Taylor Wimpey plc (TW.L) 2019-02-27 Earnings Call Transcript

Good morning, everybody. Thanks for joining us. If -- as ever, I'll just go through a quick summary, give Chris get a chance to add in anything I may have missed. And then we'll open up to questions. I think, you should all take a significant amount of comfort from this statement in a time when I think we're all uncertain about how trading will perform in the short-term, through the back-end of 2018. Performances continues to be strong. I think Taylor finished the year with a sales rate ahead of last year and with a record order book which I'll come back to, is a strong performance. But also shows what we've seen sort of out in the field that the market has remained pretty stable. As we said to you in our last trading update, we wouldn't say to you that there is no uncertainty out there in our customer base. There are definitely marginal customers who have decided, “I'll leave it for a bit.” But actually, there are still sort of plenty of customers to continue to trade at the level that we have expected and plan to. And many other things that we've been doing over the last year plus in terms of making sure that particularly those larger sites we have to our product on the ground, the right sales techniques, the right usage of price points to people who we think also head into that strong sales rate performance. And I think -- I said I’ll come back to the order book. Probably our strongest focus through the second half of 2018 was not on 2018 performances, it was on making sure we went into 2019 with strongest order book possible. As the statement sets out, the majority of the growth is in the scale of the affordable housing order book, which if you remember last year was reasonably low at this point, but to maintain the strength of the private order book which is -- sort of continues to be an all-time high over the last couple of years. And we're -- them to be trading this far ahead in the kind of conditions that we're seeing we think is a very good performance. And is the right thing to do in terms of managing the overall balance of risk and returns in the business. I think if I move on to land, we have seen a land market where buyers have been less confident in the last three months but we still continue to see deals done, but there have been opportunities to renegotiate on price. And we’ve continued to acquire land, but probably on a slightly lower rate than we would have done without the overall uncertainty. And to give you just a sense of scale, just to give you some sort of indications without an uncertainty, there’re probably an additional six or seven sites that we might have bought, an additional 2,000 or so plots, sort of which we’re in the process of either renegotiating or deferring. Those opportunities remain there. We're not seeing sort of competition step up. But at the same time, we think it's the right balance to continue to acquire sites at good margins but not to stretch ourselves. It’s certainly not a time to bet the farm. Just briefly on build costs, the conditions have continued to be sort of pretty stable through 2018. Our guidance going into 2019 remain at the same sort of level in terms of annual build cost inflation. I think our sense on that is there's probably a bit of upside, as in the inflation may actually be a little bit less than that, but it is pretty patchy. It depends very much on the particular quality, the particular sort of level of subcontract resource. We are not seeing any meaningful signs of subcontract labor leaving the workforce. And now it’s not the time to go into it in detail, but we're definitely seeing some material benefits from that extended apprenticeship program, which we'll come back to, I'm sure, at the prelim stage If I look at sort of 2019 and sort of forward guidance, we go into it, as I say, with a very strong order book, we go into it with a record cash position. Those are both very conscious things to do. We can't predict with certainty where the first half trade for 2019 will be. It's very early. Sort of initial signs are actually at the positive end. But it's still early that I wouldn't read too much into those but making sure that we're in a stronger position as possible. And reading into sort of how conditions haven't materially changed during the second half of 2018 should give us some confidence. Our overall guidance remains for a flat 2019 in terms of volumes and margins. So nothing really has changed there. And as I look ahead further into 2020, we still have significant potential for volume growth in 2020 and beyond. I would say -- and I know -- and I'll touch briefly on outlets, but many of you will look at the outlet number and still sort of see a degree of concern in that. I would refer you back to the beginning of 2018, where there were similar concerns and we had showed you that we had the potential to manage sales rates perhaps more effectively than people thought. And obviously as we look back at 2018, now you can see that that was true. But I won't pretend that outlets don’t make any impact whatsoever. And it does remain the case that we have to take the right decisions on each individual piece of land investment against the conditions that we face. So we have lots of potential growth for 2020 and beyond. But it will to some extent depend on trading performance in the first half of this year as to how aggressive we are in seeing through land purchases and making sure that they happen. The sort of most bearish views of market obviously will impact on that. So that remains a sort of factor that we will keep you updated on through the course of the next six months. But overall, as I say, our guidance remains for a flat 2019 with potential growth beyond that sort of in a reasonably meaningful way. Chris, is there anything key that I've missed in that?

Just a couple of quick points I think from me. Firstly, the continued strength of the Group's cash generation and balance sheet discipline, net cash ended £132 million, up year-on-year despite paying more tax, more dividends and spending around £30 million on leasehold and cladding. So I'm pleased with the flexibility the cash generation gives us, also pleased that our revolving credit facility wasn't drawn on at all during 2018. I can probably say this is we're in different locations, but I think modesty probably prevents Pete from commenting on Glassdoor, so I will. And we have one of, if not the lowest rate of staff turnover in the industry because we invest in the training and the development of our employees. And very importantly, we have a culture that our teams are really proud to be part, also to be voted ninth best place to work in the UK by employees is a great achievement for the company. And as you can imagine that brings lots of value in attracting and retaining the best people, but it can also give you an insight into how different we are from our competitors. And then lastly, a more general point that in February when we report the 2018 results in full, I expect to be showing you improvement over 2017 in pretty much all of our key financial metrics. And I emphasize that just because I think it's really easy to get distracted away from the strength of our performance in 2018 with everything that's going on at the moment.

I think if you look at sort of the South East market versus Midlands and the North, I think -- and we touched on this before. I think people oversimplify, almost everybody has sort of accepted that the London and the South East is weaker and makes them very nervous about talking anything other than everywhere else is strong. I think that exaggerates both positions. It is true that the higher price points which are weighted towards London and the South East are generally weaker and the balance of the market is generally stronger. But I actually don't think there’s as big a difference as people sort of would imply. So we haven't suddenly seen a weakening in the Midlands and the North. But I think through the last 12 months they've not been quite as strong as they were 12 months ago. And if I look at London and the South East broadly, yes, we still generally have high sales rates in many of those markets than we do in the Midlands and the North. So sort of I'm not changing the position but I do think there's just a slight mis-message sometimes. Sort of people like a simple story. The reality is sort of actually it's not quite as black and white in that. In terms of cancellation rates, no, we haven't seen any meaningful change. Obviously the points where you tend to see cancellation rates spike if they are going to is right at the period of peak completions before half years and full years and we didn't see that total in December. There was no kind of pattern of sort of increased cancellations nor was there anything like down valuation issues or any of those normal signals. And I -- sort of am looking at in front of me that sheet of full graphs that we sometimes use in presentations just to give you a broader sense of market resilience. And if you looked at that with the trends and things like online sort of appointment bookings and brochure requests and those sorts of things that we look as forward indicators, you would not -- if you looked at you would not see any trend that you thought I wonder what's going on there. Statistically everything looks pretty normal.

Just a couple from me. I'm just wondering if you could comment on kind of pricing trends through '18 and kind of how you saw about exits, and whether or not you kind of feel there's enough in the systems to kind of offset the build cost inflation you're seeing? So that's the first one. Second one is just about your commentary, Pete, around some renegotiation opportunities on land. I don't know, is this kind of mirroring what you saw post the EU referendum back in June 2016 or is it a slightly more moderate profile? And the final one is just about these comments around significant growth in 2020, I'm just wondering if you could kind of flesh that out a little bit more. I think everyone interprets the word significantly differently. So I'd just welcome your sort of thoughts on what you're implying by that?

Chris, are you happy to take the social proportion and the forward sales? And I'll take the quality one.

Sure.

Okay. So in terms of the proportion of social terms, yes, you said 19% last year to 23% bit. I think over the last 10 or so years we've seen the contribution of affordable homes in the Northern regions has increased quite a bit. I think as councils have got more sophisticated in viabilities, and there's been a great desire for affordable homes in more widely across the UK. So I think the 19% was probably a low. I think whilst the 23% is reasonably high. It's probably not the extreme. But I wouldn't say -- I think you were asking for the guidance going forward, I would be saying closer to 23% then the 19%. In terms of the forward sales, and I think you asked whether something else was going on, not at all. The order book we're obviously pleased with, 16% up in volume, nearly 10% up in value. Those increases are driven by affordable homes. And we’ve seen that across all three of the divisions and in the affordable order book, but mostly in London and the South East. And that increasing affordable also obviously explains the 6% reduction in the blended ASP in that order book.

Okay. Just on margins, I think that was referring to flat margins, but I don’t see that as being fundamentally different from what we said in November about the potential for sort of 50 basis points compression. It’s very small numbers and difference at the beginning of the year. So -- and as I touched on in terms of the balance between price and cost, sort of it feels hard to see an enormous amount of upside in the balance on price and costs this year. We’re not seeing a huge amount of upside either, but the balance is probably on the 50 basis points downside. So no real change from November, but pretty flat overall. In terms of share buyback, I mean, I think you probably know, if you don’t, it’s certainly no secret, because we wrote to all of our shareholders that we got a shareholder approval to sort of to increase our potential to do share buybacks. That doesn’t mean that we’re suddenly about to use that. That was over the Christmas period. We had an extraordinary general meeting just to give ourselves that flexibility. It doesn’t mean we expect to use it. In fact in the very short-term before the results we couldn’t use it, we’re in a closed period. But I think when you look at, how we’re seeing trading, the strength of the cash position, the potential for sort of dividends and growth into 2020 and 2021 and where the share price is, it will be irresponsible of us not to at least be considering it. And I don’t want you to take that as a strong indication that we will definitely do it, but we wanted to make sure that depending on how things go both in terms of the share price and trading over the course for the next three to four months that we have the potential to do share buybacks, if it felt right. So we’re certainly open-minded about it, but please don’t take it as a signal that you should expect something in the immediate future. I’m sure we’ll come back to that at the prelims.

Yes.

So we have one question left. It's from Andy Murphy. Your line is now open.

Yes, I think as you all know, for us and I think for the vast majority of our sector, our level of direct imports is very low. There's very little that we ourselves import. So that the -- it's more a component issue in the supply chain to make sure that our supplier base is thinking and planning ahead. So -- and on things like bricks, where we've had a degree of imports over the sort of growth in the market, that level of imports has already dropped off pre-Brexit kind of discussions anyway. So it's more about our procurement teams being close to our customer base to make sure that we see any sort of potential bottlenecks for them. We also have, as you all know, what’s unusual in the sector, an internal business curtailer would be logistics, which does give us the capacity to actually stockpile things at a national level if we feel the need. At the moment the number of areas we think that’s necessary is very small, but obviously we’re working pretty closely. But for us as a business, the direct impact is both relatively small. But also it’s slower to impact because it’s further down the supply chain.

Okay. That concludes our Q&A session for today. I will now handover back to Pete Redfern for his closing remarks.

Thank you, Carl. Thanks, everybody, for the questions, and thank you for the sort of the number and depth of the questions. I think sort of hopefully our position is fairly clear. We're pleased with 2018. We’re pleased with the way that we go into 2019. But we’re not naive about the level of risk and we’re not pretending to you that there isn’t any risk. Our job is to make sure that it’s the best end of potential market performances. We can take advantage of that particularly into 2020 and beyond. And if it's a bit tougher, the business is in a stronger position as it possibly can be. And I think you can see from the stats and our comments that we’re on top of both of those. So thank you very much and look forward to catching up probably in a couple of months.

Yes. Thank you, Chris. Can we open up for the questions there, Carl?

Yes. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. And your first question comes from the line of Aynsley Lammin. Your line is now open.

Just two questions actually. I know you don't like to give much guidance on kind of site numbers. But obviously last year the average sites were down 5% and the current spot number, I think, it gets down around 9%. Just wondered if you could say a bit more and do you expect to be opening more sites as we enter this year and would the kind of site numbers be down by less than the 5% they were down in '18? And then secondly, obviously, you talked about the customer kind of caution seen in London South East. I wonder if you could comment on markets in the Midlands and further North, assuming they're still strong and not showing any of that kind of caution. And I think your cancellation rate was up 14% for the year, do you see an increase in that as we got towards the end of 2018? Thanks.

Thanks, Aynsley. I think that was three questions, not two. On outlet numbers, I think, we do expect to open more outlets during 2019. All things being equal we expect the outlet numbers to increase during the year but not by massive quantities. I'm not going to give you specific guidance. I think the outlets that we need completions on in 2019 are highly secure. So they're either already open or we are planning and we’re literally in the final stages. Sort of outlets opening risk in terms of its impact on 2019 completions is very low. As I touched on the balances, our condition is strong enough for us to see through every land purchase in our plans and bring things through at the same pace as to how many outlets we exit the year and then 2020. That's a bigger swing which we'll keep you updated on. I'm not trying to give you a signal that, that has changed but I don't want us to be in a position where conditions are weaker in the next six months, we're chasing a number and yes sort of trying to do the wrong thing. What that would do would be to defer the growth sort of into later 2020. But that's the swing factor more than 2019 volumes. Does that make sense?

Yes, that's all very clear. Thanks.

Your next question comes from the line of Jon Bell. Your line is now open. Mr. Jon Bell, your line is now open. You can now ask a question.

I think, Carl, maybe if you move on to the next question and come back to Jon. It seems like he might have a technical issue.

Our next question comes from the line of Chris Millington. Your line is now open, sir.

Yes. Okay. So first, if I deal with the renegotiation on land question first, then the pricing and then the growth. Yes, and no, I think, we’ve got a longer period now, where I think landowners and particularly land promoters sort of bringing forward schemes have had a building of uncertainty. The same uncertainty that you see in the share price, the same uncertainty that we all feel about, not quite sure where the world is going. It seems okay at the moment, but I’m quite sure where the next few months will take us. And so because of that, you’ve got a nervous set of landowners who want to close deals and you’ve got sorts of slightly more sellers than buyers. And we said although the land market has been good over the last sort of four, five years. In a historic context, it’s been balanced. And I think that shift is gone sort of further, sort of in our favor in that over the last few months. That’s slightly different to the immediate post-referendum period simply because that kind of uncertainty takes time to build up. At the end of the day, when you get certain amount of uncertainty and deals suddenly halt post the referendum, actually, you get one or two marginal sellers who really panic or who desperately need the cash then, now you’ve got a more general trend of uncertainty. So maybe the movements are smaller, but it’s more general across all land deals. Sort of so I don’t think you could really see that in the overall land price statistics. I think what we see at the moment, you probably will start to. It may change quite quickly in the New Year, but it definitely through the last two to three months, there has been a shift in the level of confidence in the land market. And that we have seen from our perspective as a positive, but we’ve got to choose how to use it. Is it to do some deals and not others to push on price and it’s a mix of all of the above. I think in terms of fleshing out the growth. I’m going to duck that question for now and come back in February. I'm happy to talk about it, but I think it's better talked about in a couple months' time and a couple of months of extra certainty and also when we’ve got a bit more time, because it’s about choices and it’s not about we have the capacity which we haven’t really had for the last couple of years. But as I said before, it will depend on things through land investments and the scale of the work in progress, investments we make, and I think sort of the scale potential is significant, sort of however you define, it is the timing, that's the choice. And so that's more of a strategic question, so better done, I think, face-to-face in a presentation. And then on pricing, I think it's fair to say that there's a balance. There is risk in there. I think there will be some cost inflation and we don't know what price inflation we'll see. I think if you look at the last six months, we still see net-net a small positive price trend. Is it compared to sort of say April, last year, 1.5% something like that? It's that sort of order? That about offsets the cost movements, but it's close. There's not a lot of buffer there. So it's the main reason why we guide you to flat. We've got to push our own costs hard and make the savings. And as we talked about in our strategy presentation back in April, May, we have certain things in our own gift, so that all goes into the mix. So we still think that guidance is a good one. But the market is not going to do us any favors in that, so we've got to work hard to make sure that happens.

Okay. Your next question comes from the line of Andy Murphy. Your line is now open.

Quite a few more questions have been answered, but I still got a handful left. Just on the social content, up from 19% to 23%. Can you just talk a little bit about the trends behind that, what's the driver and whether that's going to be representative at the 23% level or different in sort of '19 and 20? And on the forward sales being up, just wondered if you could talk a little bit about how that's been achieved and to what extent you maybe have been deferring or holding back sales? Because obviously we -- in fact, the numbers are very good, but your site numbers are down and sort of perhaps suggests that something else is going on. And then, finally, on the quality side of things. You said previously that you've been striving to improve basically sort of the customer experience, the sort of build quality. Just wondering what you can point to, to say what you've done and what the evidences of achieving those kinds of milestones in terms of quality?

Yes. Shall I go first?

Thanks, Chris. And going back to the quality question, Andy. I think that there are two main types of measures that we are tracking. One is the sort of pure customer feedback and that measures well one kind of quality, which is sort of final finish, the handover. What you tend to think of as number of snagging issues and alike and we can both manage overall numbers and then specifics like the number of snagging issues is a specific feedback number, but also increasingly we're able to track the big quality measures. So for instance, the NHBC started about three years ago construction quality review audits, which really aim to help businesses improve on tests and work out where issues sit. And we've seen material improvement during 2018 on all of those measures. So if you take the last of the construction quality reviews, our performance went from mid-table to top three during the course of 2018 across the sort of 28 largest sort of builders in the sector. And if you look at our customer satisfaction scores, year-to-date scores have gone up to about 90.3 sort of from 88 point something sort of a year earlier. So on both of those measures, which measures slightly different facets of quality both of which matter. You can see both real and relative improvements over the course of the last 12 months. And as we look forward, those will be I think increasingly important measures not just for us but for the sector both for customers and for sorts of the potential for a quality ombudsman.

And your next question comes from the line of Will Jones. Your line is now open.

Thanks. Good morning, guys. I've got three, if I could please, as well. The first is whether it's just possible to give us the private volumes in the order book at year-end please? So separate from the social and how if possible that would compare to the same point last year? And then when you think about that number, is there a particular flow you have in mind as to what you’d ideally want I guess and then when you go forward into any given financial year I guess thinking 12 months ahead? The second, I think I'm right in saying there was a bulk deal in your sales towards the end of the year, perhaps you could just touch on that. And again as we look to '19 what's your I guess propensity to do both deals and how valuable are those I guess in the marketplace generally? And then the last one was just touching base on mix for the ASP. I think in November you talked about a couple of percent on mix in '19. From memory you’ve always talked about this year as being one where Central London dropped as a percentage of revenue just given timings. Is that's still the case and if so what's helping get that mix back up as a positive? Thanks.

So could you -- I got to the last question where was about mix. But I was still noting down the previous bit, can you...?

Yes, it was just -- I think you talked about it being a couple of percent positive mix for the ASP in '19. But thinking about the previous comments on either we've highlighted 2019 is being a year when Central London drops as a percentage of revenue given timing. Is that still the case, what is it that's allowing the mix to be a positive in the current year?

Okay. I think a floor on the private order book number, not in absolute terms. The way we tend to think about it is at a business unit and a site level, a proportion of the following year completions. And I personally tend to think about it more how far ahead we’re setting on each individual site. So yes we touched on this before. So if that started to selling sorts of less than three months ahead, I think it starts to impact on price and confidence. It's not the end of the world sort of but it's not ideal. If they’re selling more than six months ahead, then it tends to impact on service and accuracy of forecasting of delivery timetables. So the sweet spot is probably somewhere around 4.5 to 5.5 months. And we’re comfortably in that range at the moment on the majority of sites. So if that balance and we look at -- then that’s sort of individual sales rate site-by-site as well. So it bodes well inevitably from a external macro point of view looking at order book number, I think that timing of when we're selling, we got a decent amount of re-lease on each site, but we’re actually know sort of not selling from sort of finish stock or close-to-finish stock, improve the confidence of the customers and our own sales, to think about it. You're right, there was a bulk deal. I mean that is relatively unusual for us. I think the decision for us is very much about it is a period of uncertainty. We've kind of been very clear that making sure that the order book was as strong as possible at the end of ‘18 is a key point. We weren't particularly trying to fill out a gap, it wasn’t sort of big enough for that. But the pricing felt right, the timing felt right. So sort of it was felt like the right thing to do. There are things out that's relatively rare I think that they come together when you think that's the right price and that's the right balance. So there is lots of interest. It's not something that we particularly feel the need to chase impacts on the year. So it's a relatively small which is why we haven't sort of talked about it or haven’t particularly quoted it. So sales rates for instance would still be ahead year-on-year and those sorts of things, it doesn't distort any of those underlying sort of messages. I don't expect particularly to be doing something similar in the next three months. But will something similar happen in 2019? Maybe, it's institutional-backed money but through a registered provider, it's a fairly normal deal sort of I think across the sector but just felt like a good timing to have that extra strength in the order book. And then it is really hard question to answer because if the positive movements of the small things, it's -- you're right. We expect 2019 to be very low on Central London completions and we see sort of business going back in from Central London in 2020 and 2021. But yes, the reason the 2018 and 2019, there was a more positive mix variance like that is just quality of locations, it's more that than really big regional shifts, where I don't think we see a meaningful shift from sort of North to South, it's just the quality of locations at an individual regional level. It's not particularly bigger product either on average sort of -- it’s pretty stable but it's just generally you’ve seen and you see in this [Technical Difficulty] locations at a regional level.

Great, thank you. And just a one follow-up on the order book. Would you be willing to give the private units in the order book at the moment?

I’m sorry. I don't have the exact number. The private number is very flat which is why the reference in the statement to the growth comes from affordable housing. Do you have the absolute numbers at hand, Chris? I don't have them in front of me.

Yes, it’s 3,852, Will.

Okay. And your next question comes from the line of Gregor Kuglitsch. Your line is now open.

There's only a couple left. So the first one is on margins. I'm not sure I may have misheard you, Pete, but you were kind of saying flat volumes and you also threw in margins in that sentence in your initial comments. So I want to understand if that is indeed what you were trying to say? Because obviously, I believe in November you were kind of talking for some modest compression. I think the number that you flagged was something like 50 basis points as we think about ‘19. So I want to understand if anything has changed in that position and perhaps today you have some visibility in your order book, what the margin is relative ‘18 outturns. So if you give us some color there, it would be helpful? And then secondly, this perhaps is not a question necessarily for trading updates call. But I’ll ask it regardless. Obviously you’re committing your 600 million dividend payment, I think that works out assuming like 12%, 13% yield. Are you thinking about perhaps giving yourself flexibility to deploy that capital either partly or in whole to share buybacks rather than dividends? Or is that not something you think makes any sense for you? Thanks.

But just to be clear, if you were to, I understand you have the authority to do buybacks, but we should basically take that funding out of dividends, we’re on top, or is it kind of all open?

It’s fairly open, Greg, because it depends on the circumstance. I think we’re very aware that to serve investors -- sort of favor buybacks serve investors very wedded to dividend structure, we’re not naive about the impact of doing it in various different ways. But it just depends massively on the circumstances, where the share price sits, where we see trading, where the balance sheet sits. Sort of so I’m not going to pin it down any more than that. We’re open-minded about the various different options. But it will be wrong given the sort of volatility in the share price and the underlying strength of trading for us at least not to be thinking about it at this point.

And your next question comes from the line of Glynis Johnson. Your line is now open.

It’s just a quick one, just unfortunately covering the Brexit topic. I'm just wondering if there's anything in terms of how you are running your business, managing your WIP on site, your product, your materials on site. Are you changing how you're running the business given the uncertainty on Brexit and what will happen around the March time?

Yes. I think we've touched on the main areas, Glynis. It's undoubtedly affected sort of -- the sort of marginal land purchases in November and December. It's affected sort of drive for a strong order book at the end of the year. It’s affected our desire to just protect cash that a little bit more and give ourselves that bit more flexibility. I would say it has not in a material way affected sort of where we are with work in progress. We feel work in progress is reasonably under control in our businesses. We're well covered by the scale of the forward order book. But sort of across the whole of the business, across the cost base, across how we're investing in new skills, it's there in the background just perhaps tweaking those individual decisions. But apart from those areas of where the order book sits and land purchases, I wouldn't say the impact is particularly material. But it's there, we've taken into account.

Okay. And our next question comes from the line of Rajesh Sia. Your line is now open.

Hi. I have two, others are kind of answered. The first one is on incentive level. So are you kind of seeing any kind of spike in the incentive lever probably end of the year or early this year. Have you seen kind of any spike happening there and customers are asking for more goodies or putting extra things into homes? The second one is on the land. I see your comment about your kind of some timing issues that were, I mean, additional cash generation for this year. But is it also a conscious decision from your side to see that the land market cracks a bit more and you wait and see right opportunity to go to the market and buy it? Or is it also driven by your target of cutting down the landbank close to one year?

So, yes, thank you for both. On the incentive levels, no, we haven't seen any change. I mean, you will all know, we always talk about pricing net of incentives anyway, so you will see that in all of our other comments. But no, I mean, I don't think I need to sort of explain in the prime Central London market there are more incentives than there were three years ago, but not particularly more incentives in the last six months ago. But if you look across the business as a whole, there's no change in the level of intensity levels. If you look on land, absolutely, it's a conscious decision. When I say it's a timing issue, it's a conscious decision for there to be a change in timing, as in we might delay the purchase sort of, but still keep that option open. Yes, I think there is -- certainly in terms of how we kind of explain our views on land to our own teams internally, there's element of, look, at the end of the day, it's in our interest for the land market not to become overheated. I wouldn't say that, that we'd be as conflicted as to view that we could change that sort of overall, but there's a responsibility to make sure that you don't sort of -- that you do reflect risk in how you buy land. And obviously, for the bigger players, that tends to have a broader impact on the market overall over time. So, but it is a conscious view. Is it -- is the phenomenon I'm talking about related to our longer-term sort of plans that our landbank will shorten as volumes grow, less though because the 2,000 or plots I was talking about was relative to our plans perhaps six or nine months earlier for 2018. So those plans already reflected sort of that view of a shorter longer term -- shorter landbank over time. So it's more about the shorter term market, uncertainty and the opportunities in the landbank than it is about the longer term strategy.

Thank you, sir. And your last question comes from the line of Mr. Jon Bell. Your line is now open.

Apologies, I got cut off early. I've got three questions for you actually. Firstly, could you just comment on the land creditor position at the year-end? Second, I know you've touched on some of those forward lead indicators. But I just wonder whether you could just comment on things like web hits and site visitor numbers albeit at this early stage? And then thirdly, you've got one notable Central London scheme down at the bottom of excess market there. I just wonder whether you could comment on sales rates and progress there? Thank you.

Yeah. So do you want to pick up the land creditor, last, Chris, and if I touch on maybe yes sort of forward indicators in Central London?

Yes. Yes, no problem.

So in terms of forward indicators, as I said before, there is nothing in website hits or brochure requests that would concern you. That's very consistent with the last two, three years sort of and were through the December period. So there's no individual trends that you would look at and sort of either worry about or think “Oh! Wow, that's massive investment I thought.” They’re very much in line.” I think in terms of sort of our newer Central London schemes, I don't get into individual sales rates but sales performance on both pricing and rates has been where we expected on pricing and ahead of where we expected on rate. Yes, to be honest I know this sounds a little bit sort of wrong, but to be honest, is what we'd expect -- we would have expected in this kind of environment because we have been relatively cautious on both. And sort of so for us to be ahead on rate is what we would want to say rather than being a massive shock. And Chris, do you want to pick up the land creditor?

Yes. Well, actually, I think Jon's referring to Mount Pleasant, isn’t he?

And I actually popped down there last week. I think since we launched in September, we've had something like 45 sales, so that is a scheme that's looking good on both build and sales front. On land creditors, they've increased by about £70 million since the half year. But the increase in net cash obviously means that adjusted gearing has actually reduced. I think buying larger sites obviously increases the opportunities for deferral on attractive terms and the numbers tend to reflect that, yes.

Sorry, just to catch you before you leave. Just on that Brexit issue, can you give us a flavor for the goods and products that you're importing and to what extent you're thinking or actively stockpiling any important bits or thinking about maybe, boilers in particular might be an issue? Just wondering how you're thinking about that and what activity you're actually -- action you've taken?