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 a Q&A. I will now turn the conference over to Pete Redfern, Chief Executive. Please go ahead.

Thanks very much, and thanks, everybody, for joining us. I think we see this as a fairly straightforward, very much a trading update call rather than anything deeper. Obviously, we gave you a very full run through in November and moved kind of guidance and expectations for 2020 and 2021 materially. This is more of a sort of reassuring that that's all in line. Very happy to talk about how we see current trading, current market and our views for this year in terms of the market, but I don't think there's any dramatic new news. But I think overall, we feel very positive about how the last couple of months since our trading update have gone, and very much the plan that we set out on cost savings and how we want to run the business. And investments in land have continued to follow the track that we set out there. And we see good evidence of the execution of those things sort of -- and I think particularly, the land will continue to jump out at [ Europe ], which I will come back to. First of all, running sort of over the 2020 numbers, I think very much solidly in line with what we set out. Sales prices probably will be the number that surprises you the most, and I will come back to that as we look forward, but up around 6%. The biggest part of that is around mix, but we did continue to push price through the second half of the year. And that 6% is after offsetting the care worker discount, 5% on those plots, but a cost of about GBP 20 million on sort of revenue next year. So even with that, we still see a meaningful sort of improvement in price. Construction activity remained sort of very much in line with what we set out in November, pretty much at normal levels through to the year-end and beyond. And again, I'll talk about that a bit more when I talk about 2021. But no sort of material change. We still see sort of friction at a site level in terms of making it more difficult for our guys to manage, but not enough to impact on the level of construction that we saw through to the end of the year or that we expect. And I think sort of particularly reassuring that our WIP levels, sort of particularly as we look at vertical WIP sort of driving completions for early 2021 ended the year in a good place, I'd say, probably slightly ahead of what we would normally expect rather than behind. And I think sort of our tactics have been slightly different to others in terms of focusing on ability to sort of move the business forward through 2021 and beyond. And actually pushing our guys to do the right build last year rather than maximize the last completions last year, I think leaves us in a good place. You can see in the stats, that Help to Buy 2, which, for us, sort of we were able to use in a formal reservation way sort of only from about the 15th of December, sort of help the post-November sales rate to about 0.92. So ahead of the year-to-date and ahead of the rest of the second half. I think if you stand back from that because obviously, we said to you in November that we felt sales rate was slightly depressed because we didn't have Help to Buy, and in fact, through the previous few weeks, that catch-up could risk exaggerating it. If you smooth that out over the period, I think we saw a very solid but relatively normal sales rate through that period. And I think as we go into 2021, I would still say that construction slightly lags where our order book is overall as we still catch-up from second quarter, but not by a lot. So we expect a more normalized sort of performance as we go through this year. Availability is not quite normal, but it's getting there. And so sort of -- we have a sort of relatively clean entry, I think, into 2021 in terms of those stats. And we were pleased that the outlet numbers remained stable, obviously, with the slowdown in activity and slowdown in some areas in planning activity, risk that new outlet openings would have been affected in the final quarter. But again, because our focus was very much on the sort of forward position in the medium term, I think we devoted more time and effort to getting outlet numbers open through late 2020 and to create that stability. Still see that 2021 might see a small dip and then start to grow materially as we set out in November, but probably slightly less of a risk than we saw sort of a couple of months ago. And as I say, land purchases sort of continued at a high level post the November trading update. To give you sort of context, GBP 1.3 billion of new land approvals equates to a normal year's land purchase, plus the GBP 500 million capital raise, all committed in roughly a 7-month period. And all that sort of returns and margins, they very much sit in or slightly above our sort of longer-term guidance for financial performance. So very pleased with that. I'm very pleased with the breadth a mix of those sites with, as we said before, more smaller sites, but still sort of a decent number of strategic sites coming through. I think sort of our take on that hasn't changed. We expect land purchases through the next year to remain positive, but more like normal levels. We don't expect to run at that kind of run rate sort of into 2021, but it also isn't the case if we make those sort of additional purchases and then sit back and sort of see them slide backwards. We expect to continue to drive normal levels of land purchase through this year broadly, obviously, will be opportunity led, but that's our broad expectation. If I then look at 2021 and beyond, then I've obviously touched on a couple of sort of leads into this year in that sort of historical run through. I think it's been a good start to the year. It's clearly a different mood sort of out there with the third shutdown and more concern over this wave of the pandemic, certainly than the November shutdown. But from a construction point of view, government guidance is clear. I think there was a point a week or so ago where there was a risk that sort of the housing market was more -- became more restricted. I think that risk has reduced over the last few days. We've had fairly clear guidance both publicly and privately from government, that they expect construction activity to continue. Where there is a little bit of risk is that some of the sales sort of processes may become restricted, but I don't think that risk is high. And with the strength of the order book and the level of sort of capacity we now have doing most of the process remotely, I think we see that risk as being relatively low. And we haven't seen interestingly, any real impact of that on customer demand. Sort of we came into the year, sort of clearly with people being in a more cautious mindset about the pandemic, but the 1st of January was our third best day ever of website interest and the level of activity and interest across all of our forward indicators has remained at good levels. It's 1 week, so I wouldn't want to pretend this as a statistical sort of piece of analysis, but our sales rate for the first week of the year was well above last year. You continue to see Help to Buy 2 sales sort of probably running at a more normal -- at a higher-than-normal level. There's a bit of catch-up sort of being part of that. But just ordinary sales also remain solid, and we're not seeing a big sea change in the confidence or approach of our customers. And we are sort of going slightly above and beyond the government guidance from a safety point of view on things like sales. We are sort of operating an appointment system in our sales offices, but we're trying to sort of make sure that our people can work from home if they don't have appointments and to make sure that there's some restrictions around appointments, the number of people from one family that attend, those sorts of things to sort of fit in with the spirit of the guidance as well as the detail. But both on construction and on sales, what we are seeing at the moment through this sort of third shutdown is that we can manage it without material additional costs or change. And as I say, more challenging for our people to manage, but not any fundamental difference and not something that sort of affects our guidance and not something as things stand at the moment that we expect to. As I said, we entered the year with -- we're in a good position. We expect a stronger first quarter sort of as we catch up what would have been our fourth quarter 2020 completions. And with the strength of the order book, and you know we run with an order book that tends to be longer than the sector, so to be a good 10% plus ahead of that sort of puts us in a strong place. It continues to give us the opportunity to push price sort of which we expect to do. And not going to give you a big update on that today, but we'll -- yes, I would expect us to come back in February and give you a clear picture of what price movements we've seen sort of and how we see that impacting as we move forward. On costs, I think sort of -- it's been a pleasant surprise that overall, that remains benign. I think with the strength of the market and obviously, the Brexit risk, there was some risk that we'd started to see, cost inflation coming back in towards the end of the year. Probably the one area where we've seen material cost inflation is timber, yes, which you'll understand is a sort of more international rather than a U.K. housebuilding sort of thing. But we are seeing some offsets. So actually, our view of cost remains running below the level that we've seen over the last few years, not 0 sort of -- but sort of at a slightly lower level. So that balance of price and cost feels healthy. Certainly feel that sort of they're offsetting each other, and that there's a bit of upside as you go through this year, but a bit early to build that into our guidance. And we'll come back and talk about that in a bit more detail, I think, in February. And I think sort of overall, sort of as we look at this year, we continue to see this as a year where, clearly, we can show significant improvement from last year. But actually, more importantly, if we look at it from a long-term value, that we can show real improvement in some of the underlying metrics and give real confidence in how we can then build both volumes and margins as we go into 2022, 2023, 2024. I'm still of the view that the volume growth piece will come as outlets open. Outlets should open in 2022, but the volume sort of uplift of that comes largely in 2023, 2024, but we should be able to show you improving margin dynamics sort of over the next 12, 18 and 24 months. I'm going to stop there. I think that's the key headlines. Really would like to focus sort of the questions and the discussions around about the trading update. Happy to talk about our views of the market sort of, but February is a better time to talk about sort of longer term -- sort of longer forward-looking metrics. Chris, anything I've missed? I'm conscious I didn't sort of cover lots of numerical data but very happy if you want to give sort of a bit more on guidance and on cash positions, et cetera, et cetera.

No, I think that's all in the statement, Pete. So happy to move on to questions.

Great. So Melanie, if we can open up for questions, please.

[Operator Instructions] And your first question comes from the line of Aynsley Lammin from Canaccord.

Just 2 questions for me, really. Maybe Pete, if you could give a bit more color on the land market. It seems that you've kind of gone out there quite aggressively, obviously, buying land. Is your view now that any bargains that may have been there are kind of less opportunity in '21? It's more of a normalized market, but kind of still meeting your hurdle rates. So just your view really on the land market and the outlook. And then secondly, the forward sales position, I think it's 50% forward sold for private completions this year. Just could you remind us how that compares to a kind of more normal year? And is that higher forward sales a reflection of you derisking this year a bit? Or is it just kind of delays rolling over into '21 in terms of build?

Yes. So I think, yes, on the land market, normalizing, but not yet normal. So we do still see some extra opportunities. It does sort of vary -- should I choose beyond the size of site, the nature of site, the local area? Whatever thus, but I'd say that variation is probably sort of bigger than usual. Sort of you've seen land sellers broadly return to the market. You do see a little bit of a drive from some nervousness about future capital gains that is bringing some land to market, which is a newer dynamic back end of last year, early this year. But I would not say we're now in a massively unusual market. I'd say it's getting closer to normal. There are still some players who are not in the market, there are some who are. And you can see from our public competitors, obviously, that others have been -- have taken a different view through that, and a different timing through that. And sort of time and execution will tell which of those approaches paid off. But you can see from their statements very clearly that we were more active than others sort of from very early in the year. So it's not been normal, it's not quite normal there, but it's close. And I think if I put it in margin terms, we were buying land about 21% operating margin sort of -- but with a heavy mix of strategic land within that. Through this period, we've been buying land at more like 22%, 22.5%, so above, but not massively above, but with a lot more short-term smaller purchases in there. And so it's really hard to sort of totally benchmark that because you've got a different mix. But you can see in the stats and the mix and you can see from some of the data we've quoted, and we'll quote in more detail in February, yes, the mix of sites is different. We'd have had to pay more for those sites in other conditions. But is it a buyer sale land market? No. But is it better than usual and other -- is there opportunity to do more deals in the short-term market with more smaller sites that sort of underpin that sort of medium-term performance? Absolutely. So it's sort of shades of gray. In terms of forward sales, I mean, the forward sales were above 50% sort of -- we're always nervous about quoting an absolute percentage because it feels like a formal forecast of volume if we could view the order book at an absolute percentage, but they're a bit above 50%. Normal is more like 35%, 36%. And sort of what's driving that? I don't -- it is more weighted towards the business rebalancing as construction has been catching up with sales. It's a bit that our order book at the end of the year continued to perform better than we expected, sort of -- so both outlet numbers and the year-end order book are slightly above sort of our forecast from a couple of months earlier. Sort of -- I don't think it's really driven by caution, but it's still the case, although construction is -- activity is sort of looking pretty normal in terms of the rate on site. I do think it will be great to think that we could suddenly accelerate production, maintain the COVID guidance, keep build quality and costs in line and catch up with sales rates. So I do think the construction activity will continue to be the limiting factor. But again, as we've said before, that gives us the opportunity to just focus a bit more on price, focus a bit more on efficiency. And that's not a bad place to be, given our sort of objectives around sort of margin recovery leading volume growth.

And your next question comes from the line of Gavin Jago of Barclays.

Just a few, if I could. The first one is just to revisit your comments on build cost, Pete. Obviously, one of your peers yesterday talking about build cost this year probably being up a few percentage points. You think -- I just wanted -- somewhat interested in where you think it could be in terms of mix pre labor materials this year. Second one is, I guess, a revisit from one of the questions back in November, and obviously, your pipeline of forward order book and delivery for Q1. And I guess the risks around construction and meeting, I guess for your customers who have got Stamp Duty savings to come towards them by the end of March. And the final was just an estimate of any change in mix between private and affordable, just given where that forward order book is for FY '21.

Yes. So on build costs, we haven't given a numerical number at this point, partly because the movements are so small that actually, it would be quite hard to sort of pin it down. And that's broadly true on both materials and labor. As I say, on the materials side, we are seeing sort of pressure on timber specifically, a bit of pressure on other things, but offset by sort of some savings elsewhere on materials. And I do think we've been very clear and very open. We fully acknowledge that through, particularly early 2019, we saw more cost inflation than some of our peers. Actually, sort of Jennie has sort of refocused our central procurement team, and we're seeing some good efficiencies come through that. It's not -- so I think we probably have a slightly different sort of set of things that we can go for, and that's probably helping us a little. So I don't know which peer you're talking about who gave you numbers yesterday, but I would be below 3 to 3.5 at the moment. But we're consciously waiting until February to be able to give you a slightly sort of clear and numerical guidance, but it feels a bit more benign than that. But as I say, we probably got a bit of catch-up in that sort of relative to peers as well as seeing a broadly stable environment. And sort of similar on the labor side, sort of we're not seeing big pressure. But as ever, it's very much you'll see some pressure in one regional area or one particular trade because of availability. And you'll sort of -- but you'll get some savings elsewhere. We expect to see cost inflation this year, but it's not huge. And against the price dynamic we see, I think our underlying guidance of selling price inflation, offsetting cost inflation feels secure with a bit of upside, but a bit too early to put a number on it.

Sure. Okay.

Sorry, and pipeline for Q1. I think at a point, I would say, a week -- sort of 10 days ago, where it did feel that there was pressure on the government to constrain construction activity, build activity, sort of -- then clearly, that would have had an impact on our ability to deliver Q1 plots. If we had to close sites for a period, then sort of -- there's not a lot of safety factor in there. That risk largely feels like it's reduced. So in the environment we see at the moment, with, as I say, some friction, with some tighter rules, with making sure our own rules are applied really closely, and we've gone back probably 3 or 4 times over the course of the last 7 months and really reinforced the rules to make sure they're genuinely operated on to each site, I don't think that, that creates a risk against quarter 1 delivery. There will be a small number of clocks that always are in the mix, but overall, in terms of delivering to those customers within that time frame, yes, I think it's within our capacity. We feel in a good place with where work in progress is. And I go back to -- we manage the build recovery carefully to -- and we set out our own objective. We knew our people can meet, and then we kind of increased that steadily as we saw performance match it sort of through last year. So I think we finished the year in a good place with our sites sort of feeling like they've delivered the right completions last year, and they were set up right for the first quarter of this year. And I think what I'm about to say is probably a given, but sort of it is important, we expect our business to be much smoother during 2021 than it's been for a long time. Now sort of obviously, how last year went has enabled us to make more progress on that than we would have otherwise have expected. So the risk through the year on construction delivery is lower than normal. And so that enables us to absorb sort of that sort of friction around build that we're seeing without sort of having to either change our sort of forecast or sort of see material risk to delivery on timing for customers. And then the final question on affordable private mix. I think I'm right in saying, Chris, that sort of the affordable mix will probably be down a bit this year, but that's just to do with the contractual delivery and timing and how the different phases of sales and products have worked through the pandemic. I think our underlying level of affordable housing through the next 2, 3, 4 years is -- 2019 is probably a better measure of mix there than 2020, 2021 will be. I think that's fair, isn't it, Chris, in terms of 2021?

Yes. I mean, the affordable mix, as you know, tends to vary around a midpoint of about 20% from year-to-year. A couple of years ago, it was at 23%. In 2022, you can see from the statements that it's at 20%. And as Pete says, we'd expect it to be a bit lower next year, perhaps around the 18% -- 17%, 18% mark in 2021.

Next question comes from the line of Brijesh Siya of HSBC.

I have 2 questions, if I may. The first one is on the pricing done. If you can give a little bit flavor on what have you done since 1st of January, whether you have made any price increases across the sites or any reasonable difference there? If you can tell us a little more on that. And secondly, on the planning delays. I recollect in November, you were talking about probably, you're slightly down where you were planning to be. Can you tell us where you are right now and what was your expectation to be? So whether there is a significant difference or you are kind of more trending towards what you thought you would be.

Yes. So in terms of selling price increase, we did not, on this occasion, give as we did 12 months ago, a sort of an absolute, across-the-board price increase, partly because we'd seen our businesses increase prices sort of through November, December. And so they were in slightly different places. And so it was appropriate to have a slightly different approach side-by-side. We have seen and the underlying instruction to our teams is where they are sensibly forward sold to start to test and move price up. And we have seen statistically, that happen in the first week or 2 of the year. So yes, if somebody isn't, then we'll pick it up very quickly, but there's not been a standing instruction on this occasion. But the overall sense of just kind of making positive movement on price sort of in using the stronger forward order book remains. I'm not going to put a number on it today. We will come back in February, as I say, and talk about it in more detail. It's just a bit early days. And I think sort of we feel pretty good about the strength of the underlying market this year. You can't get away from there being some risk around sort of where this sort of third shutdown goes and its impact on confidence. At the moment, the signs are good, but sort of it feels a bit early to sort of give a -- and sorry, could you just -- oh, yes, the second question was on impact of planning delays on outlet openings. I think, I mean, many of you have heard me say many times, we expect planning delays, so we should build them into that forecast. So there shouldn't generally be a big reason why we see a difference. And it's -- I will make the same comment today. I'm not sort of talking about sort of a slower planning as being reasonable. Our outlets will be sort of down in 2021 and sort of -- or changing our volume forecast. They remain very robust. But I think we are seeing sort of, both because of the pandemic and its impact on local authorities and just their priorities and their resources, it is a grind getting through the system. And I expect the next couple of years not to sort of be much different from that. Having more sites and having more sites in the hopper, I think, is a key strength in that period. And we've sort of built that into how we talked about the timing about the openings and sort of the timing of sort of how we expect volume growth to come through. But that is what we're seeing. Sort of -- I think, if we were where we were 18 months ago with less outlets coming forward, that would make me far more nervous than it does today. But sort of -- I don't expect the planning environment to suddenly be easier over the next 12 or 18 months. So, yes, the best way of dealing with that is to have more choices so you're not too dependent on any one of them. And again, I'll go back to having more sites in those choices, so a better mix of smaller and larger ones. And I think you can see that in some of our competitors' commentary and where outlet numbers are likely to stand in the sector. They're likely to be lower in January 2020 than they were in January sort of 2019 and sort of -- I don't think that's going to reverse overnight.

And your next question is from the line of Sam Cullen of Peel Hunt.

[indiscernible] question for me. In terms of the price/mix in the order book, can you talk perhaps about the prices you're seeing in the private completions, including the order book and how the mix has shifted? And then also in terms of how much of that order book is weighted towards the first quarter versus the second and third quarter perhaps and where does that sit versus the last couple of years would be helpful, too.

So on price mix, I mean, we quote the price movement on sort of private price over the year. And actually, that's probably pretty reflective of what's in the order book in terms of private price. And that price movement is on the private side, the affordable side tends to not move that sort of quickly. Where is that mix -- the mix part is that coming from? I would say it's principally coming from the fact that, as we talked about a couple of times through the last sort of 6 to 8 months, that in the late stages of the quarter 2 shutdown and all the way through last year, the part of the market that relatively performed strongest -- and I'm careful of my use of the word relative. It's not that first-time buyers were slower. First-time buyers continue to be pretty healthy, but they've been pretty healthy through previous years. The secondhand market moved better in sort of late 2020 than it had done for a while, and we see that in our mix of properties and prices. So sites with larger products and larger sites with some larger products on them, we've seen just a greater volume on sales rates at sort of healthier prices on those larger sites. And that's probably the biggest change year-on-year, that the part of the market that have been slowest seem to be more affected by effectively the dynamic of people staying at home and thinking, "I want to get on with my life. I want to make a move." And it did seem to create a bit more movement in that secondhand market as the upper end of the market, and upper furrows. So we're talking about GBP 300,000 plus in sort of Midlands and the North and GBP 500,000 plus in the Southeast. So that's what's driving the mix, is similar level of first-time buyers sort of -- and particularly if you smooth out the Help to Buy impact and a higher level of sort of other customers sort of in the secondhand mover market. I'm sorry, Sam, there was a second question, wasn't there?

Yes. Just the weighting of the order book in the first -- that you have at the moment, first quarter versus second.

Yes. I mean, Chris, you may have the absolute sort of data in front of you, but I can tell you, we are sold out for the first quarter. We are heavily sold for the first half. And a lot of our sales at the moment are going into July, August and September. There's some products still to sell for June, but there isn't much before June. So from that, you can take the order book is pretty evenly spread between sort of first and second quarter and then with a decent level of sales into sort of the second half of 2021.

Yes. I think that's right, Pete. So you're probably looking at 40% to 45% of the private order book is for the first quarter on that basis.

Okay. And sorry, just to come back on the first question. Are you saying you're seeing more sort of fresh demand for those properties, I guess? Or is it you're seeing more effective demand because second-time buyers can actually sell their existing home to buy one of your homes?

I'd say it's both, but the one bit that I'd pick up on is, I don't think that it was that those second time buyers couldn't sell their properties. I think it's that price, it's that sort of -- it was the dynamic in the market of those secondhand buyers, yes, taking a sort of 1% or 2% sort of view on price to get liquidity move. There wasn't enough will sort of in the secondhand market to get it moving. I don't think that -- I think anybody who wanted to sell their house in 2019 at a reasonable price could have done and wouldn't have had to take a big discount. But if you want to get moving and you want to sell, you've got to sort of take a view and make a decision, and we're seeing just far more will to make that decision. And I think to a certain extent, yes, there's the psychology of the lockdowns and people staying in their houses. It's also just the pure confidence piece of a housing market that's remained stable to positive through sort of the Brexit period, through general elections and then through the pandemic. But the second -- those sort of second time sort of buyers do tend to be more cautious in their nature than first-time buyers. And I think there's quite a lot of people who looked at it, thought, "Well, if it's going to stay resilient and prices aren't going to go backwards in any circumstance, I'd want to get on with it." It was caution that was probably holding them back before more than the fact they couldn't sell.

Our next question comes from the line of Arnaud Lehmann of Bank of America.

Just one question on my side. Could you give us a bit of color on the trends in -- again, in the sales rates? Now that you're able to book Help to Buy 2.0, how much of that boosted your sales rate in December or January? And what would you expect now in the context of the solid demand environment, but at the same time, maybe a bit of constraint on the supply side for the industry? What do you think should be a normalized sales rate for 2021, assuming there's no major macro disruption?

So I think if you looked at the sort of period pre Help to Buy 2 coming in, the actual sales rate was in the low 0.7s. I mean, that's -- 0.72 was a reasonable indication of where it was. Then obviously, we had a sort of a couple of weeks where sales rate was artificially high. If you'd have sensitively smoothed that out and adjusted a little bit for not all of the reservations would have come into the December period, some of them will come into early January, I think the sales rate last year with Help to Buy -- in those last sort of 3 months of the year, if Help to Buy 2 had been there throughout, would have been something like 0.82, 0.83. And that's taking into account the fact that we had, as we talked about several times, relatively low availability. And obviously, high order book, low availability go hand in glove. So I think if I look to sort of what we'd expect this year, it starts with a 0.8. And I think depending on where we are in the year, availability, underlying strength, we'll probably govern whether that's 0.80 or 0.88, 0.89, but that's probably the range. And with the length of order book we've got, sort of the impacts towards this year's completions on where we sit in that range isn't huge. It's more about where the order book then lands for 2022 and beyond. I mean, do you think that sort of view, Chris, of 0.8 something for sort of the end of last year, if you'd have smoothed Help to Buy out and that view of this year feel -- do you feel that's reasonable?

Yes. I mean, the intervening period between sort of our update in November and the end of the year, that sales rate that was boosted by the additional Help to Buy sales was 0.92. So obviously, that was an elevated level. So I think, yes, what you've -- where you've got to, Pete, is very fair.

And we would not want, in the ideal world, our order book to be as elevated at the end of 2021 as it is at the moment. It's fine where it is now because of the circumstances that have driven it there. But actually, I still think the right sort of distance to be selling out in normal circumstances, the right balance between volume and price, the right kind of forward look for customers is more like 5 months than it is 6, 6.5.

The next question is from the line of Marcus Cole of Liberum.

Three questions, if I may. I was just wondering if you could add a bit more color to the land spend since the equity raise in just terms of what was that number last year. And then just any color you can sort of add forward indicators, any numbers you can give. And then just finally, on the dividend policy, I assume it remains unchanged to the 7.5% of ordinary of net assets as it was before COVID.

Yes. In terms of land, there's not a lot of additional color to give at this point. I mean, I would say a normal year's land purchase would be in the order of GBP 700 million, and obviously, in the order of 15,000 plots. So GBP 1.3 billion and 22,000 plots gives you a pretty clear indication of where that is. It's important, and yes, hopefully, we're very clear in the way that we state this. Obviously, because we're trying to get people a clear sense of where we're going, the number we're quoting is new land we've approved rather than what's come on the balance sheet. You can see in the landbank numbers, a chunk of that is starting to come on to the balance sheet, but you'll see the landbank step-up this year as those plots go through from approvals to contracts. And we were quite pleased with the pace with which those sort of first stages post-approval were running at sort of through late November and December. We were slightly nervous that it would slow down a bit because just the level of activity and just people taking sort of a slower readthrough in the pandemic, but we haven't seen that. So we're seeing good traction on that coming through. But I think if you look at roughly that GBP 1.3 billion against the normal GBP 700 million, you get a sense of the pace last year, but the impact of that on the balance sheet is spread out sort of into this year. I'm sorry, there was a second question.

It was just -- there were 2, actually. There was this one on sort of forward indicators. Is there any sort of numbers that you can give sort of on the initial trading in January just to give us a bit more flavor? And then the other question was just on dividend policy. Does it sort of remain unchanged from what it was before COVID?

Yes. So I think on the sort of dividend policy, we've said, we expect to pay ordinary dividends sort of from this year at a similar level per share to the 2019 dividend, and that remains the same. We'll come back to the special dividend policy later in the year, but that doesn't signal that we're expecting to fundamentally change it. But I think it's right to set it out in the context of a post-pandemic world, but we expect it to be material special dividends and that they're likely to resume from next year. And in terms of forward indicators, it is too early to give you something numerical. I think first week sales rates were above last year by a meaningful amount, but that's helped by Help to Buy 2 activity levels and interests sort of are at good healthy levels, at or above normal levels. But I'm nervous about giving you a single week sales rate because that just sort of doesn't -- I don't think that's particularly helpful.

And your next question comes from the line of Will Jones of Redburn.

Three as well, if I could, please, and I think mostly an extension of some of the points already discussed. But just coming back to the land, that GBP 1.3 billion, would you be able to give us a broad feel as to how much of that you feel was on the balance sheet at the end of the year? Or maybe another way of answering, I suppose, is if you were to, say, broadly replace going forward in '21, do you have an idea of, I guess, the cash land spend demands on the business through this year? Second one was just coming back on outlets. Could you give us a feel for -- I think you mentioned the likelihood of a slippage to '21. I appreciate it will be a function of sales as well. But is there a number you might be willing to put on that? Is it [ maybe 10 ] or something from the 240 odd? And then did you say in the opening remarks, Pete, a material lift in '22? And if so, is that the core business kind of catching up? Because I think you've guided that the new land money, if you like, really kicks in from '23 on sites. And then finally, would you be drawn at all on how you think completions may split this year between the first half and the second? Obviously, you've had a strange 2020 in that regard and the big order book. And just wondering how much you might be able to book of your target by the 6-month stage?

Yes. So Chris, if -- on the land one and how much is on the balance sheet and the cash impact, if I leave that to you, then I'll pick up the other 3 and then come back to you on that one. And on outlets, it's quite possible our outlets remain sort of -- will remain stable at about the 240 level. But as I've said numerous times, sort of it's not entirely in our [ gate ]. And the sort of range probably is 10 as we go through this year. And the impact of sort of last year in some of the planning kind of means new starts are a bit slower. So the range is -- it dips a bit. But as we said in November, we expect it to dip a little and then more or less end the year in the same sort of level that we're at the moment. In terms of material lift in '22 and sort of I'll be very careful and precise in my wording, what I'm saying is that we should see in late '22, the first of the outlets from new land purchase, that does have an impact over and above the core business starting to come on, and that's when we should start to see outlets begin to increase. Where we talked about the impact on the business, I'm talking particularly about then completions impacting on 2023, 2024. So we should be selling from some of those new sites in the second half of last year, but the material impact on completion isn't until 2023, 2024. And that hasn't changed from the dialogue we had with investors back in sort of May, June that that's where the impact on completions come through. But yes, we do recognize that it's really important to be able to show you the forward indicator. So whilst we won't necessarily split because at the end of the day, from one of our businesses, it's -- there's no distinction between land that was bought from the capital raise and land that we would have bought anyway. You can see that we have secured more sites, but it would be artificial for us to run the business as if they were different. The aim is to get the value and the time out of all of them. But we will sort of be continuing to show you how that wave of additional land is progressing through the business through to those outlet openings and then that future volume because it's our way of giving you confidence that volume growth is there. But it's a bit arbitrary to just split them as totally different sites. But yes, outlets in second half of '22; completions in 2023, 2024. And Chris, if you just want to pick up the land. I think on sort of the half 1, half 2 completions split, Will, much closer to 50-50. I think sat here today, I'd still guide to sort of slightly second half weighted, high 40s to low 50s, but sort of much closer to 50-50 than we've been in a while.

Yes. And just on the land, Will, of course, not all of that spend is going to be reflected on the December 2020 balance sheet, because some of it's still to be contracted or is already contracted, but conditionally contracted. But even so, you will be able to see an increase in net land in the balance sheet compared to 12 months ago. And when I say net land, I mean, land net of land creditors. And I think that was something like GBP 2.0 billion at the end of December '19. And I'd expect that to be around about GBP 2.2 billion at -- in the December balance sheet when we report that at the prelims.

And your next question comes from the line of Christopher Fremantle of Morgan Stanley.

Two questions from my side. The first is on Help to Buy and Stamp Duty deadlines. So I just want to understand your view on to what extent those deadlines have really pulled forward demand as well as you obviously satisfying the pent-up demand from the initial lockdown. And if you can just talk about Help to Buy. What percentage of your second half volumes are Help to Buy volumes and how does that compare to previous periods? And if possible, you can tell us what proportion of those Help to Buy volumes are the non-first-time buyers, that would be helpful. And then the second question was about margins and the focus about returning to 21%, 22% operating margin. Appreciate you don't want to be too specific at this point. But is that something you aspire to achieving in 2021? Or should we be assuming that that's a 2022 aspiration?

Yes, no. I think in terms of the Help to Buy, Stamp Duty deadlines, we've been of the view through the last 6 months that the impact of Stamp Duty was not huge. And particularly, if I look at economist commentary and press commentary, there's almost an assumption sort of -- well, I say almost an assumption, there is an assumption, the Stamp Duty sort of holiday has been the reason why the housing market has been much stronger in the second half of 2020 than everybody thinks. I just think that's wrong. I think every bit of data that we look at in terms of actual performance and the anecdotal data of our conversations with our customers says that it's a component, but it's not anything like the most significant component. And therefore, I am unconvinced that it has sort of had a big impact in driving demand into a particular period. I think that's the underlying market, people's desire to move, low interest rates, mortgage availability. Help to Buy is much more impactful, I think. And that, you can see in our sales rates. It clearly has an impact on phasing, when one scheme runs out and another one comes in. So -- and the biggest piece of evidence that I can give you for that view on Stamp Duty is what we said to you in November and is true in spades now, that we don't see a disjoint between our sales performance on rate and price sort of when we move from selling sort of product that we'll complete in March 2021 to product we will complete in April 2021. And we try to be very, very clear with customers sort of on what that sort of timing impact is likely to be like because, obviously, sort of it will make customer sort of relationship management very difficult if we sort of tell people we can deliver a product they're going to benefit from that and then we can't. So we've been very careful with that. So we do not see a sort of price reduction in the sales we're taking in the second quarter, and we're pretty well sold for the second quarter already and into the third quarter. So I think we have clear evidence on that, that it's continued to head in the same direction. I think you asked about the proportion of Help to Buy in the second half sales and proportion of first-time buyers. It will be lower because of the period where we didn't have Help to Buy. I haven't got the numbers because we tend to look at sort of it on a completion basis. We haven't got the full data yet, but I would imagine sort of that the Help to Buy sort of sales, the reservations in the second half as we look back, will be sort of low 40s or even high 30s rather than high 40s. It will have dipped just because of the period of unavailability and the sort of catch-up in December wasn't a complete catch up. But I would think if we look back, once Help to Buy 2 has got its full capacity and we look at it on a completion basis as we look back at 2020 and 2021, it won't have dipped very much. And so your question about what proportion sort of the first-time buyers and sort of an extension to that question is they're about proportion with the form outside the price caps, about 20%. But I still think that the underlying demand sort of from first-time buyers within the price gaps is enough that it will keep Help to Buy in that sort of 40%-ish kind of range through this year. It's an important part of the sales piece. And it's why I will play down the impact of Stamp Duty on the market in 2020 and 2021, but I wouldn't play down the importance of Help to Buy as we look forward at 2023 and what government decides to do around first-time buyers post then. That, I think, continues to be a material sort of debating question for the housing market. Stamp Duty, if I'm honest, is a bit more about noise, and I don't think it's had a big distorting effect. Does that sort of -- and I know there's a question on margins, Chris, but does that answer the overall question you were asking around Help to Buy and it's...

Yes, that's helpful.

Okay. I think on margins, we have never said and we will continue to say that we get back to that 21% to 22% level in 2021. We won't have a fully normal level of volume, that brings a bit of inefficiency. Some of the overhead cost saving we brought in last year will impact this year. But there's still noise around the business, we're not back to normality this year. We're heading there, and our plan and our goal is to get as close as we possibly can. But our guidance is absolutely not for that range this year and never has been. It's not necessarily to get into that range for 2022, but I'd say that's the first year where it's feasible. But we certainly would be sort of disappointed if 2022 didn't start with a 2 in terms of margin. And we'll come back and give you a bit more sort of guidance on how we expect that to progress through the next couple of years in February and then during the course of the year, sort of -- because obviously, there's a lot of water to go under the bridge. We expect to see material progression this year against, obviously, a very weak 2020 and to be able to continue to map out that path back to that 21% to 22% margin in the short, medium term, if that makes sense.

The next question comes from the line of Gregor Kuglitsch of UBS.

Maybe on ASP, if I may. So obviously, your private ASP was quite high, I think, relative to history and you kind of flagged mix. And I guess the question that I have is, it sounds like is it -- this year, there's not going to be much change in that regard, correct me if I'm wrong. But as we think about sort of medium term and looking at the land that you're buying, how do you think the mix -- is there a mix online, I guess, we should be thinking about? Or putting the question differently, if you printed nearly GBP 290,000 of ASP, how does that compare to your landbank ASP as you kind of stand here today, maybe factoring in as well the land acquisitions that obviously aren't necessarily in the landbank yet? That's question 1. Question 2 is on volumes. I think previously, you sort of said 85%, 90% for this year, if we take '19 -- 2019 as a benchmark for this year, right? And then can you just remind us how you map that into '22 and beyond? Do you think in '22, you can already match the '19 level? I appreciate the new sides only contribute later. I get that. But those were, I think, incremental. So if you could just maybe map out for us the volume path as well as you see it today. I'll leave it there. I have one other question, but those are the 2 main questions here.

Yes. So Gregor, I'm going to sort of go through those questions, and I'm happy to answer them. But we're starting to stray into things I think are better talked about in February. So I'll cover those, but probably the -- if people want to expand on those, I'm probably going to kick them back and say we'll come back to you in a couple of months. I think on the average selling price unwind, no, we don't expect a material average selling price unwind. I think whilst there was an improvement in mix through this year was that those higher-priced properties started to get sort of -- we started to see more traction, I see that as more of a normalization to what we would ordinarily expect, having been held back rather than a sort of a totally temporary thing. Now there's a bit of a judgment in that. It's hard to know how the strength of these different parts of the market will behave. But if you look at our landbank, I don't think our average selling price in our landbank at the end of 2020 is fundamentally different to the average selling price on completions delivered in 2020. So it will vary a bit from period-to-period depending on the exact mix, but I don't think it's -- that we're guiding you to it going backwards. And of course, that's sort of helped a bit by some of that, is an inflationary shift. It's not the biggest component, but it is in there. Sort of -- there's that in there as well. In terms of volume unwind, yes, we guided you to 85% to 90%. We're not changing that. We feel sort of increasingly more confident about that. We haven't got formal guidance for 2022, but I think we would say 2019 is a good place to start, but probably slightly below 2019 rather than slightly above if we had to cut it today, sort of but not a long way off. And then as you say, sort of starting to see sort of that volume growth past 2019 and 2023 and 2024. But I wouldn't want to be drawn on anything more numerical than that at this stage. And by the end of this year, I think we'll be mapping out for you, as those outlets flow through, a fairly clear trajectory on both margin and on volume. But I think at this point, we've given you, I think, pretty clear guidance about the overall direction. And given the amount of sort of uncertainty and change going on, that feels like a pretty fair place to give you in terms of sort of planning certainty.

And then maybe just on the Help to Buy side. So I think if I look back, your completion mix was comprised historically -- I don't know, maybe, I think in 2019, it was like 45%. With the new scheme, what do you think is realistic? Like half that level or more or less?

No, no. Definitely, significantly more than half. Sort of -- and against 45%, 40%, sort of it's a bit less, but it's not massively less, I don't think. You'll see every developer will have regions where they're very unaffected by the price caps, and regions where they've got a couple of sites that have sort of product just over the price caps and the effective grade for it. Sort of -- but overall, as they look nationally, sort of -- I don't see it having a dramatic impact. There continues to be good demand for it within the price gaps and with the first-time buyers' limitation.

The last question comes from the line of Ami Galla of Citigroup.

Just one question for me. I was wondering if you could give us some color on the demand trends that you're seeing in the London market? And how is planning really progressing in that market?

Yes. I think on the demand side, it's been sort of probably, encouragingly and probably, mildly surprisingly resilient. So I know people talk a lot about sort of an exodus from London. I think if you're looking at the rental market, you've clearly got less people moving into London and obviously, because the rental market is shorter term. But I think most people's sort of house-buying decisions are longer term than that. And so we haven't seen a material drop-off in demand in London relative to the rest of the country. I think on the planning side, though, we continue to see a reasonably challenging environment with the interplay between national government strategy and the mayor strategy. So we continue to see, particularly for Central London, a more challenged planning environment than elsewhere than historically. And as we said in November, we've shifted our focus in London. We don't expect to be adding in new sites to what would be sort of historically, our Central London business. But we still remain committed to London, and we have bought sites in London and in sort of the immediate surrounding area. So it is slightly different to the picture elsewhere, but I think, particularly, if you look at demand, it remains sort of reasonably robust.

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

Thank you, and thank you for the questions, and thank you for keeping them sort of largely, pretty tightly around the trading update. We're looking forward to February and sort of talking a bit more forward-looking a bit longer term. But we sit here at the beginning of 2021 and feel good about where the business is. Sort of -- I think, 2020 gave us a chance to adjust some things on cost to make a big step forward in land purchase and having not driven for the absolute maximum construction completions at the end of the year with -- and the forward-looking sort of part of the business that sits in a healthy place. Clearly, some broader uncertainty, but I think we feel we still sit pretty strongly within that. So we look forward to catching up properly in a couple of months' time. Thanks very much.

Thank you for joining the Taylor Wimpey 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.