SEGRO Plc

Okay, good morning everybody and great to see so many people here on a Friday in half term week. So whether you are here in the room with us or joining us online, we're absolutely delighted to have you with us as we present Seagrow's 2025 full year results. I'm joined here by a number of my executive colleagues and I'd particularly like to welcome Suzanne Schroeter, who's presenting her first set of results after joining us only in December. Before getting into the detail, what I'd like to do is share some key messages with you, set the scene as it were, and explain why we are confident about the future. And I should just mention, our presentation is going to run a little bit longer than normal today because there's a lot we want to talk about, particularly to give more colour on our data centre strategy and set out what we think is a really exceptional opportunity for this part of our business. So 2025 actually turned out to be a very strong year for Seagrow, both operationally and in financial terms as well, despite the rather challenging macro. We signed a record £99 million of new headline rent, including £33 million of development signings. Within our existing portfolio, we delivered 37 million of reversion uplifts from lease renewals and rent reviews, which itself was a key driver of our 6% growth in like-for-like net rental income. All of this translated into a 6% increase in adjusted earnings per share and a 2% growth in adjusted NAV per share, so a strong set of financial outcomes. But what pleased me most about 2025 was the improving occupier sentiment and a pickup in deal activity in the second half of the year as the structural drivers underpinning demand for our assets began to reassert themselves. That momentum has continued into 2026. Inquiry levels right now are strong. Occupiers are starting to progress their investment plans and we have an active pipeline of discussions both on existing space and for new prelips. We know that deals can take a long time to convert from active interest into actual signed deals and no one quite knows how 2026 will turn out in terms of geopolitics. but we're really pleased and very well positioned right now and it feels much more encouraging here today than it has at any time for at least the last two years. Those results added to our long-term track record of delivering compounding annual growth driven by disciplined capital allocation, operational excellence and an efficient capital structure. Since 2016, we've delivered an average 8% growth in earnings, dividends and net asset values, despite the more challenging environment of the last couple of years. And we anticipate that improving market fundamentals and the exceptional opportunities in front of us will enable us to move back towards those longer term averages. Onside our financial and operational achievements in 2025, we progressed our Responsible Seagrass Strategy. We continued to champion low carbon growth, reducing our carbon intensity significantly and have refreshed our net zero targets which have been approved by the Science Based Target Initiative. We added to our community investment plan framework. We achieved record levels of volunteering by our employees, customers and stakeholders and we delivered 54 community projects. We also continue investing in our people to further strengthen our market leading operating platform through our nurturing talent strategy. These initiatives are a really important part of how we sustain high performance across the business and ensure that we continue building for the future. So let's now get into some detail. We'll start with our strong financial performance presented by Suzanne. Then we'll talk about the strong operating performance behind these results. James Craddock and Marco Simonetti will address the UK and the continental European markets respectively, after which I'll bring it all together to give you a group overview. And then we'll finish by looking at the future opportunity for Seagrow, which I'll address in two parts. Firstly, the multiple levers we have to drive growth within our industrial and logistics business. And then secondly, the compelling opportunity that we have within our exceptional data centre pipeline. So now, I'm delighted to hand over to Suzanne.

Thank you, David, and good morning also from my side. I had a fantastic start to Seagrow so far. The team has been extremely welcoming and supportive, and I've also already had the chance to visit a number of the offices and assets across London, Midlands, Germany, Netherlands, and France. And I must say what I've seen so far has really impressed me, both in terms of the quality of the assets and the strength of the team. So I'm very excited about the opportunities ahead and as I continue to get to know the business better. About 2025. While I can't take credit for the excellent performance the team has delivered in 2025, I'm very happy to talk you through the key numbers. 2025 was defined by strong operational execution across the portfolio. We also continued with our balance sheet discipline, and we saw improving momentum in our key markets. This was reflected in the key financial metrics. Adjusted earnings per share increased by 6.1%, and this was driven by higher net rental income and continued cost discipline. We have chosen to pay a full year dividend of 31.1 pence, which also represents a 6.1% increase year on year. Portfolio valuation grew by 1% on a like-for-like basis, and this was the first year that both the UK and continental Europe have been positive since the start of 2022. Adjusted NAV per share increased by 2%, and that reflects the like-for-like valuation uplift and additions we made to the portfolio throughout the year. Our balance sheet remained strong. Loan-to-value ended the year at 31%, and net debt to EBITDA reduced from 8.6 to 8.4 times over the course of the year. Let us now turn to the income statement. Net rental income grew by 8.6%. I will tell you more about this on the next slide. Net interest costs were stable year on year. Lower gross interest was offset by lower capitalized interest. And the reduction in gross interest came from lower interest rates, particularly URIBOR, which offset the higher net debt figure. Our APRA cost ratio improved slightly in 2025, and this was also helped by a 3 million reduction in administrative expenses. Operational efficiency will remain a focus going forward. Adjusted profit before tax increased by 8.3%, and to summarize, this performance demonstrates the resilience of our operating model and the quality of our portfolio. Let's now look at net rental income in more detail. We delivered 47 million of net rental income growth, and that was driven by four factors. Number one, the 6% like for like rental growth, which was strong both in the UK and continental Europe. The UK performance was driven by capture of reversion at the five yearly rent reviews, and continental Europe benefited from increased occupancy and asset management initiatives. Number two, development completions. These contributed 31 million last year. Number three, acquisitions and disposals. The impact of those two was neutral due to the sales we did in 2025 and the full year effect of the 2024 disposals. Number four, the other items. These include mainly take backs for redevelopment, surrender premiums and also some FX impact. We expect like for like rental growth to remain strong as we continue to capture reversion to lease vacant space and that we continue our active asset management. As I said before, 2025 was the first year since the pandemic where both the UK and continental Europe saw positive valuation movements and the total portfolio value increased by 1% on a like-for-like basis. EAs were broadly stable during that period. ERV growth for the group was 2.3%. It was stronger in the UK at 3.1%, driven by a standout performance from our West London portfolio, which delivered 4.7% growth. In continental Europe, it was 1% overall. Spain and Germany outperformed and delivered the strongest growth at 3.2% and 2.4% respectively. The portfolio now stands at 19 billion at share, including our development assets and land holdings. The equivalent yield is 5.5%. Our balance sheet remains strong. The LTV is at 31%, which is a level that we are currently comfortable with. Net debt to EBITDA stands at 8.4 times, down from 8.6 times last year, and that reflects higher EBITDA and disciplined capital management. We continue to benefit from a diverse and long-term debt structure. Our average maturity is six years. We have undrawn RCFs and term loans of circa 1.9 billion and ongoing access to attractive financing through the euro and sterling bond markets, also the private placement and bank markets. Our 650 million bond maturity in March will be refinanced through an undrawn term loan that we have signed in the second half of 2025, and the residual amount will be drawn from our RCF. This robust financing position gives us the flexibility to invest through the cycle and capture future opportunities. Now let us talk about capital allocation. Our capital allocation framework remains clear, disciplined and aligned to long-term shareholder value. Development on existing land remains our most accretive use of capital. It yields 7-8% on total costs and 10% or more based on additional capital required. We expect 2026 development CAPEX to be in the 450 to 550 million range. The final number will depend on the level of new projects we start in the next few months. Our CAPEX guidance includes about 150 million of infrastructure investment to support the long-term growth from our logistics parks in the UK and for power upgrades for our data center pipeline. We will remain very selective on acquisitions. We focus only on the most compelling opportunities in core markets that provide wider portfolio benefits and attractive returns. We do consider additional distributions to shareholders such as share buybacks, but only when we believe that we have material surplus capital and the lack of compelling development and acquisition opportunities. This is currently not the case, especially given the momentum building in our development pipeline. We continue to take an active approach to capital recycling, and we have an annual planning process to identify assets where we have optimized returns. With the current cost of capital, we continue to be very disciplined when it comes to capital deployment for new investments, but also for the assets that we retain. We therefore expect disposers this year to be at or above the upper end of our longer-term run rate of 1% to 2% of our portfolio. These disposals will generate proceeds that we can invest into opportunities with higher risk-adjusted returns. In addition to disposals, we are regularly considering options to fund our growth pipeline. We also have a successful track record of working with partners to share capital intensity, for example, with our self-joined venture and now also with Pure on our first fully-fitted data center joint venture. This capital allocation framework continues to support both the near-term delivery and our long-term returns. To summarize the section, in 2025, we delivered a strong 6% like-for-like rental growth, contributing to 6% earnings and dividend growth. We have a strong balance sheet and a clear, disciplined capital allocation strategy aligned to long-term shareholder value creation. Let's now turn to the operational performance of the business, and I'm delighted to hand it over to James, who will start with the UK.

Thank you, Suzanne, and good morning, everyone. So let me start by talking about the broader UK market. So 2025 was the strongest year for logistics take-up since the pandemic. There was about 33 million square feet of logistics occupational activity. Pre-lat activity did remain low, however, and take-up was driven more by immediate needs of customers rather than the more strategically planned decision-making. On the supply side, we've seen things stabilise, and there are encouraging signs of positive net absorption in some markets, which is resulting in vacancy nudging down. And we've seen this in our own portfolio, both in the urban and in the big box markets. In terms of overall logistics supply in the UK, it's important to note that about two-thirds of the supply is of second-hand or poorer quality stock. So this continues to favour owners of prime, modern, well-located portfolios like our own. New speculative development starts have fallen materially. They're running at roughly half the long-term averages overall. and 3PLs are reporting low levels of grey space within their portfolio, both of which are supportive factors as we look ahead. That said, the market is far from uniform. There were areas of real strength and other areas that remained weaker in 2025. If we turn now to our own portfolio, pre-let levels were low, but we were able to sign a fantastic deal for development on our food campus at Seagrow Smart Park in Derby. We also leased one of our two speculatively developed sheds at Seagrow Park Coventry, which helped to improve our UK occupancy by 50 basis points to 93.1%. We've also been doing some selective speculative development, which included a redevelopment on the Slough Trading Estate, which has been leasing well. For me, however, the highlight of the year was the standout asset management performance and standing stock leasings, with the teams completing on over 250 individual transactions across leasing, rent reviews and lease renewals. Our key urban markets, especially the highly established Heathrow and Park Royal, which together make up 40% of our UK portfolio, continue to perform well. This is driven by good demand and the depth of our customer relationships. Transactions have included setting new headline rents to customer segments, including food and beverage, 3PL and pharmaceuticals in these sub-markets. This activity demonstrates the continued attraction of prime urban markets for occupiers who are providing value-add goods and services who need to remain located within prime M25 locations to service their end customers and to attract labour. A major focus for us in 2025 was also preparing our very special UK logistics sites for future development, which included hitting key milestones with the groundworks and the strategic rail freight interchange development at Seagrow Park Radlet. We therefore now have three sites in construction ready status and the first plots at Radlet will also be ready in the early part of next year. Between them, these can deliver over 9 million square feet of the very best modern logistics space in the UK, ensuring that we can respond quickly as occupier demand continues to build. On that topic, over the past two to three months, inquiry levels have improved materially across both logistics and urban, and we are seeing more activity across a broader mix of occupiers. This is largely being driven by the structural drivers which support our business. Retailers, food, e-commerce and general distribution are particularly active, seeking efficiencies through supply chain optimization, which is driving decision making. Taken together, these trends give us confidence in the outlook for the UK business, and the pick-up in inquiry levels and leasing activity since the budget, both on standing stock and for pre-let opportunities, provides a solid foundation for 2026. I'll now hand over to Marco, who will talk you through the performance in continental Europe.

Thank you, James, and good morning all. Let's move now to continental Europe. And I would like to cover four points, share some key highlights on the overall occupational market, then cover the performance of our existing portfolio, then move into the development pipeline, and finally touch on that outlook for 2026. Starting with the overall occupational market, leasing activity in 2025 has outperformed the pre-pandemic average. In fact, Q4 was the strongest quarter of take-up in three years. Vacancy rates now have stabilized with an indication of a modest downward trend. And new speculative developments are limited to few prime locations. Similar to the UK, the European market is in uniform and some countries and some regions within countries have performed better than others. Our exposure to the best performing markets has contributed to a strong performance with a clear momentum in the second part of the year, both on the existing portfolio and on the development side. Our existing portfolio has performed extremely well. We signed over 180 deals. We had a stronger letting activity and high customer retention, bringing occupancy to 98% across the continent, with some countries fully occupied. We completed several notable letting transactions above 30,000 square meters, like Ideologistics in south of France, GD.com in Germany, GXO in Milan, or H&M in Poland. Moving now to the development side. Structural trends, including urbanization, e-commerce growth, and the supply chain organization, led to an exceptional Q3 and Q4 from a development side. In fact, H2 2025 was the best Alfea ever in continental Europe, outperforming even the pandemic years. We saw the return of large pre-lets. We signed nine deals equating to over 300,000 square meters of space. A pre-let to GXO in the south of Paris. A fulfillment center for e-commerce players in Germany. The new distribution facility for Primark in Italy. As well as multiple smaller deals across Germany, Italy, Spain and Poland. The leasing activity was strong on our speculative programme as well, with our schemes in Germany, Spain and Poland all hitting a high level of occupancy before completion. And in the case of Warsaw, they have been able to fully land space even before starting construction. So in summary, 2025 was a strong year for Seagrow in continental Europe. Now looking forward. We enter the year in a stronger position than this time last year. Many of our 2026 lease events have already been secured. We have a healthy development pipeline, partially pre-let and partially spec, with some projects in the near term pipeline already signed in Spain, in France and in Poland, waiting just for the building permit. And we continue to see good progress in our speculative German urban schemes. And with that, I will hand back to David.

Thank you very much, Marco and James, and indeed, Suzanne. So as you heard, actually, 2025 was a very strong year of deal execution for Seagrow. In total, we signed £99 million of new headline rent, which is the highest in our history. And even as you can see, slightly higher than the pandemic peak of 2022. So this reflects strong performance across both existing assets, which is the part shown in red, led by the UK, and with our development programme, which is shown in salmon pink, which is led by the continent. As Marco and James both commented, though, activity levels strengthened notably in the second half of the year, and that momentum has continued into 2026. It was an excellent year for reversion capture, demonstrating the quality of our portfolio, the strength of our diverse customer base and the impressive skills of our leasing and asset management teams. Overall, we achieved a 36% uplift on rent reviews and renewals, which was 46% on average in the UK. Despite these higher rents we also maintained a high 82% customer retention at break or lease expiry and we increased our overall occupancy by 90 basis points to 94.9% driven mostly by continental Europe but also with some progress in the UK. We continue to take a disciplined approach to capital allocation as Suzanne highlighted earlier. Whilst capital deployment into development is our priority, we always remain alert to opportunities to acquire good quality assets that offer attractive returns in our high conviction markets. Such was the case in Germany and the Netherlands with the acquisition by our SELP JV of some excellent assets formerly owned by Tritax Eurobox, and in the case of a smaller logistics park close to Prague. Following a big year of disposals in 2024, we carried out fewer asset sales in 2025, whilst investment markets remained quite subdued. But we were pleased to make a number of target disposals at prices above book of smaller non-core assets, including an older estate and a budget hotel in London, as well as some small residual land plots. As Suzanne mentioned earlier, our rigorous portfolio review process subjects every single asset and land position to a thorough assessment of future returns and risks and this directly feeds into our disposal planning. Everything we hold has to justify its place in the portfolio compared to our cost of capital and the expected returns from other opportunities. So 2026 is likely to see an increased level of disposal activities subject to market conditions, but we think those are also starting to improve. Development offers our most compelling immediate and medium-term return on capital. We invested £413 million into it in 2025. £387 million of it was on development capex, including infrastructure, and £26 million was on land acquisitions. That was all a little bit lower than our original expectations due to the slower pre-let market in the first half. That in turn fed into lower completions in the year with space equivalent to £29 million of headline rent being delivered. The average development yield of 8.2% was above our normal range as it included a powered shell data centre delivered in Slough and despite a lower proportion of prelets in the mix, The space we delivered was actually over 90% leased by year-end, suggesting that we picked the right sub-markets in which to launch selective speculative developments. All of the projects were rated BREEAM excellent or better. At the half-year, we did point to an expectation of a recovery in occupier sentiment in the second half, which is indeed what happened, with a strong run of pre-let signings, particularly in continental Europe. So as a result, our onsite development programme is now returning to more normal levels. Currently, it represents 53 million pounds of potential headline rent, of which 47% is already leased. And we have a further set of pre-elect projects at advanced stages of negotiation, representing another 9 million pounds of rent, plus an encouraging set of potential projects behind these, including in the UK. So moving on, I'd now like to talk about the attractive growth potential in the coming years. Before covering data centres, what I want to talk about is the significant opportunity within our industrial and logistics business. As you know, we've positioned our portfolio and our business to benefit from a number of enduring structural trends. These have become somewhat muted over much of 2024 and 2025, but now appear to be reasserting themselves. Digitalisation, urbanisation, supply chain optimisation and a continued focus on sustainability once again are prompting occupiers to search for modern, well-located and energy efficient space. At the same time, securing planning consents for new greenfield sites is increasingly difficult and urban brownfield land is continuing to be lost to competing uses such as residential and now data centres. For landlords and developers with the right assets, land, operational capabilities and balance sheet strength, this creates a supportive backdrop for future performance. Which are exactly the things that Seagrow has. We've built a fantastic portfolio across Europe's most attractive markets. Two thirds of it is in dynamic, high growth and supply constrained cities like London and Paris, where demand is diverse and long-term rental growth is expected to outperform. Plus, we have one of the best most modern logistics portfolios and an exceptional land bank for development. And our market leading operating platform with deep local capabilities across the UK and the continent means we really know our markets and we're well placed to spot new opportunities and drive further performance. There's £152 million of growth opportunity in the existing portfolio alone, including £99 million of reversionary potential, one third of which is available to capture with lease events due this year. There's a further £53 million of opportunity in vacant space, much of which is recently developed or refurbished space that is well located and occupier ready to lease in 2026. Capturing these opportunities will continue to drive strong light flight growth and unlocking it requires very limited capital expenditure. On top of that, we believe that improving occupier demand and constrained supply will also support further rental growth, which we continue to believe will be in the range of 2-4% for Big Bot statistics and 3-6% for urban assets over the medium term. Beyond the existing portfolio, our land bank leaves us well positioned to deliver substantial development-led profit growth. The current pipeline plus near-term projects under advanced negotiation represent £62 million of potential rent. The rest of the land bank offers a further £346 million of opportunity at current market rents. Development yields remain attractive at between 7% and 8%, with a greater than 10% yield on new CAPEX. As James mentioned earlier, our teams have made great progress to have our super prime UK logistics sites construction ready, so we are brilliantly placed to capture improving demand. Combining all of these opportunities together, we set out our updated rental bridge chart. This is based on today's rent, so it doesn't capture any further ERV growth or indexation uplifts. And you can see that on top of today's £755 million, we can generate another £800 million of new rental income. Almost a third of it comes from our existing portfolio as we lease our vacant space and capture reversion. two-thirds of it comes from our land bank as we complete schemes under construction and develop out the future pipeline this only factors in powered shell developments in terms of data centers but in fact the data center opportunity is much greater than this and this takes me on to the next part of the presentation demand for data centers in europe is predicted to grow significantly in the coming years led primarily by cloud adoption as businesses and individuals move more activity online, and by inference AI, which is where the end users interface with the AI models. Most of this demand is being satisfied by hyperscalers who prefer building out their data center capacity in close proximity to major population centers and financial hubs within established availability zones in the so-called flap D markets. This is because most of the applications running in these systems require low latency and high resilience to meet customer demands. Capacity constraints and demand growth are now pushing development into some newer availability zones, such as in Berlin, Marseille and Warsaw. And by contrast, Latency insensitive AI facilities for training and some of the inference workloads that don't require low latency. These can be located in secondary and tertiary locations where land and power are less constrained and energy is cheaper. These are the locations that have no interest to us because we simply do not like the real estate fundamentals. Rather, our focus is firmly anchored on serving demand in supply-constrained and established and emerging European availability zones, markets that overlap with our existing portfolio of prime industrial assets and where our local platform and expertise provide a competitive advantage. Our ability to benefit from all of this future growth is underpinned by an exceptional bank of powered land across key European availability zones, which now totals more than two and a half gigawatts. In addition to the half a gigawatt of operational capacity mainly in Slough, we have a clear route to another 1.1 gigawatt which can be pre-leased over the next three years. and a further defined 900 megawatts of power supply in process supporting medium-term growth thereafter and with additional long-term multi-gigawatt opportunities being pursued over and above these amounts. Our sites are well positioned to secure the necessary planning approvals and the simplified planning zone in Slough provides a unique advantage with data centre development already pre-approved and with an additional 0.4 gigawatts of capacity due in 2029, making it, we think, the largest holding of powered land with a live plan consent within any of the London availability zones. All of this puts us at the front of the queue in a number of markets and best placed to address data centre customers' key criteria – which is essentially speed of deployment. We've delivered excellent progress in our 2025 strategy for data centres. We've strengthened our specialist in-house data centre and energy team. We formed a joint venture with Pure Data Centres, giving us access to the technical expertise needed to deliver fully fitted data centres. On the ground, we completed a powered shell for Iron Mountain on the Slough Trading Estate. We secured a building permit for our first French data centre and submitted the planning application for the Park Royal Joint Venture Project, which is expected to be determined in the first half of this year. From a power perspective, we initiated infrastructure works to support the power upgrades in Slough and we secured a separate 190 MVA power offer in West London. We maintain the strategic flexibility across our portfolio, choosing the optimal route for each project based upon the site-specific characteristics, local market conditions and the expected returns. And while we expect to deploy capital through all three strategies, we're now increasingly focused on fully fitted projects. We believe that on certain sites, this model can generate development profits for Seagrow of up to three times greater than for the equivalent powered shells. And we believe we can effectively manage the additional risks and complexity involved. And for the avoidance of doubt, this approach does not expose us to the obsolescence risks associated with innovations in chip technology, because we will not be investing in the racks or in any of the compute capacity. Our fully fitted approach is designed to be capital efficient and operationally low risk. We will develop only within key availability zones on the basis of pre-let agreements to major hyperscalers before construction starts. We'll be targeting long-term net leases to avoid operational exposure and they'll be delivered through JV structures that combine specialist expertise with strong governance. project level financing and seagrows contribution in most cases of powered land will keep our cash equity requirements limited. In fact, broadly aligned with, if not lower than, the equivalent powered shell developments delivered on balance sheet. And although we have capacity to fund several fully fitted projects from existing resources, we expect to actively recycle capital from stabilised assets through a range of potential exit routes, recycling capital into other opportunities. Based on our assessment of the exceptional sites in our pipeline, we expect to bring forward one or two data centres per year for the next several years with a mixture of some parachels, but mostly fully fitted data centres. We'll be carefully sequencing the delivery and monitoring the overall evolution of the European data centre market to ensure that we manage our overall exposure to fully fitted data centres and to joint venture structures. So in summary on this piece, our data centre platform represents a substantial incremental income and value creation opportunity. It's underpinned by unmatched European land and power positions, the capabilities to deliver both powered shells and fully fitted data centres, as well as powered land sales, a disciplined approach to capital management and the strength of the SEGA operating platform, including local market insights, planning expertise, energy capabilities and robust governance. This strategy gives us exposure to one of Europe's strongest structural growth markets and adds significant upside to the growth drivers already embedded within our industrial and logistics business. So let me conclude by bringing all of this together. 2025 was a strong year of operational and financial performance for Seagrow. Momentum that started building across our occupier markets in the second half of the year has continued to grow and become more widespread in 2026. And we are primed for significant growth in the coming years, thanks to our high quality reversionary potential supporting strong life-like growth, upside from industrial and logistics development, and a compelling opportunity with data centres, underpinned by a clear strategy, strong balance sheet, and a market-leading operating platform. With that, I thank you for your attention, and we'll now turn to questions. Suzanne, James, and Marco, if you'd like to come and join me on the stage, so we can do that, and also Andrew Pillsworth, who's leading on data centres, he's going to join for this part as well. Okay, thank you. We're going to start taking questions in the room. Those of you who haven't been here, you need to take the microphone out and keep the button pressed whilst you're speaking. John, yes, thank you.

Morning, it's John Kyle from Stifel. Thanks for the presentation. Really good to hear a UK REIT, both positive looking backwards and forwards. With regard to the data center business, you're clearly backing the right horse here, and this will no doubt be a great success, I'm sure, in the future. But there's one other big change that's happening in terms of European and UK industrial space, which is obviously the investment in defence manufacturing capabilities. Your contemporaries at Sirius have obviously gone in that direction, and the market has clearly liked that. Is that something you would perhaps seek to look to become more involved in, you know, particularly in Germany? It sounded at the Munich Security Conference that there's going to be an awful lot of investment in that space. Would you be looking to go that way, notwithstanding the data center?

Yeah. I mean, I'll maybe just make an overall comment, and then Marco specifically can add a continental and a German flavor to it. I think what I'd say is so far, I think it's a small thing in terms of impact on a business like ours. There may be some significant investment in some large defense capabilities around Europe, but generally they're going to be in locations where governments want to encourage investment and the creation of jobs and not in prime locations where we want to keep our capital invested. Having said that, undoubtedly there will be some spin-off. There will be some particular logistics needs to actually move goods and services and support capabilities around. So it's something we are looking at. But I don't right now – I mean, it's a very helpful – additional demand driver at the margin. I don't think it's going to have the same impact that, for example, e-commerce had over the last decade. But Marco, do you want to add anything in terms of what we're actually seeing?

Yeah, I think you covered that well. So it's clearly a sector that we are monitoring. But at the moment, what we see that in terms of location are more bespoke locations. Those locations do not match with our strategy. But it's an additional demand and there will be some opportunities. So clearly we are monitoring that across all the European countries. where we are active.

Thank you. Max. Yeah, Max at Deutsche Nimbus. Just two questions if I can. One on London. It feels like you feel a little bit more confident around kind of western corridors, A40. Perhaps if you could just talk a little bit about the wider London market, north, south London, how are you seeing supply in that market? And then secondly, just on the data centers, fully appreciate that you're not exposed to kind of the chip risk. But just in terms of the build-out requirements, hearing lots in terms of the progression of liquid cooling, things like that, Where are the risks for what you're doing in the fully fit-out space?

Thanks. Two good questions, Max. So, obviously, the first one, James can make some comments on. And, Andrew, maybe you can pick up on the depreciation and the obsolescence risk, which are slightly different things. Yeah, do that. So, James, do you want to do the UK?

I think you're right. So, I mean, London is not one thing and our other markets are not one thing. And actually, the markets have quite different characteristics at the moment. So, you know, we were super pleased with the results we saw in terms of West London. It's a very mature market. There's a huge depth of number of customers. We've got a very good, you know, level of customer relationships in those markets. So that performed exceptionally well. And if you take Park Royal, you take Heathrow and you take Slough as our kind of urban markets, 70% of our UK portfolio is in those and we're very confident about those and they're not particularly high vacancy markets. If you look at perhaps south and east, these are markets which are a little bit more fragile in terms of occupier, in terms of vacancy. But, again, we have seen a tick up in inquiries that we've talked about as part of the presentation since probably, well, the back end of last year. So we are more confident in those markets. But it's definitely right to not see London and the other markets as one thing. So, as I say, we feel confident and look forward.

Andrew, take a sentence.

Yes, so on... Excuse me, on data centers. Yeah, as you say, we are our end customers will be investing in the in the servers, the racking. And as David mentioned, the GPU chips where we see that having the highest level of obsolescence risk. And actually, if you look at what we are investing in, we're investing in. long-term power enabled cooling technology. So it's all the mechanical and electrical equipment which we think has long-term intrinsic values in those very attractive markets that we're investing in. So we think they have a very long economic life and certainly longer than the leases that we're investing in. One of the risks is definitely obsolescence, but we feel that's covered off by that point. As David said, slightly different issue on the depreciation. we are targeting a net lease structure to see growth, so very similar to what we do in the rest of our business. And the exact counting treatment will depend on the structure of the lease, but certainly the advice we've got that by targeting a net lease, that will be treated as investment property in a similar way to the rest of our portfolio. And indeed, if you look at other asset classes, offices, where there's fit out, and therefore treated investment lease and no depreciation.

I think on the point around the risk of obsessions of technology moving on, I mean clearly it has evolved. Cooling technology has changed. I mean there was a big thing about water usage when water cooling was introduced a couple of years ago. Now the latest technology is basically it's a closed loop system. So it's a bit like a car radiator. You put water in at the start and you don't need a huge amount of water then to run it thereafter. These things do change. But actually if you go back and look at when we started 20 years ago with data centres in Slough, The first generation data centers we've built, they don't have the latest cooling technology and the latest engineering, but they're still fully used and fully occupational because, frankly, the growth of demand, the growth of need for data storage and processing capacity is just outstrips the ability to build more. So it's very rare that people are going to just strip out the old stuff and say, we've got to write that off. This stuff seems to, you know, it's all additive. But, you know, each data center we build will have the latest technology, but the fundamental fabric of the building and the main cooling isn't going to change that dramatically. Yes, Zach. Okay.

Morning, it's Zachary Gage from UBS. A few questions sort of all tied into each other. Firstly, just starting on the 7% yield on cost on the current pipeline. I appreciate that's ex-data centers, which aren't under construction at the moment, but am I right in thinking that for sort of logistics space, 7% is kind of the run rate yield on cost now, and to get up towards 8% plus, you need the higher yielding data centers to sort of get that blended yield on cost higher? The second question is on the 300 megawatts of immediately available power. I think we sort of know about Park Royal and some power available in Slough. Is sort of the residual power in that the new opportunity in Paris? If so, that's a very large amount. And could you touch on what the plan is for that in terms of whether it's going to be fully fitted power shell and whether you'd obviously bring in a JV partner if it is fully fitted? And then sort of lastly on the wider data center strategy, I mean, it feels like a bit of a change in tone leaning towards more fully fitted. Obviously, the capex on that is going to be substantially more. I think, you know, for the pure DC, we're looking at almost 400 million for one project alone. You obviously guide to the 1% to 2% recycling, saying it might be slightly above that this year. Just how do we think about how this potential pipeline gets funded if it is successful and hyperscalers are there to take it? Because obviously the capex numbers will go up very, very quickly. The income won't catch up as quickly. And should we expect to see just an increased level of recycling well above the 2% or is equity raised potentially on the table if this is a success and you have the demand there to build them out?

Okay. I should have said at the beginning, one question, please, so we can keep up. But there's quite a few there. Just briefly on – and I'll throw the data center piece back to Andrew, and maybe Suzanne can comment on the – the capital side of it. In terms of development yields, we've always said that we should be shooting for between 150 to 200 basis points premium for a development yield over and above the equivalent investment yield of a prime product. Now, if you think that equivalent yields now are somewhere around the five, five to five and a quarter, somewhere about maybe five and a half, then in most markets... Getting a development yield around seven is actually a pretty good outcome and very profitable. Now, we've said there's a range of seven to eight because we've got a mix of geographies. We've got a mix of, frankly, land holding costs or land values on the books. And we've got some markets where there's going to be some projects where we're going to do much better than that, even in core industrial logistics. So the reality is there's a range. But I think broadly, if we can be getting 7% to 7.5% on our industrial logistics and close to 8% when you blend in some powered shelves, that's a very attractive overall development yield. But it will vary by geography and by product. Data center power, Andrew. Okay.

Yeah, so that 0.3 gigawatts, we're not going to give details on individual sites and what we might pursue on them. However, what I can say, the 0.3 gigawatts that you referred to, Zach, that spread across a number of opportunities, both in Slough. We do have some immediately available power in Slough when we're in advanced negotiations with a customer on that power. but also within that 0.3 gigawatts. That's spread across a number of projects, not only in Slough and the UK, but also across the markets in which we're present in continental Europe as well. And as I won't comment on the route we will pursue on individual sites, but we are likely to go for a fully fitted route with a JV partner to get the capability, to utilize their capability on fully fitted, and we're likely to pursue fully fitted in the strongest and most attractive markets.

Okay. Suzanne, do you want to talk about traffic?

Yeah, very happy to. So first of all, you are right that we are leaning towards more fully fitted data centers on suitable sites. So the best sites in our portfolio are suitable for that, and we are looking for joint venture partners to work on those fully fitted data center opportunities. What does that mean? So first of all, in terms of the equity contribution to the joint venture, we don't foresee this to be substantially higher than an investment that we would make into a power shell because we are obviously contributing powered land to the joint venture. So that is a starting point for us, a favorable outcome. And then the capex financing for this project is planned to be in the joint venture, meaning it's going to be project debt that is raised together with the joint venture partner at the joint venture level. This will initially have a relatively high loan to cost, but these longer data center projects will see evaluation uplift as we complete the phases of the construction meaning that naturally the leverage will come down as a result of it. Project Debt is available at the moment. We have already a lot of discussions with interested providers, so we feel that this is a good strategy to fund the CapEx needs, and based on that approach, the currently envisaged strategy would not require an equity raise.

And maybe just to add to that, I mean, even if we've obviously, we've modelled out, we're not quite ready to share the detail of the forecast with the market, but we've modelled out what it will look like if we build, I alluded to one or two per year. They won't all be fully fitted, but I think probably an increasing number will become fully fitted. We've modeled out what that looks like over the next several years. And frankly, even if you do it on a look-through basis, the impact on our LTV and indeed the impact on our proportion of assets in data centers is very manageable. As long as we continue to actively recycle broadly across the whole portfolio, this is all very doable. So we think we've got plenty of capital to pursue this. They're going to be one or two at a time, or one or two a year. They're not going to be five in one year that would put an unnecessary strain on the balance sheet. Tom.

Thanks. Morning. It's Tom Musson at Berenberg. Just a question on Europe. I appreciate countries like Spain and Germany perform well. Can you just give a bit more color on the market dynamics in Poland and the Czech Republic in particular? I think those are the two markets where asset values fell and rent growth was sort of flat there. Thanks.

Yeah, sure, Tom. Mark, do you want to comment on Czech and Poland?

Yeah, so starting from rental growth, we have 1% across continental Europe. As Suzanne said, a few countries have performed well, like Spain and Germany. Eastern Europe is a little beyond in terms of rental growth. What we have seen, as I mentioned in my presentation, is that there was a recovery of the activity in the second part of the year, especially from September to December. And even in Poland, we had some SPAC development in Warsaw that has been fully let even before starting completion. We have done some major lettings like H&M in central Poland. So there is a recovery of the market there. and we don't see that yet in ERV growth because it was in those letting and pre-letting being finalized in the second part of the year and so our values need a little more time in order to factor that in ERVs but we are confident in our guidance that we give between the two and four percent of big box logistics So we think that as soon as the occupational market is going to recover even more, we will see those levels again. And in terms of rental growth, when we look to the performance of the European portfolio, I think that we have not to focus too much on just one year number. Because if you look to the three-year rolling average in continental Europe, ERV growth is above 3% and the average of the past 10 years is above 3% as well. So, yeah, it's just a matter of time.

But I think generally in terms of Poland and Czech, in terms of places to invest, I mean, we, you know, Poland, Czech's been an amazing success story for a long time. In Poland, I think GDP growth was 4% last year, expected to be top performing in Europe, in the EU country this year or thereabouts. above 4%. So I think we've got very, you know, clearly there's a lot of issues around geopolitics and what happens in Ukraine, but we've got You know, we've got long-term conviction over Poland as a place to do business. So I think we'll continue to invest.

In terms of location, we are very selective in this market. And there are some markets, like if you take the example of Czech Republic, we are just investing in Prague. We've done an acquisition last year. And Prague has been historically a strong market and benefit of the proximity to the German border. So we are just investing in selected location in Czech and in Poland as well.

Thank you. Thanks. Any more?

Thank you. from Bernstein. I saw a couple of questions from my side. So firstly we obviously saw an improvement in the occupancy levels overall. I think there was a more mild improvement in the urban occupancy levels both in the UK and on continental Europe. Just in terms of the supply levels, the discussions you were having on that urban portfolio and your urban exposures, What are your expectations in terms of the trajectory ahead for a recovery in occupancy in those markets towards more normalized levels? And then secondly, you were talking about the use of third-party capital. And obviously, you've got some quite large schemes in the UK. You mentioned the 9 million square foot of potential space. And just any thoughts around whether you could utilize third-party capital there and how that structure could potentially look? Thank you. Sure.

I mean, James has already sort of covered a bit about the UK market, so I won't repeat all of that. But I mean, for us, most of our urban vacancy is in London. The bulk of our exposure is to West London in Heathrow and Park Royal and indeed Slough. That's a pretty strong market. In fact, in Heathrow, there's a real shortage of good space right now. There's not much supply in any of these markets. Where there is a bit more vacancy for us and in the market is in the east and the south, in particular, so Croydon and Barking and Dagenham, that area. We don't have a huge amount of space in those markets, but there has been more supply, particularly going out east. because land is a bit more available. So that's one to watch, and I think we need to see a bit of a recovery in the London economy before that's going to pick up. But we're optimistic about North London. It's a pretty tight market around Enfield. We've got a bit of vacancy there, and they're good units, but optimistic that will improve this year and further performance to come in West London as well. I think Croydon and... East London, we've got a bit of interest. We'll see if it all actually crystallizes, but those are the stickier markets right now in terms of our whole portfolio. Urban elsewhere in Seagrow, you know, we're building spectacularly in Germany. It's leasing up really well, you know, ahead of expectations, quite often leased before we get to completion. So that's that. In terms of funding, third-party capital, as we said in the In the presentation, we keep that option open. We've had some success clearly over a long period of time with our CELT vehicle in continental Europe. We do have a new JV model for working on data centers, which is partly around access to skills and capabilities and partly around sharing capital intensity. And as we look at the significant opportunities we've got ahead of us in all parts of our business, including in the UK logistics piece, We're thinking about is it best to do it ourselves on balance sheet? Is it best to do it in partnership? And we're having, as you'd expect, conversations on those. But nothing is sufficiently far advanced that we can say any more about that other than nothing's off the table and we're always looking at these things.

Thanks. Yes. Good morning, Suraj Goyal from Green Street. Just one quick question. So there's mention of positive demand from e-commerce players returning to the market, including sort of Asian players. Big picture, what are your thoughts on where the UK e-commerce penetration rate could land in the next five years, particularly with the potential boost from agentic commerce? And then what do you think that sort of means for your expected market rent growth? Over the next sort of five years.

There's a UK question particularly, was it? James, why don't you comment on what we're seeing on e-commerce and where you think it's going?

Yes, you're right. So in e-commerce, we are seeing the return of a couple of big players who've been out of the market for a period of time, which obviously is good in driving the market. We've also seen some of the Chinese players also come into the UK market. In our own portfolio, we've seen that more in the last mile piece around London and our urban markets. In terms of a look forward, as I say, there's a couple of things that make us feel quite confident. I think that the absorption of grey space, which I mentioned in the presentation, is an important factor, and that should drive more pre-let activity as we look forward in those markets. And then on the supply side, the... The ability to find sites in specific locations which can deliver large boxes is very challenging, actually. And there's a theme around consolidation in the UK market. So customers who are looking to drive efficiencies, consolidating into more efficient facilities, which are generally larger. We've seen an uptick in the demand for large buildings. So, again, that favors companies like Seco who do own those sites and those right locations. And on a look-forward basis, again, if you look back on a long-run average for the UK big box, we delivered over 4% ERV growth over the past 10 years. So, again, no reason to adjust that look-through guidance of 2% to 4% on a look-forward basis.

I think the other thing about e-commerce, I mean, clearly there was a time back in the pandemic when there was a bit of a narrative around we're only ever going to shop online from here. Clearly, there was a massive expansion. That's now slowed down. There's been a lot of consolidation over the last two or three years. But our expectation, our firm view is clearly physical retail will continue to play a very important part in how consumers want to buy stuff. But there's no doubt that the amount of shopping that's done online will continue to increase as a proportion. Where it gets to, I don't know, but it's definitely on the up. And as James says, people need to invest in better facilities, better distribution networks to do that. And that goes to both the big logistics units for fulfillment, but also last mile. The real battleground continues to be in the major cities like London and Paris around delivery of last mile, getting the product to the consumer faster and more sustainably. And to do that, you need to have the right last mile facilities as well. So we feel really positive that after the boom and the quiet period post-pandemic, e-commerce is going to continue to be a factor. It's not going to be the whole thing, but it's going to be a factor. I think we probably, unless there's any more in the room, we probably ought to go to the conference line. So if the operator is listening, could you please take some calls, take some questions from those online, please?

No problem. Thank you very much. If you would like to ask a question, please press star fold by one on your telephone keypad. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. We have our first question from Patrick Bernard from . Please go ahead.

Hi, guys. Good morning. Thank you for taking my question. I have two, if I may. The first one is on the CapEx range, which has been around 500 million over the last few years, at the start of the year for quite some year now. But you mentioned delivering between one and two DC assets from here. I was wondering what would be then the CapEx on a run rate basis and on a low true basis, if you consider that. That would be my first question. And then I would like to come back on the third-party capital. And you look quite enthusiastic there. Of course, there was an article also in the press in January mentioning potentially opening the UK big box business to a partner. How do you evaluate the trade-off between short-term earnings, potential decline, and long-term value creation?

Thank you. Well, that's a very good question on the latter one, and that's exactly what we're thinking about as we decide how to fund our development opportunities going forward. So I'm not really going to try and answer that now other than to say that's exactly what we're thinking about is what's the impact on near-term and longer-term performance for us, and also how does, if we were to create another vehicle, how does that fit with the overall capital stack and the way we're with funding the whole business. So, unfortunately, you just have to wait and see on that one. In terms of the capital expenditure, yeah, the run rate, about 500 million per annum historically, if you sort of average it out, we've guided to 450 to 550 this year, which, as Suzanne said, will depend on the rate of pre-lets. That does not yet include any fully fitted data centres. The first fully fitted data centre is, So if we, assuming we get planning, we'll probably be in Park Royal this year or next year. I mean, they're very big projects. We'll get planning, I'm sure, this year, whether we sign a pre-let. If we do this year, it will be back end of the year, so I don't think it will have a dramatic impact on this year's CapEx. But going forward, if one of the one to two data centres turns out to be fully fitted, then, as Suzanne said, the actual – in fact, I did in my bit of the presentation – the actual cash impact for us is going to be similar if we do it in a – A JV off-balance sheet, the cash is going to be similar, so somewhere around £75 or £100 million of cash equity contribution is typically what we'd expect. But if you do it on a look-through basis, I mean, the capex on these things is about £800 million, something of that order. So you're going to be taking half of £400 million, but that would be spread over a couple of years or so.

Okay. All right.

Thank you very much.

Next one.

Thank you. We have our next question from Paul May from Barclays. Please go ahead.

Hi, guys, and thanks for the presentation. Just got three quick ones, hopefully. First one for Suzanne, just a quick question on the old bugbear around capitalized interest. Just coming in from the outside, what were your views on the policy and the assumptions behind it? Can you just confirm what the main sort of assumptions are, the financing costs that's used, what is actually interest capitalized on? Is this just current developments? Is there any future developments and infrastructure, et cetera, within that? Should I ask them one by one or?

Yeah. Yeah. Well, why don't you give it all three and then we can deal with them. The three quick ones, Paul. Cool.

Yeah. Yeah. The second one, given the skewed investment market, as you mentioned, and I think if you look around, there's been relatively limited capital raising for warehouse or logistics funds. Just wonder what gives you the confidence that you're going to sell more and what yields would you be willing to sell at? And then on the London market, what we've heard is that rental levels, so ERVs, have become not necessarily unaffordable but not affordable for many tenants. I think it's a comment that we've had. Does this go some way to explain the higher vacancy in that market and the comment in the report that tenants remain more discerning in London and Paris?

Okay, right. So I think Suzanne is going to talk about capitalized interest. Maybe I'll pick up on the investment market and what we're seeing in terms of yields and pricing and volumes. And then James, back to you on London ERV. So Suzanne.

Okay. So on capitalized interest, Paul, we do capitalize interest, of course, on developments, but also on land where we are doing significant infrastructure or preparatory work to get the sites to a construction-ready state. And we have larger sites, as you are probably aware. across the UK that do require infrastructure investment and this is also part of the capitalized interest that we apply. In terms of the cost or the interest that we are using to calculate, we are using where available the specific funding rate that is related to where the source of capital comes from for those works that we are doing and where there is no such specific rate available, we would use the marginal cost of funding. In my view, this approach is the most realistic approach that we can find to match with what is actually ongoing. And if you also look at, for example, the 2025 numbers, we have 63 million in total of capitalized interest, and the vast majority was capitalized at this specific rate. Only about 2.5 million of that were done on the marginal rate, so it's a very minor portion where we don't have the specific rates. The approach we take is, of course, fully aligned with accounting standards and also discussed with our auditors, so I feel comfortable with that approach.

Okay, thank you. Investment markets that you're asking what gives us confidence that we're going to be able to trade more in these markets. Well, we are talking to the market, talking to our advisors and sources of capital. And I would say there is more capital coming into real estate generally and within real estate, industrial logistics and residential, the two favored sectors other than data centers. Time will tell, but there's definitely more signs that investors are willing to start putting money to work in the early weeks of this year, Paul. But time will tell, but I think people have been sitting on the sidelines long enough, and I think given the relatively attractive outlook and the improving occupier fundamentals that we were chatting about, I think there's a very good chance that a lot of that capital will be put to work this year. We'll see. London ERVs, James?

Of course there are customers who continue to feel cost pressures and there are customers that don't choose to be in London and can't afford to be in London. But for every customer that can't afford to be in London, there are multiple customers that do need to be in London and can afford London because of the nature of services they're providing, which are typically the high-value goods and services. And look, I don't think you can ignore what the portfolio is telling us. We have seen a nudge down in vacancy from an urban standpoint from 9.6 to 9.4 during the course of 2025. And also our ability to continue to capture reversion, drive ERV growth, see low insolvencies in our market, again, points to a relatively favourable position. The other thing I'd say is there is a narrower discount now between prime home counties in London. So again, on a look forward basis, I think that drives really positive retention rates for our London markets. And if you look at our highest rental market, which is Park Royal in West London, our in-place ERV is actually only £23 per square foot. And you compare that to the top rents that are achieved in the market of £32 to £35 per square foot. So we see plenty of room for growth in those markets and a resilient occupier base.

Thank you. I think maybe one more question on the phone lines.

Thank you. We have this question from , from Bank of America. Please go ahead.

Thank you very much. Very good morning, everyone. I have some pull-up question on your data centers, if I may. And the first one would be, would you please quantify the quantum of CapEx we should expect over the next three to five years related to data centers? The second related question to that is, when do you think we should start to forecast any runs on income or any income coming into your P&L on which yield basis, knowing that it's going to be a blend between PowerShell and fully fitted data centers? Thank you.

Yeah, you're not going to like this, Mark, but we're not really going to answer those questions just yet. I mean, we've talked already about the scale of some of these projects and the likely CapEx, whether done on balance sheet for PowerShell or off balance sheet, fully fitted. I think when we've signed some deals, we will share some updates to our CapEx expectations, and that will also enable us to talk about timing of rental flow. So, unfortunately, we're going to have to hold fire on that one for now. Sorry.

And I have another question which is related to your , which is 300 million, if I'm correct, from last year and this year. Is that a non-yielding asset, non-yielding on the year of deployment of the project? And is that part of the yield on cost of 7% you're mentioning, or is it something which is going to drive the yield lower, 1%, 2%, and then it's going to ramp up?

So is the $300 million of infra spent last year and this year, is that accretive? And how is it accounted for in our development yield guidance? The answer is it is obviously enabling works that will allow those projects to go ahead, including the power upgrades in Slough. And so when we give our guidance on development yields, that's with each project taking its proportionate share of that infrastructure spend. So it's not an additional non-yielding part of capital. It's factored into our development yield guidance.

Okay, brilliant. Thank you very much.

Thanks a lot, Mark. We've got just a couple of questions maybe coming through the webcast, and Claire's going to read them out.

Yes, we have. A couple on data centers to start with. How much of the 1.1 gigawatts of land or power available to lease by 2028 is secured and within your control?

All of it.

And then we had a question on the simplified planning zone in Slough. That needs regular renewing. When's the next renewal date?

Of these SPZs? It was just renewed at the end of 2024, so the SPZ, it runs for 10 years. This is the fourth iteration. We've had three renewals. So it's got nine years to go before we have to renew again. It's a big process to get that renewed, and we never take it for granted, but we do. have a very good working relationship with Slyborough Council, and I think they see the benefits that the SVZ has brought. So nine years firm, every expectation that it will continue thereafter as well.

And then another one on power. Grid connections are difficult and subject to queue management issues. Have you ever lost a place in a queue?

No, we haven't. And particularly in West London, what we're able to do is lock things in early. We've been planning for the upgrade Uxbridge Mall power station for quite a while. So, in fact, our position in that is kind of clear of any NISO review of the queue process. And we're bringing it through elsewhere as well. So, no, we haven't lost the position.

And then the last one on data centres. Can you remind us of the income recognition differences between powered shell and fully fitted? But more importantly, when do we start to expect to see the income?

Yeah, I mean, in theory, the data centre, whether we lease the powered shell or we build fully fitted, is going to become active and operational at the same time. If we do a powered shell... it's quite possible that with a rent-free period in there that the income for us in P&L terms at least can start earlier because we would typically build the shell. It might take 12 or 15 months to build it. Then we would hand over the keys, rent-free starts, and we start accounting for the income at that point. Whereas if we do a fully fitted data centre, the income is going to take another probably 18 months to two years because of the extra fit-out time, so really three years in total. So there is a 18-month to two-year lag between income recognition on PowerShell versus fully fitted in broad terms. But we think it's worth the wait.

A question on capital allocation. Your comment on assets having to justify their place in their portfolio and increased target disposals, does that mean you think assets generate less Do you think less assets generate sufficient returns relative to your cost of capital right now?

What we're saying is we rank all our assets according to return expectations and risk profile. And given that we have a lot of high returning opportunities ahead of us, we want to accelerate and increase the volume of disposals we do so we can self-fund a lot more of that capital investment. And therefore, if you like, the line below which assets that fall under become disposal candidates has raised throwing up more opportunities or more situations where we think, you know what, it's done very well for us, it's performed well over the years, now it's time to take our money out and put it into new opportunities. Thank you very much. I think we're done. I'm sorry it's been a long session. Hopefully interesting, and thanks all very much for your questions and your attention. Have a great day.