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.