Glenveagh Properties PLC (GVR) Earnings Call Transcript & Summary

Good afternoon, everyone. And you're all very welcome to Glenveagh's Investor Day 2020. Delighted to have such a strong, well-educated audience. Thank you very much for coming. Glenveagh, to remind you, was established just over 28 months ago with the clear goal of becoming the leading sustainable home builder in Ireland, and we think we're well on our way to achieving that. We've built a talented and vigorous team. We have now got a clear organizational structure, and that's going to take your company to the next stage of expansion. We have ambitious but, I believe, achievable goals and targets, and they are clearly set out in this morning's RMS. Today, the presenting team are joined by several Board members, who we're glad to see here, and members of our senior team. And during the course of the afternoon, we're delighted to chat with you, take any questions that you might have. As you know, strong corporate governance has been a pillar of the group from the outset, and we've put in structures to make sure we can do that while the business grows. But in a sustainable way, while not losing our entrepreneurial spirit and energy, and that's the balance. In that regard, we have continued to strengthen the Board of Glenveagh with 2 additions during the year of Pat McCann and Cara Ryan, and their contribution already has been not alone notable but noticeable. Pat is Chief Executive of Dalata, which is our leading hospitality and hotel group in Ireland. And he shares with us a passion for the consumer. And he also has had to endure the trials and tribulations of large-scale development and building hotels are not that different from building apartment blocks. Cara Ryan has a background in economics and finance and has wide experience in both fund management and on the financial side of residential development. So in our market, there continues to be a long-term demand for at least 35,000 units per annum, and we intend to be the volume operator supplying that opportunity. So the agenda today, we hope we will leave you with a comprehensive understanding of where we are and where we intend to go and how we intend to get there. We'll bring you through the group's strategy, and we'll update you on the market environment that we're operating in, our land investment and holdings. We will, of course, break for coffee to give you a break. And on return, we'll brief you on the operational and financial parts of the business, and we show you what makes Glenveagh different. At the end of Stephen's delivery on our strategy, we'll have a Q&A session with him. And we'll also have a Q&A session with the whole management panel at the end. Just to remind you, everything seems these days has to come with some sort of health warning, somewhere along the line. We're in a closed period with our full year results at the end of February. So I know you'll respect that and try and get around it with your questions as best you can. We'll be resolute. The speakers were rightly proud to have a terrific team at Glenveagh, and some of them will shortly be presenting to you. We've also, as I mentioned earlier, will be joined by a number of other members of the senior team, and they'll be happy to talk to you informally during the course of the afternoon. But let me briefly introduce our team that will be speaking to you. Firstly, we have Michael Rice, our CFO, and he's brought the rigors of his PLC experience to bear on Glenveagh. He's impressed us all with his leadership, not just in the financial aspects of his role but also in putting in place the structures and processes that are essential as we execute our expansion. However, we do also intend to concentrate today on our strong delivery capability. And we have 3 key members of our delivery team here today: Tony McLoughlin, Fergus Boyle and Peter Gavican. Tony has overall responsibility for the Group's unit delivery. And in the past year, he has excelled in that, as you can see from our numbers, and that has been in a fairly challenging environment. We also recognize and have recognized the need for specialist skills to deliver complex urban schemes, and we selected Fergus Boyle to join the team from Ballymore in London, where he has an exceptional track record of large-scale apartment delivery, and he'll be driving Glenveagh's construction approach to that segment. Peter Gavican is bringing his private and public sector experience in planning, design and the manufacturing side of our business, which is crucial to scaling the business the way we want to do it in a sustainable manner. We have Wesley Rothwell, who has executed the sourcing plan, that's given us highly attractive starter home land portfolio, and he'll brief you further on progress there. Conor Murtagh, who most of you know, keeps us all on our toes, works tirelessly to keep our shareholders completely up to speed on where we are and how we're measuring up. Finally, and importantly, we have our CEO, who has transformed -- Stephen Garvey, who has transformed the way homebuilding is conducted in Ireland. It's fair to say he is a terrific example of a leader who not alone walks the walk in terms of building but he has a profound and progressive knowledge of our industry. And I don't think it's overstating to say that while there was homebuilding in Ireland before Glenveagh, we are making the landscape completely different. I should just mention to you that, that team, the bios for them all are in the back of your pack. So without further ado, I will introduce you to Stephen, who will bring you through our strategy. Thank you.

Thank you, John. Good afternoon, ladies and gentlemen, and you're very welcome. If you could indulge me for a moment, I'd like to take you back 10 years, almost to the day when the wheels were set in motion for where we are now. If you could imagine the scene, it was a cold and frosty night, as I sat with my thoughts, waiting for concrete to cure. Those unfamiliar with the process, it is quite a laborious task waiting for concrete to set in order to power floors. And at the time, as I led a construction business in the midst of our worst recession, it was all hands on deck. So it was dark in every sense of the word that night. The ways of the past were not going to be the ways of the future, and the construction industry was in for a profound change. What I could see in the ground at the time was, the family-controlled highly leveraged operations were going to be wiped out. No bank debt was available. We didn't even know if the banks were going to survive, and no one had any equity domestically. But there still was an underlying demand for quality homes. I knew then that the challenges we were facing were, in fact, our opportunities. And I started to envision where we needed to get to and what it would take to get there. We focused on the product for affordable homes and locations where people wanted to buy them, the way you deliver that product, embracing a new methodology and the manner in which that product could be delivered economically. To this end, we could see that the most conducive funding model to support and deliver decision was long-term capital. Today, we are on the cusp of becoming Ireland's leading residential developer. Looking ahead to the next 10 years, we have a clear strategy of where we want this company to go, underpinned by a strong track record of experience and turning vision into reality. Today, I'm going to take you to the first 5 years of this plan. Glenveagh, home of the new. Let me tell you what that means. Home of the new is not about just building new homes, it's about how we select and partner on our lands. It's about how we plan on those lands. It's about how we foster and embed relationships with the communities. It's about how we use technology to innovate how we deliver on these lands. It's about how we provide energy-efficient quality homes to the customer. Glenveagh sets itself apart by creating an experience that is different. What do I mean by that? We want to offer the customer the following: quality energy-leading homes, in location of choice, in their home of choice; where they want to live and how they want to live. We want to streamline the process involved. We want to minimize the stress involved in buying your home, and we want to offer what others can't. Let me give you a sense of what the business has created to-date. [Presentation]

So that's what we are creating and delivering. Let me tell you how we are doing it. We have a clear vision to create the leading and more sustainable home building platform in Ireland. To do that, we have developed a culture that is safety-led, customer-centric, collaborative and innovative. I'm going to touch on each of these today. But you will see the rest of -- but you will see these characteristics come across as the rest of the team present. But the most important thing for me is the people. Almost 2,000 people work directly and indirectly for our business today, our people that have a can-do attitude. It is this can-do attitude that has helped to ensure that the group has delivered on Phase 1 of our IPO objectives. A key investor concern following the IPO, "Could you deploy the capital raised? Could you scale the business?" We've not only succeeded in that deployment, we've assembled a land bank, which is targeted at the deepest and most resilient segments of the market, starter homes in large urban centers. We have opened 20 sites in total, delivered 1,100 units and have the same number under construction in a sustainable and profitable way that is core to our strategy, multiple sites and multiple locations. This strategy has delivered units, revenues and profits, which have exceeded expectations in each of the years since IPO, all underpinned by proven operations and construction philosophy. The market opportunity remains compelling. Population growth is driving a housing need, and the supply side does not exist to deliver what is required in the long term. Every well-educated economist in Ireland will tell you, we require 30,000-plus units per year in Ireland, but we are delivering 21,500 units. Ireland has an accommodation crisis. We need first-time buyer product. 30% of our population is between the ages of 25 and 44, prime home-buying ages -- years, sorry. Ireland needs a rental product. 6,000 mom-and-pop landlords are leaving the market every day -- every year and are only being replaced by 3,000 via the institutions. Look at our inward migration numbers last year. 34,000 people came to Ireland. Look at the size of our tech industry in Dublin today. Almost 10% of Google's entire workforce are in Dublin today. We have a social housing need. 70,000 families are on the waiting list for a home. Smaller firms are going to fall to site and larger firms will consolidate those positions, exactly what happened in the U.K. I'm going to bring you back to my concrete experience now, what I'm seeing on the ground. When I talk to the MDs of the concrete plants, they tell me demand is great, things are flying. But the people who really tell you the truth is the plant managers, the people who are sending the concrete out. And they tell me the following things: the smaller guy is struggling; the cost of capital is killing them; the regulation, they have no economies of scale; they can't control their costs. We have one of the most sustainable and conservative markets in the world. The newly appointed Central Bank Governor from New Zealand said in his own words, "House prices should be 26% higher today, only for the existence of the macro potential rules." Glenveagh's capital and operational structure is our advantage in this market, and Conor is going to take you through that in more detail. Because of this opportunity, our focus remains on our core markets: suburban housing, urban apartments and partnerships. These 3 segments will replace the home and living banners. This will streamline communications to investors. So what are the characteristics of our end market? Suburban product is predominantly housing with some low-rise apartments. Demand is coming from private buyers, board institutions also. An example of this is the deal that we recently completed with IRES in Taylor Hill and Semple Woods last year. The majority of our portfolio is focused on the Greater Dublin Area, but the product is required nationally, and we are best positioned to roll that out. Urban is apartments to be delivered in partnership primarily with -- in partnership with institutions, primarily in Dublin and Cork, and locations with significant rail transportation hubs. These are for considerable attractions from a risk and return perspective, given the opportunities to forward sale or forward fund. Partnerships in mixed tenure is accretive to the business over the long term. We invested early, making us a partner of choice for key state agencies and local authorities. This is a long-term strategic decision that is coming to fruition, and we hope today to give you live examples of this through 2020. The attractions of our complementary business units are evident. Suburban demand and alignment of buyer, that means affordable high-quality homes in locations of choice, the majority of our product is EUR 350,000 or below, meets all of that. Fragmentation, the smaller guys falling to the side, as I mentioned earlier on. Easier optimization of construction process, ability to deliver product quickly on multiple sites and multiple locations. Urban, shift to rental, driven by millennials' lifestyle and the size of our tech industry in Ireland today. This is being driven by a growing demand and an exodus of the mom-and-pop landlord due to regulation and fiscal policy, who are being replaced by institutional investors. This gives us long-term earnings visibility due to the early commitment of a forward sale or forward funds. What does a partnership look like? A partnership is a government or local authority putting their land on a reduced cost or phased basis into a development agreement with us. It has a reduced risk from a sales perspective, where 50% of the product delivered will go back to government or local authority via social housing or affordable housing and 50% will have market exposure. That gives a strong return on capital employed, increased business resilience, reduced risk, fits with both suburban and urban segments and gives us access to both land and deliveries. We have streamlined the business to deliver on this. So we haven't duplicated resources. Our central functions of underwriting, planning, design, procurement and corporate, all support a delivery across all 3 segments. We split suburban delivery into teams clustered around distinctive geographies. This is on top of an already established dedicated team for site openings. Urban apartment delivery is a specialist skillset, and that skillset exists in our business, proven by delivery of Greystones and Herbert Hill, both on time and in budget. Our first target in 2018 was 250 units. We delivered 275. In 2019, our target was 725, we delivered 844. When we commit, we deliver. We have committed to delivering 1,000 units in 2020, 1,400 units in 2021. And revised targets, as you can see, in '22, '23 and '24. We are now delivering 12,000 units by 2024. That gives us an annual run rate of 3,000 units. This gives you a breakdown of where the units are coming from, both in suburban and urban. Due to the size of the North Docks portfolio, we've singled that out, EUR 110 million of capital. And our aim is to monetize over the time frame of the project, which commences this year. This will result in revenue, cash and profits in 2020 and 2021. Our internal resources will be delivering the Docks. We will endeavor to apply similar approach to a number of our urban projects, and we will be outlining this in more detail later in the year. The chart on the left displays how construction resources are presently allocated in the business. The chart on the right shows the ideal split of units across 3 segments once partnerships scales. This will optimize return on capital employed. I have consistently made the point at maturity and scale. We want to control approximately 4.5- to 5-year land supply in front of us. We are now committing at least EUR 100 million reduction in investment by 2021 due to a ramp up and efficient use of capital. Additional reductions will be made when strategic or structured land deals happens. Partnership wins will allow us to further reduce this investment. If the business has the capacity to deliver 3,000 units per annum, this will require somewhere between 13,500 and 15,000 plots of land. To maximize return on capital, we envisage it being laid out in the following ways: 10,000 units potentially in our ownership, 2,500 in partnerships and 2,500 in structured pay-as-you-go deals. These are huge opportunities for Glenveagh because of who we are today. Not only have we the financial capabilities, we have the machine and we have the people. Quality is key to everything we do, be it our people, our supply chain, our health and safety, our policies. Key to scaling the business has been the people. Growing the business from 75 at IPO to over 330 directly today, with over 2,000 people working in direct -- both directly and indirectly for the business. Health and safety is the first item on the Board's agenda and drives an element of all staff's remuneration. We've already achieved various awards for our health and safety initiatives. Health and safety will always be to the forefront of the business. Consumers will always be to the fore of our business decisions. Given the international perspective of our Board and the shortcomings identified in the U.K., customer satisfaction has been a KPI for the entire business and raise an element of all staff's variable remuneration. We want our customers to experience the difference studies at Glenveagh. We are externally audited to ensure we deliver for our customers on their experience. Full variable remuneration is not paid to employees unless the equivalent score of a 5-star status rating is achieved. Sustainable communities exceeding our environmental obligations and sustainably integrating with our supply chain are all features of our operations. And the guys are going to talk you through this in more detail through their presentations. Let me give you a sense of what health and safety looks like in Glenveagh today. [Presentation]

As you can see from the video, health and safety is in the fabric of the business. As I mentioned earlier, our offering is built around access, quality, innovation. We want to be the leading innovators in the market, constantly refining, developing and evolving. Our focus is on ensuring that the experience will always be different, and that's what sets Glenveagh apart. I want to give you a real life example of what this means for the business. You all know about our 90-apartment development in Herbert Hill, which we closed last year, under a new 25-year government-backed enhanced lease, the first time ever done on a project of this scale. This is a prime example of maximizing opportunity, innovation and leveraging partnerships. We had 4 months to bring a totally new concept of product to realization. We were told it couldn't be done, but we did it. It involved bringing government, local authority, and most importantly, the institution together. The reasons the institution choose us is because we offer access to quality, certainty of delivery, track record and reputation, blue-chip backing which is unique to the Irish market and will drive repeat business. That gives you a scale of this opportunity. Our 3 core segments: suburban, urban and partnerships are all driven by diverse markets, as I outlined earlier. The customer is core to our business, be that retail or institutional. And we will always constantly evolve to deliver best-in-class product. We have consistently said that we will deliver through standardization, off-site construction and the use of technologies. Why are these so important to us? Well, productivity in the construction industry has been diminishing for years. And while at the same time, the workforce has aged significantly. These are both challenges but also opportunities. At Glenveagh, we are positioning ourselves to be responsive to these challenges, mindful of our global obligations to sustainability. True innovations in our work, we will pioneer new methodologies in the industry, and ultimately reap the benefits as a market leader. The team will go through this in more detail later on. That, along with minimizing upfront land costs, controlling WIP investment, innovation to control our cost of delivery, all drives shareholder returns. We made a commitment at IPO to create the volume home -- the leading volume homebuilder in Ireland. In what has been only 2 short years, we've delivered beyond our commitments and what was asked of us -- by shareholders at the time, all of the key concerns raised by investors when we were a new business with EUR 550 million in cash have been addressed. We have assembled a highly attractive land bank and are now at the peak of our investment trajectory in euro terms, with no net land spend envisaged over the forecasted period. We have already grown the delivery capability threefold and are now committing to do the same and more. This will require continued investment in work and progress, but is necessary to work the balance sheet efficiently. This is not simply growth for growth's sake. It is also not the full extent of our ambitions in terms of driving shareholder returns. We have an ambition to lead the way in introducing structured land acquisitions into the Irish land market. It has the potential to deliver further upside by reducing the group's capital deployment on land. Where possible, we will mitigate with investment via forward funding on our urban projects. Innovation is to the fore of what we do, using it as a tool to drive down costs and continue to improve the margin profile of our business. The opportunity remains significant, if anything, more than ever. We have a clear path to generating strong returns, by continuing to scale the construction operations and allocating capital efficiently. Having completed our net investment in land, that scaling of output will now require investment in working capital. Given the operational time ahead for the business, it makes good business sense to maintain prudent leverage levels at this early stage of our life cycle. Once there is excess cash available to implement a capital returns program, we will do so, but not at the expense of introducing financial risk into a business which is 2 years old. We want to deliver a sustainable capital returns policy over the long term. When we will do it, we will do it right. If excess cash can be delivered earlier than anticipated, we are keen to return it. However, the time to discuss is when it's in the bank. I am a strong believer in the fundamentals. Not only are they highly attractive, but they are also sustainable, as we operate in one of the most conservative housing markets globally. Consolidation on the smaller firms falling to the side is our opportunity to create a leading sustainable home building platform, and we've built the machine for us. Our 3 segments are strategic because they deliver for both our customers and our shareholders. The future is about continuing the good work we have done to date, to deliver a step change in return on capital profile for this business. We never look to the past in what we've achieved, only into the future and what we can achieve. I hope today has given you a sense of the opportunity, the capability and the strength of our business and its people. I'd like to show you a video now of the external people, who interact with Glenveagh on a daily basis, our subcontractors and our customers. [Presentation]

We'd like to take some questions now. Conor is eagerly awaiting to pass the mic, tell me if anyone needs it.

So you said that you're going to start using internal resources to deliver the Docks. I think over time, you said that there was probably optionality of using contractors on sites like that. Has anything changed in the market to send you down this route? Is it an economic decision? Or is there something else going on there?

No. I suppose, as we're scaling up the business, we would have talked about potentially using contractors to deliver the likes of the Docks. If anything, you've seen that we have the capability and the skillset to deliver internally now. So overall, we are very comfortable with the team assembled. If you all hang on and go through, you'll see the team and the skillset of the team that we now have in-house, the capabilities to deliver that. So we are very competitively driven. It's not a market decision in a sense of where is the market. It's an internal decision that we have the capabilities to deliver. I suppose, if you take the Docks as just one example, it's nearly 1,150 units, along with the commercial space. It's a 5- to 6-year -- 5-year project, probably, overall. And our ambition is to deliver multiple of these projects. And obviously, we want to have that skillset internally.

Stephen, maybe if I can ask you just 2 questions right now, and I might have more later. First of all, in terms of partnerships, can you talk about when partnerships get to scale. When do we think that might occur in terms of scale? And then second of all, in terms of delivery, some of your sites are actually quite far forward in terms of off-site manufacturing and the usage of that, that we've seen some sites that have some volumetric being delivered. How much faster do you think you can deliver on your sites? Because given the demand from the institution side there, a prompted delivery would actually be more -- certainly would be helpful.

Thank you, Glynis. So just on the methodology, and obviously, how we are going to deliver it. We have -- we spoke an awful lot about our site's construction. It is something that we are exploring. We believe that's the way of the future on a number of fronts. Construction industry, between productivity and the age of the workforce, has diminished for years. The skillset is reducing on an ongoing basis. The methodology delivered and you would see some schemes here in the U.K. delivered through the likes of Fleming, off-site modular construction is the way to go. There's a couple of things in factor there. It gives you certainty of program, delivery, quality and you know what time you'll be able to get your project. If you think about some of the institutions who are coming in to invest, a big problem for them is, "When do we actually get the product to make and we put the people into it?" So it's mostly off-site construction. The ramp up, it's not something we will be able to do today or tomorrow, but over the next 12, 24 months, we hope to be able to bring it as quickly as possible, and then it would hopefully feed into systems, but that's something we are working on. It's not something that can just be turned on like a tap. And the key to actually any off-site construction is -- and Peter will talk about it in his manufacturing slides -- is actually how you run that operation because the most efficient manner to run it, and I describe this sometimes to people as, to get maximum output of a factory, you must run it consistently at the same pace. You can't go up or down with it. And the whole idea is, you run it at a steady pace, and any excess capacity, you pick it up through other alternative methods. So the key for us is if were to introduce something like that is, "Can we keep it consistently fed to a certain degree?" In relation to partnerships, and I suppose the best case in the business plan today is the numbers are without partnerships. But obviously, we're talking about, if partnerships comes in, how it will reduce our overall land bank moving forward. There's a number of processes ongoing. As I said, we'd like to update, hopefully, later in the year. We're involved in a number of those processes. I didn't want to bring the election into it, but I'm going to be brought into it now. There's a lot of commitments being mooted about potential government parties saying to deliver 100,000 units. I don't know where they're going to deliver, but they say they will. Well, the only way to really deliver that is in true partnerships. And this means where the government are going to have to put their own land up and partner up with the likes of someone like us who has the skillset, the people and the machine to deliver it. I would hope over the next 12, 24 months that we could start to get active if we win some of these, and obviously, then they would feed them. I suppose it's probably another 2 to 3 years away before we see those numbers come into the system.

And just to be clear on the off-site manufacturing, are you talking about the same sort of approach that Persimmon has, where you'll actually manufacture internally? Or are you talking about buying in...?

No, internally. We're talking about controlling our own manufacturing is probably where we're going to.

Having your own factory?

Yes, potentially. We're -- sorry, there is nothing to say here today. It is something that we are working on though.

It's Samuel Cullen from Berenberg. You've hopefully given the kind of unit splits or at scale partnerships and urban, suburban, and you've talked about driving Rocky. Can you just put some numbers around those 3 different divisions?

I suppose -- we've always talked, and Michael is going to cover this in his slides. He is the CFO. He is much better at it than I am. I suppose -- look, you would have always talked about the suburban housing and the land that you would have paid for you yourself, having a kind of mid- to high-teen return on capital employed. The forward fund in some aspects -- obviously, margin profile, what we're seeing is the margin is now more aligned to the suburban, but the return on capital always depends on the forward funds. So the return on capital in that is into the 20s and probably mid- to high-20s. On the partnership side of things, and what we're seeing from -- obviously, it's very early days, but the margin is slightly lower than the suburban side, but the return on capital is much better, more akin to something in the mid-30s. Anybody else? So thank you very much for your input and questions. So -- yes. Okay.

The new target. Is it a -- just want to clarify if it includes any of the partnerships?

No, the new targets at the moment don't. So that's just solely what's in the business at the moment. So obviously, if partnerships feed into that. But I go back to the point, that is more to replace the land as the land recycles.

Yes. So I think to answer the question clearly is if the partnership's opportunity materializes, will you see the unit number go up above 3,000? Or will you reposition who you're investing in land?

It will be just how we're repositioning and investing in land.

How about the split between PRS and core sales?

It all depends. I suppose we've been talking about this for a while. And look, there's a lot of example of it. We've seen it in the product that we've delivered last year, and you look to the past and tell you maybe where the future might go. 25% of our book last year almost went to PRS. PRS is not only urban, it's now growing in the suburbs, and there's a growing demand. Like, I meet the institutions on a regular basis. And some of the things we're seeing is, they've identified 2 key markets. They've identified the IT worker for a better degree in the city center, but then they describe it as the sticky income out in the suburbs, and that seems to be a growing demand. And like you look at the transactions that are recently happening: IRES are buying houses, [indiscernible] for Capital are buying houses. They've now moved up. And it's probably a phenomenon that has come -- went from the states, first, spread to Europe and is now coming into our market. So there is demand across multiple. To give you an actual percentage, it would all depend on the deliveries here. But let's say, we are doing 1,000 homes, just pure homes, you could see 20%, 25%, and that potentially could be PRS, I think, and then the majority of your urban projects will be all PRS, predominantly. It's hard to give you an exact percentage with one total. Thank you. Conor will -- Conor is going to bring you through the market dynamics.

Cheers, Stephen. Afternoon, everyone. As followers of the Irish residential homebuilding markets, you'll all be aware that there is plenty of very well-regarded commentators on the Irish economy and indeed the Irish housing market. And I can see a number of familiar face in the regard in the room today. So what we are not going to do is bore you with the minutia of multi trends here, but what we would like to do is highlight the key themes that we see in the market, and that we believe are going to persist for a period of time and then allowing how Glenveagh is positioned against those key themes. Firstly, the Irish economy continues to outperform its peer group. 2020 is set to be another strong year in that regard, with over 5.5% growth forecast by a number of analysts. As you'd expect, in an economy that's growing strongly, employment is increasing and wages are rising. In the context of the population with only approximately 5 million people, we've added 500,000 persons to the workforce since 2011. In addition to that, we're running a government budget surplus. And we're also seeing strong FDI. What gives us greater confidence as a business, however, is that almost all of the consumer indicators are in positive territory. We're seeing a continued expansion of real incomes. Retail sales remain robust, but at the same time, savings rates are exceptionally high. We're all aware, consumer confidence did take a breadth at the time of the Brexit debate, but that's now pointing in the right direction as well. At the same time, as we're enjoying a very strong overall economy and consumer environment, we're also in the midst of a period of significant population growth. A country where, again, with 5 million people is expected to add close to 500,000 persons by 2030. It's that population growth that is the foundation of the housing need in Ireland and all of the stats you hear in relation to the number of deliveries required. A report published by the Central Bank of Ireland late last year puts that housing requirement at 34,000 for the foreseeable future. That assumes that the level of inward migration, which can at times be volatile, continues at its current pace today. But what it also assumes is that headship rates in Ireland remain static. Headship rates in Ireland are one of the highest in the EU. Ireland's headship rate declined rapidly as we went through the 1990s and early 2000s. But as soon as the financial crisis hit, at the same time as headship rates continued to decline in Europe. Ireland's actually increased. So what drove that increase? We didn't all suddenly decide that we wanted to put more people in the same number of houses. What you had was the outside of Dublin, that headship rate continued to decline in line with preferences and in line with what we're seeing on our sites where the highest demanded product is the 2-bed product. But within Dublin, due to the shortage of housing, particularly the younger cohort, stayed at home and are living at home longer, not at a preference, but because there simply isn't the accommodation there. Where Ireland's headship rates to converge with that of the EU, this would bring additional demand on housing, above and beyond the central forecast of 34,000 per annum and would, in fact, require 47,000 houses per annum. But the message we'd like you to leave you with, in this regard is, we're confident that we can deliver the 3,000 units on any of the demand scenarios set out by the Central Bank because of the structure of the industry today. At our peak delivery of 3,000 units, we'll still be less than 10% of the market, given the base case output targets. While on the face of it, it would appear to be a very nurturing environment for the supply side, the supply side, as Stephen mentioned, continues to struggle to scale up. Unlike the U.K., where when the financial crisis hit, balance sheets were resized, land banks got written down, but ultimately, homebuilding continued. In Ireland, the entire supply side went out. We continued to build one-off houses, and that's what you see in the numbers, but estate housing effectively dropped to 0. By the time green shoots arrived, equity returned to the market, there was a semblance of debt. The environment for homebuilders had moved on significantly. 2% to 3% cost of funds was replaced with 10% to 15% cost of funds, 100% loan to cost was replaced by 40% loan to cost. And compliance and regulation also moved on, and the sector was forced to professionalize, and that brought with it costs and a way of working which were unfamiliar. Again, as Stephen noted, the U.K. market has consolidated around the larger homebuilders. 80% of the builders producing less than 100 houses per year left the market in the U.K. between 1998 and 2015. We expect and we see the same happening in Ireland. It's not that there's a need for M&A. There are few scale players to acquire. It's that the structure of the market today makes it very difficult for that smaller homebuilder to build a sustainable business. As the chart demonstrates, there's very few homebuilders producing more than 200 units per annum. Our sales [indiscernible] are 2 and a number of others that are continue to be supported by NAMA. One of the advantages that the macro prudential rules have brought is that it's created a very sustainable and robust environment. As you can see from the charts, first-time buyer on the left, second and subsequent buyer on the right. New loans are hugging the limits outlined by the Central Bank. As a result, again, as Stephen alluded to, the Central Bank believes that prices are 26% below where the ordinary would be, where the rule is not in place. These rules are low by international standards, the U.K. operating at 4.5x. Taking a medium-term outlook. Our view is that given the clustering around the 3.5x limit that HPI is likely to, at least, equal wage inflation for the foreseeable future. And that's, obviously, absent an expansion of the likes of help-to-buy, which has been mooted by the government party. Our experience of the mortgage market is that these LTI rules haven't tampered bank's lending appetite, they've just set the parameters for it. We're not only signing reserving units, we're closing them with the help of our banks, and we're building closer and closer relationships with these banks. The message we'd like you to take from this slide, and I know we've had new statistics out today, which are positive, but we're clearly seeing on the ground, if we can continue to deliver product at less than 3.5x income, there's ample finance available in the market. The extent of which there's the ability to pay beyond the 3.5x limit is best demonstrated by the rental market. Here, the cost of renting is significantly above the cost of ownership in practically every market in the Greater Dublin area. This has contributed to the emergence, not only of an urban PRS market but a suburban one as well. The strong economy underlying demand for housing has attracted significant institutional interest to the sector. We are seeing yields tighten and sellers of PRS product like Glenveagh have actually benefited from the introduction of rent stabilization measures. Our experience from our recent processes is that if you can create greater certainty around the rent, that tightens the yield, which is ultimately more valuable than rents racing ahead which are harder to underwrite, and therefore, priced accordingly. It's also important that the product delivered is at sustainable rental levels which again helps tighten the yield. Due to the lack of supply in the PRS market, transactions were initially focused on standing stock. Increasingly, investors are entering into forward commitments and forward funding arrangements, the shape of which Michael will take you through later in his presentation. What excites us having run a number of processes is the sheer volume of participants looking to get access to rental product in Dublin and the suburbs. Outside of the top 2 or 3 that you see in the pie chart, very few would argue that they're not in need of finding additional product to capitalize on the advantages of scale. 3,500 units to 5,000 units is often mooted as the ideal number. One other point to note is that despite the continued requirement from occupiers and despite the investment of the institutions, the number of PRS properties in the market continues to decline. As Stephen noted, the mom-and-pop landlord is exiting. Why? Because of the onerous taxation environment, because of bank deleveraging, because of increased regulation. So we need more supply and we're getting left with less product despite this institutional investment. Putting all of that together, we believe that's why PRS is a market that's here to stay in Ireland. So what does that mean for Glenveagh? We're operating in one of the best-performing economies in the EU. The consumer environment is very healthy. Demographics and population growth are driving a housing need. This need is not being met by the supply side. Our approach to tackling these unique set of circumstances is threefold. We're delivering volume to the deepest segment of the market at prices that are financeable in the market. That's starter homes at less than EUR 325,000. We're working with institutions to deliver quality product at sustainable rental levels. We also recognize that not everybody that needs a house can afford a house. That's why we're partnering with government, local authorities and other institutions with a view to delivering product on their lands to capture those outside of the affordability net. It's this 3-pronged approach that we believe will ensure that Glenveagh is best placed to capitalize on the key themes that we see persisting in the market for the foreseeable future. I'd now like to welcome Wesley up to talk about our land investment. Thank you.

Good afternoon, everyone. Just getting a glass of water here. And so I'm -- I'm Wesley Rothwell, Chief Commercial Officer, with a responsibility for the land portfolio which includes identifying investment opportunities for the business within the segments which Stephen has mentioned. As previously mentioned, the team has deployed over EUR 700 million on land acquisition and equally important is in that period we've reviewed over EUR 2 billion of assets which we haven't pursued for a variety of reasons. To put this into context for every 10 to 12 assets which we review, we would actively engage in 1 or 2. Later, I'll take you through a detailed overview of the processes and procedures which we adopt in identifying, reviewing and acquiring lands. So looking at the segments. The investment team is focused on these 3 segments of the land market, namely suburban, urban and partnerships. Investing across these 3 segments allows us to optimize the return profile, our investment and utilizing the group's construction expertise. So firstly looking at suburban. If we consider the suburban and urban markets in 2019, in excess of EUR 1.2 billion of land traded in the year which is consistent with 2018, and we'll anticipate a similar volume to trade in 2020. We're sourcing the majority of our opportunities off-market and we're seeing a steady flow of opportunities on-market as well as off-market. And again, we expect this to be consistent throughout this year and into next year. The profile of purchaser has involved, however, over the past 4 to 5 years from opportunistic high-net-worth investors and developers to developers funded by PE funds to a more tiered structure in 2020 where we're now seeing limited demand for opportunities in excess of EUR 10 million with smaller family offices focused on the sub EUR 4 million to EUR 5 million market. And again, we expect this trend to continue as mentioned by Stephen. There are multiple exit options in the suburban market focused on owner occupier, social housing and a newly evolved trend of institutional investors looking at the suburban sector as Conor has alluded to. So looking at the urban market. There's no doubt that during 2018 and '19, we experienced competition for urban sites which were focused for the PRS sector and we expect this to continue. The profile of bidder included investment funds, local specialist operators and developers partnering with international capital. With the opinion that this -- that there is a significant amount of these assets that have traded over the past 2 years, may not be delivered and an opportunity may present itself over the next 12 to 18 months to use the advantage of the PLC covenant to extract value from these assets. So for example, working with the landowner on a JV or a structured deal. Turning now to partnerships. We're currently involved, as Stephen has mentioned, in a number of active processes which we expect will be awarded during 2020. We believe that as the land market continues to evolve over the next 2 to 3 years that the partnerships will grow in significance. And this is being driven by state entities such as local authorities, semi state entities and the newly formed land development agency. And I'll bring you through shortly some more detail in terms of the potential pipeline that's in the partnership sector. Each of these 3 sectors are important to us here in Glenveagh. And while there are nuances in each of them, the ability of the business to maximize a return on capital by reducing our investment in land will grow hyper. So looking at our portfolio. Over the course of the past 2.5 years, we've assembled an excellent portfolio of land which falls within the 3 segments. Our portfolio is essentially Dublin-centric, 90% in the Greater Dublin area with a particular focus on the deeper segment of the residential market, namely the starter home sub EUR 325,000. In addition to affordability, we've placed a significant emphasis upon transportation hubs and employment. And this is further demonstrated with 69% of our portfolio in the suburban locations. As I've mentioned and as we've previously discussed, we are focused on assets which have multiple exit options which is demonstrated with 15% of our portfolio having either a private or a PRS exit and we expect this trend to continue as the investor continues to enter the market. So a fundamental driver in assembling our portfolio to date has been our focus on the deepest segment of the residential market, the starter home combined with affordability. We're continuing to experience population growth, particularly in the main urban centers which are a focus for Glenveagh moving forward on future acquisitions. With the opinion that the demand coupled with projected population growth that the starter home mark has the greatest potential for HPI. So an important part of our portfolio assembly to date has been our focus on the market in Cork. Designated Ireland's second city, 2 hours by car and train from Dublin, an international airport, an extremely young and dynamic population, and a significant emphasis upon form and IT. If you Google, "Why I live in Cork," you'll find the following: An attractive jobs market, the cost of living, the way of life and the culture. These points demonstrate why Cork has been such an important market for us in Glenveagh. We've assembled the portfolio of 5 assets, which have the potential to accommodate in excess of 2,100 plots, focused on both the Build-to-Sell and the PRS sector. While this comprises in excess of 14% of our landbank, the average plot price is extremely attractive. We believe this is significant opportunity for us in Glenveagh to become the dominant house builder in Ireland's second city. So I mentioned the pipeline in the partnerships area. So this -- in addition to the traditional options of procuring land on and off market, we see partnerships as being accretive to the business, as it offers alternative delivery options, it complements our existing landbank, and it contributes to the key financial metrics of our business. Partnerships have been a feature of the U.K. market over the past 10 years and have been adopted by such entities as countryside. The existing pipeline of opportunities is strong, and we anticipate that this will grow, as we've alluded to over the next 12 to 24 months as the government encourages Mixed-Tenure opportunities and exits by state entities. As I've mentioned, we're at the advanced stages in 2 processes, and we expect these to be awarded during 2020. So we're continuing to see a strong volume of opportunity on and off-market in each of the segments of our business, and we expect this to continue. I think a key focus for us in the investment team is to really assure the following. The profile of asset that we're looking for, that the location fits the acquisition criteria of our business, that the asset offers multiple exit options, that the asset meets the key metrics of our business in terms of margin and ROCE, which have been discussed today, and the capital allocation, in particular, geographical locations. So we delve a little bit deeper into this. What we've done is we've created essentially 4 categories in our land market and the sector when we're looking at opportunities. The first of those -- the first 2 category 1 and 2 have been a particular focus of the business to date. In terms of identifying in the case of Category 1, assets that have full planning permission, whereby we can deliver units within a maximum of 14 months. The second are lands which are zoned with fully serviced, whereby we hand it to our planning team and we bring it through the planning process, and we can deliver units within the 13-month period. The addition to that now are focus on the Category 3 and 4. So Category 3 is a hybrid of 1 and 2, and it's based upon phased pavements linked to a phased drawdown of the lands. There are obvious benefits to us at business in terms of our ROCE and our deployment of capital. It's important to realize while this is a concept which hasn't existed to date in which -- sorry, this is a concept, which has existed in the U.K., it's something that hasn't existed with -- in Ireland. And therefore, it's important for our ability to utilize the strength of the PLC to extract these opportunities in the market. So turning to Category 4. These are strategic long-term acquisitions, and these are focused on areas where the potential rezonings of land in time in a period of 4 or 5 years. Again, if we can procure one of these assets, there's obvious benefits in terms of the advantage and the underlying land value. So I suppose we have a disciplined approach to land acquisition and selection. And really, we've broken that down into 3 key steps. So as the first of those is identifying the key area. So with a focus on employment, demographics, transport, schools and absorption levels, all of those things as being key components to selecting the area and why you should go into it. The second, once we've identified the area, we focus on who are the owners. So we sit down as a team and we say, right, who are the owners of this land in this particular location. And I suppose what that allows us to do is be strategic in our approach in terms of who we're targeting, how we're targeting, and again, we're ahead of the posse on that front. I suppose the third is, once we've identified the location, and we've identified the lands and we're engaged regarding a potential acquisition, the investment team in conjunction with the internal teams within Glenveagh prepared a detailed assessment of that asset. Once we've done that and we believe it's an asset that we want to advance on, we, at that point, engage with external consultants. So architects, planning consultants, surveyors, engineers, solicitors, et cetera. And at all stages in this process, with regard to the key financial metrics, which we've alluded to today and more important -- as equally important is the delivery matrix. So while I briefly outlined the forensic approach, which we follow in acquiring lands, it's important to realize that at all stages in this process, it's not just the investment team that are reviewing these opportunities, we're fully supported by the overall business. So -- and the planning team, our infrastructure team, our procurement team, our QS team, construction, sales, finance, et cetera. And that's extremely important to us on the acquisition side of the business. So as part of this engagement with the internal teams, we obviously -- we've internal and external processes around that, and we have pre- and post-acquisition meetings and reviewing of assets. And again, this is a critical part of the process, which we go through in procuring our lands. So in addition to these meetings, and once we've identified an asset has been brought in, our team would then obviously support the other parts of the business in terms of the construction team, the sales team and the planning teams. So I could leave you today just with 3 key messages from the investment team. We're seeing a volume of opportunity, and we have a disciplined approach, targeting 3 segments. We have a quantum of capital, whereby we're focused on particular locations, and particularly on the first unit delivery and the importance of multiple exit options. So Conor?

You're done?

Yes.

Great.

Too quick?

He changed his ending.

Keep you on your toes.

All right. We're making -- we're actually making -- we're making very good time. So we might break now and if people could maybe start filing in about 10 to 3. We're very excited with the next half of the presentation. We have the operational team, we're going to take you ahead of how we're going to get to 3,000 units and then Michael is going to outline what all that means for shareholders. So see you all back at 10 to 3 that'd be great. Thank you. [Break]

Welcome back after the break. My name is Peter Gavican, and I'm responsible for planning, manufacturing and design operations. So over the next number of slides, I'm going to take you through our holistic approach to planning and design operations. I'm going to speak about our manufacturing culture. And I'm also going to speak about pioneering a new way in terms of integration right across the supply chain. So moving into our planning and design function and our holistic approach, we consider planning a design around the principles of consumer requirements, place making, regulatory and delivery. In terms of consumer requirements, we consider institutional and retail consumers and customers. In terms of what their ask is of us, what their needs are, in terms of private and public open space, in terms of fit and finish, in terms of layout. But on top of that, we look at the latent needs of the customer. And when I want to speak about latent needs, I speak about the needs that the customer might not know they have. And a practical example of this is our heat pump technology. We use heat pumps in our suburban development in our houses now. And often, on open weekends, consumers and customers ask us, what is that process or what is that piece of equipment in the back of the house? We explain it's a heat pump. And a number of months later after using the heat pump becomes apparent, the convenience of the heat pump is a must-have now for those consumers. So we're constantly looking at pushing the boundaries in terms of innovating our housing scheme design and looking at those latent needs of the customers. In terms of affordability, Stephen has mentioned it and Conor has mentioned it. In terms of design principles, we brought a new dimension into design and working with our design teams. So it's not only about designing a house or designing a residential unit and fitting with regulatory compliance, it's also about looking at affordability in the area, the macro prudential rules at 3.5x income. That's a key component of our design influence. Place making. We've recently engaged a design team here in the U.K. and to make an interesting analogy. Everybody considered and thinks about where they're going to live. How many people consider about where the house is going to live? So what is the architecture in the surrounding environment? How are we representing that in our schemes? How are our schemes fitting in with the natural surrounding environment? How are we leveraging public open space? And how are we leveraging infrastructure in the surrounding environment? Do we consider the requirements of the urban and the suburban surrounding environment throughout our design process? Moving on to regulatory. In Ireland, most of you are familiar, we have a number of plans and regulations in terms of our obligations to fulfill on developing out residential delivery, and that can be across national planning framework, development plans and local area plans. And sometimes there can be inconsistencies across those plans, but there's a drive now on its policy level in terms of bringing consistency across those plans. And generally, the policy is providing an urbanization of the suburban locations and a higher urbanization of the urban locations that are trying to consolidate talent and bring vibrancy to town and village centers. So therefore, the suburban development now, as Stephen alluded to earlier, has a component of low-rise urban product. And while we are obliged to comply with policies, we see ourselves as a trusted partner. So we get involved in dialogue in the formulation of policy through submission, through public consultation. And it's our function to work with the policymakers and informing them what the consumer requirements are, what the viability issues are, what the macro prudential rules mean in terms of forming policy that derives a certain density, a certain percentage of private and public open space. In terms of construction rates, construction rates in Ireland are at NZEB level near 0 energy building. So it's almost at that holy grail of the housing unit becoming a net contributor to energy rather than a net consumer. NZEB isn't a problem for us because we've been there and we've been there a long time at this stage. We've been there well over a year. So NZEB isn't problem for us. We're aiming above NZEB. What does that mean for us? What do our design teams need to engage now in terms of bringing our houses above NZEB -- our residential units above NZEB? What does that mean for our construction teams? The reason where it NZEB [indiscernible] is because Tony and Fergus, who you'll hear from shortly, their meticulous attention to detail means coal bridging, airtightness, et cetera, is robust in our housing developments. So we're pushing the boundary to go above our NZEB, which leads on to delivery. In terms of delivery, manufacturing and assembly is a common word across industry at the minute. And so our design teams automatically will accommodate manufacturing and assembly. And Stephen spoke about early -- spoke about manufacturing earlier. Our manufacturing at the moment is in terms of timber frame and moving on to 2D steel, which Fergus will speak about in his urban apartments. In terms of that manufacturing piece, we have supply agreements with our manufacturing partners. So our design and our design influence right across the housing units and the scheme layouts will, firstly, drive efficiency in the manufacturing operations and those manufacturing partners that we have supply agreements with. So we consider manufacturing and assembly as part -- as a key component of our design suite. Also in terms of layout, layout is very important to us. And layout is very important in terms of getting a good return on capital employed. How can our construction teams work to get proper layout, proper phasing, proper phasing and moving throughout the development? How can pedestrian traffic and construction traffic coexists safely on our site? You saw the emphasis by Stephen on safety. Safety is critically important. So our design teams are challenged looking ahead and see how that layout function works. Something I want to speak about is ground. A lot of innovation in recent times in housing has gone into the product itself and the NZEB level of almost passive, now, indeed, insulation. We're looking now at ground, and we're looking at ground in terms of how ground can work better for us as a business? How ground can add value, value to the consumer or value to the bottom line of our company? In terms of the regulatory requirements, as I spoke about, there's a certain density that you -- that the planning authority will determine you must make. There's a certain amount of public open space and a certain amount of private open space and then there's ground. So what ground is left over or what can we do with that ground? In the traditional component type that's used in Ireland, the 3-bed semi, the 2-bed townhouse, the terrace unit and the apartment product, typically, in suburban developments now, you're looking at a split of 55% suburban-type product and 45% urban-type product because you must meet a density while maintaining your private and public open space. So we're looking really hard at that. And we're looking at why we don't use a traditional product that is in the sector? What about we use a product that will tap into the latent needs of the consumer that I spoke about earlier and a product that will satisfy the needs we know that exist? And those needs we know because that comes back to our sales team from Ronan McKenna that's here with us today. So we're innovating that product type, and the first release of that will be tomorrow and back in to us to see what that looks like with our construction team and with our viability team. But it means we're pushing that 55%, 45% split. We're pushing that now to 75%, 25%. So 75% of the suburban product in a suburban location and 25% of an urban product in a suburban location. And that's a real game changer. In terms of our design teams, our design teams have been challenged now, not only in terms of designing and delivering units according to regulatory requirements but designing within a set of commercial parameters. Designing to make sure that delivery of that unit makes an exit less than 3.5x income in that area. Design has gone beyond just designing houses for the sake of regulatory compliance. Designing on standardization and making sure that those designs work for our construction team. Moving on to standardization. Standardization is a potentially dangerous word in terms of the perception of it. Is the perception of standardization, does that mean there's going to be standardized housing developments produced by Glenveagh? Not at all. We bring standardization to component level. We bring standardization to standard specs. We bring standardization to standard housing layouts, but we do not have standardized housing developments. They are contextually different in every case and sympathetic to the environment that they are in. To kind of phrase from Stephen, Volkswagen used a similar chassis for their Golf, for their Jetta, for their Tiguan but they're different cars. Similar approach with ourselves. We've standardized housing floor plans, standardized specs, standardized components, but we have different outputs. While we believe that our efficiencies in standardization, there's no doubt it's also, I'll comment upon, our manufacturing partners to drive efficiencies in their business. And then we're maximizing efficiencies. Efficiencies under standardization of layout and housing units will get you so far. The manufacturing business by adopting manufacturing approaches and just-in-time inventory management, single-minute exchange in die, double drive the efficiencies even further. And I'm going to speak to you about that shortly. So the challenge on standardization, develop our standardized suite of components, make sure we're compliant with the regulatory requirements and the planning authorities, make sure the planners and the planning authority list subjective opinions, accept that we're contextually different on our housing schemes and making sure our best case requirements on business in terms of margin or return on capital employed are maximized. Standardization cannot happen and does not happen with the planning and design team alone, that happens with the input of construction, with sales, with our viability teams, and with our land management teams. And just to mention, we currently have a number of standardized units. We're using them in each and every day in our business. And as I said, tomorrow, we have a new release of a new product into our own company that we feel is going to be a game changer in terms of working our ground harder. I want to speak to you about manufacturing and our operations culture. And I'm going to speak about it in terms of decision making, integrating the supply chain and finally, costs. In terms of decision making, we're using a process called sales and operations planning now in Glenveagh. And sales and operations planning relies around a demand forecast, a robust set of figures that comes right from demand forecasting back to our construction supply chain, back to our manufacturing partners and into their suppliers. That's one set of data -- one single set of data and is derived from demand forecasting by our sales team on all our various sites. So to put it simply, if we have 20 sites open, and we have 5 standard house types, how many of house type A, B, C, D and E are going on that site and when are they going on that site through the construction program? That's pulled back into a manufacturing business, the manufacturing business, which we have the supply agreement with, knows how many of house type A, B, C, D and E are going on each one of our 20 sites and when they're going there. Let's pulled further back to their raw materials suppliers, i.e., the timber frame suppliers. They know how much material that manufacturing business needs to push through that supply chain. That supply chain integration is something we're pioneering in Glenveagh. And we're finding that that's gaining significant efficiencies in the operation of our business. So it's an integrated business model. That's bullish and even selfish on accuracy. It drives efficiency, it drives on continuous improvement and it's relentless on productivity. The strength of integrating the supply chain to our current supply agreements are that we can give demand accuracy. We can give certainty on demand. We know, given the housing difficulties in Ireland at the moment, once we're lower than the 3.5x income in that area, there's a demand. The question is the demand for a what? Is it a demand for the product that the planning system is forcing developers to produce? Or is it the product that innovation while remaining within the framework of the planning system that we produce that the consumer wants? And it's the latter for us. In terms of sales and orations planning, and I'll leave the slide with this, sales and operations planning as opposed to planning, operations and sales. Planning for the sake of planning, forgetting our planning permission to the regulatory process. Moving on to operations, we'll have a look at that planning and decide that layout doesn't work from a construction perspective, that layout doesn't work from a return on capital employed maximizing perspective, goes back into the design team again for replanning. Sales. Take a look at it. And sales, say that 3-bed, 4-bed unit in the corner won't sell, we need to change that. Traditional approach to construction. That's planning operations to sales. We've moved sales and operations planning, one set of numbers, demand forecasting. So why offsite construction? Because it's not construction, it's manufacturing. So why manufacturing? While manufacturing, not because of the shortage in labor, manufacturing because of the attributes that's inherent in manufacturing; productivity, quality, tolerances, fit and finish, design, health and safety, removed from inclement weather conditions, removed from the inherent difficulties on site of dust and contamination. Once we move through that process, then offsite manufacturing or offsite construction, if you want to call it, becomes cost-effective, becomes efficient. On all of those attributes, you can define, measure, analyze, improve and control on every single one of those attributes and that is taking a manufacturing approach to offsite construction. That manufacturing approach is optimized year-on-year all the time. And working with our manufacturing partners have diminished to our supply agreements, I'll give you an insight at the end in terms of the optimization we're doing on that. And for all the consideration and talk about offsite manufacturing, it does exist today and exist in timber frame manufacturing, it exist in component design. I remember the days when windows came to site and a pane was put in on site and putty put on top of it. Now triple-glazed AluClad windows are coming as 1 unit to site. Our timber frames are coming to site as a manufactured product. So to sum me up, exploring ways to build closer links with our supply chain. We believe if we continue to innovate, continue to work closely with our supply chain partners, continue to optimize our design, continue to force that innovation on the product within the realms of the regulatory bodies, do -- we will the gain efficiencies on program, cost, quality, health and safety and certainty will be guaranteed. A couple of examples [indiscernible]. So Keenan Timber Frame, who you've seen in a video already, they have a supply agreement with us. And in that supply agreement, where -- we share plenty of information. So we have a good idea on how their process operates, okay? On that supply agreement, we've had our procurement director get involved in negotiating some of the material prices. Richie Caldwell is here today. We've negotiated a 35% discount on insulation used in Keenan Timber Frame that's passed directly on to our bottom line. Why? Because we can give certainty in demand and volume across our supply chain. Another example with Keenan Timber Frame, their timber comes from -- came from Scandinavia at a point in time. We went up, we looked at their manufacturing line, we made some improvements in terms of efficiency of product flow. But we also suggested, given that we are Irish and there's plenty of timber in Ireland timber, could we use some Irish timber? We visited an Irish supplier, and it now turns out that Keenan Timber Frame are using timber from an Irish supplier for the stud walls. In terms of that supplier of timber of raw material, Keenan Timber Frame, the manufacturer was amazed by the system control and data acquisition systems they have placed in their product line, 100% monitoring of moisture control, 100% monitoring on knot content on timber. So the quality is exceptional. And the impact is profound, and that the lead time in our timber now is a matter of hours, 3 hours down the road as opposed to weeks from Scandinavia. The payment terms remain extended. So in all fact -- the fact of the matter is that timber is into a manufacturing process on-site and being constructed before it's been paid for. So there's a couple of examples on our supply chain. I will speak to you about the quarry, had to choose quarry. Enough material being removed from site is something that is contentious at the moment in terms of Irish regulations to make sure there's no contamination leaving your site. So once soil inert material is tested and it's proved to be okay, there are facilities that will take that soil off you. And that's a cost that we see rising. Michael is going to speak to this shortly. We've bought a disused quarry. We're using that to take our inert material. So now we've hedged our costs on the exit side of that. If there is surplus capacity in that quarry in the future, we can open it up to third parties and get a return on that. I've shown you integration from suppliers to our suppliers to an exit on inert material. And in the near future, we'll be making a significant announcement in terms of further integration and further innovation right across our supply chain. So I'm going to leave you on a quotation and the quotation is disputed whether it's Darwin or Megginson, but it speaks about, "It's not the strongest or the most intelligent that survives, it's those who are able to change." And Stephen opened his presentation earlier today about changing and the structural changes and reforms that are across the construction industry. I've spoken about we've changed under designs. I've spoken about with new standard designs coming tomorrow. I've spoken about our sales and operations planning approach to our manufacturing business. I've spoken about our design teams, our design team is challenged now from a procurement -- from a commercial perspective, not only design. So finally, each day in our business, we innovate, we integrate, we consolidate and we win. So I'm now going to hand you over to Tony. Tony is going to speak to us about construction on site and the good relationships we have with some contractors.

Thank you, Peter. I'm Tony McLoughlin and I'm Head of Suburban Delivery at Glenveagh. Today, I'd like to update you on the progress we've made on developing our supply chain and how we're implementing technology so that we can continue to scale our business. As Stephen has mentioned earlier, our construction delivery is split into 2 components: suburban and urban. Why? Well, we recognize that the delivery of these 2 elements, as Stephen has touched on, require completely different scale sets and competencies. We know what our teams can do. We also know where we can make improvements to optimize and specialize within our business. We firmly believe in hiring the right people to do the right job and empowering them to get it done. Going forward, our suburban developments will center around traditional greenfield, low-rise residential houses and apartments. We have and continue to complete high-quality schemes of this nature, such as [indiscernible] Taylor Hill, which you've seen earlier in the videos. Our urban developments will focus on brownfield sites, providing high-rise residential schemes. We've recently completed examples of these in Marina Village Greystones and Herbert Hill in Dundrum. My colleague, Fergus, will go into further detail on these and a few more a little later. Key to our continued success for delivery is not only the 330 employees we have within the business but also our supply chain of 2,000 people on an average day. The fallout from the recession saw much of the industry -- the industry supply chain overexposed financially. This, along with restricted credit in the market, meant that there were numerous stop-start developments leading to reluctance for subcontractors to scale and grow their business. At Glenveagh, we've taken a partnership approach with our supply chain. We provide them with clear roadmap of annual targets across multi-phase projects. We can ensure consistent and coordinated work and give them the confidence to scale their business with us. Since IPO, we put significant effort into growing our supply chain. We've worked hard with our subcontractors, and now they understand and believe in the Glenveagh way. What is the Glenveagh way? That's our standard expectations. It's our processes. It's our procedures that we require across all of our sites. It includes site set up, health and safety, environmental requirements, procurement processes, our quality expectations, amongst others. With this in mind, I'd now like to show you a short video how our partners view working with Glenveagh. [Presentation]

As you can see in the video, we work collaboratively with our subcontractors and they have a growing desire to work with us. One of the key areas that we focus on to enable them to scale is credit. To reduce the effect of restricted credit within the system, we've taken the decision to centrally procure all or majority of our high-end value items that we use each and every day. Items such as heat pumps, sanitary wear, insulation and plasterboard are free issued to our subcontractors so as to reduce their credit requirements. As a result of this and other initiatives, we've been able to maintain and indeed at times reduce the cost of subcontractor packages. In particular, our mechanical, our timber frame and our dry lining, some of which you've heard about from Peter earlier on. Back to the video. Knowing that Glenveagh has the ability to pay and pay on time, reduces the need for the subcontractors to avail a discount invoicing. This, in turn, leads to more competitive pricing for us. Subcontractors are now targeting Glenveagh for business, and they want to work with us. In the last 15 months alone, we've been able to add 191 approved partners to our panel. Put simply, this means that despite growing to circa 20 sites, we now have more people to pick from. To become an approved partner with Glenveagh, we assess a range of competencies including health and safety, resources, quality and previous performance, amongst others. During the tender process, we consider these factors, along with price, to ensure that not only do we get the best value, also desired performance. This process also ensures we don't have reliance on any single contractor. There are many obvious advantages of maintaining a substantial supplier base, healthy competition, minimizing cost inflation, and it facilitates our continued scale and our ability to open multiple sites together at the same time. Our ambition and clear roadmap to scale gives us substantial opportunities for strategic partnerships and long-term procurement options. Our ability to both buy and enter into long-term agreements has multiple benefits. As Peter referred to earlier, by streamlining our specification, we now realize economies of scale. We can opt for higher quality premium products at very competitive prices, ultimately providing a better home for our clients. We can provide and maintain -- we can fight maintenance plans and meaningful warranties for our customers, giving them further peace of mind with the sale of our homes. We can control material costs for the duration of projects and minimize inflation risk. Ultimately, we can maintain and manage a sustainable supply chain as we continue to grow. We have and continue to see the positive effect of this strategy, particularly in packages, such as kitchens, appliances and heat pumps. At Glenveagh, we have a centralized procurement approach, headed up by Richard Caldwell. As a result of his hard work and the work of this team, we get the benefit of a portfolio-focused strategy and avoid a solo approach from any particular site. We plan just-in-time deliveries to manage logistics and help minimize our carbon footprint. Where possible, we work with local suppliers, so that we can provide local employment. For our suppliers, the knowledge at Glenveagh has the ability to pay and pay on time, reduces their requirement for credit insurance, and this encourages more competitive pricing also. Along with a sustainable supply chain, we're utilizing technology to enable continued growth and actively manage costs, quality, health and safety and program. Our aim is for a more connected construction, as I hope you'll see in the following video. [Presentation]

As I mentioned in the video, we currently have our drone surveys integrating with our modeling software to ensure that we incorporate the best value solution from the outside of a project. This one activity is having a profound effect on how we manage and plan our networks, the single largest risk item when it comes to suburban delivery. We've embraced technology that helps us shape how we operate and grow our business, helps us communicate, manage and monitor our sites. We can now coordinate our portfolio and more accurately plan for the future. This, alongside a solid, sustainable supply chain, position us well for the ambitious but achievable growth and expansion that Stephen has outlined earlier. I'd like to thank you for your time. And now I'll hand you over to Fergus Boyle who'll talk to you about our delivery capabilities for our urban developments.

Thank you, ladies and gentlemen. My name is Fergus Boyle, I'm Construction Director for the urban developments with Glenveagh. I have 25 years? experience in large-scale apartment construction, both in London and in Dublin. The following will give you some sense of the size, complexity of some of the projects I've been involved in. To start off with, Wapping Lane. Here, I was Construction Director with Ballymore. It was the first residential project after the recession. We built 124 apartments over 2 buildings with a basement parking. This opened the gateway to Embassy Gardens Next door to the new American Embassy in Nine Elms. This project was funded by NAMA. Embassy Gardens was the single biggest construction site in London at its time. And at its peak, we had 11 tower cranes, 1,000 operatives, plus a management staff of 78 people. We hand built 3 million bricks to complete the commercial, retail, restaurant and leisure facilities, along with a retro supermarket and a large underground car park. Lincoln Square, which is only 3 streets away from here, was an island site in Central London, where we delivered a very high-spec apartment development next door to the law courts and the universities. That was for Sean Mulryan. So here -- this is -- here is what I'm doing now for Stephen Garvey. I'm assembling on -- a strong team in Glenveagh that is delivering at the moment. Here are some examples of what we're delivering at the present. Herbert Hill in Dundrum. This 90-unit apartment scheme was completed in quarter 3 last year, including full fit out with furniture and off-white goods. The scheme was sold to Real I.S. investments and handed over following a snagging process, which was completed over a short period of 2 weeks, showing the quality of the product that we had achieved on that job. Marina Village Greystones. This 210-unit development constructed on public lands, and we are engaged on working closely with the local authority on this project. The first block of this course of development was completed quarter 4, 2019. And the balance of the project is due for completion at the end of this year. This project also has a large public park and coastal walkway. Adelaide Road in Bray. This 71-unit development commenced in quarter 3, 2019. This structure is now up to second floor, all packages and subcontractors are procured, and we're expected to complete this project in quarter 1, 2021. Coming up now here are some of our new projects, which we're just starting. Eden in Cork. We are breaking ground on this 271-unit apartment complex in March. The plan is to build this -- to build the underground carpark up to podium level in traditional concrete construction. Thereafter, we are considering the 2D building of the apartments themselves, which Peter alluded to earlier on in his presentation. Dublin Docklands. This multi-unit scheme with 2 hotels, office block and 1,150 apartments. This is very similar in scale and size to Embassy Gardens, which we referred to earlier on in my presentation. Enabling -- enabling work has commenced on this project and full construction will ramp up in Q2 this year. In addition to Glenveagh's procurement team and existing subcontractor base, it is my intention to bring expertise in from the U.K. We are currently negotiating with formwork, bricklaying and dry lining contractors, all of whom I've worked with previously and who have a wealth of experience and proven track record in their respective fields and are enthusiastic about the prospect of expanding their operations into Ireland. Castleknock in Dublin. This city center site is located near the Phoenix Park, the largest enclosed public park in any city in Europe. This 190-unit scheme will start in 2021. And we've already started looking at the buildability of this project. Cork Docklands. This is the first development in the Cork Docklands. As you enter the city, this Glenveagh development will be the key landmark on the horizon. This high-rise gateway includes offices, commercial buildings and a hotel. 1,100 apartments will form part of this development. As I said, I am building my team and delivering of these projects outlined above require a strong and committed senior management team. Brendan Corcoran has an established track record on delivering projects with Glenveagh and has recently been appointed as Senior Contract Manager on the Bray and Greystone's projects. Joining me from the U.K. are Kevin Delaney and Brendan Coen. Kevin, who was a Senior Contract Manager -- sorry, Kevin, who will be the Senior Contract Manager on our Docklands project, has worked alongside me in Ballymore on Embassy Gardens project. Brendan Coen also has considerable management experience in London apartments, has just completed 250 City Road with the Berkeley Group. Brendan will head up our Cork projects. My senior management team with a wealth of experience and track record at home and abroad gives Glenveagh a sizable advantage in establishing reputation as a key player in the apartment building market in Ireland. The apartment market is a great opportunity for Glenveagh, and I am very excited to lead it for Stephen. I'd now like to introduce you to our CFO, Michael Rice.

Good afternoon, everyone. Mine is the final presentation of the day, and I'll use it to bring together some of what the team have said, but also show you the financial impact of what they've said. Stephen has introduced his strategy for the business and the increased delivery targets. Conor has given us some economic data that has created the market to allow us to increase our delivery targets. Wesley has emphasized the strong and well-located landbank that we currently have, but also the very attractive land markets that we see in front of us. Peter, Tony and Fergus gave you an overview of the planning, design and construction departments and all the ongoing initiatives that we're introducing to benefit the business in the medium to long term. As I said, I'm going to spend about the next 20 minutes or so giving more detail on the financial impacts and, in particular, the impact on the P&L, balance sheet and our net debt position and ultimately, what this means for return on capital employed. Just to act as a reminder, Stephen has already outlined our significantly increased output targets with 2,650 units between 2022 and 2024, culminating with an output target of 3,000 units in 2024. By that stage, we will deliver nearly 12,000 units, which is effectively our current landbank. In line with our new business segments, the increased output targets have been split across suburban and urban. Approximately 3,000 units or 30% of our units will come from urban apartment schemes in the next 5 years. And given this significance, it's appropriate that a dedicated segment has been established, particularly when each of the segments now have quite an independent financial criteria. Let's start with the suburban segment given that this has been our main focus since IPO. Our portfolio reflects the more affordable and deeper segment of the market due to average wage rates and our Central Bank's macro potential rules. Our decision to focus on this segment has been supported by the market data and justified through our growth and surpassing our delivery targets in both full years of operations. As you can see on the right-hand side, 90% of our current suburban landbank is focused on the sub-325,000 markets. Given the spread across the various price points, it makes sense that our average ASP is EUR 270,000 on a spot basis. It is important to give greater context to this figure as it purely relates to the suburban segment. The urban portfolio, which will carry a much higher ASP, given location and product type, and they need to be viewed together when assessing the overall revenue profile in the coming years. Our urban segment will have a very different revenue profile to that in the suburban segment, and our target is to forward fund our urban developments. Based on what we've seen in the market to date and some initial discussions with interested parties on our urban portfolio, we feel that this is an appropriate target. In very simple terms, a forward fund model will allow us to sell the land post planning to our forward fund partner and recoup our land costs. Our partner will then finance the working capital requirements of the construction phase, giving us a very capitalized model from post planning to completion of the project. The land revenue and any potential profits are recognized once the land transfers to the forward fund partner and then revenue and profits are recognized throughout the construction phase based on stage of completion. This means that revenue, profits and cash will be received in advance of any completed units and delivers these returns a number of years earlier than some analysts have in their models. As you can see, the emergence of the urban model will create a divergence from the current ASP multiplied by units completed formula. It is important in the context of the right-hand side, but more particularly, the delivery of the urban elements of our increased delivery targets. Even though the majority of units will be completed in '22, '23 and '24, the revenue, profits and cash will be recognized as soon as the land is sold and construction begins. The revenue profile of these projects will be determined based on rental prices and yields in these urban locations. And the timing of this revenue will be spread across the land disposal and construction timelines. We acknowledge that this is a new way of thinking of Glenveagh revenue. And therefore, further guidance will be required from us and we'll provide this once more certainty on individual projects is available. This revenue and funding model will play a significant role in the enhanced capital structure of the business, particularly when you consider the number of urban units that we have outlined in our plan today. We have seen solid gross margin progression in our first full 2 years of operations, with 17% gross margin in 2018 and 18% gross margin in 2019. Our current spot gross margin across our current -- our entire portfolio is 18% with no HPI and no CPI. We have strong visibility on continued margin progression over the coming years, but probably not at the original pace that was set out as IPO, 20% in 2020. It's worth noting, though, that this target was set in an environment of 5% to 7% HPI in the new markets -- in the new homes market with double-digit growth in the overall market. Is 20% gross margin still achievable? Absolutely, but it will just take us a little bit longer than it was originally envisaged. We are confident of this continued margin progression due to 3 main factors. The attractive landbank that we can -- the attractive lands that we can purchase in these locations, our ability to achieve better HPI than is in the market, and our ability to better control CPI. The first of the main factors and you can see it on the right-hand side and as Wesley outlined, is that the land market is very favorable and allows us to continually challenge our acquisition hurdles. For the first 14 months post-IPO, we acquired the majority of our current land with a minimum spot gross margin of 17%. But in reality, the average acquisition was around 18%. From 2019 onwards, we pushed the hurdle to 20%, and we've been acquiring land at this rate since, and we envisage that we can continue to buy our land at this minimum spot gross margin hurdle into the future. We will see a natural margin progression by simply introducing this newly acquired land into our active construction portfolio. The second main factor for continued margin progression is HPI and the initiatives that we're introducing to maintain and improve HPI. We saw a 2.75% HPI across our portfolio between our autumn selling season 2019 and our autumn selling season 2018. Given current wage inflation and our continued focus on the more affordable end of the market, we would expect similar trends to continue in the future, even with the current restrictive macro prudential rules. As the business matures, we have started to look at HPI from different perspectives. And one of the new metrics that we're looking at is HPI per square foot. Peter has touched on how our design improvements and maximizing the utilization of our lands can influence this. This slide provides an example from an existing housing scheme and how we are able to influence the densities and efficiencies and create greater revenue for that particular phase. We achieved 16 additional units. We had a 20% gain on the units per hector. We were able to reduce the total square footage by 6% without impacting the attractiveness or the salability of the home. And most importantly, for me, we had a 12% gain in terms of the revenue in that phase. The third and final element of our gross margin progression is our ability to control CPI and the initiatives that can influence this. As we've hopefully demonstrated today, we continue to be innovative in how we look at our planning, design and construction methodologies. And our investment to date in these areas will see future margin progression. The full benefits from our planning, design improvements will be seen in 2021 and 2022 because the initiatives that Peter and his team are working on now, we'll only see the true benefit from those when they're active construction sites in those years. We have already started to see the benefits from our timber frame supply agreements through lower prices and guaranteed supply. You heard from John Keenan of KTF, one of our key timber frame suppliers. And I think the strength of that partnership is already quite visible. Later this year, we will open our disused quarry facility, which we purchased in 2018, to take inert material from our construction sites. The disposal of inert material has seen significant price increases in the last 2 years, and this facility allows us to better control those costs. You've seen the benefits that technology can bring to the construction department and the video with drone footage, our TAG time and attendance system and our Aconex system being to the fore. But the rollout of technology is not simply focused on the construction department. We went live on a new procurement, commercial and financial reporting system in Q4 2019, with further technology being rolled out in 2020 in our sales and HR departments. The true benefit from this investment in technology will only really be seen when we're at scale and delivering 3,000 units per year. To give you a sense of where CPI is at the moment, overall, we have seen 2% to 2.5% CPI from our current tendering with inflation really coming on the labor side. Materials have been relatively flat for the last 12 months due to the good work that our procurement department, but given the low unemployment numbers, we have seen some increases in labor, both direct and from subcontractors. Recently, we have seen new wage rates introduced in our sector, with a further 3% increase to come in October of this year. These increases are already in our forecast, but they point towards the greater need for off-site construction and to try and reduce the errors on site and our reliance on certain trades. Our investments in the business is not only in technology, but possibly, more importantly, it's in our people as well. We continue to invest in the business with the medium- to long-term goals in mind. And this is applicable to our investment in our skills team that we have. We have built a business of over 330 people, but most importantly, 220 of those are on our sites with related cost setting and gross margin. A further 80 people whose call sit an overhead are construction focused and include health and safety, planning and design, quantity surveyors and our central procurement department. Overall, 90% of our employees are construction focused regardless of where their call sit. The recruitment of this skill team has allowed us to ramp up at the current rate and gives us the confidence to continue to grow on this growth trajectory. Glenveagh has already established itself as a very attractive employer, not only in the Irish construction sector but also in the overall employment market. We made a conscious decision early post-IPO that to grow the business quickly and effectively we needed to build the team and the systems early. We knew that if we didn't put the infrastructure and systems in place when we were operating on 15 to 20 sites, we didn't have any chance to implement these when we were on 40-plus sites. We have invested in the people in all 3 segments, with particular focus on the partnerships model, which isn't revenue-generating yet. As you've seen from Peter, we have invested heavily in the planning, design and manufacturing capabilities of the group. We have established a best-in-class health and safety department, and we continue to invest in that. We continue to invest in our new site openings to facilitate the ramp-up and the increased delivery targets that we set out today. We have invested in our sales team to build ourselves as a trusted brand in the market that is customer-focused now and will continue to be into the future. We've invested in a strong PLC and corporate team to ensure strong corporate governance, which John has already mentioned, and reporting frameworks during the significant ramp-up stage. With this investment already in place, our ongoing recruitment and spend is now site specific, and therefore, our overhead as a percentage of revenue will increase significantly in the coming years with a target of less than 4.5% over the medium term. We'll now spend a couple of slides working through the balance sheet and how we plan to enhance the capital profile of the business. As Wesley has demonstrated, we now have a strong landbank focused on the starter home market. It's this strong landbank that has given us a very solid base to work from. But we need to continue to invest in our landbank to ensure that we have a balanced landbank in terms of geographies, site size and product mix for the medium to long term. It is important to us that even with this continued investment in land, the refinement and evolution of our landbank will generate significant cash with over EUR 100 million coming back to the business by the end of 2021. Notably, our assumptions on the evolution of our landbank does not include any investment in strategic, structured or partnership land deals. As Wesley has outlined, these are key to the business strategy going forward and our reduced capital requirements will have a material impact on the capital profile of our business. The majority of our multiyear sites delivering units for the next 4 to 5 years are already in place with the initial setup already done. The sites to acquire over the coming years will be focused towards smaller incremental sites. And in fairness, you've seen us do this over the last 6 to 9 months. Our continued investment ensures that we have the correct and balanced landbank across geographies, site size and product mix, but it's also evidenced through the new sites on our path to opening 41 by 2024. Continuing to acquire sites also ensures that we have the appropriate landbank for our unit deliveries post 2024. And this makes sense when you consider that we'll have delivered 12,000 units at that point, which is effectively our current landbank. Our continued ramp-up to 41 sites is in the context of us having already opened 20 sites, an average of 10 a year. This proven track record, along with having the skills management team and the infrastructure already in place, gives us that confidence that we can certainly achieve our goals that we've set out. Our goal is to become a more efficient user of capital is not -- and this is not limited to our land capital per unit, as Stephen has shown you, but also our work in progress per unit. We will reduce our WIP per unit over the coming years through a combination of better construction efficiency in the suburban segment, but also through the introduction of our forward fund model in our urban segment. The continued ramp-up in the business and the tripling of construction output will need a significant investment in WIP over the coming years with incremental investments to be EUR 240 million in the next 3 years. This level of investment does not continue in the longer term and levels off in 2023 and 2024, as you can see. This flatter profile of WIP investment is key to the creation of excess cash in the business. My final slide acts as a summary of the financial initiatives that we are implementing and what that ultimately means for shareholder returns. Our priorities are and remain to be increasing our unit output to give greater revenue and earlier revenue in the case of our urban segment; improving our operating margin through scale and continued efficiencies; reducing our euro investment in land, which we have seen already, gives over EUR 100 million back to the business in the next 2 years; investing in our construction activity through web funding given the very strong visibility and attractive returns we see from this investment; forward funding our urban portfolio, which reduces our WIP requirements; and ultimately, continuing to enhance our return on capital for the business. These priorities need to be considered in the context of our funding model and our appetite for debt. Our preference, given our sector and our relative infancy as a business, is to limit the financial risk that we put on our business. And therefore, we want to maintain a prudent leverage policy, particularly in the near term. Capital returns to shareholders is a very important part of our strategy. But given the very favorable market dynamics, our priority remains to grow the business, but not at any cost. As you can see, cash will be available to the business from each of the potential forward fund deals and the leveling off of our WIP investment, but we feel it is just too early to give a specific date on when we'll return cash to shareholders. But I can assure you once we have excess cash available, we will return it to shareholders. It is important for us that any capital returns program is timely, meaningful and sustainable. They're fancy words, but what do they actually mean. We don't want a significant time lag between announcing and returning cash to shareholders. The quantum should be material and meaningful and have a significant impact with shareholders. Any capital returns policy and program should be long term in nature with strong visibility on future and subsequent returns. Our goal remains to create a long-term and capital-efficient business that will be the leading homebuilder in Ireland. We believe that focusing on these priorities, having the discipline to maintain an appropriate funding model and demonstrating a sustainable capital returns program will give us that business. Thank you very much. We'll go to a Q&A panel now, but if there is any specific questions in relation to my slides, I'm happy to take them now before we go into the panel session.

Just on Slide 68, with the percentage completion for urban projects. So I think this represents the accounting revenue, but how does -- what is the cash -- you made reference to receiving cash, but aside from the land revenue, which I assume is cash, how does the cash receipt work?

Yes, so the way we've looked at it, and obviously, this is from initial discussions we've had, we sell the land upfront. Title will pass to the forward fund partner and as you said, cash and revenue will be recognized on a clean land sale. We'll then effectively enter into a development agreement with the forward fund partner. We'll construct on their behalf. There'll be timely, probably monthly independent surveys done on our work. And effectively, we will get paid for that continued work. So the cash, revenue and profits are effectively recognized throughout the construction phase. So going back to one of my comments, it's probably incumbent on us to look at it on a project-by-project basis and give you guys further guidance when we're very close to either signing or starting a construction phase to say to you, it's a 36-month build, therefore, you're going to recognize your revenue and profits realistically evenly over that 36 months. So reflecting the completed units in the dark blue on the right-hand side, you're seeing the divergence between when the completed units happen and actually, the revenue and profit. So revenue and profits will come in advance of completed units.

But just so I'm clear, revenue and profits, I get that, but what about the cash?

Yes, we'll get paid for the work throughout the construction phase.

Including profits?

Yes.

Okay. Because typically in percentage completion, so the actual cash is pushed out further?

No, we'll get paid for the work we do. We'll be like a main contractor. Once it's certified, we'll get paid for it.

Yes, on that point as well, Michael. Just to what extent are -- that is one of those deals on the forward funding, 2 separate transactions where maybe look at it as the land transaction separately and then the contracting work on top of that, I suppose. What I'm trying to get at is, could there potentially be very different margins on either of those separate transactions? Or are you going to see more of a blend across a whole site?

No, I think you'll see a blend and that's probably -- it's up to us in terms of negotiation. Obviously, I'm stating the obvious, but the land and the end building will go to the same party. So it'll all form part of the negotiation. So it's probably incumbent on us to make sure that the overall margin that we see on the development is reflective in both the land sale and the development sale, I suppose. It's not in our interest to create any lumpiness in terms of extreme examples, but a 25% margin on the land and a 10% margin on the construction phase. So again, going back to the point in terms of project by project, it will require us to communicate to the overall market in terms of what individual deals look like, but I don't think you're going to see -- sorry, you're not going to see any large difference between the land and the construction element.

Colm Lauder, Goodbody. Just a follow-on question to my 2 colleagues there thinking about sort of the timeline. The cash flow is from both the forward fund and the forward purchase agreements and then overlaying that with the split across the portfolio. So we've looked at, say, the last 12 months, you've seen schemes, both in suburban apartment design, which are more focused, perhaps, first-time buyers, not first-time buyers, but owner-occupiers, where they were designed like Herbert Hill. And then the more individual housing units with Semple Woods and Taylor Hill, which were again designed from a perspective of an owner-occupier entering up with an institution investor. How much optionality do you build into those sort of conversations when you're thinking about a design stage? So when we look at more on the suburban apartment-style schemes and we look at the split, maybe this is one for Peter later on in terms of design split and I noticed you have comments about the standardization of design, but how early does the conversation happen when you're thinking? With that scheme, we prefer to focus more on a PRS side, therefore, we'd look at the design route there? Or do you want to keep those options open in case there is perhaps a softening in PRS?

Yes. And I think you've touched on the point earlier in the likes of what we have done to date on Herbert Hill, that was originally designed as a build-to-sale development. PRS moves into -- moved significantly during the construction phase and this ultimately became a PRS deal. I think with the creation of the urban segment -- and we have moved certain assets from what would have been the old homes model or the old home sector into the urban. The aim for the urban segment is to forward fund and bring in that funding partner on all of that. So I think it's certainly part of our thought process as we're looking at planning to think -- and let's be honest, we know a lot of what the PRS buyers are looking for. So part of the planning discussion and the design is around what the PRS guys are looking for. So I suppose we now have the advantage of knowing that the PRS market is there in terms of planning. It's probably not something we had in the past because the PRS market hadn't progressed. So probably to answer to your point, your question more directly, we can start making those decisions preplanning in terms of what a PRS buyer is going to want.

Yes, I just wanted to follow up on, again, on this particular point. If I was one of the guys that was interested in forward funding this on -- with you. Is the reason why I'd been doing that just for certainty of supply? In other words, the market is so tighter in Dublin, I assume, for most of these -- and -- is so tight that, that is why I'd be doing it to ensure I get certainty of delivery.

Yes. Yes, to answer your question, it is. Conor and Stephen both touched on it, the number of PRS buyers that are coming into the Dublin market, significantly outstrips the supply, and more importantly, the number of people or the number of companies that can actually deliver that product. So absolutely, it's working to our advantage that they're so keen to get into the Dublin market that they're willing to do these forward fund deals. We've seen the compression of yields over the last 12 to 18 months. That, again, demonstrates the level of interest that there is in the PRS Dublin market. So as Conor said, it's certainly an asset for us and a delivery platform that's here to stay. And we like to think we've demonstrated our adaptability to that change in the market by creating this urban segment, which will be solely focused on that institutional buyer.

In terms of follow-up. In terms of the 40 sites you might be working on in, I think, it's 2023, I think it was. How many sites will be operating on this kind of model? Do you expect?

So I suppose, over that 5-year delivery period, there's 3,000 units or 30% of the deliveries in that urban model. Our aim, as we stand here today, is to try and forward fund all of that urban segment. So that 30%, we will try and forward fund. So it is -- it can be a significant part of the business. And going back to one of my points in terms of enhancing that capital return, it's going to play a significant part of that. But as I said, it's certainly our aim to try and forward fund as much of that urban development or urban segment as possible.

Just one point we would make there because it's not just about the capital and getting the capital to work that's important for the institutional investors, it's also the quality and the capability of being able to deliver the product. So a lot of institutions want to get their money working fast. But the problem for them is who did they team up with. You're living in a market that has no competition. So the key for them is actually, can I partner with someone that can I actually deliver exactly what I want. And just an experience to talk about Herbert Hill and the one thing that stuck out to about this was, yes, location was critical, but also the builds, the program, the collateral warranties is it -- blue-chip backing kind of -- it all came to the fore. What -- we could offer what are those can't, guarantees from the PLC. If you're a small developer with -- and I'll use this perfect example. Let's say you're building out of an SPV and the balance sheet of that SPV is EUR 300. What have you to chase? If you're an institutional investor, how do you go to your investment committee and make the case? I'm partnering up with the right people to deliver the right product, but I've only got EUR 300 to chase it. That's an example of the difference in what we're offering versus what the rest of the market can offer. And there's very few that can do that. Sorry, I just had a follow-up because I just wanted to get started over there and...

He just started over there and...

Yes.

Can I maybe just clarify? This revenue example here is for forward funding. When we're talking an institutional buyer, though, on the suburban, are you talking about that you think you can get forward funding on the suburban? Or are you talking that you're going to do forward sales because they're 2 very different profiles in terms of the, I think, cash flow?

I think on the suburban side, and you've seen it today with the IRES deal, they're more akin to a forward purchase, particularly in the scale and the size that institutions are buying. We did 118 units with IRES. We're building that phase anyway. So in terms of working capital, it's not that intensive. So we're happy to take on the suburban element. I think if you were to do a wider deal in terms of the suburban segment in terms of a 300, 400, 500 unit deal, I think that's when you start looking at phase payments. But at the moment, the institutions are looking at that 100 to 150, and that's certainly something that's just on a forward purchase basis. So it doesn't fit into that model.

I have a few more questions. So they're actually directed to Peter and Fergus, should I wait or should I...

They'll all be up on stage in 2 minutes.

Your voice is loud enough, Jack. You don't need the microphone.

I'll speak loudly. Just on Slide 73, I think it was. The phrase in the top right, the increased investment, is that a forward-looking or backward-looking statement?

I suppose it's -- if you look at what we've created today, it's really a backward-looking statement. We've invested in a lot of the infrastructure and the technology already. We've probably talked -- we've talked -- probably over the last 12 to 18 months, we talked a lot about our overhead and realistic probably defending our overhead. And I think what today hopefully demonstrates is where we've been spending that money. So we talk about reducing our overhead as a percentage of revenue because we now have that infrastructure. We now have that team in place, probably realistically to hit the delivery targets that we've put out today. The incremental spend in terms of euro is very little year-on-year. And that percentage of revenue comes down significantly. So when you look at our health and safety, our innovative thinking around planning, design, our construction, our technology, our new systems, all of that is with the mindset of 2023, 2024 in mind. And I mentioned earlier that if we didn't do this when we're active on 15 sites, let's be honest, we haven't a hope in hell of doing this when we're on 40 or 45 sites. So we've deliberately invested now to allow us to grow that business. So hopefully, the conversation around the quantum of overhead is going to drop away now when we can clearly show what -- where it's being spent and what it's being spent on.

Sorry, the EUR 240 million of WIP that needs to be funded over the next 3 years. Can all that be done organically? Or would you need equity? Or given your aversion to debt, what -- how do you intend to fund that? I know, forward sales will be a big part of that. And then...

Yes, I wouldn't say we have an aversion to debt. I suppose we just have a -- given the sector, given the history, particularly in Ireland of the sector, we've just come out with a prudent view of the level of debt that we want to carry at any point in time. But we certainly don't need to go back to the markets and raise more equity. That WIP investment will be funded through a combination of our debt facility. So we've a EUR 250 million debt facility with AIB, Barclays and HSBC. So -- and as you point out, some of that is going to be forward funded. So a combination of the cash generated from the business and a sensible use of our debt, we'll finance that investment in WIP.

One more question then in the front.

Todd. I think you're close enough.

Yes, so when I look at the next 5 years, looks like you're roughly budgeting to buy EUR 80 million per year of new land, looks like you're talking about a 20% margin. You're focusing on new land purchase that you've said you're struggling to get past 18%, and we have to wait a bit longer for that. So help us -- help me understand how you can be buying land, targeting a 20% margin, land price has appreciated. And on the land that you own now at much cheaper prices, you're not breaking 18%. So like help us understand that call it, EUR 400 million you're going to spend on land in the next 5 years at a margin you've not been able to achieve on lower-priced land you hold today.

So a fair bit in that. And -- so just to, I suppose, unwind a couple of the things you've said, we certainly don't think we're struggling to get past the 18%. We delivered 17% in our first year. We delivered 18% in our second year. We'd be confident to move that margin forward. It's just not going to be the 20% margin that we had set out at IPO. And I talked about the HPI environment that was there at the time we set out that original hurdle. We're buying land at 20% margin now. So naturally, and sorry to skip through, but I suppose, what we're -- what we have in our portfolio now is a mix of that 17% and 18% plant that we bought there -- they were the spot margins that we bought with that. Granted, there has been some HPI in the media -- in the term -- in the interim. But I think the more of that land -- the more of that 20% land that we bring into our portfolio, our active construction portfolio. And obviously, if we continue to buy land, and you can see from one of the slides that we will continue to buy land at 20% margin, that just naturally has that incremental improvement to margin. So...

I just don't understand how. If the land you own now is at a cheaper price because you bought it 2 or 3 years ago, land now is a more expensive price. How are you getting a 20% margin, if you can't get that now?

It's not more expensive is the point. So we would say the land market has probably -- and Wesley can speak to it better than I can in the Q&A, but the land market has been pretty flat, probably for 12, 18 months. So we're buying land now as well as we were post IPO. So as I said, we're buying land better. We're challenging those hurdles. And part of the reason we can challenge those hurdles is because we have a very stable landbank. We don't need to increase it anymore. So we can be very picky and Wesley touched on the point of the amount of land that we actually look at and turn down. So we can be very picky, and we talked about incremental and smaller sites. That's the type of land we need to buy now. So we can be very selective on when we buy that land and how we buy that land. So having that strong base to work for has allowed us to be a little bit pickier and a little bit choosier, if that's even a word, on the lands that we buy. I suppose the other points and I made it to 2 of our shareholders at the break, we're not looking at this from the perspective of we suddenly stop in 2024. We need to think about where we are in '25, '26, '27 and the land that we need to buy now. There is no point to us stop buying land, deliver 12,000 units over the period and then come to the end of 2024 and realize we've no land to build on in '25, '26, '27. So a portion of what you're seeing here, particularly in '22, '23, 24, is actually looking out into '25, '26, '27. Peter has talked a lot about being able to design as we can. So to be able to put our design into a site, we need the time to design it the way we want and the most efficient way. If we buy land in 2024, that's going to deliver in 2025, chances are it already has planning. It doesn't have the planning that we want. It's not our product type. So you end up building 4-bedroom houses. That isn't our market. So we need to continue to invest in land. But I think the important piece here is, yes, we're continuing to invest in land for the longer term. And our units might stay at 13,000, 14,000, but that euro investment is coming down significantly. Like reducing our landbank -- or reducing our euro investment by EUR 100 million in the next 2 years is a significant reduction. And you can see that reduction continues. And part of that is going back to my original point, part of that is recycling the lands that we had at IPO, recycling that out and replacing us with cheaper land, recycling out sites that were 100,000 a unit in -- at IPO. We're now buying land at 40,000 a unit. So that evolution of the landbank just naturally creates that cash and brings it back in. So yes, we're continuing to invest in land. But we're not net spenders on land, we're bringing cash back into the business at the same time as buying land with a long term in mind.

What HPI assumptions that you're making when you buy land?

No, no HPI assumptions. So we build it and sell it today, so no HPI, no CPI. So when we talk about spot, it's genuinely spot, no HPI, no CPI. So that 20% build doesn't sell it today.

How do we think about this land spend trajectory in the context of the 5-year landbank that you're targeting? Like, is the 5-year target going to be reached in 2023 or 2028? Like how do we think about that?

I suppose, firstly, just to make the point that this is -- and Wesley had this in his category 1, category 2. This is probably the most conservative that we can be in terms of how we continue to buy our land. If we can bring in strategic and structured land, but particularly, if we can bring in partnerships land, that will allow us to actually decrease these numbers or decrease the investment further. So yes, it's -- we're talking about a 4.5- to 5-year landbank now, which is effectively, as I said, 13,000 to 14,000 units. But if the partnerships business came in and we were able to get 400 or 500 units out of that with a clear line of sight because these schemes or these developments are going to be 4, 5, 6 years in land. So that gives you good visibility and good certainty around outputs. So if we had that in the model, you could certainly run the landbank down to circa maybe 10,000, 11,000. So not wanting to avoid your question, I'm just saying a lot of -- there is a lot of evolution in terms of strategic and structured land to happen.

[indiscernible] taken in part, I'm just trying to understand by 2024, is this assuming you can be 5 years by 2024? And then you actually are starting to answer my second question, which was how does the strategic and structured land partnerships then impact that 5-year number, right, at the 3,000 target?

Yes. So this effectively reflects bringing the 3,000 units that you see, this will reflect a 13,000 to 14,000. So that reflects your 5 -- your 4.5- to 5-year landbank. Your second question, and I probably answered it already, but absolutely, if we can be more creative and innovative in how we buy land, there's risk to the upside here.

The election that's coming up, does that change your thinking if there was a Fianna Fáil, Sinn Fein coalition? Even if it's possible?

If it's all right, I might [indiscernible]

[indiscernible] dramatically change your [indiscernible]

It's all right. You might hold the general questions just on the general time, just for the -- we got the wider panel on stage. Is there anything more specifically on Michael's section that anyone wants to raise before we move on?

I'm happy to get into politics, Conor.

No. No. No.

Sorry, just finishing up on margins. Homes living margins, please talk about slightly different margins. And I'm conscious with this greater focus coming through in terms of forward funding. Should we assume those forward funding completions are done at a marginally lower margin than what would be the suburban, I guess if I can phrase it that way?

Not necessarily. I suppose we would have talked previous around the 3 segments and homes at the time having the highest gross margin than the step down in terms of living and then the step down to partnerships again. I think given the PRS demand and what we're seeing, that urban margin is now moving closer to the suburban margin. So I don't think you need to assume that we're talking 300 basis points or anything like that. I think it will be there or thereabouts in terms of the suburban margin.

It might be a follow-up question on that. Just even with the margin, I know indiscernible] start talk about individual deal, but maybe just to go back to the sort of Taylor Hill deal. I know Knight Frank yesterday announced their prices for your next few phases between, well the 270 and 350 for a house. And then, obviously, looking at, say, the IRES deal, which is about 320, 325, including VAT. How are you looking at the pricing spreads between these? Are you able to comment on -- you think these were done at a premium t what you had sort of considered ASPs for those units?

They're not done as a premium, but they're not done as a discount. This effectively -- it's -- the way we would view it as you're getting the same revenue as you would if you were selling to the private buyer. The benefit that we have is it gives us certainty in terms of volume and in terms of numbers. What it also allows us to do, and we would have always talked about the private market will do 50 to 70 units per site per year. What that -- what the PRS market does allow us to do is actually ramp up that site slightly. So the 2 sites that you mentioned, we would have done circa 100 units in each of those sites. We're still maintaining that 50 to 70 on the private market, but that PRS is giving us better return on capital because we can run the site quicker. So it's not really a revenue play, it's a return on capital allowing us to run the site a little bit quicker play.

If I can start with Fergus, you're looking very relaxed up there so I'm going to start with you. A couple of questions. One, in terms of labor, you talked about bringing labor across in the U.K. to Ireland. There isn't necessarily an oversupply of labor in the U.K. So I'm quite surprised at that movement. How will that impact things like your costs?

It's specialist contractors that are -- that have capacity at the moment, that have people available. And there -- we're looking at them to bring them in to augment and help us get moving with our large projects. It's not their work. Yes.

Okay. Second, well, in terms of -- question for Fergus. If I look at the urban delivery, 2024, actually takes a step down. Now I appreciate Docklands is a large part of what's within there. But what is the -- is there any reason why you really should have that step down in 2024, apart from what your land guys are giving to you. Is there any reason why urban should not drop off?

It's more just project-specific answers, more or less.

Yes.

Okay. And then Peter, and the reason I picked Peter next is that you're not going to like the questions. You talked about releasing tomorrow. You talked about the first release tomorrow of the sort of new range I'm going to take it as. Can you help us understand the movement you talked about in terms of suburban versus urban on those suburban sites is really quite marked? How are you increasing that density? Are you making units smaller or are you putting more per site? Are you building higher? Are we going 2.5 stories? What are you doing? Because obviously, the question is, how is that going to impact the salability?

Yes. So the approach is very much consumer-oriented, would you believe? And if you look at Ireland in general, the house type that's selling quite a bit, is that the house type that consumer wants or is it a product of affordability of what could be built based on compliance with planning regulations? What we're doing is just looking at the ground on-site and looking at those parts of the sites that aren't working hard enough for the business. And we're looking at bringing ground into play in terms of housing units. That's not necessarily encroaching on public open space, but it's about being clever and creative on our approach to private open space and clever on our approach to housing layout. And it's not going into smaller units as such and it's not going into multilevel units as such. So I'm not going to give the game away because I think this is something unique. I think it's something unique to convey and I suppose, what we've done is we've challenged design principles, just design principles and -- outside of the norm. And I think that's something that hasn't maybe been done in the industry before.

Corner turners and less gardens.

Say it again?

Corner turners and less gardens?

No.

No. I think maybe I'll clarify Glynis' question. With your new proposal, would you envisage more apartments or less apartments or more houses or less houses?

I've already addressed this in the presentation. But specifically, we're not compromising private open space. Was that the question?

No, I suppose it's going to density because there is the urbanization of some of our suburban schemes. There is a requirement at present to build an element of apartments on those schemes. I suppose what I took from your presentation was that you weren't proposing to put more apartments, you were proposing to do a more efficient housing design to allow for more housing and lower density on that site. So you're actually providing a product that the customer wants.

Yes. That's the whole -- I suppose the drive is the consumer requirement rather than the consumer affording a product as a product of -- as a product, again, to use the word, of compliance with planning regulations. So we would be maximizing our suburban offering and minimizing that urban apartment-type offering in the suburban location.

Okay. I'll follow up on that one after. And then the off-site manufacture, building own facilities cost money, whether or not you're building your own brick facility or your own timber frame facility or whether or not you're building a roof tile facility. All that's -- is that in the guidance in terms of the cash usage if we're going to see you go down that route or more offsite?

No, I suppose, in the short term, it's just strong partnerships. It's not a significant investment. It's not in the cash usage that we set out today. But as Peter mentioned and Stephen mentioned as well, it's certainly a direction of travel, as we -- if we ever look to integrate the supply chain and own some of these factories or manufacturing facilities, we've certainly come out because we appreciate it's a slice divergence from our main skillset. But it's not in the current numbers to run a factory or anything like that.

And I think a couple of key things just to point out is that if you want to maximize the efficiencies in the business, you always go after the high-value items. So you go after the items that cost you the most and see can you extract the value-add. Like ambition of building roof tiles and brick, brick is pretty cheap. There is no need to doing it. It's maybe just a supply constraint. But the likes of those items are not required in our country because there is a good supply chain. It's really you're chasing the high value. How can you find the efficiency in the high value? And go back to what Michael is saying, the partnership agreement with the likes of Keenan Timber Frames has offered us control of our own supply, quality assurances, et cetera, et cetera. And it's having that efficiency. It's working with them, as Peter outlined. I think that's really bringing the -- it's bringing the supplier with us on that journey of exactly what we want to do. So...

As you've said yourselves, your volume target is quite ambitious, although achievable. And just looking at Page 75, there are 3 sites you're planning to open next year, and then 8 sites, I think you're planning to open the year after that, that you don't -- that you haven't acquired yet.

Yes.

So if the land market changes and you don't get the 20% gross margin presented to you, is the idea that you would cut back on the volumes and prioritize margin? Or would you go for the volume because that's what you've laid out, and that would just cover a slightly lower margin?

Yes. I think one thing we've learned as business is, and maybe Michael walked you through that the margin profile of the business is, are you better off extract from a site at 18% versus trying to hang on and wait for 20%. So the theory in the business would be -- keep the machine moving as much as possible. But I would have no concerns about the land market for -- and Wesley can go through it in more detail. The land market has really stabilized in our country, and it's driven on a few fronts. I talked about smaller guy falling to the side. But also the government realized that they don't want to create the same problem that happened before, where the land got constrained coming into the system. And the likes of the introduction of the vacant site levy goes back to our thesis. If you've introduced the vacant site levy, again, we don't want to bring politics into it, but one of the leading parties have said that they'll bring the vacant site levy up to 14%. Now if you're a landholder and you don't have the machine to deliver houses and you don't have the vehicle and you don't have the finance, your only exit is partnering with someone like us. So that's where we really do see the opportunity. All the incentives are -- and if you think about it this way, and I always make this point to a couple of people. I don't know, the guys would show me a site in a certain town and you could say this is the best road in this town and best trees and best people, et cetera, et cetera. And we buy it for $70,000 a site. And they go down the road and they go to the other side of the street and they say, we can buy this for $40,000. I would always go for the $40,000 because, in one sense, our market is controlled. The macro prudential rules have set the rules of what people can buy. So they can never reach that $70,000. So in that sense, we have a very fluid land market going forward, which means it isn't about the land as much, it's more about being efficient, being able to build the product. That's the key to the success, we think.

Just a few more for me as well, guys, if that's all right. The larger product, the vacant site levy, Stephen, that's what my first question was going to be on. I mean when we look at the slide that Michael was talking about in terms of the change in spot margins going from 18% to 20%. To what extent do you think the vacant site levy may have played into that? And extrapolating your comments there, could there be the potential to push hurdle rates on again at some point in time if that vacant site levy really begins to bite? I also then just wanted to ask on PRS sites. Obviously, we're saying that the margins have probably moved on, on the sites that you actually already own. The implication would be that the land market has probably moved on quite a bit on those sites as well. So when I think about you replenishing your urban landbank at that part of the landbank, are the hurdle rates as attractive on the PRS side of the land market as it is in the suburban side?

I'll deal with the latter one first. I suppose on the urban sites, if we were to replicate the margins we expected that the -- I'd say, when we purchased them, yes, that's achievable. Obviously, through yield compression and rent rises, obviously, that returns have grown. I think there is a couple of things that will be a play. And it goes back to the point Wesley was making in his presentation. There are some people who have acquired urban sites who just don't have the capability of delivering them. And the biggest thing that will test that deliverability will be when they try to talk to the institution and the institution will demand X of them. So yes, it's probably the most difficult space to replenish those sites, but we have a long runway in front of us. So we're not overly concerned. Like -- you look at the Docklands, it's 1,100 to 1,200 units. You look at the Cork Docklands, 1,100 to 1,200 units, and we're very excited. So we're not worried about that anytime soon. And obviously, it will be above the market. Again, and you would have seen it on one of Wesley's slides. And one of the key sites is, you look at Dundrum Mental Hospital, this is now controlled by the land development agency and the land development agency has been set up about probably 18 months at this stage and is obviously working its way through legislation. And the whole idea of the land development agency, it's tasked with 3 main tasks, take all the semi-state land in its control, and then dispose of that land on an annualized basis, delivering it into the market around 7,500 units. But take that -- just that hospital site is 38 acres, has the potential for 2,500 units and you want to be a fairly substantial machine to go in on that. But that's an ideal one for the likes of us to partner. So you could see the evolution of urban sites coming from the likes of the land development agency and also the local authorities. So at this moment in time, I wouldn't be concerned. So on the suburban sites on where we see, the vacant site levy has certainly had some impact. It has focused people's minds. I certainly think if the mood music is correct and the elections, people will be more focused on it. Margin progression is where we want to go. As Michael said, 18% today is not our ambition for the business, getting to 20%, it might be a little longer, but we intend to get there. Is 20% our ambition? No, it's not. And I suppose 1 day, I was out with an investor and I made a point, and I wanted to make sure my facts were correct. In 2014, Persimmon, and I think this is correct, were 18%. Obviously, the market dynamics changed that to 32%, Barrett's were 14%. As a business, what we really want to achieve is, over a period of time as we scale the machine and as we grow the business, we see margin progression. And obviously, if we can do that better and they're more efficient with our capital, that's -- that delivers for everyone in the business.

And just maybe to allay your fears on the urban question, if you were to look at Michael's site opening bridge that he took you through, the majority of those sites that aren't owned sit on the suburban side. So effectively, the urban pipeline out to 2024 is practically full from a land perspective.

I think just one thing to add, I think, on those urban sites something we believe, as Stephen mentioned there, just to stress it like, but the institutional buyer wants an institutional covenant as well in terms of delivery. And that's what's going to generate these sites. I believe these sites will come lower end of that.

And maybe one final one then, just to get on the urban side. You've confirmed today that there is a fair bit of nonresidential delivery to be completed on both the North Docks and in Cork. Is it your intention that Glenveagh deliver that nonresidential portion of those sites or could that potentially turn around?

Yes, it's not a major concern. Obviously, the likes of hotels are a specialist skillset. Probably that skillset we bring from external resources. They're not the majority of the project, and it's probably more bolt-on. They do add incremental value, but I suppose our main focus will remain on the residential element. Our knitting is in building homes.

Yes. I just got to add another one on the margin outlook, if possible. If you take that 20% at spot kind of 0 HPI, CPI. If you think HPI's broadly kept to wage growth given the macro prudential rules and you think construction wages probably grow ahead of overall wages in the demographic trends that you guys have alluded to, you can tell me whether that's right or wrong, what confidence do you have of holding on to those margins? And what do you have kind of at the [indiscernible] levers do you have to pull on the construction side to ensure that you can hit those targets?

Yes. I think -- yes, to answer your first piece on HPI. I think it would make -- it'd make perfect sense that if the macro prudential rules are at a certain level and as Conor slides -- one of Conor slides shows, everyone is kind of pushing that ceiling in terms of the 3.5x. I think it then just makes sense that it grows with overall wage growth and Stephen has probably been saying that for the last probably 9, 12 months, that would make sense. So let's take it that the HPI is going to move us 3, 3.5x. On the cost side, as I said, we're kind of seeing between 2%, 2.5% at the moment. A lot of the initiatives that we're rolling out, there -- you'll only see us really in the margin in terms of '21, '22. So I think if you're taking 20% spot, I think you can see margin progression -- you can certainly see margin progression. I think the big piece on margin is going to be the evolution in terms of the sites that are delivering those units. So our IPO sites and working through those, and we've been very honest and open to say they're the most expensive sites that we have in our portfolio. So those churning out what we were buying is pretty quick post-IPO in terms of 17% to 18%, that churning out as well. So it makes sense again that more of the 20% spot land that's coming into our active construction with a little bit of HPI and that divergence between HPI and CPI allows our continued margin progression. So I think, hopefully, what you've seen from the guys is we're not just trying to accept what the CPI is in the market. If CPI is running above what wage growth is running at, I think we have the scales internally, we have the initiatives internally to probably run at about 50% what the external market is at. So if they're at 4, we will be at 2, if they're at 6, we will be at 3, if they're at 2, we'll be at 1. So I think we've shown that we're not just willing to accept what's the norm in the market. So we'll continue to push that CPI down, we'll continue to try and be innovative in terms of how we can achieve HPI, and that divergence between the 2 will continue that margin progression. So I don't think there should be any concerns that there is suddenly a ceiling in terms of where our gross margin can get to.

It's probably a question for Stephen and maybe Fergus as well. But obviously, the forward fund is the model of choice for the urban projects was in, I'd say, north wall, you're looking to develop organically or internally. It's obviously a flagship project for the North Docklands. It's a huge project for Glenveagh. Just maybe give us an idea of the scale of the opportunity here and why this site is Glenveagh's route to the first forward fund?

Yes, I suppose there's been a couple of things. Obviously, there's been an evolution in the PRS market in Ireland. A lot of institutions have come to invest in Ireland, they see the opportunity. And obviously, I spoke earlier about to a certain degree, they've follow the likes of Google and others into the market. I think the big thing that sticks out to us is, and we see this as -- and Wesley made the point earlier is that anyone can buy a site, but actually the key to the site is actually having the capability to deliver it. And we see that as a -- to a certain degree, having that skillset in the business will offer what others can't. Again, Fergus why we targeted Fergus to come into our business is just -- you've seen his experience. The likes of Embassy Gardens probably replicates to a certain degree what we're going to be doing on the docks, a project of that scale. But we already have the skillset to a certain degree in the team in the sense of delivering Herbert Hill. We commenced Herbert Hill in October 2017. I remember the storm came in and we had to shut the site down. But we delivered it in exactly 2 years, a complex department project within 2 years. We run into no hiccups. And we transacted at the back end of the year. So look, we realize, if we want to be a -- if we want to be the scale player in the market, we do need this skillset. And we've invested in that, and we hope to roll that out. And the other thing too is -- and we've seen it with other people and you hear a lot of talk about the children's hospital in Dublin and how that's gone really wrong. Exposure to contractors can bring a lot of risk. They can bring certainty in the sense of delivery, but they can bring a lot of risk in not being able to control the cost. And I suppose being -- controlling those costs in-house and being able to deliver is very important for us. And I think we have the team and the capability. And it's not only just where we're delivering it today and the guys who delivered it to their methodology, but where we want to bring it to in the future. Again, we're talking about this off-site construction. And that's where the huge opportunity is in that delivery. And I suppose, the key for that is having the machine to deliver, but having the demand at the other end of it as well. And if you can marry both together, that's where you can really maximize that opportunity.

Yes, just on partnerships, when partnerships comes into the mix. I think you were keen to point out at the start that you -- although it's not in the unit guidance that when partnerships come in, that will be substituting other deliveries in terms of keeping that 3,000 target. Was that right, just in terms of my understanding?

That's right.

And given that, when we do see partnerships, obviously, fantastic return on capital employed, great certainty, it does typically come at a lower margin. So just in terms of baking into my guidance, if there was to be 500 units in partnership delivered in 2024 or somewhere far out in the DCF, I should model that as a lower margin. So just thinking about my margin over time when partnerships come in, there will be margin compression from that, given they're not incremental units?

Yes. And I think that the challenge there is going to be, and that's the exact conversation that we've had internally ourselves is you're replacing a lower margin with -- you're effectively taking 500 units out of a higher margin and putting it into 500 units into a lower-margin business, putting the return of capital to one side for a moment because, obviously, it's significantly better. I think the challenge for us is, it's not as simple as take 500 items and replace it with 500. We're conscious that it may be -- we put an extra 100 units into that if partnerships suddenly come in, but it's certainly not take 500 in partnerships and add it on to the 3,000, and you suddenly get 3,500, it's not that. But I think if partnerships comes in at that lower pure euro value in terms of profit, we'll have to look at that capability. But I think, certainly, the benefits of our partnerships certainly are very attractive, and hence, the reason we're willing to put them into the overall delivery.

Okay. I see -- just in the interest of everybody's time, we said we'd sort of finish up a quarter. I see 2 or 3 more questions. There's -- Dermis is there and then we owe an answer on the election question, which we haven't forgotten about.

Robert Eason, Goodbody. Just 2 quick questions. One on land prices. When you talk about the stabilization in land prices, but I suppose there is probably kind of 2 speeds going on between suburban, which has probably fallen quite significantly and then urban, which has other dynamics going on. Do you see that on the ground? And will that kind of dynamic change your view as to where the value is in terms of where you buy land over, say, the next 12, 18, 24 months? Maybe just on the apartment side, then, again, kind of a 2-speed thing going on between the cost of apartment building and cost of house building. And what kind of dynamics do you see going on there? Is it doubled the price in terms of cost inflation in apartment building relative to house building at the moment?

Yes, certain elements of the apartment construction would move faster. I suppose that I was making the point to one of the shareholders earlier on is that when you are actually doing one of these large urban projects, you're probably locking in around 60% of your procurement before you start the project. So you're nailing down the likes of your curtain wall, windows, finishes, et cetera, et cetera. So you're doing a lot of buying upfront. So you do have that locked down much earlier because you are conscious of -- it's quite a large project and you want to control it. And obviously, we're baking in whatever CPI will be required. And it has moved in different -- different parts of the apartment element has moved faster than others. And it's obviously points in time as well. If you think about apartment construction, it's obviously quite intense, the likes of curtain wall. If it clashes with other big infrastructure projects, the likes of the hospital, which is ongoing at the moment, obviously, that can make constraints in the market. But a point that Fergus has made to us and something that we looked at is, obviously, the London market has cooled down. There is certain capacity here. But there is also -- there is Irish people who are working in London and doing contract work who want to get back to Dublin. And I suppose we're offering them that route. And they've learned -- like it's a specialized skillset that they've just used it here for years. And obviously, if we can bring that into a system, we'd hope to control our costs moving in -- moving forward. On the land side, and Wesley, happy for you to jump in, there's been urban -- obviously, sites have moved because of, obviously, the demand for PRS, but good quality suburban sites, the market has been pretty stable. If there has been falls in the land market, where it has predominantly fell is land that is long infrastructure. It doesn't have water. It doesn't have storage, has constraints with roads, rail, et cetera, things like that. And I think one thing that we really focused on when we were deploying our capital, and I think it's testament to the businesses, we've opened 20 sites. If we bought sites where there was constraints, we'd be still looking at them. Obviously, we're trying to open them on an ongoing basis. But I think there's been a nice element of the land market that has come back because think about it, if you're buying land and you put your money in for 5 or 6 years and you won't see a return, is that a really good investment? So I think that has cooled down to a certain degree. But the good product, the good sites with the proper -- where that proper housing is more in demand, is pretty stable for the last 12 months. An example of this, I'll give you a live, so you're not going to cross it, we bought Leixlip last year, right, and we negotiated with that landowner 12 months previous to that. And we didn't get to a deal. We came back and revisited it, and it was exactly at the same price it was 12 months previous. But it's the same quality site and we've just opened it, it's a fantastic site.

And I think that's the key point like -- there's an expectation from vendors in terms of where pricing may be at. And what we're saying is, we would view it is there's a Glenveagh price that we will pay for the asset. And if we can acquire for that asset, we will acquire it. And if not, we'll wait. And I think what we are seeing is in cases that those assets are coming back around. It takes a little bit of time, but we are getting them. And I think that's the example. I think just on the urban point, I think, ultimately, what you're seeing there is your rent and yields is what's going straight to value. People are just doing their maths and putting it straight on to land, back to what we've said around counterparty and covenant, I believe what you're going to see is you're going to see some of those assets come back around because people can't exit, and I think that's where the opportunity for us will be. Yes, there'll be competition for certain assets, but I think there is such a volume in that market that, that opportunity will present itself.

Okay. Maybe -- and to finish on the election question from that gentleman?

Yes, so you have -- [indiscernible] like Fianna Fáil are going to get in pretty much. And they're either going to be with the Greens or with Sinn Féin by the looks of things. And I'm just wondering, based on your kind of guidance for the next 3 years, how those would change under those 2 different scenarios?

Well first of all, we should never comment on politics. But I suppose what we would reiterate is that our plan is set on the dynamics that exist today. Obviously, there's been a lot of promises from political parties and the likes of Help to Buy and driving more housing, which we have to see how that plays out. I think both main priorities have made a commitment to increase Help to Buy. But look, obviously, we're doing -- we're just living with what the facts that are on the ground today. And it has to be taken into context of the macro prudential rules are, to a certainty, the control element on the overall market, and they will be the biggest constraint no matter what. It's not really a constraint, it's a bit like it's just controlling the market overall. But I think it will be interesting to see what comes out of it. If it's a Green, Fianna Fáil thing, yes, there'll be a lot of housing initiatives. And there'll obviously be a lot of what Peter said, and we have gone to NZEB already. There will be a further drive to that, which will be, for us, we'll be well able to deal with that.

Okay. I think if you were to rewind back 12 months and the best case scenario you were going to come out with last year was the status quo because we knew the macro prudential rules were up for renewal and the question was, would they be renewed or not. I think now looking at the political environment and the commentary, probably the worst-case scenario you're going to come out with is the status quo. And so we've outlined our plan based on what we see in the market today. Yes, there is talk of upside to that, but we're very comfortable with where things are at as well. Okay. And Stephen just had a few closing remarks.

Yes, I suppose, I'm [indiscernible]. I wrote down my closing remarks. Public address. Yes. I suppose just a couple of key things and things I want people to take away. It's interesting, we all arrived last night and we checked into the hotel and one of the large U.K. developers were having a conference for their salespeople. So I decided to sneak in and have a view. But something I found very interesting was there is a lot of similarities between us. I suppose if I was to say into context is that we are the buyer for the Persimmon of the Irish market in relative terms. And we have all that opportunity in front of us. The opportunity is compelling, and it hasn't changed. If anything, I'd be more confident about that opportunity today, and obviously, due to various things, the macro prudential rules are having their effect. We live in the most conservative housing market in the world, I believe. And I sometimes describe it, it's a bit like we're driving down the road and the hand brake is slightly pulled up. And that's the way I would describe our housing market to a certain degree. The competition doesn't exist. It's been identified. We're delivering 21,000 homes a year. Go back to my concrete analogy, I don't see the supply coming into the system. The foundations aren't being dugout, which means the smaller players are really slogging. And the only one who is actually delivering any volume into the market is ourselves and the likes of Kern. We have bought the right land to deliver the right product. And that is key. It is really working. We delivered 844 units last year because the demand was there for the right product, and we have that right product there. We're scaling it now to capture the opportunity. That's the key. We do see the opportunity in front of us for all the things I've outlined. And we really do want to capture that. I suppose a couple of things. We're capturing it through the ways we're doing business. And the guys talked about the technology, the methodology, all of those things, they have never been seen in our market before. It's not been revolutionary or anything like that. It's just using best practice. An industry that for 30 years has stood on its hands and done nothing in productivity, hasn't embraced technology, hasn't embraced a new way of doing it. This is a huge opportunity. But you need to be a scale player to be able to do that. And I suppose that's a couple of key things. Michael talked about the capital profile of the business, how that's going to evolve over the next number of years. And that is key. And a point we really make to a lot of investors is, we realize we have a big balance sheet, and we need to grow the revenue. That is our main ambition is to drive that revenue as fast as possible, whatever way we have to do it. And then you have a proper working machine. That's where we want to go. We really want to capture the market opportunity, and -- that's in front of us. And that will change the dynamics of this business. And I suppose a couple of -- you've seen the team today. And I think a big thing we want to roll out today was the team, put the team in front of you, see what they're like. And this is some of the team, but there is a lot of other people behind us. And it is quite a phenomenal machine that has been built over the last number of years. We've been on this journey for 10 years. We've now outlined where we want to go for the next 5, but we've 10 years' ambition in front of what we can do here. So I'd like to thank everyone that helped put this together today. I'd like to thank all of you for coming today. I thank you for all your support. And look, I suppose I describe it, we've traveled the journey so far. We have a long way to go, but we will reap the benefits of this if we get there. So thank you. I think Conor wants to say something, guys.

I just want to leave -- and feedback is always appreciated. So you got -- you've already got an e-mail from me asking for it. So we really appreciate it, thank you.