Earnings Call: H2 2018

Feb 28, 2019

Okay. Great. Okay. We'll make a start. So, very welcome to you all to the, Bogus Homes full year results for 2018. This is an audiocast. So if you could all turn your phones off or put them on to silent, that would be great. And I'll start with an admission, this was going to be our first webcast. So, but unfortunately, we were due here overnight at 7 o'clock. And this morning, we problems with the tube. We've got a 10 minutes late, filling up with makeup. I was okay, but makeup decided that It couldn't do enough with her in the 2 hours that we had left to, so we've had to revert back. So I do apologize, and we'll try again. In 6 months' time. So the agenda today highlights, that'll be done by me. It'll obviously do the financial review. I'll then come back in with a operational update and update on our medium term targets and outlook, which is very strong, and then we'll obviously take any questions and answers. And that photograph there is of the group's largest development spanning across Wellingborough, which has been in people's minds over the years. It's been around for years years years years years delighted to say, as of today, we've got a show home and we had 27 completions, for Christmas, more completions since, and it's probably our one of maybe our best selling site today. So that site is actually happening as we go forward. So the highlights, and there's lots of them. So it's been significant operational improvements, which have delivered a step change in the business and financial performance. Record Euro profits with 47.4 percent increase in PBT. Transformation in build quality and our customer service more on that later on, and June December, our period ends were both controlled and disciplined. Significant improvement in the operating margin, up 3.90 basis points to 16.4 percent, along with that, a step up in return on capital employed to 19.3 percent from 13.7% last year. Excellent progress on our balance sheet optimization. So we're today announcing that we're expecting that to rise to 1,000,000 from the initial target of 1,000,000 when the expected completion of the Wellingbrook JV which will add in just under 1,000,000 complete. Very strong period on land position. In fact, the second half of twenty eighteen was a stronger period as we've had for years and strategic land conversion, which has given us excellent land visibility. We successfully launched the new Phoenix housing range with our new, sales specification and the first two show homes of the Phoenix range are now open. Great news that we're going to launch a new Partnership's Housing division, more on that later during 2019. We've seen great demand, Brexit and all, in the 1st 8 weeks, at our show homes with a sales rate of 0.58 over the 8 weeks. It's over 6, well over 0.6, if you just take February. And that's sales rate that the group haven't achieved for years years years. Puts us in a strong position for 2019 revenues already concerned. And I've been around for a long time. That really is a strong position to be in. Good progress towards achieving all of our medium term targets and expect to make a lot of further progress during 2019. And against all of that, the board has recommended a 20% increase in the ordinary dividend, reflecting the strong performance and confidence in the group's outlook. And on the back of our performance on the balance sheet, cash, the group obviously remains committed to reviewing further capacity to give more back to shareholders over time. So Good morning. And pleased to hear that the case file gets bigger for me, Greg. So thank you for that. You're looking at the screen at our 1st development joint venture at Sherford in Devon. So joint venture, we completed entered into December last year. And that will be equity accounted going forwards, but the development you see, we will finish off the current phase ourselves, but new and future phases will all be in joint venture going forward. So I can now take you through that significant step up in profits and more importantly, margin that has come from controlled growth and a real focus on margin in the business. So revenue up 3%, driven by a similar increase in volume. Pricing was ahead, and we have had more affordable in the mix in terms of how that's come through. I'll take you through that in a moment. Gross profit up 25%, two 30.9%, again, more in a moment. Admin overheads flat year on year. Of training and IT as we invest in the business and a better way of working going forwards and increased employee costs in there. Operating profit of 174.2 They've got interest costs slightly down on last year. We have got lower average debt, also slightly lower imputed interest on our land payment deferrals, But we have lost the benefits of an interest credit we used to get on shared equity that we held. We obviously sold that during 2017. So overall, profit of 168.1, up 47%, tax at 18.7%, largely following the rate with a small adjustment in respect to prior year. So looking at sales prices and volume, and say, we're pushing prices forward. So private sales price up 1%, but at $337,000, still a very affordable product. Affordable price also moving forward, reflecting the tenure and location where we're operating. Overall, no move in our price as that greater proportion of affordable has an impact. If I take you back a little bit in terms of a 4 ability, you'll recall 2017, we sold our last million homes. If you look now at the number of homes over million that we're selling. We completed less in 2018 than we did in 2017. And that trend will continue as we go forward, and you'll see that in our landbank in a moment as well. The affordable proportion approaching 32% lower in the second half than the first half. And when you think that we buy land, tends to have 30% or 40% affordable, so that's quite a natural level at the moment in terms of our construction routes around the site. Combined that together, 3% up on housing revenue, This had 1,000,000 of other income. The largest part of that is 1,000,000 coming from our PRS joint ventures as we dispose of those. So that was revenue that was deferred when we originally went into those ventures now coming back through our income statement. And there's about 1,000,000 of profit. With that, Other in there is some small land sales and some commercial revenue normal course of business. So in terms of our profit split between housing and the sales of development land, so is that significant step up in gross margin to 21.8% and a total of 360 basis points on the housing margin, driven by a number of things. Firstly, the improvement in the embedded land bank margin, and you'll see that progress going forwards. I'm doing it right first time in terms of our build costs and certainly lower costs with customer care post completion and the initial impact of our margin initiatives. So pushing price impacts on the cost base and the Phoenix housing range coming through. Again, the overhead ratio of 5.3%, down from 5 0.5% the year before. We are still expecting to get that to 5%. There may be a bit of an adjustment for joint ventures as we progress. Overall, operating margin forward 3 ninety basis points to 16.4%. Pricing and costs, just look at the 2 ring numbers on the screen. So 3% up in terms of private sales price per square foot. I'm not going to claim I can accurately identify every impact in here, but we certainly estimate pricing inflation in the markets we're in at about 1%, certainly supported by external house price indices as well. Then got an impact of mix and high value locations, but also that pricing initiative pushing prices, getting off sales advisers as centralized on the net price and reducing our daily margin. Construction costs, again, we've seen a 3% increase, but actually we've been seeing inflation run around 3% to 4% and continue to see inflation, arguably a little less inflation pressure just at the moment with the market backdrop that there is But we will have seen costs up again from mix and the locations we're building on, but offset by specification change and underutilization of contingency, so delivering just the 3% increase in the year. Most importantly, the operational improvements, the change in processes and new system for our commercial teams, leaves us in a great position to control our costs going forward. Cash generation, good cash generation in the year compared to last year, we did have 2017 sort of big inflow of housing association monies. But still a strong position for 2018. Little impact from those PRS disposals I mentioned because most of the cash there to the bank in the first instance, we've still got effectively our cash to come as we finish those disposals. The construction reflects our further investment in Wellingborough during the year, and it also reflects an increase in our housing work in progress. So as you'll see in our balance sheet in a moment, we had about an extra 100 homes in construction at the end of the year. Cash expenditure on land,174.5 reflects both the unwind of the creditors, and the new land investments during the year. The dividend payment reflects the first million of special dividends paid out in November. And the non trading items are largely PAX, and we did make a special pension contribution of 1,000,000 following the closure of that scheme to new accrual. Overall 18,810,000, sorry, 18,100,000 outflow, closing net cash of 126.8 And as Greg mentioned, we expect to see cash benefit of around GBP 68,000,000 as we move into joint venture at Wellingborough That will be both a cash inflow of 1,000,000 to 1,000,000 as well as the impact of the Holmes England loan going off the group balance sheet of about 1,000,000 So again, as Greg said, the most active period we've had for a long, long in the second half of twenty eighteen. You'll see the dots on the map are largely all the new acquisitions in the year. So certainly the the white or gray dots, along with the red dots and the red dots specifically, are those sites coming from our strategic land bank, so 47% of our land coming from Strategic Land Bank Pin Point 2, particularly development at Althington, near Exeter and North Whitely near Southampton, both significant strategic investments now coming into our land bank. But you can also see the investment in the future. So the blue dots are new strategic land options, so continuing to invest in the future of the business with the strategic land. Again, good period for strategic land, so a further 2134 plots gain planning consents in the period. And all the land, that we have bought during last year, we expect to get at least an average 26% gross margin and 25% Rocky. All that activity giving us great visibility, we are on and building pretty much everything for 2019 97 percent of 2020 land already secured. I won't dwell on this, but just to give clarity on our land bank, total land bank, 17,328 plots within that are 1496 are in the Sherpa joint venture. So if you net that down, 15,800 roughly and our target 4000 completions a year, that's a 4 year land bank. Can see the average sales price has gone up just a little, but the average cost per plot has moved in the same proportion. And importantly, the average gross margin in the land bank move forward significantly, reflecting both those margin initiatives starting to come through and the quality of the land that we're buying coming into the 26 percent in terms of acquisitions. So strength in the land bank, 96% of our private plots are now under 600,000 looking forwards. In fact, 42% under 300,000 and only 1% of the plots that we bought in 2018 are, in fact, over 600,000. So that trend in terms of ASP in the future will come through. We won't see that necessary in 2019, but you will see a drop in ASP in 2020 onwards. Really pleased balanced portfolio across the business and no region is, in any way desperate to buy land. So it's controlled land buying. And in terms of low risk, 4% apartments and 91% on Greenfield, so low risk land bank. In our balance sheet, you can see that investment in land since the half year. You can also see it in the land creditors. The land creditors are at 34 sense of land. Within that, I mentioned the 2 big strategic investments we've made. So in Exeter and North Whiteley, around 38,000,000 of the land creditors are accounted for by both those sites. And as we said previously, mid-30s percent, we're quite comfortable with in terms of land creditors, particularly with that profile of site coming into the land bank. Working progress, investment reflects about 1,000,000 further investment at Wellingborough at the year end. It reflects that extra 100 homes in production and they are homes that are further progressed than the previous year. But pleasingly, we've actually got less investment in roads and sewers as we control the infrastructure investment on the ground I mean, a little bit less parts exchange again this year, so further reduction year on year. Other liabilities are down, reflecting actually where we are on payments on account from our housing association, a little bit around timing of payments at year end. Overall net assets per share 7.90p. And finally, we've been looking to optimize our balance sheet over the last 18 months or so. So I think we started midway through 2017, as Greg said, we're now aiming to get to 1,000,000 and the slide shows both progress to date and the opportunity still to come. So land disposals, 66,000,000, entering into the joint venture at Sherford, great progress on our work in progress, particularly in part exchange. And in other areas, the complete disposal of our shared equity portfolio, disposal of fixed assets, including our 4 owned offices, reduction in debtors and the ongoing disposal of our PRS joint venture. So there is more to come. Wellingborough being the big part that we've mentioned a couple of times, but there is still the PRS joint ventures to conclude. Most important now with a better shaped balance sheet is managing that tighter balance sheet going forwards, and that's what we're doing to embed the right behaviors right across the business. With that, I'll hand you back to Greg. Thanks so much, Jill. So, operational update, I'm sure our health and safety team has scoured that photograph to make sure there's nothing wrong. Seem to be, but I'm sure they've had a very, very good look. So we've transformed absolutely transformed our customer service. So customer satisfaction is central to everything we're we're doing definitely in 2018 and definitely going forward massively helped by controlled and disciplined period ends, which both Al and I have talked about. So, delighted to say, we are now a 4 star house builder for 2018, and that's up 2 stars from 2017 ahead of target jumping 2 stars in 1 financial year is very, very rare. It's been done before, but not very often. Better than that, all of our 7 regions were at least 4 star, 2 of them were 5 star. So it's absolutely spread across the business. And for those of you who don't know, the HPF year where the star rating goes from 1 year to another start on October 1st, it finishes end of end of September, of course. And I can tell you now that with just under, as of this morning, 500 responses, the majority of those coming through our December completions, which is, you know, the usual pinch point, we're currently trending at 5 star with 4 of our business units at 5 star, 1 just under and 2 at 4 on. So it's getting better and better, and that is underpinning our financial results. So that wasn't a flash in the pan. It's getting better and better as we go forward. Customer service remains a key priority for us. We're implementing our new CRM customer relationship management system in May. Really excited about that. Input from our home builders, home buyers, sorry, panel, which is extra, which is purchases of our houses, giving us feedback. Collaboration with the Institute of Customer Service, where we're now members and, of course, ongoing training and development. Huge step change in build quality. So to get good customer satisfaction, you've got to start on-site. So further progress on build quality, 6 NHBC awards in 2018. We have to go back to 2004 when the BOLVUS won more than 6. NXBC reportable items down a massive 66% since December 2016. High caliber construction directors, site managers and site teams across the regions, which is if someone said to me, what is the most you've done at Bobert Homes, this is the area our focus the most on. Huge hands on approach now is embedded throughout the business, increased standardization and best practice across the group, and we're massive sorry, investing massively in health and safety. And it's great to see with all those photographs that ladies on-site that we still are employing the odd bloke on our building side. So, probably not supposed to say that, but there we are. The Phoenix collection, our industry leading, housing range in my mind, Clyde. So excellent progress on implementing the new housing range. 34 sites, replanned, totally 1664 units, 19 further sites currently in planning, and we're confident we'll get it. 2 new show homes have been opened with excellent customer feedback and the first completions are expected in spring. Circa 15% of complete in 2019 are going to come from Phoenix, and that will ramp up dramatically as we go forward. We're very confident that the new range will deliver improved sales proposition and value added stuff to our customers, improve build efficiency and reduction in costs that's coming through already and definitely increased competitiveness in the land market. So overall, as we said to you before, we are expecting to deliver circa 3%, every time we change a portfolio house, our previous, standard housing range to Phoenix, but that will probably balanced up to a 1% increase in our overall land bank. And I can just see the quote there. I can just see one of our is turning up saying the open, modern living areas with classic architecture were hugely popular. High quality and skilled workforce. So we are now investing in people and in processes. So in house training center, which was nominated for a couple of awards last year, covers all business functions, including subcontractors. The leadership training program is well on. And today, today, 140 of our employees have gone through that. 20 Assistant Assistant Assistant Site Manager of the group on a program We've nearly got 70 apprentices, and that's a big focus for us, and that's rising as a steady improvement in our Pecon engagement survey. So you score 7, we're told by Pecon, that's a really good score. The last score in January showed us at 7.9, which is towards, top of the tree. And the big takeaway from that slide is 2 years ago, it was really difficult to attract people to join and keep people focus homes. That is no longer the problem. We're not using headhunters to bring people to focus now. People like what we're doing, particularly on-site, and we're getting lots and lots of emails, looking for people to come and join the business, which is great, and definitely different from where we were a couple of years ago. So we're building about me or is it cold in here? Sorry. Just need to warm up slightly. So, feeling a better focus home. So we're 18 months into a three and a half year major program of business change. So coins, which you'll be aware of, that was successfully rolled out during the course of 2018, and we're making significant progress with that. So the process reporting, cost control, almost better, and the 2nd phase is being rolled out during 2019. Other process changes in include consistent automated, this is called Viewpoint, consistent automated document management system, sales website enhancements, which might be one of the reasons why I was sales rate has gone up, business planning and modeling, learning management and HR and payroll solution, and all of that alongside our CRM, which I mentioned earlier, and our Phoenix housing arrangements, these initiatives are definitely driving forward our margin and our profits. Value from our strategic land bank. As I've said all along, it's a great asset for Vodafone. There's no getting away from that. So very well positioned. We've made major progress in 2018 with some significant land coming through. We're delivering high quality developments in the very near future. There's been a step up in strategic land pull through during 2018 with a conversion of 19.58 plots at an average margin of 29.9 percent. And we expect the if you look at planning agreed and planning application there, which is just over 9000 plants, I've got no reason to think they won't come through in the next couple of years at similar or even better margins. We're continuing to pursue new strategic land opportunities. It's a very good department for us. And in 2018, we secured 1415, so we're basically securing what we're bringing through into the current land bank. So strategic land is definitely demonstrating its value to the group. Partnership Housing So we are launching, during 2019, a new initiative, our partnership's housing range. That will be led by Keith Carnegie, who's been with the group for a long time as CEO. I would ask Keith to land up, but, those of you who know him, it would be difficult to get him to sit down again. So so we won't bother with that. But both his homes, and I do have some experience in the affordable housing section. Is very well positioned to maximize this area. So it's going to be a land led strategy. We're not going to be going out there tendering. This will all be done through our land bank and particularly through our strategic land bank. If you like, over the last 18 months, obviously, we've done a lot of rebuilding of our relationships with our private clients. I would actually to the relationship building that we've done with our housing association clients has been even greater. And I would say today we've got a very good relationship with them. So I've had in my mind for a long time, let's bring in partnerships housing. But what's the point if you haven't got a good relationship with the people that you've been working for? So today to date, relationships are far far back. There's still some work to do on shore we're in a good enough position to launch this exciting initiative. So we've got a track record of doing it already during 2018 at Wokingham, Paulie, Sherford and Tavastock, and there is availability, obviously, huge availability of funding from the housing association movement. So massive benefits for the group, deliver the best returns from the land opportunities, facilitate better working capital management, and additional cyclical revenue, profit stream in time, and it's a safer area to be in. So that's where the growth, major growth from Boberz Homes will come from the next few years, with some growth, of course, but limited on the private side. So with everything that's going on, We need a new brand. So, we just, we're introducing it today, the new brand identity for Bogus Homes, but the existing brand has been around for over 20 years been a little bit outdated. So the whole brand will try and to reflect the increased pride in the group internally and better reputation externally. Now I'm not into. So my input has been very limited. I'm not into all of these airy fairy stuff, but I have to say If you look at it over to homes and the way the hummingbird's gone there, I do think it looks pretty impressive. Market environment. So fundamentals remain strong. I'm sure we want to have that high level of consumer demand, strong support for sector, we were delighted with the Help to Buy extension and no issues at all with it being just for first time buyers. My own group or what it's worth, I think it'll be harder to stop help divine 2023 when it's just relating to first time buyers as opposed to stopping it in 2021 when it's up to £600,000, but time will come. Low interest rate environment continues, competitive, very competitive mortgage market, high employment levels. There are alternative routes across to the market through Hala, which I think we're right up there with anyone on that PRS and partnerships available. And of course it would be remissivous not to mention, Brexit, if you didn't know that was going on. Of course, the shambles that it all is, but we are trading well through that. And we are focusing. We're not whinging about Brexit. We're focusing on putting one brick on top of another. Selling houses, that's what we can control. We can't control what's going on elsewhere. And I think in the 1st 2 months of this year and leading up to Christmas, we're doing pretty well on it. So particularly from an Analyst, aspect here, we are earl touched on it a little bit as well. We're a well positioned low risk house builder. So we've got a new housing range, which is family houses and it's a very, very good housing range. Typically locations are on the edge of a town or a village we have absolutely no exposure to the London market. We're not even any developments within the M25. Only 4% of the owned land bank is over GBP 600,000. Next nothing. 42% is under GBP300,000, which is a very, very safe place to be. And that's growing. So if you just looked at what we bought in 2018, those statistics would enhance that. 91% is on lower risk greenfield developments. We only really build 2 story standard houses, very limited apartments, and there's hardly anything over three stories. It is as low risk house builder as you are going to get. So we've got a strong very strong sales position for 2019. With our sales advisers, we're continuing to focus on price organization along with controlled growth. The new sales specification, which is a reduced specification has been successfully launched, and our upgrade is called a system which is called Select has only just started to kick off in the second half of last year and there's huge opportunities for us. We've only just scratched the opportunity of that. So the input select where people come in and want customer extras, it hardly touches. It's peanuts in 2018. And I expect that to grow quite strongly in 2019 2020. Help to Buy remains a very important private completions in 2018, very, very happy with the extension, with the vast majority of those helped to buy completions being under GBP 400,000. Part Exchange, very positive sales tool for us, only 8.7% of completions in 2018, were from Help to Buy. I'm very happy to use Part exchange up to 20%, 15% of sales in 2019 so far, as been from part exchange, no problems as long as it's well controlled, and it is well controlled. We only have 3 properties in our stock portfolio and products change over 3 months old, and they've only just come into 3 months old in the last week or so. So it's a very well managed scheme for us. There are increased opportunities for private sales, with halo and well established housing associations. 14 new developments are expected to launch in the first half of this year. And as I say, forward sales represent 48 percent of consensus for 2019, and I haven't said this before, but just over 5% of sales 2020 private sales are already in the bag. So the medium term targets for BOPIS running through these quite quickly, 4 star customer satisfaction rating done, and we're currently trending at 5 star, 4000 completions, well on target to achieve back a little bit of a step up in 2019, three and a half, four year landbank. Earl said earlier, 4 star tick, minimum 23.5% gross margin by 2020, big jump in 2018, so well on track to achieve that. 5% overhead expect to get to there in 2019, minimum GBP 180,000,000 worth of cash tick, we expect that to rise by about 1,000,000 with the anticipated completion of well in breath and 25% return on capital, again, a huge jump in 2018, so well on track. Margin initiatives, we've got the 4. They're the same 4 that you've seen before, and there's no change in any of our outlook for that. So the price optimization, 1% margin opportunity, definitely starting to see that coming through. The specification review, we've reduced specification we're getting the same prices that's happening, but we've only just scratched the surface on the potential of Select and there's a huge, I think input there that will help our margin and profitability again. Cost reduction, we've not we're not using 1% of our contingency because of our better site managers, better supply chain on-site that's actually coming through at 0.3% as predicted. And the big unknown still is the Phoenix housing range. So we're fully expecting 3% on a like for like basis, 1 percent on our overall land bank. We've just opened up the show homes, 2 new show homes more to come very, very quickly. We just sold our 1st unit the feedback's very good. We might be holding a little bit back on that, but that is coming through very, very well. Enhance enhance sorry, cash returns to shareholders. So a strategy of maximizing sustainable dividends to our shareholders continues. Full year total up 20 percent to 57p as I've said, and the ordinary dividend cover will reduce to 2 times cover by 2020. The special cash returns totaling GBP 180,000,000 to GBP 134 per share in 3 years of 2020 was based on a balance sheet optimization target of 1,000,000. The first payment of 1,000,000 was made last November. The balance sheet optimization you've heard, Earl and I say, we're now aiming to get to 1,000,000, and the board is committed to reviewing what we do with that extra money in due course. So we've got massive amount of work over the last couple of years at Fovis Homes, which has put us in a very, very strong position and gives us a very strong outlook. So strong sales position, 0.58 sales per week per site in the 1st 8 weeks, over 0.6 if you just take February 15.7 percent up from the prior year, and we've not achieved those sales rates for years and years. 48 of 2019 revenue already in the bank. Control volume growth, we are going to maintain building high quality unit with high levels of customer satisfaction. We're investing for the first time in years in people, process, and systems, and that's starting to build at Bedabobas Homes, which starting to come through the bottom line. The 1st completions of the Phoenix Housing Ranger expected in the next couple of months, excellent land visibility, all land or planning for 2019. In fact, we're probably on-site building everything for 2019. It's better than that, 97% secured for 2020 and that 3% is all identified and work being worked through. Really excited about the launch of the new partnerships division, and we are very well placed maximize our strategic land going down that route. We expect Wallumbra to complete pretty shortly, and there's a 20% increase in the ordinary dividend and the board is committed to looking at further capacity for returns. So overall, we're expected to make further operational and financial progress, but there's no doubt about 2018 following an awful lot of work in 2018 2017 and seeing a great year for us. So on that, with our new logo there, which, hummingbird stuff is like a bird of prey there, I think, which I don't have a problem with, we'll take any questions. If you'd like to say your organization and wait for the microphone. Morning, it's Chris Mannington, Numis. Free, if you can, firstly, just start about the Phoenix rollout. You mentioned it's going to wrap increase as we go through the next few years. I just wonder if you'd give us a bit more meat on the bones there. So 15% this year, probably about 60% 60% as we go into 2020. And then that'll be the biggest jump, Chris, and then it will be, gradually over the next couple of years to 100%. So never 100%, because things like Sherpa will be around for a while, but it took about 90%. Next one is just really on this partnership business, kind of where you see the potential. And is it all incremental? To the current private homes business as we stand. I would say it's a mix So it's not totally, incremental, but it will definitely, put some growth that we haven't indicated before to the unit numbers. You want to add anything to that, Keith? Thank you. So yes, so we've said at the moment, have a target of 4000, you know, we can do 4000, we could probably do 4200 from our existing 7 business units. The introduction of the partnerships division. Nothing really in 2019, but as we go into 2020, 2021, it will come through. That will give us the ability, but I don't want to get carried away to increase those numbers. Community engagement. Now I appreciate your land mix is a little bit different from most in the greenfield bias there. But are you seeing anything to that? I mean, it looks like you're in a pretty decent place where we go visibility. Funding isn't easy, but I think we're pretty good on them community engagement. And then all I can see in the couple of months is planning coming through. I'm looking at the James and Dow. Planning is coming through pretty much on time and for us. In fact, it all depends on what you allow at the land acquisition. So are you realistic with how quickly you're going to get planning? I think we're very, very realistic probably on the side of being pessimistic. So we're doing it any better, but we're definitely doing it within the timescales that we predicted. So no issues from where we sit. Thank you. Thank you. Dennis Johnson, Jefferies. Julian. I'm going to go with 5 things, Greg. First one is joint ventures. Can you give us a little bit of guidance actually in terms of joint ventures, what we should anticipate in terms of profit flow, what might come out of admin, and also maybe tag on to that the partnerships or partnerships likely come in as a joint venture? Do you think you'll actually have them consolidated? I'll answer the joint venture 1 on the partnerships, as I've done previously, 2019 2020, the profit will stay within the business units, but we will extract at the half year and full year the benefit of what we've achieved from partnership financing and the intention would be by the time we get to 2021, we'll bring it out all together and it will be a separate business stream. George Sanchez? Yes. So I mean, I mentioned on Sherford that we're, actually constructing out the current phase ourselves. So there'll be minimal impact in reality on 'nineteen and growing into 'twenty. Wellingbrook, we expect to put into joint venture in the first half. So first completions last year from the point we're in joint venture, obviously, that will start coming through our share of profit, which will be half of that. I mean, our admin expenses are expected to keep running. Obviously, what the joint venture accounting will do, we'll take the revenue out. So we'll be apparent in terms of gross volumes, net volumes, and what's happening with that, in terms of how it's running. Does that answer your question, Glenn? Numbers in that whatsoever. Is there any numbers you can put on it? Well, we did, 22 completions at Wellingborough. This year, we're looking to deliver at Wellingborough Bauer 100 of completions, around 2017 in 2019. And there'll be very few at Sherpa in joint venture during 2019 but growing into 20 prices. Okay. Next question, just in terms of, coming to the margin initiatives, the 3% like for like in terms of the housing range going down to the 1%. Is that just a factor of the number of sites you think you could roll out? Yes. So if you take something like Sherford, Although there is a chink in that, but up until a month ago, sure, if it was a special case and we couldn't change any of the units to our Phoenix range because it was it had to be designed specifically, although we have had a little bit of movement on that. So it's 3% goes to 1% because we're halfway through a phase and we can't change it or there's a particular development like Sherpa where we can't change it, in any case. But where we can change it, it's 3%. And importantly, it gives us more land that we can look at because we're obviously better equipped and more competitive in the land market than we were beforehand because we've got better square footage, per acre, and we've got cheaper build costs in building at FIGR Square Footages because the units are more straightforward to build whilst I think retaining their coverages. Next one just in terms of your number of show homes has actually gone up or the value of the show homes has actually gone up? I know your whippers come down, but that element has actually gone up. Can we use that increase as a guide to what's going to happen in terms of site openings? Or is it just that you're building more show homes or that higher value show homes on each site? The number of show homes is broadly the same. Our number of outlets around 87 we expect to remain consistent. So we said 14 new outlets in the first half. We expect roughly the same to close. I expect that through the year, and the number of showhomes on the balance sheet as much reflects how many we have or haven't sold. We do sell some and lease them back. So that's what's reflected on the balance Tumor. Strategic land, are you seeing the size of the land of the site coming to change. I figured I can't remember what that side looked like last year, but in terms of what's coming in, is it getting bigger? Is it reducing? I would say it's getting I would say it's getting smaller. Yes, it's getting smaller. In terms of the some of the large schemes, they are the ones that are coming through. So we've got the first eight hundred plot come through in ex to the first Circa 500 plots at Whitley. There are more to come on both of those sites, but they are the larger developments. Obviously, there were, I think, about 7 dots on the map and about fifteen hundred plots on the new sites that got in. So getting smaller on average. Interesting that the accountant is giving more answers there on, with numbers on strategic land than he did on the numbers. One last, more top line question. We saw reference in the papers over the weekend about potentially what could change in terms of Help to Buy and maybe, linking it to quality. How are you thinking about that in terms of how you're running your business? What measures do you think are the right that government should be using to assess quality? Well, I think I would have been very nervous this morning saying record profits, and we haven't moved the goal and we're still a 2 star house builder. The fact is the reason we've got record profits is we're not spending as much on our customers. We've got a better reputation. All customers are coming, the sales rates are up. We're doing better on the back of it. So from a government and we've had no conversations whatsoever. We've got record profits in the right way where we are driving customer satisfaction up and it's quite a dramatic change. It's costing us and that change is costing us no money. In fact, it's saving us lots of money and I'm delighted to say we're even going up further, I suspect. And so we're 80 6.5% for, let's be clear about that for that 4 star. So that's closer to 5 star And so it wasn't a scrape at 80.5%. It was 86.5%, you know, with whatever it is 16, 1700 responses. And with 500, which is still a long way to go, but it's not insignificant. We're trending at Firestar. So I think the government, you know, my own view is 2 years ago, helped to buy, we want more houses built. When I started at Bogerson was inundated with, people writing and complaining about X, Y, and Z, and every third email was written to an MP, the local MP. I think today you'll see the government want more houses they would like them built properly as well. I think there's a subtle change there. So, you know, so I think we can say we're growing slowly we were where we were work, we are where we are now, and profits are rising, but they are rising on the back of much better, much, much better, customer satisfaction and build quality. And do you think the star rating is the way to assess that? I'm not sure what they can accept I'm not sure how else they could, how else they could, do it. I'm, you know, someone wants to come up with something, but, I don't think a star rating lines. I mean, the fact is if you ask me how many emails did I get on April 18, 2017 compared to February 25th, 2019, it's a hell of a lot less. Sorry, there is a correlation at the point. Thank you. Clyde Lewis at Peel Hunt. 3, if I may. Coming back to the partnerships, and I'm just trying to get a little bit more of a flavor about exactly what you're going to do within that business. Is it just Clarion and Living West that you're going to work with or is it going to be a broad spectrum? Yeah. We're working with it supports Spectrum. That's the 2 that we got permission to use their, their logo. So it'll be an absolute spectrum and we are working with a lot more and we're talking to a lot more than those, than those 2. Wellingbrook is a housing association, but I won't get another bowl again and mention the name. But so So it's a housing associations, across the country. And when you talk about a land led strategy, is it your land that's leading it or is it actually the housing association land that My experience is it will be our land that will need it to start with. But as we're taking land and help housing associations out, which helps that program. My experiences and you build up better and better and better relationships in the trust build they bring some of their land in as a quick pro pro as a benefit to us. So it'll start with our land particularly the strategic land. So if you've got something, you know, take more widely, 17.50 plots, do I really want to sell 400, 500 of those to, you know, Taylor MP or Barrick, and have another flag on the site, not really. I'd much rather do a joint venture with the housing association where there's one flag, one brand, which will be the bulbous brand, and the housing association will be behind us. We can probably make a turn on as we go into the JV, so we still get the benefits, probably greater benefits of a land sale, but you still only have one competitor so one house builder on the site, and you work from that. So here we are, whoever the housing association is going to be, I think we know it was going to be already, and it's none of the 2 that were on that list, clarifying that. And you then say, we're bringing things to you. What about you bringing things to us? What we're not looking at doing at the moment? And that's exactly what's happened in my lifetime previously. What then happens is more things come through. You just set up joint venture, a joint venture company, and put nothing in, but sites follow, sometimes from us, and sometimes from the housing association. What we won't be doing in the foreseeable future, if ever, is actually becoming a contractor and tendering for work with housing associates. It will be land led. And in terms of product, would you see this again largely housing with very, very little apartment? Mean, I think at the end of the day, Clyde has gone, I think to start with, yes, because that's where we can actually see where the land is, but in due course, would have to change and it would have to be, you know, we'd have to learn how to climb a ladder and go to four stores, I mean, but it would have to be some apartments, I think. And what is the read across from that to your appetite for doing PRS stuff? Are they mutually exclusive or? No, no, we've got the PRS would go with, that new team. But at the moment, we get a lot of offers on PRS. It just doesn't quite seem to quite stack up, but we'll be looking for land going forward with that focus team on not necessarily buying it to sell. Buying it for PRS, understand the model, and then build it from there. The other question I had was on forward sales. You've obviously flagged that very healthy start and obviously a big chunk of activity already locked in for 2019. What does that allow you to do now in terms of talking to the sales teams and your regional directors about pushing prices a little bit harder and in terms of sales rates? Are you doing that? Were businessmen. So we're further on than we expected. So we will be, pushing prices and we have been pushing prices over the last week. And if we're doing the odd deal, to a housing association where we're not quite as in the same position as we were, a month ago. We're a bit, we're, we're, you know, we're doing a harder deal. There is a number of deals that are on the table at the moment. I think aren't included in those members, and we're just holding on around a little bit. Yes, I just got two questions really. One's point of clarification. In the forward coverage that you've talked about, are you including the proceeds of the Wellingborough sale in that number. So that's purely on residential sales. Second question I had more generally, sitting through the presentation, the number of things you highlight, such as the higher caliber, site managers, the new CRM system, even right down to the new Partnership division, which appears to actually be having its own infrastructure to deliver, or even though initially it sits within divisions, I'm sort of quite surprised the admin expenses are flat and they haven't actually gone up, which sort of I don't know the implication is all these things that you're talking about. There doesn't appear to be a lot of cost gone into anyone from the point of view of I get what you're saying. I would suggest to you and hopefully, Daryl, change will back me up here, but then I suggest we'll be looking at the number of, we have a lot of people in customer care. And those people in customer care, when we were a 2 star harris builder and dealing with lots of legacy issues. So if anything, I'm still looking to, to make savings. The Partnership housing side and strategic side, yes, there's a bit of an increase in that, but we've been able to absorb that. The better quality site managers doesn't come through admin. So yes, and Daryl and James put forward some losses on the sites when we on a site manager for 10,000, £15,000 and more per annum than we were paying before. But a site manager, you get a good site manager. He will build the scheme as close as you're going to get to the original budget. He won't back to the budget because the budget was done on a sunny day in an office, etcetera, etcetera. But I'm telling you now you get a bad site manager or a ordinary site manager with some ordinary subcontractors, he'll lose 10,000 to £15,000 every day. So that's was going on with Boga's homes. And we had our whole infrastructure and our build costs were based on, we've we've had to build that two story bay window. Again, better make sure we put some of that in down the line to do another one, what's happening, what's coming through with our cost reporting, which is much more accurate because of our coins system is we've pretty much leveled out and we're pretty much doing it right first time we'll obviously be making mistakes, of course, but those mistakes are few and far between, whereas the mistakes we were making in the old bogus were the norm. South, so there's no sort of hidden jump that's expected on that line going forward? It. Thank you.