yet, we sit in a place of the sector where people don't really see the value that we add in a broader sense. And I think we just need to be a little bit braver about sort of calling out that cost, calling out what we do. If I go back to the days when we had a business in the US, you were driving around sites and the bus sign saying, this school delivered by such and such a housing developer. We actually hide away from it for some reason. I'm not trying to signal to you that car is going to inexorably increase. It would depend on the balance of sites we go through, you know, our our senses at the moment. It's reasonably stable. Yeah. We'll talk a little bit about the environment in the in the second section. But actually, this is part of us talking far more openly and positively about what we contribute communities, and you should see that trend continue. Last one, customer service, and I said you could see the regional sort of split where all of our businesses are just over that 90%. I'm not gonna spend a lot of time on the the bottom half, but we will come back to it. That shows you the breakdown of the 9 month scores. And there's a number of things on there, like the service performance afterwards, the development score, which is how people rate the environment they live in. Which don't really come up on the 28 day survey. Those are the sorts of reasons why we think that's a better way of assessing how we do. You can see you know, there's a big performance improvement over the course of the the 12 month period that we're that we're looking at. It's always more difficult to use as a management tool because of the lag factor. But actually gives a far better level of data. And if you're not getting good scores on this, then, actually, we're not really delivering the right service to our to our customers. Something you're a little bit more used to, sort of quality of land acquisitions. Same chart you've seen before, showing return on capital on acquisitions in the period set against contribution margin, but we've added scaling onto the the size of the chart. So you get a sense of the sort of the level of investment. Obviously, the yellow sort of for the first half of the year is only looking for a half year, so it's always going to be smaller. Our sense for the year is, you know, probably more or less in line with, you know, sort of an average of 2016, 2017, landbank probably increasing a little because strategic land additions, but not fundamentally different. But the main message is additions remain at exceptionally high return on capital and very good strong margins, and we're not seeing that being challenged in, in the land market at the moment. And again, more traditional slide on, on land, just giving you a sense of the overall scale of where our landbank sits. I said we'll come back to production, and this is a little bit less first half performance related. But what I, as I say, I'm trying to do is give you a sense of how, what we're focused on in terms of business improvement can really add to the bottom line. I touched on it, you see it well down the slide, the construction quality reviews, which test underlying build quality. Our aim is to get those to sort of well into the 80s, which we think is perfectly reasonable. The level of progression is very significant, and most importantly, the worst performing sites are the that stepped up. Just as importantly as the bullet point above, which is an more of an internal measure on a consistent quality approach, we are the only national house builder who can say to you, this is our national quality standard. Nobody else has a national quality standard that they are holding all of their businesses to. Actually quite a difficult, surprisingly difficult process and document to pull together because the industry is so used to running regional businesses you know, sort of on the views of of local management on issues like that, but it's actually quite a big challenge. If, as we say on the slide, we move to a housing on the them. That goes from a helpful process document that is useful to set a standard for our customers and useful for our own people to an essential tool that you can't manage an independent quality review process. If you're not able to say, this is the quality expectation that we're setting. It just gives you a sense of one of the ways in which we're moving the business on, then in the end, we'll be essential in our sector for everybody. And at the moment, we don't believe that anybody else has. Our focus has tended to be over the last few years on getting finished quality right because that has the most direct impact on customer service. Our focus over the last 12 months, and if you look at the next, sort of, the next 2 years is on underlying build quality efficiency, getting the process as slick as possible. And that that document, that process, that consistency of process naturally is really important. And when Chris comes on to the cost and efficiency review, having that as the sort of start point as to how you, how we do things at the moment is, is an essential base level. Our overall strategic goal is to deliver faster to be more responsive, more cost efficient, but also maintain quality. You can't do that without changing the process under the surface. And again, just a snapshot in external, as sort of measure, these are pride in the job winners over the last 4 years. You can see, you know, sort of 2015 was a good year. Then the pressures on the industry on volume put us put us under pressure, and we've got back for the first time until in 2018, we've got more winners It's not that we haven't got any sale of excellence or regional winners in 2018. They just haven't announced them yet. So we will see. But it it just gives a snapshot And I said I would also come back on the people side onto the Glassdoor survey. I'm not gonna go through every stat on here. We find this survey useful because of the other companies that are rated on it because they're businesses that are progressive and moving forward. The top 20 companies include ones you'd expect, the Googles or Facebook, the apples, but they also include growth companies that don't include many other relatively traditional businesses If you go and look at the the, the site in detail, you'll see the site anomaly apart from, you would might argue, us, is Angley and Water is on there as well. But as I say, nobody else in our sector is in the top 50. Getting on to the second half of my first half, market and sales. And I'm going to talk both about our own sales. And, yeah, whereas in the past, we've left the sort of forward looking piece to the final section, I'll pick up you know, sort of what's happened in July, you know, sort of alongside the sort of first half performance. I think we do have to acknowledge that consumer confidence has been affected by the Brexit uncertainty. We haven't seen that in our numbers at all. You know, I'll show you the usual snapshot I sort of show you of you know, sort of different forward measures of customers. So you can't really see that in there. You can't see it in our sales numbers. We don't believe last year, the first quarter was strong. And really since the first quarter, we've been tracking more or less in line with last year. But we can't we shouldn't hydro on the fact that consumer confidence generally is not quite where it was. Yeah. That's not worrying us for 2018, but it will be naive of us to sit there and say, yeah, no, everything's totally fine. There's no risk. It's all, it's all wonderful. It is an uncertain backdrop. But new house building sales build rates remained very positive. We can't get away from the fact that Help to Buy is a key piece of that, and I'll come back to that. I have one slide on politics, and I'll touch on our views as do continuing low interest rates. But at the same time, a quarter point rise, as I've said to you before, doesn't deeply worry us. And if I'm honest, underlying confidence is more of a concern to me than a quarter or even a half point rise in interest rates. So it's the next 18 months of people not being quite sure what the world helps for them that we have to be careful about. Mortgage availability and affordability remains good. And as a couple of your notes said this morning, at the end of the day, that's what's going to drive the next 2, 3, 4 years. But we can't get away from the fact that the next 18 months is a pretty uncertain period. Against that, performance to date has been very good. And as I say, this slide now includes the July numbers, sort of which I haven't tended to do historically. If you look at the last 3 weeks, 2 of them have been ahead of last year. One of them has been behind last year. The average is slightly slightly ahead. So overall, sort of, certainly nothing, if we bring it right upstate, that should give us concern. Cancellation rate in line with the second half of last year. And actually, you'd expect the immediate post half year period to be a little bit higher. Sales prices are tracking in line with expectations. We're probably about 1a half percent ahead of where we were kind of September, October time, but but actually today pretty flat, I would say, sort of month month on month. But overall, a pretty solid set of sales statistics, so nothing in the forward measures at the moment that particularly gives us concern, which I'll come back to. Just briefly touching on Central London. Again, a more stable performance. You see that sales rate probably a bit better than you would have expected in our Central London business in the hurt first half. And specifically picking up Mount Pleasant, which we bought almost exactly a year ago, we now started on-site in terms of physical construction. We launched from point of view in September and our expectations today in terms of financial performance at the same as they were when we bought it. So certainly nothing that, you know, no no regrets sitting there at the moment with Upside, which we think over the longer term will be a great site for the business. And, you know, cancellation rates, which I wouldn't want you to place too much story, but should give you a, you know, sort of a reasonable degree of confidence in the stability of the environment that we see in those sites. Looking at those usual lead indicators, you can see on most of them that the 1st sort of quarter of 2018 was perhaps slightly below the sorts of, the particularly strong 2017 numbers, but not much and actually in line or slightly ahead of the previous 2 years, which were pretty good years. And you can see, as you go through into the second half, actually, we're actually probably slightly ahead of year on most of those lead indicators. So nothing that should give you particular concern. One thing, I don't want to make too big a thing of this, but one thing we haven't particularly talked about, we changed our use of, national, what's the right terminology overall, well, right move in Zoopla, our usage of them at the beginning of the year. And actually, we're using very few sites at the moment, which is not particularly a long term strategic piece. We wanted to test our own social media marketing, our own sort of website usage. And you could perhaps see that in the first quarter a little bit, but actually now we're still not using them. A great extent and we're actually back where we were a year ago. So that's part of wanting to interact directly with our customers and not depend on a third party agency so that we use them selectively where we think it makes sense in individual developments rather than across the borders we've been historically. But, you know, we we wondered whether that had an impact, but as I say, we're pretty happy with where we sit now, but that we've sort of worked through that change. I'm not spending a lot of time in this presentation, going back to the core part of the strategy about sales rates on large sites outside traffic. We haven't changed our views. We'll talk to you a lot about it, I suspect, when we come to February, it's just too soon after to May to give you lots of brand new data, but I did think one snapshot which gave you, for the first half, a sense of our sales rates, set out as we set out in that strategy. So you can see the variation, and you can see that we're already achieving yeah, sales rates of 1a half on on those largest sites. Just give you some confidence that we were, yeah, sort of, not completely making it up and that you could actually see, yeah, that we can see in the business, actually, our realistic sort of getting additional volume out of those larger sites over time is as I say, just a snapshot so you get a sense of where we are. We will come back and spend more time over that over the next couple of years, but it just sort of, was a bit of an update. And I also thought this would be, you know, sort of useful and interesting. Our our price mix and our position in the market has moved steadily over the course of the last 6 or 7 years. Obviously, the market has moved, so the average selling price has moved up. But, but Taylor Wimpey's position in that market has moved up. In doing that, we wanted, in the same way as we want to geographically quickly to retain a very broad, strong base. We're not trying to drive sales prices up by HU's dominance in the upper end of of the market. And this just gives you a sense of the breadth of the market that we cover and actually breadth of the market where we have significant presence in terms of sales rates. We're not particularly dependent on any one sort of, positioning sales price wise. Again, we'll probably spend more time over the next few presentations on customer segmentation where we sit, which custom groups we see as being, you know, sort of, most positive medium to long term. That's just starting to start that conversation. And then just summing up, yeah, if I take a medium term view, employment prospects, mortgage availability, affordability, all generally good, Help to buy is key, which I will come back to. Our base case still remains low price growth overall. Interest rates are important, but in the short term, you know, sort of the thing, I just think we need to keep a watch on is consumer consumer confidence. We're not changing our guidance on build pressures. I think you're in an environment where we do have uncertainty. Actually, the risk is on the upside for us. Bill costs in place and slightly more likely to be lower over the course of the next 12 months than over the last 3 or 4 years. But it's I'm saying that because it feels instinctively right than we can see evidence of it today. And we're certainly not seeing strong upward pressure. Land market remains good with reduced competition, and we feel certainly in a very good place for the balance of 20.18. And I think more importantly, from our point of view, that we're managing the right things and adding the right value longer term. Chris? Thanks Pete. Good morning, everyone. Before we launch straight into the numbers, just a reminder that the group results shown on this slide incorporate our Spanish business, which has had a very strong first half, nearly doubling their completions and more than tripling the operating profit to just shy of 1,000,000. Pardon me. We expect to see further progress from Spain in the second half. And you can access more information on that business in the appendices to this presentation. Overall, the group results for the first half very comparable to what was a record first half in 2017. And in the context of that and the poor weather conditions in March, We consider these results represent strong performance. As noted in the trading update, in April, we expect volumes to be more second halfway to the normal and we remain on track to deliver 2018 in line with expectations. Revenue for half is pretty much flat with volume reductions, offset by price improvements. Both gross profit and margin are showing slight improvements year on year, whereas operating profit and operating margin are showing small reductions reflecting a reduced performance from our joint ventures, which you'll see on the next slide. Net interest costs at 1,000,000 are slightly reduced compared to the same period last year resulting in a profit before tax and exceptional of 1000000 is just 4,000,000 shy of last year's record mark. The effective tax rate for the group but 18.7% is broadly in line with the statutory rate, with a slight pardon me, slight benefit from the recognition of additional deferred tax assets in Spain. But we expect the future tax rate to stay pretty similar to that statutory rate. Tangible net assets per share is up 6.7 percent to just in excess of a pound and that reflects our continuing investment in the business and of course the reduction in the pension deficit. Turning to UK performance, volumes worth 3.2% down on the same period last year, reflecting the greater second half waiting. It's worth noting that build is well progressed on those 2nd half legal completions. And at 22nd July, we were 87% forward sold, so a strong position to be in. Affordable housing represented a greater proportion of the total completions in the first half. And we'd expect that to drop back to a more normal share by the end of the year. Both private and affordable pricing were up year on year. Affordable pricing showed strong growth across all three of the divisions, with the increase in average unit size only contributing 1.4% of that total nine 9.8% increase. And as you can see, our JVs didn't contribute many legal completions in the first half, which was purely timing and entirely expected. The reduction in UK operating margin is driven primarily by that JV performance year on year and will and that will pick up again in the second half. This indicative analysis of the movements in U. K. Operating profit margin is slide you've seen many times before. And as a reminder, the slide aims to consider how the market has performed and then how we've performed relative to that. In our update in April, we talked about the market impact on margin from both house price and build cost inflation being pretty neutral for us and that's exactly what this slide shows. In our, we also see when you look at the land bank evolution, that that's a pretty modest impact as we trade out of those sites that we acquired prior to 2013. Which have the benefit of cumulative inflation. And we replaced them with a new land where the margin on acquisition has shown incremental improvement over recent years. We've talked in the last few years about the investment in the customer journey and that 0.1 impact, 0.1% impact, you see here compared to the first half of last year is really indicative of that investment now being complete. Overall, you can see that absent the JV performance that I mentioned earlier, pardon me, the UK operating profit margin would be very close to flat year on year, even taking into account those reduced volumes. Now most companies when they embark on a cost and efficiency program have a burning platform, which drives the change. And we clearly aren't in that position, but we believe that taking a proactive approach on this now will underpin the achievement of the financial targets that we set out at the Capital Markets Day in particular, maintaining that operating margin between 21% 22%. Part of the program involves getting more out of our IT systems, Pardon me. We have an ERP system that captures significant quantity of financial and operational data, but we're not really fully exploiting that data at the moment. Other elements of the program involve harnessing technology to strip inefficiencies out of the back office processes and in store doing drive productivity. And I'm going to touch on some examples of those in the second next slide, but I think it's important to note that the anticipated level of in the in place and very few of those benefits related to people or redundancies. I'm happy to say that overall the program is progressing in line with my expectations. I'll drink. With some work streams, you know, already underway and others that are in, you know, in the process of being validated. And the timing of the capture of, of the benefits from the program is varied simply because the nature of the different, opportunities are quite varied. At the Capital Markets Jenny talks about the rationalization and consolidation of our standard house type range. And the impact of that obviously will only start to see in the P and L once we've worked that through the planning and we start to deliver that on-site. And obviously that takes some time. So this list of opportunities is a high level selection of some of the opportunities that have been identified. I think they're pretty self explanatory, so I won't run through each one of them. But I thought it might be helpful to give you a bit of a steer on the first too that we're underway with, delivery excellence will transform the working lives of our site managers. And I can say that with a degree of confidence because that's exactly what it did for those who took part in the pilot. The feedback was great. Being able to refer to drawings and update build progress direct into a handheld device rather than having to go all the way back to the office, and note things down on pieces of paper and then input them into the systems. That is a huge saving in time. Also it makes the site manager much more responsive they can spend much more time out on-site, which is where we want them rather than in the site office. Commercial Excellence incorporates 22 separate proposals in that one work stream. One example in commercial is the forecasting of WIP spend, which can be quite time consuming for our commercial teams and the solution involves that with forecast being generated directly from the information in our ERP system at the press of a button. And clearly that means we can deploy those commercial resources into more value added areas. One element in finance of the commercial program would be electronic data interchange and this involves supplier invoices being sucked directly into our systems and removes the need for any manual input at all. And these days that sort of technology isn't sort of cutting edge, but it doesn't need to be in order to deliver good efficiencies for us. The average contribution for each of our homes increased by first half of last year. Contribution margins remained constant at 25.9% with increased build costs being offset by lower land costs and selling and efficiencies. It's probably worth noting that the increased mix of affordable units in the first tends to increase the build cost as a percentage of selling price, but reduce the land cost as a percentage of selling price. So you should expect those movements to reverse in the second half as we as well as the mix moves back towards what you've seen in previous years. Following the tragic fire at Grenfell Tower last year, we undertook a detailed review of all of our buildings to identify those with aluminium composite material in their facade. And where we identified buildings with ACM, we worked with building owners, with management companies, and with fire service to implement the government's interim mitigation measures. And we also sought professional advice from experts on each individual building as to what, if any, the next steps should be. We have taken the decision to replace the ACM cladding on a small number of legacy sites where we believe it's the right thing to do. In the circumstances that are specific to those sites. And as a result, we've set aside a provision and exceptional provision of 1,000,000 to cover those costs and that provision is based on our own internal cost estimates, but also an independent assessment by an external specialist PQS. The majority of that million provision relates to our Glasgow Harbor Development, which was constructed between 2003 2000 and 2006. And whilst the cladding at Glasgow Harbor met the technical standards that were relevant at the time of the building warrant applications, those standards were updated after the construction of the development started, and this ultimately left those customers are facing a very significant and unexpected cost. So we stepped in because we believe in the specific circumstances, but it's the right thing to do for those customers. Turning to the balance sheet. The increase in long term assets reflects the adoption of IFRS 16 leases, which has required the recognition of just under 30,000,000 of assets in respect of our company car fleet and our leasehold buildings. There is a corresponding credit in other creditors. In total, we've adopted 3 new accounting standards in the period and there is more detail in the appendices for those of you who are particularly interested but their impact for us is pretty minimal. The land and wind balances at the end of June are higher reflecting the wording of volumes into the second half. And I'll touch on cash and pensions in a minute, but clearly the provisions balance is higher. Simply because of that exceptional ACM cladding provision. Now I mentioned that the capital market say that our basic approach to capital structure involves the land bank being financed by equity and the working capital being financed by short term facilities. And clearly, we have a slightly more conservative position at the moment with 1,000,000 of cash on the balance sheet at the end of June, but obviously don't forget that there was a million special dividend payment in July. I'm pretty comfortable with the flexibility that to increase. And we're also likely to consume a little bit of extra whip as we move to implement the growth in the strategy that we've set out. As you know, we made a payment of 1,000,000 in April to fully repair the pension scheme deficit and contributions have ceased as a result, those contributions will only resume if the scheme drops below a 96% funding level on a technical provisions basis. And at the end of June, we were sitting at 99% funded. Turning to dividends, we've declared an interim dividend for this year to be paid in November of 1,000,000 or 2.4p per share, This together with the million special dividend paid in July and the 2017 final dividend paid in May, means we will return 500,000,000 to shareholders in 2018. At the Capital Markets Day in May, we updated our ordinary dividend be 7.5 percent of net assets or at least 1,000,000. And at the same time, we declared the special dividend for 2019 which is to be paid in July 2019 of 1,000,000, which of course will be subject to shareholder approval at the next year's AGM. So together, these generate a total dividend of for 2019 of approximately 1,000,000 or about 18.3p per share, which is a 20% increase year on year. Now working from yesterday's share price, this declared dividend represents a very, very attractive. So, Michael, whopping 10.6 percent yield. And then as I emerge from my first 100 days in the role. My immediate focus is in 3 areas. I think we have a great opportunity to harness technology to improve the business. The electronic data interchange example I mentioned earlier is just one example. We've recently introduced for our VAT returns, a robotic process automation, an RPA accesses operating systems and applications just like human would only faster, cheaper, and more accurately. And we think that technology has of potential users within the wider organization. Clearly I want to get stuck into the cost and efficiency program. Implementing an ERP system is hard work and the guys that implemented ours 5 or 6 years ago did a great job. But the process around that system as you know, the commercial excellence program is identified can be better in places. So there's opportunity there. And lastly, we capture significant quantities of financial and operational data But we aren't always using that analysis to transform the data into useful timely information that that assists better decision making. And I'm not entirely sure as I stand here now what the optimal solution is yet, but I definitely know that it's worth and some degree of exploration. So in summary, we continue to make really good progress as a business. We've got a strong balance sheet, quality land bank that drives great cash generation and excellent equity returns. And our new strategy and the growth that flows from that strategy positions the group really well for the future. I'll hand back to Pete. Tetris. And serious respect for getting the word whopping into your presentation in a credible way. Yeah. It it wasn't it wasn't a bet. Actually, they really sometimes have those bets, but that wasn't one of them. So second half, I just wanna go to the strategy, but talk about it in a slightly more granular way from within the business and particularly try and, set out why we think it's the right approach and what we think the benefit can be medium to long term. You get some sense of it from my first presentation. You get some definitely get some sense of it from Chris's ending slide. What this slide does is set out the last of my slides from the strategy presentation just to reassure the you that we haven't changed our minds and gone back and changed anything. But what I really want to pick up is just the final bullet point because that sets the scene for what I just want to talk about in the next 5 or 10 minutes, building a sector leading customer centric, highly professional, robust business model that can take advantage of long term demand and be much better able to flex to meet short term threats. We do think a lot of what we're talking about doing around customers and other ideas the right thing to do, but we also think there are serious business benefits. We're in a very unusual situation, as I started off with my strategy presentation back in May, that were in a UK market where there is far more demand for our product than the industry can reasonably satisfy. We might have 2 or 3 years post Brexit uncertainty, but that long term position is what drives fundamental value of the business, and we're not able as an industry to take advantage of it. So a lot of what we're focused on doing is retooling the business to enable it to respond better in a higher quality, more cost efficient, but above all responsive way so that actually we can take advantage of the market opportunity that the same before us. So it's not so much about short term performance, although there are upsides, but it is about how to make sure we take advantage of what we see as a very positive market opportunity for us in the medium to long term. So I'm just going to try and give you a little bit of granularity, but just giving it a graphical sense. And this first picture, I don't think is harsh. It's just a sense of where we were as an industry back in 2008. I think the guy in the middle is probably about to lose at least a hand, but if not, you know, sort of, his business. I think this is too generous. We have moved on in the last 10 years. We as a business have moved on, but we're still not a process industry that can actually reliably increase production, change the way we deliver, and do it in a high quality way managing costs things move too far out of kilter. We can't resource as quickly and efficiently as we want to. Yeah. We have too much of an impact on our underlying costs when we try and grow to respond to the market. We can't manage our quality. We think on the last 2, we've actually got a lot closer as a business than anybody else in the sector over the last 3 years, but we were reacting we want to make sure that as we look ahead over the next 10 years, we're not just reacting. That actually will be set up the business that, yes, we'll have some good times and some bad it actually, we can take the best advantage of the good times and make sure we're as strong as possible in a tougher environment. So we want to get to a point where actually it really is a production line. That doesn't mean it sits in a factory. This is not about whether we produce on-site. This is about every element of of the business and how it how it operates. Not just just about our production. So what I'm trying to do, you know, and all this slide does is set out a kind of contents page, which we use over the next few presentations to talk about the different areas of the business we think are important. What I'm going to try and do in each of these areas, except for systems and efficiency which Chris has already covered, just give you a sense of some of the projects that are underway. We did 1 or 2 with a strategy day. I'm not going to talk about everything that's on the slide. I'm just going to pick out the odd example, but what I'm trying to do, it gives you a sense are the depth of the retooling process that we're going through, some of which is complete, some of which is midstream, some of which we're just starting with the sense of progression of what we can do in each of those areas. For pick out a couple of things, the customer service portal, the fact that our customers can now actually, you know, sort of, for the first time, go and get all the information they need it gives us efficiencies, but it gives us consistency. It gives us a record. We've moved away as people start to use that portal. We move away from a place where the only record of the condensate around the customer. It depends on whether our sales exec on-site happened to make a handwritten note or not. And whether 5 years later, that's actually been kept in a leveraged folder somewhere in in a site office. Getting away from that history of how sales happens on-site is a is a huge step. Being able to provide online immediately 20 fourseven, you know, sort of is is long overdue. The level of adoption was immediately extremely quick, and I think it will only we early grow from there, and that's actually out in all of our business units. A key part of that, which was practically more difficult, which provides a little bit behind and has only just been trialed, is a proper options online system. To do that properly, you need to be offering more or less the same options across all of your 24 businesses. You go back to that consistent quality approach document I talked about before. If you don't have that, it's very difficult to do an options online system really effectively. So there's lots of base work you need to do. But by the end of the year, that will be an operation in all of our businesses. Picking up a couple of others, and we We touch really quickly on, sort of house type ranges. And I and I said to you, if you remember, that actually people sometimes see that as a silver bullet It's not, you know, the, yeah, we're not talking about going back to a range. We already have a range, which gives us reasonably good degree of efficiency, pretty good set of standard standard ranges. What we've already done with that range over the course of the last 9 months is slim it down from 112 house types. It tends to grow over time as people add things they think they'd want. Back to 47. But the second piece, which I think we find more exciting, is the opportunity to then take that base level range and really create some additional value with it to actually add customer value, but doing it from a efficient construction perspective So we can take it forward. It's not gonna totally change our performance, but it's a huge opportunity, and there's a while since we've really refreshed our house type range. On the land side, we've already made big changes to our strategic land team. One of the reasons you saw such a big step up in land acquisitions in 2017 early 2018 on strategic land was because of the investment we put in into new people. And often, actually a new breed of strategic land person that we trained in house and brought through with a different set of practices, particularly in the southeast, where historically our desired strategy was held back the resources that we have. But we're also focused on, and I touched on it earlier, the project improvement plan sort of at the bottom. And actually, this is probably the area I want to explore the most in terms of setting out something like that, which seems like, well, of course, you're training your people. Of course, you're kind of, you know, sort of trying trying to move them on. It's it's a bit more than that. It's actually a structural change as much as it is, a training change. So we have we have redesigned the project management approach in the business if you think of it, if you're familiar with the area, some as a cut down version of Prince 2, so that all of our projects can run with the same set of consistent project management skills. You'd be surprised for a project management industry, how variable and weak some of the project management sort of, skills across the business are. And something that we kind of talk about a lot. So in that over the years, you know, we've talked about, like, in terms of the the difference between outlet opening time and outlet mean quality and a choice that you make. This that project management improvement plan cuts straight to that choice. I've been saying to you for years, that I favor quality over pace. I won't give you an outlook forecast because actually, I don't want to put the business under pressure to, deliver facts because I want them to deliver rights. In the end, I think that's where the value is. Now I want them to deliver rights, and I want more pace. If I want that without it being a 0 sum choice, where effectively all we do is suddenly accelerate outlet production, but actually go back to a world where we're compromising on the planning permission, not having it, then I've got to change something in the machine. I've got to change that balance between quality and pace. And actually, that project management improvement plan, that training, which we've been doing for the last 2 years, in terms of developing the process, getting it out there, getting people familiar with it, getting people using it. Is about being able to say and really put people under pressure to deliver both at the same time and measure what the trade offs are rather than leaving it to sort of individual decisions sat sat in the business. We can improve on both, but if you just keep pushing and going from one end of the extreme to another, depending on what you wanna term, you'll never improve on both. You'll we'll go back to a compromising on quality just to deliver pace. But actually getting that right makes a huge difference to business. Getting a balance between the quality and the pace and getting more of both, that has real value. Similarly, on production and So that Chris touched touched on some elements of production efficiency, some of the technology can provide to site managers, but that same balance between getting it right and getting it fast is impacting heavily on our build times. It's one of the reasons why we can't respond as quickly as we would like to a market opportunity is because actually if we try and push too quickly, then quality goes backwards. What we're trying to do is create a world where we can have some of both. And I think by changing the technology we use, the training that we use, the consistency people, and it's where things like having a low staff turnover rate makes a huge difference. There is a huge impact when we lose particularly production, direct and production managers, but site managers as well to get in that quality pace, not just the balance, but the total of the 2. Right. If we can actually change some of those things, if we can change the pace at which we can get outlets without compromising quality, we can change the pace at which we build without compromising quality. Mean, do the whole thing in an efficient way, then the potential high value growth for the business relative to the sector over the next 10 years is huge. And it's those things that actually will make the difference between us and our competitors as we look forward. I think the last one I just wanted to touch on is project 2020 talked a lot about it a couple of years ago, and we haven't talked about it as much more recently. It was just to give you a sense that we are, from the back of that, trialing 3 different production methods on a set of new house types. That's part of our sort of process as we look at our new house type range. How can we do things different and, but make sure that we get it right on sites that we're not just, sort of asking our people to deliver something that can't be done at the right pace and in the right quality. So, yeah, we'll probably talk about those a bit more. This gives you a snapshot, I think, of some of the house sites that we're trialing. And then lastly, on people, we've consistently invested more than anybody else in training, development, in recruitment. You see it in retained And the impact on performance, is enormous. We currently have about 600 people in apprenticeship programs, graduate development programs, management trainee programs, new people into the business all in the 1st 2 years. And our ability to scale that up has grown significantly as we're now able attract people from outside the sector who wouldn't historically have gone for a traditional sector as they would see it like house building. And so why do all of that create a long term growth platform, more agile, more responsive? We have 3 choices as we looked at the strategy. The first one was to do what we'd historically done in the past and see and said we wouldn't do again. We look at a point where the business is performing financially better than it ever has done to move on from there. We could have gone back to go out buy more land, we have the capital to do it, go out buy more land, grow the business. But we all know that creates additional cyclical risk, and we said we wouldn't do that. The second choice would have been to do what we're doing at the moment, but try and sell a bit more of the value back from everybody else we deal with, whether it be our suppliers, our customers in terms of quality, communities, or anything else. I think of that as a 0 sum game. Biggest share in the pie for us. You can take it so far. You know, it's right to fight for the share of the pie that's fair for you. But actually, at the end, that sort of old style Tesco strategy isn't going to take you that far. The 3rd option is slower and longer term, but it's trying to create more value overall trying to be able to grow further when the opportunities arrive. But to do that, we need the business to be more efficient, more flexible, more responsive, more modern, more proactive. And that's what we're trying to do. I said to come back to the political environment, this slide sort sat down slightly outside the others, but it felt right given the amount of kind of dialogue over this over the last 2 or 3 years. Two main points that I kind of wanted to focus on with the Littmann Review and the planning policy framework. But I said it'd pick up helped by here. Yeah, clearly, this is an unprecedented time in terms of the focus of government is distracted from things they would otherwise be very focused on, and our industry would falls into that. I really do feel that things have just not happened at pace in terms of decision. And I think that's delayed, helped by a decision. If I'm honest, I think that's probably ended up being a positive because I think If that decision had happened 12 months ago, then they will probably have curtailed help to buy, you know, sort of, certainly from 2021, if not even a little bit earlier. I think that less likely now. If you look at all of the other uncertainties, I think, you know, actually, as time has gone on, probably that's too high risk. So my base case is it probably sort of gets extended a little without any major change, but we will see. We don't know anything specific on that, but I, we do get a sense that Cision probably will come reasonably soon. I could probably have said that at any point in the last 6 months and given what's going on in, you know, sorts of other political questions, then then it's hard to be confident. On the specific bits that I did want to talk about, the Lettmann review and the planning policy framework, I think we were reasonably pleased and more or less agreed with all of the Lettmann's kind of predominant conclusions. It's always nice when, you know, sort of yet another review concludes the speculative land banking. Isn't really something that happens in the industry. Don't think it's going to change the question I expect to be sort of, you know, arguing that case pretty much my entire time in this industry, sort of whether that be, you know, sort of, however many years that may be. But it was nice that he actually said it quite clearly because he could adopt the question more than he did. I think the general sense that we can do more with this larger site got, you know, clearly is embedded in our strategy. So it's hard for us to disagree with. I think the slightly sad thing is, you know, sort of it seems to have gone very quickly into sort of the myths and doesn't really seem to be getting much focus either politically or press wise. So I'm not sure we're going to see anything particularly substantive out of it, but certainly something that started, you know, and I think people would have perceived as a risk has ended up being a mild positive. I think more positively, the new planning policy framework could have had some meaningful negatives in it. I don't I think overall, we felt it would be neutral, but overall, I think we now feel it is probably a net positive in terms of just generally progressing the planning environment. And we're quite comfortable with the fact the government needed to have a renewed focus on environmental issues. I think our sense is, you know, sort of post, post sort of 2008, 2009, the focus went away from it too much, so that that's actually overdue and, you know, we're kind of ready to sort of refocus on it ourselves. So just in terms of summary, We think some of the investments we've made are starting to pay off. We can see particularly the process improvements really starting to improve our control of the business. Our focus is on using customer, Centric focus as really a catalyst for our, for the people in our business to change everything, to make everything work much more effectively, and be far more proactive rather than defensive. The strategic goal is to create a business with a long term ability to grow, but be more agile in doing so. And we see significant benefits and efficiencies to come longer term from some of those investments that we've already made and continuing to make today. And in terms of, short term trading, I'll restate what I said at the beginning, we're comfortable with where our guidance sits for 2018. We expect small positive steps in all of the main financial metrics, you know, our own expectation for this year is almost exactly what it was in January. The environment remains good, but we should be, you know, sort of aware and have a cautious mindset about consumer confidence because, you know, it's pretty unprecedented times. Questions? Oh, should we start with, we'll at the front and then move back to Glynis? I think just as we get onto questions, I think, I'm sure you've all seen this, but I think the way the slides are printed has changed the numbers. So, you know, sort of if you can describe, if this question is specifically to a slide, if you can describe the slide rather than just, sort of, rather than just the number, that would help. It's Will Jones at Redburn. I think I've got 3 if I could. The first is just the inevitable follow-up to all the initiatives you talked about today on customer care and bill costs and all the other issues. Is there a way of quantifying what you think that might deliver you in aggregate over time or should we just think about this as a means of delivering your target margin over the next few years even if house price inflation slows? The second was just a follow-up really from the CMD. I don't think it got asked and appreciate you're not outlet driven per se, but there was a reference to growing to 3.20 outlets over time. And yet at the same Tom, you were talking about landbank length dropping slightly site size rising. So I just wondered how realistic is that growth, particularly given the experiences over the last few years and outlets, can those all those aims really coexist? And then the last one is just touching base on the mortgage market. There's a story. I think last week during the rounds that created some concerns about down valuations across the wider market having stepped up. Is that something you've noticed at all for your customers? I will probably miss at least one of those. I think I've got 3 of them, but I think you asked for. So I might need you to rip them, but let's go through what we be captured and then then if I've missed something or between as we do then, then please let us know, Will. So I think broadly, when you're looking at 2018, 2019 numbers, then you should take what we said on the various different things we can drive on cost and efficiency as being factored into our margin guidance. I think when you move beyond, 29 and particularly when you move beyond 2020, I think, you know, we see upside potential relative to where the market goes, and we wouldn't try and give you a market forecast sort of that far out. But on a relative basis, we think there are net savings that aren't factored into our broader guidance. And I think similarly, and it kind of goes to your outlet numbers over time. We've, we were quite clear in May, and this has not changed that what we're trying to do on large sites doesn't affect 2018 2019 particularly. We have the potential for more meaningful growth in 2020. I'm going to say the potential because again, I don't want to sort of be trying to give you a market forecast that far out in such uncertain conditions. But whereas we look at it and say, no, actually, without doing things in the wrong way, we can't increase the doses of volume growth beyond expectation in 2019. When we look at 2020 with some of the things we're working on and some of the things we're doing we have the potential to do it with the market. That's us. And I think as you're looking that far out, and I know, you know, at the moment, forecast are probably as short term as they ever are. So I get that that, you know, But at least if you start to get a sense of that and that that's why we're doing it, you'll understand why it actually, sort of why we believe it has a real value impact. No, it's not going to impact on on this year's or next year's numbers. In terms of outlets over time, site size, and land bank, to a certain extent, it's it's time that's the difference. It it it is our view that now is not a great time to, go out and aggressively grow the land bank in a way because we've got quite a lot of strategic sites coming through over the next 12 to 18 months, that will naturally pop push up the numbers. And as we've talked about before, there's not a huge amount of, you know, cash impacts of that because of how those sites are structured and and the cost, but it cosmetically, you know, increases the size of the land banks nature of what they are. Yes, sort of so that's why we had a slight caveat, but the land bank won't increase apart from some of that impact. But I don't think we think that we would never increase the size of the land bank. We just don't think over the course of the next couple of years, that's the, that's the right balance. So as we look at an outlook number further out and where we talked about a 5 year forecast, we are talking further out. And some of that is more sites. Not we're not talking about the land bank growing massively, but to actually make those numbers work, you're right. It has to go above 80. I don't think it gets to 90, but it does it does move. So the we're slightly confusing, and it's probably our fault. We're slightly confusing short to medium term view of what the right land balance risk is with a 5 year view then on where the business can reasonably, reasonably get to. In terms of down valuations, we've not seen any sort of meaningful increase inevitably, you know, sort of, our own people are sort of looking at the market and keep testing themselves Nigel when we were talking about this, last week. Yeah. So they said to me, yeah, I had salesperson in one business say, you know, we've seen a meaningful increase in down valuations so how many have you actually seen? Well, we've seen 2 since Easter, you know, they're they're they're still very small numbers. Did that capture all of your questions from there? Thank you. I'm going to move back to Glynis. Bank. 4, if I may. The first one is on slide 3, maybe 5, quality of land bank acquisitions. The contribution margin has gone up. The return on capital employed is flat for the 2018. Is that the size of site going up? Is that an assumption on Help to Buy? Is there something else in terms of selling rates and asset turn? That's just one question. Question 2 is slide at the very front of the pack that we don't have. The community investment, I know you say it's not indicative of what we should anticipate, but it has gone up every single year that you give us in that slide, at least the last 8, 10 years, what are you seeing in terms of the community investment that you required? Is it just because larger sites are requiring more? Is it something to do with mix or is there more in there? Thirdly, I'm going to take you back a couple of years. Couple of years you told us that you were being constrained by build and not sales, you talked about a 15% potential additional customer demand wondering how you feel about that today. Do you think your build rate is the constraint on sales or is it much more finely poised And then lastly on the reduced competition in the land bank or land market rather do you think that's because of the size of sites that you're looking at in terms of large versus small what's can you give us color in terms of smaller house builders, larger house builders, just what's driving that? Okay. So if I, I'll give you a I'll pick up some of the others, Chris, but if you pick up the contribution margin, you know, sort of retail or capital on acquisitions, if I kind of work backwards, the reduced competition, I think, on sites goes back to all the things we talked about in the last 5 or 6 years. I don't think it's suddenly switched in the last 6 months because we've suddenly changed our strategy and focused on larger sites. I think it's still absolutely true that competition is less on larger sites. But we're still looking at, you know, what we would see as smaller to medium term sites, you know, sort of their, it's not that we've suddenly made a big switch in terms of focus, and that's kind of colored that view. It's a general comment that competition for land is, you know, has generally been more muted that the opportunities are better and that trend hasn't particularly changed in the last 6 months. I think that absolutely right that 12 months ago, 24 months ago, probably not 36 months ago. I think we had kind of had maybe a 18 month period, maybe a bit longer. When it was very clear that, you know, we could lose 10% of our sales, maybe even more than the 15% I quoted. And actually, we couldn't build any more sort of anyway. So it would make no difference to the output of the business and the constraint on sales rate was our own availability. I think your, you know, sort of, comment, you know, is it now more poised? Is it true? I would still say the impact on quarter on quarter, you know, completions is is more build than sales. But I think if you look over a 12 to 18 months time frame, it's pretty balanced. Yeah. And if you think back to the beginning of this year, our order book was behind last year, and we were fairly sanguine about it. And I think it, you know, as a bit for some concern in this room. Yeah, you look at where we are today, our order book, you know, sort of it and the biggest part of was affordable housing. You look at where we are today, our order book is ahead of last year, and the biggest change is affordable housing. We're still fairly excited about it. Our our focus at the moment is on building the order book for 2019. We're not particularly worried about where 2018 sits in terms of sales. So, yes, it's more poised but that doesn't mean that actually we're starting to live hand to mouth on sales, if you see what I mean. We still have a good forward position of where we are, and it's probably better than it ever was at any point during the last cycle, for instance, in terms of the sales positions. So it's, you know, it's all relative, isn't it? On community investments, yes, you have seen a, generally increasing sort of cost over a long period of time. That was inevitable. If you look in many ways, surprising that it didn't happen more quickly than it did. And some of that's to do with the pace at which planning applications actually happen and come through the box and some of it's about, you know, sort of the the process of a planning application and how it works. I think what I'm saying is not that it won't continue to rise, but that it will that it will only tenderize where extra value is generally there in the system. And I think if if you were to it's a bit like the question about, sorts of Help to buy just the, you know, the political view 12 months ago quite different to the political view today. And I think I don't think we're going to see a sudden sea change there. And you can see that in a way the is drafted, for instance, you know, sort of that there isn't suddenly a big increase. It is one of the things that's kept land values muted, you know, sort of there is no doubt you kind of mathematically broke it down. Some of what's happened to land values in terms of maintaining them at a very stable level through the last 7 or 8 years is what's happened in the land environment going back to the first question I answered. But actually, some of it is that the proportion of social take has increased. And our argument has always been that's fine as long as you don't think that you can get it to a point where you get where landowners just won't sell. And there is a point. It will vary with the land owner, it will vary with the geography, it will vary with where that point is. But as long as there's not an across the board, sort of this should work everywhere. If you see what I mean, we can take x presenter on of every site in every geography, then it's manageable. So I I think it still remains manageable. My main point is we should look at it from a more positive point of view than we tend to and actually prepare to talk about it rather than, you know, sort of almost almost hiding it, if you see what I mean. And Chris on land acquisition? Yeah. I think if, you'd told me a few years ago that we were getting a question on on return on capital on acquisitions, sort of flattening off between 34% 35% I would have, I would have been very surprised, but I think it shows how far, you know, we've, we've come as a business I mean, the real answer, is its mix. You know, with every, acquisition, we trade off all the those key performance measures. And the 2 key ones clearly are return on capital and margin. And sometimes, you know, we will take super margin site that has a little bit worse return on capital and sometimes we will take sites that have, you know, stellar return on capital with a little bit of margin reduction. So this is, I mean, I think the the blobs on the slide tell the story, but we're pretty pleased with the rates that we're requiring Landau at the moment I I I have a serious issue with your answer, Chris, which is that you didn't use the word whopping in at all, right? It's a missed opportunity. Can I just when you talk about mix in that mix, is it that there's more upfront infrastructure coming back to the community infrastructure? Is it a lower selling rate? Cause you're assuming the selling rates a 2021 drop off because of Help to Buy. Certainly, there are no, sort of inherent changes in our assumptions, you know, in in local markets, if you know what I mean. You know, we buy land based on current market conditions. You know, your point on, you know, different size of sight is entirely logical, but what we find is actually just because you're buying a a really big site doesn't mean that you won't get any deferral on it. You if you buy in a small site, you might get some deferral and you might not, they might want it on it completely is determined by who's selling land and what the level of competition is for that particular site. So it's not quite as simple as to just sort of put them in different categories, if you know what I mean. Sorry, sorry, I can't give you an absolute answer like that, but that's the reality. Every, every acquisition is Yeah. And I think, you know, it's also worth remembering that acquisitions in a 6 month period are never going to be a statistical basis. So mix is genuinely a mix of one site that happens to be particularly strong on a particular measure. All we take of you actually know that's the right site for us and it's slightly weaker on it, but yeah, is going to distort the mix in of acquisitions, you know, to the level, if it was down in the bottom left kind of quadrant of the set, then then we'd have to have a far more sort of focused answer, but it's always going to move around a bit. Should we come across to? Good morning. It's Gavin Jacob. I'm just wondering if you could please us on near term production and after yesterday's announcement from Eberstadt about their plant maintenance. Shutdowns. How comfortable are you've got enough visibility on brake supply for the next 12 months? We do have good visibility. And I think, yes, we've tended to find that whilst we get frustrated with the price of bricks, actually, yeah, the relationships have been good in terms of getting the availability I think we feel reasonably comfortable on that. I think we haven't seen that being widely discussed in the market So it'll be interesting to see whether it affects smaller house builders to some degree, but I don't think we expect at this point that it will affect us and probably a larger piercing machine. Oh, do you want to move back, sir? Yes, good morning, Chris and it's at Numis. Just wanted to ask firstly, I wasn't totally clear on what you were saying on kind of underlying pricing versus costs and kind of how you see that progressing at the moment, is it broadly offsetting? That's the first one. Next one's just on London. Is that higher sales rate discount driven or can you just comment on pricing generally? And the final one's just on the contribution margin you did on that blob chart we spoke about before. Can you just reconcile that back to a gross margin just tell us what the differential is? Do you want to do the last one, Chris? And I'll do the other 2. On Central London, I think sort of the last two and a half years. We've kind of been feeding our way through literally every single sale on every single scheme. There's no sort of overall movements in price sort of as a trend in that, if you see what I mean. So I don't think, the margins are pretty similar to where we were and certainly where we expected to be at the beginning of the year. So can you just refresh my memory, Chris? I didn't know down your first question. The first question was or the balance between, build costs and sales price? Yeah. It's just whether or not there's still a net economic benefit there as we're kind of running forward. No, I think where we are right now use the second half of this year. And, yeah, certainly impact on the first half, and you can see it from Chris's margin reconciliation slide, and it wasn't that different in 2017. Because kind of our expectation going forward, it's pretty damn neutral. 1.5% to 2% of underlying selling price inflation more or less offsets 3 to 4 on bill costs. I think given the uncertainty, you'd say 2% selling price inflation in 2019 is your most optimistic forecast today. But as I say, my sense is in that kind of environment, build costs probably moved down a little in terms of inflation, closer to underlying inflation, just because the underlying pressures are a bit less. And so I, yeah, base cases still, they more or less offset. But you kind of go back in a way also to Will's question in that environment, you know, it's a bit pointless for me sort of pointing the sand. We can save 1,000,000 on sort of customer care costs on this or on net cost ex, yes, we're balancing an awful lot of things, and I think you should want us to want to know that we've got some levers that we can pull depending on where the environment sets. But overall, you know, the market impact we see has been pretty neutral on margin. Chris, I called the reference to gross margin, but I didn't quite catch the rest of the cause me problems again. It's more just you show the site based contribution on your return on capital on land acquisitions. I'm just wondering how that reconciles back to a gross margin because it's a site based contribution, not a reported gross margin contribution Yeah, I mean, the difference is, purely selling, expenses. So roughly just so we can do the maths Well, probably about, I would say about 3%, you know, talking about in, in that, that order. I'm I'm just looking for the slide because I think when we see the Which which which slide are you referring? It's it's the blob site, the the way you show the land acquisition margin. I'm just can you just reconcile that to a gross margin, not a site based margin? Sorry. What I just wanted to check, Chris, was that because you referred to it in return on capital. And I think Sorry. What might you show both on this part? So the return on capital is based on our operating margin, not a contribution margin. That's all I wanted to make be clear of. And as Chris says, the difference, yes, slipperton contribution margin operates in sales cost. Yes. So it's just where you'd said return on that. Between gross, not operating, but between gross, yes. Doesn't look like we have any more questions. Thank you very much. Catching began at the trading of Dayton Senior in February.