Hargreaves Services Plc (HSP) Earnings Call Transcript

Well, let me, first of all, say welcome. Welcome to all of those of you who have taken the trouble to be with us in the room. Thanks very much for attending and also for all of those of you who are online. So my name is Roger McDowell. I have the privilege and honor to be the Nonexecutive Chairman of Hargreaves Services PLC. Please get comfortable. This could run for a maximum of 2 hours. So probably easier if you're at home, you can take optimum bathroom breaks and make yourself a cup and tea when you feel like, it's more difficult in the room, particularly for me. So you may be wondering why we would choose this timing to have a Capital Markets Day? Well, the answer to that is that we have at Hargreaves pretty much completed a strategic -- major strategic shift in the business over the last couple of years. And I think we are very conscious that we are for our size a relatively complex business. And for that reason, the timing is right for us to explain in some level of detail, as you're about to see, the underlying business units, the 3 principal pillars. So that's the reason for doing it now. If -- and Gordon, if you wouldn't mind popping up the aims slide. If by the end of today, we have helped provide a clear overview of the strategy of the business. If we've enabled a better understanding of the principal value pillars within the business. If we got provided greater clarity in particular around our land business, our renewable portfolio and illustrated the quality and resilience of our services business. If we did all of that and pointed also in the direction of some of the ESG initiatives that we've got running, which are very important to us and a lot of you in the room, then we will have achieved our aims. And hopefully, during the course of the day, you'll have some fun. The way it's going to work as a series of presentations, next slide, Gordon, if you may. So first up, we've got Gordon Banham, who is going to talk principally about our Hargreaves raw material services business. And at the end of Gordon's session, very happy to take questions from the floor and also any of the online questions that have cropped up, so we'll try and deal with them at the end of Gordon's session, if you were so kind. Then we move on to David Anderson, who is our Land Supremo, sitting there over on my left. He will talk through the state of play in our land business and in particular, Blindwells, Unity and the renewables opportunity, which is considerable. And then John, who is going to sort of take 2 roles here, talk about our very high quality and resilient services business and then some topics -- sorry, is my mic still working because I don't think it is. Is it fellas? It is. All right. I can't hear myself, but never mind. So that's essentially it. So please be patient. Please reserve your questions for the point at which the individual pieces of the presentation conclude. But the tougher the question is the better my management team likes tough questions. So let's kick off. Gordon, over to you.

So thank you, everyone. I'm just going to talk you through our German business, so that we're obviously an investment there. So just first slide really explains the business. So it all started in trading. Trading business has been part of the group for over 14 years. And then we realized the nature of trading we needed to create some asset backing behind it. So the first asset that we actually built and set up was the coal pulverization plant. And again, I'll go into some detail. On the back of that, we were able to purchase DK Recycling. Now DK Recycling to anyone was an employee benefit for us. And if ever there was a reason that employee benefit trust don't work, this was probably it because we purchased it for a euro and the turnaround has been significant. And it wasn't because the team -- the team are good, but it wasn't clearly that good. It was actually because of very, very badly run and I'll explain why. So you can see there were some very simple steps that we've embedded into the business, which we think has really added some true value. So it isn't all about commodity cycle being positive. It's also about the embedded changes that we've done. So the 3 businesses work very well together. So for instance, if you look at DK Recycling, we will be selling through our trading business, their pig iron, their zinc for them. We'll also be supplying coking to them from trading will also be supplying the coal into the coal pulverization plant. So they're all interlinked on a very, very small scale. You might say a bit like how Glencore back integrated into the mines. Important point to make you aware of is the structure of the business. So we do not consolidate it because we have 49.9% of the voting shares but 86% of the economic interest. Now when this business was first started, the trading business actually 14 years ago, when I set it up, it was the trading team from Thyssen and it was 50-50. It's evolved over time to this structure. And again, I will give you a lot more detail about how the businesses run and how we take it through. So that's just a quick overview. So let me just talk about each individual unit. So trading, this is where we started 14 years ago. The Shaggy dog story almost that goes with it is the trading team with the ex-Thyssen trading team that we had dealt with. I knew them very well. They decided to leave Thyssen and they were looking for funding, and they joined us over 14 years ago and set up this joint venture, which, at the time, as I said, was 50-50. That team, I spend a lot of time with. So I sit on their Board, and I probably spend 2 weeks a month over there, helping and advising them on the way we take the business. The other thing to make you aware of, the trading team own 14% of the business. So they are well aligned with us. And actually, on top of that, their bonus results, which obviously comes on before the bottom line, they get about 14% of the profits. So we have very weighted trading team. I have absolutely no worries about them ever going anywhere else, which is always 1 of the concerns you have with the trading team. So their type of business is very relationship backed. So it's not like coal trading where you've got an API2. And you can see it on the screen and you can trade it. It's all about relationships that have been built up over a number of years. So what they tend to do is buy these products that I'm talking about. So you look at it there's pig iron, there's ferro-alloys and there's other minerals. They buy it from suppliers, let's say, in Colombia or Canada or China. They then back to back it before they lock up the sales. So again, they don't take primary position, which is an important point to be aware of. So they back-to-back it, sell it on a fixed margin multiplied by a volume to a number of customers. Again, you can see it here. It's a very tight business. So again, limited overhead. And like I said, 94% of the stock is normally forward sold. There's a little bit around the edges. But like I said, the predominant theme is back to back. So let me just talk about that trading business. The example that I would try and give you to understand it is that they don't take risk. Therefore, the profit is variable. And the example is if you're a big steel plant, you tend to contract about 70% of your supplies on longer-term contracts 3, 4, 5 years. And you know that supplier very, very well. But of course, when there's an upturn in the market, you'll then go to 80%, 90%. And then you go look for a trader and say, I need another 20%. Have you got a relationship with someone? Can you find me this material? Are you price competitive? And that's why the trade has stepped in. So that's where they love markets that are doing very well and the volumes are going flat out. So that's really good for them. And remember, they're always back to back. But of course, you can imagine a world where, let's say, the steel market turns down and steel plants running at 75% of volume. And then the trading team, as we laughingly say, go home and sit in the deck chairs and sunbathe in the garden because what they don't do is go and say, "Right, now the volumes from my low-risk customers has disappeared, I'm going to go into a riskier business" or "I'm going to start taking primary bets on the underlying commodity." So I'm very proud of this profile from a point of view, it reflects exactly that, that they don't take primary positions. And when the market turns down, they tone down the volume they trade. Now that gives you this variable profit. But in the 14 years we've owned them through the commodity cycles, we've never lost money. They've always been profitable, they've always managed to cover the cost. The interesting thing to say, though, to pick up, remember, we've now purchased these 2 assets, which the CPP and DK. So that, for instance, if you take DK, they used to supply 80,000 tonnes of their coke requirement, total requirement is 160. Now they sell all of it. Now we do it as an arm's length transaction, but it always goes through the trading business. So they're getting an extra 80,000 tonnes of volume they never had before. They now trade -- they used to trade about 150,000 tonnes of Brazilian pig iron. They now trade 285,000 tonnes of DK pig iron. So what you're looking at, if you look at this graph, if you can imagine the base volumes moved up. So with those assets in the business, I can't promise you there won't be volatility because there will be. So if the market turns down, you'll see it there. But it won't drop to the level that was historic because they've moved the base up. One of the other issues, which again, I think everyone can quite capture. Imagine you're in Colombia. You want to load a 20,000-tonne cargo for a customer. You see freight at a certain level. And they're like, actually, if we have 40,000 tonnes, I could get economies of freight. So there again, what they can do is take a position on DK's books, take 20,000 into DK, 20,000 tonnes to the customer, 40,000, you now got more volume. Their strategy then is to sell that 20,000 tonnes knowing they've got a cover position in DK on to a third party, and it never actually goes to DK. Again, you'll find a strange thing with some of the producers as they like to sell to end users. So the fact you sit there and say, I own DK and I buy 160,000 tonne of coke, means they're much more relaxed. They don't like traders in some respects because they want to get to the end user. So actually, we can trade with some people who are really think it's going to end up in DK and actually, it never touches DK. So again, it's another benefit that the trading team get from the 2 businesses working so closely together. So that is a quick run through of trading. So this is a coal pulverization plant. So if you look at the picture, what you've got there is basically the line across the top is the belt. So basically, you feed in coal to this big tower. Coal comes in the top, and it goes into a bore mill, which pulverizes the coal into micron levels. The blue cylinder on the side is nitrogen because you need nitrogen because you have to pulverize it in an inert atmosphere so it doesn't explode. And then you pump it into those 4 silos, which are the blue silos, as you can see, 3 of them. And then underneath truck pulls in underneath, discharges automatically in the bottom, goes off to the end consumer. If you could see a bigger picture of this, you'd see that the rail line is about 200 yards on one side of it and the Rural river is about 600, 700 meters away. So very good logistics position. The plan with this was in Germany, if you follow the German industry, you'll see that they use huge amounts of lignin brown coal. It's very, very cheap because it's near the surface, open cast, onto conveyor belts, into their power stations and also into the cement plants. Now there was, and we'll talk about that in a second, a big drive to close those mines. When those mines closed, there was going to be a need for replacement. And you need ground coal for that. You can't use normal coal because lignum brown coal, all the plants have been built to go on a very soft product. So this is perfectly positioned, both logistically and also as a lower carbon footprint for replacing the lignum brown coal market, of which there's about 2 million tonnes, which is easily accessible from where we are. And currently, we're doing 100,000 tonnes, which is breakeven with the plant. So it's breakeven. That's fine. And again, just take you over the page. This gives you an idea of where the customer base is steel plants. The steel plants use it in what's called PCI, which is ground coal. So one of our customers is DK itself. So it takes material from the plant, which actually be blowing a pipe cement industry and chemical plants, the weird one you see up in Sweden is a chemical plant that takes it already. But it gives the idea of the geography. Just -- so here's the numbers. So this is all about volume multiplied by our margin. So it's a very low fixed cost base, very automated. You need a couple of people on the plant that's all. You can see the cost of the plant. It was funded by a term loan, as we've said here, amortizing to December 27, only at 1.4%. So it was cheap money. The key issue with this, as you can see, is it's pent-up, is breakeven now. As soon as you add another 1,000, 10,000, 100,000 tonnes it all fall straight to the bottom line because just there's nothing really. In fact, the efficiencies improve because you've not stopped starting a plant, it's better to run it straight through. You use less nitrogen. So what's going to make that happen? Well, hopefully, the closure of the lignum brown coal, but as you know, because of what's happening in Ukraine, the Germans are having to rethink, do they continue to spend huge amounts of CO2 up because they haven't got the security with gas. So that's causing us a few challenges. And that's why at the moment, it's breakeven. How quickly this turns to making a significant contribution will be driven very much about what happens to the lignum brown coal market in Germany. But at the moment, it's breaking even. We're happy with it. It was actually the thing that opened us up to DK because it was the joint venture, when we were talking about this, DK needed a supplier. We were able to invest in the plant. They couldn't. What happened then was the local government approached us and said, look, you're actually committed to this type of industry. How about you guys buying DK for EUR 1 and trying to sort it out because it was loss-making at the time. So it was an entree into DK as well. We definitely wouldn't have been able to buy DK without it.

I can go on, if I may. I think it is worth emphasizing because the word coal appears in this and just how much greener PCI coal is the lignite brown coal call, which is about as bad as you can get.

Yes. So if you look at it lignite brown coal, nearly half the colorific value, throws off nearly twice the amount of CO2. So from a carbon credits point of view, it's significantly better. And one of the things that if you're tracking carbon prices, CO2 carbon prices, you see they nearly doubled in the last sort of 6 months. So there's pressure on people to move even if the lignite brown coal markets adjust and stay. But remember, coal prices are very high at the moment on the back of what's happened in Ukraine. So coal prices are double what they were. So if you see coal prices coming back down, carbon price is staying high, people will then look to switch across the coal because they'll save on the carbon, coal will be cheaper at the moment. Lignum brown coal is the same price as it always was, which is pretty low. So you need coal prices to come down, carbon to stay high, and you can see people switching even if lignin stayed open. So that's an area of opportunity. Thanks, Roger. Finally, obviously, long term, all of these processes, whether it's cement, whether it's steel, whether it's chemicals need heat. So it's going to come from somewhere. Ultimately, the move would probably be to these type of products. So we're looking to blend those in and add them to the mix and eventually evolve over time. Prices of these, as you can imagine, are relatively high for the heat value. So like all the things in the carbon space, it's going to be very much driven by legislation driving CO2 carbon credits up and forcing people to move these. At the moment, these products are really not cost competitive, but there will be as the carbon credit price moves up. So that is the grinding plant. Now I think the word goes a picture paints a thousand words. So we'll just give you a quick overview of DK. [Presentation]

So as I said, a picture says a thousand words. So hopefully, that's helped to put it in context for you. Let me just talk you through the slide, which again helps people understand. So one of the things I would say with DK a very high health and safety culture. It's a big issue because obviously, it doesn't look very safe, wandering around here that molten steel. So it's a high health and safety culture there. What we're doing, remember, is we're avoiding product going to landfill. Now what that happens in a steel plant, just explain a normal steel plant. Again, people you're talking about, Thyssen, Arcelor, HKM, Salzgitter. They get iron ore, they get coke, they put it into a blast furnace. That blast furnace in the process blows off dust. Now the issue is when that dust gets blown off, zinc is poison to a normal blast furnace, okay? What happens is, is when you get zinc in the blast furnace, it forms what's called skulls on the outside. And that stops the flow and it means that if you're running a blast ponies you actually have to stop the blast furnace, cool it down, knock the scales off and then restart. So as a blast furnace you want to minimize the zinc that goes into your blast furnace. So when this dust starts to build up zinc, you can't put it back in the blast furnace, so you either put it into landfill or you give it to us. Now when you give it to us, it typically has a zinc content of 2.5%, maybe up to 11%. So that comes to us. Now you'd say, well, surely that's toxic in your own blast furnace. Well, we run our blast furnace very differently to a conventional blast furnace. We have what's called very high top temperatures. So if you imagine when the dust originally goes in, it hits a very hot top. What that causes is to drive the zinc off. It goes into the gas filters. We capture the zinc and it comes off as a byproduct. And then the pig iron falls at the bottom. Now that's where we're similar to a normal blast furnace. But remember, when you talk about these people like Thyssen, ArcelorMittal, HKM, they have a blast furnace and a [ bus ] plant. So for those of you who don't know, you make the iron in the blast furnace. You put it in normally a rail wagon called a torpedo and you go over to what's called a bottle plant, the basic oxygen steel plant, and that's where you make steel. So everyone else is normally profiled to make steel. They don't go for this intermediate stage, which is very commoditized, they look for the added value. So at DK, what we do is take their dusts with high zinc. They -- we charge a gate fee because of the waste we're stopping going on into landfill. It comes into our blast furnace. As you saw in the center plan, it's blended. You then just run it like a normal blast furnace with coke and coal. You have to add a bit of iron ore, pure iron ore, just to get the values right, goes into the blast furnace and what do you get out? Well, as you saw, you get 285,000 tonnes of pig iron. And also you get 6,000 tonnes of zinc. And again, I'll talk about that in more detail. But that's basically straight off the top. So the zinc comes up, you trade it on to the likes of Glencore or [ Miele ] or the other 2 zinc processes. So we have annual contracts with them. They've been taken from DK for over 20 years. The other thing just to point out here is the energy piece. So when you run a blast furnace, you drive off gas. That gas runs in our own power station, and we are self-sufficient effectively on power. Now that's not totally true because we actually export some. But I would say what's happening is because energy prices have shot through the roof, the cost of the gas we buy in for the plant, nitrogen and oxygen is a lot higher. So we're getting more for our exports, but that's hedging effectively the increase in our input costs. So don't get too excited that we have a power plant, and we can sell to the grid. But from the same point of view, don't worry because it creates this natural hedge for us, which is a big positive. And then you have a fixed cost base, as we've said, over 200 people, Again, this plant has been running for over 20 years. So the maintenance and servicing is pretty well known. There's some overhead and admin and of course, there's some depreciation. As I said, this plant runs, what I'd say, flat out. So you turn it on. You run it for about 45 weeks of the year. You turn it off for what's called summer maintenance, you go in you actually just knock anything off the inside of the blast furnace. So even we get some skulls from the zinc, not going off clean it up, tidy it up for 7 weeks and then you start again. And that's the cycle that keeps going. We do believe that we can shorten that to 2 weeks less, so we'll probably run for 47 weeks after this year. So we'll get an extra 2 weeks of production. The management team are polishing things up to just get an extra 2 weeks of production out of the plant, which is important straight to the bottom line. So again, context, I think for everyone is pig iron, coke. So let's just talk about pig iron and how it's priced. So pig iron's priced really off 2 marketplaces. You first have got pg iron produced in Brazil. Now Brazilian pig iron tends to be from forestry, so charcoal. So instead of them using coke, they use charcoal, they produce pig oil in Brazil, ship it to Europe. So that's one competitor the DKs output of pig iron. The other one was Ukraine. In fact, if you watch the press, you'll see Mariupol. Mariupol was a big pig iron producer. I don't think based on the pictures that's going to come back anytime soon. And Ukraine and Russia were people that sent pig iron into Europe. So that has created opportunities. I don't know how long they'll survive. But to give you an idea, I talked to the trading team this morning just to make sure I was up to date. And pig iron is trading in quantity market at about EUR 800 normally, it's EUR 500. So it gives you an idea of how much the prices have moved up significantly. How long they'll stay like that? I don't know. And I'll -- I think if you look at broker's forecasts I think James has been quite conservative in terms of the numbers, which I think is that he's got a sort of first half being heavy next year, then going back to normalized rate and then just hitting a more normalized run rate. That's a view. I think everyone has to take their own view. Do you think these commodities are going to stay high? Time will tell, and we'll obviously keep upgrading the market in terms of what's happening as we see it. One of the issues on pig iron. We -- the customers we supply to are foundries, they typically only have an order book about 3 months forward. So therefore, our visibility is about 3 months out. What we are working on is trying to push that out to 6 months, and we're talking to customers because we're saying, look, we're a European-based producer, we're secure. You don't have freight problems as if you would from Brazil, and you don't have geopolitical issues like you have had from Russia and Ukraine. Why don't you tie up with us? So we -- there's 2 bits on the pig iron sales piece that what we're trying to do is push customers longer. And underneath this dynamic of 280,000 tonnes, very simplistic. I've always said 180,000 tonnes was always profitable, 100,000 tonnes we sold basically at cost to the electric arc furnaces or Turkey to the steel industry. There's now the opportunity to take that 100,000 tonnes and sell it at a profit because people who traditionally bought Russian or Ukrainian or Brazilian and they're saying, maybe we'll change our supply source and maybe we'll look at DK. So that's potential to move things up. If we can switch those customers, at least it will make a contribution even if we return to more normalized levels. But as you can see, that market is very dynamic at the moment. What you see in this graph, what we're trying to illustrate there is, the gap between -- so pig iron prices have always tracked coke prices to a degree because you think about it, if you were in Russia and Ukraine, price of coke went up like it did to us, therefore, it forced up the price of your pig iron. So there was this relationship. What you can see is when we took over the business, we were able to widen that gap. DK as a stand-alone business just went to the market and the trading team said, right, you want to buy 30,000 tonnes, 60,000 tonnes, fine. Now the trading team are engaging and saying, right, we think you should go long on coke. We think you should go short on coke. And then to Eller Hilmar, who's the Head of Trading sits on the board of DK, and we talk about the long and short trading strategy. So that's where we think we've added value to widen the gap and we think that should be sustainable because the trading team are probably the best coke trading team that I've come across. So if you look at pig iron, I think there's a positive outlook at the moment. If you look at zinc, now that's an interesting point. So zinc is there, it's traded commodity. Remember, this just falls straight off the bottom line. It's gone up significantly. It's come off. We hedged 40% of our output. So I must admit jokingly what John and I laugh about it, but when prices were 4,500, people were saying, should we have really hedged and they start to come up again, everyone going, oh, I'm really lucky, we're hedged. So we thought 40% was the right level. We may look to increase the length of the hedge or we may look at increasing the volume of the hedge, and that's always under discussion at the trading team. But like I said, I believe zinc prices are going to stay high, normal run rate, I would say, an average of that USD 2,500. If you look at the graph of where it traditionally is. So fall straight off the bottom line. A couple of initiatives that we're working on there is on zinc, we think we can increase the volume of zinc we produce. So at the moment, the blast furnace takes about 2.1%. Zinc as an average. We think we can get that up by 10%, 15% without causing skulls. It's all to do with some operational changes, which aren't very difficult. Actually, what happens at the moment, just to bore you. When a skull forms in the blast furnace, they slow it down. They actually put water in, which is a renders to blow the skull off the wall, that calls the coke down, which cost us more money. So we need to put more coking. And then the skull actually falls into the blast furnace and gets into the mix. Our plan is to actually use basically an air hose that blows it off, but at the same time, sucks out the skulls that doesn't fall in. So therefore, we can increase the volume of zinc. So it's relatively simple, and the team are working on that with one of the universities in Germany. But we hope within a couple of years to be able to do that, and that should allow us to increase the zinc content. So one of the final points, and I mentioned it earlier, the interesting thing about DK is I can definitely guarantee everyone in this room that this proves employee benefit trust don't work. It was really badly managed. And I'll just go through the things that we've done, which are really simple, easy to understand, that has moved the base up even if we go back to a more commoditized version. They were using too much iron ore and there's a famous story where I sat with MD, who's no longer there and went through the numbers. He went, no, no, you must be wrong Gordon. And he came in and said, yes, you are wrong, we wouldn't save 20,000 tonnes would save 18,000 if we did what you said, he is not there anymore. But that's to they've got fat and lazy because there was no shareholder to provide money to. So this contractor had been there for 15 years. We replaced the contractor, and it's a simple saving GBP 1 million it's there. In fact, personnel, everyone and their dog had a PA, now there's one PA. There were various surplus people in the business that we moved out. So that's GBP 1 million. Coke procurement, half the coke they bought from us, half they bought from a third party. We've been able to offer better coke at a lower price than the other third parties. So that saved them money, but there is also a leg that still benefits in the trading business. They never had a head of procurement. So literally, each operational head procured off his mate, because they've always bought from Fred. So there was no discipline on procurement, that's million. We've already taken steps on the sales mix. So we're already taking this 100,000 tonne of breakeven pig in and started to trade it into foundries, and that's already added GBP 2 million to the bottom line. The 2 companies that took the zinc, we've already reduced the charge for zinc treatment, so that's really easy. And we've done the waste disposal, we've reduced the waste to it. So they're pretty factual. So the key message I'm giving you is this isn't all about commodities being high. Yes, they are. Yes, that's fed in. But I think if you look at the note from James you'll see that he's forecasting a return to more normalized levels, but still a pretty profitable business. So really, I hope that's achieved the objective of where we normally don't get the chance to the shareholders to get into the granularity of what's happening in Germany and would allow me to people ask really difficult questions, as Roger said, so I like difficult questions because then it proves that I've got into granularity.

Now everybody in the room is an expert on pig iron production. We would like to question. I mean, if I may, without embarrassing Gordon, what we have done here in DK in particular, is a step change in its profitability, a change in the model, a significant improvement in the model. and we've positioned this business, which, by the way, is a recycling business, and I would emphasize that. We've positioned this business to be consistently profitable. Yes, there will be the influence of commodity prices. And candidly, we're not in control of that. But the work that Gordon and the team have done have dramatically changed the basics of this business. So congratulations to Gordon and the team on what was a great acquisition that dovetails very neatly with our pulverization plant. So on that note, yes, questions.

It's Michael Donnelly from Investec. Two questions, Gordon. If we look at Page 7, again, which is your 3-circle diagram of the businesses. You were very clear when you spoke about the DK bit about a scenario where you have a high and sustained input energy prices, and you were suggesting it was effectively hedged on that. Can you just very quickly at a high level the other 2 businesses? And either confirm that the same dynamic obtains there or if there would be an imbalance?

Yes. So if you look at the trading, yes, that's fine. So high energy markets, actually, it plays to their strength to a degree because they tend to deal with more like -- their strength is really China, Colombia, Canada and the States. So the supply of Russian material hasn't played into them. So they're in the right places for trading. So energy hasn't had a negative effect on them, if that's what you're saying. Coal pulverization plant, yes, the cost of electricity has had a negative impact on that because it uses electricity. So that has increased the cost base but they're contracted in on index-linked contracts. So it will break even going forward, but high energy prices has a negative impact on the coal pulverization plant. High energy prices has no effect on DK as near as -- does that answered your question?

That's what I was going at. And then just one follow-up on DK. There was a bit in the bottom left of the picture, yes, you said that there was an agreement to sell into the German grid. Is that like an offtake agreement we would have with the U.K. grid? And how much percentage of revenues is that if it is?

Right. So what you can imagine is you have this big blast furnace running, you have the whole plant running. One of the things we're doing to CapEx on at the moment is to upgrade the -- to the power stations, so that will increase. There's about a GBP 5 million spend, okay? So based on conservative prices, that should give us about a -- we think about a 3-year payback. So you can see that we're going to generate more power than we do currently. One of the things I would say is that because its primary need is to supply DK, it's -- certain times, it supplies the grid. So it's spot. So there's no contract. It's spill prices. So you spill in, which gives you a lower price than you would get on a long-term contract. And it is just when the blast furnace suddenly might have a hiccup. And therefore, it will slow down. That means there's nothing to go to the grid. So you can't continuously do it. When you're at full speed, you need it all. If there's a hiccup, you spill. So it's relatively... One thing I must say, and John will pick me up I always have to be careful he told me often before. If I've used the word we, can I please point out that we do not control this business. Got my Finance Director happy. But just to be clear, for shareholders, I spent 2 weeks a month there. DK, the word D, it's like Doncaster as you want to see so. It's not a place I'd recommend for any of you who want to go on the holiday. But it's 2 weeks a month on there. I sit on the Board, we are very actively involved in that business. But as John will say, we do not control it. I want to be clear on that.

Question over here.

It's James Tetley from Singers. First one is quite straightforward in the one there more acquisition opportunities for HMS, Acarer, also DK and any other opportunistic deals we might do? And you might want to add to our first. Second one is kind of a numbers question.

Okay. So take that one. I think we've got -- DK is interesting, one of the things we talk about is, there's lots of opportunities there. So it's taken a lot of my focus and the team's focus. So at the moment, I really want to focus on getting the grinding plant, running and finding new customers for it, and I really want to focus on optimizing the low-hanging fruit that's at DK, I really would not want to. But if a bargain came along, you know my style, you've been along me long enough. If somebody is selling me something again for euro, I might think about it, but in your world, would I be spending any significant money? No. If another bargain like DK came for a euro, I might try and convince the Chairman to let me play with it. But no, there's nothing.

You've had a lot of work to do to convince me. But what is interesting, I think, James, there's a couple of things have come to us because the turnaround here has not gone unnoticed. This was a very badly run business and is now a very well-run business. And there's quite a few people in Germany with badly run businesses supplying surprisingly enough. So it hasn't gotten noticed. But we're not beating the bushes for acquisitions at the moment.

Definitely not. Not nearly enough hours in the day.

The second question is on the CPP. On that slide, where you've got some helpful numbers you talked about the margin being EUR 20, EUR 25. Just wanted to clarify if that was linked to the coal price at all?

A very good question. So that's a tolling price. So what we do is at the 400,000 tonnes we turn up to a cement plant, say, look, you've got 2 choices. We'll sell you a finished product that we have purchased the coal or you can put your own coal through this. So it's a -- purely a tolling margin if you see there. So if I sold you coal, the coal profit would sit in the trading business, the processing margin sits in the CPP.

So a quick mental arithmetic on the basis of 400,000 tonnes on the EUR 25 to you might get to a number.

It's Steve from Canaccord. Could you just say a little bit more on your gas contingency sort of supply and arrangements going forward?

Yes. I mean -- so I think the issue for all of Germany, and we were actually contacted by the German government to say, look, if we turn the Russian gas off, what would happen. And it has a pretty horrible impact on German heavy industry in there. we are much more insulated than anyone else because we have our own power plant. But there are times, imagine our power plant is off, so say it as a breakdown, then we need to buy from the grid, electricity, et cetera, and that would make a big difference if prices have spiked significantly. So we -- it's something we wouldn't want to see happen. Talking to all the mayor and the local people in the region. The regs can't have it happen. They've got to keep buying Russian gas, and you see that in the press. But we are probably more resilient than most people because we have our own power plant. And we're very lucky and we didn't plan it, but the investment of EUR 5 million we're putting into the power station will improve that resilience even more, and it's going to get done this summer. So it will be fully operational in August.

Look, I guess, Gordon, just to add to that, the unknown would be what the external consequences of that would be. So if there was -- if that scenario of very, very high gas prices or gas shortages meant that some of our key suppliers and our customers have problems. That's a knock-on effect, something that's outside of our control.

Simon Corfield, private investor. At the risk of destroying my reputation for asking difficult questions, I have a very simple one. When you were talking about pulverization plant, you said the total plant cost was EUR 29.5 million. What does that mean the depreciation charges?

Look, as my Finance Director. I think I'll...

Defer on that.

Yes, I'll defer to my finance director.

Well, they depreciate it over 20 years.

And I think we've got one from online maybe?

Gordon, we've got one question from a private investor asking what is going to happen with the cash at HRMS?

So remember, as I said, we don't control HRMS. At the moment -- and again, I think you saw it in the press, Roger picked it up to me that if you're a trading business. So remember, one part is trading one part is DK. So they're generating big profits. But look at the commodities, they're trading a lot more commodities and the price of the underlying commodity has nearly doubled. So they're using all of their cash to deliver these trading profits. Now if you look, we said it, it was clear that we lent the Germans GBP 15 million because they were -- they needed some more money, and they've given us more profits on the back of it. So I think as shareholders, we should all be happy. If we return to a more normalized position and commodities lower in price, there will be surplus cash there. And at that time, the Board of HRMS will have a discussion which I will be heavily involved with to look at what to do with the surplus cash.

Gordon, maybe why just to give an insight into the revenues of the combined German activity HRMS and how those revenues have profiled over the last couple of years. And then you can kind of figure out what the working consequences of that will be.

I think -- which way should I go. So there's volume, there's revenue in the trading business alone. So that's what the trading business has done. For simplicity, there's only 100,000 tonnes going through the grinding plant. So you just multiply that by 100. And then, of course, DK, you can simply work out the revenue because you go $285 million, it was let's say, EUR 450, EUR 500 a tonne. That's now EUR 700, EUR 750 and zinc 5,000 multiplied by 2, now multiplied by 4. So the revenue of combined business is close to EUR 600 million.

Yes, that's helpful. So I mean you can imagine the working capital requirements inside of that. But the point at which some of these prices move in a different direction, there will be a significant working capital reduction.

And remember the trading team own 14% of the business. So again, at this point about alignment, I think, is important. They are as focused as we are to make sure the cash is deployed properly because it's not just people who are employees, they own 14% of the business. So they are going to make sure the money is dealt with properly.

Yes, alignment of interest is great. Well, we've got a flurry of hands at the moment.

Toby Thorrington from Edison. Simple one, not a difficult one for you, I think, Gordon. Around the CPP plant, current run rate 100k tonnes, for plate 400 notional. I don't know how standard or unique this plant is. Are there any ramp-up risks? Are there any operational changes that need to be made to the plant to get to that number? And does that change the P&L in any way?

So this is a standard plant. There's about 30 of them over the world. If you Google it, it was built by a company called [indiscernible]. So there are experts in the field, the plant is running now, actually doing 100,000 tonnes is approved. The -- back to the point of focus, they're really valuable as extra 300,000 tonnes. So we don't want to be spending any time looking at acquisitions if we want to be looking at finding customers for the 300,000 tonnes. So it is as simple as find the customer, stick it down its throat and it goes straight to the bottom line. I'm not worried about the plant because this technology is 20 years old. It's not bleeding edge or anything.

I'm not sure we answered the question about what the competition is.

Sorry, so the competition is old grinding plants that have been around for 20 years. They typically were built to provide the steel industry with PCI. So traditionally, steel plants used to just run on coke. Technology was developed called PCI, which is to blow coal in, which is cheaper than coke. And a steel plant would turn around and go that's a bit expensive. I don't know if they're going to work. So 2 or 3 of these were built and then they provided 4 or 5 steel plants. And then over time, some of those steel plants built their own. So there's 1 in Belgium, it's 1 in Austria, and there's sort 3 in Europe, I would say.

And I think it's also worth saying that the plant was built and 1 of the underpin, if you like, under strategic reasons for it is that we do see considerable growth in this market at the expense of brown lignite. And I think that's just a timing issue candidly.

Gordon, if I may, what -- the 14% ownership is by the top exec team or by all the employees?

So it's the 3 top employees that were with me at the start when we set the business up. So Hilmar the MD has 10% and then he's 2 left tenants, Maria and Daniel at 2%.

Sure. And my last one is that have we -- is it possible to expand -- increase the capacity?

Of the?

Of the CPP, DK?

So CPP is capped at 400,000 tonnes. So no. The DK, as I said, the opportunity is yes, so we can increase the capacity by -- so just at the moment, it's 285 divided by 45 weeks. So we can multiply by an extra 2 weeks. So add something like 10,000 tonnes of pig iron. Zinc, I think we can increase the production by 10%. So 10% is roughly another 500 tonnes multiplied by whatever the zinc price is.

But nothing beyond that?

No.

What's the average age of the key people in the trading business in Germany? And how sustainable is the business post their retirement?

It's a shame that you -- the German trading team are very busy, but Hilmar continues to tell everyone that he had his blood test and he has the blood of a 21-year-old. So Hilmar's -- Hilmar, I think will go on long not after all of it. He's 61. He loves being where he is. He's Mr. Doesburg, as Roger and I jokingly call, he's very committed to the business. And there, Maria is in her late 40s. If she watches this, you might beat me up because he might be slightly younger. And Daniel is just in his early 50s, below that, as we said in the trading team, there's a mix. And can I say -- although I talk about the 3 shareholders, there is a strong team below that. who are well aligned and bonused and have been with us a number of years. So it's a loyal tight team. And they're a great team, best traders that I have come across.

Look at risk attempting, I think we've had 0 attrition in that team over a period of years. We've added new people in what we've had 0 attrition. And everybody's interested very strongly aligned. But the point that you make, Simon, is a really good one in that these people are key, absolutely key.

So is he irreplaceable?

He might be watching this.

Standard answer is nobody. Nobody is a irreplaceable except Gordon, of course.

Like we all are, yes, we could. But Hilmar was the best coke trader I've ever come across. We've worked together for 15 years. We have a good relationship. And he loves it. I mean does absolutely love it. He eat, sleeps and breathes it.

Hard to believe, isn't it, but, yes.

Yes. But it's what he likes. So yes, there's a -- I have this discussion with its key man risk, but he has a team below him. How might just cause the market very well. So yes, it's a key individual and a key risk. But that's part of -- if you talk to the trading team, one of the advantages of having DK and having the grinding plant is you can stand at the table, not just on relationship, but also that you are an end consumer. So that's helped all of the trading team below Hilmar to be able to go to people before you're a trader, okay? There's always a bit of sniff around the trader. But if you're actually -- so they tend to turn up buying on behalf of DK or the CPP, which gives them a right to be at the table.

Good credibility, Good. Any more questions from the floor?

Yes, we got one more from the webinar and then we'll go to [indiscernible]. -- that's.

Sounds like you've taken control, which I really do appreciate.

Very quick question, Gordon, just asking from private investor, how the share the shareholding works in DK with the 80% -- 86% economic interest and just the 49% ownership, how did that come to be?

So I think you're talking about the 86% in HRMS and the 14%. So the question is, so that evolved over time. It's an interesting debate. So remember, I said at the beginning, it was a 50-50. Hilmar felt at the time that it wasn't fair to be a 50-50. So we actually sold stake down the economic interest to us. And therefore, sometimes Hilmar laughs, it's probably a bad deal that you did one of these bad deals because it was ...

The only bad deal.

Yes, the only bad deal that is done. And the control issue was driven historically about 7 or 8 years ago that my old Finance Director put that in place because what happened was, you can imagine in a trading business, the commodities -- so if you bought a cargo at coke, you could add GBP 20 million to the debt just like that, but it was back to back. But it made our debt number look bad so there was some financial engineering by my old Finance Director. But I mean, the team are we are absolutely aligned. We work really closely. But there's never been a situation where we've sat around the table to make a decision, and we haven't been consensual. They respect that. We've worked together with friends for so long that we respect each other. We've never disagreed on anything. So although that we talk about that control issue, it's never been an issue.

And that's due to the nonvoting and voting shares, is that correct?

Yes. So we don't control the business. So -- but we have certain blocking rights, again, to be clear, but it's never come to that. Again, Hilmar and the team are well rewarded 10% of this number is after paying Hilmar 10% of the profit. So he's very, very aligned. And he respects what PLC does, again, look, we lent them GBP 15 million, which has helped their trading. So they do appreciate the support they get from PLC Board. PLC Board drove there last month for the annual visit to the site and met all the team and had a chat. So it's a very positive relationship. And it's a bit like being married. We've been married so long for the last 15 years. We're all happy and we're too old to get divorced probably.

Brilliant. Okay. So we'll move on to David Anderson's section revision now.

Hargreaves Land. So the business level of Hargreaves land is relatively straightforward. We operate in a range of development sectors. The obvious one being as master developer. So likes of Blindwells, Unity and Westfield. This is essentially where we deliver serviced plots to end users or other developers. So for example, we sell to housebuilders serviced plots. We may do the direct development to commercial space. We then have renewable energy business. This [indiscernible] is purely as landlord. We're not renewable energy developers. We take the land through the planning process, secure contracts with wind farm and other energy developers. And then we retain an economic interest by way of lease, which I'll touch on later on. We do direct bespoke commercial developments, typically, industrial and logistics space as well as things like retail warehousing and that's effectively for end users and that's typically on the forward sold basis. And then we do strategic land, which essentially is promoting the land through the planning process. Once we [ seek your ] planning consent, then we'll either sell it on to [ end purchasers ] or we'll do the direct development in some instances. So in terms of the basic business model, we operate across a broad range of sectors and geography. That's, again, primarily to maintain some resilience to the market. We look to derisk the projects ahead of implementation. That typically means we get planning. We secure forward funding before we put further investments in. And then [ with that in ] direct investment, we look to minimize the quantity of that and also the timing. Again, that plays into the return on capital employed target of 15% plus on our direct investment. In terms of where we're active, that's essentially the Midlands, North of England, Scotland, and that's serviced from our offices in Leeds, Durham and Glasgow. And then finally, in terms of our active development portfolio at the moment, it's got a gross development value of around about GBP 375 million, where the overall margins we expect to achieve on that are 15% plus. Over the page to Blindwells. Now this is our longest running large-scale master development. Many of you will have seen it progress through the last few years. And the traction of these longer-term master development type of schemes is they give us a lot of visibility on forward revenues. We can predict over really a number of years what we're expecting to generate from these. In terms of Blindwells, the key function of the development process does actually limit the amount of development land we can actually deliver each year. It's a function of the construction process. We can't do a lot about it. It actually is quite a good discipline because it prevents temptation to flood the market. So you'll see from the schedule there that plots 1 and 2 and plot 3, they're all sold and they're all on-site busily constructing houses. We've got Bellway, Persimmon and Cruden, and roughly around about 100 houses are now up and built. A significant number of those are actually occupied. The overall Blindwells site is around about 220 acres. It's got planning consent for 1,600 homes, but we expect to increase that to around about 2,000 in due course. But as we look forward into the future, it's relatively easy to predict the acreage we will sell out each year. So for example, plots 5 and 11, they are the subject of contracts or under offer, and we'll deal with those in the next financial year. Plot 4 will come forward in the following financial year and so on. So again, a very clear predictor of revenue generation scheme. And at the moment, the net land values we achieved is around about GBP 900,000 to GBP 950,000 per acre, and that's inclusive of our planning obligations under affordable housing. And then beyond Blindwells itself, we have a significant share of what's known as Greater Blindwells. Now this is a substantial 1,000-acre site immediately to the west of Blindwells. It's held really by ourselves and Taylor Wimpey, who have the other part. We have a 25% share. It's currently working its way through the planning allocation process with the support of local authority, and we expect to allocate around about 8,000 homes together with a large commercial center. And we're anticipating that the allocation will land in around about 2026, '27, and that will allow us to effectively secure consent by 2029 and allow the immediate development to commence, with first housing occupations probably around about 2031, 2032. So again, in terms of visibility long term, we can see this potential Blindwells going on for another couple of decades quite easily at a steady pace. Over the page. So this is Unity near Doncaster, which, just to clarify, is nothing like DK. In terms of the scheme itself, slightly different from Unity. It's a 50-50 joint venture with a retail developer called Waystone and effectively has consent for 3,000 homes, plus 2 million square feet of commercial space. So slightly different from Blindwells in as much as the commercial element. The benefit of that is that the commercial element will really be sold out much more quickly than the residential, the simple function of the fact that you can only sell so many houses in a certain location in a year. It doesn't matter how many house builds you have on site. You'll only sell so many. So in terms of -- again, the same point about forward visibility of earnings. In FY '22, we sold a 79-acre commercial plot to a logistics company -- or a retailer for a logistics hub. That was very good for cash flow for the joint venture. Next financial year, we've got 29 acres which is under contract for design build for just over 0.5 million square feet of logistics space. And then you'll see us, in FY '24, we'll be developing out the first commercial -- or sorry, residential areas, which, again, are under contract to Bellway and Harron Homes at the moment. And as you'll see from the schedule that as we go forward, we expect the commercial space to be sold relatively quickly within the next 5 to 7 years. [ Followed by ] really, it will be primarily residential thereafter. But again, a lot of visibility on looking forward. We're less constrained on the volume of housing land and commercial land. We can actually deliver at any one time. We have no sort of technical constraints. It's more a reflection of what we think the market will stand at any time combined with the fact we are looking to improve on the land pricing as the site becomes established. So over the page, Westfield in Fife. This is our latest sort of large-scale development. This was a former opencast coal site. And the development for a [ wider ] commercial scheme where we have consent for over 1 million square feet of commercial space was triggered by the funding of a new energy from waste facility. The [indiscernible] will not be the developer of the energy from waste facility. We are simply landlord. We've granted them a 35-year minimum term lease at GBP 420,000 per annum with annual RPI reviews. And our commitment was to [ infrastructure ] of the site to provide them with a serviced plot. And as part of that, we're delivering out another 40-or-so acres of serviced land as a Phase 1 commercial development with the ability of the scheme to deliver a second phase of 50 acres of commercial space for further development. And then on top of that, as part of the EfW development, there's an 80-acre solar farm and battery storage facility on the site. If you'll see just the top of the picture, that is expected to come on stream under a separate lease around about the same time. So again, it gives us an additional angle to the scheme. Over the page on the renewable energy portfolio. So this is something we started to talk about in the last few months. We've been quietly working at this for probably the last 5 or so years. And on all these, we are essentially the landowner, and we'll be promoting various types of consents through the planning process to really generate revenue income. So they fall typically into 2 types. You've got the wind farm ground leases where we own freehold. We grant the lease to wind farm developers and wind farm operators. We have 3 consented wind farm sites in our ownership, which covers just under 3,000 acres. To give you an idea, that we own around about 8,000 acres in total in Scotland where we consented for 29 turbines and it delivered about 130 megawatts of power. One of those lease is granted and is currently under construction. And the other one -- other 2 are the options are -- options for lease are in place, and we're expecting those to begin to be taken up in the next few months. The lease profile for all those wind farm leases are very similar. So it's a 28-year term. We receive a percentage of the gross generating income, which typically is between 2% and 4% depending on where the income sits. And that is dependent on the megawatt hour pricing, which I'll touch on later on. And this rises to between 4% and 6% after year 12. So again, shows some definite growth going forward. But just to be clear, we're not involved with the construction of these wind farms. We are purely there as a landowner. In terms of the access agreement, which is the other part of the portfolio, we have 7 of these agreements in place. These are essentially where we grant rights to third-party wind farm developers across our land to provide access both for tables and also physical access to access third-party wind farms. Typically, they have to come through us to get to the grid, which is what they need to achieve. Very similar type of arrangements to the wind farms where we have 28-year term certain lease arrangements. We take a percentage of the income generated from those wind farms. Typically, it's 1%. Some of them we have fixed, index-linked payments for the majority of percentages, and these come on stream as the wind farms get developed out. Just to give you an idea on those is that in terms of scale, we have about, [ again, around ] 600 megawatts of renewable energy. That represents around about 5% of the current renewable energy generated by -- in Scotland and about 1% of the total energy usage of the U.K. So it gives you an idea of the scale. This slide really just simply shows you the location of the majority of those opportunities. Around about 30 miles south of Glasgow as you go up the M74. If you've been up there, you'll see a whole forest of wind turbines. It's all set in that area, and that historically reflects where we're active in the coal mining sector previously. Over the page then. So in terms of timing, we have our first wind farm that's currently under development, which [ depicted ] there is the ones at Dalquandy. The upper one is actually the substation, which serves the wind farm. The lower picture is actually the [ base of ] the turbines, which is currently being built at the moment. The delivery program for all of these assets is dictated to by the grid connection dates. These are what the operators have to commit to with the grid. So they're very heavily pinned down to this. So it gives us a lot of visibility on when these things will actually start to generate power. In the meantime, we grant the leases as soon as they commence development simply because they want to know they've got a lease in place before they start making investment. We do get a modest income during that period, but then [ it steps up ] into a percentage of power as it's generated. So you'll see through those we have a fairly clear idea of when these things will actually begin to generate power. Over the page. In terms of how you forecast the actual value and the income of these things, this is a rather messy formula that we put on the slide to try and give you guys a bit of an idea of how it works. So simplicity, you multiply the hours in a year, which is 8,760, by the installation capacity of each of the farms or facilities, which is in megawatts. You then multiply it by the strike price, which is essentially the price that the operator achieves, which I'll touch on in a minute. The utilization is essentially how windy it is in that part of the world, which, again, is a variable. And then we get a share of the income, which, as I said previously, ranges from 1% for the access arrangements, between 2% and 4% and rising for the wind farms themselves. And then obviously, these are the typical yields. So in terms of the actual variables, the 2 key variables are the strike price and the utilization. In terms of strike price, what you get on these is that the operator will sell its power in potentially a number of different ways. They can either sell it into a contract [ through different ] auction, which is essentially a government auction. It's a reverse auction because basically, the ones that win are the ones of [ ] the lowest price. They sell them straight into the grid. They get a guaranteed 15-year term price, which is index-linked. Some of the operators will sell into the spot market. A [ bid live ] was mentioned for DK, but this is slightly different where they sell in at times when the power of the pricing has peaked. And then some parties will combine that or separately sell direct to commercial entities who basically want green power. So for example, when you see Tesco, obviously, tells you that all their power is renewable, it's because they bought direct from generators. Again, that tends to be a better price than the auctions but not as good as the spot market pricing. So each operator understands that differently, and the pricing is very variable. At the moment, that ranges from around about GBP 45 per megawatt hour to GBP 95 per megawatt hour, again, depending on the function. And in terms of utilization, this is also a variable, [ but much narrower ]. Typically, in Scotland, our utilization rate is between 30% and 35% off the year. That's essentially when it's windy and the turbines will turn. So that gives you a pretty good idea. We've done a bit of a calculation for the Cumberhead access agreement, which just gives you an idea of how that converts to an [ actual ] income [ phase ] as well. So in terms of the -- and then once you've got the income, then clearly these are considered to be annuity grade investments. They're long-term commitments. You've got a 28-year income stream. You've got a significant investment mine operator, and as a result, they generate annuity grade values, which have recently [ are certainly sub ] 4%. So that gives you an idea of that 25x income.

David, if I may. I mean that is basically essentially the low case, isn't it?

It is. That's right. Yes.

So what would it be -- and I'm kind of throwing a curveball here because this isn't scripted. But what was the best case for you then if it isn't the GBP 95?

Well, GBP 95, for example, one of the operators, BayWa, they're a large revenue utility company. They don't need to source funding for their wind farm because they've got it internally. So they have already declared that they intend to sell their power onto the swap market. They're anticipating they're going to be nearer to the GBP 95 per megawatts average [ power rate ].

And what would that do to the annual income number?

That essentially double it. We simply double it, and then you apply the running yield, which at the moment is significantly below 4%, 4% [ of 25x ] income. So it is [ significant ] variable. And then on top of that, the thing that reflects is these [indiscernible] RPI linked. So they're index-linked, so growing.

So in terms of the annual income, what would that be?

Sorry, if you don't mind, can we just do that -- yes, at the Q&A piece. We're already running a little bit behind, and there'll be people in the room who are keen to get a sandwich.

Turning over the page then, so other renewable energy opportunities. This is quite a rapidly developing market as you'd probably expect. The 2 ones which we are seeing at the moment, these are essentially linked to the existing renewable opportunity we have primarily due to proximity. They are hydrogen production, where what we're seeing is a whole market where operators are coming in, wanting to position hydrogen production plants, which in simple terms is you're running electricity through water and it generates hydrogen oxygen. And they want to be in close proximity to the wind farms. They take the power off wind farms. They take the off-peak power. So when it's windy at 4:00 in the morning, that's when they take power. It's cheaper. And hydrogen, as we all know, is becoming flavor of the month in terms of alternative energy. And then the second one is battery storage, which, again, they need to be located close to the wind farms. They're looking to take power off-peak. And then what they do is they store it, and they sell it back into the grid at peak times. Again, our experience is that they are located close to wind farms where they can feed into the same grid connection. So it's essentially expanding -- we're seeing this expanding our renewables portfolio simply by [ product being ] the location. So over the page. In terms of [ wider ] development pipeline of Hargreaves. So I would say that the deal structure we undertake really aim to minimize the quantum of direct funding both in timing and actually the amount, and we look to derisk transactions before we undertake developments. This typically means that we're talking about conditional contracts to acquire sites, development agreements, joint ventures and options and promotion agreements. And in terms of where we target, we target residential sites. These were effectively we can either make them up and ready and we sell onto housebuilders who pay a premium for an up and ready site or promote them through the planning process. Retail warehousing and industrial and logistics space where typically, we'll seek to do direct development on a pre-let, forward-funded basis; and then roadside, which we look to do, is similar. Currently, our sort of new development pipeline over and above the GBP 375 million GDV we've previously mentioned has a gross development value of around about GBP 103 million, and that's across 8 separate projects. So you'll see the 2 drawings on there. The top drawing is a residential site. We're currently promoting through the plan process in Scotland. It's just been allocated. We're anticipating it will come to the market probably next year. And the lower one is a commercial center part of a larger residential scheme where we went in a joint venture with the landowner to take that through [ direct ] and develop it out. And then we move on to questions.