Good morning, everyone, and happy New Year to you all, and as usual, I'm joined by Chris this morning, so I know you will all have seen this morning's statement, but I'll start by providing a brief summary of our full year trading and then open the floor for questions, and to open, I'm pleased to report that we've delivered on expectations and traded the year out well. We delivered UK completions, excluding joint ventures, of 9,972, which, as expected, was towards the upper end of our previous guidance range and expected to deliver a gross margin of around 19%. As a reminder, this includes around a 50 basis points benefit from the land sales we flagged at the interims. Our expectation of operating profit continues to be in line with our previous guidance at GBP 416 million.
We retain a strong balance sheet and ended the year with net cash of GBP 565 million, coming in ahead of our guidance due to the timing of land transactions. Our 2024 sales rate of 0.75 is a 21% increase from prior year. Whilst excluding bulk deals, our net private sales rate for the year was 0.67. So we've achieved these results while maintaining our high-quality build and customer standards, with our customer scores the highest they have ever been, which is really very pleasing and a testament, I believe, to the hard work and dedication of our teams right across the country. The 2024 trading environment was pretty stable, but it's fair to say changing sentiment, in particular the pushing back of expectations of interest rate cuts and some modest mortgage rate rises had some bearing on our customers' confidence, in the second half.
In November, we called out that after a few years with no marked regional differences, conditions in the North and South of England had started to diverge, with affordability more stretched in the south. This had the effect of softening sales pricing in the South, where average selling prices are higher, relative to the North of the country, where we have captured pricing gains. As a result, given our mixed underlying price in the U.K. order book, it's now around 0.5% lower year on year. We had a good year in the land market in 2024 and approved 12,000 units that met with our strategy of targeting land in high-quality locations where customers want to live. This was higher than we originally anticipated due to a number of attractive deals and some increased landowner activity in the lead-up to the budget.
Together with our already strong land bank, we are very well positioned for the coming years. We were pleased to see the rapid progress from government implementing the NPPF, which we expect will support sector-wide volumes in years to come. Taylor Wimpey is particularly well positioned in this regard, with around 26,500 plots for Planning in Principle currently in the planning system. A fully functioning planning system remains key to growth, both at Taylor Wimpey and across the sector. And while it will take time for these changes to result in additional sites for the sector, we are well placed with a healthy short-term land bank to bridge the gap. As you know, we don't give guidance for the current financial year with our January post-close trading updates, but I would make some marked observations, which I hope you will find helpful.
We entered 2025 with a stronger private order book, which is up 25% by volume on last year, amounting to an additional 643 homes compared to the prior year. So we start the year in a good place. As you'll appreciate, it's too early to say much that is meaningful about this year's trading, but we've had a positive start to our Boxing Day campaign. Start waiting, start living is a call to action for those customers who are in a position to buy but who have perhaps been waiting on the sidelines. This has landed well with both our sales teams and customers and pleasingly has generated encouraging sales leads. However, there remains market uncertainty with an increase in borrowing costs in January, with the potential for that to impact mortgage rates and therefore affordability in 2025.
Noting yesterday's inflation data, we will be closely monitoring high interest rates and mortgage rates continue to evolve over the coming weeks and months, and we'll, of course, update you more on sales progress at the full year results. Turning now to build cost, we are now seeing signs of build cost inflation returning, given cost pressures faced by U.K. businesses, including the impacts of increased employment costs as a result of the taxation changes announced in the budget. It is too early to guide on this in detail, given ongoing contractual discussions with suppliers, but we will provide an update at our Prelims in February. Progressing land through planning remains a key priority for our teams, and to remind you of what we said in November, we expect to open more outlets this year than in 2024, with openings weighted towards the second half.
So, to conclude, we have delivered a strong 2024 performance in line with expectations. We're now focused on seeing how customer sentiment develops as the spring selling season gets underway, but we are very pleased, to be entering the year with a stronger order book and excellent visibility of land and outlets for 2025. This positions us well to grow volumes in 2025, albeit, of course, we do remain vigilant to the evolution of borrowing rates and any impact this may have on customer affordability and confidence to transact. Given the extreme undersupply of new housing and clear government initiatives to address this, we remain excited about the market opportunity and are well placed to capitalize on the substantial underlying demand in the years to come as the market recovers and as government action and planning reform improves visibility for the sector. So, we can now open for questions.
Thank you very much. If you would like to ask a question, please press star followed by one on your telephone keypad now. Please ensure your device is unmuted locally. If you change your mind or your question has already been answered, please press star followed by two. Our first question comes from Aynsley Lammin with Investec. Aynsley, your line is now open. Please go ahead.
Thanks very much. Good morning, everybody. Just two questions from me, please. I guess I appreciate a bit more color around the commentary on pricing, which you said was obviously softer in the southeast. And just wondered if you could give an indication of what incentives have been running out. Did you increase them until the end of the year, and kind of tactically, you know, how are you playing the incentives as you go into the spring selling season? And then secondly, I know you're not guiding, made that quite clear, but just on build cost inflation, others in the sector have kind of pointed to low single-digit % for this year. Is that kind of something, you know, a level that you concur with at this point? I know it's early, but any bit more guidance on that would be great. Thanks.
Morning, Aynsley. Yes, first of all, in the sort of sort of pricing, I mean, these are small movements, but as they're, you know, sort of pulling in different directions, it's worth us flagging them for you. Incentive-wise, I think most of last year we would have been saying 5-6%. That has ticked up towards the end of the year, sort of 5.5-6%, you know, to sort of support those sales. You mentioned the Southeast. I probably just widen that, Aynsley. I'm not talking about just the Southeast. It's a more broad South. Now, where the line is, I'm probably not willing to get drawn, but it would be wrong to characterize it only as a Southeast issue.
On build cost and inflation, I mean, look, always want to try and play a straight bat with you. Normally at this time of year we would, you know, have completed our negotiations, but we have been working with suppliers to understand sort of their justification a bit more forensic, as you've become used to us, and looking at ways to offset that. So the discussions are, you know, a bit lengthier than usual instead of dynamic process, and I don't really want to be negotiating in public, you know, and I'm sure that you'll understand that. But, you know, don't disagree with the peers that have gone earlier this week, but, you know, we're sticking to our discipline, and we'll work through it, and we'll give you a more detailed sort of breakdown and color at the prelims.
Thank you very much.
Our next question comes from Will Jones with Redburn Atlantic. Will, your line is now open. Please go ahead.
Thank you. Morning. I'll just try a quick three if that's okay. The first, perhaps you could just elaborate on the encouraging remark with regard to early year indicators. I know you have your various lead ones that you show us chart-wise, results, but how, how are they trending, if you might, updates on that, please? The second was just around the order book, actually, because I think it's, if I look at it on a trailing basis, that, that private business is now 40% of last year's completions, and it was, I think, 30% a year before. So it looks quite high relative to usual proportions. I guess, would you potentially see scope for the order book to maybe ease a bit lower this year to help your completions? And then the last one was just maybe around all things outlets and planning.
Appreciate you won't guide on outlets, but the 26,000 number you mentioned, Jenny, is that still the applications coming out of the strategic land bank? How's the progress going in the under control? And just any wider planning commentary would be great.
Okay. Well, I'll take the first and third, Chris, if you would pick up the order book. I mean, look, I'm very pleased, actually, with the early indications. It's really important that we recognize that it's a very, you know, it's a very short sort of period, and we'll be in a much better position to update you at the full year, but you know, website appointments was quite strongly up, organic inquiries strongly up. Walk-in appointments was a bit weaker, but I know I'm not supposed to mention the weather, but it was pretty bad, particularly in the north, so you know, all those early indicators quite positive. I'm very happy with how the new campaign has landed. On outlets, I mean, look, again, we've tried to be helpful.
I think in November, you know, I gave you sort of an indication of we expected to open more outlets in 2025 than we did in 2024, which I'm really pleased about. I think even more, we opened all the outlets that we planned to open by the end of last year, which means we're in a good position for trading for this year. So I think 98% of 2025 volumes will come from outlets that we're either already open on or that we're already on site and preparing to open for. So, you know, good visibility there, Will. On planning, I mean, you'll see if you look back 26,500, we've brought that down a bit. You know, we've had some success in landing some of our strategic land.
So, conversions still lower than I would like, but starting to move in the right direction from a strategic land. We are starting to hear and feel a bit of sentiment change in local authorities. It's not consistent. So, we're, you know, we've had some very positive outcomes. And I was just reflecting with one of the teams this morning, you know, a local authority where we have consistently had to go to planning committee repetitively for one decision determined our next planning application on Tuesday night, first time round. And I think that is a sentiment change that we are seeing in some authorities. But at this point, I'd say it's still some, not most. Chris.
Okay, Will. On the order book, we're really pleased with that strong private order book position that we've built. And, you know, we would always, in pretty much every year, look to build a strong order book position, ahead of the start of a new year. And that allows us to optimize price, especially in the spring selling season. So, you know, I would expect that to be our modus operandi, not just this year, but next year as well. And we, you know, we'd look at the, you know, the trading conditions in any market as we approach the end of the year and trade accordingly. So really pleased with that order book position. It's where we want it to be.
Very pleased. Thank you, Will.
Thank you. Thanks.
Our next question comes from Allison Sun with Bank of America. Allison, your line is now open. Please go ahead.
Thank you very much. Good morning. I just have one follow-up question on the outlets number because it looks like you are left with a little bit extra that you didn't intend on having this year. So will that affect your overall outlet plan in 2025?
Okay.
Thank you.
So, I think when we spoke in November, we talked about expecting to end the year with just over 200 outlets. We've got, I think, 23 at close, and I think we're at, sorry, 213 at close. And we're, I think, on a spot basis, 213 today. It's just the effect of closing outlets. You know, it's an art, not a science. You know, there'll have been just a few stragglers. So we would expect the number to come in. So as you say, just a small number of delayed outlets closing to take into account there also.
Thank you.
Thank you. Our next question comes from Zaim Beekawa with J.P. Morgan. Zaim, your line is now open. Please go ahead.
Morning, Jenny. Thanks for taking my question. It's just two from my side. One on land. Can you just sort of give us a view as to what you're expecting in 2025 in terms of maybe pricing and availability? And then secondly, to come back on the build cost inflation, I appreciate you're not guiding just yet, but I think historically you've also mentioned kind of a positive impact on the self-helps. Could you just remind us what you're doing and how you see what the measures you're aiming to put in 2025 also? Thank you.
Thanks. Good to speak to you, Zaim. From a land market perspective, I mean, I would say it's still competitive, but it is variable. It depends on the local markets. And pricing, you know, has everything to do with availability in the area that you're looking to acquire land. So, I would expect it to be still quite variable and choppy through the year. As we start to see maybe, you know, sort of the benefits of NPPF and land supply coming up, then, you know, I would hope that we would see some cooling in land price. What we do this year, look, I'm not feeling under any pressure. We had a good year last year. Really happy with the quality of what we've acquired.
So we'll just reflect on how the market, sort of, plays out, and just make sure that we're doing the right thing, on that basis. On self-help, I mean, we are busy. You know, the teams are consistently, sort of, pushing. So, you know, cost management is well ingrained in our business. We have a zero-based, you know, approach to budgeting each year. The teams will be working through both value improvement and cost management schemes at some pace. And as I mentioned earlier, you know, we do take a partnership approach with our supply chain and engage with, you know, how we can both come out with a better result. And those are part of the discussions that are ongoing at the moment.
Working hard through all of those elements and probably be able to give you a little bit more sort of color around that too at the full year.
Okay. Thanks a lot, Jenny.
Our next question comes from Marcus Cole with UBS. Marcus, your line is now open. Please go ahead.
Hi, morning both. I've got two questions. Well, the first one is just on Spain. There's obviously quite a lot of news reports in terms of 100% property tax. I just wondered what you think about these implications for your Spanish business. And the second one's on margins. I know you don't want to give any guidance at this stage, but if I sort of put together the building blocks you've given us on house prices, underlying slowdown build cost inflation coming through, and the one-off impacts for gross margins in terms of land sales in 2024, it seems directionally they'll be down. I just wondered if you could flesh out any thoughts on that. Thanks.
Okay. I'll take Spain, and Chris, will you pick up on the margin? So, I mean, look, Spain's a small business. You'll see from the statement, delivering, you know, sort of approximately 500 units per annum, really well. And you'll also see from the statement, you know, that they carry a pretty strong order book. I mean, the announcement has no real details to it at this point, or, you know, indeed what the tax is taxing, or, you know, when it would be introduced. And we have a minority government that would require the support of sort of conservative parties to pass. So, you know, something that I think we'll watch, but, you know, not unduly concerned about at this point.
But, you know, just to give you an idea, we're predominantly, sort of EU, EU nationals are our predominant market, probably 75-80%. So of the 20-25%, 10% would be British buyers, historically. And then there's a number of Schengen, and we don't know because there's very little detail as to whether they're included or not. But, you know, something for us to watch, but not unduly, not unduly concerned at this point, Marcus.
Y ou're quite right. We aren't providing guidance for 2025, but I think you can see from the statement that we are trying to be helpful. You know, we confirmed that the gross margin position for 2024, excluding land sales, is around 18.5%, which is obviously a good starting point. You know, we have an increased order book to start 2025, but it does come with an underlying price which is down 0.5% due to price growth in the north being more than offset by lower pricing in the south, as Jenny mentioned. Also, as we've talked about already, we're seeing signs of build cost inflation. But as Jenny said, it's too early to guide on that, given the ongoing discussions with suppliers.
And yes, you know, the other factor influencing the margin in 2025 is the degree of house price inflation that can be captured in the remaining sales for the year. And clearly, you know, that is quite hard to gauge at this point with borrowing costs being, you know, reasonably, volatile, which is why we, you know, provide guidance at the prelims. But of course, Marcus, you know, if house prices were to stay exactly where they currently are, then yes, that together with the build cost inflation would obviously push the gross margin lower year on year.
Thank you very much.
Thank you.
Our next question comes from Ami Galla with Citi. Ami, your line is now open. Please go ahead.
T hank you. Just two questions for me. The first one was on the demand trends that you're seeing this year. Can you give us some color between how to mix between first-time buyers and home movers? And is there at all any urgency or the thinking behind stamp duty changes in April working in their minds? I mean, is there some, you know, pent-up demand that we've seen in the January market, which is a function of them anticipating stamp duty changes? The second one is, could you give us some update in terms of Section 106 take-up? Has that seen any improvement on the back of what the measures that the government has laid out so far?
Okay. A bit muffled there. I mean, so hopefully I've got this right. In terms of sort of the split for 2024, of buyers, I think we were 31% first-time buyers, 39% second movers. In terms of stamp duty demand, we don't think that's what's fueling sort of the customer inquiry levels. We don't actually have much availability for Q1 . And you know, given how sort of transaction times are taken with local solicitors, the customers would be hard pushed, I think, now, to beat the time scale. So you know, I think what we're seeing is genuine customer demand at this point. And on Section 106 take-up, I mean, we did what we needed to do by the end of the year.
You know, I will say that it was probably, you know, more challenging on both sides, I think, of the transaction, both housing associations and, you know, our teams than it has been in the past. We, you know, know that the conditions that we talked about at the Interims, where housing associations were feeling under pressure for funds and sort of reluctant to commit, continues. So, we haven't seen the benefits of the additional funding mentioned in the budget at this point.
Thank you.
Our next question comes from Chris Millington with Deutsche Bank. Chris, your line is now open. Please go ahead.
Thank you very much. Morning, everyone. Three quick ones. Hopefully they will be quick. Just on bulk sales, just wondering what your attitude is there and kind of how you're seeing discounts feed through at the moment, you know, probably particularly in light of the higher forward interest rate curve. Second one's just really, obviously everyone's talking about build cost inflation, but internal cost inflation's been quite an issue for the house builders over recent years. Do you see much in admin and the fixed costs which are sat in COGS over the course of 2025? And the last one, it's a bit of a follow-on from the land question earlier. Can you possibly give the number of plots you've got detailed consent on? I know you talked about the pipeline plots, but those which have detailed consent. Many thanks.
Okay. Bulk sales, I mean, I think, quick, quick answer to your quick question. Attitude's not changed. You know, our preferred approach, sort of to bulk deals and relationships has always been to plan them in at the point of purchase. And, you know, the bulks that went through at the sort of end of 2024 are a good illustration of that. The sites were bought on the basis of having sort of build to rent as part of them. I mean, we do look at the balance of the benefit from a return on capital perspective and versus the discounts.
You know, I think at this point I can tell you that, you know, I'm happy with the ones that we've taken, but there's probably very many that we have declined over the year because of the depth of discounts. I'll leave it to Chris to sort of do the internal costs. I mean, clearly, and we mentioned them in November, the NICs, you know, does have an impact on costs. And in terms of land bank with detailed planning permission, it's up a bit, I think, since half year. So detailed planning permission, I think we're about 30-35 thousand eight hundred, you know, 36,000 thereabouts, Chris.
That's in the owned land bank?
Yes.
For the total of the short-term land bank, it's closer to 40,000, Chris.
There we go. Thank you, Chris.
That's very helpful. Thanks. And Chris, did you have anything else to add just on that internal costs and maybe administration moves this year?
O f course, you would expect me to say, because it's, you know, very true, we are always very disciplined on costs. You know, and as a result, we run a lean business. But at the same time, you know, we've been setting the business up for growth and investing in the future. And, you know, we'll update you on our thoughts for 2025 when we get to the prelims, including on the cost side. But, you know, we did, I think back in November, just confirm that the annualized cost of the increase in employees NI, relating to our employees is between GBP 5 million and GBP 6 million.
and with that increase effective from April, the additional cost for 2025 is GBP 3.5 million-GBP 4 million. Got you. Got you. But it sounds like there's probably a little bit more on top of that, just a general inflation and credit foundations, Chris. Got you. Got you. Very clear. Understood. All right. Many, many thanks, guys, for, for your answers.
Thanks, Chris.
Our next question is from Charlie Campbell with Panmure Liberum. Charlie, your line is now open. Please go ahead.
Good morning. Thanks for taking the call. A couple of questions. One point of detail, and sorry if I missed it. Do a number of sites opened in 2024. Obviously, so we see the net movement, but the gross would be interesting. And then secondly, just wondered how quickly you think that sort of grey belt might have an impact on sites acquired and whether it's realistic to think of companies such as yourselves buying or getting approval for grey belt land in this financial year.
Okay. Number of sites opened in 2024, 55.
Thank you.
On grey belt, I mean, I think we're still waiting for real clarity as to what the definition of grey belt is. But you know, I prefer to think of it as the opening up of a discussion. Charlie, you know, from a planning perspective, you know, with the last government, we ended up with this idea that all grey belt was, or sorry, all green belt was sacrosanct and that it was a permanent fixture. And so the dialogue that the new government have introduced around sort of green belt where there's a lack of housing delivery or grey belt to support sort of short-term housing needs, I think is a really helpful dialogue.
In that sort of 26.5 thousand, sort of plots in Planning in Principle that I mentioned, there is, you know, a grey belt, a grey belt site, by what we think is the definition, or two. And there's certainly some that we are looking at in green belt or preparing at the moment. I think it's a matter of where the housing need is. If there's housing need and the authority are demonstrably not delivering it, then, you know, providing that all other sort of good planning principles, you know, sustainable location and et cetera, are in play, then there should be a reasonable discussion. And I know that there were some recent appeal decisions, probably relatively small, but appeal decisions that start to guide that way. You know, we're feeling very much on the front foot.
You know, as we talked about last year, you know, we've shaken down our strategic land bank. Our teams are very active. I'm putting them under a lot of pressure to get applications in, and we're engaging with local authorities in those areas. Could we see some decisions this year? Yes, I think that we could. But really, I think, you know, it will take time to prepare the applications, get them in for determination. You know, look, I'm feeling really fairly positive about the planning changes, but, you know, it's all the proof is in the pudding, as we say. You know, it's important that we see government sort of leaning into local authorities and that we see the decisions. The indications are, you know, the indications are good.
Thank you very much. Thank you.
Next question comes from Sam Cullen with Peel Hunt. Sam, your line is now open. Please go ahead.
It's basically on kind of sales rates and affordability. I think in the past you've given some charts looking at your sales rates versus kind of mortgage rates and the corresponding drop-off as rates get above kind of 5-5.5%, 75% LTV. Do you guys think that relationship kind of still holds going forward, or do you think kind of the house buying public has moved on? Obviously, your ad campaign that I can't remember, the strap lines, kind of trying to encourage people to look further out and get busy living, as it were. But should we think about kind of that relationship still holding going forward?
I'm disappointed, Sam. You don't remember our start waiting and start living campaign. But, you know, look, I think that there is a sense, and certainly a sense that's come from, you know, my discussions with our sales teams that, you know, that there have been customers sort of just a series of, you know, events that they've been watching, you know, whether it's the election, the budget, you know, this holding on, maybe waiting for rate reductions, and you know, a sense that if it's going to take a little bit longer, that maybe there are customers that just, you know, they can't put their lives on hold any longer.
But look, there's a wide range of variables, not just interest rates, wage growth, employment levels, you know, the sentiment that need to be taken into account, the relative cost of renting, you know, in the case of first-time buyers, as well, so you know, look, we'll be watching all of that evolve over the coming weeks, and we'll probably, you know, again, look to give you a bit more sort of detail and color of what we're seeing come the full year.
Great. Thanks.
Our next question comes from Cedar Ekblom with Morgan Stanley. Cedar, your line is now open. Please go ahead.
Thank you. One follow-up question on the gross margin. Is there a way to quantify what volume growth you need in order to offset the spread between the house price and build cost inflation in 2025, by any chance?
So, there's a, you know, not a particularly specific calculation, but a bit of a rule of thumb. Cedar, in the past, I would have, on these calls, talked about maybe, you know, a 10 basis points improvement in margin, operating margin, being derived from an extra hundred units of completions. So yeah, that's still broadly the case. So, you know, if you use that on an operating profit margin basis, then you should be able to backfill to get to what the gross margin impact is.
Helpful. Thank you so much.
Thank you very much, everyone. We currently have no more questions. That concludes our questions and answers session. I will now hand back over to Jenny for any closing remarks.
Thank you all for your time and your questions this morning. I hope you find that helpful. As I said, we've delivered a strong performance for 2024 and are well placed for 2025, though we are aware that there's a fair amount of market uncertainty. We remain confident, though, that we operate in a very attractive market with substantial opportunity, and that we're well placed, having set the business up to capitalize on significant unmet demand for the years to come. We look forward to speaking to you again at the full year results in February. Thank you.
Thank you very much, Jenny, and thank you, Chris, as well. That concludes today's call. Thank you very much, everyone, for joining. You may now disconnect your lines.