Henry Boot PLC

So, morning everybody. So it's going to be the normal running order. I'm going to start off with the brief introduction and then review of our performance. And then Darren's going to go through the financials and land promotion. Then I'm going to finish off on development, construction and Stonebridge and also Outlook. So, first of all, an introduction. Our focus on high-quality land, prime development and premium homes helped us to achieve total land and property sales of nearly £350 million, or our share, £224 million. This is broadly in line with the sales over the last three years and shows it's a time when the markets have been pretty challenging that demand for our property remains resilient. We also continue to make good strategic progress and we've done three things. We've agreed terms to take full ownership of Stonebridge Homes. Following a strategic workforce plan at Hallam, we're increasing headcount and also in-house specialism to enable us to submit more planning consents and then ultimately to grow the sales of the business. And then we've also entered into the Origin Joint Venture, and I believe that that's going to help us to accelerate industrial development. And throughout this period, as you have grown to expect, guess what? Our bannet sheet has remained rock solid. And our NAV, it keeps on growing. It's just over £3 a year. per share and as you all know again very conservatively valued because the land and the developments are held at cost. The decision to increase our full year dividend by 5% is a sign that we continue to have conviction on our three key markets and we're confident in hitting our medium term targets. And we also believe we're not only well positioned as our markets recover, but also we think that we can take full advantage of the freeing up in the planning system that we've seen. So just going through the operational performance, and as flagged at the interim results, we expected our performance to be half two weighted. And I'm pleased to say that we've had a very good second half. And as a result, we've delivered results in line with market expectations. And going through the slide, first of all, land promotion sold just over 2,660 plots and 97 acres of employment land, translating to £183 million of land sales, or our share, £78 million. And that meant that Hallam formed ahead of budget. Our land portfolio has also increased to 105,000 plots. And as I said last time, our aim is to place more emphasis on winning planning and realising sales and less on growing the portfolio. And the reason why is that we think that the portfolio already has scale and balance. Changes to the MPPF have opened up a window of opportunity for us to win more consents. Even at the end of last year, we saw the inspectorate and the local planning authorities changing their approach to planning, and it is freeing up the planning system. And our ambition is to submit applications for 10,000 plots over the next 12 months. And to give you an idea, our normal run rate is about 2,500 plots per annum, so fourfold. Turning to developments, including Stonebridge, we again were marginally ahead of budget. HBD completed on £188 million of developments and 72% of that is pre-let or pre-sold. The investment portfolio generated a total return of 9.9%, so again it's well ahead of the index. And then Stonebridge continued to grow by completing 270 homes. That's 8% growth. And we carry on scaling up this business. On construction, operating profit was nearly £5 million and that was in a challenging environment and was below budget as in particular HBC's turnover fell. A new management team has been installed in HBC and I'm pleased to say they've made an encouraging start. And all this means once you deduct £11.7 million worth of central operating costs, group operating profit was £34.2 million. So quickly going through the medium-term targets, capital employed increased to £439 million and is on track to grow to £500 million. Rocky was at 8%, but we maintain a target through the cycle of 10% to 15% return on capital employed. Plots sold in 2024 are in line with the five-year rolling average of nearly 2,700, and we expect to sell 3,000 plots this year. And again, that's going to mean that we will step closer to the target of 3,500. On HBD, £188 million of completed developments was the second highest total ever at a time when markets have been subdued. And then on Stonebridge, we've increased completions in a difficult year and we keep on buying up land to hit that target of 600 units per annum. And then HBC, the construction order book this year started in a much better position with 55% contracted and 16% secured. So handing you over to Darren.

Thank you, Tim, and good morning, everyone. If I can take you through our financial review for the year. So turning to our financial summary, as anticipated, we delivered a strong performance in the second half of 2024 with a number of significant transactions within both our land promotion and property development businesses completing in the final quarter, along with the usual flurry of house sales. Whilst land and property sales were broadly in line with the prior year, the lower revenue largely reflected a reduction in turnover within the construction segment. Gross profit decreased slightly by 3%, 74.5 million, with the gross profit margin improving to 22.7% from 21.4%. With operating profit of £34.2 million and an underlying profit before tax of £29.4 million, our return on capital employed reduced to 8%. Through the cycle, we continue to believe our target range of 10% to 15% remains appropriate. Earnings per share reduced to 17.4 pence in the period. We have increased the dividend by 5%, reflecting our progressive dividend policy and the continued growth of the business. Whilst many house builders have returned to taking larger sites, these typically take longer to agree terms and progress through legals. We therefore expect our 2025 performance to once again be second-half weighted. Moving to the balance sheet, following more than 10 million of sales during the year, investment property has increased to 111 million, as we've seen further rental growth for our industrial assets and added 6 million through Origin, our new INLJV, which Tim will tell you more about shortly. We have invested over 35 million into inventories, growing Stonebridge homes with investment in their land and work in progress, as well as adding to our strategic land portfolio and building out our committed development programme. Following land and property sales, net debt reduced to 63 million, with gearing well within our optimal range at 15%. We expect gearing to be towards the top of our 10% to 20% range during 2025 as we face into improving markets. Since the year end, we've completed on the first tranche of our purchase of our JV Partners stake in Stonebridge Homes and we are also increasing our number of new planning applications. I'm happy to report that during the year we completed our bank refinancing with a facility of £125 million. That now runs through to 2027 and is extendable by two years to 2029. It also includes an accordion allowing us to increase the facility by £60 million over the period. Terms are broadly in line with the previous arrangements and are based on a margin of 1.6% above Sonia. Finally, our net asset value per share increased by 3.6% to 317 pence or 312 pence, excluding the pension surplus. And including dividends paid during the year, our total accounting return was 6.1%. Looking at the cash flow, this largely demonstrates how strong forward sales and cash collections on past sales from house builders on deferred terms has allowed us to continue to invest in land and property. Operating cash inflows totaled £9 million, being returns in the period largely offset by payments for interest, tax and dividends. Investment of £35 million into inventories relates to growing the land bank and working progress in Stonebridge, delivering our committed development programme and infrastructure works in Hallam to bring forward sites for sale. Given a lower level of land sales to house builders in the period, our continued investment has been supported by cash collections on those previous disposals and deferred payments on land acquisitions of almost £46 million, seen here in other working capital, leaving us ending the period with net debt of £63 million. I can move on now to the operational review and starting with land promotion. Hallam sold 2,661 plots in the period, along with 97 acres of employment land, generating an average ungeared IRR of 26% per annum, which we're clearly pleased with. It was also delivered on average over 17 years. Pleasingly, land values stabilised during the year and we continue to see good demand for our sites in prime locations with the house builders actively returning to the market for schemes of a larger size, evidenced by our scheme in Coventry, which I'll run you through in more detail shortly. Having received planning on almost 3,000 plots in the year, this compares to the three-year prior average of around only 600 plots a year and reflects the positive changes to the MPPF. 2,000 of these were actually achieved in only the final quarter of the year. We therefore ended the year with planning on nearly 9,000 plots in total, and this positive trend has continued with permission on nearly 900 plots already in 2025. As Tim said, with the portfolio all held at cost, we don't take any valuation gain on securing planning permission until the land is actually sold, reflecting a significant uplifting value currently not recognised within our balance sheet. And finally, we've started 2025 well, with over 2,000 plots either sold, exchanged or currently under offer. Over the long term, our land promotion business has delivered significant returns, with the return on capital employed averaging almost 17% over the last 10 years. The scale of the portfolio allows us to mitigate the site-specific risks, and whilst we're clearly highly correlated to demand in the housing market, this can be mitigated to some extent through forward sales. As we move forward, our focus is continuing to increase sales and secure planning permissions whilst continuing to grow the portfolio at a modest level. We've continued to add to the portfolio, securing sites with the potential to deliver over 6,000 plots and growing the portfolio to nearly 106,000 total potential plots in the year. Given the positive changes we're seeing to the planning environment, we anticipate the planning system will continue to unlock. And with this in mind, we now have five active appeals running on around 2,500 plots out of the 13,000 plots we currently have in the system awaiting determination. And following 2,660 plots submitted for planning in 2024, we've now identified around 10,000 plots which we believe can be advanced into planning over the next 12 months, with more to follow that, demonstrating the scale of our current ambition as we lean into this positive trend. 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. With a balance of freehold and promotion agreements, we're able to manage capital investment appropriately between risk and reward, taking advantage of our market at the right time in the cycle when acquiring freehold land. Our tendency to use planning promotion 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. Our five-year average plot sales are nearly 2,700 plots per annum, and we continue to target sales of 3,500 plots, being our medium-term target. We believe this target remains achievable from the scale of our portfolio, with plot sales expected to be over 3,000 this year. Based on our current portfolio, our average of £9,200 gross profit per plot, we've estimated that the whole portfolio could generate nearly £900 million of gross profit at today's prices. And here at Pickford Gate in Coventry, this is a prime example of the large scale complex schemes Hallam is capable of delivering. In 21, we secured a permission for 2,400 plots, including 25% affordable homes, 1.6 million square feet of employment space, and accompanying community infrastructure. The scheme required a new junction off the A45, which Hallam, having secured partial funding through Homes England, successfully delivered in April of last year. Following this, £102 million worth of sales were completed last year, which included 491 plots to Barrett's, 632 plots to Vistri and 52 acres of employment land to Royal London. Including the Phase 1 sale, the scheme has delivered total sales to date of £120 million, equating to an ungeared IRR of 33% per annum, and still leaves Hallam with around 1,000 plots remaining for sale in future phases. And on that note, I shall hand you back over to Tim.

Thank you, Darren. So I'm going to turn to property and development. I'm going to start off with HBD. First of all, HBD had a successful year with completions of £188 million worth of developments. And as I've said, 72% of that is pre-let or pre-sold. Last year, though, was a time to be thoughtful about committing to new schemes. Origin iJV with Feldberg has helped us to maintain a good base of developments by committing to schemes with a combined GDV of 100 million. I'll talk about that in a minute. And that takes our committed programme to £124 million, our share £33 million. 25% of that has been pre-let or pre-sold and 98% of the development costs have been fixed. We have a strong £1.2 billion pipeline and this will give us optionality through this year to grow back our committed programme. I just wanted to spend a minute just talking to you about two of the key developments that we've completed last year. First of all, Ireland, which is held in a joint venture, and it's a net zero carbon prime office building in the centre of Manchester. And I'm pleased to say that we've pre-let 50% of the space to Virgin Media. We did that letting in October of last year. And also pleased to say that we set a new record office rent for Manchester at £44 per square foot. Not bad. The scheme achieved practical completion in November and the remaining space has generated a good level of occupier interest. Secondly, looking at Settle, where we've developed 102 premium apartments and again that PC last year in May. And we've now secured 69% of the apartments at our target selling price and we've achieved a sales rate of one unit or one apartment per week. Now, there's no doubt in my mind that the reason why we've had good demand for these products is just because of the quality that we're offering. So let's say a bit more about Origin. We formed a 2575 JV with Feldberg Capital, and I believe this is going to allow us to accelerate industrial development. It's been seeded with three pre-prime sites. You can see them on the slide. They total about 450,000 square feet. We've brought them from our pipeline, and we sold them into the joint venture, and we made a profit in that sale of £5.5 million. The JVs secured a loan to fund the development from BGO of £54 million, and bearing in mind we formed the joint venture in December, we're already on site on all three developments. Looking ahead, the joint venture intends to deliver around £1 billion of high-quality industrial schemes with strong ESG credentials. And we're likely to put more of our sites into the joint venture. A, because it's a way that we can share risk, but B, we also take development managers' fees and we have a promote over a geared return of 8%. So looking at the committed programme... You can see it's dominated by industrial. We've committed to four industrial schemes totalling nearly 600,000 square feet, of which our share is £30 million. On Preston, which is the top, that's the one current scheme that's not within the Origin JV, and we've pre-sold that to an occupier. The total estimated profit on all of the committed schemes is £9.1 million, our share, equivalent to a 38% profit on cost. And 16% has been taken to date, and all that 16% is in relation to Preston. On the development pipeline, as you can see, 54% of it is industrial, with the rest in urban development. Most of the pipeline is controlled through development programmes, so it's capital light, and you can see that we hold it at cost at £54 million. And we've maintained a relatively high level of development over the last couple of years. And obviously the key is to replenish that development. And we're going to do that from two main areas. First of all, in urban development, we've got Golden Valley. And that's got the potential to be a £1 billion mixed-use urban project. It's held under a development agreement with the local planning authority. We only recognise the first phase, which amounts to 117 million in our pipeline. And phase one is going to be known as the National Cyber Innovation Centre. It's next door to GCHQ. I've said this before, nothing has been formally signed, but you can guess who we're talking to to anchor it. And the good news is that we've already got support from the government for this because, as you can imagine, cyber security is of national importance. So our aim is to be on site either side at the year end. And then on industrial, we've got 3.8 million square feet of schemes with outlined consents. Again, that leaves us with several options to draw down these schemes to start development this year. And just turning to the investment portfolio... During the year, the commercial property market stabilised with positive returns recorded at an all-property level, and certain sectors, very much including industrial, showing valuation increases. And this is why I say that we will look to draw down industrial, because if you look at industrial in terms of rental level, it produced the highest rental growth in the index at 5%. Transaction volumes remain low for most of the sectors, with high interest rates weighing on activity. But as the outlook for rates has improved, we have seen encouraging signs in terms of investor demand and funding demand, especially in industrial and built rent. Our total return in the investment portfolio was 9.9% for the year. Again, it's ahead of the index at 7.7. And I show a line graph comparing our performance over the last five years. And you can see that we've achieved a return of 7.1%, significantly outperforming the index at 3.1%. 73% of the portfolio is in industrial. Most of the properties are modern buildings that we've developed. There are some investments that we've bought that we then intend to develop. A good example of that is Scalmersdale, where we've got an industrial unit and we've secured planning for 245,000 square feet, and that is a 66% increase in the size of the existing building. Going to Stonebridge, you know we exchange contracts to acquire our partner's 50% share of Stonebridge just before Christmas. The transaction is structured to complete in three tranches over the next five years with the total purchase price linked to the performance of Stonebridge. We've got an integration plan, and we're going to be implementing that over the next 12 months. And as we integrate and scale up, there'll be opportunities to realise synergies and cost savings. Looking at Stonebridge's operational performance, which this slide is about, as I've said, we've completed 270 homes, an 8% increase on last year. The average selling price is £402,000, reflecting a reduction in the average size of homes sold, but also we've moved into the north-east region where the price per house is smaller. The average sales rate during the year was 0.45, and that is unchanged on the prior year. And we expect to increase output this year by 10%, which in this market is no mean feat. Sourcing land is a fundamental strength of Henry Boot and is key to growing to Stonebridge, so I'm particularly pleased to say that we've increased our total land bank to over 1,700 plots. This just gives you an idea on the number of outlets and land bank that we've got. In 2022, Stonebridge expanded its operation from Yorkshire into a second region, the North East, and very recently we've secured our first site in a third region, the North Midlands, and that site is at Bracebridge Heath, just outside of Lincoln. And the business is operating from nine outlets, and you can see from the graph... in terms of the active outlets and the land bank, that we've got a significant multi-regional house builder in the making. And we're confident that each region can basically... meet demand for 200 units per annum and potentially up to 300 units per annum. And that's the path for us to grow the business to 600 homes. On construction, the segment remained profitable last year but was impacted by HBC's fall in turnover and Banner Plant also traded a bit below budget. However, you know this is a small part of the group, accounting for just 2% of capital employed. HBC completed on two major city centre schemes in Sheffield and York and we're also pleased to have been awarded the £36 million redevelopment of Rotherham Markets. As mentioned, last summer we made senior management changes and that included an appointment of a new MD, Lee Powell. who's got a great track record of winning work. And the immediate focus for that team is to restore and grow the order book. And as I've already said, they've had a good start to the year. In response to market challenges, Banner has adjusted its strategy by focusing more on cost and efficiencies, and Roadlink, as normal, just keeps on trading in line with expectations. But as you know, it is in the final year now of its contract. So I'm going to finish off now on outlook. We continue to make good strategic progress and have conviction in our three key markets with a strong emphasis on quality projects. There's a clear focus on land promotion, land development and premium homes. And that's where we want to basically keep our focus, create synergies and build a simpler investment case around those three businesses. There's been a significant shift in planning policy. This is now apparent in our dealings with the planning system. And over the last six months to date, we've run planning for nearly 3,000 plots. And this more positive environment is going to help us make a difference to output in Hallam and also help us scale up Stonebridge. On top of this, sentiment across all our markets is gradually improving. And whilst this is good for the group, naturally there is going to be a lag between us seeing this improved demand and our results. And also due to the timing of the key transactions, much like last year, we're going to be half too weighted. And in the meantime, I think as you can see from this morning's presentation, we remain very active. We're well positioned for recovery. We've got a rock solid balance sheet and we're absolutely clear that we can hit medium term growth and return targets. So thank you.

Kristen York from Deutsche Numis. Three questions for me, please. Two on Rocky, actually, just to start. Just maybe a point of clarification. When you talk about the Rocky target being through the cycle, that means when things are better, we could be potentially above the 15%, so it should average over that period is the first one. And the second one, just sort of the Rocky by division, because you obviously set out the really attractive Rocky generated in Hallam. Yeah. There's not a huge amount of capital tied up in the property development, you know, uncommitted portfolio. Construction is relatively capital light. So are the drags really there in the committed property development in Stonebridge? And what is the route to returning returns in both of those? And then just finally on the H2 phasing this year, Should we think a similar level of phasing to 24, as in H1-H2 splits, or is it just a bit too early in the year to tell? Thank you.

Right, so I'll have a go at answering the first one, and maybe you can start thinking about an elegant answer to the second. So in terms of Rocky... Yeah, we get that the returns are below our range of 10% to 15%, but obviously we've suffered because our cost base has gone up, like nearly all businesses. But what we believe through the cycle is that the 10% to 15% range is still appropriate for our business. And as I've talked to you before, Kristen, we model what returns we think that we can get Certainly over the next five years, a lot of the returns that we model are existing opportunities within the site. So there's nothing that we see structurally that suggests that our medium-term target of 10% to 15% isn't still appropriate for this business. And, yeah, although that's the target, there are going to be times where we might be a bit below. And then we're working very, very hard so that there are times when we're a bit above as well. In terms of the rocky, that's really talking about the returns on the different divisions and whether you think Stonebridge is...

I think Stonebridge is growing business, as we've already said. In doing so, it's carrying cost for the future, growth effectively. So until we get that to a size where we're looking to stabilise it, I don't think we'll truly see its full potential. um and then within the property development segment you're absolutely right clearly we've got the investment portfolio in there which is a significant proportion yields about six percent so the property company is going to have to work very hard to get the rocky up to the range we require of it that coming through the development activity which we've seen the market at the moment clearly it's not the right time to be pulling developments forward That said, I think the Felbird joint venture that we're doing that allows us to advance delivery, we will have relatively low levels of capital employed in that, given the structure of it, which should hopefully help them achieve returns without using the capital in the short term. But I think we just need to see interest rates coming down a bit more such that commercial activity unlocks and they can get back... committing to that up towards kind of 200 million delivery target per annum that we're hoping to get to.

And just to add before we answer your third one, because if you look at development and we talk about the fact that the cost of holding a £1.2 billion development programme is 54 million, that's just phenomenal. Absolutely. So what we're not doing is we're not sitting on big bits of land where we've got to wait for the market to fully recover before we can develop. Most of our land is on drawdown and we're drawing down at market levels. So we're fully adjusted already, if you think about it, to market levels. But what we've got to be is we've got to be confident that there's either demand there or we're confident that we've got the right level of security in developing it, either through a funding, a joint venture, or a pre-let. And what you know is that we're good at doing all those things. I mean, last year we were very active and the year before. So we've got all those skills in our bag. And because of that, I do believe that we will scale up the development programme. And then in terms of phasing the second half?

It is very early in the year. We are clearly very deal-driven, and the timing of a deal between the 30th of June and 1st of July, as you know, can make a significant difference. I think for now, assuming it will be similar to last year, is a reasonable expectation. I think from our perspective, we would like to try and do more deals in the first half if we possibly can.

and Christian again you know we do reasonably chunky transactions and the good news is that we have got a good number of those reasonably chunky transactions under offer but when you are dealing with big bits of land or development you can't say well whatever happens we're going to do this by the 30th of June so that's our dilemma

Adrian Kearsey, Pamela Libram. Three questions, if I may. Shall I sort of do them one by one? You talk about the 10,000 plots taken to planning within Hallam. Would you perhaps be able to give us an indication of within that 10,000, are there any big schemes that you're looking at or is it a large number of smaller? Is it sort of a mixture of the two? The other one, in terms of Stonebridge, you've got nine sites currently active. The range seems to be, on the presentation, 70 plots to 225 or 223, to be precise. Is that a typical range of scheme size that you could be looking at going forward? going forward. And then on Roadlink, final year of Roadlink, is there anything in there that we should be thinking of in terms of revenue margin and cash flow that's different from previous years?

Okay, all right. So I'll have a go at the first two and then Darren can answer Roadlink. In terms of the 10,000 plots... typically they would be of a size between 250 and maybe up to 1,000, and it's probably going to average about 500. So I think maybe what your question is picking at, do we have any specific risks on certain schemes, or is it the typical Hallam blend of, well, we've got quite a few... different applications that we can make it's definitely we've got quite a few different applications that we can make and we think that the spread is a good spread and we're giving you a figure of 10,000 but there is more there so We think that we'll get 10,000, and if we find that 500 of the plots, it's not the right time to put the planning application in. What we will do is we'll look to draw another 500 around. So it's not a target that I'm going to drive the business to get at all cost, but it is a target that we think we can achieve. In terms of Stonebridge... Yeah, the nine sites where you tell us the range of plots on the site, that is pretty typical of Stonebridge. And I think there's just one thing to add. As we scale up... We're also going to buy some bigger sites. Now, for us, a big site would be 350, 400 plots. And Bracebridge in Lincoln was about 300 plots. And we've got another site under offer at the moment that's 360 plots. So I think that what you will find is that over the next three or four years, the average size will grow because we're like most house builders. If we can get on site, invest in opening up that site, and then manage to get an income stream of five, six years, we like that. But then we've also got to balance the fact that it's a young business and we don't want to be really, really land-heavy. So we want that Goldilocks. We want to have some smaller, medium-sized sites, which aren't too capital-intensive, but then some things that are right for the medium-term growth of the business. And then...

Yeah, if I could just add to your Hallam question before I move on to Roadlink, which is we're gearing up to put 10,000 plots into the process and submit for planning. Our historic run rate, probably about 2,500, 3,000 in a good year. So we're running four times faster this year. And one of the constraining factors, therefore, actually becomes the capacity of the team. And I think we spotted the change in planning really early, such that the team were very active in the last quarter of last year, recruiting additional resource to be able to actually make sure we've got resource to put this into plan. and then on road link final year sadly business as usual should be similar revenues rates of return in terms of cash the only one slightly unusual thing is they've got a retention pot of about one and a half million that will be released three months six months after the contract ends any other questions

Thanks. Sam Killen from Peel Hunt. I've got three as well. First, I guess I'll follow up on the Hallam point. Is there a maturity curve we need to think about with the additional headcount that's come in? A maturity curve in terms of their efficiency?

Capability.

Are they fully motoring now, six months in? Yeah. Secondly, on Hallam, you talked about house builder demand coming back. Are the payment terms improving at all from the house builders that have been pushed down over the last couple of years? And then the final one is on Stonebridge, and really whether you'd ever explore bolting on an additional smaller regional house builder to accelerate that growth, perhaps in a more southerly region that you could then help to further accelerate with some land via Hallam?

Well, do you know what? I'm really, really pleased to see that all the analysts asked three questions. Is that pre-agreed? They share them out. So I'll answer the first and the third one and then perhaps Darren will talk about house builder payment terms and maybe also demand because we are seeing encouraging signs of demand. So I think that in terms of Hallam, you know it's a very good quality business and And it's gone through a big growth phase of its portfolio. And although the planning system is definitely easier than it was, planning is still complicated and it's got more complicated. And the good thing is that Hallam, and I think I can say this because I've been around for a bit as Chris is smiling at me now, Hallam is as good at planning as anybody in the country. So it can deal with that complexity. But we have to accept that the planning system is complicated and that the business has got bigger. And then also you've heard me over the last year or so saying, yeah, but we've got to actually harvest that size by selling more land. So we're going to have more land in the market as well. And for me, all that means is that the business has got to get bigger. And look, we're talking about growing the business from rounded 40 people to rounded 50 people. but also we're going to have more specialisms, so it's not just going to be normally... I'd guess and say out of the 40 people, there would normally be 36 of them would be planners, qualified planners. But we want more specialism. Why can't we have a highways engineer? Why can't we have an environmental officer? And I think that specialism, and I've talked to the house builders, will help us sell land. So I think, Sam, what will happen is that we will grow this. Probably 80% of the people that we're after, because we started this to Darren's point, we started doing this in October of last year, so we were quick off the mark, because we knew if we were doing it today, we wouldn't be able to put the 10,000 planning applications in, and also everybody else saw twig that the planning system was getting better, and then the pick of the crop has gone. So I think that what we will do is we will probably have about 50 people employed in Hallam for the medium term. And then the other thing that we're doing, which we never really talk about in these presentations, and if anybody wants to talk to me about it afterwards, they're welcome, we're putting more systems in accordingly. across the business, not just in Hallam, but Hallam is trialling those businesses along those systems, along with HBD, because like every business, we've got to be slicker in terms of using data, slicker in terms of using processes, and we've got to be more efficient. And I think that all of those things, Sam, will make Hallam, and the rest of Hennyboot, but we're talking about Hallam at the moment, I think that it will make it a real Rolls-Royce business. In terms of house builders, we've seen some encouraging signs on demand, haven't we? And that might be feeding through to payment terms.

Definitely. I think there's a slight nuance to that in terms of whether you're on the smaller sweet spot sites or the larger, more strategic sites. We've said that we've seen the house builders returning for those larger sites now. Coventry was a prime example. We put 500 units in the market thinking that might be the one we got away and actually proceeded with Barrett's then as the underbidder on another 500 units. We put a large scheme in the market recently, which is over 1,000 units. We've had eight bids on it, which is pretty good. And I think once you get that competitive tension in the bidding process, certainly one of the angles that they can use is the payment terms to try and make any deal look that bit better for us. I think if I switch that to Stonebridge and what we've seen on the site that Tim just mentioned, that's 360 plots, which we're taking in partnership. The terms are definitely getting stronger. The landowners definitely in a stronger place. And we're requiring that on deferred terms of 24 months. I would have much preferred it to be on 36 months. And the converse of that in Hallam is we're hopefully seeing the same. I think as you go down the size of site, however, we've just put a site into the market north of Leicester. Now, the last time I was talking about a good land market, I was talking about 12 bids. The site in Leicester has just picked up 13 bids. And once you've got that kind of level of competition, you can really start driving kind of some of the deal structure in your favour. So particularly down that end, I think we'll start seeing payment terms almost... coming back to payment on the nose. And that, again, by comparison into Stonebridge, is why they're moving up to larger sites because the competition down at those smaller site ends is really still quite competitive.

In terms of Stonebridge, I think the first thing we've got to absolutely focus on is integrating the business into Henry Boot. And although we are now a majority owner and will not be the full owner until the back end of 2029, we have got an arrangement with our partner where we will start to integrate it this year. So that's important. So our focus really, Sam, is scaling it up and integrating it and it goes back to what Darren and I keep on saying we're really really good at buying sites and we do it in a thoughtful way in terms of the planning we do it in a thoughtful way in terms of how much capital is deployed so we've got a clear route to growing Stonebridge Would we close our mind to adding bolt-ons? No, we wouldn't. But I don't think it's something that we're going to be busting a gut to do over the next year or two.

They do pass over our desk from time to time. We do cast our eye over them. I think we've not really seen anything that would be suitable or appropriate from our perspective to actually bolt on.

Any other questions? Yes.

We've got quite a few here, so I'll just go through them until we run out of time, basically.

Will you be doing it in your normal deadpan way?

I forgot my tap shoes this morning, Tim, so I'm sorry. So central cost increase during FY24. Do you anticipate the pace of this trend continuing into 25?

Well, that's definitely a Darren one, isn't it?

As Tim said, look, we're doing a lot around the business, whether that's improving the technology and the systems. You'll have hopefully seen our refresh branding and marketing that we're doing at the moment. We've certainly taken on additional headcount to support all of that in the central function, which will be a continuing kind of process. Clearly, over recent years, we've had wage inflation that has been much higher than the historic norm. It feels like now we are back at the historic norm for the time being. So hopefully we won't see those kind of increases feeding through either as we move forward.

Yeah, and we've been investing in systems as well, haven't we? And I've got to say, as we invest in systems, our headcount has gone down over the last two years quite a bit.

Great, thank you. So there was a large swing in working capital with circa 46 million of inflows last year. Moving forward, do you expect the increase in inventory to be broadly cancelled out by higher land sales?

Increase in inventory carried out, cancelled out by high land sales. I'd hope so. Given the direction of travel, we said we're targeting kind of 3,000 plots this year for sales. So the increase there will hopefully balance off the investment that we continue to make. Absolutely. There may be a timing difference on that if we're advancing 10,000 plots as well into the planning system. Now there's going to be a lag till we get those through and see the higher rates of sales. So we might see the kind of working capital reverse a bit in the short term.

Okay, so on land sales year to date in 2025, are you witnessing profitability in line with the average profit of 10K in FY24 or otherwise?

Yeah, I mean, broadly, yes. I'm not using weaselly words there. If you look at what we think that we will sell this year, and Darren gave a figure talking about 3,000 plots, we think that it's going to be in line with our long-term average, yeah.

Okay, so if we look at FY24 margins compared to historic levels, there remains scope for good improvement in land and construction. Does this fit with your expectations, or has either market changed for the worse?

Well, I think that we probably answered that on Kristen's first question, didn't we? I hesitate to say this because everybody who works at Henry Boot is absolutely important, but construction isn't going to drive our margins. So the real markets that we're focusing on are land, development and Stonebridge. And on the land and the development, we're clear that the margins will be back to normal trends. We believe that. And then on Stonebridge, we've got to grow the business. And as we grow the business, and we've been open about this as we grow the business, we think that our returns will be around the industrial or the house builders average. And we're on track to do that.

Great. So final question then. Do you expect the ratio between executive home sales stroke affordable homes to change at Stonebridge as you move to larger sites within the expansion of the business?

Yeah, broadly, because I think that what will happen is we will, over a period of time, expand the land bank and build homes on new land, and highly likely that that new land will have a higher ratio of private to affordable homes. But the model is based on the existing ratio, not the historical one, which is better. So we're still confident of the model.

Great. That's it.

Thank you. Yeah, good. Well done. Okay. Everybody happy? Good. Thank you very much. Thank you.