Barratt Redrow plc

Okay, good morning everyone. I couldn't start until the music had stopped and we dialed in our global audience. So yeah, good morning everyone and thank you very much for coming along or to dial into our presentation. So I'm going to start with an overview of the year, then move on to current trading and talk about our priorities for FY25. Stephen, as normal, will then take you through our operational performance, and Mike, of course, will cover our financials. I'm then going to come back and talk a little about industry fundamentals, revisit the rationale in terms of the Red Row transaction, and then we'll open up for Q&A, and John Messinger is going to facilitate the Q&A. So I just need to highlight before we start, sorry about this, dull I know, but I need to just highlight that whilst we are going to revisit the rationale around information on this, other than the information that we disclosed in February and through the offer document and the prospectus, that's our disclaimer done.

My point of view, I believe that we've really delivered a strong, solid...

operational performance in what has clearly been a very, very challenging operating environment. So I know that I would always do so, but I would particularly like to emphasise and thank all of our employees, subcontractors and our supply chain partners for really contributing to what I think is a good outcome in a challenging backdrop. So total home completions at £14,400.

down by 18.6%.

But returns on capital employed at 9.5%, clearly very impacted by the decline in profitability. We maintain a very strong cash position at £868 million. And this position has been maintained, notwithstanding the fact we've paid out £200 million 71 million in dividend and we've spent around 92 million in terms of holder approval for the red row acquisition in May and also to legally complete the acquisition in August but as I touched on we are now waiting to obtain CMA clearance we hope in October. In terms of current trading I mean you'll have seen the summary of current trading this morning and So I think overall, I'd set it in the context that the first six months of the calendar year were definitely more stable than we had seen during 2023. Our reservation rate for the current trading period of 0.58. for the time through to the 25th of August. So 38% ahead of the prior year, which clearly for current trading is very strong. We recognise that the prior year is a weak comparative, but nonetheless, that is a very good start to the year. We're still seeing impacts in terms of reduced consumer confidence and clearly affordability. The average outlet position is In line with what we said in July, we've seen reduced land buying during 2022 and 2023. And it's only really in the second half of financial year 24 that we've come back into the land market. So we're seeing reduced outlet numbers. We will see reduced outlet numbers during FY25, but we'll then see a sharp recovery of that as we move into FY26. And then 42% forward sold in terms of a private completion position. So something that I think is going back to a more normal pre-pandemic position in terms of our forward sold position. Just in terms of priorities, I mean... clearly as a standalone business, we obviously have a priority in terms of Red Roll. But we set out post the autumn of 22 and the market disruption that we saw at that time, four very clear priorities. So first of all, to drive revenues, really to make sure that our sales teams are having their best day every day. So doing lots of mystery shopping and ensuring that our sales teams are absolutely on it. And we feel that we've been very successful in relation to that. Always to emphasise to our potential customers the low running costs of our homes relative to second-hand market alternatives. And then doing everything that we can do to help our customers with regard to the affordability challenges in terms of our homes. We said that we would do more in terms of private rental. So pre the disruption of 2022, we had signed a partnership arrangement with Citra as a subsidiary of Lloyds Bank. and therefore focusing on that partnership with Citra, and also with other private rental investors, we've been able to increase our participation in the private rented sector, and we would expect that to continue as we move through FY25 and FY26. Controlling our build activity and costs. I know I'm biased, but I think if you look over the last three or four years where we've seen a number of events, COVID, market disruption in 22, I think we have demonstrated that week to week we can control our build activity in line with demand. So continuing to do that in the current year whilst ensuring that we're also getting all of our new outlets open on a timely basis is very, very important. And then costs, you know, we said that... The cost position was very, very important. So to look at build and also look at costs. I think the notable highlight I would pull out from that is that our recruitment freeze has made a huge difference in terms of our headcount. So whilst we didn't close divisions, we have seen our headcount down by about 12% since September 2022. So a big reduction in relation to headcount. And then optimizing land buying. So we stepped out completely, as I said, in the second half of the financial year to June 24, we've stepped back into the market around 12 and a half thousand plots approved in that period. We're closing the year and Stephen will talk about it more shortly, but we're closing the year with 4.9 years of land supply. at FY24 levels and we continue to see attractive opportunities in the market particularly given that both demand and build costs appear to have stabilised. And finally very much aligned to our purpose and values, we remain absolutely committed to lead the industry in terms of quality, service and sustainability. And if you look at all three of those credentials, all three of those areas, our credentials have been substantially strengthened in the year. On FY25 completions, our view is unchanged from July. And we expect to deliver between 13 and 13 and a half thousand total home completions. And the CMA, once the clearance has been received, then we will commence the delivery of what we expect to be a smooth, efficient and effective integration of the Red Roll business. So thank you. And I will now pass over to Stephen.

Thank you, David, and good morning, everyone. So today I'll take you through the usual operational updates. Our sales performance is detailed here on slide 7. Our wholly owned private reservation rate at 0.58 was 5.5% ahead of FY23. Our reservation rate improved as mortgage rates eased lower from August 2023. And whilst we didn't see a particularly strong seasonal uplift in the autumn selling season, reservation rates held up right through to the final weeks before Christmas. Then from January and through the seasonally strongest second half, we saw reservation activity sustained at a better level, although our sales activity has remained highly sensitive to mortgage rate affordability, for potential homebuyers. We also continue to drive sales through our alternative channels, both to the private rental sector along with other multi-unit sales, primarily private sales to registered providers. Average sales outlets at 346 were 5.7% lower in line with our guidance a year ago and reflected the trade through of outlets where sales activity was extended with the step down in reservation rates from the third quarter of 2022, as well as a solid opening program with 57 new outlets opened in the year. This year, as we flagged in the July update, we expect total average sales outlets will be around 9% lower. and this is a function of our reduced land buying activity in 2022 and 23, and the annualised impact of sales outlets, which closed in the second half of FY24. We do, however, anticipate this will be a temporary decline with significant net sales growth planned to support FY26 delivery. On our current plans, as we highlighted in July, average sales outlets in FY26 will be above FY24 levels. Here on slide eight is the private reservation customer mix. And there are really two points to highlight. Firstly, the increased use of PaTT Exchange, which supported 16% of reservations in FY24. PaTT Exchange is an important sales tool, but we're keeping a very tight control on our PaTT Exchange portfolio and continually pushing our teams to secure onward sales. And this has worked very well At the year end, our balance sheet investment in part-exchange homes was just £10 million higher than last year. However, the number of unsold part-exchange properties was actually lower. Secondly, you can see the stabilisation and slight recovery in demand from first-time buyers, who accounted for 27% of private reservations in the year. However, it's worth keeping in mind that at 27%, this remains dramatically below the first-time buyer's share seen in FY19 and FY20, which exceeded 40%. And as an aside, the Welsh help-to-buy scheme accounted for less than 1% of reservations in FY24. Turning now to completions on slide 9. We delivered 14,004 total completions in FY24, 18.6% lower than FY23, but at the upper end of our guidance range. The lower order book at the start of the year and muted demand in the first quarter saw a 28.5% decline in total completions in the first half. However, with the sustained demand recovery from our second quarter onwards, Our completion decline slowed to 8.7% in the second half. The importance of our drive to secure sales from alternative channels can be seen here too. With PRS and other multi-unit sales delivering 1,815 units or 13.5% of our wholly owned completions. And that's more than doubling on the 780 ohms and 4.8% share in FY23. On pricing, here we've given you the various moving parts to help with your modelling, but I'll just highlight applying our like-for-like matching house types and sites, we estimate an underlying price decline of 2.8%. On the bridge from 2.8% to the reported 4.8% decline in the private sales price, this essentially reflected a significantly lower share of completions from London in FY24. House price declines were tightly banded across the country, with our southern, west and east regions seeing greater declines, and London and central both better than average. London was, however, supported by its longer lead time from reservation to completion. The increase in the average selling price from our PRS and other multi-unit sales was accounted for by broadening geographic mix and a slight increase in the average size of home completions. Now turning to slide 10. I want to cover some of our key metrics around health and safety, productivity, customer service and build quality. Health and safety is our number one priority and something which everyone in our business takes very seriously and is striving to improve. It is therefore disappointing that the area where our performance dipped in FY24 was around our injury incident rate, which increased in the year to 302. I am able to report that a renewed focus on health and safety has helped reduce the injury incident rate by 5% since the start of FY25. On build activity, our site management teams have done a great job again in FY24, aligning activity with a reduction in sales outlets and lower completions. Across the year, and including joint ventures, our site teams delivered an average of 257 equivalent homes each week. And with legal completions averaging 269 each week, we've managed to reduce our construction work in progress by £78 million in FY24. In FY25, we are again aiming to balance construction activity between the expansion in sales outlets for FY26 and anticipated completion volumes. On HPF customer satisfaction scoring, our customers awarded us the maximum five-star rating for the 15th successive year, a unique record amongst the major house builders. The 2024 NHBC Pride of the Job Awards programme began in June and we're delighted to announce once again that we led the industry with 89 of our site managers securing this coveted award, making it the 20th successive year which we've secured more awards than any other house builder. Our industry-leading build quality was also maintained once again throughout FY24. We ranked first for the fifth consecutive year amongst the major house builders group throughout FY24, with average reportable items, RIs, at 0.13. Turning now to slide 11 and build cost inflation. Our view for FY25 remains unchanged from July, with total build costs expected to be broadly flat in FY25. On build material pricing, we saw inflationary pressures easing through FY24, and we achieved price reductions in some key product areas, notably bricks, blocks and steel, which have helped FY25 material costs. At the year end, we have supply agreements in place for 85% of our material needs to December 2024 and 19% through to June 2025. And we're looking to secure improving terms over the coming months when deals become due. Around our labour costs, we've seen a more stable and steady picture across all our regions, a reflection of the slower market. Many of our capital-intensive subcontractors are looking to secure work to maintain their capacity, and this is delivering competitive rates with limited inflationary pressures. So pulling it all together, we see broadly flat as a realistic view on total bill costs impacting our income statement for FY25. Turning now to our land bank on slide 12. As we highlighted in July, after an extended pause, we delivered a significant acceleration in land approvals during the second half, and particularly during the fourth quarter. And as a result, we reported net approvals of 12,439 plus. Our decision to re-enter the land market was based on the identification of some very attractive opportunities, notably some larger sites, and many of which we've had on the back burner since the autumn of 2022. We have, however, maintained our disciplined approach to land buying and ensuring these sites meet our gross margin and rocky hurdle demands. Reflecting both lower completions as well as the pause in our land buying activity, the duration of our owned and controlled land bank has extended to 4.9 years. And importantly, over 69% of our owned land bank had detailed consent at the year end. and I can confirm now we have detailed consents in place for all FY25 planned completions. We've also made good progress driving conversions from our strategic land in FY24, with 3,723 plots converted into our owned and controlled land bank. So in summary, we delivered a solid operating performance in FY24, We also have to recognise that mortgage rates and mortgage qualification have been and will remain key to our reservation rate as we look ahead. Total bill costs, after unprecedented rates of inflation over the last three years, are expected to be broadly flat in FY25. And we're back in the land market, but we have been and will remain both selective and disciplined in our approach to land over the months ahead. And finally, as you heard, our divisions are focused on expanding our sales outlet position to ensure we deliver the most attractive sales outlets and appealing house-type choices across the country, supporting completion growth from FY26. So thank you, everyone. And with that, I'll hand over to Mike.

Thanks, Stephen. Morning, everybody. So I'm going to take you through the key aspects of our financial performance now. But as David said earlier, this all relates to Barrett on a standalone basis, both in terms of the year just gone and any guidance. And we'll come back probably at the half year with more information on Barrett Red Row. So turning to slide 15 and stepping back for a second from the results, I think, as you've heard... share was challenging for a number of reasons. Our volume declined on the back of weaker demand, their incentive use and at the same time ongoing build cost inflation, both of which squeezed our gross margin. As you know we said we wanted to maintain the scale of our business to take advantage of future growth and therefore we didn't close any divisions but again we saw the impact of reduced volumes on our operational gearing as a result, resulting in operating margin decline as well. Overall, our adjusted operating profit was £376.6 million, 56% already touched on the impact of pricing and bill cost inflation, and I'll cover the key drivers around overheads and operating margin in a moment. Our results include £214.5 million of adjusted items relating to building safety and the cost of the red row transaction, and I'll cover both of these items in more detail in a second. Adjusted EPS was £28.3, that's 57.9% lower, and based on our dividend policy of cover at 1.75 times adjusted earnings, we'll pay a final dividend this year of £11.8 per share, taking the total to £16.2 for the year. And finally, we continued to manage the balance sheet carefully and we ended the year with net cash of £868.5 million. So moving on to the adjusted margin bridge, and you can see here the impact of the main drivers in the margin from FY23 to FY24. And first of all, as I said, the impact of those lower completion volumes, which reduce their margin by 300 basis points in the year. And on inflation, the net impact of build cost inflation of around 5% and underlying softening and selling prices reduce margin by a further 430 basis points. As Stephen said, the trajectory of build cost inflation has been lower and we continue to expect broadly flat build cost inflation in the income statement in FY25. We also saw a benefit this year from two of last year's items reversing in their impact. Firstly, as Stephen touched on, London developments equating to 60 basis points and also a more normalised charge for our completed development costs contributing a further 20 basis points. And other changes in sales mix and the impact of administrative expenses made up the final 70 basis points of the year-on-year movement. And now onto admin expenses in a little bit more detail. So we ended the year broadly in line with our earlier guidance, and we've continued tight management of overheads during the year, including maintaining our recruitment freeze throughout the whole financial year. Adjusted admin expenses were up by 16% in the year to £314.5 million, and that was mainly driven by the normalisation of employee performance pay, the annual salary increase, which was around 5%, and also increased IT investments in some of our core platforms during the year. Offsetting these we insourced more of our work on the building safety unit and we also saw red row transaction costs of £22.4 million which we reported as an adjusted item and we expect the final transfer of our standalone transaction costs of a broadly similar level in the first half of FY25. Looking forward I'd expect adjusted admin expenses to remain around this year's level with our annual salary increase of around 3% being offset by cost savings elsewhere. So moving on to adjusted items, and these all relate to items that we'd reported before today. On building safety, the portfolio under review has started to reduce, and we saw 16 building reduction to 262 at the year end. 137 of these buildings, so that's more than half, are now at the tender stage, mobilisation or inactive remediation. And that means that our visibility of potential future costs continues to improve. The net charge of £125.3 million for external wall systems in the year comprised the charge of £61.4 million in the first half relating to increasing contingencies, as well as the latest cost information from the Building Safety Fund, and in the second half £63.9 million for the complex development we'd flagged as a contingent liability at the half-year. The reinforced concrete frame charge of £66.8 million largely reflected the recognition of future remediation costs on two developments we'd flagged last year as contingent liabilities. And in relation to Scotland, there's still no conclusion to the ongoing discussions in terms of the standard of remediation required, and so we continue to provide for the buildings in Scotland on the same basis as those in England and Wales. So moving on to slide 19 and the cash flow, I'm gonna take you through the bridge from our reported operating profit of 174.7 million pounds. So first of all, net interest and tax payments of 28.4 million during the year. And then we saw 159 million reduction in working capital which came largely from the non-cash increase in provisions and the net impact of movements in our trade payables and receivables. With the good progress made on building safety, we spent £91.5 million on remediation during the year, and our net work in progress decreased by £53.5 million. So that was driven, as Stephen mentioned, by careful management of our build rates, but was partly offset by part exchange holdings increasing and some additional contracts in Gladman. We've got tight controls, as Stephen said, around reselling part-exchange homes, and at the year end, nearly three-quarters of the homes on the balance sheet had already been sold. On land, we saw a net outflow of £125 million, which reflects a higher level of land activity in the second half and total spend of £674 million for the full year. Together with the net £26.4 million impact from JV investments, the group generated an operating cash inflow of £115.1 million. Other investment and finance expenditure totalled £45.4 million. And so after the payment of dividends, which totalled £270.6 million, we saw a net cash outflow of £200.9 million for the full year. And now to update on the position of our land bank and gross margin, detailed here in slide 20. And I think the main point to make here is that the gross margin in the land bank has stabilised in the second half of the year. And as we bring in new land at target hurdle rates, hopefully we're now at the low point of the cycle in terms of margins. Again, as a reminder, here we're pricing the whole land bank on today's prices, today's build costs and today's sales rates. So we're not including any assumptions about future inflation or improved sales rates. As you can see from the chart, just under half of the land bank plots have an estimated gross margin of more than 20%. And over the coming year or two, it looks like margin recovery will be gradual because we're not seeing any benefit in sales prices and build cost inflation, whilst stabilised, isn't continuing to fall. We're therefore very focused on driving volume through opening more sales outlets across all of the brands, which will help to improve our operational gearing and consequently improve margin. And now on our usual guidance slide, and again, just a reminder, this is Barrett on a standalone basis for FY25 at this stage. Given our activity year to date and current trading levels, we continue to expect to deliver between 13,000 and 13,500 total home completions for the year, as we guided previously in July, and that includes around 600 homes from joint ventures. On finance costs, we expect a net interest charge of around £25 million, with cash receipts of approximately £15 million and non-cash charges of around £40 million. And then with land spend anticipated at around £800 million for FY25, we expect to report net cash of around £500 million at next year end. And so finally, in summary then, as expected... The results this year reflect the impact of lower volumes, net inflation and lower outlet numbers. The margin pressure we've seen over the past two years will take some time to unwind through the land bank, so the underlying margin position is unlikely to materially change in the short run, absent a stronger sales rate. We're making good progress on building safety with better visibility of the risks in the portfolio and over half of the buildings at tender stage and beyond. And our strong balance sheet gives us a good platform to return to outlet and volume growth into FY26, which will feed through into increased assets and return on capital. And as I said earlier, when we next report at the half year results, we should be able to give more guidance around our expectations for Barrett Red Row. And with that, I'm going to hand back to David.

Thank you very much Mike. So now moving on to look at market fundamentals as we would normally do. So I think everyone recognises that as a country, we face an acute need for more homes across all tenures. So if you look at rent inflation in the private rental sector, clearly a significant shortage of properties available for rent. Huge waiting lists in the affordable housing sector, a shortage of affordable houses across the country. And mortgage affordability... remains an issue for those who are looking to move into home ownership for the first time or to move up the housing ladder. So we welcome the new government's prioritisation of house building and the early steps that they have taken. Customer surveys tell us that the vast majority of the population want to own their own home. We can see that whilst employment remains robust, the cumulative impact of inflation, cost of living pressures are acting as a drag on consumer confidence and also the consumer's ability to save a deposit and to meet mortgage affordability requirements is a challenge. So if we now turn to the next two slides to look at planning in the land market and then mortgages. So this is a slide that we've shared on a very regular basis. looking at planning consents, net new build additions in England, along with the Savills Greenfield Development Land Price Index. I think in summary that planning consents on an annual basis have remained ahead of new build home additions, but as you can see here, the annualised consents peaked in June 2021 at around £336,000, And they were running something like 30% below this level through to March 24 at just over 236,000. The planning situation was still on a downward trend through the first quarter of 2024 with detailed planning consents 13% lower than the first quarter of calendar 23. But I think that's the bad news out the way. we clearly now have very positive momentum post-election, given the new government's recognition that house building and growth are national priorities. Their plans to date are centred on addressing the supply-side constraints in the market. So we welcome the reintroduction of national targets to deliver 1.5 million homes over the five-year term of the new government. We're pleased to see the fast tracking of the proposed reforms to the National Planning Policy Framework. And we also recognise clear logic and the need to review the redevelopment of Brownfield Greenbelt or grey belt, which offers significant opportunities in many parts of the country. And finally, we are pleased to see the government act with urgency as highlighted by the recent new homes accelerator initiative. There are clearly ongoing challenges on the demand side, notably around affordability. And in particular for first time buyers, as well as also challenges around the financing for affordable housing providers. But we welcome the government's focus on our industry and the early steps that they have taken. Again, a chart on mortgage affordability and mortgage lending that we've shown a number of times before. So on the demand and financing side of the equation, These charts really look into more detail on affordability and mortgage rates. The left-hand chart showing the proportion of average post-tax income being spent on monthly interest and capital payments based on the average Halifax house price. There has been a welcome easing in this affordability measure, helped by the decline in mortgage rates and the benefit of reduced national insurance costs. As a result, the average Halifax house price home absorbed 41% of post-tax income in the second quarter, down from almost 44% in the fourth quarter of 2023. The chart on the right details average monthly mortgage rates at 75% and 95% loan-to-value lending. from January 20. And I would highlight the easing in mortgage rates from August 2023 through into January 2024, when rates fell back by almost 150 basis points. the more gradual rise in mortgage rates from February through to May 2024 before a welcome shift lower in June and July. Affordability at higher loan-to-value lending, essential for first-time buyers, clearly remains a challenge for the industry. Moving on to Barrett-Redrell, the Barrett-Redrell combination, We believe that the combination with Redroll will help us to address the country's housing shortage by creating an exceptional UK home builder in terms of quality, service and sustainability. The combined business is clearly going to be capable of accelerating delivery through our three high quality and complementary brands. and in doing so will improve our combined asset term.

We believe too that the combination can realise significant cost synergies and we can achieve these synergies rapidly and efficiently.

Barrett Redwell is also going to maintain a robust balance sheet better protected to operate through the cycle and a strong platform from which to deliver improved shareholder returns over the medium term. And finally, the combination will deliver significant benefits for our other stakeholders, including our highly skilled and dedicated employees, our suppliers, our partners and more price points. As an industry, we face a challenge in accelerating the speed of development and restoring asset turn against the backdrop of the lower reservation rates that we've seen since the autumn of 2022. We've seen through David Wilson and Barrett that applying a multi-brand strategy drives the ability to have more sales outlets You may remember the example given in February of Grey Towers Village, a site up in the northeast near Middlesbrough. We made the clear decision during COVID to dual brand Grey Towers, adding Barrett Homes to the site with a separate sales outlet and show home suite. As you can see on the right hand side of the page, what dual branding delivered in terms of performance across the site. Completions increased by over 110% from the pre-COVID average. The reservation rate increased almost 100% to an average rate of 0.94 in FY22 and FY23. So you can see why we are excited about what three distinct brands can do. We can accelerate the delivery of homes from the combined land pipeline by introducing the Red Roll brand to appropriate Barrett sites and vice versa and have sites that contain all three brands. As well as the strategic and operational benefits of the combination, there will also be material financial benefits. we have estimated at least £90 million of pre-tax cost synergies, which is clearly a material number. But we are confident about the delivery of that. The savings are going to come from both Barrett and Redrose cost bases across the following areas. Firstly, procurement-related savings, primarily from direct materials. and other efficiencies in build cost overheads are expected to unlock some 38% of the synergies. Secondly, optimisation of the divisional office structure was expected to crystallise 37% of the total. And finally, consolidation of central and support functions will deliver the balance of approximately 25%. The associated one-off costs to allow this delivery of synergies will be approximately 73 million. I would just make the additional comment that clearly there will be a phased impact in terms of the delivery of the synergies and there will be a phased impact in relation to the 73 million of one-off costs as set out on the slide. So then just moving to the transaction timetables very briefly. So we've laid out the timeline in hopefully simple terms. We achieved shareholder approval in the middle of May. We made a decision to complete the acquisition of Red Row really to give us certainty and we were able to waive the need for CMA clearance and therefore legally complete the acquisition which we completed on the 21st of August. We made a submission to the CMA on the 15th of August for the undertakings that we would give in relation to the single overlap in Shropshire, which was identified through the CMA's phase one process. Based on the CMA's standard timetable, we would expect a decision to be made around the 18th of October after a period of public consultation. So to conclude, We delivered a very solid operational performance on what has clearly been a challenging year. We maintained and we improved our industry leading customer service, build quality and sustainability positions. we have had a solid start to FY25. We remain focused on our four priorities and we are very excited about the future potential for the Barrett Red Roll combination, particularly our ability to accelerate sales outlet openings and also to be able to achieve or improve on the cost synergies. So thank you very much, everyone. We're now going to move to questions. John is going to facilitate questions and I will take questions from the audience first and then we'll move to questions if there are questions online. Thank you.

Thank you, David. I think everyone's familiar with the format in here and that you should have a microphone to your right-hand side. Just hold down the red button when called to ask a question. And if we could start, actually, Ainsley's most persistent with his hands up. So, Ainsley, over to you. And actually, could you state the name of your organisation as well, please?

Thanks, John. Yeah, Ainsley Lamman from Investec. I think I've got three, please. Just wondered if you'd give a bit more colour around kind of pricing, incentives... how you're tactically playing that going into the autumn selling season. And then two, just on the merger, understand obviously CMA, just interest here, a bit more detail maybe, how easy are they to resolve those issues, what are the risks that it could go beyond 18th of October, just provide a bit more kind of confidence around that. And then a kind of techie accounting one, just on consolidation, assuming it goes through in October, CMA approve it, does the

of red road business get fully consolidated from the is it late august when it completed or the cmo approval or before there's any uh guidance there as well thanks ainsley hi uh good morning so um because you build it as a techie accounting question mike will answer that um and i'll pick up the other two just briefly so in terms of incentives i mean i I think everyone understands that if you went back to the first half of 22, we said at the time that we would have been running incentives at around 2% to 3%, that sort of order. And whilst we've seen variations in incentives since then, I would say as a generalisation we're running incentives at around about 6%. That's the kind of order. One of the drivers for us on additional incentives is the increased utilisation of part exchange. But again, if you go back over time, you'll see that us having part exchange levels in the order of 15% to 20% is not unusual. And part exchange is obviously a key way for us to compete with the second-hand market. So that's a big driver of incentive cost for us. Over the last six, eight months, I would say incentives are reasonably stable. And we're not expecting any particular step up or step down in relation to incentive levels. In terms of the... merger and the CMA. So because of the overlap that was identified and the CMA was reported on that overlap, we were then required to give the CMA undertakings in relation to how we would deal with the overlap. And the CMA said publicly, they have said publicly, that they're kind of minded to accept, but they haven't accepted, but they're sort of minded to accept the undertakings. So that's point one. And point two is, in line with the timetable, we expect it to complete around the 18th of October, to get the CMA clearance around the 18th of October. And there's nothing that we believe should disrupt that timetable.

The tech question. So we'll consolidate from August. I'm not allowed to know what I'm consolidating until October. But yeah, consolidation from August.

All right. Good. Ami, just behind Ainslie, and then we'll work back up the row there.

Thanks, John. Amigala from Citi. A few questions from me. One was on the land market. If you could give us some colour as to the land opportunities that you're seeing currently. Is availability back to normal? And in light of the recent potential budget announcements of a capital gains tax, is there any dampener or change that you're seeing on how the land market or the land vendors are reacting to that? The second one was really on Gladman. You know, what is the sort of contribution that Gladman currently has in your business? And, you know, where does that number sit versus what you would consider as normal contribution from that business? The last one was on the combination. I understand you can't quite talk much about it, but in terms of the supply chain renegotiation in terms of the agreements, how long do you think that really takes once you kind of start integration? How quickly can you kind of revise your sort of material agreements or subcontractor agreements on pricing?

Yeah, okay. Well, I think if I could ask Mike to pick up the Gladman question, I'm sure Mike will answer that without actually giving any numbers, I predict. But I think... If I can cover the other two areas, okay? So I think in terms of land opportunities, I mean, we see generally really good opportunities in relation to land. And I would say that there are two drivers for that. First of all, a lot of companies, including ourselves, have not really been as active as normal in the market since October 22nd. So there is clearly some pent-up land in the market, is the first point. And I think the second point is that the government have delivered a very clear message to the local authorities. They've made public announcements, they've written to every local authority and every local authority chief executive, and they've made it clear that they will need to deliver the housing numbers And if they don't deliver the housing numbers and they don't have a plan in place to do that, then obviously they'll be subject to appeals if planning approvals are declined. So without any change to the national planning policy framework, that will already start momentum in terms of the land market. I understand that different landowners will have different drivers as to why they're selling land. Some of it may be that they're just selling one piece of land and they don't have any more land. Some may be that they run a business in terms of the buying and selling of land. But I would say in the round, I wouldn't expect any major changes to landowners' behaviour In relation to government announcements, because I think the landlords understand this is going to be the backdrop for the next five years and potentially the next 10 years. So I think what we've tended to see is that if the government changes the position on planning, the market adjusts over a period of time and then moves on.

So I'm glad, but I mean, I think if you think of the two parts of that business as being securing planning and then selling the land, obviously it's been a tough year in terms of land sales through the first half in particular. So the focus has been very much on securing new planning consents and sort of filling the hopper, if you like, for future land sales. So they did secure 8,500 new plots through planning and new agreements in the year. So very positive. But as you would expect, the land sales piece has been a bit muted. In terms of expectations, I think they're performing in line with our expectations. So I don't think we're still very pleased with it as a long-term acquisition. And we think it will contribute to the growth of the business into the long run.

I think the reality is that it's not really appropriate for us to get too far into that. We don't have CMA clearance at this point. We clearly can't engage with the suppliers until we get CMA clearance. And I think we gave some guidance in February in terms of how we expected the synergies to flow through for year one, year two and year three. But inevitably, it will take time because there's got to be a negotiation with a large number of suppliers and it will take time for that to flow through in terms of the related benefits.

Great. Thank you. I'll just carry on up the row there, so if I could pass back to Sida, please. That'd be great.

Thanks very much. Sida Ekman from Morgan Stanley. Just a question on your outlet guidance. Can you give us any colour on how you see outlets ending FY25? I know you've guided to down 9% on average, but it would be quite helpful to get a little bit of visibility on that exit rate so we can think about how that sets you up into 26%. And then just on planning reform, how do we think about where the risk to margins or pricing is? Is this more of a topic that landowners potentially need to see their pricing lowered to the extent there's more affordable units needed if planning requires that in the future? Or is it a case that the housebuilders take a margin hit because your economics are different but the land market doesn't adjust. It would be helpful to get a bit of colour in terms of how you are thinking about land reform for landowners versus house builder margins. Thank you.

Okay, so if Mike picks up in terms of outlet guidance, then I'll pick up in terms of the position for landowners.

Yeah, sure. So I think we're sort of coming into the low point of outlet numbers around sort of 300 as we come into the next quarter. And then through the second half of the year, outlet numbers will start to build back. The only guidance we've given on sort of forward numbers, Cedar, is that the average number in FY26 will be higher than the average number that we had in FY24. And obviously there will be a little bit of phasing as we get those sites open. But we're not guiding to a sort of closing number for FY25 as such beyond the average guidance that we've given.

Yeah, and I think I'll just add to that that in general, in terms of our guidance, I mean, we're looking at sites that we have under control. The sites clearly almost by definition don't all have planning, but we have them under control.

And given that we're back in the land market, as we acquire more sites, there's a potential for them...

I suppose really sort of land value capture and how that splits. Well, I mean, at headline level, we are buying land on a subject planning basis. And therefore, we're not sitting with a freehold land bank that is... potentially going to be impacted from a value point of view in relation to further land value capture of affordable housing coming particularly from, for example, Greenbelt or even from Greybelt. And also in relation to the proposal for new towns that there would be higher levels of affordable housing provided. There's clearly a mix there between the level of affordable housing, the impact for the landowner and the impact for the house builder. But we feel that we're pretty well positioned in terms of protecting our position in relation to that. And I think historically we've demonstrated that we're quite well positioned because of our land purchasing model.

Sorry, one follow-up.

So just to understand, the stuff that you have permitted already, you have very good visibility on what the margin is for those sites. And then if we think about future land purchases, which may come under a new regime for affordability, et cetera, it would basically be a discussion between the margin you're willing to accept and the price that the land owner would be willing to sell it.

Yes, and I think also if you look at what the government are saying is that the government aren't saying that universally they're seeking the provision of more affordable housing on every site. What they're saying is that they see that there are certain types of site where the level of affordable housing should be higher. So almost as a trade-off, if land is going to be released from the Greybelt or there's going to be land committed for new towns, then there should be a higher level of affordable housing provided. So it's not sort of across the board.

Great. If we could, just passing back up the road to Harry, if I could ask Harry to ask the question. I'm sorry, David, can you just let your hands away from your mic when you're answering? Sorry. Apologies. LAUGHTER They're not getting the words of wisdom as clear as they would like at the back. That'd be great.

John, I'm not going to ask you to do this again.

Morning, Harry Goad from Berenberg. I've got two, please. So firstly, on the share of units from PRS slash partnership, I think the number has been sort of mid-teens-ish in the last couple of years. Should we expect that number to sort of trend upwards? And can you give us some feel for maybe what you feel a normalised number around that would be? And then the second one, Different topic and and probably sit a couple of years away, but in terms of sort of the government's volume aspirations, how are you thinking about both of subcontract labor availability and building materials availability? If we get anywhere back close to or get close to where this of governments ambitions on on volumes will be because I guess clearly we were struggling at at lower levels than the sort of 300,000. How on earth could that be met? Thank you.

Okay, Harry, thank you. I'm very anxious about my hands now. So, yeah, so Mike will pick up in terms of PRS, and I'll just talk about Outlook for volume. I mean, look, I think, first of all, I would say... It's a really nice challenge to have. The idea that as a business or as an industry, we could be looking at a situation where we're presently well sub 200,000 and we're talking about can we grow the business or can we grow the industry to 300,000? So you think, okay, well, that's quite a nice problem to have is the first thing. The second thing is the industry has demonstrated a number of times since 1990 that we can get above 250,000 units. And it's a challenge, I accept. It's a challenge at that level. But I think what the industry has done a lot of in the last five years, and you can go through the different participants here, The industry has done a lot about changing production methodologies. So as an example, but not confined to the adoption of timber frame. So we made an acquisition of Oregon in 2019. And then we opened a new factory in Derby around 18 months ago. So we now have two full-on timber frame factories, which really enhances our capability. But there's plenty of other initiatives that are taking place that make the build process on site more straightforward. And I think the industry has got to deliver on more of that over the next five to ten years. And then the other point is that the government have been very clear that, they themselves and the industry, not just in house building, have to do more in terms of encouraging apprenticeships and bringing more people into the industry at a trade level. And that is obviously particularly driven through the industry's inability to continue to bring labour from continental Europe, which is clearly the way we've satisfied labour. And I think that that shortage of labour... So when Oliver Letwin did his review of the industry, that shortage of labour is around very specific trades, I won't name them all, but for example bricklayers, because bricklayers really just work in the new build market. relatively do much activity in the domestic market or the commercial market so it's much much more about house building and therefore we need to ensure that we're training sufficient bricklayers while at the same time we're looking at alternatives to brick.

So on affordable, Harry, I mean, the proportion tends to hover around 20%, so high teens into 20%, and obviously it depends which part of the country you're talking about, slightly higher in London, and, you know, sort of site to site can vary. I think for FY25, we've already talked about the profile of site outlet openings being sort of second-half weighted this year, and because typically affordable will come quite early in a site's life, the proportion will be lower in FY25, so I think it will be around the mid-teens rather than the high-teens for this year. And then in the long run, as David said, in terms of government policy, directionally it could be higher into the medium term, but we need to wait to see how that plays through. So I think if you think about it as mid-teens for this year and a normal level being high-teens to 20%, that's reasonable. Yeah, so that number will trend up slightly over time. I don't think we're going to move to any extremes on partnership activity. And as you know, we've got the PRS relationship with Citra and others where we're delivering around about 1,000 units a year. So over time, we'd potentially expect that to increase slightly as well.

Great. If we could come down the front to Will.

Thanks. Will Jones, Redburn Atlantic. I'll try three if I can, please. First, you made several references, understandably, to the rate sensitivity of customers as lenders have been trimming rates through August. Has that had any impact on leads as you look towards the autumn market? Second was whether you would be willing to talk about any of the moving parts for gross margin in 25, akin to the bridge you gave for FY24. Within that, I suppose, one thing we know is that I think you exited on price at about minus three, like for like, as per the July update. Bill costs flat. What should we think of the price-cost spread in 25? would you be willing to call out what your bulk sale completion gross margin is compared to compared to average um and then the last one's maybe just a reflection and maybe we've touched on already but in the land market six months ago you were on a net basis probably doing negative or nothing now you're back at what looks like you know one times plus replacement back six months ago, was that really about the absence of macro confidence to press the button, or has something fundamentally shifted on the supply side since that enables that big change in strategy? And then just within that, have you moved already to the 24% gross margin target post-retro, as it were, or is it still on 23% at the moment?

Thanks. OK, right, thank you for all those. So if I just do the easy one, we haven't moved to the 24%. We're a standalone business. We need to fully complete the acquisition and receive the CMA clearance, so that will be the first one. And then on the land market, what I'm going to do is I'm going to start and then Stephen will talk a bit more about what we're seeing in terms of land generally. And Mike will pick up gross margin and... The other question on bulk. So just in terms of the initial question in terms of what we're seeing, as you know, we're not going to disaggregate the current trading period. What I would say is we recognise that current trading is up against a soft comparative for the prior year. But I think what we've got to do is just bank that and move forward. And the reality is that relatively we're seeing a strong current trading period through July and August. If you look at the Consumer Confidence Index, it has improved substantially from where it was 12 months ago or where it was 18 months ago. And therefore, whilst I know that's not just covering house building, but there is just a bit more consumer confidence out there. We're definitely seeing higher levels of inquiry, and that's flowing through in terms of us being up on reservation volumes. So I think that's a pretty positive backdrop. Mike, do you want to pick up in terms of the R2s?

Yeah, sure. So, I mean, in terms of the margin, the building blocks will. Clearly, sales, as you say, sales price inflation is going to be muted. So I think for the full year, if you thought about that as being broadly flat, that's not unreasonable. And we've given guidance on build cost inflation also being... um broadly flat um outlet numbers are down and obviously we've guided to lower completion volumes as well so there's a little bit of an impact on that on the the carrier fixed costs and i think if you put those moving parts together um you know you can sort of get to get to a gross margin number In terms of the discount, we call them multi-unit sales rather than bulk sales, but the discounts vary, obviously, as you would expect from deal to deal. And we would always want a discount level that was acceptable to us in terms of the overall business. I think we've said previously, typically they tend to be sort of low double digits against private sales incentives of 6% and so on. So they are... slightly dilutive versus private sales, but we're able to close the outlet earlier and we can make things work in that way. But we don't disclose the sort of aggregated discount number, but it varies deal to deal.

I think just in terms of the land market, and then I'll pass over to Stephen. So just a couple of points to make. I mean, one... We've announced approvals at 12,500 for the six-month period. I think that clearly that's way beyond what we would expect as a normal run rate. Because if we're doing 13,000, 14,000 completions, we're obviously not going to be replacing at 25,000 per annum. So I think that's the kind of first point. And the second point is that there is some pent-up land within that because clearly what the land teams have been doing is trying to protect the position since the autumn of 22 when we stepped out of the land market. And we're in a situation now where we're seeing, as we've said, more stability in terms of build costs, more stability in terms of reservation rates, and... reservation pricing, then obviously that's a good opportunity to go back into the market. But Stephen, I'll maybe give you a kind of flavor of the type of stuff that we're seeing and sort of round the country picture.

Thanks, David. Yeah, I was off to say that one of the driving factors is we've seen more stability in our sales rates, our incentive levels, and selling prices. I think if you look back to sort of mid-22, sort of spring and summer of 22, Prices were getting higher and higher. That was certainly the peak for land for some time. And clearly we've not bought anything in those 18 months. But since the start of stability, we've felt more confident. And I think the landowners have become more realistic in some of the terms. So we've seen our land buying see a lot more conditionality around detailed planning consent, whereas previously it would maybe be bought with an outline consent. So a lot of the sites we bought have been subject to detailed planning. We've seen better deferred terms, which again, when the market was getting hotter, there was more cash on completion, so we've seen that. I think the positive situation is, yeah, fine, we've been out of the market, but a lot of the other house builders have been out of the market at the same time. So there is a good pent-up supply of land available at the moment. So a lot of the sites we've been buying in the last three, six months have been sites that have been on the back burner for the 18 months or so. So we've pulled a lot of those sites through, arguably on much better terms in terms of payment and still got neutrality issues is an issue. Dynamics of the market is that there's, I think as we've said before, there's a lot of large sites coming through. So we've reported in our announcement today there's some pretty large sites, what we've put through, 600 units here, 1,000 there, which are ideal to sort of split for dual brand or potential third brand if in the future I'll sell a piece off.

So a lot of good sites. which are ideally suited.

Gregor, we'll work our way around.

Thanks. Gregor Kuglic from UBS. So I've got maybe sort of a two-part question on margins. So I think you're sort of flagging, give or take, flattish, maybe slightly down margin for this year. I guess my question is, A, is that correct? B... Your midterm ambition, I guess you've got 23 growths. Are you kind of thinking this business should be making sort of high teens margins in the medium term? And I guess, I mean, that's maybe a bit tough for you to assess, but. what sort of time horizon of something like that would look like. So that's question one. Question two is, so I know that your land with detailed planning dropped to sort of sub 70. It used to be more like 80% of your own land bank. I want to understand if you think that's a temporary position And if that rebuilds, is that in essence the driver or one of the drivers to get site count back up and running to a sort of higher level? And then a third question on volumes. I guess, do you think there's any reason why the company, either standalone or pro forma, couldn't return back to the volumes that it maybe produced in 22 and a sort of reasonable time horizon? Thank you.

Okay. So Mike will pick up in terms of margin.

Yeah. So, I mean, I think, as you say, you know, we've sort of walked through the moving parts. I don't think there will be any significant short-term movement in margin. You know, when you look at, as we said, sales prices broadly flat, build cost inflation broadly flat, you know, there aren't any margin drivers in there. I think in the medium term you would expect it as volumes increase on the back of the increased site outlet openings into FY26. As volume increases we see the reversal of some of that operational gearing effect that we've seen on the way down as volumes contracted. And so that will be one of the drivers for taking margin above its current level. So again, I think, I mean, we're in this sort of slightly odd position at the moment where we can't talk about the combined group and where we'll be. But when we come back at the half year, we should be able to give you a bit of visibility on medium term aspirations and how long we think it will take to get there.

I think just picking up on those two points in terms of volume aspirations for the group I think the short answer is that there is no reason why an individual house builder can't grow back to the levels they were at or ahead of the levels that they were at we're We're close to 300 in terms of site numbers, let's say. But I mean, we know that we can operate 400 sites. I mean, historically, I think we've operated 500 sites. The reality is the operation of the sites is just a byproduct of the number of divisions that you have. So a division can only operate a certain number of sites. the divisional management team need to visit the sites and ensure that the sites are operating as they should be. And they can't do that if they've got 50 sites, but they can do that if they've got 15 to 20 sites, say. And then the other part of the equation is the rate of sale. So I think if we're looking at rates of sale that are in the order of 0.6, 0.65, we know we can handle far more sites. But that obviously takes time to get those sites through planning. So... I think we're guiding to quite good site increases in FY26 as a standalone business, and therefore we would expect as we go back into the land market during FY25 that perhaps the tail end of 26 will benefit from that, and then running into 27. So we would definitely expect... To go back to higher volume, there's no structural reason why a house builder can't do more volume. I mean, in terms of the detail planning point, I mean, I don't really think there's much in that, Gregor, to be honest. I think that... My sense of it would be that average site sizes are rising. There is no question that average site sizes are rising. The planning system was grinding to a halt and hopefully with the new government the planning system will be reinvigorated and start moving more efficiently. So I would think the combination of those two things are most likely to impact the percentage of detailed concerns sitting in the land bank.

Thank you. Great. I'll just finish off in the front row if we go to Charlie and then we'll come back to you.

Thanks very much. This is Charlie Campbell at Stiefel. I've got two but they're both quite quick really. Sites for FY26 so you're promising more than FY24. Just wondering kind of if there's upside to that because I'm guessing you haven't really factored in much in the way of an improving planning system. So perhaps that could come through and deliver on that. And I guess we could also see some resolution to nutrient neutrality by then as well. So just to confirm that neither of those assumptions are in that statement about FY26. And then secondly, just a quick question on price. Just wondering if you are seeing any movements in headline prices, sort of July, August, September. Be very grateful to hear about that, if that is going on at all. Thank you.

Yeah, Charlie, I think really very straightforward. I mean, I know it's difficult to predict the future in planning, but I think when we look at the backdrop just now, and you're looking out to, let's say, the end of 26, so we're all the way through to June 26, it is very, very hard to see, given what the government have said, that we're going to see a downside to planning, given the way we forecast. I mean, we're just saying this is the stuff we've got in the pipeline already. We're not assuming some heroic assumptions in terms of, you know, we'll get planning in 12 weeks or something. We're just assuming that everything will take ages as it normally does. So I think that on normal planning, I struggle to see a downside to what we're saying, firstly. And then secondly, I think nutrient neutrality is just a really good point for you to highlight because... There is something like 160,000 homes across 75 local authority areas tied into that issue of nutrient neutrality. And we understand that protecting the environment and the sustainability credentials of businesses, the sustainability credentials of local authorities and central government is very, very important. But it is hard to see that there is a justification for stalling 160,000 homes. Now, whilst they can't all be delivered in FY25 and FY26, I think it is realistic to assume that the government will unlock this over the next 12 months. Because the reality is if they don't unlock it, it won't be 160,000 homes, it will be 200,000 homes and then 250,000 homes, and it won't be 75 local authorities, it will be 100 local authorities. So they've got to find a solution to it that works for everyone, which I think is possible.

Sorry, on pricing.

Yeah, I mean, in terms of pricing, I mean, generally stable. I think stable through July and August. We're not seeing anything unusual in terms of pricing.

Thanks, and we'll come back to the middle. Alistair and then Chris.

Alistair Stewart from Progressive Equity Research. A couple of questions related to previous ones. On the 0.58 private current sales rate, it's obviously very strongly up in last year, but that was probably the low point or near to it. But it is a quiet time of the year with holidays. Can you cast your mind back to, say, FY19, the last normal year? What would the sales rate have been roundabout then during the holidays? That's the first question. The second question was the multi-unit percentage fell from 17% to 14% during FY24. Did that vary much quarter by quarter as the land market picked up and you maybe saw better opportunities keeping it in house as it were?

I think on the first one I don't have the figure. I don't want to speculate on the figure. I'm not even going to speculate that it was higher. But we'll answer that offline because we've got the figure somewhere. I think on multi-unit, my sense of that is just more that It's really getting deals agreed, I think, is a factor. There's more and more house builders who are doing multi-unit sales. There's more and more participants coming into the market who are interested in multi-unit product. And so I think it's just more about... getting a pipeline that really moves forward and saying, well, you know, these are the four or five companies that we're going to deal with on multi-unit sales. And I would assume that all house builders are facing that challenge. if you want to add to that, Mike.

I think the only other driver for the move year on year is at the end of 23, we did quite a big deal with Citrus. You remember that we announced in June, so there's a little bit of timing. They do tend to be lumpier deals, as you know, because of the size.

Are you more inclined just now to actually hold on? You're always going to have the Citra type deals, but are you more or less inclined to have that sort of level of multi-unit sale?

Yeah, we're still keen to engage. I mean, we see it as a way of helping to drive volume through the business. But as I said earlier, I think, you know, the discounts have to be realistic and they have to stack up for us in the context of each individual deal that we're looking at. So, you know, in principle, yes, we're happy to do them, but we won't do them at any price.

Great. I think we'll go to Sam and then Chris, if that's OK.

Yeah, morning, everyone. Sam Cullen from Peel. I've got three as well, please, mostly followers, I think. If you think about sales rates, and I think Stephen touched on kind of first-time buyer percentages, where they were now versus 2019, absent any impact from kind of the Red Road transaction, what's your sense of where first-time buyer percentages could get to in a more normal market? And essentially, how far back to normal, in inverted commas, or prior sales rates do we think the business can get to? Going forward, that's number one. Number two is just a better sense idea of the tension in the supply chain in terms of you see volumes recover 5%, 10% from here. How far can they extend before price increases or price inflation, or cost inflation rather, starts to become a feature of the market again? And then the last question is, in your statement, I think you've got a figure around MMC penetration at 30%, 35%. So you have a figure in your minds of where that should get to over the medium term, going back to your comments, David, earlier about volume output increases across the industry.

Yeah, OK. Thank you. So if I pick up on these sales rates and the supply chain, and then Stephen picks up in terms of MMC and just our thoughts on that. I think in terms of sales rates, excuse me, quite rightly, I think we should be cautious about sales rates. And I think you can see from the announcement this morning that I think our focus is much more on outlets. So, I mean, I think broadly we're assuming something similar. So let's say that we're at 0.6 or thereabouts. I mean, that's the kind of assumption that we've got. We know that sales rates... Sales rates differ by house builder, obviously. But we know that our sales rates could be as high as 0.75, 0.8 on an annualised basis. But equally, that was with significant demand-side support in the market. And latterly, demand-side support that was aimed at the first-time buyer. I mean, we believe that the overall equation would benefit from demand-side support And the industry, and Barrett as a participant, has said that we would be happy to pay for demand-side support, and we've always said that. But the reality is I think demand-side support is some way off. And we are in an unusual position. I mean, if you look over the last 20-plus years, this is a period of time where we have no demand-side support. And that hasn't been the case for 20 plus years. So I think it's right that we should just be cautious about those rates of sale. And if we can end up at, say, 0.6, then I think we're broadly happy with that kind of level.

In terms of supply chain.

I mean the reality is the supply chain is absolutely fine and there aren't the sort of pressures on the supply chain because you know we've delivered into now in 2024 we're going to be sub 200,000 so the reality is that you know whilst I'm sure the supply chain will say everything's not straightforward I mean we're we're 25% plus down on volume as an industry. So the reality is the supply chain is fine, the availability of labor, the availability of materials is fine. But I think we know where some of the pressure points are as volumes start rebuilding. And therefore, as we start thinking about how do we get back to 225,000, 250,000, then we know some of the pressure points. And also, we know we've got more to do in terms of changing our methods of production and therefore doing more factory-based production. That is definitely something that we need to do more of, which is a really fantastic segue across to Stephen to talk about MMC.

Thanks David.

As you say Sam, clearly as David mentioned earlier we opened our Derby factory, went on stream July 23 and it's now up and running. It's producing good consistent production levels. We've extended our, or in the process of extending our original factory in Selkirk, which we bought with the business in 2019. So putting those two factories together, we'll have in excess of 9,000 timber frame unit capacity per year. That will also include closed panel construction. It's not just open panel. So we see a lot higher proportion of timber frame units, open panel, as well as closed panel coming through. Looking ahead, we've got teams working on how we can bring in more MMC other than just frame construction. So we've got a lot of panelised roofs, ground floor, precast concrete, insulated slabs, which we're using extensively now. So we're using more MMC construction in every element as we go forward. There's lots of other potentials in terms of pod construction, in terms of bathrooms and even kitchens. Other joinery items, smaller items, more door cassettes, pre-fixed and pre-finished doors to be bolted in. So we've got a programme of activities where we're continuing to increase the level of MMC, which, as I say, will complement the volumes recovery.

Thank you, Stephen. David, if you want to say a few words, we are running out of time, so I'm afraid we will have to halt it there, but I'll just pass back to David if you've got any final words.

OK. Yeah, Luke, thanks very much, everyone, for coming along. I know we've got one point to follow up on in terms of our 2019 rates of sale, so we're going to be on that immediately. But, yeah, thank you very much, and you know where John is if you've got any more questions. OK, thank you.