Harworth Group plc (UK6A.SG) Earnings Call Transcript

Good afternoon, ladies and gentlemen. Welcome to the Harworth Group plc half year results investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review questions, and will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you give that your kind of attention, I'm sure the company will be most grateful. I'd now like to hand over to the management team from Harworth Group plc, Kitty, Lynda, good afternoon.

Good afternoon. Thanks, Mark, and good afternoon, everyone. Thank you for joining us today for Harworth's half year results presentation. So in this slide, we're going to cover the results and operational performance for the first 6 months of 2024. But first I'd say just a bit more of an introduction for those of you who don't know us. I'm Lynda Shillaw, Chief Executive of Harworth joined the company in November 2020. And I'm delighted to be presenting today alongside, Kitty Patmore, who's our Chief Financial Officer, who joined the company about 9 months before I did back in 2019. We're delighted to be with you today. So next slide, sort of turning to the agenda. Oh, we both clicked forward at the same time. Sorry about that. It's been -- so it's been a really exciting 6 months for us here at Harworth, and I look forward to sort of walking you through the progress. This slide shows what we're going to sort of take you through. I'm going to start sort of in a traditional fashion with an overview of the first half and briefly cover the financial results, the operational achievements of the business and the progress that we are continuing to make against our strategic pillars. And I'll talk a little bit more about how our growth strategy has evolved. So some of you will remember in the trading update back in June, we talked about actually the Microsoft transaction, but also an ambition to sort of grow our industrial and logistics portfolio. I'll then provide further details on the portfolio and the progress made in each segment in driving value creation in the first half, and then hand over to Kitty, who will take you through the detail of the financial results, before I talk a little bit more about that path to GBP 1 billion of EPRA NDV and our outlook for scaling the business beyond. We both look forward to taking your questions at the end, so if you sort of submit those, we'll sort of get some at the end of the presentation. And we will, as Mark said, try to answer as many as we possibly can. So on to the strategic update and really sort of the highlights from the first half. I'll start by saying that Kitty and I are really pleased with the progress that the business is making in delivering our strategy and the underlying growth that the teams have delivered in the context of what's been a pretty static market. And if we work across this slide from the top left, in half 1, we saw our EPRA NDV increased to GBP 687 million, which resulted in a 3.5% growth of EPRA NDV per share of -- this is terrible -- 212.3p, sorry about that. We continue to deliver strong returns, achieving a total return of 4% for the half, and we ended with a net loan to portfolio value of just 9.8%, which is higher than the year-end. And while still being one of the lowest in the sector, but it's actually reflecting our development spend through to the mid-year. In the bottom left, you can see that we also continued to enhance our profitability, and we made an operating profit of GBP 21.1 million, which is significantly higher than the same period last year, and that's been driven in part by higher valuation uplifts reflecting increased land sales, revenue from development management and valuation gains on our investment properties. We also made significant progress on planning approvals. I don't think a it will be a long time before, I've been able to make one of these presentations and say, we've actually had a good year for planning. So we've achieved 3 -- consents on 3.3 million square feet of industrial and logistics space in the year-to-date, plus 685 residential plots, and I'll come back to this in some more detail as we go through the next few slides. But these planning approvals are really important because ultimately, they're increasing our consented pipeline ready for development. And finally, as I'm sure many of you recall, in June, we exchanged contracts conditionally on a 47-acre site. So this is the land sale to Microsoft at our Skelton Grange site. It's our largest sale to date, and although there's still a lot of work for us to do, we've already made a start on site and we're looking forward to completing that transaction over the next 2 years and delivering the site for Microsoft. So from an operational progress perspective, this [ site ] sort of goes into a little bit more detail about what we've been doing so far this year. As you can see, there's quite a lot going on. So to pull out some of the key figures, again, working across from the top left. We achieved value gains of GBP 47 million across our portfolio, which is significantly higher than the GBP 7.5 million achieved in the same period last year. This highlights the impact of our operational progress on planning across our sites and the high volume of sales achieved so far this year. For our service land sales, by value, they're 67% higher than the first half average since launching the strategy. And in total, we are currently 145% of our budgeted sales, and that does include that landmark Microsoft land deal. And then that's ahead of our usual position at this time of the year. So if we switch to the sort of bottom left, as mentioned in our June update, we intend to reinvest the proceeds from these land sales into our industrial and logistics direct development program, and I'll come on to that in more detail when we talk about the evolution of the growth strategy. And then if you go to the bottom right, turning to the planning progress, we've had a strong first half on the planning front, with a lot of our long-awaited planning approvals getting over the line. I've lost where I've got to, so just bear with me.

[indiscernible] results of these planning consents.

Okay, Sorry, I've just managed to scramble my paperwork. As a result of these planning consents, during the period, 1.8 million square foot of industrial and logistics space and 500 residential plots. And post period end, really importantly, we achieved an outline consent on an additional 1.5 million square foot of industrial and logistics space at our Cinderhill site and a further 185 residential plots. So really healthy progress through that planning sort of pipeline, as you'll see sort of in later slides. And as a result of these prime consents, the consented industrial and logistics pipeline has actually increased to 8.1 million square feet as of June, and it will be higher as we work through to the year-end when we include the Cinderhill post period and approval in this. Of this pipeline, we expect to deliver 5.7 million square feet by the end of 2027, which we estimate will result in GBP 800 million of gross development value. All of our industrial and logistics development underway is certified at EPC A and BREEAM Excellent, and that is supporting our transition to 100% Grade A across our investment portfolio as we expect to retain more of our directly developed property. So on to the next slide -- we're having a bit of control issue here with us. This slide is a really simple one, and it's just a really sort of quick voice over on this. If you look at the total returns on this side, what you can see is that we've continued to deliver positive total returns for the last 4 years. We've outperformed the broader real estate market, and our total returns have continued to grow in the first half of 2024. And in fact, actually, as a business, year-on-year, we're probably one of the few in the sector that have either come out flat or actually sort of increased our EPRA NDV sort of year-on-year. From a strategic and evolution perspective, so a bit more sort to talk through on this slide. So we talked in June about how we've undertaken a review of our strategy, now that we're the halfway point. And our aim is to ensure that we continue to optimize the growth and returns, and that we still expect to meet our 2027 target. But this evolution provides more detail on our journey to GBP 1 billion of EPRA NDV by the end of 2027. And a look beyond that to 2029, given our confidence in the nearer-term targets. The strategic pillars, as we've sort of shown many of you before, remain appropriate as the key drivers of growth. And just to sort of take each one in turn and walk through what some of the changes from a 2029 perspective are. For industrial and logistics direct development, we continue to target 800,000 square feet of development on average by 2027. Now the status of our site and the timing of us achieving planning and the requirements from an infrastructure perspective have always meant that this would involve increasing development between now and 2027, as we see those planning consents now starting to come through on the next generation of industrial and logistics sites. We're making good progress. We've now got 8 key sites that we'll be delivering over the next few years, and we'll continue to use a variety of funding structures to deliver the product, but we expect to deliver more on balance sheet to support the growth of the investment portfolio. And second pillar from a residential perspective, we still expect to continue with our plans to accelerate land sales, whilst driving returns. And the proceeds from those sales, importantly, ultimately provide the funding for the industrial and logistics direct development pipeline. Our landbank, which is the Pillar three, is fundamental to our strategy, and we will continue to maintain the strategic land pipeline through selective acquisitions, and these will include strategic partnerships and capital-light structures as this is what allows us to scale to meet our growth ambitions. And given that our intention is to ramp up our industrial and logistics direct development and grow the investment portfolio, over time, we'd expect that strategic land to reduce as a proportion of our total portfolio so that by 2029, 85% of our total land and property portfolio will be industrial and logistics. And I'll talk about the momentum that we're seeing in those industrial and logistics sites over the next couple of slides. So just finally that fourth pillar. As well as repositioning our core investment portfolio to 100% Grade A by the end of 2027, we're also targeting growing this portfolio to GBP 0.9 billion at the end of 2029. That was one of the things that we announced in our trading statement in the summer. And growth in this portfolio will be driven largely by the increased direct development and retention of commercial buildings, but also we'll be supplementing that with some selective acquisitions to both enable us to manage that growth trajectory, but also the transition to 100% Grade A in the corporate portfolio. The growth in recurring rental income that this generates from this larger income portfolio is expected to allow us to grow our dividend profile. We don't expect the growth in dividends to increase to negatively impact our growth levels or returns, but what it will do is to allow us to pay greater income component returns, alongside capital growth from our land and development portfolio. So into sort of the portfolios themselves. I want to spend a little bit of time about what's -- talking about what's happened in our London property portfolio. And many of you've seen these presentations before, will be familiar with it and how it creates value. But given this recent announcement on the strategy evolving, I thought it would be helpful to just take the opportunity to explore it a little further. So if you look at the London property portfolio overview, we split it into 3 main subcategories. We've got strategic land, we've got major developments and we've got the investment portfolio. Strategic land includes land without planning or land with planning secured, but where work has not yet started. Major developments include land with planning, where we started work on site. And this can be land where we've got infrastructure underway to develop service land, but it also includes land where we're building industrial and logistics units or developing our mixed tenure products. Our investment portfolio includes completed industrial and logistics building, and that provides a source of rental income. And then we've got this really small proportion that you can see we've helpfully called other. But this is largely income generating and it includes some natural resources and agricultural land and some land with the opportunity for future energy and natural capital uses. On the right-hand side, you can see the value generated as land moves through the development cycle. For example, the average value of our industrial and logistics strategic land without a planning consent is GBP 7 a square foot. Once that strategic land has a planning consent, the average value increases to GBP 15 a square foot, and then we start to work on the site, and as it shifts into major developments, which -- where it's held at GBP 30 a square foot. Although it's really important to note that depending on the mix of size and the stage of each site in that major developments pipeline, the value of this part of the portfolio can vary, and at the top end, it sits up at around GBP 60 a square foot, which is obviously significantly above the GBP 30 a square foot average. But you'll see, when we get to a later slide in this part of the portfolio, we've had a number of large sites that have recently received a planning permission. And they're at the beginning of their development journey, so all the values to come from them. And lastly, if we look at the Grade A properties in our investment portfolio, most of which we've built ourselves, and they're held at GBP 138 a square foot, which is an increase from GBP 130 at the year-end. Similar process is followed on residential, with values increasing from GBP 7,000 a plot up to the point of service land, where our average sales price in the first half was GBP 57,000 a plot. Now again, the mix of what we're selling in any year can affect this average. And for example, at the top end of this range in the sort of year-to-date, we've sold around GBP 100,000 a plot. So in the next few slides, we're going to show you the impact of the portfolio level of our activities in the half year. So first, strategic land. The strategic land portfolio concentrates on how we create value through securing planning permissions. And you can see on this left-hand graphic, the stages that the site will progress through on its journey to consent a land. And that's the process that we manage end-to-end within our teams at Harworth. A site moves through preplanning to draft allocation before receiving an allocation. And then the allocation is quite a key milestone in the process because it means that our proposal has been allocated within a local plan. And this is a key point from which value of the site begins to increase as we start to work it through to concluding with the planning consent. The charts on the right show the movements in the portfolio in the first half of 2024, with these portfolios both increasing in value. And you can see that GBP 18.8 million increase in the revaluation of the industrial logistics land and the GBP 3.5 million increase in the revaluation in the residential land. And they really reflect the progress that we've made in planning as we move through the stages from draft allocation to consented in the period. And most notably, at Gascoigne Wood, where we received a planning consent for 1.5 million square feet of industrial and logistics space on a brownfield site in Yorkshire. We turn to the next slide. This pulls out the major development components of our portfolio. Remember, these are the sites which undergoing infrastructure works to create service lands or we're building sort of buildings on them. These charts on the right show the valuations of the portfolio has increased in the first half of the year, with development spend on sites of GBP 31.8 million, and that drove a combined revaluation gain of GBP 16 million. The major activity in the period driving value in these sites has been actually the progress that we're sort of making with them. So by bringing forward development and land sales, and that includes that conditional sale of Skelton Grange to Microsoft. And just a reminder on that one, this site was originally purchased for around GBP 3 million in 2014. And upon completion, this scheme is expected to deliver an IRR in excess of 40%. And we gave a lot more detail on that announcement at the time in June, and we are going to explore the Skelton site in more detail on our up and coming Capital Markets Day, which is going to be held on the 22nd of October in Leeds. We've had residential land sales in the period of 489 plots, which actually demonstrating that continued demand from the housebuilders. And actually, in the round, our first half service land sales of 67% ahead of the first half average since launching the strategy. As I mentioned earlier, we've got really good visibility on exceeding our budgeted sales for the year, which provides an important indication of the service land values. So this sort of gets to the guts of a lot of what we've been working to over the last 3.5 years, which actually is how we're building momentum in that industrial and logistics pipeline. And the next generation of these sites are coming through now, with planning progress year-to-date, resulting in both Gascoigne Wood and Cinderhill, which is a consent that came in just after the half year, joining our near-term pipeline. We'll be starting on site works in these locations in the coming months, whilst infrastructure works are already underway at Chatterley, Wingates and Skelton. And at the half year, we've got 2.2 million square feet of enabling works underway and [ 0.6 million ] of direct square feet of developments on site were due to start shortly. The exciting thing about this slide is we've now got 8 major sites coming live for development over the next 18 months, and that's demonstrating the real momentum that we built in the industrial and logistics pipeline, and that feeds our capital growth and the building out of our larger investment portfolio as we move out towards 2027 and towards 2029. And in total, in these 8 sites, there is the potential for over GBP 1 billion of GDV to completion, and we've got a strong pipeline in the next wave of sites that follow these are sort of the balance numbers at the bottom. And the final slide before I hand over to Kitty is the investment portfolio, where we saw a like-for-like increase of 2.4% annualized rental income. And the table at the bottom left shows the value gains achieved from revaluations of GBP 8.2 million as a result of management actions and increasing market rents. As you can see from the operational metrics, the quality of this portfolio remains high. We have a weighted average unexpired lease term of around 12 years, and average rent per square foot has improved and our vacancy rates remain low. The net initial yield has increased slightly as a result of the lettings in the period, and the net equivalent yield continues to demonstrate the reversion potential of this portfolio. Our intention remains to be 100% Grade A on the core portfolio by the end of 2027, which we'll achieve by bringing through more directly developed Grade A properties as well as selective acquisitions to enable us to dispose of the secondary or non-Grade A assets. And with that, I'll hand you over to Kitty to explore the financial results in more detail. Over to you, Kitty.

Great Thanks, Lynda, and good afternoon, everyone. As Lynda said, it's been a busy first half for Harworth, and we've achieved a lot operationally and made progress against our strategic objectives. But starting firstly with the P&L and our income statement. If you look first at the table on the bottom left-hand side of this slide, this shows the total property sales in the first half were GBP 41.7 million. That is slightly lower than the first half of 2023. But just to pull out a slightly difference of makeup of those slides, in the first half of 2024, that was driven really by residential service land sales, whereas we had a number of income sales in the first half of 2023. And because that service lands driven, that results in a higher statutory revenue number. So revenue from our income generation portfolio was lower during the half, and that reflects those income sales that we made in the first half of last year, which has reduced our annualized rental income. And combined revenues from the rest of the income generation segments and development management income, that gave us underlying revenue of GBP 59 million and statutory revenue of GBP 41.3 million. Looking forward, as Lynda said, we've got 145% of our budgeted sales for the year, either completed, exchanged or in heads of terms, which is ahead of our usual profile at this time of the year. Admin expenses increased by GBP 2.5 million from the same period last year, and that's principally due again to higher salary expenses, for a higher number of employees within the organization really as we ramp up a lot of the growth that we're going to talk about over the next couple of slides, and also cost inflation and progressing those strategic objectives. Increases in the fair value of assets held for sale and investment properties through the revaluation exercise that we did at half year resulted in other gains increasing to GBP 30.7 million. And all of that combined gave us a profit after tax of GBP 14.8 million, an increase of over 100% on the same period last year. Finally, the Board has decided on an interim dividend of 0.489p per share. This represents a 10% increase on last year's dividend, which is what we've typically done. And it's actually now our dividends have increased, both at interim and year-end, now for 10% for the eighth -- for 8 years consecutively. So turning to the balance sheet. Our EPRA NDV increased by 3.5% during the half year to 212.3p, representing EPRA NDV of GBP 687 million, and keeping us on track to reach that GBP 1 billion goal. This was largely driven by valuation gains, generated primarily by management actions focused on leveraging the unique attributes of each of our development sites as Lynda has spoken about. So that's creating opportunities to unlock the use with the greatest value, planning progress and demonstrating demand for our residential and commercial service land. Net debt at the half year was GBP 80.5 million. That is slightly higher than this time last year and also at the year-end, but it's very much in line with the usual profile that we would see. We typically start doing a lot of earthworks in the spring, so spend over the course of the year and quite often have that key force of profile of sales receipts, which brings that debt down at the end of the year, which is why we typically see a higher debt balance at the beginning of the year and lower at year-end. And combined with the dividend, the EPRA NDV increase led to a total return of 4% during the period, which is a big increase on the same period last year. So looking at funding and liquidity. Our financing strategy remains to be prudently geared, and we have a target net loan to portfolio value at year-end of 20%, with a maximum of 25% during the year. At June, our net loan-to-value was 9.8%, so well within those levels. This slide also covers our main financing facilities, and you can see that our major revolving credit facility runs until 2027. We've got plenty of headroom within that, and we'll continue to use site specific about direct development and infrastructure loans to support alongside the use of those main corporate facilities. And then if we look on the next slide, this shows that the use and drawings around that debt profile over the course of the year. So you can see that this bridges our net debt position from GBP 36.4 million at year-end to GBP 80.5 million as at June. And the main driver of the increase is that left-hand bar, which is the development spend on our sites. So that's everything that we're doing on our sites to progress them through to service land sales or to progress them through to having the built direct development, which enables the center to fill into the investment portfolio. There's also a movement in deferred consideration relating to service land sales, which is shown in the [indiscernible] cash and working capital column use in operations. And these increases in the drawn data offset in part by sales proceeds received in the period. The chart also shows the headroom afforded to us by our cash and revolving credit facility. And at the half year, we had GBP 154 million of cash and available facilities. So in summary, from a financial perspective, this is another strong set of results for the group. We continue to deliver growth in our net assets, in EPRA NDV and we've got a solid financial position. We've got a low loan to value, we've got cash and available facilities and we've got no major refinancing requirements for a couple of years, all of which helps us to progress our strategy. And I'll now hand you back to Lynda to cover outlook and our road map to GBP 1 billion.

Thanks, Kitty. So before we go to questions, I'm just going to spend the next few minutes summarizing our progress and provide a view on the outlook for our sectors and what we think it means for Harworth. This slide looks at the journey to GBP 1 billion EPRA NDV. And as I said earlier, we're confident that we'll reach that target by the end of 2027. The building blocks to get there are the 4 strategic pillars that I talked through earlier. Our NDV growth comes from moving land through the planning and development cycles to create value from revaluation gains and the creation of investment properties. The land sales that we make through the year generate cash, they crystallize profits and we reinvest those proceeds to fund increased developments. And we refill the pipeline importantly through selective acquisitions of strategic land that form the next generation of the sites to come through the cycle. And if you look at the growth needed to reach GBP 1 billion sort of from this chart, that's the 46% in the next 3.5 years. It does feel like a big number. But actually, when you compare that to the growth that we've seen over the last 3.5 years, that 33%, we believe this is achievable well, especially when you consider the macro environment that we've been operating in the business has performed really, really well. We've proved our business model works so far, and we expect to continue doing more of the same as we scale the business over the next few years. So if I turn to the outlook slide. There's a lot going on at Harworth, I mean there's a lot going on sort of elsewhere. And the election of a new government has brought a sense of stability to the market, and its focus on growth in housing delivery and supporting policy reforms are generally positive for the real estate sector, but there is a lot to do. Following inflation, we're starting to see the initial interest rate cuts coming through with an expectation of more to follow is driving more confidence in the economic fundamentals that drive investments and importantly for us, tenant demand. The real estate market indicators remained pretty stable through half 1, and there's an expectation of further rate cuts feeding into tighter yields. And for the first time in a decade, all of the main MSCI indices are showing year-on-year rental growth. And that's adding the sense that the real estate sector in the U.K. is set to come out of the trough, which in turn is waking up investor interest in the sector, and we've been seeing that on the ground. The structural undersupply that we've seen in previous periods, both in both industrial and logistics and residential markets have continued, and we believe will continue for the foreseeable future, and we have seen relatively stable markets in half 1, with pricing holding firm and rents continuing to increase. But on the downside, wage and some construction cost inflation is proving to be quite sticky. And the real estate sector is not alone in an ongoing skill shortage, which is something that can't be fixed overnight as volumes as expected begin to normalize through 2025. Increased investor and occupier confidence is also tempered by the extent of the public -- sector finance deficit and the concerns that overtaxing and reduced spending could slow the recovery. But when we look at this, all of that said from a Harworth perspective, we're a long-term through-the-cycle business. We're well seasoned in adapting to changes in the markets and policy environments, some of the sites that we're buying today, we won't be through planning for 15 years, and so it gives you sort of the horizons that we work to. And as again, I hope we've shown that we've got a strong track record of delivery. We've got consistent outperformance through some really challenging periods in recent years, where we've held flat or increased our EPRA NDV year-on-year. In the absence of market tailwinds, this is all down to management actions and what we can do and the skill of our people, and I think that's evident in the results that we've continued to deliver. The business is in really good shape. As Kitty said, we've got a strong balance sheet, got low LTV. And at the half year, 8.1 million of consented industrial and logistics land, and that's the thing that will propel our growth through 2027 and beyond. And we are confident in achieving our strategic target of GBP 1 billion of EPRA NDV in 2027 and the GBP 900 million investment portfolio that we announced in the summer by 2029. So with that, I'd like to say a big thank you for taking time. Sorry, I couldn't welcome to [indiscernible] at the same time earlier on. I managed to shuffle my paperwork. But thank you for taking time to join us today, and we'll now turn to your questions.

That's great. Lynda, Kitty. Thank you very much for updating investors. [Operator Instructions] I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A will be available via your Investor Meet company dashboard. Kitty, Lynda, as you can see, you've had a number of questions from investors this afternoon. So thank you, firstly, to everybody for your engagement. If I may just hand back to you to read out those questions and give response or as appropriate to do so, and I'll pick up from you at the end.

The great front of reading them out to each other because I know this first one is one for Kitty. So Kitty, this coming from Sam. I believe the next step, the net debt has risen to GBP 80.5 million and net LTV stands at 9.8%. Given your available liquidity of GBP 154.2 million, do you foresee any need to increase debt further in the short term? Or is the current liquidity sufficient to fund your planned growth?

I think the current liquidity that we've got basis is in a really strong position going forward. And that's partly because of the way that Harworth funds itself. So if you think back to that investor slide where we're looking at the development spend and then we're looking at sort of sales proceeds coming in, we very much a start from a basis of thinking about how we can self-fund our growth, and we've been very good at that and managing that loan to value over the last couple of years. They're really trying to match the sales proceeds with spend. And going forward, as we do more and more development, we will use the balance sheet and some of those facilities a little bit more. So we have a stated sort of ambition around leverage to be sort of around 20% at the end of the year or no higher than that. And we don't see a need to change that in order to deliver this growth strategy at this stage. So it will continue to be more conservative. As we have a bigger investment portfolio towards the end as we go beyond 2027, that will give us the opportunity to maybe put a little bit more in, but certainly sort of nothing being a huge fundamental change. So it will be continued to be funded from cash sales so that, that will be service land, it includes things like the Microsoft deal that we talked about as well, which is a huge components that are coming forward and then use of the facilities that we've got already. So then I think the next one, probably ones for Lynda, it's really around government policy. So how do we expect sort of potential changes in government policy or funding, particularly around housing and infrastructure to impact our strategic plans for both industrial and logistics and residential developments?

So I think the answer to this is like we don't know exactly what's going to come out, both in terms of policy reform and planning reform as we go forward. What I would say sort of from the top is sort of we were optimistic actually as a sector. The proposed reforms are focused on growth, they're focused on housing and actually sort of building actually is really positive for the real estate sector. And as we work through the National Planning Policy Framework consultation that's out there at the moment, obviously, the government doing their spending review, we'll start to sort of see more details form as we go forward. From a Harworth perspective, I think it's just -- just harking back a little bit to what I said towards the end of my last section of the presentation is long term through the cycle as a business. So we go through many governments and through many attempts at planning reform actually on sort of most of our typical sites. But the scale of our consented pipeline is really important here. So these are sites that have a planning consent and that we can get on sort of sites and we can actually start the development and that we're pushing on, particularly opening up and scaling up that industrial and logistics parts of our portfolio. From a resi perspective, I think the government will have to balance in any of the reforms that it makes, the difference between affordability in different parts of the country. So what's unaffordable in London and the Southeast, sort of on the same metrics also what we build sort of in the regions is actually quite affordable at day 1. So having some mechanisms and checks and balances in there that don't just drive sort of building an increase in affordable homes, but actually focus on sort of the viability of some of the regional disparities, I think, will be really important. And we've yet to see what the governments are going to sort of come out and publish with that. I think the answer -- we had a similar question at our presentation this morning that I honestly gave is, I've been around a long time. I've been through a lot of the governments and planning policy changes. A business like Harworth, actually we're seasoned at working through both political cycles and changes in planning reforms. And the long-term nature of our site means actually sort of we have time to adapt as we go. And as you can see, we've consistently actually deliver quite successful outcomes when it comes to planning, and that's the key. If you haven't got planning, you can't build anything. And so we're very focused on making sure that we work within any policy, and we drive the business forward.