Taylor Wimpey plc (TW) Earnings Call Transcript & Summary

Good morning, and welcome to the Taylor Wimpey plc Trading Update Call. Today's conference call will be hosted by Taylor Wimpey Chief Executive Pete Redfern and Group Finance Director Chris Carney, followed by the Q&A. I would now like to turn the conference over to Pete Redfern, Chief Executive. Please go ahead, sir.

Thank you. Good morning, everybody. Thank you for joining us. I think this is a fairly straightforward sort of update. And obviously, given the timing very early in 2020, it's more a confirmation on 2019 and a first flavor of the year we've just come into but obviously early to give you sort of too much sense of how the market has started this year. Looking back at 2019 overall, I think the key thing you will take away is overall in-line, no surprises in latter part of the year very much where we guided to sort of through the second half, probably slightly higher volume than you expected overall, everything else very much sort of in-line but probably the strong order book sort of even stronger than you might have expected. And those sales rates up 19% year-on-year in half 2 even if I exclude bulk deals, and in the low 20s sort of with them, I think, particularly strong, which we'll come back to. I'll give you a flavor of particularly where our objectives are for 2020, more than necessarily where the market will be, which we'll touch on what we think it might look like but still, as I say, too early to say. I think, sort of last quarter of the year, no major market changes; and sort of the cost pressures easing that we talked about sort of in the late autumn, we continued to see being the same pattern. And sales, sort of by the time the election result happened, too late in the year to see any meaningful change. People -- sort of reservations we take after that would always be low. But definitely finished the year, post election, with more of an air of confidence sort of across the sector with agents, sort of with our own salespeople and, to the extent that we can judge it, with customers coming through the door as well. I'm going to keep saying it's very early to say how that will go into 2020. I'll probably say it an annoying number of times in sort of this overview and in the Q&A, so -- but it is. I think, if you look at the first sort of -- and we really have 1 trading week in January, positive, no surprises and sort of definitely more of a feel of confidence but statistically sort of not particularly meaningful. So I think there's potential for market sort of upside this year on last, but we'll be able to give you a much better feel. And I think, in all honesty, we'll probably have a very good flavor for it by the time we come to the prelims. I think what's most important in that, though, and what probably the most important takeaway is where our balance is year-on-year. To a certain extent, through 2019, the way I would express it, we were managing for risk, a lot of uncertainty and sort of particularly on costs but actually in the market as well. Sort of whilst trading continued to be strong and the sales rates were strong, sort of with the uncertainty of Brexit and the inevitability of a general election at some point in the year and the potential range of outcomes, sort of actually ending the year with a strong order book was always a very key goal for us. With being able to get the volume growth and that strong order book, we -- sort of we've exceeded our expectations. I think, as we go into 2020, whilst risk hasn't yet completely gone, still -- we still clearly have a sort of Brexit process to go through. We do feel it's materially reduced, and so I think the balance of where we're managing will switch. And it's about a more balanced risk and opportunity. And I think where we will see that most clearly and where we're most focused on the moment is the balance between sales rates and price, a strong order book. And we'll come on to whether that's selling too far ahead or whether it's about right, but actually it gives us choices. So we would not be disappointed to see sales rates slightly down in the first quarter if we can make up that difference in price, and that's where our focus is. And I don't mean 3%, 4%, 5% on price, but actually in the -- sort of in this kind of market with balanced cost and price movements, every 0.5% makes a big difference either way. So I think that's where our emphasis will be, and it will be slightly different than last year. So I'm not flagging that sales rates will be materially down. They may not, but actually sort of our balance and our focus is slightly more weighted towards price in this environment. And that elections results and the air of confidence that, that has created, I think, gives us sort of the feeling that that's, a, the right balance; and b, that there is the potential for some price growth, which is quite important in our sort of chase to recover some margin. I think, if I kind of run through the other key areas: I touched briefly on costs but less pressure in late 2019 than we'd seen. It was particularly earlier in 2019 that we saw the material cost pressures that had eased by the time we got to September, October. We haven't seen that change in -- very late on in the year, obviously again too early to sort of call where that will be sort of strongly this year but certainly start from a normal year overall on costs, sort of with a bit of sort of upside against that potentially. And very much again, I think our focus sort of is the important point that I want to put across through the last quarter of last year and going into early 2020. I think our cost focus is sort of much stronger. And I will say it's slightly broader than just costs. It's costs and simplification. We've done a lot over the last 3 or 4 years on customer service, on quality. We don't want to go backwards, but we want to do less new stuff in 2020 and make it easier for our people to focus on costs and efficiency and really delivering customer service, that quality but in a simple and an efficient as -- way as possible and changing less things. And I think that message is quite strong in the business at the moment and has landed very well. So I think both on price and costs our focus is on self-help in a world that we can't control sort of rather than just on what the market can do for us. Not a lot to say on the land market, I think, sort of unchanged through the year. Again, I think a year in 2019 where we were managing slightly for risk, looking at the uncertainties politically and not wanting to go too deep. So our purchases were focused very heavily on strategic land. I think sort of we would like to see more potential outlets coming through. It's not a short-term sort of pressure point and it's not deeply concerning, but I think that sort of general reduction in outlets that we've seen over time is not something we want to see continue. So making sure that we've got the right balance of investment between smaller and larger sites is going to be important to us. And if we get that right, I wouldn't be surprised to see sort of 2020 being a bit of a stronger land purchasing year. I would say at that point that I don't want you to overread that. I'm not talking about something that would impact materially on cash or our sort of dividend strategy or anything like that but definitely on balance after a year where the focus has been on risk; just being -- sort of edging forward a little bit more to build the outlets for 2021, 2022. And I think coming on to sort of an overview sort of outlook, and I've touched on sort of several things. We talked about a half -- in the statement sort of a half 2 weighting. I think we've still got a bit of tailwind from 2019 on margin and on costs, which affects particularly, I think, half 1. We have the sales in the order book, but we still got to deliver properly on the completions and very committed to getting that build quality right and not putting the teams under too much pressure. We do think it will be a smoother half 1, as in not too weighted towards June, but sort of actually the weighting of the completions should be -- sort of will continue to be more towards the second half of the year. And our focus is on reducing that as we go through 2021 and 2022. I think, price, as I touched on, a very key factor, probably the most important for us in 2020, sort of we've come into the year with a pretty clear set of targets. I'm not going to be explicit on what we think we can achieve because it's too early, but I'm sure, when we come back to the prelims, we will. Cost control, in our own, [ gift on ] control but a better environment than we saw last year; and areas where we can make not massive but meaningful reductions in overheads and efficiency and, as I say, particularly these simplifying things for people and not giving them too much new stuff. And relatively stable volume over 2019. I think 5% was the top end of our growth expectations. It was higher than we came into the year expecting. Some of that was sort of that our strategy on sales rates on private sales was more effective. Some of it was that we consciously decided to take bulk sales given the overall market risk. So I think 2020 won't see continued volume growth, but I don't think it will be a meaningful shift either way. And our focus will be on sort of maximizing the margin as we deal with the sort of 2019 cost follow-on but try and get price back and set ourselves up for 2021. Chris, anything missed?

Yes, just a couple of figures from me, Pete. Firstly, I think -- at a time when there's a growing interest and appreciation of the importance of company culture from all stakeholders, I think it's worth noting that we were included in Glassdoor's top 50 places to work in the U.K. for the third year running, which is pleasing. Secondly, just on spend, 2019 was another strong year for us. An increase in demand from Eastern European buyers comfortably offset any Brexit-related uncertainty from U.K. buyers. And although we'd expect operating margins to moderate over time from what was a very high level of 28% in 2018, we still expect them to compare favorably to, say, U.K. margins in 2019 and as we move into 2020. And then -- and lastly, I suppose it would be remiss of me not to remind everybody that, with GBP 546 million of net cash at the end of the year, we retain a very strong balance sheet. There is no change in our dividend plans for 2020, with the ordinary dividends of GBP 250 million, plus GBP 360 million of special dividends in July, subject to shareholders' approval, yielding a total dividend for 2020 at GBP 610 million.

Thanks, Chris. If we can open up for questions, Nadia, please.

[Operator Instructions] The first questions come from the line of Brijesh Siya.

Two questions from my side. First one is have you seen any -- I mean if you can give a reasonable flavor of price increases; or sentimental change-led price improvements post election, whether it's in the North or it's across regions or it's -- I mean is it broad-based? Or it's only specific -- site specific. Have you done any kind of blanket increase of prices? So if you can give a little more flavor on price improvements post election, that would be great. And the second one is on outlets. I appreciate you're guiding outlet -- that outlet will be flat this year compared to last year. Considering that there'll be a -- your intention to increase land buying, would you expect that -- outlets to be materially higher in 2021 compared to 2020? And if we can link that to the impending changes in the Help to Buy program from March '21. So how do you want to basically balance that out?

Thank you. I mean, sort of as I touched on in terms of price movements post election, what's actually happening in the marketplace, it's too early to say. Sort of the feel is positive, but it will be wrong to give you too strong or confident view of how that plays out over time because it's the evidence isn't there yet either way. I wouldn't expect to see sort of -- we've had a month since the election, of which at least 3 weeks of the period were active sales are always very low because of time of year you're in calendar-wise. So what I can touch on but won't go too deeply into this, our own plans on price. We have made a -- almost entirely across the board changed the price from the 1st of January. I'm not going to tell you the exact amount because, I think, we don't know how much of that will land and that will vary geographically. And that's how we would tend to do it, but that's certainly pushing harder than we were 12 months ago largely because we feel that the environment is there and a little bit because we feel on the balance -- as I touched on before, on the balance sheet, sales rate and price last year, we were switched slightly the other way. So a bit of that is making up some ground, but it isn't just a case-by-case piece. I think the most important bit of that but the hardest piece to call is what happens in London and the South East. I think there is -- you obviously saw Savills' comments yesterday. There is more potential sort of upside in terms of recovery in London and the South East, but it really is too early to say. And I think it will take a little bit longer, but the air is more positive there. But I think it will take a little bit more time for people to really kind of think, "Yes, actually there is enough certainty now for me to take a big decision." So I think it's reasonable to say it will be more positive than 2019, but the degree to which it's more positive is sort of far too early to say. But I think for me personally I'm more interested in what happens in London and the South East in terms of price than anything else because I think it's a big swing factor. That part of the business for us has sort of been relatively tough for the last 18 months to 2 years. It's probably -- if you split things out geographically, is a sort of more meaningful headwind, and so the impact is sort of more significant. I think, on outlets, do we expect outlets to be materially higher at the end of the year? No. We just want to make sure that we have the opportunity to maintain and grow outlets as we go through the next 2 to 3 years. And it's not -- but come back to your risk question about Help to Buy. It's not that we think, "Oh right, election. That means it's time to go deep in demand." We just have to push harder, and we touched on this in the last half of last year, of making sure we get the balance of sites between smaller sites which help our outlet numbers more and longer sites which help our margins more right. And smaller sites have certain extra risks but certain actual risk mitigations as well. So it's getting that balance right. And if I could get a bit growth in small sites, and that means a bit more land spend, but still see through the higher-margin strategic purchases, that's where it might be that we would spend a bit more on land. But the risk element of that is not significantly different. We are very focused on the risk of Help to Buy, but that's about making sure we've got the right product on those sites. We've got the right timing for the product we bring forward through the period of price caps and the initial period after Help to Buy is removed. And it's also about working out what are the choices our customers have got and how we mortgage providers and government can help them with that.

The next questions come from the line of Aynsley Lammin.

Just 2 quick ones from me. And first of all, could you just remind us of the bulk sales you did in 2019? And I wondered if you'd have a kind of estimate of the impact on the net margin of those bulk sales. And then secondly, just coming back on the kind of land market and the -- and confidence post the election. Have you seen -- I know it's early days and -- for the comments, but just in London, is there a bit more activity in the land market? Just would be interested in your views there, what you may have seen and expectations specifically for London land.

I'll pass the first question to Chris, but I'll take the second one just to give him a second. The -- I still think it's too early to see any movement on land in London. Sort of deals that were lined up for the end of the year sort of happened, and I don't just talk about our deals. I think, looking at the sector overall, people who might have been sort of waiting for the election results as a swing factor went ahead with those deals, as far as I can see in the marketplace. So you can point to that as a sign, and that probably covers somebody like Savills very strongly in terms of their perspective. And I also think you see a meaningful change in inquiries from the sort of both overseas and local buyers of sort of higher end of London product, but it's really sort of it's a feeling and rather than big sort of movements overall. And I think it will take time before you see London land really get back to some sort of normality because, I think, we've had political sort of market uncertainty, but we still have the planning and sort of more local political uncertainty, which I think it's sort of it's still an issue around Central London land and getting sites to be truly viable. So I would -- I think it will -- it's something we'll be talking about through the course of the year. And I sort of hope, by the time we get to the half year, we'd give you more certainty, but I certainly am not expecting us to be making material Central London land purchases, for instance, in the first 6 months off the back of an election result. I just think it removes one of the shadows. I think what will also be interesting sort of in the budget process is to see if anything happens to stamp duty because obviously that's one of the other big shadows seen on the higher-end London market. And that will also have an impact on that, but I think that -- in the general market, including the South East and more normal London product, I think we could see sort of a positive effect kind of develop and be measurable over the course of the next 2 to 3 months. I think in London land, in the higher end, it's a bit slower, but I may be wrong on that.

Yes. And on bulk deals, Aynsley, I haven't got the exact numbers at hand, but to give you a feel for it: Through the course of the year, I think there were probably in the range of something like 10 to 15 bulk deals done, anywhere from like 10 units to over 100 units. And the impact on margin is -- obviously it varies quite significantly from deal to deal. At the end of the -- I think in the November trading update we referenced a couple of bulk deals in Central London, where there was an opportunity there for us to liquidate some stock. And that did have an impact on margin, but actually some of the other bulk deals earlier in the year -- you'll recall we did at -- the point-of-land acquisition. That had absolutely no impact on the margin. So it's probably not quite as much as you might think it would be.

Sure. And just to clarify, for 2020, at this point, you wouldn't really expect any bulk deals, the need for any, given your focus on a bit more margin.

I think we'd expect less. I think it'd be a strong statement because I don't think we'll look at something and say, oh no, we wish we hadn't done that. There's a lot -- where you've gotten large sites -- and actually the main aim is some of the bulk deals -- and one of the reasons they tend to push up the order book a bit is because they don't sacrifice your short-term completions. So it's sort of actually where we've got large sites and a good strategic landbank where we can prepare for those large sites, there is still a very strong logic sort of doing them. So to say we wouldn't expect any would be wrong. To say the balance of risk and opportunity is slightly different and we'd expect less is a much sort of more reasonable statement, I think.

The next questions come from the line of Will Jones.

Three for me as well, if I could, please. The first was just around, I guess, outlets, just reflecting on the decline in the numbers last year of, I think, 20 or so on an average basis. How would you split those, do you think, broadly speaking between what was in your control, i.e., it was a function of maybe a higher sales rate through the year than you anticipated, or maybe, as you say, lack of land spend versus, say, things like planning delays? Just trying to get a feel for to what extent you controlled the fate on that number this year. And I guess, within that, how quickly do you think you'd get up to the 250 number that you expect to average versus the 240 today? The second area, which is just around margin, obviously pricing, build costs are going to be 2 big inputs to that, which it's too early to call, but when you look at other moving parts, I guess, mixed issues around the quality of land coming through year-on-year, London's impact or not, just are there any other kind of factors that you kind of have visibility on at this stage around margin you can help us with? And then I guess the final one was just around the cash flow side of things. Yes, it's probably too early, but do you have any idea of what your cash land spend number for last year? And any idea on how that may move this year? And on the other stuff, I think we have the guidance on the extra tax from November but provision payments. Again, just anything you can help us with in terms of the cash moving parts as well?

Yes. I'll let Chris take the cash flow question in a second. On outlets, I would actually say, sort of a -- this has been true for years, but I've always felt uncomfortable when I see sort of our peers kind of complaining about planning and its impacts on outlets because, if you don't understand the planning impacts on outlets, then you don't really know what the business is about, if you see what I mean. So I'd always resist complaining about that. And actually I'd say it will be completely unfair for me to complain about that this year. Planning process remains hard. We have delayed, but -- we didn't expect, but actually we're forecasting them very well. So our outlet opening timings are very much in line with what we expect, probably. And we tracked it more closely during 2019. So it is more to do with things that are in our control. And actually it's more to do with, I think, land purchase and large sites versus small sites than it is to do with sales rates and closing outlets more quickly. If we were taking bulk sales to close outlets, sacrificing price but not then having the choice in the marketplace of having the outlet, I think that will be the wrong strategy. Those bulk sales are on large sites where we have lots of potential yet, so we're not closing that outlet because of those sales. So it's in our control, but if you look at the land spend piece, if you look at 2018, 2019, for instance, the balance of our land spend, I've already touched on, weighted towards larger sites, weighted towards strategic land, weighted towards higher future margins but not weighted therefore towards giving us more outlets. And also geographically, because of the uncertainty in London and, to a certain extent, the wider South East market, if you looked over the last 2 years of that sort of purchases, they've been weighted away from sort of London and the South East where site sizes tend to be smaller, and therefore they proportionately push up your outlet numbers. Now I don't regret any of those things, but sort of you're still going to look at the outlets and think, "I don't want the number to sort of continue to decline." So if we kind of see a bit more certainty and potential in the South East, then over say, over the course of 6 months sort of then that weights it, pushes us towards slightly more smaller sites. And we've been actively pushing our teams to look at a broader mix of sites. Then that's what I'd like to see happen overall. So I think, the outlook movements, it isn't that we are kind of getting disappointed because we're losing 5 openings in sort of a month or sort of a quarter. That is just generally not happening. Sort of we've got much better at forecasting than allowing the -- allowing for the planning delays that happen, but it is underlying we've got to make sure we've got that broader mix of sites. So it's finding a balance. If we get the -- if we can get that long-term sales rate sort of balance right -- and we want to continue to maintain a sales rate which is above the sector norm and above history. There's nothing I've said on that price-volume balance that moves away from that. It's shading it a bit so that then we don't need as many outlets. And actually bigger, higher-value outlets where there is less competition is the right place for us to be, but it's balanced. And I just don't want that balance to push too far that way. On margins. I mean you've got the main moving parts. There is the 2019 cost movements that impact on 2020. There are some bulk sales in 2019 that will come through in the first half of 2020. Those two sort of affect the first half, second half weighting. Cost savings sort of come through sort of a bit in the first half but actually more weighted towards the second half inevitably because of timing, but the big movement is about price. So can we squeeze our price sort of over the course of the next 2 to 3 months? Because if we can, it impacts on this year, again particularly on the second half completions, but sort of I think the potential is there in a way that it wasn't during the course of last year. And the focus is there, but that's what we'll be updating you on with the prelims, I think.

Great. And you referred to that experience last year. I think you said sequentially you're pretty flat in the first half. Would that -- I know -- and obviously autumn is a tad weaker in London and the South East, but would you say group-wide you were flat again in the second half so it's a year of no movement?

I would have said so, yes. I think sort of -- yes, sort of the small local movements, but overall -- and to the level of experimental measurement error, flat. It's been of -- and I think I'd be disappointed if this year was flat, but what -- it's too early to call its -- sort of what that number is.

Yes. And just going back to your question on cash, Will. The net land spend in 2019 was around GBP 680 million, so around about GBP 100 million more than 2018. A bit early to be giving you year-end cash guidance, but what we'll -- I'll aim to give you some things on that at the prelims. And as ever, land will be a key element of that. And touching briefly on 2020: I previously mentioned the fact that we have 2 extra U.K. corporation tax payments in the first half amounting to about GBP 70 million. And those, together with about GBP 50 million of spend on the exceptional provisions, amount to about GBP 120 million of onetime cash flows in 2020. And that alone would suggest a net reduction in the cash balance at the end of 2020 compared to 2019, but I'll give you more of a feel for the quantum of that in February when we see how trading has gone in the first couple of months.

The next questions come from the line of Gregor Kuglitsch.

I've got a couple of questions. So just sorry to come back to the margin. Just to be crystal clear: Are you suggesting, given the -- where the order book is, obviously you've sold forward quite a lot, as you said, that in the first half your margins will be down year-on-year? Is that what you're kind of hinting at? And on a similar note, as we think about the year as a whole, I appreciate the pricing variable is obviously too early to call and still very early, but if you have a similar situation as last year where pricing is flat, are you suggesting you'd be down? So in other words, you need some price increases to hold the line on margin. Just to sort of get a sense where you started [indiscernible].

Yes. So yes. So I think, on the first one, in the first half, I think, yes, that is what we're saying, that actually -- and it's not so much about selling forward, although that obviously means we know what the price is, more or less. But because we have the cost inflation in 2019 sort of in sort of that first -- those first half numbers, and we know more or less what the price is, then yes. I think we are saying that the margin will be down year-on-year. I think, for the full year, what we -- it's again same sort of answer, in a way. We've got cost inflation that came through last year which isn't fully annualized. We've got cost inflation that we expect, albeit significantly reduced, in 2020 but are obviously not a full year impact. And so if you saw nothing on price, then we can offset some of that by our actions, but then yes, you would expect to see margins down. Sort of I think mathematically that's absolutely right. I think -- but I think there is a lot -- but I think there is an awful lot of potential that the second half margin actually is up sort of certainly on the first half but also up year-on-year.

Okay. That's clear. And then if you could just give us sort of anecdotally what you've procured on sort of the major cost items. I'm thinking bricks, blocks, tiles. And then perhaps some of the key labor items. I mean just to give you -- give us a little bit of a sense. I don't know if you're kind of at this point securing new 6, 9 months contracts or whatever. How the inflation rates have trended on some of the items...

Yes. So I will say -- and I'm not going to get into specifics sort of, but overall I will say we've obviously been sort of generally talking about a cost inflation environment of sort of 3% to 4% through the last 3 or 4 years, which then picked up to 4% to 5% last year and then sort of softened again a bit during the course of the year and ended at about 4.5%. I think, if I were to sort of give that same number today, you're probably about 3%, so you're at the -- and when I said at normal, we're at the low end of what we've seen as normal on costs. And I'd say there's probably a bit of upside against that. I'm probably being slightly cautious in how I'm reporting what's happening, but I think on materials it's more like 1% to 2%. And on wages it's more like 2% to 3%. So sort of right now 3%, maybe a little bit lower.

The next questions come from the line of Charlie Campbell.

A couple of questions from me, if I can. So first question was just kind of just trying to square the order book with the comment on the weighting for the year. Is that because there's quite a lot of maybe affordable in there that comes through in the second half? Is that what's fair? Or is the comment really that actually the year is just less second half weighted than last year but still second half weighted? Just to sort of clarify that. And then secondly, I know you said at the beginning it is early days, but I suppose just really curious about some of the sort of leading indicators, i.e., thinking about things like website traffic, visitors on the ground or inquiries. Just any sort of quantum you can give us on how that's moved, I suppose, in the months since the election?

Yes. So on the order book, there is a higher proportion of affordability in the order book at the end of this year, but that's not the sort of main reason for the growth. So I think, the private order book is up 12%. So sort of the affordable order book is up a bit more, but both are up materially. And so yes, that does -- that means you can't mathematically take the order book and proportionately work it through, but there is still mean growth in the -- sort of. But we have to -- we are slightly further ahead. And we have to build those sort of homes and build them properly, so it's about matching the build and the sales. And I think I said I will touch on it, then I didn't, sort of to what -- when you can be selling too far ahead and particularly from a customer service point of view. We were one of the first to say, look, if we sell too far ahead, then we create more uncertainty for our customers if we're not careful and more likely that the dates will shift. I think what we felt during the course of last year, by having invested heavily in build process and quality, we are far more confident that we can execute our build programs to our original plan. Our outlet openings are really good outlet openings. Now that may sound like a trite comment, but it means when we open we know what we're going to do. We have all of the information, and the plan is off and running. It feels far more controlled. So that gives us the confidence with that from a service point of view. Of course, you always have a sort of a price-versus-risk dynamic in that. And if prices were increasing by 6% or 7% a year, then it becomes a meaningful tradeoff. If, say, this year prices increase by 2%, the impact of selling ahead an extra 2 months is academic, if you see what I mean. So although, what -- at this point in time, when we've had a year last year where prices were under pressure and a year where we had it a bit better, you kind of think, well, maybe the balance isn't quite right. Actually, generally I think a longer order book gives you the confidence to sell well both on price and from a customer service point of view. So I don't think we're losing out a lot from that, but I wouldn't want to see it get much bigger. So I think sort of the balance is about right, but sorry. I missed the other part of the question, Chris...

Lead indicators...

Sorry. Lead indicators, yes, yes. I think generally positive but not big swings, but you'd never see big swings in visitors and website inquiries and things in December. So -- and actually, lead indicators were all very good through sort of 2019. So sort of they all look positive, but they have not -- look positive. It's just that what we are seeing is that people come through the door. The conversation we have is more confident. And I think sort of I would expect over the course of the next couple of months cancellation rates to be a little bit lower, which makes a bit of a difference to net sales rates. I would -- so all of those things are there, but I think it will be wrong to say suddenly a switch is turned on. And sort of actually, last year, it wasn't bad, but actually just trying to grind out price was tough. I think that environment feels better and we can sort of see that from our early conversations, but it is really, really early.

Yes, yes, yes. Can't blame me for trying.

The next question comes from the line of Jon Bell.

Pete, Chris, Debbie. Three, I think, I've got. And first one is on customer satisfaction. I think, the last time you updated us, it was assuming quite likely a drop down to 4 star, albeit [ cigarette paper ] below 5 star. I'm just keen for your updated thoughts on that. Second one was on London. And I wonder whether you could just update us at Postmark on sales rates and prices. And then the third one, finally, on Help to Buy regional price caps, there was some discussion sometime ago about some lobbying maybe to iron out some regional inconsistencies. Is that still going on? Any traction, anything like that?

Yes. On customer satisfaction, I think, no change, unfortunately, on sort of the year ending in October 2019. I think we will be at sort of 89.4 or 89.5, so sort of just under the sort of 5-star rating, yes. That's partly a [ pride and a signaling ] thing that is frustrating, but I think that's highly likely. We have about 500 completions in the new customer care yet. We've still not got the full set of results for last year. It's just where the timing works, about 500 in the new. And there are 5 star. And the trend, as I've said before, has been at 5 star, but I think unfortunately we will dip below that sort of level. I'll -- I don't know if Chris has got up-to-date Postmark data. He tends to, so I'll let him...

Yes. So we sold 83 units at Postmark in 2019. And that makes a sales rate, I think, of 1.92 since we opened that, so that's pretty pleasing.

And I think, on regional price gaps, you may remember me saying before we specifically have been -- have not lobbied on regional price gaps. And I have a view with how we deal with government, but when they know what they are trying to do and they do it and what they do makes sense to what they're trying to achieve, then lobbying to change it isn't particularly effective and helpful for a long-term relationship. I think the price gaps, looking on this, if you look at it from a developer's point of view, from a government point of view, what they're trying to do is stay towards certain parts of the market. And therefore, they are conscious regionally, so we have not lobbied with that. And where that conversation happens, as far as I know, that conversation has sort of fizzled out. And there isn't a change, but I am arguing for one because I think sort of what they are doing is reasonable and it's up to us to manage it. I think what will be interesting, and it's one bit where -- although you know I have a long-term view that we should be finding a way out of Help to Buy, I do think having a kind of much smaller in terms of the volume of customers that it can affect but a bridging piece of Help to Buy post 2023. I think -- as we get closer, I think that will be an interesting conversation with government. And I mean so that this is very -- that maybe is -- means tested. And it's focused on customers who are not just first-time buyers but really marginal first-time buyers. And it's sort of it's a bridge between affordable housing and private housing, but it may be 10% to 15% of the volume of Help to Buy, not 50% or 60%. That -- I think, that, I would be happy to sort of lobby for because I think that will be long-term sustainable and healthy, from a market point of view, as a bridge.

The next questions come from the line of Sam Cullen.

Just one left really from me, just kind of following on from Will's question on outlets really. I guess, if you do see a [indiscernible] 2 weeks into the year, if you do see a volume recovery across the whole market as we move through January, February, March, how quickly can you guys respond to that? I take the point you want to take price over volume, but at some point clearly, if the market does recover more rapidly, you'd want to take volume also, yes. How quickly can you increase the outlet numbers across the group?

I think, in terms of increasing the outlet numbers in a meaningful way, we can't, and neither can anybody else. It's just, if you have outlets that you are able to open in outlets, then you open them. If you are able to -- you might -- there might be a delay that you consciously choose to take of a few weeks as you get the details and the information right, yes, or get your sales sort of presence in the right place, but you don't have outlets waiting in the wings. I can see that might be slightly different for a very London-centric developer at the moment who maybe had a few sites, say multiple, that they can then open up again but in a more general sense, sort of. But what we have, though, and what I think we are better placed than anybody else to do, and last year to a certain extent it's about testing this, is increase our capacity on individual sites. And those same large sites which can be a challenge to leverage out the numbers are an asset in letting you be flexible with the market. And that's why we wanted to test the higher sales rates and what the balance was. Because if I look at the last 5 years, there's been a missed opportunity because we didn't have the control over our build to be able to step up by 20% over the course of a year; and feel like we can do it properly, manage quality, manage customers' resources. And I feel we are much better placed to be able to do that. Now it still takes 6 months for that to have an impact on completions, at least, but still we are -- we can actually make that shift quite quickly and impact on half 2 next year and into 2021, whereas in the past actually, stepping a build on individual sites, we got very nervous because it will tend to come with quality problems and real management issues. Now we have much more confidence that we have the control and the production mentality to be able to get that right.

[Operator Instructions] The next questions come from the line of Ami Galla.

Just one question from me. On the landbank, I was wondering if you could give us some comment on the plot cost-to-revenue ratio at the end of the year. Were there any meaningful shifts as a result of the strategic conversions that you're seeing? And on the broader land market, I hear your comments on London and the South East, but on the broader land market, do you see more competition tightening the intake margins in this space?

So I might need you again to repeat the second one. On the first one, I don't think -- yes, because we are not going to fully process the accounts, I don't think we can give you a specific number on plot cost-to-revenue ratio, but I certainly don't expect it to have moved significantly over the course of sort of 2019. And certainly, generally it has remained low by long-term historic standards, and a combination of the strategic land and the overall land environment will help to continue to make it do so. And sorry. The question on London land, I missed the question...

Yes. My question was really on the intake margins in the broader land market. Do you see that tightening over the course of 2020 to an extent?

No -- sorry. It wasn't that one at all, was it. No, I don't particularly expect that to tighten. I think sort of -- I mean, in a way, the earlier question about Help to Buy and risk is part of that, whilst I think inevitably there is a sort of more of an air of confidence in the market overall. And that includes therefore the land market. I don't think the dynamic that we've seen for the last 10 years, which is what's driven that kind of higher intake margin, lower plot cost-to-revenue -- but I don't think that's changed. Sort of -- and I don't think it's about to change. It's not something -- and it -- in the same way is I don't suddenly think that with the general election results somebody has turned the switch on in the market. I think that is true on land as well. It is a more positive environment, but actually I think it worked -- it might actually help us on intake margins, particularly in London, because as we've touched on before, actually there is a level below which land sellers won't go. There's a level in London where alternative use starts to kick in over residential, and that's made buying land at reasonable margins very difficult in sort of Central London for a little while. And so actually seeing a more positive market environment will actually help that because it will, I think, sort of help residential compared to certain other land uses. And it will kind of help the maths on sites. So I don't -- that's not me flagging that margins will go up materially on purchase, but I don't see that we've sensed an area where there's a meaningful sort of extra degree of pressure.

This concludes our question-and-answer session for today. I will now hand over back to Pete Redfern for the closing remarks. Thank you.

Thank you. And thank you, everybody. It's not many extra remarks to close. We look forward to seeing you at the prelims, when we will be updating you on really the key first 2 months of trading. Thank you very much.

Thank you for joining the Taylor Wimpey plc Trading Update Call. This call has been recorded and will be available to listen on demand on Taylor Wimpey's website later today. Thank you.