Cairn Homes plc (CRN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Cairn Homes 2024 Preliminary Results Analyst and Investor Call, which will be hosted by Michael Stanley, Chief Executive Officer; and Richard Ball, Chief Financial Officer. [Operator Instructions] It's now my pleasure to hand over to Cairn's CEO, Michael Stanley.

Thank you, Drew. Good morning, everybody. Richard and I are joined this morning by Stephen Kane, our Director of Corporate Finance; and Ailbhe Molloy, our Investor Relations Manager. So good morning, everybody, and thank you very much for joining us. I'll bring you straight to Slide 4 on our investor presentation and as I reflect on our performance and prospects, I can't help but feel both positive and thankful. Positive in the context of our performance in 2024, the momentum we've carried into '25 and thankful for the commitment of our incredibly talented team, our mature contractor base and of course for the thousands of people who have acquired and live in today the homes that Cairn has built. But we're not going to sit on our laurels. We are relentless in driving delivery, we are primed to realize the patent market opportunities, we are highly focused on delivering for our customers and our shareholders alike and we are extremely confident about the outlook for our business. So I'm going to take you through some of the key highlights for 2024 if you'd like to move on to Slide #5. So we begin this year with a closed and forward order book valued at nearly EUR 1 billion comprising almost 2,600 new homes, which clearly highlights the demand for our homes. We continue to scale our mature delivery platform in tandem with executing our growth strategy. In 2024, we generated EUR 860 million of revenue from the sale of 2,241 units. This represents a growth of approximately 30%. We delivered a gross margin of 21.7% and grew our operating margin to 17.4%. And reflecting on the operating leverage of our business, our operating costs are industry-leading at only 4.3% of revenue. We generated operating profit of EUR 150 million in the period and we delivered our 15% ROE target this year. We will continue to increase this and generate attractive returns for our shareholders. And on to Slide 6. We continue to deliver value for money for our customers. Our net ASP was EUR 383,000. We executed a number of forward fund transactions, which will deliver well over 2,000 social and affordable units for our state partners. And reflecting the positive business environment and confident outlook, we are accelerating our investment in our business. We commenced over 4,100 new homes last year across our 21 active sites, which was a record for our business. We invested nearly EUR 100 million in strategic land acquisitions in 2024 focusing primarily on our core first-time buyer market. We also entered a number of land option deals. These capital-efficient transactions will support our medium-term growth ambitions, something that Richard will talk to more later in his presentation. We are disciplined with our capital and are delivering for shareholders. We carefully balance reinvestment in our business with shareholder returns. In 2024, we returned EUR 115 million to shareholders with over EUR 335 million returned since 2021. We are consistently paying dividends since 2021. And in 2024, the fourth year of our progressive dividend policy where our dividend per share has grown each year, today we announced a EUR 0.044 ordinary dividend which delivers a 2024 payout ratio of 46%. Our dividends to shareholders will continue to increase in line with our profit growth. I will now touch on the supportive business environment that we are operating in and outline some of the housing initiatives that our newly elected government in Ireland has included in their program for government. On Slide 7, you'll see that 2024 saw just over 30,000 homes built in Ireland. And while we at Cairn increased our housing output by 30%, it is disappointing that the broader market slipped by about 7% in output terms. The structural demand remains more than twice the current industry output. The delivery of scaled apartment developments is critical to achieving these targets. In recent years, apartments have represented approximately 1/3 of housing delivery. This needs to increase to over 50% or from the current 9,000 per year to over 25,000 if the government is going to meet its housing targets. The macro environment is very positive for us and more broadly for Ireland. Economic growth is robust and Ireland is forecast to continue to outpace its European peers. We continue to have near record levels of net migration. Ireland is operating at effectively full employment and inflation is below 2%. Exchequer returns are forecast to remain strong; household savings, as you can see, continue to increase. And the mortgage market, which is very important for our business, continues to improve particularly for our first-time buyer customers and particularly for energy-efficient homes, the homes that we are passionate about delivering. And on Slide 8, the newly elected government has also put home delivery front and center in its Programme for Government. We will see government introduce a new all of government national housing plan to follow on from Housing for All with a multiannual funding commitment. We believe this is critical. As part of this, the government will target a ramp-up in construction capacity to build more than 3,000 new homes in Ireland by 2030. It has already announced that it is extending Help to Buy and First Home Scheme to 2030. It will continue with the Croi Conaithe scheme, which is very important to support the increase of apartment delivery and allows young working people to get access to apartments near areas of high employment and on good transport links. It will provide additional funding to AHPs and to the Land Development Agency and the government will also seek to attract external financing into the housing market to help finance this circa EUR 20-odd billion per year that is needed to meet their target. So moving back to our own operational performance on Slide 9, you can see the significant step-up in our business. We have a multiyear order book of well-located and scaled social and affordable apartments. Our low cost land bank and construction efficiency means we can retain attractive margins at very competitive price points. The average selling price of our order book is EUR 382,000 net of VAT. 2025 will see us significantly increase our delivery of new homes to our core first-time buyer market. The spring selling season so far has been extremely strong and we have 11 launches planned for the first half of 2025. On Slide 10, you can see the significant stepup in commencements in our business in 2024 clearly illustrating our ambition. We have to continue to grow our business and we will do this over a multiyear basis. In 2024, we commenced 10 new sites and 10 new phases of existing sites. Our established subcontractor base is fully aligned and embracing our growth trajectory. Across all of our active sites, we are now over 75% procured for 2025 ensuring visibility over our costs and most importantly, delivering certainty for our supply chain partners. On Slide 11, we give some more information on average selling prices and unit mix. We are delivering homes at extremely competitive price points against the inflationary backdrop witnessed in recent years. The changes in ASP driven by a combination of mix, but also by how our scaled operating platform can deliver homes at attractive ASPs to our customers while also generating attractive margins. In 2024, nearly 2/3 of our delivery were apartments. Reflecting on our more recent land acquisitions and our focus to increase delivery of new homes to our first-time buyer market, we expect our mix to shift back to or transition back to a 50% apartment, 50% housing output in the medium term. And on to Slide 12, we have a proven track record of delivery for our state partners. Since 2022, we have delivered or have under construction over 6,000 social and affordable homes including 4,700 homes, which are being delivered for approved housing bodies and 1,500 homes to the LDA. As I mentioned earlier, in order to achieve its housing target, Ireland needs to increase its apartment delivery and Cairn is uniquely positioned to play a key role in this. We have already delivered 10 scaled apartment developments and are now building apartments to passive standards at no extra cost to our state customers. We are delivering at pace and since 2022, we have delivered high quality apartments at a net ASP of approximately EUR 376,000. This is, we believe, significantly lower than other state delivery options. Now on to Slide 13, which outlines the progress we continue to make at our EUR 2 billion GDV development at Seven Mills. The scale and output is very evident from the photo, which hopefully you can see on the slide, which shows how construction has progressed significantly over the last 2 years. And to call out just some of the highlights. By the end of 2025, we will have built over 1,600 homes in just the 2-year period or at that point close to 3-year period that we will be active on the development and by the end of this year, we'll have a further 1,200 units under construction. We will have approximately 1,400 people, including 140 apprentices, working on site every day delivering these homes. And importantly, we will have over 3,500 people calling Seven Mills their new home. Slide 14 outlines how lean construction delivers and drives our operational excellence and continuous improvement. Lean construction is at the core of our unique end-to-end operating model. It encapsulates our way of working focusing on innovation, productivity and driving scaled efficiencies. The 6 pillars, which you can see, of our lean construction operations leverage our approach to key areas such as standardization, digital technology and modern methods of construction. Our lean construction approach drives significant benefits, including improved planning and preconstruction, increased site safety, increased quality, reducing waste on site and allows us to optimize our subcontractor workforce to increase productivity. Thank you. And I'll now pass you over to Richard to bring you through our 2024 financial performance and sustainability highlights. Thanks, Rich.

Thank you, Michael, and good morning, everyone. I'm delighted to be presenting a very strong set of financial results for 2024 across all key financial metrics to you this morning. As Michael mentioned earlier, the management team has great confidence in the outlook for the company. We have a very strong position in our market and remain ideally placed to continue to grow our platform, meet the exceptional demand for new homes across all buyer profiles. Moving now to Slide 16. We delivered a record full year performance in terms of units, revenue and profitability. EUR 860 million revenue was delivered from 2,241 units representing a 29% increase in the year. Gross margin was 21.7%, some 40 basis points below for the period. The reduction was primarily due to the product mix and an increase in the delivery of affordable state homes for state supported counterparties. Our OpEx investment increased to EUR 37 million in the period equating to 4.3% of net revenue. This is down from 5.1% in the previous year, which is reflective of our disciplined approach to cost management. This resulted in operating profit of EUR 150 million and a 32% increase year-on-year and an operating margin of 17.4%. Finance costs were EUR 15.1 million reflecting the increase in working capital investments throughout the period. Profit after tax of EUR 114.6 million grew 34% and we delivered impressive earnings per share growth of 41% to EUR 0.179 of a net asset value of EUR 1.22. We maintained a balance sheet size of EUR 758 million after total shareholder distributions of EUR 115 million. On to Slide 17 next. We have closed and forward sold 2,593 units with a net sales value of EUR 989 million, of which 34% relates to our 2026 and 2027 pipeline with more opportunities being actively pursued. Our sales strategy significantly derisks our WIP investment and as you can see in the bottom table on the slide, our 2024 closing WIP of EUR 246 million is 4x covered by closed and forward sales. A more normalized coverage ratio would equate to a range of 2x to 3x. Moving to our balance sheet on Slide 18. Our land and WIP investment is EUR 862 million, which includes our investment in self-funded apartment schemes and our core starter home market. Our balance sheet is conservatively leveraged with a debt to gross asset value of 17.7%. This week we completed a refinancing of our syndicate facility, increasing it by EUR 75 million to EUR 402.5 million and extending the duration to 2029 with an option to extend a further year. This means the company now has access to EUR 460 million of facilities to support our continued growth with an average maturity of 4.8 years. We are making a significant investment in WIP across a number of our recent site commencements, which will increase our H1 2020 (sic) [ 2025 ] net debt. This will unwind in the second half of the year. And now to the cash flow highlights on Slide 19. We generated EUR 134.7 million in operational cash flow, an increase of EUR 27 million in the period. This was after we invested nearly EUR 100 million in land acquisitions. The EUR 88 million net reduction in WIP was offset by net working capital movements, including balances of circa EUR 80 million, which were received post period end. Following total shareholder returns of EUR 115.3 million in the year, an increase of nearly EUR 31 million, our closing net debt was EUR 154.4 million meaning we had available liquidity of EUR 230 million as we started the year. We have today proposed a final dividend of EUR 0.044 per ordinary share, which presents a payout ratio of 46% of our 2024 profit after tax. I now want to talk to you about how we think about land acquisitions on Slide 20. With our strong market position, our pipeline of opportunities continue to grow, which allows us to take a disciplined approach and expand our acquisition strategy to include subject to planning deals options and potential joint ventures. These structures are a capital-efficient way to acquire land. In 2024, we invested nearly EUR 100 million mainly on low-density sites with full planning permission focused on our core first time buyer market. Over 60% of this land investment was on sites that we will deliver homes in 2025. In 2024, we also entered into 4 option deals. These transactions are typically linked to zoning and/or planning. Cairn takes an active role in optimizing these opportunities from a planning, design and ultimately a construction perspective. We have exercised 2 of these options already. We now have a 16,150 unit land bank, which equates to a 7-year holding. And during 2024, we obtained 7 new grant supply permissions comprising nearly 1,300 new homes and over 70% of our overall land bank has effective full planning permission. Our land acquisition strategy leads us nicely into our capital allocation priorities on Slide 21. We are a long-term sustainable business which has consistently delivered multiyear growth in volumes, revenue and profit. We deliver value for all of our stakeholders. Our approach to capital allocation supports and underpins this growth strategy. We prioritize a strong resilient balance sheet. Efficiency is demonstrated by our 15.1% ROE in 2024, a new committed and flexible debt facility and monetizing our land bank to drive significant cash generation. We invest in WIP and land, a focus on investment to drive sustainable growth. We deliver shareholder returns. We have a progressive ordinary dividend policy and we distribute surplus capital to shareholders after investing in our business and paying dividends. In total, we have returned over EUR 335 million to shareholders since the start of 2021. During this time, we have doubled our business from an output perspective and our operating profit has grown by over 150%. 2025 will be another year of growth in volumes, revenue and profitability. As you've heard from both Michael and myself, we remain very confident about our future outlook and are today providing the following 2025 market guidance. A 10% growth in revenue to in excess of EUR 946 million, an operating profit of circa EUR 160 million from EUR 150 million in 2024 and an ROE of circa 15.5% from 15.1% in 2024. Finally, I'd like to bring you through some meaningful progress on our sustainability strategy on Slide 22. Here we've laid out some detail of our progress against the commitment targets we've made over the past few years under each pillar of environmental, social and governance and just to call out a few key highlights. We were delighted to be ranked 92 out of 500 global companies in Times Magazine's World's Best Companies in Sustainable Growth 2025. This ranking identifies companies globally that have demonstrated both outstanding financial and environmental performance. We are proud to be a leader in sustainable construction. Last year we published a passive house position paper on our first climate transition plan. These publications allowed us to detail our sustainability commitments, including setting ambitious targets, detailed action plans and searching for new and innovative ways to limit our environmental impact. We also launched our Cairn Apprenticeship Programme. We currently have 176 apprentices participating in the program, all of whom are working with our subcontractor base as they develop and grow their skill sets. This is a critical initiative not only for Cairn, but more importantly for the broader construction sector in Ireland. I will now hand you back over to Michael, who will bring you through our outlook for the business.

Thank you, Richie. I'm on Slide 24. As I mentioned at the beginning of today's presentation, Cairn finds itself in its 10th year in business in an incredibly strong position. We have worked hard over that period to position Cairn to where it is today and we really look forward to the future and we will remain, as I said earlier, as ambitious as ever. And finally, our Chair, John Reynolds, will be retiring from our Board at the end of April. John has served as Chair of Cairn since our IPO in 2015. John has seen it all. He's led our Board, he's guided us, he's inspired us and he's been an integral part of the company's growth and success over the last decade. On behalf of everybody, I would like to sincerely thank John for his invaluable contribution to Cairn's success. Drew, I will hand back to you to manage the Q&A. Thank you all very, very much.

[Operator Instructions] Our first question today comes from Shane Carberry from Goodbody.

Well done again on a great 2024. Just 3 from me, if I may. The first one just in terms of you mentioned that home delivery is going to be kind of front and center for the new government and you talked through extension of Help to Buy, shared equity, et cetera. Is there any other kind of policy evolutions we should be looking out for over the kind of coming months or year? The second one then is just in terms of your kind of delivery of social and affordable units. Obviously you mentioned in the presentation on Slide 12 the 6,200 units. One of the figures that surprised me I guess was the net ASP on that, the EUR 376,000 was kind of lower than I expected. Just wondering if you could tell us just how competitive that is in the market setting and how you managed to sustain at a group level at least such a resilient margin with that backdrop? And then the third one for me is just in terms of the PRS market. I'm just wondering if you've seen any pickup at all lately or if that's something we just need a bit more color on rental caps before we see any pickup there?

Yes, I mean probably your third question maybe in some way relates to the first question, Shane, on policy evolution. Look, there are certainly some areas that the new government are probably questioning a little bit at this time around maybe some of the unintended consequences of some of the policies that were at times for very good reasons were implemented in Ireland, whether that was the Rent Pressure Zones and caps on rents and particularly at that time they were very understandable interventions by government, but I suppose the incoming government are asking them the obvious questions. What were the unintended consequences of those? How much has that impacted on institutional capital supporting housing growth in Ireland and investing in Ireland? Obviously with the strength of our economy and the growth prospects for our economy, there is capital to invest in Ireland and obviously that's one of the areas that the government might think about from a policy perspective. We're probably of the view that a lot of the policies that are needed to significantly increase housing in Ireland are actually in place. A number of them at this stage, Shane, are just a little bit subscale. And we actually believe when you look across the suite of measures, they are starting to have a positive impact with probably the notable exception of apartment delivery, which did disappoint last year. And again if you look at something like Croi Conaithe, which we think is incredibly important to support apartment delivery, scaling up that particular measure we think would be incredibly positive as would more support for the housebuilding, the Housing Association Alliance in Ireland who are doing a phenomenal job. The housing associations delivered just shy of 6,000 units last year. Outside of Cairn, as far as I'm aware, they're the only, if you like, group or entity that increased their output last year. Most other delivery routes actually saw a fall in housing output. Obviously from a Cairn perspective because we had scaled, and this is probably answering your second question a little bit, Shane. You know as a business, we always felt from day 1 that we had to offer mixed tenure developments and we had to be prepared to invest in a capability to build all housing types. Ireland is a small economy, small country, but also there's quite a diversity in the types of homes that people want to own and buy. And we put significant investment into our apartment delivery, scaling initially for that PRS market that you're referenced, Shane. And building quite a lot of apartments indeed, sold a number of apartment developments to Richard when he worked for Urbeo as a very significant investor into PRS and built a very high quality long-term rental platform in Ireland. With the fact that that capital not just within Ireland, but more broadly impacts from COVID, et cetera, et cetera; that capital probably moved a little bit away from residential development, but it gave us a phenomenal opportunity to pivot more towards state delivery; we started that journey 5, 6 years ago. And that apartment capability meant that for state-supported entities that really need scale and want to own larger efficient and easier to run developments with energy-efficient apartments in urban locations. Our capability played into that market very well and that's why we are by a stretch the biggest deliverer of scaled apartment developments for the state in Ireland today. And we're doing it and we're using that scale to deliver at price points. Our responsibility is absolutely to illustrate to the state that we are providing value for money. And I suppose it's just the culmination of our expertise, our supply chain, what we've learned over the years, the capability of our subcontractors, the fact that we own the land and the design of the product. We design to suit our own business and how we build and that allows us to control cost. We deliver quickly. We know we are way faster at delivering apartments than most of our competitors and we know we're delivering high quality apartments and that just allows us to protect our margin as well at those sort of price points. Richie, you're an expert more so than I am on the PRS market. What's your sense of whether capital is having a look at Ireland again on the PRS side?

So just to mention the PRS, I suppose if you think about it in the last 12 months, the environment has definitely improved for PRS capital to come into the country primarily down to where we've seen interest rates move. The demand for product is obviously is very strong. It's just down to pricing now. So we obviously hope from a government policy point of view that they recognize that the private capital that wants to invest into this country that they can come up with hopefully a scheme maybe in the affordable rental space that will work for that capital that wants to deploy here.

And they need a stable policy environment, Rich, as well. They need to know that if they invest in Ireland over the next 5 to 10 years, it will be into a pretty stable environment from a policy perspective. That's probably fair as well.

Yes, absolutely. Like particularly if you want to get the lowest cost of capital, you want to have the most stable environment for them to invest in. So we just need to be really clear of what we want as a country.

Our next question today comes from Jonny Coubrough from Deutsche Bank.

Great year delivered. Can I ask firstly on the land bank? Is there a need for portfolio management to optimize it for the strategy to shift mix progressively towards first time buyers? And related to that, how do you view the optimal length of the land bank in terms of years of output in unit terms?

Well, look, on the first-time buyer market, Jonny; I mean I've certainly emphasized our apartment credentials, I think Cairn thankfully I hope and I believe has built a reputation for providing first time homes in areas of high demand. We've always focused on well-located larger development sites with multiyear delivery that create new communities and give in most cases hundreds of buyers and families the opportunity to buy our homes and that just gives us a great footprint in the market. We are quite selective in terms of land acquisition. We look for scaled opportunities as I say and we look for sites that in as much as we can are on multimodal transport links and that's very reflective in terms of our strategy on land buying. And we have probably focused most of our investment over the last year or 2 in adding to our lower density land bank, which I think will continue to shift our mix back to that kind of 50-50 that I talked about. In terms of managing that portfolio, the other major benefit we've had and one of the benefits of being in the business for 10 years is you get to bring a substantial portion of that land bank through the planning system, which is challenging. I know it's challenging in the U.K., it is in Ireland. And you need to be patient, but you also need land cover. You need to be active on 21 or 22 sites in Ireland and that will probably book to about 25 by the end of the year. We need to own at least 40 large active or large development sites to be active on the 25 at any given time, which kind of leads on to land cover. I mean obviously the bigger projects and somewhere like Seven Mills for example where we'll deliver 5,500 units and possibly even an additional 2,000 or 3,000 units on adjoining land potentially for the adjoining local authority. The scale of our land bank doesn't need to be 7 years. That would be our current outlook. We would probably see that coming back to maybe 5 or 6 years. But at the moment we're pretty pleased because we're really confident about where we are today. We're really confident about the opportunity. We're kind of saying to our shareholders it is time for us to invest as well. We are ambitious and we can grow our business. So it's a balance. And I think Richie covered that a little bit as well when he talked about our land buying strategy and options and I'm not sure we'll be as good going forward. But having done 4 or 5 options land deals and have already converted 2, that means that 2 of the sites we bought with an option for zoning or planning actually clicked within about 18 months of us taking the option. And in that case we're probably putting down no more than 10% of the value of the land, the market value of the land, and the option would allow us to exercise at a discount, a significant discount to the market value. Landowners are pleased for us to do that because they feel that with Cairn on board, the land probably has a much better chance. We have a much better chance of navigating the system with our expertise. So land options is a great way for us to think about the land bank size, Jonny, and if we continue to be successful with that strategy, again that would probably drift you back towards land cover of more like 4 or 5 years cover than the kind of 7 years sitting at the moment.

If I could just ask a follow-up question. Richard, you mentioned you could look at JVs in the land market. Just who would those potential JV partners be? And then final question for me is just a reminder on how revenue is recognized over time on the forward fund contracts and how you manage to build cost risk within that?

Okay. Just in relation to the JVs, Jonny, obviously the number of potential parties that we're actually talking to is probably a couple of buckets. You can probably look at longer-term landholders. Long-term landowners could be adjacent to our joining sites who've obviously seen our platform and obviously they are able to yield units beside any existing landholding they may hold. So we do get approached on that. And then also there's other JV opportunities where we probably see that the capital structure is actually under pressure and that those current owners are looking for maybe different ways to be able to monetize their position. So I don't think there's not 1 obviously set form. It's very much on an opportunity led basis. But I think the most important thing is we're actually starting to see a number of different opportunities coming to us in relation to either a joint venture or a hybrid of a joint venture. Just on your second point in relation to the forward funds and how do we control our cost side. So as you probably know the journey that we went through last year, Jonny. We actually started a number of those sites, actually invested with before we actually executed the actual contracts on the forward funds and actually by the time we executed, we actually significantly procured on all those sites. We had probably 75% to 85% of them already fully procured. So the risk on the cost side is actually easier to control. And we obviously know as we centralized our procurement there in the last 18 months, we're starting to see significant benefit of that coming through because just of our growing purchasing power in the market and our ability to be able to work with our subcontractor base and actually sit down with them and actually create business plans for them and tell them what our plans are for the next 2, 3 years. So we're starting to see real benefits from that.

Yes. I suppose the only thing I would add then, Jonny, is kind of learning from good international initiatives including the U.K. We've had a number of engagements recently for example with Homes England. They operate as I suppose a very effective, it certainly seems to us, Jonny, a strategic enabler to try and deliver housing and they do a lot of it through JVs like the MADE Partnership. And there's lots of good lessons to be learned internationally as to how we might evolve as a business and how we bring our platform capability and strength to a joint venture that delivers not just for ourselves and our shareholders, but potentially for the state through joint venture structures. So we hope to have quite a bit more to talk about on this probably at midyear in September and at that point, we'll probably be able to add a bit more color on the JV side.

Our next question today comes from Colin Sheridan from Davy.

Well done on '24 again. A few for me, if I may. Just starting with policy. You've done a bit on it, Michael, I know, but specifically on planning. I guess it's 1 area that there's been a little bit of pushback on though I know obviously for Cairn, it's not that much of a short-term concern considering how much your land bank does actually have planning already. But in terms of filling the hopper, do you think you've seen enough from government at this point in time, whether it be planning bill or NPS to give you confidence about the long term and keeping volumes at that higher level that the government is looking for in its current plans? Then secondly, just quickly on build costs; clearly still very benign for you guys, which is great to see. I wonder if there's anything that kind of stands out; labor, materials or anything within those 2 headings; that might be challenging at this point in time? And finally, just on the land bank, a quick point of just confirmation. The 16,150 plots, does that include option and subject to planning deals; the additional 2,000 that are options, are those over and above it? And I know you spoke a little bit about this, Michael, but it's not just the capital-light nature of it that's attractive. There's also a margin kicker by the sounds of it too. If you could just give maybe a little more color on that.

Start with the last one, Colin, yes, it is over and above. We're not counting them in the 16,000. And yes, I mean look, you probably know well how the system works in Ireland and local authorities are being challenged to look at their land banks and try and zone new land to meet the needs of a growing population. So obviously the local authorities appropriately need to look at what land is most likely to get developed on and would deliver housing. And I suppose current landowners would hopefully look at us and maybe Glenveagh and other large developers and understand that they are more than capable of delivering housing and also bringing land through that planning journey and it probably just puts us in a strong position to partner with those landowners. Potentially I suppose a landowner might take a view that if ultimately with a really good partner, my land has the opportunity to be zoned from its current use; be that agricultural or recreational; into zoned land. That's obviously incredibly accretive to the value for that landowner. And if we're best placed or well placed to try and help navigate that journey because hopefully with our credibility and delivery track record, we'll then ultimately buy that land at a discount to market value and it would obviously be part of any fair commercial arrangement we might have there, Colin, which again won't hurt us on the ultimate margin that we might generate from those sites. So yes, it's a bit of a double win. It is certainly capital-light, but also should be healthy for margins going forward. Planning one Colin, I mean it's very complex so won't get too deep into it. But we have a new Planning Act and it's one of the biggest piece of legislation, as you know, Colin, ever written in Ireland and it will take time to implement. It may even face challenges in the courts for various parts of it, but it's going to take at least 2 years to fully implement the act and maybe longer to have it working effectively. The first pillar of that, which is the current LRD planning process is working well. The challenge is that you're kind of still between 2 systems. So our view is that there are definitely quick wins. And from a policy perspective particularly on planning, we believe that while it is taking time to iron out the wrinkles on the bigger piece of legislation, there are lots of things that by ministerial order or with very quick legislation could be changed to make sure housing output in the near-term column keeps going. They could be things like looking at how residential land is tiered. You might be aware for example that on zoned land, you have to build 70%-odd of Tier 1 land before Tier 2 land becomes active even though Tier 2 land could be better serviced or ready to build. So we'd be strongly advocating for looking at the tiering approach to zone resi land, Colin. Things like, as you probably are aware, LAPs for certain local authorities are starting to lapse now. There is no reason why those LAPs couldn't be kept live in countries like Wicklow and Clover while the new UDZs are being formed, which is going to take time. So we believe there's a lot of fixes, Colin. Why would we allow planning permissions to expire in the next 12 to 18 months in the middle of a housing crisis? The lifetime of those planning permissions could be extended acknowledging that you're at a point in time where you're transitioning between 2 systems. So there's some really quick wins, no cost to the exchequer that could absolutely boost and not compromise the journey to a new planning system. The second question, Colin, was the build cost. Look, it was a rocky ride for a few years, Colin, on a lot of building materials for various kind of not so much domestic, but for global reasons like we're operating at just 2% and the look forward, we don't expect any pressure on that 2% number. We are seeing certain materials that will continue to be reasonably volatile. Concrete would be one of those for example, but more than offset by other kind of raw materials that are probably moving the other way, Colin. So nothing really to see for us on build costs. Our job is just to continue to use our design-led approach like standardization, the lean construction methods that I talked about today, which are a major part of what we do. And I suppose as analysts and shareholders, the fact that we're 75% procured probably should give people a lot of comfort on where hopefully the very minimal impact that build cost inflation will have on our business over the next maybe at least 2 years, Colin, anyway.

Our final question today comes from Andy Murphy from Edison Investment Research.

I've got basically 2 areas of questioning. First of all, the 4,100 units under construction and then secondly, the forward fund transactions. I guess some of the latter might end up being part of the former, but I wonder if you could sort of slightly disentangle that. But more important question was when do these start to be reflected in the revenue because you're talking about 10% growth for this year, which sort of suggests that the delivery of these units under construction is perhaps further out than 2025. And then the second question was sort of around the sort of green issues. You talked about net diversity gain and a lot of people do talk about it. But I was just wondering in your case how it's measured and how it's sort of measured over the longer term because in England for example, you hear these things bandied about, but you do wonder sometimes whether the diversity that's in there initially after the construction actually has a long-term sort of husbandry angle to it. And an allied to the sort of the green issues, you mentioned green mortgages, which was quite interesting. Can you just sort of highlight what the discount is on green mortgages versus, say, a like-for-like traditional mortgage just to give us a flavor of how attractive these are for homeowners?

On the mortgages, do you want to start on the rate changes? But they're obviously quite beneficial to our customers and particularly with the homes that we're building all to A-rated standards.

Andy, so in the Irish market, you're probably seeing a discount somewhere between 50 basis points to 75 basis points depending on the financial institution for green mortgages, which are normally set at housing apartments achieving a rating of [ B1a3+ ]. So it is a great benefit to the market. And in fairness to the 2 large Irish banks in the market, they are really pushing that green mortgage product into the market. I think the other question in relation just to support funds in relation to your site commencements. So actually some of the 4,100 is obviously going to be delivered over a number of years. Is there some of those 4,100 that could be for fund contracts? Yes, there are. You would have seen in our deck that we have a very strong relationship with a number of state partners and we hope to populate that further from that 4,100 units. So hopefully that kind of gives you some color on that. And then your last...

Yes. Probably on the net bio and more broadly on our green agenda, Andy. Look, we're a homebuilder and we have a big impact on the land. So it feels really appropriate that that's something. That net biodiversity gain is something that we focus on and we take it very seriously, Andy. If you think of Seven Mills for example, a new town for potentially 30,000 people, that will be Ireland's largest net bio gain site, which we think is a fantastic initiative and there's lots of ways that we're achieving that. What we're not doing is we're not offsetting, Andy. We're not into acquiring or we don't need to acquire carbon credits. We do pretty extensive initial surveys on all the sites that we develop and we measure our impact right way through. So it's something that we feel passionate about and it's a large part of our business and it's even into our remuneration policies as well to try and give it the focus that it deserves. And I think it will continue to be something that we're passionate about.

That concludes today's Q&A session. I'll now hand back over to Michael Stanley for some closing remarks.

Thank you, Drew, and thank you, everybody, and we look forward to seeing many of you over the coming days on the road show. Thank you for your continued support and have a great day. Thank you. Bye-bye.

That concludes today's call. You may now disconnect your line.