Hello everyone, welcome to the Taylor Wimpey trading update. My name is Nadia, I'll be coordinating the call today. If you would like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. I will now hand over to your host, Jennie Daly, CEO to begin. Jenny, please go ahead. Thank you, Nadia. Good morning, everyone. I think it's still acceptable to say Happy New Year. Thank you for joining Chris and I this morning. You'll have already seen our trading statement, so I'll take you through the headlines and then update you on what we saw in the market at the back end of 2022 before opening up for questions. I'm pleased to say that in a more uncertain and challenging market, the business performed well, and we expect to report an operating profit in line with consensus and a strong margin performance, benefiting from our focus on driving price in the year and our commitment to improve cost discipline across the business. As you'll recall, in November, we guided two group completions broadly in line with 2021, which we have delivered. It's went to improve cost discipline across the business. As you'll recall, in November, we guided two group completions broadly in line with 2021, which we have delivered. It's worth reiterating that this incorporates slightly lower U.K. private completions and a bit more from Spain and JVs. Given the market backdrop, we're very pleased with this. As you know, by the second half, we were very cautious on the land market, both reflecting the strength of our land positions and what we saw as unattractive pricing given market conditions. This has resulted in significantly reduced land commitments in recent months, and we ended the year with a similar number of land approvals to the half year and a land bank that has reduced slightly to 83,000. This is clearly a choice which we made, but one we think is right, given the market conditions. As you'll have seen, from the statement, this has supported our year-end cash position, but will of course have some impact on outlet openings in 2023. One of our key strengths is our land bank, and I'm more focused than ever on ensuring we drive value from this strong position. Despite the challenging planning environment, I'm delighted that we've delivered an increase in outlets as guided. We see these additional outlets offering more locations and customer choice as an important benefit coming into the year with lower sales rates. It's fair to say there was a lot happening around planning in the final weeks of 2022. I'm not going to repeat it here, you'll see our thoughts and concerns arising from the current planning changes in this morning's statement. Just taking you back to May, in my first update, I talked about our having a very clear focus on operational excellence and efficiency. This focus has positioned us well as we face into a more uncertain environment. We've acted quickly to mitigate risk using all available levers, including a freeze on recruitment, significantly reduced land spend, and increased management controls around spend and investment, including WIP releases. We've announced today as part of this operational focus and in light of market environment, that we have entered into consultation with a number of our employees on a series of proposed changes. This includes proposed changes identified as part of our ongoing drive to increase operational efficiency, as well as others which, if implemented, would reduce our overheads to reflect market conditions. I think importantly, none of these proposed changes would affect our existing market coverage, our ability to deliver volumes from our land bank or strategic pipeline, or importantly, to deliver a high quality product and service to our customers. They would ensure that we are a leaner, fitter, more efficient, and a more resilient business. Should the proposed changes go ahead post-consultation, these would be expected to generate annualized savings in the region of GBP 20 million, with cost to achieve circa GBP 8 million. Now turning to current trading. In terms of the market since we last spoke with you on the ninth of November, there has been little underlying change, which probably won't come as too much of a surprise. Having obviously been a quiet period in the run-up to Christmas, which is a trend seen every year, and we're just a couple of weeks in to January. I thought that it would be helpful to give you some additional data points on net sales rates and cancellations. As we updated you at the half year, sales for the first four weeks of the second half were 0.57, with a cancellation rate of 19%. Sales for the next eight weeks up to the second half were 0.57, with a cancellation rate of 19%. Sales for the next eight weeks up to the mini-Budget of 23rd September were 0.55, with a cancellation rate of 23%. Our net sales for the six weeks post the mini-Budget up to our update on the 9th of November were 0.43, with a cancellation rate of 29%. For the eight weeks from the trading update to the end of the year, sales were 0.4 with a cancellation rate of 21%. We know that many of our customers are still keen and have a desire to move. We kicked off our new campaign, Let us Take Care of It, on Boxing Day, which you can see on our website. Whilst it's a relatively short period, just to give you a bit of a flavor, while appointments booked via our website over Christmas were down year-over-year, total appointments were up overall. This was really the result of the very proactive efforts of our sales teams who directly booked more than twice as many appointments than last Christmas. We also saw an increase in walk-ins over Christmas as we stepped up our marketing efforts. Overall, though, you won't be surprised to hear me say that conversion, that interest is taking much longer. Looking at other lead indicators, website sessions are currently running pretty similar to this time last year, and within that, organic traffic is down by about a third, but we've driven an increase in paid media to make up the difference. Our customers are telling us, unsurprisingly, that the key factor in their decision-making continues to be the well-publicized cost of living challenges, mortgage rate rises, and general economic outlook, all weighing on sentiment and feeding into increased caution from customers regarding ultimate commitment. We remain very confident in the quality of our locations and our product. What is critical now is for us to stay laser-focused on sales and to keep very close to our customers at all stages of the order book. As you know, we refreshed our sales training last year for selling in a more difficult market, and our teams remain focused on maximizing our leads and providing the best possible customer service. With the important spring selling season approaching, I believe our teams across the business are very well prepared. We are employing targeted incentives, this has become a bigger feature across the market in the final quarter. Incentives, as I've said previously, are not a silver bullet, so we need to constantly assess the effective application of incentives and tightly control them, so we're not giving away margin without a sales benefit. Another critical element, of course, is the mortgage market, where we continue to see a good appetite to lend with the banks in good financial health. As you know, rates went up substantially in the third quarter, but with lenders having already factored in above peak base rate expectations, we continue to see mortgage rates reduce. For example, the Halifax's 75% LTV two-year fixed is now at 4.95%, and its five-year fixed at 4.55% on the same basis. Moving on, we will, of course, update you on the board's decision on dividend at the full year results on the 2nd of March. It's worth reiterating our ordinary dividend policy here, which is to pay out 7.5% of net assets or at least GBP 250 million. This is deliberately designed to provide investors with visibility of a reliable dividend throughout the cycle. As you know, our dividend policy has been stress tested to withstand conditions beyond what we would consider a normal downturn. Despite the economic backdrop, long-term sustainability and value add to the business remains a top priority for all of us at Taylor Wimpey. We have made excellent progress on our net zero transition plan, we have now submitted our net zero targets to the Science-Based Targets initiative for independent assessment. For all of us at Taylor Wimpey, we have made excellent progress on our net zero transition plan, and we have now submitted our net zero targets to the Science-Based Targets initiative for independent assessment. To conclude, whilst current conditions are uncertain, we face into 2023 in a strong position with a very strong balance sheet, excellent land bank, an increased number of sites in high-quality locations, and tight operational discipline throughout the business. We remain completely focused on this, ready and able to deal with whatever the market conditions we see, whilst remaining agile and alive to opportunities should they emerge. Hopefully, that's been helpful. Chris and I are now happy to take your questions. Thank you. If you'd like to ask a question today, please press star followed by one on your telephone keypads. If you choose to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question today goes to Ami Galla of Citigroup. Amy, please your headline is open. Yeah, happy new year. Thanks for the opportunity. I have a couple of questions. The first one, can you give us some color on the profile of buyers that you've seen in Q4? The sort of LTVs that they're using, and also some regional differences that you're seeing in the market over the Q4. The last one I had was just in terms of the price points that you're see in the most difficult market conditions, if you can give us some more flavor around that. Thank you. Morning, Ami. Yeah, quite a bit in there. I mean, from a buyer profile perspective, it's really hard for us to segment, you know, over that short period. I mean, we've had probably about 35% of our completions over 2022 were to first-time buyers, about 40% to second-time buyers, and a very low, you know, number to investors. We haven't really seen that move significantly. Regional differences, I think in November, I said, you know, on a relative basis, the various regions where, you know, we're performing in, you know, in terms of what you would expect. I think probably in some areas where there's a heavy reliance on first-time buyers and there was more significant Help to Buy, a little bit more, but nothing that I'd really want to call out there. Again, you know, on price point, really hard for me to unpick that at the moment. You know, clearly, the availability of high loan-to-values are affecting first-time buyers, you know, coming into the final quarter. I don't think that's a surprise for you. Thank you. Thank you. The next question goes to Aynsley Lammin of Investec. Aynsley, please go ahead. Your line is open. Thanks very much. Morning, everybody. Just, I think I've got three actually. Wondered if, firstly, I may have missed this, but if you could give the private order book, what that was at the end of the year, and what it was kind of down year-on-year. Secondly, just interested, any comments on kind of building materials, labor cost inflation, trends you're seeing there, what you expect for this year. Thirdly, just on site numbers, obviously 232 averaged last year. What's your kind of view and tactics around sites? Looking at kind of if the sales rate stays at 0.4 or 0.5, you will still be bringing on more sites to support volume or will you be more cautious given the kind of cash implication? Just interested to hear your thoughts around how you're managing that. Thanks. Yeah. Okay. You'll still be bringing on more sites to support volume, or will you be more cautious given the kind of cash implication? Just interested to hear your thoughts around how you're managing that. Thanks. Yeah. Okay. Could Aynsley, you just repeat your second question for me, please? Second one is just on build costs, for building materials and labor, what you're seeing, trends you expect. Is there a bit more tension on kind of negotiations? Are you pushing back a bit more on building materials, et cetera? Just interested to hear your thoughts there. Yeah. Okay. Well, look, I'll cover the order book and outlets and pass to Chris on the build cost. On private order book, we've got... Let me just find it. Yeah. 2,943 private order books. That's 45% down, Aynsley. Of that, 53% is exchanged, so, you know, a decent exchange level. On outlets, we're not going to guide into 2023 on outlets. In terms of bringing sites forward, you know, there are very few instances where I would think it's a good decision not to bring a site forward. We are managing WIP really closely. We've got good management controls in place. Clearly the sort of infrastructure, the opening infrastructure, cost is something for us to look at. You know, for the vast majority, we would continue to open sites even if sales rates were low. Chris, on build cost. Yeah. Morning, Aynsley. When we reported the half-year results in August, you know, I said that the prevailing annualized rate of build cost inflation had increased to 9%-10%. If I look back 12 months from today, that 9%-10% range remains pretty accurate. Where build cost inflation goes from here is a lot harder to sort of pin down. Some of the sort of unknown factors include, you know, the impact on Scandinavian timber pricing due to the absence of supply from Russia and Belarus. You've also got what happens to U.K. energy costs with the end of government support and how we unpick that given some generally opaque supplier hedging policies. Although, you know, obviously gas pricing is significantly down on the highs of last year. Then you've got wider wage inflation, which I think is still to fully flow through for some materials. Clearly we should see some easing in subcontractor wage inflation as subcontractor availability increases. You know, currently there are anecdotal localized examples of that, but nothing that, you know, statistically consistent across the business that I would want to point to. Obviously we'll expect to update you further on that when we get to March. Great. Thank you. Thank you. The next question goes to Marcus Cole of UBS. Marcus, please go ahead. Your line is open. Hi. Good morning. I think I've got three questions as well. I'm just wondering if you could give the fixed cost in the business as we think about operational leverage. The second one, I was just wondering what incentives are currently doing in terms of percentage of sales. Lastly, I was just wondering what the land creditor unwind is this year. I think previously you said GBP 350, but just wanted to double-check that. Thanks. Okay. I'll take the incentives question, Marcus, and then I'll pass over to Chris. Okay. I'll take the incentives question, Marcus, and then I'll pass over to Chris on the fixed costs and land creditor unwind. I mean, I've said, you know, previously that, you know, we're very controlled and targeted on incentives, and that, you know, very much sort of remains our focus. Incentives use generally has been quite low. I think the average incentive for 2022 was around 2.3%. That was actually lower than our incentives for 2021. You know, you can see how strongly we were pushing price at the start of the year. They have ticked up towards the end of the year. You know, we're continuing to really play them on a tactical basis. Yeah. Marcus, you know, as this is just a trading update, I'm not gonna go into any detail, but for very broad brush purposes, it wouldn't be far wrong to assume about GBP 300 million of fixed costs in total with about a quarter of those sitting in gross margin, which are things like, you know, show home depreciation, salespeople, maintenance costs. The balance then would sit in admin expenses. In terms of land creditors, they peaked back in June at GBP 844 million. As expected, due to the reduction in land buying in the second half, they are more than GBP 100 billion less than at that peak. Really, you're talking about GBP 720 million-GBP 730 million, and approximately half of that balance, will be due within one year. Marcus? Yeah. Thank you very much. Okay. Thank you. Our next question goes to Will Jones of Redburn. Will, please go ahead. Your line is open. Morning. Thanks. I'll try three if that's okay as well. First, just coming back to the sales rate, I think in Q4, that 0.4 number, which looks somewhat firmer than a couple of peer numbers reported this week. Just checking, is there anything we need to be aware of there around potential use of bulk sales, or is it a fairly clean figure, and would you highlight any great shift through the course of above and beyond normal seasonality? The second story, just exploring that last few weeks a month as well. Just thank you for the data around customer leads, appointment and websites. If you're looking at the year-on-year picture, if you've been giving us that same shape, if you like, in November and October, was it different year-on-year at Christmas, or is it more or less as you were? The last one is just a technical one, but when we think about the obviously big drop in the private volumes in the order book compared to relative stability on affordable, how should we think about the percentage of the volume that's likely in affordable this year? Will it step up, or will it actually track the private, do you think? Thanks. Okay. I mean, first of all, on sales rate, you know, that final reporting period at 0.4, you know, our teams worked really hard for that. Our sites are in really good, really good shape. You know, we've ensured that our website, you know, our development websites and plot details are up to date. You know, I'd really stress that, you know, quite a strong effort right across the business to deliver that. You're looking at bulk sales. I mean, overall in the year, not nothing really to call out, you know, relatively low numbers. It is fair to say, Will, that there will be bulk sales in that final reporting period. I don't have the number to handpick it, so it's less than 0.4, but it would be more, I think, than point in that final reporting period. I don't have the number to handpick it, so it's less than 0.4, but it would be more, I think, than 0.3, if that's if that's helpful. I mean, again, on customer leads, I don't have the breakdown today for sort of October, November. We've continued to see really strong early leads. We did, and I think I said in November, had started to see a drop-off in appointments, at our sales centers, you know, through the normal period, into late autumn that we would expect to see a tail off. You know, really reinforced the very pleasing level of activity that we've seen alongside our Christmas and sort of Boxing Day campaign. Just on private volumes and and affordable, Chris, do you. Yeah. You know, pick that up for me. Yes. Obviously, the affordable mix was 21% in 2022. I mean, I would have expected in sort of normal sort of market conditions for it to be around the 21%-22% level. I think to some extent the outcome is gonna be a function of private sales in 2023, so it might edge up a little bit. If private sales are weaker, you know, you might be talking, you know, in the range 22%-24%, depending on, you know, the strength of those private sales. It's not like you can just completely switch to affordable because, you know, in vast majority of cases, there are pepper potters around the sites. Yeah, you could see an increase, but it's not gonna be a massive increase in the mix. Understood. Thank you. Thank you. The next question goes to Anthony Manning of Bank of America. Anthony, please go ahead. Your line is open. Hi. Good morning. Thanks for taking my questions. Could you just give us a bit more color around the cost savings plan? When can we expect that to be realized and the phasing of savings over the year? If I could just push you a bit more on the incentives? You mentioned that the sales teams have doubled meetings this year, and you've given them training. What's the messaging you're giving to your sales teams around them to really push sales and what incentives they can go do in that price of nature? Okay. I'll pick up on the incentive points. Chris, will you pick up on the? Yeah. the cost savings? Look, you know, I think the first thing that I'd say, and I mentioned it in my opening remarks, you know, incentives are a tool, but, you know, they're not a silver bullet. You know, so it's important that they're, you know, deployed in a sort of a tactical and targeted basis. That depends, you know, very much on the proceedability of the customer, the stage and build of the plot that's been negotiated and, you know, the age and maturity of the development. You know, we would possibly, and I think Chris might have mentioned this, you know, in the past, new sites that we're just getting started on, it's not likely that we would deliver, you know, significant incentives. An older site, you know, where we're, you know, sort of final build-out, that that might be an area that we can be a little bit more sort of innovative and and forgiving. You know, I want to be really clear, you know, that incentives are a tool. They're not an answer in and of in and of themselves. You know, be really clear, you know, that incentives are a tool. They're not an answer in and of in and of themselves. you know, how are we, how are we, sort of priming our sales teams is exactly around that. It's to understand each individual customer's, sort of preferences. What are the blockers, if any? Where, where are their concerns? Two ensure that we're delivering incentives that then meet those specific, those specific issues. you know, very much a bespoke customer-facing approach to those. we would continue to focus on the really just strong basics of, you know, delivering good site presentation, and, you know, sort of clear and navigable web website, and informed sales teams. Yeah. On the proposed changes, you know, you've got to bear in mind that we are in consultation on those. You know, it's very much dependent on the outcome of that consultation. If they did proceed, then perhaps, you know, say 75% of those annualized savings might be realized in the current year. Very helpful. Thank you. Thank you. The next question goes to Glynis Johnson of Jefferies. Glynis, please go ahead. Your line is open. Thank you. Actually, a little bit of really follow-up on a few of the bits just in terms of incentives. Can you just talk us through the Let Us Take Care of It, just a bit more color in terms of who is eligible for it, what actually you are doing within that? Just, you know, in terms of whether the costs of that are coming as a deduction of selling price, when you're actually putting it through the P&L or whether that's just coming as additional costs? Just a bit more color, just really in terms of what you're seeing on the ground. What is the constraint on customer demand once you get them through the door, once you get them booked that appointment? Is it just that they're waiting for the interest rates level off to make sure they're not, you know, that they're getting the right deal? Is it they're thinking that house prices are gonna come off and therefore they should wait? Is it eligibility for mortgages? Is it just the affordability, and we need to wait for energy costs to come back? You know, what are the real, you know, real-time pushbacks you're getting from those customers who are going, "I need more time"? Yeah. I mean, look, in-incentives, I think that, you know, my response to sort of Arnaud's question about, you know, trying to build a bespoke sort of incentive or a bespoke package around each customer is very much at the heart of the Let Us Take Care of It. You know, if you look at the website, you'll see that it, you know, sort of talks to customers that are both concerned potentially about mortgage payments, but also those who may be more concerned about energy prices and sort of normal bills, for example, or just around, you know, sort of support in an uncertain in an uncertain market. You know, I think that that bespoke approach works really well, works really well for us. You know, as a part of that focus that we have in supporting our customers through all stages in the sales process in these challenging times. On the constraint on sort of customer demand, I think, you know, what we're seeing is, you know, a continuing strong level of customer interest. It's their ability to affect that interest or affect that demand, either through concerns on mortgage availability, around affordability, so, you know, particularly first-time buyers, and, you know, the changes that we've seen with the all mind of Help to Buy, that they need more support in understanding sort of products and affordability. First-time buyers is definitely, you know, an area where that we can see sort of genuine constraint. You know, cost of living, it very much depends, you know, on the nature of the customer, sort of their income profile as to, you know, how significant those particular issues are. I mean, it's been very pleasing, Glynis, you know, in the first few weeks of the year to see mortgage interest rates starting to come in. You know, we've seen some really good movement, you know, some very good movement, in fact, at the lower loan-to-value. We would, you know, we would like to see some more movement at those higher loan-to-value levels to support the, those fundamentally important first-time buyers. Can I just go back to Let Us Take Care of It, just so I understand? 'Cause when I look on the website, and, you know, it talks about up to GBP 15,000 deposit, or it talks about a GBP 15,000 mortgage contribution. You know, can you just quantify what Let Us Take Care of It, what are the maximum level of cost that could be? Also, does it come off selling price, or is it extra cost? as a couple of the peers have said over the last couple of days, you know, incentives really are top out at around 5%. And after that, you know, achieving a mortgage becomes more difficult. Lenders tend to, you know, have an issue with any incentives above 5%. And if you know, look at the terms and conditions of many offers across the market, you'll see, you know, that sort of limitation up to there. I mean, what we found, you know, from a marketing perspective, Glynis, which I think is what trying to get at, is often the let's call it the hook in marketing terms. Often the hook that brings a customer to us isn't actually the incentive or the package, let's call it, that we end up with. For example, the, you know, key worker, is something that we know in some of our regions has been really effective in bringing customers, you know, piquing their interest and bringing them to talk to us. Ultimately, when we've, you know, when we've done the reservation, it's been built in a different way. You know, I think I'd really stress that flat incentives, you know, are, you know, they're a tool, but really then we flex around the customer, which is what that, you know, Let us Take Care of It is all about. Okay. Chris, does it come off the selling price? Would a 5% incentive be a 5% lower selling price within this product, or does it come as additional costs? All incentives, Glynis, are a discount to pricing. As Jennie said, you know, we are not, you know, we're not running a blank at 5% discount. You know, it's actually, you know, in the first half of this year, discount levels were remarkably low. Yes, they've sort of increased a little bit post the, you know, the mini-Budget, but, you know, actually still nowhere near on average the 5%. When the value is looking at the valuation, you can look at the valuation less the discount. Yeah. That's right. It's net to. Yeah. It's in the net revenue. Okay, perfect. Thank you. Thank you. The next question goes to Andy Murphy of Edison Research. Andy, please go ahead. Your line is open. Good morning, everybody, and thank you for the time. I've just got one question left. It's really around the land market, and your attitude to land purchases, what you're thinking about, whether you think or whether you're seeing land prices decline, or whether you think they will in fact decline, or whether your view is that, you know, people would tend to sit on their hands and activity this year for the next, say, six to nine land prices decline, or whether you think they will in fact decline, or whether the months will just sort of plateau out, or whether you genuinely think there'll be a recent prices might come down. Interested in your thoughts. Okay. That's sort of a bit of a philosophical one, I think, at this, at this point. Our approach to land, at the moment it remains highly selective. You know, you can see in the, sort of the reporting that, we haven't, you know, haven't increased the number of approvals. We're in a, you know, excellent land position, and therefore, you know, for land to be attractive, it would have to be at, you know, really very attractive, very attractive levels. I wouldn't really have expected the land market to have reset, yet in any event. You know, it does require a degree of, stability, in the sales market that flows back into land. You know, there are multiple other factors as to how much, if any, prices would decline, availability, you know, where the sales market is, you know, landowners, you know, own comfort. You'd expect to see declines where landowners are feeling under a degree of pressure. I think at this point it's fair to say that there's not many feeling pressure and prepared to sort of sit back and watch also. I think we'll continue to monitor it, but we'll be very selective in the coming months. Okay, great. Thank you. Thank you. We have no further questions. I'll hand back to you, Jenny, for any closing remarks. Okay. Well, thanks again for your time this morning. I think we can all agree that we're in uncertain times, but you can see that we're entering this environment in a good place. We've got an excellent land bank and a strong balance sheet. We acted quickly on costs, land, and WIP investment to reflect the lower demand. Once the market is tougher, the business, I think, is operating well, and our increased number of outlets as we enter this year is a key differentiator for Taylor Wimpey in our ability to secure sales in the market. It's challenging, but we've always known that we operate in a cyclical market, and we've run the business with that in mind. Fundamentally, the U.K. has a shortage of housing, and we remain well-placed in the medium to long term in a highly attractive market. Chris and I look forward to speaking with you all again on our full year results on the second of March. Thank you, everybody.