Henry Boot PLC

So morning everybody. It's good to see quite a full room this morning. I assume that the sun has brought you all out. And actually you're all smiling at me, which is nice. Now, we're going to do the normal. This is the agenda. So I'll start off with an introduction and give you some operational highlights and talk about our medium-term targets. Then Darren's going to come in and do the financial review, but he'll also talk about land promotion. Then I will finish off going through development, house building and construction and then finish off with an outlook. So, first of all, I'm not going to go through the investment case, and I can see that you're all relieved, but the good news is that the investment case is still in your appendix of your slide pack. But what I wanted to do is I just wanted to talk you through a few points just to give you some context for today's results. Now, the first thing is that our focus on high-quality development projects and premium homes has helped us to achieve relatively strong property sales over the last two years, at a time when, to be honest, the markets were pretty challenging. We continue to have conviction in our three key markets, and with a wealth of opportunity within the portfolio, I remain confident that we can hit our medium-term growth targets. Now there's no doubt that there have been difficulties in the planning system and that has held us and many other businesses and indeed I think the country back. But Darren and I are going to start to give you an impression of how we think that this can change and that the planning will ease. So you'll hear that in the presentation this morning. Now, throughout this period, as you'll all expect, our balance sheet has remained absolutely rock solid. And I would say this, wouldn't I, at just over £3 a share NAV, the business is materially undervalued because we only hold our land and developments at cost. And the decision this morning announced to increase the interim dividend by 5% just shows that we've got some spring in our step and confidence going forward. So turning to the operational performance, as flagged in our 2023 results, We started the year with a materially lower sales position, and that's meant that our operating profit is not as strong as in previous years. However, we still expect to achieve market expectations because we've got 81% of our sales against our yearly budget achieved. And also, there are early signs that our markets are recovering. So going through the operational performance, first of all you've got land promotion, 843 plots sold with nearly 1,700 plots exchanged and a further 1,000 under offer, showing the pickup in demand from house builders for Hallam's prime sites. Our land portfolio, that's increased marginally to just over 101,000 plots. And I said last time that we were going to concentrate more and more on getting planning and more and more on achieving sales and less on growth. And that's quite simply because we think that the portfolio already is of sufficient scale and it's got a nice balance. So we want to concentrate more on output. Now, I think that's particularly pertinent today because we believe the proposed changes to the MPPF will open up a window of opportunity for us to win more consent. And we expect in 2025 to make 8,500 fresh applications. Turning to development, we've completed on £68 million worth of development. 77% of that has been profitably pre-sold or let. And not surprisingly in the current environment, our share of the committed programme has reduced, so it's at around £119 million at the moment. And the good news is that I believe commercial values have stabilised and the investment portfolio has gone up marginally by 30 basis points to £113 million. On Stonebridge, that was just below target in terms of completions in half one. Sales definitely took longer to get over the line. Now, post-election, we've had a marginally improved sales rate. And as a result, we're back on track with 95% of sales secured. Once we hit our target of 275 homes, which we think we will do, that is a 10% increase in volume from last year. On construction, operating profit whilst positive was below budget as HBC struggled to basically turn PCSAs into turnover. And then if you look at it all, it means once you deduct £3.9 million of central operating costs, we've got a group operating profit of £5.9 million. Now, I said that we'd continue to be confident about hitting our medium-term targets. I'm not going to go through all the targets. I'm just going to pick out a few. First of all, capital employed, that's still set to grow to 500 million. Our aim is for Rocky to be towards 10% this year, which is obviously outside our range. But as our markets recover, we are confident we'll get back into that range. Hallam expect to sell 3,000 plots this year, and that will be accretive to its five-year running average. So we're getting towards that 3,500 average target. On HBD, we expect to complete £192 million of development this year, and that's going to be one of the highest of our totals ever. And there's potential to replenish that committed programme from our development pipeline. And then on Stonebridge, we've got ambitions to sell 300 homes in 2025. So despite difficult markets over the last couple of years and an improving market this year, bit by bit, we're getting towards that 600 homes sales target. I talked at the beginning about strong property sales and also that we were confident of meeting our full year expectations. And I think that this hopefully shows where our confidence lies. what you can see is that we've already completed, exchanged or reserved on 81% of budgeted sales for 2025. Now, to be clear, that's not turnover, that's actual property sales. But what we believe is that that figure gives us good visibility on our year end. And as I said, we're confident we'll hit expectations. So just going through the slide in a bit more detail, you can see the key at the top. You've got Hallam light blue, HBD green and then Stonebridge Homes dark blue. And we've got the budget of £225 million. We've completed on £111 million to date, but this rises to £134 if you include exchanged, and then £182 million including reserved. And obviously in the reserve, there's a reasonable chunk of dark blue, which is Stonebridge Homes. And just to say that level of reservation is not unusual at this time of year. It's a busy time of the year for us to be converting reservations into exchange contracts and then completions for people getting to the homes before Christmas. To get us to the £225 million, we need to achieve another £43 million of sales, and the vast majority of this is in two transactions. The first one is Phase 3 of Pickford Gate in Coventry. That's a Hallam sale, and that is under offer. And then the second one is... is a land sale on phase one of Spark. That's an HBD sale. And again, that is under offer. And there are other deals that we're doing that Art has advanced, which we would feel reluctant talking to you today about. But those deals, we believe, also give us some cover in the event that the two deals that I've mentioned don't happen. And with that, I'm going to pass you over to Darren.

Thank you Tim and good morning everyone. So if we can turn to our financial summary. Revenue in the period decreased 41% to £106 million and gross profit decreased 40% to £24.7 million, reflecting the anticipated weighting of this year's activity to the second half of the year. This has been driven largely by the house builders who, having only been in the market for smaller sites until recently, have now returned to taking larger sites, which take longer to agree terms and progress through legals, resulting significantly in our H2 weighting. Despite this, demand for prime, high-quality assets remains, and as you've seen in Tim's walkthrough of sales, we are confident that the timing of sales will see us achieve our full-year expectations with that 81% of this year's total sales now secured. With operating profit of £5.9 million and an underlying profit before tax of £3.6 million, our return on capital employed reduced to 1.4% for the six months ending June. We expect this to increase in the second half of the year, but will likely be marginally below our medium-term target of 10% to 15%. Whilst earnings per share has reduced to 2.8 pence in the period, we remain confident of achieving our full-year expectations and have increased the interim dividend by 5% accordingly. Turning to the balance sheet, the investment property portfolio has seen a modest uplift to £110.6 million as market values have stabilised and in light of current interest rates will be considered in our approach to growing this to our medium term target of £150 million. We've continued to invest over £50 million in inventories, growing Stonebridge homes with investment in their work in progress, as well as adding to our strategic land portfolio and recycling returns in our committed development programme ahead of anticipated disposals later this year. Following these investments, net debt increased to £104 million, with gearing above our optimal range at around 25%. Since the half-year, disposals have now reduced this to around 18%, back within our target range of 10% to 20%. We expect this to reduce further towards the middle of this range between now and the end of the year. I'm happy to report that we've completed our bank refinance. We now have a facility of 125 million, which runs to 2027 and is extendable by two years, taking us to 2029. The new facility includes an accordion, allowing us to increase the facility by 60 million over that period. Terms are broadly in line with the previous facility and are based on a margin of 1.6% over Sonia. Finally, our net asset value per share ended at 305 pence as dividends in the period offset retained earnings. Looking at the cash flow, this largely demonstrates how strong forward sales and cash collections on past sales to house builders on deferred terms have allowed us to continue to invest in land and property to bring forward schemes for future disposals. Operating cash outflows totaled £6 million, being returns in the period largely offset by payments of tax and dividends. We then invested £52.8 million into inventories related to growing working progress in Stonebridge Homes, delivering our committed development pipeline and infrastructure works in Hallam to bring forward two of their larger schemes. Given the lower level of sales to house builders in the period, our continued investment has been supported by cash collections on previous disposals of almost £40 million in other working capital. As such, we ended the period with net debt of £103.9 million, which we've already seen significantly reduce following sales post-half year and anticipate will reduce further to the year end. If I can move on now to the operational review and starting with land promotion. Hallam sold 843 plots in the period and have a further 1,695 plots exchanged, of which 1,246 are due to complete in the second half, or in some cases have actually now completed. At an average £9,700 gross profit per plot, this remains above our five-year average of £9,100 and we expect this figure to be upheld for the full year. Whilst land values have been stable, we continue to see good demand for our sites in prime locations, with larger house builders actively returning to the market for schemes of a larger size. We've continued to add to the portfolio, securing sites with the potential to deliver over 2,000 plots, maintaining the portfolio at over 100,000 plots in total. Whilst plots in the portfolio with planning permission is reduced to 8,000 following sales in the period, this still equates to around two and a half years worth of sales and also continues to reflect the delays in the planning system. With the proposed changes to the National Planning Policy Framework, we anticipate the planning system will start to unlock. And with this in mind, we now have seven active appeals running on around 2,500 plots out of the 13,000 we have in the system awaiting determination. We've also conducted an initial review of our portfolio, identifying around 8,500 plots which we believe can be advanced into planning over the next 12 months in light of the changes proposed. With our portfolio all held at cost, with no valuation gain on securing planning permission recognised until the land is sold, this continues to reflect a significant uplift of value not recognised in our balance sheet. And finally, we have 1,000 plots currently under offer, which we're targeting for completion this year, the majority of which are on our site in Coventry. If completed, Hallam will achieve its full-year financial target. And here we have that very site, Pickford Gate in Coventry, a prime example of the large-scale complex schemes Hallam is capable of delivering. Having secured a permission for 2,400 plots in 2021, the scheme includes 25% affordable homes, 37 acres of employment land and new local facilities, including a school district centre and open space. The scheme required a new junction off the A45, which Hallam, having secured partial funding through Homes England, successfully delivered in April. In Phase 1, Hallam were able to open up the site last year, selling 247 plots to Countryside. In Phase 2, the sale of 491 plots to David Wilson Homes completed just last Friday. That generated an excellent ungeared internal rate of return of almost 20% per annum. Phase three is the disposal I referenced that we are hoping to conclude later this year, where we are in advanced negotiations for 632 plots. This will leave Hallam with around 1,000 plots remaining for future phases and even more to go at with the 37 acres of employment land. We continue to manage one of the largest strategic land banks in the country, with 77% of the portfolio in the Midlands and South where values tend to be higher. Our tendency of using agency agreements provides a capital-light investment structure and gives us our USP against house builders by marketing the sites to drive best value for our landowners. We've seen increased demand for larger quality sites of around 500 units in prime locations, evidenced by the scheme we've just seen in Coventry, and we anticipate disposing of around 3,000 plots this year. This is above our five-year average of 2,850 plots per annum, and we continue to target sales of around 3,500 per annum, being our medium-term target, which we fully believe is achievable from the scale of our portfolio. With an average gross profit per plot, our five-year average of £9,100, this average continues to represent what we believe might be achievable from the full portfolio over time. And on that, I will hand you back to Tim for property.

So, property investment and development. HBD completed on £68 million of development. 77% of that has been successfully pre-let or pre-sold. And the 23% that's not been sold is all in Settle, which is our premium apartments in Birmingham. Relative to the market backdrop, we've maintained a high level of committed development, 190 million-hour share, and 64% of that has been pre-let or pre-sold, and 96% of the development costs are fixed. And I'm going to go through the programme literally on the next slide. The majority of our £1.3 billion development pipeline is made up of industrial. And within that, there's £200 million of near-term occupier-led developments that we are in a position to start. In terms of the investment portfolio, that's shown modest growth to £113 million, and again, more on that in a minute. On the committed programme, the first part you can see is industrial. It's made up of four schemes totalling 579,000 square feet. And just over 40% of that has been pre-sold. And the one scheme where we've not achieved pre-lets or pre-selling is Raynham. And there the contractor went into administration earlier this year, which has delayed practical completion and then has had an obvious knock-on effect in terms of our lettings programme. Now we made the decision and we've got the skill set to take over the contract and I'm pleased to say that since then the scheme has actually come in under budget. We're very pleased with the quality of the scheme and I think that the letting interest will pick up thereafter. On industrial, more generally, whilst occupier take-up has slowed from the record levels that you saw during the pandemic, demand still remains resilient due to structural drivers. And a great indication of that is the rental growth. And if you look at the rental growth on the index up to August, it's at 5.4%. And therefore, we will expect to commit to more industrial development in the near term. The next section is urban, residential and commercial. And with the completion of Settle, that section just now comprises Ireland, and I'll talk about Ireland on the next slide. And then finally, we've got Land Another, where our main commitment is the grant-funded remediation work at Sparks. Work's going to complete there in autumn, then we can draw down the land and then we've got the opportunity to develop over 600,000 square feet in seven units that literally overlook the M6. And the strong interest in the scheme generally, and as I've said already, the first unit, that is one of our key sales for the year, we've got that under offer. Total estimated profits on all of these schemes is £22 million, of which only £4.7 million has been taken to date. And all of that £4.7 million relates to schemes at Walsall and TMS Leicester, which are both pre-sold. Now, set an update on Island. This is a 50-50 joint venture with Greater Manchester Pension Fund. It's an absolutely sparkling building in the centre of Manchester that operationally is net zero carbon. And I'm very pleased to say that we've got 50% of the space and offer to a significant company. And the rents that we've achieved are in line with the target rents that we've got here of £44 per square foot. The scheme will complete in the autumn and we've got good interest for the remaining 50%. Then in terms of settle, that completed in May, 102 premium apartments. You can see a photo of the building, a photo of one of the apartments and then also the rooftop garden. 52% of the apartments have been sold or reserved. We've been achieving our target price of £470 per square foot. We've got demand for that, although because the market has been slow, we are marginally behind programme in terms of sales. And we would expect to have achieved the majority of the remaining sales by the year end. I've talked about the 1.3 billion development pipeline. It's a high-quality pipeline. It's got great scale, and the majority of it is in industrial, with the rest in urban development. Most of the pipeline is controlled through development agreements, so it's capital light. And as you can see from the slide, we've got £58 million worth of our capital invested in it. We've maintained a relatively high level of development over the last couple of years, and we're going to look to replenish our commitments. And they are likely to come from... these four schemes. And again, I'm not going to go through all of them, and I've talked already about Spark. But just to talk to you a bit about Neighbourhood, it's a £128 million GDV build-to-rent project. We own the site, we've got planning, and we have got investor interest in funding it. And subject to concluding a funding agreement, we're hoping to start on site next year. And then Golden Valley, that's got the potential to be a £1 billion mixed-use campus. It's held through a development agreement with the local authority, and we only recognise the first phase, which is around £155 million in our pipeline. And this first phase is known as the National Cyber Innovation Centre. It's next door to GCHQ. We haven't signed anything, but you can guess who we're talking to in terms of anchoring that innovation centre. So just a quick word on the investment portfolio. There's more detail in your appendix. I think, first of all, over the first half, there are signs of the commercial property market stabilising. And if you look against the indices, at an all-property level, there have been positive total returns. And certain sectors, including industrial, have shown a positive capital return. Transaction volumes remain low for all sectors, with higher interest rates weighing on activity. But as the outlook has improved, we've seen an increase in investor confidence, and we're definitely seeing investors talking to us now about funding BTR and funding industrial schemes. Our capital return at 30 basis points compared with the index at 10 basis points, fine margins, and our total return at 2.7% over six months was rounded in line with the index at 2.9%. More importantly for us, you can see the performance over the last three and a half years, and that's since we've been collating all this information. You can see that we've materially outperformed the index. Our total return is the dark blue line at 7.6%, and the index is at 3.8%. Both figures are per annum, so a meaningful outperformance there. The investment portfolio, 74% of it is industrial with a good weighting in the southeast. And most of the portfolio is made up of modern buildings that we've developed. And then there are also some investments where we've bought them because we will turn them into developments. So going to Stonebridge. Stonebridge. As I said, they completed on 90 homes, slightly down on last year. As in an uncertain market, sales took longer to get over the line. The average selling price is at £381,000 and our pricing has been firm. That's reflected the fact that that we have sold smaller homes during this period and also we've sold quite a few homes in the north-east region, which is where we've recently expanded in, and house prices are lower in the north-east region than in Yorkshire. The average sales rate was at 0.5%, and that's marginally better than half 1.23% at 0.48%. And then if you look at the five-week sales rate to the beginning of September, that's improved again to 0.54%. And the important thing there is that obviously that period of five weeks includes August, which is always a slow period for us. And if you compare that with the period last year, that's 26% better. So we feel as though we've had a decent summer. 95% of the target is secured, so we're on track to grow the homes sold by 10% of this year, which is no mean feat in this market. Last year, we grew our land bank by nearly 40%, and over half one, it's actually fallen almost by the level of sales achieved. But we have got three sites under offer that have the potential to add 750 plots to the land bank and also... Within those three sites, there will be our first site in the North Midlands, because you know we want to end up being in three regions, call it in the Midlands and the north of England. And changes to the MPPF will not only help Hallam, they'll also help Stonebridge achieve its growth objects. So construction. The construction segment has been impacted by HBC's fall in turnover in a challenging market where a material level work we'd expected to win was put on hold or delayed as clients actually struggled with the viability of some of their schemes. This is reflected unusually in HBC. As you can see, in terms of returns on sale, they've made a small loss. Now, as a segment as a whole, of course, it's made an operating profit, but also remember this is a small part of the group. It only accounts for 2% of our capital employed. There are some early signs of a pickup in the construction market. We're pleased to have been appointed to the £36 million redevelopment of Rotherham Markets and we've also got £54 million worth of PCSAs that we're hoping to convert into firm work. In the summer you will have seen we have made management changes including the appointment of a new MD and this MD has got a good track record of winning work and his main aim is to restore the turnover numbers at HBC. Banner Plant and Roadlink are trading in line with expectations. So I'm just going to finish off now on Outlook. It feels like the economy is picking up with inflation more under control and interest rates are forecast to fall. This, together with the early signs of a pick-up in demand over the summer, is positive for our recovering markets. With 81% of our sales budget secured and the two key transactions we're aiming to complete and offer, I believe we remain firmly on track to meet expectations. The group continues to have conviction in its three key markets, plus I believe this focus on high-quality schemes and premium homes will put us in a good place. The proposed changes to the MPPF also give us a great opportunity to materially increase plots within Hallam and also to realise our growth ambitions at Stonebridge. Our rock-solid balance sheet, a portfolio rich with opportunity and a recently signed larger banking facility means we've got the resources to grow the business and to achieve future shareholder returns in line with our medium-term targets. Thank you. So any questions in the room? All right.

Krista. Thank you. Krista York from DB Numers. Two from me, if that's OK, this morning. So the first one is just around returns on capital employed. And sort of looking back over the last five years or so, seen quite a significant increase in inventory across planning promotion agreements, property development and house builder land. So when you look forward to get to those, particularly the higher end of the return on capital employed, you'll need to sort of turn that inventory a lot quicker and I was just wondering, you know, the world's changed somewhat with inflation and things like that. Do you think the environment will return, that you'll be able to return that inventory quicker? Or is it that maybe actually having a skinnier balance sheet is better going forward, notwithstanding your medium-term targets? And the second one is just on land and looking forward and definitely take the points of the NPPF and that really helps volumes. But some of the other things that the government is saying around affordable housing and you've got the future home standards and things like that. Do you expect that the house builders will potentially put a lot of pressure on land prices and how that impacts you and whether that creates a bit of a standoff maybe between landowners and house builders in terms of selling the family asset in essence? Thank you.

OK, right. So in terms of the first question on returns, you know, Christian, you've been following us for a long time. We're a long-term business. So even though we've gone through a cycle, we've carried on investing in the business because our experience is that if you invest at this time... usually you are in a better place to make returns as the market recovers. And you went through your waterfall on your balance sheet, and what's the inventory? 52.8 million. And I think it is cyclical, and because it's cyclical, When we look at the returns either in our development business or Hallam or the house builder, we still think that the returns will revert back to the historical averages. So for us, we think that as we grow the business, as we keep on producing high-quality schemes, we will get returns on capital employed back within our 10% to 15% range. And, you know, Christian, you've looked at the averages in the past. We've been able to comfortably do that. And we are thoughtful about where we put our capital. So I don't think we can run a skinny balance sheet, but we can run a balance sheet that is aimed to make the most of what we've got. And I think that that was a good example when we went through the development pipeline and I purposefully put on there how much money we've got invested in it. and to have the optionality to draw down on £1.3 billion of developments, and at the moment it's costing us £58 million. So we're thoughtful about how we use our capital. On the MPPF, I think first of all, Excuse me. It's been a major initiative, hasn't it, from the new administration. And it's something that just absolutely needs to be done for the country. Forget about Henry Boot, forget about house builders for a moment. You know, we have got ourselves into a dire position where some major infrastructure, some major power works, some major public services are being constrained by planning. And look, we've got to hold the government's feet close to its fire, but it feels as though they're determined to change that. And I think that that is the main thing that I take from the position. And I absolutely understand that more will be expected of developers in terms of future home standards. But also, it's a competitive market. And if you've got, and we've seen this very recently, if you've got six house builders bidding for a site, I think that you're still going to get good prices. So it's not something that we're worried about. We're not thinking there'll be land deflation. And actually, if you look at the Savills Index, which is our favoured index, and like Frank do one as well, but we use Savills, the Savills Index over the first half, in a sluggish sort of market, the land prices have gone up by 1.6%. Yes, Sam?

Thank you. Sam Cullen from Peel Hunt. I've got a couple, if possible. Both really on construction, I guess. Do we need to think about any sort of potential cash unwind in construction, given the lower order book? Do we need to think about any potential cash unwind in construction, given the lower order book that we have at the moment, notwithstanding you're obviously trying to rebuild it? And then related to that, I guess, the experience at Raynham, Would that make you reconsider how much construction you do yourselves in the property part of the business versus subbing out to other contractors?

Or do you want to do the cash and wind one? And do you want me to start off with rain?

Yeah, go on. To a degree, Sam, yes. Obviously, if we're doing lower levels activity, it's going to have an impact on the balance sheet. But I think given the margins within construction, the kind of differential between the cash unwinding on the receivable and the payables in terms of the subcontract supply chain, it ends up relatively minimal. I think both will move because of that dropping activity. But the net position in the balance sheet is probably negligible.

And then I don't think Raynham is a defining moment in terms of views on construction. You'll be aware that there have been contractor failures over the last two years, and I'm pleased that... Henry Boot has got the skill to take over a contract, then actually finish a high quality building under budget. As you've heard me say before, the focus on the group is very much in terms of getting more output from Hallam. Hallam is a Rolls-Royce business. It's got scale already. We can continue to grow it, but we want to focus getting more output from it. HBD needs to develop a bit more scale and more consistency, and that's why we're doing more industrial. Industrial will be our bread and butter developments. And then Stonebridge, we want to grow Stonebridge, our premium house builder. So I don't want to diminish the efforts of the construction business because we've got a lot of colleagues who work in it and they work very hard. And actually, if you look back over the last 15 years, and we've only chosen that period because we reorganised the accounts after it, HBC has made a profit and construction has always made a profit. But that will not be our focus going forward.

Thanks, guys. Colin Sheridan from Davie. Just a couple of follow-ons, if I can. First, just in relation to the land sale comment on number of bidders, give us a feel for how you think that's changed over the last few years, and specifically in relation to the more recent improvement. whether that has been more driven by national builders or if it's a little bit more broad-based. And second, then, just following up on the planning side, I mean, I think we can see that the MPPF changes could potentially be going in the right direction finally. But one of the things being kicked about, I guess, is land value capture and how would the business think about something like land value capture in relation to risk versus opportunity over the long term?

Yeah. Okay. So I think that in terms of bidders for the land, we were saying about this time last year, we were seeing selective bidding and it tended to be for the smaller sites. So Hallam had the opportunity and the scale to pull down some of the smaller sites. I think I elegantly called them bite-sized chunk sites at the time. And they therefore managed to keep momentum in that business. And then as this year has progressed... We've seen house builders prepared to buy bigger sites. And the really, really big site that we exchanged contracts on just before Christmas, which is over 2,000 plots, was at Swindon where Vistri bought it. And then this year we've seen good demand at Coventry. We have split those. I mean, originally we were going to – bless you, Richard. Originally we were going to sell phases two and three in one chunk. and we split those, so they're roughly 500 and 600. And that was the right thing to do, and we've got them away. But I think that now we're probably back into thinking that we could sell the 1,000. So there's definitely been an improvement in demand from the house builders. And in terms of numbers... I'm aware that there have been some mergers and acquisitions in the house building, but there's still enough parties out there to be competitive. And what I would also say, because we experience it from the other end of the telescope, in that we're bidding for sites for Stonebridge. And with Stonebridge now typically... the sites that we've got under offer average 250 plots per site. In some of those instances, we have been bidding against 10 house builders. So we're bidding against the national house builders, and then there are a lot of regional house builders like us where the 250 plots just hit their sweet spot. So I think... that there will be competitive bidding going forward, which kind of goes back to Kristen's question on the sites. I think that answered the question on the interest in the sites. And then in terms of the NPPF, Yeah, we've got to be thoughtful, haven't we? The present administration have said that they're going to open up planning. And we're convinced that they will do that. And we firmly believe that the consultation will go through and that we will get pretty similarly legislation in line with the consultation. That's just going to be good. But they will also, I think, look in some areas where they're going to try and get some money back. And I suspect that the main area will be Greenbelt. You'll have seen what they're proposing. On the Greenbelt, they will look for 50% affordable and social housing. And there are just suggestions also that they will not be looking for the landowners to get the full value of residential land. But for us, we promote greenfield sites. The number of greenbelts within our portfolio is a low percentage. So as long as, and I think it is economically and in terms of the ambitions that the government has got, I think it makes sense for them to let, as far as possible, the free market exist on the normal greenfield sites. Okay.

We have a couple of questions from the webcast. So the first question is from Adrian Kiersey. How long will it take for the next phase of the redevelopment of Spark? What is the size of the units you are planning on delivering on the site?

All right. Okay. So in terms of the Spark... It's 600,000 square feet in total. So the average size is going to be about 80,000 square feet, but it's a range. We've got one up to 250,000 square feet. And there's a degree of... Agility within those unit sizes. And I want to say that the smallest one is 50,000 square feet. So you've got a range, and that's good in this market. Our aim is to start on site on the first unit early in the year. We've got planning on that. And then we will phase the development. So the development is probably going to be broadly over the next two years.

Thank you. Next question is a follow-up from Adrian. In the presentation, you talked about bringing forward certain projects within the development program. What sort of projects are you looking to bring forward? Are these projects likely to be delivered solely by Henry Boot or via JVs or via a mix of the two? Yeah.

Well, Adrian, you'll have seen from the presentation, we talked about four schemes. So the Build to Rent scheme in Birmingham, Cheltenham, and then the SPARC, which we've already talked about, and then Preston. And then we've got other land. For example, we've got a site that is ready to go for development of industrial at Welling. So they're all schemes that we are poised to start on. And they will be committed, subject to us, A, being convinced that there is... some form of occupier backing to them, so that will be a mixture of pre-let and us building them speculatively, and that's our way. And on things like the bill to rent project in Birmingham, you can see it's pretty chunky at £128 million. Well, we won't do that on our balance sheet, so we want institutional funding for that. And then we've always had a good record of joint venturing, so I think that there will be a smattering of joint ventures in there to help us sometimes with capital and to also help us think about risk.

Thank you. Next question is from David O'Brien. He's asked, how do you expect to be impacted by lower government-related spending?

I was going to give you this one. Is that why I've given you the awkward question to answer?

No, so I think if we look at the various businesses we've got, construction typically is around 50% public opportunities. So clearly if the government do pull back on public spending, there will potentially be less to go at for the construction business. But as Tim said, that is a relatively small part of our organisation now. I think from a property development side, there's potentially quite some opportunity in that. So we've got a strong history of partnering with local authorities to bring forward development, unlock opportunity and release funds. So again, if local authorities are becoming constrained, in funding, then it may be that we see them being more opportunistic in how they generate returns in the local authority, bringing opportunity for our property development business. Have you had anything?

No, you know, if there is a reduction in government spending, and I don't think it is clear that there will be, what all businesses and definitely Henry Boot wants is we want a stable fiscal and monetary policy. And if we get that, we will still flourish, even if there is a reduction in government spending. But I'm not clear that there will be. I'm seeing Adrian later on. I'm going to ask him where he gets his government spending figures from.

Thank you. Next question from David O'Brien. Will dividend cover revert to more normalised levels of cover from FY25?

That's definitely a question for you.

We've said all along that we want to have a progressive dividend policy and following the reduction in dividend post-COVID, we've been building back the dividend at quite a high annual rate. I think you've seen in these interims that we've slowed that rate of growth now and it feels like that is a more sustainable level for us going forward to still achieve a progressive dividend policy. but at the level that's fit for the returns that we're seeing.

Great, thank you. That concludes all of the webcast questions, so I'll hand back over to you.

Good, okay. Any more for any more? John.

Two, please, Tim. The first is in property development. How would you describe the segments of demand in industrial distribution? Do you have any opportunity in data centers in your portfolio or your aspirations? So that's the first one. And secondly, in planning, have you seen any early changes in local planning authorities their appetite for embracing planning targets and getting their plans up to date and even outlook for decisions on what you're seeing on the ground.

And on the planning, are you talking about it generally or are you talking about it specifically for industrial?

Particularly residential, actually. Residential?

Yeah. Okay.

Okay.

Yeah. So I said in the presentation, it feels to us as though the industrial market is getting back to a bit more of a normal market. So it's not the boom that we've seen during the pandemic and immediately after the pandemic. um and and we're good with that that that kind of like works for our model um and and also you've got to remember uh still we have a good percentage of our industrial in the midlands and the north where the rents aren't particularly high um so we're seeing um Reasonably good levels of industrial. We've sold three sites to occupiers over the period, which again is something that we do. We don't always feel as though we've got to develop if we can sell a site and make a good profit. Back to Christian's point about returns on capital employed, we do that and we've got lots of land in which to do it on. And we've also completed a couple of logistic units in Southend. So it's been a steady period for us on industrial. What we've seen, and you'll have all read about this, is... The frantic demand from distributors based on e-commerce, that has definitely fallen back. Amazon are back in the market. We're talking to Amazon on a site, and others will be talking to Amazon on a site, and I think that's good news. But it's not as frantic as it was, and what seems to be replacing it is good old-fashioned manufacturing and heavier industrial. And again, for some of our sites in Preston, Wakefield, Markham Vale, that's bread and butter for us. In terms of planning, I think it's a bit early for us to say how the local authorities are reacting today. And the only thing is, is that in the lead up to the election, the local authorities that were of a certain political persuasion were already in contact with the Labour Party, and the Labour Party were being clear that they were going to open up the planning. And we were being told by those leaders of those local authorities, some of whom we've got partnerships with, that they think that they will... have more encouragement to develop more and in terms of housing I've already talked about it we think that we will advance 8,500 applications And we're beginning to work on those now. And we will definitely take on more people, which shows our level of conviction, in order to do that. And we would expect to do that broadly within the next 12 months. And that's a meaningful amount. And then we've got another bucket. But in the good old Henny Boot conservative way, we won't give a figure on another bucket. But we've got another bucket that we think will follow. So we definitely think that the environment will be more positive. And I think the only other thing to add is that the government have also made it clear to planning authorities that they generally want planning authorities to be more positive on anything that helps economic growth. And I think you've seen some of that already. So Ed Miliband, if you think about some of the decisions he's already made on energy, government does feel as though it's got the bit between its teeth in terms of letting the planning system carry out its proper function for the country.

Is city development and urban developments in your property development business going to be possibly the first winner of the new planning regime?

It could be, because traditionally, so the areas that we do urban development really are the big cities, excluding London. So there'll be Manchester, there'll be Birmingham, there'll be Leeds. But to be honest with you, we found that those planning authorities have always been very receptive to well-conceived, designed schemes. I mean, we had very, very straightforward getting planning on Ireland in Manchester, and then we've obviously got planning on settle, and we got planning on neighbourhood, 400 units, the build-to-rent scheme I mentioned earlier. quite straightforward doing it. Now I believe that part of that is because we are consensual, we work with planning authorities because of our background of working with partners and also our aim is to produce high quality schemes and I hope we keep on Showing that is not just an assertion. I hope that we're showing you that we're doing that. And that means that we do get on well with the planners and the urban planners. And as you know, my background in London, the planners in London, on the whole, they're very, very good to deal with.