Good morning, and welcome. Thank you for coming today. As usual, I'll take you through the very brief highlights of 2024 before handing over to Chris, who'll do a more thorough job around the results. I'll then spend some time talking to you about what we're seeing on the ground in current trading and how we've set the business up to perform well for the year and beyond. I'm very pleased with our 2024 performance, delivering what we said we would. I'll kick off by just giving you a few of the highlights here. I'm particularly delighted that we have delivered our results while achieving the highest construction quality scores, customer scores, and overall build quality we have ever had at Taylor Wimpey.
I'd like to thank all of our teams and subcontractors across the group for their hard work in achieving these results. It's also been a year of reliable dividend payouts for our shareholders while maintaining a strong balance sheet, demonstrating the way that we manage the business through the cycle. As you already know, we are exiting the year with a strong land bank of 79,000 plots, which means that we start the year from a position of strength and are poised to take advantage of the opportunities brought by the improving planning policy background. I know it is early days, and it will take time to flow into the market, but it's a strong and welcome direction of travel.
So, I showed you a similar graph to this last year, and I've just extended it to two years so that you can see the impact of borrowing costs on sales rates. And this time, I've excluded the bulks, just to give you a clearer picture. While continuing to track the mortgage rate, you can see that fluctuations in rates have had less of an impact on monthly sales rates during 2024. There have, of course, been pinch points on affordability, as we saw in 2023, but at current levels, we see an increasing number of people able to transact, whilst the smaller movements in volatility in rates have not particularly moved the dial. Affordability does remain a challenge for many, especially from first-time buyers. But given where we've come from, it is all moving in the right direction.
I'll touch upon our customer behavior later, but given the backdrop, we're very pleased with the 0.75 sales rate that we achieved, which includes only a small amount of pre-planned bulks. The rate, I think, underpins how we are feeling about the resilience of our customer and the underlying demand picture, which you can see in the improved order book, which is meaningfully up on last year. And with that, I'll now hand over to Chris.
Good morning, everyone. In 2024, we delivered what we said we would. Despite starting the year with a lower order book and navigating mixed market conditions, we achieved a good set of results in line with expectations. As Jennie mentioned, we're particularly pleased with the U.K. sales rate of 0.75, which is 21% ahead of 2023. And this not only allowed us to reach group completions of 10,593 in 2024, but also enabled us to enter 2025 with a much stronger order book, positioning us well to improve on the GBP 3.4 billion of revenue delivered in 2024. As you know, we are always very disciplined on cost, and as a result, we run a lean business. However, in any period where volumes and revenue are reducing, it is particularly important to have strong cost discipline to protect margin and returns.
I'm pleased we have demonstrated that discipline in 2024, delivering an operating profit of GBP 416 million. The 2.6% reduction in tangible net asset value per share mainly relates to the additional GBP 88 million fire safety provision we booked at the half-year, together with a GBP 14 million charge in the second half relating to the exit from our joint venture with Wandsworth Council. Both of these items are treated as exceptional, and the other results on this slide are shown before exceptional items. The quality and location of our sites, combined with the work we have done in marketing and sales targeting to improve the quality of our leads, helped us to achieve stronger sales rates in every quarter of 2024 compared to 2023. This enabled us to deliver 9,972 U.K. completions towards the upper end of our 9,500 - 10,000 guidance range.
The blended average selling price was GBP 319,000, also in line with our guidance. The 3.8% reduction in private pricing was mostly related to mix, along with some underlying deflation, mainly on, pardon me, half one completions. As noted previously, the increase in affordable prices is the result of improvements to mix in geography, size, and tenure. Looking forward into this year, we are confident in our ability to grow volume and expect it to be weighted 45/55 in favor of the second half, similar to 2024. For average selling prices in 2025, I expect the negative mix effect on private pricing observed in 2024 to reverse, along with a slight reversal of the positive mix effect on affordable pricing from 2024. Overall, half one should see blended average selling prices increase to around GBP 330,000, also assisted by a slightly lower proportion of affordable units in the half one mix.
This slide aims to illustrate the various factors impacting the U.K. operating margin in 2024 compared to 2023. The impacts from house price inflation and build cost inflation caused a reduction in the operating margin in 2024. However, you will note both are lower over the full year than those reported in half-one because there was no year-on-year change in underlying pricing and build cost for half-two completions. The 0.5% impact from land bank evolution is the same as half-one, consistent with starting to trade out of some of the sites acquired in the years after the Brexit referendum when the land market was most benign. In most years, we have a small number of land sales, which tend to be individual phases of larger sites. Those sales, which are pre-planned, give us the opportunity to improve returns, reinvest the proceeds, and diversify our land investments.
Typically, land sales generate profit, but you wouldn't expect them to move the dial very much on margin. 2024 was different because our land sales generated a margin of around 60%, and that improved the total U.K. operating margin by 50 basis points compared to 2023. Most of this benefit occurred in the first half, as we previously disclosed, and whilst there may be land sales in 2025, we are not expecting them to have a similar beneficial impact on margin. Looking forward into 2025, despite volume growth, we are expecting the half-one operating margin to be lower than in half-one 2024 for the following reasons. Firstly, we entered this year with an order book with underlying pricing on average 50 basis points lower year-on-year.
And whilst we've seen some gradual improvement in pricing in the first eight weeks of this year, those plots in the opening order book with lower underlying pricing will flow through into completions in half-one. Secondly, we aren't expecting land sales to have a similar beneficial impact on the margin in half-one 2025. So that is a 50 basis points reduction year-on-year and a 100 basis points reduction half-on-half. Lastly, as flagged in January, we observed signs of build cost inflation returning. We now anticipate this inflation to be low single digits for 2025, primarily driven by material costs. The impact on half-one will be limited, as the opening work in progress position includes very little year-on-year inflation. However, there will still be some impact in the first half, albeit at low levels.
Looking further forward into half-two, it will be the pace at which interest rates reduce and how that plays through to affordability and consumer confidence, which will determine the scope for capturing improvements to house prices and, in turn, the trajectory of margins. So, along with hitting our income statement guidance, I'm very pleased that we've maintained a strong balance sheet and continued to invest in the business to prepare for growth. For the previous four year-ends, we have reported a net cash balance in excess of our land creditors' balance, and this was an intentionally conservative balance sheet position, which reflected the degree of market volatility and uncertainty in the outlook. As inflation and interest rates have reduced and the market backdrop has improved, we are confident in delivering sustained growth starting in 2025.
It is appropriate, therefore, to begin returning the business to a more normal and efficient balance sheet position with low levels of adjusted gearing. You can see we've increased our land and WIP holdings commensurate with a growth mindset. Over 65,000 plots in our short-term land bank are owned, which is 7% more than last year. And over 40,000 plots in the short-term land bank have detailed planning, which is 3% more than last year. So, we start from a very strong position from which to drive growth with a total of 7.8 years of supply in our short-term land bank at current output levels. Most of the decrease in the long-term assets and JVs balance is due to the disposal of our Winstanley joint venture with Wandsworth Council.
This mutual decision allows the Council to take a new approach to the regeneration scheme to prioritize the delivery of affordable housing on a standalone basis. The disposal generated a loss of GBP 3.6 million and a cash inflow of GBP 18.5 million. The increase in the provisions balance reflects the additional cladding provision booked in the first half, offset by spend and by the release of part of the provision to reflect it being recognized in our Greenwich Millennium Village joint venture in the period, and there's a slide in the appendices which provides the details on this. Turning to cash flow, this chart shows that the group generated a very healthy amount of cash from operations and closed the year with a strong net cash position of GBP 565 million.
This is despite the investments made in land and WIP to drive future growth, which will increase the productivity of our 22 regional businesses in the U.K. and improve the asset turn. We noted in January that we are planning to open more outlets this year than in 2024, and although the openings are weighted towards the second half, there will be upfront infrastructure spend to achieve that in half-one. I would also like to highlight the other category, which includes GBP 29 million of spend on fire safety in 2024, which you can see in the footnote to the chart, and this is expected to increase to around GBP 100 million in 2025, now that we have more remediation projects underway. Within that figure, we are also anticipating reimbursements to the Building Safety Fund in half-one of approximately GBP 31 million.
Moving on to capital allocation, no changes here, but I would like to make a few points. Taylor Wimpey is committed to maintaining a strong balance sheet. As I mentioned earlier, we consider now to be the right point in the cycle to move towards a growth-oriented stance. And we do so from a position of strength, having successfully managed the balance sheet on a conservative footing through a period of tougher trading while continuing to pay a consistent dividend to shareholders. We can achieve growth and deliver improved asset turnover and return on capital whilst maintaining our strong balance sheet, and we remain committed to doing that. Our appetite for investment in land and WIP has and will continue to be driven by the quality of the returns those investments can deliver. The NPPF represents a very positive change to the outlook for the supply of consented land.
But at this point, supply remains constrained, and there is strong competition for the sites that are out there. We don't need to invest heavily in land in 2025 in order to retain confidence in delivering growth in 2025 and 2026 and beyond, because, as I've already said, our short-term land bank provides a 7.8-year supply at current output levels. So, we are not constrained by a choice between growth and value, w e can be selective. And lastly, our ordinary dividend has consistently provided a reliable return to shareholders, and we intend to continue to pay it through the cycle. So, finally, turning to guidance, we came into 2025 with an improved order book, and trading in the year- to- date has been ahead of the same period last year.
We are setting our U.K. volume guidance for 2025, excluding joint ventures, at 10,400-10,800 completions, which represents growth of between 4%-8% on 2024. As I mentioned earlier, we expect U.K. volumes to be weighted 45/55 in favor of the second half, similar to the delivery profile in 2024 and w e expect the affordable mix to be around 20%. In terms of group operating profit, assuming volumes around the middle of the guidance range, we expect performance to be in line with market expectations. Current consensus is GBP 444 million for group operating profit, including joint ventures. Net finance charges will shift to an expense of around GBP 20 million in 2025. This change is mainly due to a decrease in interest receivable resulting from lower average cash balances and reduced deposit rates.
Additionally, we anticipate higher levels of imputed interest on land creditors, consistent with the increase in the land creditor balance. And finally, we expect around a GBP 2 million share of profit from a similar level of JV completions in 2025. So, in summary, I am very pleased with the group's performance in 2024, delivering a strong result in what was a challenging market. Looking forward, we are fully focused on leveraging our excellent land position to drive volume growth in 2025 and beyond, which will enable us to enhance our return on capital in the future. Handing you back to Jennie.
Thank you, Chris. Okay, so before we get into how we're set up and our plans going forward, a brief look at the demand backdrop that we're facing into. I think it's been encouraging to see how supportive lenders have been and how they've maintained competitive rates despite some macro noise and volatility in swap rates. And we can see from their efforts to hold rates where they can that they remain committed to mortgage lending, including in the new homes sector. Mortgage availability remains good at present, including an increased number of lenders offering higher 95% loan-to-value products. Unemployment remains at lower levels. And for those with larger deposits, the cost of servicing a mortgage is lower than rental costs. So, overall, we are confident that medium-term drivers are robust, underpinned by a strong desire for home ownership, significant structural underlying demand, and a resilient employment position.
Our IFAs are reporting a higher percentage of first-time buyers in the mix. And lenders are keen to lend with good product availability, with numerous new product and lender initiatives to improve affordability, most notably increasing borrowing limits for first-time buyers. Borrowing trends continue to reflect extended mortgage terms to support affordability and customers choosing fixed-rate mortgages. Finally, we haven't seen much of an impact as we might have hoped, but the increasing interest in energy efficiency and green mortgages, I think, will further support new build given the considerable environmental advantages and lower running costs of new homes. I've talked to you in the past about the sales funnel. The skill is in converting initial interest into actionable leads and from there to appointment and reservation. While the improved market has had a positive impact on organic customer interest, which you will see on the next slide, we haven't been complacent.
Our team has done quite a lot of work on improving the efficiency and user-friendliness of our website, as well as the quality of our website visits, through a range of initiatives and incremental improvements in our approach to marketing and sales targeting. We've made a number of system changes and upgrades to every stage of the online experience, so we now have more targeted email communication benefiting from increased automation, and we have improved navigation and optimized the user journey through the website, including a streamlined appointments booking system. We've also reviewed and changed our approach to where and how we use advertising channels to increase the quality of website visits. As we anticipated, this does reduce total website visits by decreasing the number of poor-quality visits, and as hoped, these changes have increased the conversion from website visit to inquiry and then appointment.
So, to put some numbers on that for you, in the first eight weeks of 2025, compared to the same period last year, our conversion rate from website visit to inquiry has increased by 7%. But more significantly, our conversion rate from website visit to appointment booked on the website has increased by 59%. This, in turn, is translating into an 11% increase in appointments booked via our website year-on-year and a 25% increase in web appointments per outlet year-on-year. And here are the familiar charts on customer interest. And as you can see, we have seen an increase in organic traffic, which is up by over 30% in the first eight weeks of 2025, compared to the same period last year, reflecting the improved backdrop, which is encouraging, of course, to see.
Reflecting that quality optimization effort that I mentioned earlier, you can see that the total website visits are down. You'll also see a noticeable dip on the graphs, around weeks 29-34, and then subsequent improvement. There's a full explanation for this on the slide, but in short, it relates to platform changes undertaken at the time. While total appointments are down year-on-year, which captures a reduced walk-in rate, within that, website booked appointments are up, which is what we expected from the changes that we had undertaken, and not to forget the all-important feedback from our sales teams, who are corroborating the data that the commitment and proceedability of prospective customers attending appointments has improved. Which brings us nicely on to current trading.
So, you can see, the year started off well from a sales perspective, with sales rates up 12% year-on-year, with, and I do use the term advisedly, relative stability, in the backdrop. So far, every week, is up on the comparable. And you'll remember that this time last year was a fairly good period also. So, I'm pleased, with the business's performance thus far. This means that our total order book is up on last year, placing us in a good position to grow completions this year. It isn't easy. Our teams are continuing to work, hard to grind out sales, and incentives remain an important driver, in gaining commitment to buy. And on affordable housing, while conditions, for housing associations continue to be challenged, when it comes to Section 106, we are in a good place for our 2025 affordable deliveries.
Our campaign, "Stop Waiting, Start Living," is landing well, and the feedback from customers has been excellent, encapsulating as it does, I think, a message which is clearly resonating with them. There remains a strong desire for homeownership and a sense of not wanting to wait, or put buying off indefinitely. There do remain regional differences in how the market is performing, as we outlined in January, and while things continue to improve in the north, around our London and Southeast businesses in particular, things are feeling a bit tougher given stretched affordability. Though confidence is good, affordability is pinched in some areas, and where average selling price is higher, chains tend to be longer and more fragile. Helpfully though, we are seeing the cancellation rate evening out. Overall, the pricing picture has incrementally improved since the start of the year, and current pricing is now flat year-on-year.
So, I just wanted to remind you of how we have set ourselves up. Our strategy remains consistent, based on our four strategic cornerstones of land, operational excellence, sustainability, and capital allocation. This strategy enables us to respond and adapt quickly to changing market conditions, but also to position the business to drive sustained growth and returns for all stakeholders. In the next few slides, I'm going to show you a bit more color on how we are set up for what is hopefully the next phase of the market and a return to sustained growth. I don't think any of you will be surprised to see that it starts with our excellent land bank, our continuing focus on driving operational performance, and then the wider measures throughout the business, all of which build our capacity for growth.
At the outset, I'm not going to make an apology for telling you yet again how great our land position is. As you know, this is a key for any house builder, and everything flows from there. We have a strong and long land bank. In future years, we expect land bank years to drop as land conditions improve and volumes pick up. However, for now, having a slightly longer land bank through what we expect to be a transitional period remains an advantage. While our land bank is quite stable, we have increased our own share of the land bank by over 4,000 plots year-on-year, reflecting some underlying progress through the planning journey for a number of sites. Our strategic land and pipeline is and will remain a differentiator. I'll remind you of its maturity and that you can't get to this position overnight.
We've invested in our team throughout the cycle, even in times when land flowed much more freely in the open market. And this consistency is why we are confident that we will continue to drive value from our strategic land in the coming years. The new NPPF is welcome news, and to reiterate, we're on the front foot with 26,500 plots for first principal planning already in the system, and that was as of December 31st , and there are more applications being prepared across our operational businesses and strategic land to follow this year, so you can see how well we are set up. The recent planning policy changes are excellent and are capable of delivering a step change in planning outcomes.
However, we do continue to need increased resources and a focus on the implementation phase now to really drive the outcomes, and the most recalcitrant into action. Overall, the government's ambition is good news though, and we are starting to see positive signs of this on the ground, from the revised NPPF. Changing the methodology of housing need and making targets mandatory together with the presumption in favor of sustainable development has already had a positive impact on a couple of recent decisions and appeals now, including applications that had initially met resistance and would, but for the changed environment, have been refused and gone to appeal. But whilst it's an improving picture, it is still a patchy one. Last year, we approved 12,000 plots and completed just under 10,000 plots in the U.K.
As you know, we've also benefited from a greater number of good value opportunities in the run-up to the budget in particular, many bringing forward high-quality deals on attractive terms that would otherwise have transacted in half one this year. We expect the land market to continue to be competitive during this transitional period before the full impact of the NPPF is felt. The strong land bank in place, we'll continue to be opportunistic if we see attractive opportunities in the land market, but we feel no pressure. This is a slide we showed you last year just outlining the depth of our portfolio. As you can see, there's good dispersion between small, medium, and larger-scale sites. This year, we'll continue to benefit from multi-year sites, meaning that we're not reliant for this year, this year's openings for 2025 volumes.
And as a reminder, we are already on all sites, from which we expect to deliver 2025 completions. And as I've said before, we will open up more outlets in 2025 than we opened in 2024, which, though weighted towards the end of the year, will support volume growth beyond 2025. So, moving on now to operational excellence, our approach here is very much part of the business culture now, but it's worth flagging some of the ways in which we are continuing to drive marginal gains and so stay ahead of the curve. This is a business-wide focus starting centrally, with our procurement and partner strategies. The closer we can work with our suppliers, the more accurately we can drive our efficiencies, improve forecasting, and as a result, drive better deals and deal structures.
Our value improvement program identifies opportunities for savings and productivity from our suppliers to achieve savings in a way that protects the quality for our customers and retains the quality of our technical specifications. So, let me just give you an example or two on materials. There were clear areas such as brick and roof tile materials and color palettes where we found savings by identifying different products with very similar attributes, but with no lesser specification. And we also remove certain materials from supplier packages entirely, where we can source these for better value directly, reducing costs. On productivity, our central logistics function remains key to our strategy in driving efficiencies through standardization. We are also increasing the use of our standard house types, something that we've been driving throughout the business for a number of years, with standard house types now representing 94% of 2024 house completions.
Taylor Wimpey Logistics remains key to our approach to driving efficiencies through standardization. And in the year we upgraded the Taylor Wimpey Logistics warehouse management system to drive further efficiencies and ensure we are future-fit. Overall, there are dozens of initiatives group-wide, which, though marginal individually, combine to incrementally offset cost pressure. So, we are, of course, always mindful of the regulatory backdrop and our approaches to prepare well ahead of changes wherever possible. And I think we're in a good place. Mitigating action is helped by our unwavering approach to health and safety, which is our number one priority. Our partnership approach, when working with subcontractors, as well as a major focus we have placed on driving build quality over recent years. We are expecting an update on the government's Future Homes Standard together with transitional arrangements in the summer.
As you know, our Sudbury trial and other ongoing developments, we are well positioned to implement the necessary changes once the government's prepared, preferred approach is confirmed. The same is true for changes associated with the Building Safety Act. I would emphasize our excellent CQR scores here as evidence of how well we and our subcontractor base are placed in terms of build quality standards. Finally, in respect of the Building Safety Levy, this is expected to be published in March, with a six-month transitional period. There remains a number of unknowns here. However, we are working to prepare the business for these changes and to mitigate the impact insofar as will be possible on existing assets and to recognize the likely cost in ongoing and future land price negotiations.
So, we continue to look to the future, and have been focused on prioritizing a number of areas across the business, which will ensure that we are fit for the future and prepare our business for the next phase of the cycle and the opportunity for growth. So, first up, a reminder that we retain the capacity and the ambition to deliver higher volumes as the markets recover. Continuous business improvement is vital and will remain embedded in the way we work. Our timber frame factory is a key component in supporting efficiency and environmental performance. And though we have much to do, we are pleased with the progress and are already driving cost efficiency into this newest part of our business. We remain a business which values its people.
And as we look to sustain growth, we are focused on attracting, retaining, and developing the best people with an attractive and competitive offering for our employees. In developing our digital capabilities, we are focused on driving efficiency and productivity, freeing up employees to focus on areas of greater value to the business, such as scrutinizing costs and value improvement. So, we also launched Taylor Wimpey Innovate TW this year, which is a business-wide IT upgrade to further digitize the business, including the use of AI, to free up time on repetitive tasks and allow our employees to focus on more value-adding activities. A good example of this can be seen in the business adoption of Copilot, with early benefits being especially seen in the quality and speed of our customer service engagement. We'll continue to leverage technology to improve our efficiency and to share best practice across the group.
Finally, we're really pleased that the spring selling season has started well with good levels of demand for our quality homes. We came into 2025 with an improved order book when compared to the prior year, which puts us in a strong position to continue to grind out value, where there are opportunities to do so. With the private order book up 25% in volume, we are well set up for growth, completion growth in 2025, and have remained focused on building our order book, which is now a total of 8,021 homes. We expect 2025 U.K. completions, excluding JVs, to be in the range of 10,400-10,800 homes, with approximately 45% occurring in the first half.
It has been a challenging couple of years, but I think we have proven to be a strong and resilient business with a clear strategy to manage the cycle, focused on driving value and operational excellence while investing in the long-term success and sustainability of the business. We are now looking forward to opportunity. With an improved planning and market backdrop, we're in a great place with a strong balance sheet, excellent land bank, and experienced teams to deliver sustained growth. So, let's open up for questions. So, I'll start at the front and we'll work back.
Thanks. Will Jones from Redburn Atlantic. Mic three, please, if you don't mind. The first, just exploring the slight improvement in pricing so far this year. Should we assume from your comments that's a Midlands and North thing as opposed to South? And I just wonder what scope you see for that to continue to grind higher. Second, outlets, I appreciate you won't want to guide on, on numbers over the next year or so, but just, I guess, conceptually, medium- term, when you think about the, the rough move you've had from 300 down to 200-ish on a land bank size that's more or less held, do you see scope that longer- term that a number close to 300 could be achievable in a, in a better planning world? And perhaps linked to that, really just the, the, the wider theme of asset turnover. You've mentioned land bank length reducing again medium- term, but are there any other levers you have in mind, perhaps around WIP or other factors that could help improve the asset turn? Again, more medium- term. Thanks.
Okay. So I'
ll look. I'll just take those in order. From a pricing perspective, we have continued to see the North strengthening, sort of, and improving. It would be wrong to think that the South isn't improving. We have seen, you know, some improvement there. And look, it's easy to characterize it a North and a South. You know that we often say, you know, every site on its merits, and we look at each site. So even in some of those sort of regions that are sort of polarized, there are sites that are performing really well, and there are sites that are perhaps experiencing a little bit more of a challenge. But you know, generally, improvement across the across the board, but still weaker, as I said, in my overview, in the sort of London and Southeast area.
On outlets, I mean, if we're talking conceptually, almost anything is possible, you know, from a planning perspective. We do need to see the proof in the pudding. You know, that's why I'm anxious now to see us move off the black letter of policy and see the action on the ground. So I'm really focused on that implementation phase, you know, with government, the how the planning and infrastructure bill, which we're expecting sort of later in the spring, progresses through the house, what those actions are that would speed up local authorities. I think is really important.
And then probably the only other variable that I'd mention is, you know, viability, that cumulative burden of regulation and how that plays through into overall viability will affect the number of sites that the planning system then can push out that can be viably delivered by the sector. But if we had a freer flowing planning system, then you would expect to see outlets building, and I see no reason why Taylor wouldn't be taking our share of that opportunity. And then on asset turn, I mean, we run our business, you know, tightly. We are investing in opening outlets this year. So there's a, you know, as Chris has indicated, we obviously do some bulks, but we tend to look at those on a project-by-project basis. But you know, really driving an efficient business, reducing the overall size of the land bank when planning is proving that it's appropriate to do so, I think will all flow into the mix. Is there anything you would add there, Chris?
Yeah, I mean, obviously operating asset turn is sort of a 0.9, which is the lowest it's been in the last 10 years. I think the peak was 1.6. The average is about 1.3. And you know, I don't see any reason, you know, as Jennie says, if the supply of consented land improves with the NPPF and we can sort of get affordability sort of improving to drive demand, why we can't get back to 1.3, certainly, you know. You know, beyond that, then, you know, you need to have a number of years of consistent, sustained growth to grow that.
Just the best judgment of pricing against the underlying tactics.
I beg your pardon?
The best judgment of pricing against the underlying tactics.
I mean, look, I'm really pleased with the business performance. I mean, you can see some of the work that we're doing on marketing, you know, trying to keep really, really focused on that. And we talk about grinding it out. You know, it is hard work, and the teams are doing well. But that customer confidence, you know, remains, and that's, you know, that's fairly fundamental to the next few months.
Okay. Morning, Allison from Bank of America. Three questions from my side. So first, you mentioned the balance sheet is expected to be more normalized or efficient in the future, but can you give us some, like, color as in the mid-term how you expect, let's say, cash or debt to evolve? Second question is on sales rate versus ASP, because I know you mentioned you want to hit a balance, but in the near - term, do you guys maybe focus a little bit on the sales rate improvement before you want to hit the ASP? So what's the balance exactly we're talking about here? And lastly, is on the Building Safety Levy. We know we haven't got any details from the government yet, but have you done any, like, internal estimate how much more cost per unit could be if it got launched? Thank you.
Okay, I'll take the last two, Chris, if you want to take balance sheet. But on the sales rate versus ASP, I mean, again, I would, you know, continue to remind you that the business doesn't run at one speed. And it's a, you know, an assessment that we make on a site-by-site basis that, you know, the divisional chairs who are in the room today, the MDs, the sales directors, constantly looking at where there's advantage. So if we're getting, you know, a free-flowing sales rate with strong demand, then we will be taking every opportunity to drive prices, what our sales teams are trained to do. So it's not sales rate over ASP growth. It will be driving what each site can deliver on behalf of the business.
On the fire safety levy, there is really limited information, and some of it's quite old, because the consultations for the building safety levy were undertaken in 2021, and then again in sort of 2022, 2023. At that point, there was a sort of putative cost of around GBP 3,500. But it was also indicated that it was likely to be variable across different markets. So it's really hard for us to make the sort of estimates, Allison, that you've suggested. What I can say is that our teams are entirely motivated and active running the mitigating strategies that we believe are available. So a lot of activity right across the business to limit its impact. And then balance sheet.
Allison, yeah. So, to date, I've avoided putting a number on what low adjusted gearing means, mainly because I don't want to hamstring the business into having to perform to a specific number. You know, it can change a bit depending on the current environment and the outlook. Yeah, I'm probably not going to get drawn on exactly what low means. But you know, if you look back through history beyond the four years that I quoted in my section, you get a fair idea of what the typical levels are in a normal market.
Morning, Sam Cullen from Peel Hunt. I've got, well, it's two, but really one. And again, sorry, it's price and volume. When you've given us obviously a bit of color on the land bank in terms of size of, again, the split of average size, can you talk around the outlets you've got at the moment and probably give us a bit more color around the breadth and depth of those outlets and whether, how close they are to the optimum mix of product or house types you want on those outlets and therefore your ability to really maximize kind of price on those? Are you sort of holding too many sites that are slightly long in the tooth and you'd like to get off and therefore have more limited pricing power than you might have with a 0.75 sales rate because it looks optically quite high? Then related to that, I guess you've talked about the low level of down valuations. I guess, A, how low is it? And B, should it be higher?
Yeah, okay. I mean, in terms of outlets, it's an entirely dynamic environment. We talk about the level of focus and assessment that our teams undertake when we're actually buying the land, you know, land quality, the assessments that we do around the demographic, affordability, and work to match our mix to the local area and to maximize the level of market absorption. You know, you do hit little areas, whether it's driven by planning, or as you're exiting a site, you know, you have what you have.
But you know, I think that we are resilient enough as a business, and to ensure that we can smooth, sort of those various sites' peaks and troughs, and overlaid across the many sites that we have. We talked at the January call that we were pleased that we had all of our sites opened at the end of the year that we needed for this year. You know, really good headway has been made on those. There's a mix of those across our regions, some small, some medium, some large that will operate over a long period of time.
Given the affordability of the customers that we are seeing and the fact that, particularly, you know, through the last few years when we might have expected first-time buyers, for example, to think about downsizing for affordability, because we've got more mature first-time buyers who have already formed households, that's not something that we're seeing a lot of. So our mix has been actually really resilient, from a customer-facing perspective, through the last few years, and I have every expectation of it remaining. So, I think in terms of the down valuations, it's a really good question. We watch them quite carefully. You know, I would probably describe them as they are low, but they do happen, and they happen in reasonable numbers. And it's a real balance. Partly they're testing us, you know, are we in the right pricing?
And we have lots of discussions at our management teams and again locally around pricing. But if they cross the threshold of a number, it can be very disheartening for customers. It delays the process, and actually our relationship and dialogue with lenders, you know, becomes rather self-defeating. So I think that we have enough coming through, Sam, to test us and to continue to trigger the thought process of are we in the right pricing, but not so high to be a concern that we're, you know, that we're missing the price point and missing sales opportunity and causing potential customers disadvantage in the market.
I'm Ami Galla from Citi. A few questions from me. One was on regulation. After the sort of June rent settlement that everyone's looking forward to from the government, do we expect the sort of bottlenecks on housing association take up on Section 106 to kind of ease from there? I, you know, will we see a stronger order book build on social following that, or do we need more in terms of budgetary support on the affordable side? The second one on sort of demand side support from the government, you know, you know, following the sort of announcements on the sort of Mortgage Guarantee Scheme becoming permanent, do you think that is it, or is the government looking for further support in other measures in the future? In terms of your conversations with the government, is there a sort of a demand side push that is coming through at all?
One on financials. You've touched upon the investment on infrastructure upfront in the first half, for the sort of outlet openings ahead. Can you give us some color or scale of the WIP buildup that we need to factor in for this year, for the sort of outlet growth that we assume? And maybe the last one just on build costs, negotiations with the supply chain. You know, the sort of contracts that we are getting now, is that like a 12-month fixed contract pricing, or are we getting longer-term two-year visibility on terms of pricing on materials?
Okay, quite a bit in there. Chris, I'll come back to you for the financials. The rent settlement, I mean, as far as I'm aware, Ami, we still don't know quite the size of the rent settlement. I think the five-year was the government's proposal. I know that the sector are seeking a 10-year. The longer the rent settlement period, the more confidence that the housing associations will have around their sort of future investment profile. So the longer the settlement, the better it will be from a Section 106 perspective. Look, I don't think that the rent settlement is the silver bullet. I think it will help in the medium- term, but there's probably still a need for a short-term intervention, in my view, from government. You know, and I would be looking to the ministers to issue a written ministerial statement, for example, to encourage local authorities to enter into what we call cascade negotiations, so that we can keep moving in the market.
So I think that the rent settlement is an important, you know, sort of the long end of short to medium- term, but there's likely to be some more assertive intervention that's needed at the very front end. On the demand side support, I mean, we can see the government have been really focused on supply. And you know, supply side remains the thick end of the dialogue that we have with government. The mortgage guarantee scheme, you know, it's not unhelpful to have it on a permanent basis, but we would need to see more lenders lending in the 95% loan-to-value area for it to really start making meaningful difference. And you know, although that reduces deposit demand, it does increase the service costs of mortgage. So it's not really moving the dial.
More interesting, I suppose, is the FCA that the FCA are looking at, you know, sort of, reducing some of the prudence that was introduced post-Great Financial Crisis, and that could be helpful. But I suspect that really it's the Prudential Regulation Authority and how it's impacting the lenders that's really that needs to move. And on build cost negotiations, in the main, we negotiate for the year. Occasionally, we get two-year deals. It very much depends on the nature of the commodity for the supplier. And then in terms of our build contracts, the certainty that we can deliver to some of our subcontractors in the supply chain. So there's a mix in there, but it certainly is something that we have engaged in a number of different strategies depending on the category. Sometimes it's delay. Sometimes it's around the rebate structure. Sometimes it's around the fixed nature of the deal. But we've got really good visibility now for this year around our build costs from the supplier end. And then the WIP investment, Chris.
Yeah, sorry. So, Ami, I think at the end of the year, we were just under GBP 2 million of WIP investment. I'm expecting that by the time we get the half year, that's probably going to be between GBP 2.1 billion and GBP 2.2 billion, reflecting both the second half weighting of completions but also that investment in infrastructure that I me ntioned.
Thanks, Aynsley Lammin from Investec. I think I've got three as well, actually. Just to bring together all the kind of moving parts for the cash flow. Obviously, you've still got the dividends. You mentioned GBP 100 million of building safety, et c., and the interest cost going up to GBP 20 million. What's the assumption behind that in terms of where the net cash balance is expected to fall for this year, or maybe you've reverted it on an average cash basis? And obviously, land credit is in there as well, but just interested, a bit more explicit guidance around that. And then secondly, generally just interest here, your view on whether the market needs any demands kind of side support. If you're hearing anything from government that that could be forthcoming or very unlikely. And then thirdly, just on the blended ASP, Chris, I think you said going up to 330. Yeah. And I think that was mainly mixed. Just wonder if you'd give a split of expected private versus affordable for this year. Thanks.
Okay. Do you want to take those?
Yeah. Okay. So, yeah, cash flow, starting with cash flow. So, obviously, we haven't given any formal guidance for half one cash, but there are a few things to take into account. So yes, there is the GBP 100 million expected full year cash flow on cladding, and that includes, as I said, GBP 31 million in the first half, which is a repayment to the Building Safety Fund. You've got the typical pension contributions, which are GBP 7 million a year, which are weighted GBP 6 million to the first half, GBP 1 million to the second half. I've already made the point about outlet openings, and you know, you know, I've made the reference to how WIP will trend in the first half and the fact that we've got the volumes half one, half two weighted.
Clearly there's a dividend out in May, which is, I think, GBP 165 million, subject to shareholder approval. So I'd expect the sort of typical reduction in half one net cash from the preceding year-end by the time we get to the end of the first half to be a bit larger this year than it would typically be. Say a reduction of somewhere between GBP 200 million and GBP 300 million. And that, you know, gives you a bit of a sense initially, I think, in terms of how the other sort of pieces of the equation work. And obviously all with the usual caveat of depending on how land spend drops out. Sorry. Okay. Sorry, Jennie.
And then on market, I mean, I think as I've said, so the engagements that the sector have had with government have been very much supply side focused. You know, the actions that government have taken sort of around demand side have been relatively sort of small and not really driving you know material sort of changes to the market. I mean, I would count the conversation that we've just had around affordable housing as demand side, you know that there is you know very much a call for government to get more interventionist in this issue. Some of it may come from the spending review, but you know, I think as I said in the shorter term, sort of more action from government would be helpful. And we know that there is a review of Help to Buy ongoing within government at the, at the moment. But you know, just to repeat, the you know, the dialogue with government is mostly focused on supply, supply side. And then, Aynsley, sorry, your question on mix, your third question.
Just the mix between Affordable and private for this year within the completions.
Yeah. So in terms of completions, it's around about 20%. But I think you specifically were asking about the ASP and the 330. Yeah. So you know, really what I was saying was you know, the negative mix impact that we had on price, private pricing from 2023 to 2024, I'm expecting to reverse. So that that element of the pricing equation should go back to you know, similar to the 2023 levels. And I also said that, you know, the affordable improvement in mix that we saw, that will unwind a bit. So not all the way, but just a little bit.
Yeah. Great.
And that should get you to round about that sort of 330.
Okay. Glynis?
Glynis Johnson, Jefferies. Just a few to tidy up, actually. Stealing all Chris's. When do you expect the full force of the NPPF to come to actually be seen? Is it, you know, from basically beginning of April onwards? Does it take six months? Does it take two years? I don't know if you want to throw in that, your appeal success rate or not. Second of all, given that you're already open on almost all of the sites that you need to deliver for this year, you know, you talked about those sites being multi-year sites.
Does that imply there is a margin mix impact that might come from that, given they are larger sites and larger sites used to be bought at, you know, higher gross margins? And then following on from that, your land cost to ASP has gone up. Can you just talk through that? I'm sure there's all sorts of nuances, but if there's anything more from that. And then lastly, again, just thinking about land bank margin, the strategic within the completions has ticked down. You know, are you anticipating going forward that that will tick up? Should 50% be, you know, a level that you would aspire to? Can you go beyond that? Yeah.
Okay. Full force of the National Planning Policy Framework, it will take time. You know, I referenced that we've seen some changes already. We, I think when we were sort of speaking in January, we talked about, you know, some sites being approved that, you know, committee would normally take a few drives around the block before getting to. So we are seeing change. It's the momentum and the overall sort of scale of the change right across the country. And I don't expect all areas to move at the same pace. It's just the nature of local politics and some of the local constraints. But given the scale of effort that government are putting in, you know, what we expect to see is increasing numbers of applications going into the system. And I, you know, have been giving you visibility for some time as to, you know, how front-footed we have been as a business.
You know, I'm putting the business under quite a bit of pressure to get applications from our strategic pipeline into the system, which is why I do talk about resources. You know, if you think back a few years, you know, we used to put our planning problems into two baskets, resources and you know, the sort of operation of the system at a local level. Resources hasn't gone away. You know, the written policy word is not solving that problem. That needs to be addressed. That does need to be addressed. On the implementation phase that I refer to, that's about clarity. It's about you know, how are government going to drive those decisions into local authorities and how are they going to address some uncertainties?
I mean, you'll have heard us speak, over the years, you know, planning is subjective. There's lots of gray areas around it. The more certainty the government can give, as to the likely outcome of the application, the more applications that will go into the system, and then hopefully be approved, and you can get that groundswell. So if government want to deliver 1.5 million homes, they really need to get that implementation phase moving, and that, you know, if I was hesitant at all, that's the bit, you know, just how muscular are the decision makers willing to be. But I can see change now. It's just, how much momentum we can get behind that.
And then, you know, if I think back to our discussion last year at the interims, when the NPPF had just come out in consultation, it was never really going to be a 2025. You know, it would have been the tail end of 2026 and volumes increasing beyond there. But we've got a lot in the system. We've got more going into the system. You know, we are a business in with a lot of activity ongoing at the moment. In terms of the multi-year sites, I just want to be clear. It's not necessarily that we've opened more multi-year sites for this year. It's just that it's part of the mix and it helps us in terms of, you know, being on site and driving the volumes out.
And and look, you know, our output margin is a factor of our input margins of land. We've always been really clear on that. So the mix really does, really does matter. Land cost for ASP going up. I don't think that's quite correct. Land cost is a, in our short-term land bank owned has actually gone down, I think from 13 point something to 12.9. So it's, that's gone down. I think it's the approvals. Land cost is a percentage of ASP on approvals has gone up and, and that's correct. That's at 17%. And that's just a reflection of the mix of sites that we were approving through 2024. There's a number of a higher representation of smaller sites, for example, a representation of some sites that have in very good markets with higher land cost to ASP and some serviced. There's a real mix in that at Glynis.
And then I think sort of your last question was strategic land, will it tick up? I'd very much like to see it tick up. I mean what I would say you know I remember coming to Taylor Wimpey and being told that our target for strategic land was 50% and thinking that that was unachievable because my experience you know from other businesses and having been involved in strategic land was that you know 30% was actually a really good level. So 50% and for the length of time that the business has supported it is a real testimony to the endeavor and the investment that we have made in strategic land. And we know the planning has been really challenging over the last few years. So I do expect it to go back up again. I think that is, you know, certainly one of the reasons that we keep it around. Chris first.
Morning. Yeah. Chris Millington from Deutsche Numis. I don't know which one to call myself nowadays, but I just want to ask one really, and it's just about the appropriateness of devoting 100% of your post-tax profits to dividends still. You know, we're at a point in the cycle here where we're potentially looking at a much better planning regime. Your outlet numbers, as Will touched on before, are down a third from where they used to be in 2013, 2014, you know, to build back the profits and to kind of get that overhead recovery back to a decent level of the firm. We do need to see volumes build back and that the market may give us that, but is it the right thing to be doing at the moment to devote so much money to the dividend? And, you know, perhaps under what environment would you love to devote more of that to, to invest in the business? Thank you.
Yeah. So, you know, when we set our, our dividend policy, we set it with the intention of paying it through the cycle. So we always accepted that there would be a period where, you know, the dividend would be uncovered. And that's why the whole point of the, you know, and we went through the capital allocation policy and our priorities in terms of keeping a, a strong balance sheet. Keeping a strong balance sheet is, you know, really critical in enabling us to pay the dividend through the cycle. Now, a typical downturn from the past is quite different to the shape of this downturn, but you can see that actually the policy has been very successful because, you know, we've had a number of years now of sort of challenging markets and we've emerged with a very strong balance sheet. But not just in sort of net cash terms, we've emerged with a very strong balance sheet in terms of our land bank position.
And so, you know, we are, you know, guiding to growth in 2025. We're confident about delivering that growth. And you know, with a 7.8-year sort of short-term supply, why wouldn't we be confident about continuing to deliver further growth, assuming that the market is supportive? So, yeah, I'm, you know, I'm delighted that actually the distribution policy has proven to be successful and sustainable. What we, you know, what we'll never say, and you know, is that, you know, it is able to be paid out uncovered forever, because that's impossible. Yeah. But you wouldn't expect us to stay where we currently are, where we've been for the last two years forever. You know, our intent is to grow the business and to, and that will obviously improve the cash as well and cash generation. Yeah. Sorry.
Thank you. And do you not think there is a window of opportunity here to devote more capital? You know, when Taylor Wimpey came out of the GFC, it was somewhat constrained. You know, could you leave yourself a disadvantage to players who can devote more capital to growth and, and to expansionary land s
pend?
You know, I'd say at the moment that we're not limited in the amount of capital that we can deploy. You know, and I talked about really deploying capital. Our critical thing is the return we can get from that. You know, the supply of consented land is still constrained. There is still quite a lot of competition for the land that is out there. We obviously anticipate that, with the changes with the NPPF, that that will improve. Absolutely we'll be well and truly ready for that. But we're under no pressure, Chris, as we've said, because we've got such a strong land position .
Then Alastair.
Thank you. Alastair Stewart, Progressive. A question, a bit of a philosophical question, for Jennie, about the potential for house builders, plural, to seek recompense for fire safety remediation. Yesterday, the government named seven companies that they were going to investigate, having in the supply chain, having previously under Michael Gove focused overwhelmingly on the big bad house builders. Yesterday I saw in Construction News, sadly I didn't have time to get through the paywall, that Taylor Wimpey are suing an architect. Couldn't find out any more for that. I'm just too tight. And then, I don't know if you heard, a few weeks or so ago, Michael Gove launching a possibly libelous tirade on the three named material producers put together as an industry. Do you think the tide is turning from you as an industry fighting, constantly fighting a government now with the potential for recompense through the courts?
Okay. I mean, that's one question. Sorry, do you have others, Alastair?
No, no, no.
Right. Only one question. Yeah. I mean, look, litigation is something that probably not best discussed from the podium.
That's why I asked philosophically and as an industry.
Look, we're a business. We do hundreds, if not, you know, sort of thousands of contracts and enter into agreements, and particularly, you know, with professionals that we're expecting them to deliver good quality advice. If that advice, design or other things is found wanting, then, you know, as our shareholders would expect, then, you know, we would look to leverage the benefit of the contract. So, you know, I don't know that particular case, but you know, from time to time, we would litigate with those that advise us. Around the sort of material supplier. It has been, you know, a matter of, you know, some concern and, you know, I suppose annoyance from the house builders that, you know, as you mentioned, you know, we each have set our own self-remediation sort of programs and provisions that we pay a Residential Property Developer Tax, which is 4% over corporation tax. And now we've got the Building Safety Levy, which feels, you know, sort of the third time of asking that there has been a level of inaction around the material suppliers.
And, you know, we have often called on government to ensure that those that are, you know, have been found of wrongdoing, you know, are held to account for that. We would look at it on a site-by-site basis, you know, as part of our planning remediation provision. We haven't assumed that we can get recoveries, but I wouldn't want that to be taken as we don't intend to pursue them where there are good cases to do so. And that may be in the advisory chain, or in the material and the material suppliers. But that would be very much on a case-by-case basis, and not, certainly not a plural action across the sector that so far as I'm aware.
Thank you.
Okay. Well, look, thank you very much for your attendance today. Wish you all a good day.