Taylor Wimpey plc (TW) Earnings Call Transcript & Summary

Good morning, everybody, and thank you for joining us. There's quite a lot to get through both in our statements, and I'm sure plenty going on in the sector, so plenty of questions. If I just stand back for a second and talk about the overall position. We obviously see this as a very reassuring statements, restating our performance for last year and setting out how the business is set up for 2022. I think if I stand back and look at the last year as a whole, we're very pleased with the performance. You'll remember we upgraded pretty much every time we came back to the market during the first half of the year. And then, against quite a difficult operational backdrop of build availability on materials and labor, we delivered exactly what we said at the half year and sets up the business very well for the future. Touching first of all, on the housing market, it clearly was a very positive housing market last year. I think we were the first to be positive about the market and to stress the underlying strength, and we've seen that through to the end of 2021 through the Christmas period where we've seen continued good interest from customers at a very healthy start to 2022. The business has a strong order book. It continues to be slightly above what we'd say it's a long-range level. So it gives us plenty of choices as we look at the market going into this year. But our overall sense is, although for the year as a whole, it might not be quite as strong a sort of conditions we saw last year, the signals are still very positive, and we're certainly not seeing any sign of weakness at the moment. And I think you've seen that sort of reported more broadly, both in our sector and in the wider sort of housing sector as a whole. Again, and I'm sure there'll be questions on regional variations and product variations. I think they are sort of not particularly significant. So we continue to see a good market in all of our main operating geographies and across the full range of our products and our customer groups. On the material side and the build side, that's clearly been the bigger challenge through 2021 for the whole of the sector, particularly material availability and price. But as we set out through the course of the second half of last year, we expected to see the price gains that we made fully offset the cost impact. And we've been very pleased with the way our teams, both the regional and site teams, but also our central procurement and logistics functions have handled the availability challenges. And so sort of we've seen a very good performance from the business, delivering exactly the volume that we've been sort of setting out for the whole of the course of the year. Going into 2022, we see some amelioration in the availability and pricing challenges on materials. It's not across the board. So some areas are still pretty challenging, but very pleased with the way some of the strategic work we've done with our logistics function, which we'll spend more time on with the full year results, sort of have performed. I'm very pleased with the way our teams have had to work and have worked at a site level. I think set against that, particularly pleased that we continue to be a 5-star builder but also that our performance in the NHBC construction quality scores is the best in the volume industry. That's been a very key measure for us. We don't think that just customer surveys could give a good sense of the quality of how our business delivers because customers can't always see quality issues, whereas if you look at both the customer quality scores and the NHBC quality score, you get a really good sense of our overall performance. So very pleased with the rounded performance from our teams in some relatively challenging environment. I think as we go into this year, we don't see that having a material impact -- those limitations having a material impact on 2022, but it will continue to be a challenge through the next few months and our teams will continue to work hard. And if we now move on to land and planning, you see in this calendar year, the real impact of our early land investment post the capital raise, our net land on both strategic and short term has increased, and the total of the 2 is about 14,000 plots. We continue to expect both -- particularly the short-term landbank to increase as we get a full flow-through of the plots that we acquired in 2020 and the first half of 2021. We're in a more or less replacement phase on new input coming in today, but there's still some flow-through that we'll see that landbank continue to rise and remain very confident that, that underpins the sort of growth aspirations for 2023 and beyond that we've talked about. I think what should have been very clear to you over the course of the last 6 to 8 months from the general sector reporting is that the land environment has tightened, but more particularly, the planning environment has been pretty challenging with low resource levels and local authorities and sort of some political steps away from sort of driving housebuilding at a local level. We feel in a very strong position in that more difficult challenging environment. Our early land investment means that we have a bigger hopper of sites coming through. And as I know Chris has stressed to many of you, although our outlets are at a level that we'd like to see grow, we currently have 120 sites with detailed or outlined permission-owned and controlled that we're bringing through the planning system. So that's what drives our confidence in the increase in outlet numbers that we've set out that we expect to come through in the second half of 2022, setting us up for 2023. Moving on from the operating side of the business, some of the sort of broader customer and political issues and talking, first of all, about cladding, which obviously has been a subject of intense debate over the course of the last week. I just want to be very clear with what we set out a year ago or nearly a year ago and reiterate our sort of financial position and just as importantly, our position on how we are dealing with our customers. We set out with our prelims that we, Taylor Wimpey would pick up the cost of bringing any Taylor Wimpey building built in the last 20 years up to current standards. And we've used the EWS1 form to define those current standards. We made an estimate of what that cost would be. And just to be clear, that includes buildings that we own still and buildings that we did not include buildings above 80 meters and buildings between 11 and 18 meters and the provision that we set out sort of at that point in time was an additional GBP 125 million. We still believe that's the right commitment. We think it's the right moral thing for the business to do and puts us in a strong position in conversations with government. And we still think that, that is a very sound estimate of the cost of that work, and we've been in ongoing dialogue with building owners and progressing both the plans and in some instances, the work on those buildings. So [indiscernible] continue to believe that we did the right thing at that point in time and that we made the right financial estimates of that cost. Just very briefly wanted to touch on leasehold and the CMA investigation just to say that it was pleasing to get that resolved with the CMA, just before Christmas and hopefully bring drawer line under that particular issue. And the last thing I wanted to cover before I hand it over to Chris was the statement we've made on our share buyback. I think you were all expecting from us some kind of capital return from 2022. We've sort of talked about that with investors. We talked about that with analysts since the capital raise that sort of 2022 over the year that we returned to more significant capital return dividends. But it is a key decision that the Board took. So sort of weight that towards the share buyback. The exact quantum and the exact structure will depend on the conditions when we announce it finally with the prelims, but we just want to set out sort of our current expectation. Chris, over to you.

Thanks, Pete. I think it's important to note that the increases in both volume and operating margin drove strong cash generation in 2021. And although we ended the year with more cash than we originally guided to, we still spent over GBP 1 billion in cash on land in the year. On exact [ lowland ] spend in '22 as we migrate to a replacement basis, and that to be offset by increased with investment as we grow our outlook position, but even so, we still expect to generate strong operating cash inflows in 2022. In terms of the balance sheet, we're starting this year with over GBP 0.5 billion more land than this time last year and about GBP 100 million less with, and overall net assets of around GBP 4.3 billion. And if you apply our ordinary dividend policy at 7.5% of net assets, that alone would generate a dividend yield of getting towards 6% this calendar year based on Friday's closing price subject, of course, to shareholder approval. So when you consider that together with the strength of the landbank, the pipeline of outlets it provides, what that means for volumes in 2023 and beyond and the cash that the business will generate as a result, it's easy to see where our confidence in delivering sustained shareholder value comes from.

Thanks, Chris. Can we open up for questions, please, Maxine.

[Operator Instructions] Our first question comes from Brijesh Siya from HSBC.

I have 2 questions. My first one is on outlet growth. So in first half you said around 37 new outlets opened and by early November it was 67. If you could tell us what was the number for full year 2021 and your expectation for 2022 in terms of average outlet it would be and what does that mean in terms of completion growth for 2022? And my second question is on -- sorry, okay, carry on.

No, no, carry on, Brijesh. I wasn't sure if that were your 2 questions or if you got your carry on.

Sorry. So I have another on the side buyback. So has the Board kind of decided what kind of criteria they're going to look into when they kind of [ do ] in what amount of cash that will be used for the share buyback?

Okay. Thank you. I'll leave Chris to pick up the first part of the outlook question on specific growth numbers. I think looking at 2022, we've been very clear, I think, through sort of the course of last year and from the point of the capital raise that the outlook growth of setting us up for 2023 completions rather than 2022. So we actually are in a strong position for our volume expectations and the volume guidance we've given you for 2022 from our existing outlets and certainly from those that are sort of already have planning. So we're not exposed in terms of volume risk in a meaningful way this year to that outlook growth. And that's obviously consistent with the outlook growth coming in the latter part of the year, setting us up for next year. So I'm not going to give you specific guidance. We expect sort of outlooks to remain pretty stable through the next few months, but then start to grow later in the year. But when you look at our order book and sort of where our outlooks are when we look side by side, the kind of level of growth that we talked about for this year, which we have always said would be relatively low in the sort of low single digits. We're in a good place of existing outlets to deliver that. It's the outlook growth through the course of the year to deliver completions for next year. And, Chris, there was a couple of specifics on outlook numbers.

Yes. So obviously, the average outlook in 2021 was 225. We started this year with a few more at 228. I think I'm probably repeating what Pete said, but I'm expecting that to stay, so a pretty flat between now and the half year because the market is strong and sort of sales rates are likely to be reasonably strong, too. And we're continuing to make really good progress with the planning. We still expect to show that net growth in outlet in half 2 weighted towards the end of the year. I think, Brijesh, you might have been asking about something we disclosed at the end of November, which was the number of outlets that we've sold out and therefore, are not counted as outlets anymore, so not counted as outlets in the 228. We had 42 outlets that were sold out in that status at the year-end.

Thank you. And moving on to the share buyback question, Brijesh. I think I can answer part of the question sort of today, which is sort of how we will think about the quantum. And I'm not going to go into it in any detail. So any supplementary questions, I'll have to defer to the prelims. But I think sort of our take is the amount of capital that we see available is a similar sort of approach to how we have looked at our cash returns over the course of the last few years. We look at our current land investment, our expectation of current sort of performance and near-term need for investment. So in an environment where we were expecting to grow the landbank, which is not materially where we'd expect to be as we go through this year and we'd obviously set that aside. But looking at that near-term investment is looking at that, and that's what defines the amount of capital that we return. But I think I would reiterate, I'm sure we will at the prelims reiterate the comments that we have made consistently over the last few years, that we believe that a housebuilder should have a strong balance sheet, both because of the underlying cyclical nature of the business and the opportunity to be sort of opportunistic with land. So we expect that to be excess capital. We expect that to be a normal part of the business's delivery over the next few years, and we'll be returning it, but with retaining a cautious balance sheet. Should we move on to next questions?

Our next question comes from Aynsley Lammin from Investec.

Pete, Chris, just 2 questions from me, please. First of all, I wondered if you could give a bit more on what you expect for build cost inflation for '22 and maybe draw a bit into kind of labor and materials within that? And the second question, just on cladding, and can I just clarify, essentially, what you're saying is even if the government pushes the whole GBP 4 billion repair bill that they've kind of tabled on to the developers only. The provision you've made, you're comfortable that, that would cover repair work you would need to make within that GBP 4 billion if it doesn't -- the kind of scope doesn't widen out to maybe material suppliers or contractors, for example?

On build cost inflation, as I touched on the materials side, we see some softening of the pressure, but it's still above normal levels. I think, we all across the sector expect sort of some of the wage inflation we've seen in the wider economy to impact on the sector during this year. So I've gut feel and I'd say there's a gut feel rather than formal guidance at this stage, but the 5% level that we saw in 2021 is a reasonable estimate of 2022, but obviously, as we go through the next few months, we'll be getting new data to sort of firm that up and we'll tell you if it changes. But we think that's a reasonable view here today. And certainly, what we're seeing at the moment, both in forward in terms of the carryforward sales price growth from last year that's in the order book and in current sales and the ongoing sales price growth means we're reasonably comfortable with the underlying guidance that we expect the sales price growth to offset that cost inflation. We're not flagging any change in our marketing guidance because of those 2 moving parts. On cladding, there are 2 very different things there. Yes, we are very clear with the responsibility we believe we have to people who live in Taylor Wimpey buildings. And so we believe our provision is right for those buildings. I think in terms of any government wider effort, particularly tax-driven to recover further funds from the sector as a whole, we will absolutely be arguing the point about the commitment we've made and that we are taking responsibility for any issues that relate to Taylor Wimpey. I think you will understand fully that sort of none of us really know where the GBP 4 billion number comes from. And therefore, it's very hard for us to make a definitive commitment if government has a wider push. I think we all, I think, perfectly reasonably expect that government should be going back to the wider industry. But we will recognize the fact that housebuilders are large businesses that are public and very visible. So it's not possible for me to make a commitment about that, about any wider government initiative. All I can do is talk about the position we are in, in relation to our buildings, and we'll be making that arguments strongly to government.

The next question comes from Will Jones from Redburn.

Three, if I could, please. The first was just whether you'd be able to review what you perceived to be in your like-for-like house price experience through last year, January to December on the private business? And then any help for us this year, I suppose, in terms of mix effects to bear in mind for the P&L? The second one was really just around sales strategy this year. Obviously, you've got a long order book coming into the year. Price is generally rising. The influence perhaps through the year as Help to Buy cutoff points moving into sites. So just wondering, I guess, around that sales rate number, what the optimal approach is for 2022? And then just coming back to the balance sheet, I'll appreciate it's all to be decided ahead of the full year results, but am I right in thinking in the past you have talked about modest adjusted gearing is something you'd be comfortable with when you think about, I guess, net cash [ left on ] creditors?

Great. Thanks, Will. If I defer the last one to you, Chris, and I'll pick up the first 2. On like-for-like house price growth sort of from a spot point at the beginning of the year to the end, between 6% and 7% give or take. I think the number you see on the sort of P&L movement from 2020 to 2021 will be slightly lower because there was a particularly big mix of larger product in the second half of 2020. Post lockdown, you saw that dynamic being more material. I'd say that's still there a little bit in 2021, but we expect it to be in 2022 as well. To me, we've returned to what I would say is a normal mix through the course of this year where with the larger product haven't been relatively suppressed through the early Brexit years and then almost bouncing back very strongly immediately post sort of the first lockdown. And now we're selling, as I would say, more or less our average product represents what's in our P&L for 2021. So I wouldn't expect there to be a big mix shift from 2021 to 2022. I think we're at a normal level. And so sort of continue to see some price growth today. Wouldn't give you a sort of a formal forecast, but I think we'd be optimistic to think that it was the 6% to 7% level, but I'd be very surprised if it's not more than the 2% to 3% level unless the market changes materially due to some external factor during the course of the year. And on sales strategy, you're right. I mean in an environment where sort of new outlets to a premium sales are relatively straightforward to achieve and build is challenged, then I don't think it takes a genius to work out with our strategy will be weighted towards price over volume and therefore, price over sales rate. So we'd be quite comfortable if the sales rate came down a little bit. And as I say, I still see our order book at the longer end of what we need and what is right but there is still a weather eye on Help to Buy and new sales from Help to Buy effectively coming to an end in the autumn. And so sort of where we'll be pushing and to get the right price making sure that sort of we make the most of the market conditions are there, particularly with the cost inflation, a weighting towards price over volume, but wanted to keep a reasonably long order book by normal standards until we see how the Help to Buy exit actually performs. Yes, Chris, the balance sheet question.

Yes. So I think I've said before, well, planned [ outlets ] have sort of fixed maturities, the majority falling due in the sort of short to medium term. So we don't see that it's sort of appropriate for them to finance land. So our approach is really to maintain adjusted gearing at low levels to maintain some resilience and financial strength as you go through the cycle.

Our next question comes from Chris Millington from Numis.

Pete, Chris, just ask the first one just on the profile of completions through FY '21, particularly with regards to that Q4 weighting, obviously, you came out prior to the pandemic. And perhaps you could just comment how that's likely to evolve into 2022. The second one is you just -- you sounded quite confident about your position on planning. I just wondered if you could elaborate a little bit further and maybe just give us a feel as to what proportion of plots we've got planning for versus your expectations this year? And then the final one is just on price versus cost. And I appreciate you probably don't want to go too far on this. But a lot of the commentary seems to be about an offsetting scenario, whereas the numbers you're painting that seem to point to quite a big margin tailwind. I mean, perhaps you could just comment if there's any sort of offsetting taxes with regard to kind of the price versus cost dynamic and why it shouldn't feed through to that sort of margin growth we'd usually expect?

Thanks, Chris. I think I captured all of those as possible. I might come back to you, but I think probably the second question will go to Chris and he may have got the detail of that. I think on the the '21 -- 2020, '21 sort of balanced through the year. We obviously don't want to get back to the sort of quarter 4 weighting we were back in 2019. And we openly said that wasn't where we wanted to be, and that we just have too much volume in that final quarter. We've got the business under pressure. But at the same time, 2021 was extreme the other way because we obviously had a big carry-through of the quarter 4 plots that were delayed from 2020. So we had a very, very favorable first half, second half balance and we would normally expect to see a bigger balance in the second year. So I think you will see this year, nothing like 2021 in terms of the first half, second half balance but more normal than last year. So we'd expect first half volumes to probably be below last year. We'll see the growth in the second half. I'll pick up the price cost tailwind and let sort of Chris pick up the sort of planning and outlook position and where we are for plots this year. I think in principle, you're right, we could see sort of a tailwind from that balance. And I think certainly, if it's there, then tactically, we want to take advantage of it. I think at the moment, we're all -- and I think quite rightly, in the second half of this year, as shown across the sector, we were quite cautious in our first half guidance sort of given what we -- because you couldn't tell how the cost and material dynamic was going to go. And it put sort of -- I think we're right to be because it lets us run the year properly and that our teams delivered not just the volume that we're expecting, but the quality as well. And so what we don't want to do is put a lot of pressure on them. There is some upside if that price cost balance materializes, but we're in a really uncertain environment still, particularly on the material side. So it's there. It's probably there in late this year sort of run into next year. But it just doesn't feel responsible to call it out now when there's so many other pressures. And we are seeing the changing regulations. The cost of the new partner, [ LNF ] coming in. We've got good estimates, but it still needs to be executed. So in the balance, we think our guidance is in the right place. But from the pure dynamic of the market, I think there's a bit of upside if sort of that comes through as we currently expect.

Yes. And Chris, I think your outlook question was targeted at security of volume for 2022. And as we sort of came into the year and looking forward at that point, over 95% of this year's completions were on from sites that we were already on. So actually, very, very small percentage for this time of year risk associated with outlet openings for this year's volumes.

Our next question comes from Rajesh Patki from JPMorgan.

I've got 2 questions, please. The first one is on the cash position, which came in ahead of your expectations. Just to understand that better, apart from timing of land -- land investment, I mean, is there any other moving part that you would like to highlight at this stage? And secondly, the mix of affordable units in the overall group completion was pretty low at 18%. Where do you see that ending up this year? And do you see the group ASP level holding despite this negative mix impact if the mix of affordable units goes up?

Do you want to take the cash one, Chris? Or do you want to take both?

Yes, I'm happy to. So just on the cash, yes, I mean the 2020 improvement compared to guidance was due mainly to the land spend, but also to strong working capital management and also the fact that it's sort of reasonably difficult to spend as much on WIP as we would like to due to the material and sort of labor availability. And as I mentioned earlier, we entered the WIP balance about GBP 100 million lighter than the end of last year. In terms of the affordable mix, I mean, we ended up -- if you exclude JVs, we ended up at 17.6%. And actually, we've guided to 17%. So it's very consistent with our guidance. And going forward, yes, we'd expect it to return to sort of a more normal level around about the 20% mark for 2022. And you're quite right in terms of blended selling prices then obviously that will reduce and therefore, the year-on-year blended average selling price will be reasonably flat.

Our next question comes from Emily Biddulph from Credit Suisse.

I've got 3 questions, please. The first one is just on the kind of the ASPs in the private order book in sort of where the volume sits? And secondly, I just wanted to come back on Chris's comments on the cash demand for the business in the coming year. I think you sort of effectively said land commitments from now on, you'll be at a replacement level. But for the coming years, do you still see that played on land are still higher than the replacement levels. But relative to this year, sort of the WIP increase year-on-year will be higher and the land investment will be lower. Should we assume that the 2 effectively offset one another and the sort of increase in inventory be similar? Or is it sort of fair to assume that it will still be less than it was in 2021? And what are the cash demands, I guess, on the business that you should bear in mind? Where does the sort of fire safety provision fit and sort of what the reasonable assumption for cash outflow for that for the coming year?

Thanks, Emily, and I hope you are well, too. Just on the land investment, if I can pick up 1 piece because I may have sort of not been as clear as I should have been. When I said we're at more of a replacement level, I was talking about at the front end. And look, yes, so there's a number of new land exercise, a number of new approvals that we're expecting is broadly balanced. We are still -- and as we always have been expecting to see some growth in the landbank as deals we've done flow-through. And there will continue to be some sort of cash outflow over and above normal land investment through the course of 2022. And you can see some of that in the elevated land creditors and some of that in plots that are controlled. So my comment was more about the front end. I think it will be the end of this year that we're more or less a balance sheet neutral position, which is always why our view would be we'd go back into having sort of a meaningful additional cash return this year, but it wouldn't be a full year but next year 2023 will be the first full year where we're back to full sort of balance between cash coming in and cash coming out. And Chris, giving the chance for you to pick up the specific on the order book selling price.

Yes. So I mean, the selling price in the order book and if you divide one by other in the statement is up 1%. Emily, were you specifically asking about the private?

It's interesting -- the private components.

Yes, yes. So that's up 4.6% year-on-year. And just on the cash question, Emily, we will provide an update on the various elements of the cash guidance at the prelims when we announced the quantum on the excess capital returns.

And Emily, if you take that sort of order book selling price sort of then just think about comment earlier that average selling price from January '21 to December '21 went up 6% and 7%, but the mix at the end of '20 -- sort of 2020 was particularly weighted towards larger plots and now it's more normalized. That's where you get the 4.6% price uplift. You can sort of feel more or less what's going on there in the dynamic.

[Operator Instructions] Our next question comes from Gavin Jago from Barclays.

Just a few, if I could, please. First one is just to back on the cladding situation and, I guess, [ Michael ] goes for you to look like 30 years. And I guess what work have you done at these early stages, I think what might fall into scope in terms of what was being built in the 90s by George Wimpey and Taylor Woodrow? Second was just around deposit unlock. And just wondering if you've got any stats you can share around how much usage that has had in the regions where, I guess, the price cuts under Help to Buy are quite restrictive for your product and where the deposits are not going started to take up some of that flat? And then the final one was just on land creditors. If it's in the statement I haven't seen, I don't think, but if you just put a number on that at the year-end, please?

I'll leave the last 1 to Chris, and I'll pick up the first 2. It is still early to have gone back to 30 years. We haven't done a full-detailed exercise, but, I think, there are 2 or 3 areas of comfort that I can give you. We chose 20 years sort of because we felt it was the right length of time, not because there was a big weight of problems before that. In fact, to Chris and my knowledge, we've not had a single customer issue with a mortgage, with an EWS1 form relating to a building prior to 2000. So there was a reason why 20 years felt right. And when I go back and I joined the business around 20 years ago, sort of on the turn of the millennium, god that makes me sound old. Sort of -- I go back before that, the McLean business, which was the biggest part of the George Wimpey business was very much low-rise housing. The Bryant business and the [ Tawnywood ] Homes business were also very much low-rise housing prior to their merger. And so the only part of the business was that had any kind of mid-rise was Wimpey Homes. And certainly, ACM didn't really exist as a product. So I think what I'm trying to say to you is -- I could not categorically say today there could not be a building in the '90s. But we don't think that suddenly the scale of the cost balloons if 30 years becomes the accepted norm, if you see what I mean. I couldn't say it was 0, but it couldn't -- not suddenly expecting it to change dramatically because of that. And I go back to -- we've really had no issues raised by customers or building owners in buildings on that period. And then specifically on deposit unlock. We haven't been driving it hard, sort of helped by still there in the marketplace sort of it signed off, it's available. We haven't, in all honesty, seen enough of a challenge from the price gaps for us to need use deposit unlock, which obviously has a cost and is, therefore, a choice that we would challenge our businesses to use carefully. So we haven't been pushing an uptake. And therefore, it's too early for us to tell you that we think it will look like X, Y or Z. It's there as a useful tool, but it's not needed yet and we don't want our teams to use it unless they need it.

And on the land creditors, I'd expect when we get to March, we'll be reporting year-end land creditors, just in excess of GBP 800 million.

[Operator Instructions] Our next question comes from Ami Galla from Citigroup.

Just 2 questions from me. The first one is on the land market. I mean if you could give us some color in terms of what's happening to land price inflation? And is -- are the intake margins in the sector broadly similar to what they were normally pre-pandemic? And the second one really is on the sort of -- as you -- as we think about the new sites that are going to be opened in the second half of '22, is there any change in the natural absorption rate in the business '24 onwards?

So thanks, Ami. And on the land market, I mean we have said before, and I touched very briefly. It has undoubtedly tightened through the course of this year and the planning dynamic that we see sort of will also add to that because we can see peers who are short of outlets to fill their plans. I think the sector is still being responsible in how it's buying land. So we're not seeing -- we're definitely seeing land price inflation. But obviously, in an inflationary housing market, you would expect to see that. But I think we're not seeing kind of material suppression of intake margins. I think what -- you do go back to, though, in that environment, is having to be very clear about the merits of each site, sort of strategic land starts to become more critical again, which is obviously a strength for the business. And I think as we've talked about many times over the last 2 to 3 years, the balance between larger sites where there's less competition and smaller sites is key. And we're very clear we want to buy a mix sort of, but there will fairly clearly be a differential in the margin on acquisition between those 2 types of sites. So you've got to sort of take your choice through that and maintain a balance in the business. And it's why the comment in the statement that we're pleased that we've seen -- continue to see smaller sites acquired by the teams. That continues to be key, but also some larger ones as well. And sorry, could you repeat the second question?

I was just thinking, as we think about the new sites that get opened in the second half of '22, do the average private sales rate in the business, which was typically a function of larger sites, does that mix shift that slightly lower in the future years?

So I think, it does flow on from the previous answer. Not massively. I think sort of if you went back to 2019, we had a higher sales rate, and we said at the time, higher than we felt was quite right in the conditions at that point. So we don't expect to be back at that level, but the sales rate that we've been running out through the last 12 months, we see as a reasonable reflection of the right thing to do. You have to remember that we have a different way of counting outlets to some of our peers, particularly the 2 bigger peers who have 2 brands. So we will often have 1 outlet with a higher sales rate on a site, whereas they may have 2 outlets with different brands with individually lower sales rate. But the total level of competition on our site is no greater. So that's what tends to lead to us to having a higher sales rate is the lack of 2 brands rather than any different view on the pace you run the site overall. So sort of I don't see it changing materially as we go through the next couple of years, if market conditions are stable. I think that change already came between 2019 and today effectively.

Our final question comes from Arnaud Lehmann from Bank of America.

I missed the beginning of the call, so apologies if my questions have already been asked. Firstly, a question for Pete. You announced your upcoming step-down as CEO soon. Can you give us a bit of color around your decision? Is that a personal life decision? Or is it anything related to the business? Secondly, I guess, one of your shareholders has made a case that your margin should be, I guess, in the mid-20s rather than the low 20s, if I remember the comments well. I appreciate you might not want to discuss every conversation you have with your shareholders. But in principle, do you think there could be upside to your medium-term margin guidance?

So -- and thank you, Arnaud. I mean, on the personal level, sort of very comfortable to talk about that. I mean, obviously, I've been in the job for a long time. It's been my plan to leave for some time now, and that my original plan would have been to leave around my 50th birthday, which was in August 2020. But a combination of sort of the necessary Chairman change and making sure that we balance that right and then the pandemic, and effectively we pushed that back. But the Board and I have then been discussing it, particularly between Irene, our new Chairman and I, sort of for some time now. The main drivers, mostly personal in the sense of -- I've been doing it for a long time. I'm looking forward to, first of all, having a rest and spending some time doing far too many hobbies that I don't get a chance to do and then working out what I want to do next career-wise. I certainly don't see it as kind of full retirement, but definitely time for a change. But of course, they're also business related in the sense of you don't do a job like this without having a -- certainly for as long as I've done it without having a real sort of connection with the company and the people in it. So it's been really important to me that we manage it at a time that we think is right for the business, hence not doing it when we're going through a Chairman change or sort of through the early stages of the pandemic. And I think the business is in a very strong place. The land investment that we've made give the business far more momentum than anybody else in the sector. The internal team is of a high quality and it is in a very stable position. And that means that actually, a new CEO, whether internal or external, who takes on that role, has got a rear window when they can get to know the business. They can actually form their own views about what's right, but knowing that the business is moving forward. And I've seen too many times when you've got long-serving CEOs that actually the business totally lacks momentum as they leave, and that's not healthy. So the underlying driver is personal, but the timing is it feels like the right time for the business. And you're right, I would never comment on a discussion with sort of any specific shareholder. I don't think any company would. But in terms of margin direction, if you go back over my comments, we've been clear on our guidance of 21% to 22% for a long period of time. I think that is responsible and sustainable guidance. It's not always easy, sort of, but I think it is deliverable and importantly, it's deliverable sustainably. But I've always been clear if it's come up on this call, there are certain circumstances where it can be a bit better. If you've got the right tailwinds and you manage everything perfectly, it can be a bit better. Can it be 26% sustainable? I don't believe so. And I don't believe that anybody with a broad geographic mix sort of looking sustainably at the business, at quality, at customer service, at people retention can deliver that sort of sustainable level of margin.

We have no further questions, so I'll hand it back to Pete.

Thank you, and thank you for managing the call for us, Maxine. I won't sort of make too much more because conscious lots of questions there, and thank you for that. In a sense, I've already said what I wanted to finish with, I think the business is at a very strong place at this point in time and has a real potential and momentum to deliver a really solid performance in 2022, but actually, the interesting bit there is the real underlying growth in a sector, which is going to be growth constrained because of planning in 2023 and beyond because of the decisions that we've taken on land investment through the pandemic. So thank you very much for your time staying. Look forward to seeing you at the prelims.