Good morning, and welcome to the Barratt Redrow PLC AGM trading and integration update. This call is being recorded. Today's call is hosted by David Thomas, our Chief Executive, and I will now turn the call over to David. Thank you.
Thank you, John, and good morning, everyone, and thank you for joining us for our first presentation as Barratt Redrow PLC. Mike, our Group CFO, is as usual here with me today, and we will be joined for the Q&A by Steven, our Deputy Chief Executive and Chief Operating Officer, and Matthew Pratt, the Redrow CEO and a Barratt Redrow Group Executive Director. Since we last met, I am absolutely delighted that we've been able to complete the combination with Redrow. We were given CMA clearance on the fourth of October, and since then, we have been working to integrate the two businesses as quickly and smoothly as possible, including having already announced collective consultations on the first office closures.
We are today providing current trading for both Barratt and Redrow from the first of July, and for the combined group from the twenty-second of August, the day after we legally acquired Redrow PLC. We will provide further pro forma financials in December. For clarity, Redrow will be incorporated into the Barratt Redrow figures from the twenty-second of August, the day after the deal legally completed. However, synergies will be measured from the 4 October, the date we received CMA clearance and restrictions on our ability to undertake any integration activity lifted. Let me start by setting out our position as the nation's leading sustainable home builder, followed by a look at our distinct brands and how we can use them to drive revenue and returns. Barratt Redrow is an exceptional UK home builder, leading the industry on quality, service, and sustainability.
As one group, we believe that we are in an even stronger position to grow and deliver enhanced returns and benefits for all of our stakeholders. The first of our strengths is our differentiated brand portfolio, which offers high-quality homes for customers at all stages of life and at different price points. The ability to deploy these brands on the existing land bank, creating additional sales outlets, and also on future land acquired, will help to accelerate delivery and drive growth. Another key strength is our track record of exceptional build quality, customer service, and sustainability, with our customers remaining at the heart of everything we do. Our combined balance sheet with net cash gives us a robust and stable platform to deliver our growth plans and to ensure we remain resilient throughout the housing market cycle.
It will also help us to deliver improved shareholder returns over the medium term. And finally, our highly experienced management teams and sector leading expertise across both Barratt and Redrow will ensure that together, we continue to deliver for all of our stakeholders. This slide illustrates the strength of our credentials on quality, service, and sustainability. All of these credentials are independently assessed, objective measures. The industry leading accreditation shown here are a point of great pride for all of our people, and some of these have been literally decades in the making. They also highlight the similarities and the shared cultures across our business. This is already serving us well as we continue the process of integration, and gives us great confidence in our ability to deliver our plans over the coming months.
Before turning to our brand portfolio and synergy opportunities, I want to provide you with an updated position on the pro forma land bank as at the thirtieth of June, twenty twenty-four. We will, over the next few years, realign Redrow's land portfolio to the Barratt Redrow target length of three and a half years owned and one year of conditional contracts. This realignment will come through multi-branding, which will accelerate completion volumes and controlled and disciplined plot replacement. As a combined group, this is a strong, high quality, and very developable land bank, which positions Barratt Redrow to deliver both growth and sales outlet optimization, which will enhance returns. Whilst we remain committed to holding one of the most efficient land banks in the industry, we are also focused on ensuring we have a strong pipeline of strategic land....
Through our strategic land positions, we have been successful in sourcing plots for our current land bank, a skill shared by Redrow. Through Gladman, we are also present in the promotional land market, where we can choose to bid on this land or unlock the planning value through Gladman securing sales with other developers. Through our strategic land positions and our land promotion business, Gladman, we believe Barratt Redrow holds an unparalleled strategic land position to support our business model over the years ahead. Our brand strategy is a key strength of the combination, and Barratt Redrow has a unique portfolio of high quality, complementary brands. There is a clear differentiation within this portfolio, which will offer customers a wide range of house types and price points, and accelerate delivery on sites. Barratt serves first-time buyers and families.
David Wilson provides beautifully designed homes for mover uppers and families, while Redrow is ideal for premium purchasers and downsizers, and Barratt London is one of the leading residential developers in the capital. Barratt has a strong track record of nurturing and investing in brands that join the group. In 2007, David Wilson joined the Barratt family. Since then, it has grown stronger as a brand and in service and quality, and has increased from 26% to 37% of the group's completions. We have also successfully operated multi-branded sites for 17 years, which stand us in good stead to successfully integrate the Redrow brand and to support its growth. With that, I will now hand over to Mike to take you through the synergies.
Thanks, David. So I'd like to turn now to how we'll drive value from the combination. We're targeting two main areas, both of which will improve our returns. First, we see significant opportunities for revenue synergies. We'll deploy the Barratt and David Wilson brands onto the Redrow land bank, and vice versa, creating additional sales outlets from our existing land bank and improving its efficiency. We can also use the existing Barratt network to take Redrow to parts of the country where they haven't previously been able to operate at sufficient scale. In addition, we can use the brand portfolio flexibly on each development, thinking about the optimum delivery through the mix of brands across private housing, affordable, and PRS homes.
Finally, we'll be more competitive in the land market when procuring larger sites, as we'll now be able to build them out faster by deploying our three complementary brands. Looking next at cost synergies. As you'll recall from February, we're targeting a minimum of GBP 90 million of cost synergies over the coming three years. These will come through procurement, consolidation of our divisional office structure, and reducing our corporate costs. This combination will accelerate growth, and in doing so, enhance returns. We've clear plans for delivering revenue synergies as Barratt Redrow. The foundations of these plans are increased geographical reach and improved land bank efficiency. There are premium locations where we can look to introduce Redrow, including areas in the Northeast of England, Yorkshire, and Scotland. As many of you know, Redrow previously successfully operated in Scotland.
However, the divisional infrastructure needed to support completion volumes from a single brand wasn't efficient enough. Barratt Redrow already has three offices in Scotland into which the Redrow brand can be incorporated, leverage this existing network, and increase delivery. Our differentiated brands will also be utilized to achieve greater land bank efficiency across markets where Redrow and either Barratt or David Wilson already operate. We've already identified sites in the combined portfolio which will benefit from an additional sales outlet, and we expect to add at least 10% or around 45 outlets to our current position over the next three years. This translates into roughly an additional 900 to 1,000 completions every year, once all 45 outlets are open.
Obviously, the timing is subject to timely planning approval, but we expect to bring on thirty additional site sales outlets by FY 2027, and we'll be driving hard to do this earlier wherever possible. Looking forward, with both our scale advantage and our ability to deploy three distinct brands, we have enhanced our ability to bid for larger sites without the need for joint ventures or swaps, in what is generally a less competitive part of the land market. To highlight the benefits of multi-branding, I'm going to talk you through an example of one of our Barratt sites, which we've already identified for dual branding. The site shown here is a typical site within our portfolio.
The estimated sales rate is around 0.55 as a single branded Barratt sales outlet, but this increases to 0.9 when dual branded as Barratt and Redrow, an increase of around 60% on the single branded site. Although there's a slightly higher initial investment in work in progress, there is a positive and material impact on the development's return on capital employed due to the significantly reduced time to complete the site. As shown on the charts on this slide, the benefits of multi-branding are evident across a range of metrics, and even on this average size site, this approach accelerates the completion of the development by over 18 months. This is driven by the increased sales rate achieved by offering a wider range of house types. This increases the asset turn of the development and the resulting return on capital employed.
Our initial guidance in February was at least GBP 90 million of run rate cost synergies by the end of the third year post-completion. With everything we've seen so far, we remain very confident in that estimate. Those cost synergies broadly fall into three buckets: procurement related savings, the optimization of our divisional office structure, and consolidation of central and support functions. Firstly, on procurement, we believe there are significant gains to be made from harmonizing buying terms on existing arrangements and capitalizing on our enhanced scale when negotiating in the future with our suppliers. Secondly, we've already started the optimization of our divisional office structure. Of our 41 divisions, we're proposing to close five initially, with a further four being considered in the coming months. As David mentioned, since CMA clearance less than three weeks ago, we've already announced the collective consultation on the first divisional office closures.
Finally, we'll look at consolidation of central and support functions, including board, senior management, duplicate public company costs, and other third-party costs. In relation to cost synergy delivery, this slide shows the interaction between our run rate savings and what we expect to deliver to profitability in each financial year. We're measuring synergy delivery from the fourth of October, the date of receiving CMA clearance, because until this point, we had restrictions on our ability to share information, and we were prohibited from undertaking any integration activity. The timing of P&L delivery reflects workforce collective consultation periods, the stage transfer of supplier agreements migrating to Barratt Redrow terms, and the necessary IT changes to unlock all of those synergy benefits, and we'll provide a further update on synergy progress with our half year results in February 2025.
As we outlined in February, we've got a clear business model to drive our long-term success as the leading national sustainable home builder. We're going to build thriving communities with homes of exceptional build quality, along with excellent customer service. We're going to build sustainably with a framework for future homes, great places, and better living. And we're going to build the homes this country needs by growing volume and accelerating completions. We'll continue to execute with the same discipline you've seen from both businesses over the past few years, building efficiently and sustainably using modern methods of construction, and maintaining a highly selective and disciplined approach to land buying. The operating framework shown here is as we outlined in February, and we'll give more color on the framework alongside our half year results. And with that, I'll hand back to David.
Thank you, Mike. Moving now to our trading performance, where we're going to look at, first of all, the Barratt standalone performance, and then the combined group's performance post completion of the Redrow acquisition from the twenty-second of August. As you can see, Barratt, on a standalone basis, delivered a private reservation rate at 0.62. This rate is quite normal for the Barratt business at this time of year, although this is up almost 32% on the same period last year, when mortgage interest rates were a significant constraint on reservation activity. Our sales outlets were 17% lower, in line with our expectations and previous guidance. While reservation activity remains sensitive to mortgage rates and consumer confidence, we have traded in line with our expectations.
We were 55% forward sold, broadly in line with the same point last year, and on track to deliver our previous and unchanged standalone guidance. As you can see on the next slide, Barratt Redrow, on a combined basis, from the twenty-second of August 2024 through to the thirteenth of October, a seasonally strong part of the autumn selling season, delivered a private reservation rate at 0.67, up almost 37% on the prior year period at 0.49. I think it is important to highlight that reservation activity in the same period last year was dampened by a run of rising mortgage rates. However, mortgage rates then shifted into a steady decline, which created a strong reservation performance through to Christmas 2023. Our combined sales outlets were 14% lower, but very much in line with both our and Redrow's expectations.
Our combined forward order book sat at £3.165 billion, with a combined private forward sold position at 57%. Again, very much in line with the pro forma position a year ago. This is creating a solid underpin to our combined total home completions guidance of 16,600-17,200 for the year to June 2025. Looking ahead, while customer demand continues to be sensitive to the wider economy, we are beginning to see more stable market conditions, with increased mortgage availability and improved affordability. It will take some time for consumer confidence to fully recover from the macroeconomic headwinds faced over the past two years. But we are encouraged by the solid trading we have experienced over recent weeks. The supply side reforms introduced by the new government will also take time to be fully implemented.
However, we are confident that they will help to unlock the delivery of more high quality, sustainable homes across the UK As we've set out, Barratt Redrow are uniquely well-positioned to meet the needs for new homes of all tenures across the UK, and we are looking forward to unlocking the many opportunities the combined group has ahead of it. As I've said, we expect to deliver total home completions of between 16,600 and 17,200 in FY 2025. In the medium term, reflecting our planned operating structure of 32 divisions, our strong land bank and our plans to drive incremental sales outlets, it is clearly our ambition to drive growth and build back to 22,000 homes per annum.
Our focus in the near term is on achieving a smooth integration of Barratt Redrow, achieving our synergy targets, whilst delivering against our key operational drivers of increasing revenue, controlling costs, maintaining land investment discipline, and continuing to lead the industry on customer service, build quality, and sustainability. So thank you very much for listening. As I said earlier, Steven and Matthew are here for questions, and I'll now pass back to John Messenger.
Thank you, David, and also thank you, Mike. If you've connected via Zoom and would like to ask a question, please click on the Raise Hand icon. When you hear your name, please unmute your microphone before asking your question. We'll now take a couple of moments to collect questions before opening up the line. Our first question is from Gregor Kuglitsch. Gregor, could you please unmute and ask your question? Thank you.
Oh, hi. Good morning. I've got three questions, if I may. So the first one, on that 22,000 target that you just sort of issued, I guess. Can you just give us a sense how quickly you think is a realistic timeframe to get there? Bearing in mind this year, sort of, guidance and sort of the cadence or thereafter. Second question is, can you update us what the net cash expectations are for the combined business? And then maybe a third question, the private ASP in the order book was, I think, quite high, increased, I think, 3% to 4%. Can you just give us any sense whether that is indicative for the combined group's trading or expectation?
Hi, Gregor. Hi, good morning. So if I start off just with some thoughts in terms of the 22,000 home completions, and then I'll pass over to Mike in terms of both net cash and just thoughts on the private ASP and the forward order book. So in terms of the combined home completion position, I mean, I think first of all, Gregor, you know, we've given guidance clearly to June 2025. We've said historically that growth rates in the range of 5% to 10% we believe are achievable. I think it is very, very challenging for the business to run with growth rates beyond 10%, in terms of the process of securing sites, site openings, speed of build, et cetera.
So you know, I think it's in that sort of framework that we would look at future growth. I mean, we're clearly not giving guidance as we move out over the next three to five years. But I think when you look at that and you look at our historic delivery, you can see that twenty-two thousand homes is certainly deliverable in the medium term.
Morning, Gregor. I'll pick up the other two. So on net cash, I think, the way to think about that is the guidance that was previously in place. So we'd guided to around GBP 500 million for FY 2025 standalone. I think Redrow guided to around GBP 200 million. So, you know, we'd expect to be broadly stable on that position, on a combined basis, around, you know, broadly GBP 700 million at the year end. In terms of ASPs, I think there's a little bit of mix effect in that 3% to 4%.
So, you know, again, we'd said just a few weeks ago that we thought there would be a little bit of house price inflation in there, but really the reason it's up three-to-four is a little bit of mix in the round. I don't think we're seeing anything unusual or particularly stronger on underlying pricing than we were previously talking about in September. So, you know, I wouldn't say there's any sort of fundamental change in the position, to be honest.
Thank you.
... Thank you, Mike. We will now take our second question, please, from Chris Millington. Chris, if you can unmute and ask your question. Thank you.
Thanks, John. Morning, everyone. Right, first one I would just like to ask is what your expectations are for the budget. Do you think we're going to get anything on private, or is it mainly going to be affordable? Next one would be, what you're seeing in the land market with regard to your ability to get those 24% gross margins. And then I'd just like to ask around how you're approaching incentives versus gross pricing. Sorry about the echo.
Okay. Hi, Chris. Hi, good morning. No, no problem about the echo. So if I start off in terms of budget, and then I'll pass over to Steven, just to talk about kind of what we're seeing generally in terms of the land market. I mean, on the land market, I'll just touch on that before I pass across to Steven. And then, in terms of incentives, I think Mike will pick up in terms of incentives and what we're seeing on incentives.
So look, in terms of the budget, Chris, I mean, I think to a large extent, I would say that we would see that we've had our, you know, budget news early, as it were, in terms of the government's very early focus on the delivery of more housing and the unlocking of the planning system. So to us, I mean, that is a very substantial benefit for the industry and a very substantial benefit for Barratt Redrow. I think that the area that we will be looking at will just be what the government say with regard to stamp duty. We recognize that there is a stamp duty holiday in place that will come to an end in March 2025.
I think that's probably the main thing that we're looking at, as to whether the government will announce any extension of a stamp duty holiday or whether they will not make any announcement. Overall, for Barratt, I think that is helpful in terms of sentiment, if there is a continuation of the existing stamp duty backdrop. But beyond that, I don't think we have any significant expectations in terms of the budget. Just in terms of the land market, before I pass over to Steven, just to say that, look, the movement of our gross margin increase from 23% to 24% was something we outlined back in February. But I mean, the reality is we're less than three weeks into the combination, and we've got to unlock the synergies.
But Steven can give you a view in terms of what we're seeing in relation to the land market overall.
Yeah. Good morning, Chris. In terms of land market, as you know, we had a good Q3, Q4 last year. We put through something like 12.5 thousand plots on 58 sites. We've seen continued momentum. We've seen a lot of sites coming to the market. Bear in mind, there was very few land sales in the sort of 18 months, previous 18 months, so they're being held back. So we've seen a lot of those sites come through. There's been a number of vendors keen to do deals and enter into contracts before the budget because of potential change in taxation. So we've seen a good flow of land coming through. We're rigorously applying our hurdle rates, which we've published. Good visibility of excellent number of opportunities coming through.
We've got something like about 130 sites on our pipeline over the next few months to make bids on, so there's no shortage of land, and on top of that, we've got some good strategic pull-through planned in the current year. We're expecting something like 5,000 plots from the Barratt portfolio to come through in the next nine months or so, so generally very positive on the land bank. Some good opportunities around and lots of potential, particularly to dual and triple brand sites. A lot of the sites coming through are substantial in size, typically, you know, 500 to 1,000 units, and they're ideal for branding with Redrow, David Wilson and Barratt product, so positive.
Thanks. Thanks, Steven.
Just on incentives, Chris. I mean, I guess it's only six weeks since we were out with year-end results. I don't think anything's really changed in the market since then. So, you know, levels running at around 6%. We've talked about how they've trended up over the last couple of years, but they're pretty stable at the moment, similar levels to where we were in September.
Thanks, Mike. We'll now turn to Clyde. Clyde Lewis, could you please unmute and ask your question? Thank you. Hi, Clyde. Are you able to unmute there?
Apologies. Apologies, I thought I pressed the button. I think I've got three questions, please. Two on synergies, and then one probably on the ROCE targets within the land purchase. Firstly, on synergies. Which of those three parts do you think is the hardest, and which is the easiest to sort of achieve? The second one on synergies was really around, I suppose, best practice optimization, and it's not an area you've sort of split out, but do you think there are opportunities to deliver savings around sort of, again, best practicing between the two different businesses? And the third one was on that ROCE target and given the asset turn changes that you're talking about, have you been tempted to up that ROCE number within your land sort of targets?
Okay, Clyde, hi. Hi, good morning, and Mike will pick up in terms of the ROCE target, and I'll just give a sort of overview in terms of the synergy position. So I think, Clyde, it's kind of difficult, I think, to give a split in terms of, you know, what's hard and what's easy. I mean, we've set out the analysis and split the synergies into three areas, and Mike touched on it. You know, we're very confident with regard to the delivery of that £90 million. So I think that definition of hard and easy, I think, is a little difficult.
But I'd maybe add a little bit of color to say that, you know, I think clearly for everyone, anything that is involving our teams, the closure of divisional offices, is very, very difficult. Very difficult for the people in the divisional offices, very difficult for our leadership team. So I think you've got to say that that is the hard part. I think the easy part is where we have exactly the same corporate costs, and therefore, the combination of the business just simply eliminates one of those corporate costs. And it's always difficult to choose an example in those areas in case we upset a particular supplier. But I don't think anyone would mind us calling out something like audit costs, where, clearly there is just an easy duplication of costs.
And so that's how I would tend to talk about hardest and easiest. In terms of build practice, I mean, I would say that, yes, I believe that there are significant opportunities in relation to build practice. But I think that's on both sides, you know, both looking at what we do within the Barratt business, what we do within the Redrow side of the business, where we can take best practice from both sides. So we've seen some really fantastic stuff that Redrow are doing, and we think, well, yeah, actually, that's something that we could adopt, which could be on build or could be on sales, and vice versa. I'm sure that the Redrow team will see great things that we do within the existing business.
So I think that's the important thing about this type of combination, is that we've got to look at best practice on both sides and recognize that actually, when you look at build quality and customer service, as I outlined in my part of the presentation, we are already both industry-leading businesses, and therefore we can just become stronger. Mike?
On return on capital, Clyde, I think three weeks in is probably a bit early for us to be upgrading expectations compared to, you know, what we set out in February. I think clearly there will be benefits to asset turn, as we use the land bank more efficiently through dual and triple branding sites, but as I said earlier, I think there will also be a bit of upfront investment to make that happen over the next few years. You know, there is higher work in progress at the start of those sites' life, as we bring the two outlets through or the three outlets through, so you know, we'll be back with medium-term guidance in February, but I think for the time being, we're keeping the guidance consistent.
Okay, perfect. Thank you.
Thanks, Clyde. We'll now move on to the next question, which can come from Zain. Zain at JPMorgan , could you please unmute and fire away? Thanks.
Morning, thanks for taking my questions. Just two for me. The first on build cost inflation. Can you just update where we're running now, evolving in the fiscal year? And then on margin recovery, how do you see this trending in the next few years and the potential of the combined business? Thank you.
Zain, could I just ask, could you just repeat the first one there?
It didn't come through that clearly here.
Sure, yeah. Just on build cost inflation, just an update on where we're running now and how we see that evolving in the coming months.
Thanks.
Zain, hi, good morning. Thank you very much. Yeah, so, on build cost inflation, and if I pick up, and then I'll pass across to Steven on build cost inflation, and Mike, I know, will be pleased to talk through in terms of margin recovery. So just on build cost inflation, to say that in September, we did provide guidance to say that we expected build cost inflation to be around zero in the current year. But Steven, would you want to give a bit more color?
Yep, yep. Okay, David. Yeah, as David said, as we indicated in September, we expect build cost inflation to be broadly flat for the current year. That's going from a position where last year we were around about 5% for FY 2024. During the sort of last six, nine months, we have seen build cost deflation coming through, you know, 2 to 3%. We've seen material prices stabilize, and there's certainly a lot less volatility in raw material movement. Similarly with labor, with less outlets, we're finding subcontractors and labor very keen to work and secure workload for the future months ahead.
If you look at our costs, we're 100% fixed now for our half year, and we're 60% secured for the full year. So we're pretty confident that we'll be delivering a broadly flat,
... build cost inflation for the FY 2025. Hope that helps.
And then I think when you look at margin recovery, again, we talked about this, I think, at results in September. Broadly, there have been two big impacts on margin over the last couple of years in terms of the net impact of inflation, and also the reduction in volume that we've delivered through the group. So clearly, you know, as we've set out, the volume growth targets as we build back towards twenty-two thousand, that has a gearing impact on the PNL and will help that margin recover. And then, as we go forward, we're obviously bringing land into the group at 23% gross margin at the moment, stepping up to 24%, in due course. So as that land starts to feed through into production, that, you know, that will also have an impact.
So I think you'd be looking at a gradual recovery in margins over the next couple of years. But again, you know, there's nothing in our sort of outlook or expectational margin has really changed from where we were in September.
Thanks, Mike.
Thanks very much.
Thanks. Just by way of reminder, if anyone does want to ask a question, please raise your hand. But now we'll turn to Ami at Citi. Ami, please unmute and ask your question. Thank you.
Thanks. Just two questions from me. One's in the gross margin and land bank margin. Can you give us some color there? Give us some... And the second was in the budget. Do you expect the Section 106 bottlenecks to ease on the back of the budgetary announcements?
Ami, can I... Sorry, there's a bit of distortion on the line. Could I... I think your second question there was around the budget and Section 106. Could I just ask what the first question was again? Sorry to ask you to repeat it.
Sorry for the line. It was gross margin in the land bank.
So gross margin in the land bank.
Yeah. Okay. Hi, hi, good morning. We're happy to pick those up. So I think I'll pass in a moment to Mike in terms of gross margin within the land bank, just to talk about our thoughts in terms of trends there. But just in terms of the government announcements and part of the budget announcement, so I think that's what I would say would be that the government have been clear, so in the same way that they've been very clear that they want to improve and unlock the planning system, they've also been very clear that they would like to deliver more affordable homes.
Clearly, in our business, I mean, we're used to delivering affordable housing alongside private housing at the percentages that are considered to be appropriate for the local areas. I think at this stage, the government have called out a couple of areas where they've said that they will expect higher affordable housing delivery, so if land is being taken out of the green belt, then the proposal in the national planning policy consultation is that there would be higher affordable housing allocated in those areas, and they've also said in new towns, where they've set up a New Towns Commission, that they would expect higher levels of affordable housing. Now, both of these are going to be some way down the line.
The National Planning Policy Framework, the consultation has to be completed, the legislation has to be amended and then published, and new towns clearly will be some way down the line. So I think when you look at overall for the industry, I don't think in the next couple of years that you would see any significant movements in terms of the level of affordable housing, being provided, apart from any standalone affordable housing delivered by housing associations or by local authorities.
Just on margin in the land bank, Ami, I guess, as I said to Zain a few minutes ago, we've not really seen any significant changes in the last six weeks. So as we start to replenish land in the land bank at target margins, you'll clearly see the embedded margins improve. We're not giving any guidance today on the margin that's in the combined land bank. We'll do that in February when we've sort of been through the integration procedures on that, but I think, you know, in terms of trends and in terms of our confidence in being able to deliver higher margins over time as we grow the business and we bring new land through into production, I think they're all absolutely unchanged from September.
Thanks, Mike. Our next question is from Harry at Berenberg. Harry, please unmute, and fire away.
Yeah, hi. Good morning. Thanks for taking my questions. I've got two, please. Firstly, the comment you made on incentives, I think you said, was running at 6%. But if you broke that down and looked across regions, individual sites, you gave to the point on sites where you're seeing sales rates being good enough to pull that in a bit. And then the second point is just over the next few years, as you're talking about running certain sites, dual-headed, triple-headed, will you run entirely separate sort of site teams and sales teams on those developments for the three brands? Thanks.
Okay. Yeah, look, I mean, I think I'll just pick up both of those. I mean, Mike's talked a little bit about incentives. I mean, I think what I would say is that, you know, we've always called out that if you take, for example, London and the Southeast, that the affordability challenges in London and the Southeast are significant, and that is generally resulting in higher levels of incentives, but not a position that we've seen change over the last couple of months, and generally something that's been reasonably stable, if you go back to the second quarter of the calendar year.
In terms of branding and our sort of operational delivery process, as a generalization, yes, we have operated separately branded Barratt and David Wilson sales arenas, and we have operated separate build teams, clearly building in different areas of the site, and therefore, we would expect that to continue, and you know, I think that's a really great thing, as we outlined in February, for our employees in terms of being able to operate within a group where they can, over time, sell different house types, different brands, and they can also build different house types and different brands, so getting a much broader range of experience in the same group.
Thank you very much.
Thank you, David. Just one final check if anyone has any questions they'd like to ask. I've got on my magical screen, no more hands raised, so final opportunity. Listen, thank you, everyone, for joining the call today. Thank you for your time. We will obviously be putting out pro forma numbers in December, and we'll be returning to talk with yourselves, obviously, in February with our interim results. But thanks for joining us today, and we will speak soon. Thank you very much. Goodbye.