Harworth Group plc (UK6A.SG) Earnings Call Transcript & Summary

Good morning. Welcome to the full year results presentation for Harworth Group plc. I'm Owen Michaelson, the Chief Executive of Harworth. I'm joined today by Kitty Patmore, our Chief Financial Officer; and Iain Thompson, our Head of Investor Relations. I recognize that we would normally have most of you in the room with us today, but I'm certain that you'll understand why we have made this presentation webcast only. In fact, our entire roadshow will be by video conference and conference call-only this year. However, we'd be happy to come and meet investors face-to-face in the coming months when travel restrictions and meeting restrictions have been lifted. Our focus today will be on our key achievements across 2019, the financial highlights, the prevailing market conditions and the future outlook. As usual, I'm happy to take questions at the end of the presentation when the phone lines will also be open. Before I start the formal part of the presentation, we cannot ignore the escalating global uncertainty, which is being caused by the coronavirus and the oil price war. We've seen unprecedented volatility in global equity markets. And clearly, Harworth is not immune from this downward pressure on stock prices. I'd just like to remind everyone that Harworth is a long-term business with a strong balance sheet, with low financial gearing that invest to transform land and property into sustainable places where people want to live and work. As one of the leading master developers of large complex sites in the Midlands and North, we are ideally placed to capture the benefits generated by the Chancellor's announcements last week and the current administration's clear commitment to the rebalancing of the regional economies. As I've just said, we are a long-term business, and so our presentation is based on the confidence we have in the future and not the short-term challenges created by COVID-19. We, like everyone, have contingency plans in place, and I'll be happy to give more details of these plans and how we will protect the business over the next 3 months at the end of the formal part of the presentation. So if we all move to Slide 4. During 2019, we have delivered good operational performance, a total return of 7.8% against the backdrop of a year of Brexit uncertainty and significant planning headwinds. We have grown our strategic land pipeline by an average of 30%, setting us up for future growth. I remind everybody that our simple strategy is to act as the master developer of former industrial land and sustainable urban edge extensions to create places where people want to live and work. We have maintained our focus on the beds and sheds sector in the Midlands and North during the year. This has allowed us to deliver market-leading returns. Whilst doing this, we remain focused on our wider social contract to the communities in which we operate. We continue to protect the environment and promote biodiversity across our sites as we remediate these sites and deliver the developments. As we go forward, we'll continue to drive down our carbon footprint, recognizing the embedded challenges in the construction sector. So looking ahead, we still have a significant strategic land pipeline. The company is well capitalized and lowly geared, allowing us to be nimble when appraising and buying new sites. As highlighted in our most recent market update, near-term returns will be lower as we work through our more mature former colliery sites and bring forward the next wave of pipeline projects. I'm confident that our new regional model and our strong technical track record on large complex sites will support the next wave of projects and underpin our long-term growth targets. If we move to Slide 5. Slide 5 summarizes our performance during the year. I would just like to highlight the strong acquisition progress made by all regional teams leading to our largest residential and commercial pipeline since relisting. A record year for residential land sales as we open up more points of sale, further growth in our income portfolio, both from new purchases and the organic growth from active asset management within our existing business space and natural resources portfolios. As highlighted in our interim results last September, I do need to update you on the planning headwinds we're continuing to face at local level. The Brexit generated political backlash we all experienced during 2019, led to a change of control in many local authority areas in the May 2019 election. This, in turn, led to the abandonment of the local plan process in some local authority areas. This action has delayed the determination of a handful of our live or imminent planning application. As a result, 5 major planning decisions have been deferred into 2020 or 2021, and this has slowed down our total return in 2019. It will also impact on our 2020 performance. To balance these headwinds, I can confirm that our planning application at Wingates in Bolton now has a resolution to grant planning consent at local level for the first phase of the development. We are just now waiting for clearance from government that this application can be formally determined at local level. This is the successor site for our highly successful Logistics North development also in Bolton, which has been delivered over the last 5 years. If we just move to Slide 6. Slide 6 gives us a recap of our historic market performance since we relisted the business in 2015. I'm sure you'll agree that at 13.3% growth per annum, we have built an enviable track record in the past 5 years in the context of total returns. Please just move to Slide 7. Now Slide 7 is a bit of a placeholder. This articulates our proven business model. I will give more details later on, on how we'll deliver this in our 3 core regions. Moving on to Slide 8. This shows us that housing delivery continues to be the U.K.'s #1 domestic priority, regardless of political party, and we don't see this changing. This was confirmed in the budget last week, with further national funding commitments for housing infrastructure and a GBP 400 million fund for building new homes on brownfield land. Please move to Slide 9. When we look at the commercial property market, the vacancy rate for all industrial property still sits well below 10% and significantly below the long-term average for the sector. This lack of ready supply supports commercial development in the regions, irrespective of whether we sell the consented commercial land to owner occupiers or if we directly build the space ourselves. As we stressed at the half year, inquiry levels for new industrial space softened in 2019 versus the top of the market in 2016. However, following the general election result in December, many paused inquiries came back to life and we completed a number of major lettings in January and February across the portfolio. Whilst we have not seen any downward pressure on commercial rents throughout 2019 and into 2020, it would be remiss of me not to highlight the inevitable short-term pause on decision-making and the commercial pressures, which will flow from the COVID-19 travel and working restrictions. As such, we do anticipate a softer lettings market in 2020. That's enough for the moment of me talking. I'll now hand over to Kitty to talk through our financials.

Thanks, Owen, and good morning, everyone. So starting with Slide 10. This shows the bridge between EPRA NNNAV per share from year-end 2018 to year-end 2019. There are 3 key points to take away. Firstly, EPRA NNNAV has grown by 7.2% over 2019 to 155.6p per share. The main component of this growth is from our value gains which have added 13.7p to EPRA NNNAV, alongside a positive movement from profit excluding value gains. The biggest reduction is from our tax costs, which moved EPRA NNNAV down by 2.3p in 2019. Turning to Slide 11. This provides a breakdown of our value gains across the portfolio. As we saw in the previous slide, value gains are the largest components of our NNNAV growth. They include both profits on sale made in the year and gains on revaluation. In 2019, we delivered value gains of GBP 44 million, split between GBP 8.5 million profits on disposal and GBP 35.5 million of revaluation gains. 75% of our overall value gains, around GBP 33 million, came from our major developments. This is reflective of progress across our major sites. We are remediating and introducing infrastructure, bringing forward service plots for sale to housebuilders and commercial occupiers or owners and creating great places where people want to live and work. Ultimately, this number demonstrates the continued demand for our core developments. Value gains from strategic land are materially lower this year. This is a result of the planning headwinds that we have spoken about, and these offset any gains that were made on our strategic land properties. Value gains also continue to be delivered by our business space and natural resources teams. This reflects an active asset management and letting strategy as well as profitable sales, including that of our solar portfolio. Turning to Slide 12. This delves into the detail on our residential land sales across the year. In 2019, residential sales made up around 2/3 of all our sales. We made sales across 6 major development sites for a total consideration of GBP 61 million. And these sales will deliver over 1,400 new homes across our regions. This year, we sold plots at Waverley to Taylor Wimpey and Barratt. We worked with Avant at Swadlincote and Prince of Wales. And Taylor Wimpey again at Riverdale Park in Doncaster. We also made our first sale to Strata, our Flass Lane development in Castleford as part of the site's second phase. This means that we've now worked with 15 separate housebuilders across our developments, showing the popularity of our land product. Finally, we also made our first sale at Thoresby to Harron Homes, just over 4 years after the mining operations closed, which just demonstrates how quickly we can regenerate brownfield land sites to bring these forward to create new housing communities. Moving on to Slide 13. This shows our progress in making commercial land sales in the year, our Gateway 45 Leeds joint venture with Evans Property Group. In 3 separate transactions, we made land sales generating GBP 15.2 million of proceeds to Harworth Group. The first sort of 10 acres sold to the University of Leeds to build out their Institute for High Speed Rail and Systems Integration. The second was a sale to Leeds City Council for an extension to its park and ride. And finally, made a sale to PLP to build out new distribution space. These developments will now deliver thousands of new jobs to the region and support the ongoing development of this regionally important site. On Slide 14, we continue to effectively manage cash flows to fund our sustainable growth. This means using proceeds from sales across our sites to reinvest in infrastructure, development and acquisitions. Net debt increased over the year by around GBP 6.5 million as a result of an active acquisitions year that has grown our pipeline portfolio to its highest level since relisting. Along with progress on our sites, the result was a year-end net loan-to-value of 12.1%. We continue to target net leverage of 10% to 15%, which we acknowledge is low, but this provides flexibility on business decisions and reflects our higher operational gearing. Slide 15 moves us on to talking in more detail on our income portfolio over the next couple of slides. Our profit excluding value gains, or PEVG for short, reflects the underlying profits of the business, excluding those from disposals or gains or losses from the revaluation of our property portfolio. PEVG was GBP 3.5 million in 2019, which is lower than 2018. This reduction was principally due to 2 factors. Firstly, in 2018, there was a particularly large one-off promote fee of around GBP 6.8 million, which related to the successful letting of Logistics 175 at Logistics North. Secondly, over 2019, our coal fine income was lower as the closure process of coal-fired power stations accelerated. Despite this, within income generation, our natural resources income remained consistent and our business space income increased a year. Overheads were in line with 2019. However, tax was higher due to profit on sales and deferred tax. This all meant that we continue to meet our aspiration that income from the income generation team continues to cover our overheads and interest costs. Slide 16 provides a greater see-through of our income portfolio to give some more color on this part of our business. Our income portfolio continues to be derived from business space, our natural resources portfolio and agricultural land with our core income really coming from business space and natural resources activities. Our strategy remains to actively manage this portfolio by achieving new lettings, regearing rents where appropriate and supporting our tenants to sustainably grow, thus increasing our recurring rental income and creating value gains. We will seek to add to the portfolio with opportunistic purchases, and we made 4 such acquisitions in 2019, which had a blended net initial yield of 8.4%. Over the 5 years to 2019, the business space portfolio grew by 120% through both new acquisitions and asset management initiatives creating value. Where appropriate, we continue our churn strategy with sales of lower-yielding properties to reinvest in higher-yielding new acquisitions. At the end of the year, this left us with an income portfolio with a blended gross yield of 6.8%. Our asset management work means that in our business space portfolio, we have a low vacancy rate of 6% and a weighted average on expired lease term of 13.5 years. It's worth noting that we have recently appointed a new head of income to continue to lead this part of the business. Slide 17 provides an excellent example of our approach to acquiring new income into our portfolio with the purchase of a single unit in Brighouse in West Yorkshire. We purchased this site in October for GBP 3.8 million. At the time, it was vacant. We completed some refurbishment works and secured a tenant by the end of the year. This is on a new 10-year lease, representing a net initial yield of 9.4%, thereby improving the breadth and depth of the overall portfolio. I'll now hand back over to Owen.

Thanks, Kitty. If everyone would just please now move to Slide 18. So Slide 18 updates you all on how our portfolio continues to evolve following sales, lettings, acquisitions and planning progress. The graph on the left highlights our 10 largest sites by value. And the graph on the right highlights the latent underlying value in the portfolio. If we just now move over to Slide 19. Slide 19 provides you with a running total of the consented residential plot and the commercial floor space at the end of December. We provided more granularity than in previous years on how the future pipeline is made up. We've also given greater granularity on the split of deal structures across the strategic land portfolio. This reflects how our land portfolio has grown over 2019, and this portfolio now stands at almost 30,000 residential plots and around 25 million square feet of potential commercial floor space. This is a 30% average increase in our strategic land portfolio since the end of 2018. The portfolio includes freehold sites, planning promotion agreements, options and overages, enabling us to diversify our portfolio and offer deals which work for different types of land owners. It is not one-size-fits-all with vendors and some sellers want a clean break, and some landowners want more of a development partnership approach, which is the reason why we adopt these different deal structures. If you just move on to Slide 20. Slide 20 highlights our core geographies and confirms that our acquisition focus is resolute. This is entirely consistent with what we have previously stated to the market, it is focused on sites in our core regions, which play to our strength and skills. We continue to focus on large complex sites where we can create great places to live and work and drive NAV growth over a number of years. An example of our acquisition focus, which play to our skillset, is a site like Ironbridge, where we safely brought down the 4 enormous cooling towers in a matter of seconds in December. This stands us in good stead to work with the owners of other large brownfield sites and the owners of the last remaining coal-fired power stations, we were either just shut or are about to close. The success with stakeholders and our customers is all about trust. And I'll just repeat that and underline, it's all about trust. I'm sure that you'll agree that our capabilities in managing the political and stakeholder process, alongside our engineering expertise, is a compelling offer for local planning authorities and the owners of these sites. Slide 21 gives a detailed summary of our strategic priorities for 2020 in the context of our underlying business model. It provides far more detail than before in showing where our 17 major development sites are up to, alongside the sheer scale of the work we undertake. We are in exclusive negotiations on a number of other sites across the regions. These include a mixture of options, freehold acquisitions and PPAs in order to optimize the deployment of our capital and to support the geographic rebalancing of our strategic land portfolio. We are also well progressed with our more mature sites that are now in build-out mode. These will continue to deliver gains from placemaking and profit from sale on well-run sales processes. We have recently undertaken a review of all of the more mature sites in our portfolio to understand the best point in the cycle, to trade out of a particular site, or ways to accelerate sales. This will ensure that our more mature sites do not become a drag on our overall performance. We will continue to drive the existing strategic land portfolio to maximize overall returns, and we will continue to capture the shorter cycle returns, which can be generated from proactive asset management of the income portfolio. We remain transaction-ready for value opportunities for distressed income assets, which complement our existing portfolio. If we move to Slide 22. So Slide 22 defines, this is the first time that we have openly reported on how we deliver on our social purpose as one of the U.K.'s leading land and property regeneration businesses. I must apologize for this past admission. These actions are so embedded in the DNA of our business that we'd almost taken it for granted and we forgot to say anything. Slide 22 shows the sheer variety of work we undertake in actively supporting 10 of the UN's 18 sustainable development goals. This is not new work just for this report, we've always been doing this. As the slide highlights, we are also very proud of our well-established partnerships with a number of universities to support growth industries and the local skills needed to support new jobs in the regions. More information on these themes will be provided within our annual report when it is published in mid-April. So move to Slide 23. Slide 23 gives more examples of how we are making our developments more sustainable in support of our core strategy. We are also very conscious that we need to be making it as easy as possible for people to get to our development without using the car. With this in mind, we've stepped up our efforts to introduce or, in fact, reintroduce rail on a number of sites, and these include Waverley, Thoresby and Ironbridge. We also want to support new tenants that could develop transformative or low-carbon technologies. An example of this is the UK Atomic Energy Authority and their new nuclear fusion research facility, which we're building and letting to them at the Advanced Manufacturing Park in Rotherham. If anyone wants more details on our ESG credentials and future CSR reporting, please speak to Iain Thompson at any time after the presentation. So move to Slide 24. In summary, we continue to make strong progress as a business with a strong pipeline of new strategic land projects supported by our resilient income portfolio. Our long-term strategy for the delivery of beds and sheds in the Midlands and North remain sound. Our long-term strategy is supported by ongoing government policy and last week's budget announcement, which gives us even more confidence that our work is of key importance and relevant to the current administration. Our technical and placemaking abilities will ensure that our major developments remain popular with housebuilding and commercial property customers. This supports our ongoing acquisition strategies with vendors who want a trusted name to provide them with a clean exit. We can continue to fund all internal running costs through our recurring income base, allowing us to remain resilient throughout the property cycles. Our financial position and capital structure keeps us in a solid position for ongoing growth. So I just slightly paused. So finally, I need to address the second RNS we issued this morning. This will be my last full year presentation as Chief Executive of the Harworth Group before I retire at the end of 2020. After what I hope you'll agree has been a successful 10 years at the helm, I need to consider what is best for my own future and my family's future. We must also recognize that all organizations benefit from refreshed leadership from time to time. The timing has been agreed with the Board at a point where a clear strategy is in place to support our long-term growth. Our regional operating structure is working well, and this is fully supported by our wider culture and values. Our business is in a strong financial position as reflected in our results today. I'm really proud of the team, which I'll be leaving at the end of the year. However, I'm happy with the knowledge that the business is in great shape. So please remember that I'm not leaving until Christmas, and there's still a lot to do in 2020. I just want to reassure you that I'm not checking out, and you still have my full attention until the end of the year. So thank you for listening. I'll now hand you back to the moderator and welcome any questions you may have. So thank you.

[Operator Instructions] We can now take our first question from Colm Lauder from Goodbody.

Firstly, Owen, just to wish you well on your retirement. I know it's 10 months out, but our very best wishes from the team here at Goodbody. I just have -- maybe there's one really sort of forward-looking question, if you don't mind, on the forward view on sales. I know, obviously, you've mentioned that you are at a level of sort of 39% of budgeted 2020 sales. If perhaps you could give us a little bit more color on the makeup of those forward sales, the units in terms of a number of residential plots focused on some key locations and perhaps some color as well if there is some commercial space mixing with that?

Yes, if you look at it, it's around probably about -- about 60% of it will be residential sales. And if you think about the process of selling to housebuilders, I mean we're normally talking to housebuilders at least 6 months out before we're releasing a plot anyway as we're finishing the next phase of the infrastructure. So particularly where we've got advanced sort of placemaking on the sites and they can really sort of get the sense of the place. So as -- yes, we normally run the tender process with the housebuilders 6 months in advance to allow us to finish the infrastructure off. And then also during that period, the housebuilders need to get their reserve matters consent through, which is really just the detailed design work. Although we've got the master plan consented, the housebuilders need to get their individual plot designs agreed with the planning authority. So that's why we have a lead in there. We have a large single sale. Close to Gateway 45 is actually on Skelton Grange side, which is just to the south, which is a former coal-fired power station site we purchased about 4 years ago. That is due to go through in the next couple of months as well. So that represents about 25% of the sales. And then we still have a few, what I'd call, the legacy sales sites in the Northeast and bits of farmland sort of going through. So I'm looking at Kitty now to make sure I've got my numbers closed. But I would say it's probably about 60% residential, 25% commercial, and the rest is sort of the -- what I say is the legacy sales hanging over from last year.

Sounds pretty good to me, Owen.

Okay. Did that answer you, Colm?

That's fine, Owen. Just maybe sort of a follow-up on the numbers then for Kitty. You obviously mentioned that the average or the aggregate was ahead of end of year book value in terms of sales. Could you perhaps be able to sort of give us a rough number in terms of how far ahead of book value the average sales are?

Well, Colm, it's always a little bit of a challenge because what we're doing is revaluing predominantly on an annual basis, but also on a direct basis at half year as well. And obviously, as Owen just mentioned, with a little bit of lead into sales what we typically find is that the book values sort of jump ahead and then you get the sales values sort of effectively mirroring a lot of that value gain that you've seen. What you saw this year was a couple of sales that were ahead of book value as a result of slightly unusual circumstances. So we, for instance, sold the solar portfolio, which was an aggregation of a number of different sites and hence, attracted a portfolio value. But that's typically where we see sales ahead of book value, otherwise, what we expect usually is for sales to track that book value process.

Yes. I think it's always when you look in detail at our published report, obviously, we do break out sort of profit on sales in that. And it will always be a function of this business where we generate the profit on sales from the major development sites for the simple reason that valuations are always backward-looking. And obviously, we are selling into a forward market and our job is to run good sales processes. So there's inevitability that you unlock that additional value: A, as you're unwinding the discount -- your large site discount on the very large development site and also reflecting the fact that the whole valuation process is fundamentally conservative and backward-looking. So yes, but we can report on that. But you should never read too much into it just because you need to look at the combined profit we generate from both NAV gains and profit on disposal because it always depends where we are in the sales cycle in any given year.

Yes. And there's a full breakdown of that on Slide 11, Colm, as well.

Next question comes from James Carswell from Peel Hunt.

Just a quick question, I'm looking at Slide 19, where you breakdown your residential and commercial pipeline looking forward. And then obviously, the planning promotion agreement, options, overages, it's quite a big part now of the forward pipeline. I was just wondering how much further you think that could grow? And also, whether you could give a bit of information as to how you're going to work out the -- well, how you analyze the returns and which ones to go for because the return on capital to me looks very good. I guess [indiscernible] kind of resources of that use of the group. So just any kind of thoughts on how you kind of assess those projects would be really helpful.

Yes. I -- yes, okay. Let me address that. Yes, it has grown. And one of the reasons why we've put it in is we know a number of our peers do actually sort of report on the different deal types that they own, where they lump together freehold and then PPAs and options. Just so people understand, a planning promotion agreement is where we are promoting the development of land on behalf of third-party landowners, and we take a slice of the total sales value in return for the investment we've made in the planning process. And options normally means that we just have the right to buy the land at a fixed price at some point in the future, which we will exercise if we can get a valuable planning consent. Now we -- as a result of the regional structure, clearly, we've had more people, more boots on the ground. We've been out looking for sites and that's really come through this year as we're 12 months into having a full regional structure in place. We've grown our pipeline by 30%. And so the math is very easy. You can see what the teams have been doing out in the field. In terms of which we would prefer, I have to say, it's not as scientific as your question would perhaps indicate. We're very much driven by vendor expectations. Vendors are normally advised by an agent, and the market has very much been preferring planning promotional agreements, and that is very typical when you've been, let's say, in the healthier side of a cycle. Agents will advise vendors to stay in for as long as possible because they will maximize their returns, it's just risk and reward. As a business, we would always prefer to buy freehold because we're completely in control of the site. We can capture all of the gains, 100% of the gains. And clearly, when buying freehold, it's all about the purchase price. So you've got to buy right. #1 rule on property, it's all in the buying. But the large number of PPAs coming through is a reflection of the market and the desire for certain types of landowners to stay in for longer. If I had it my way, every single acquisition would be freehold. But I'd say we -- if there is a good site out there and we have the management capacity to deal with that site, and we can take a slice of profit, we'd rather do it. Returns on capital are greater on PPAs, but you don't have much capital out the door on day 1. However, quantum of return is much greater on freehold.

I suppose, James, it's also creating, isn't it, Owen? A healthy balance across the portfolio, really. So it gives us the projections over the short, medium and long term with our pipeline. So we're always assessing a balance of how we use our capital and our resources to create the best returns for our shareholders and also to drive that long-term value growth.

Yes. And I think it's probably worth -- I'll add back in something I explained to shareholders 2 or 3 years ago, when people said, which do you prefer, beds or sheds? And I said, both or neither, because by having the sort of beds and sheds split across our portfolio, it means we can ride the cycles in the market. You can never quite predict which one is going to be better, whether -- particularly -- let's face it, we are probably going to be going into some fairly rocky waters now -- rocky times going forward, we just can't ignore that. And I -- at this point in time, it's hard to predict whether the beds market or the sheds market will be the stronger one as we come out the other side of all the travel restrictions. I suspect it will be residential because people still need houses. They'll take a pause. If they can get the mortgages, people keep buying houses. There's a fundamental shortages of houses being supplied to the market still. So -- and it's the same way as the deal structures that we're talking about. Yes, in a perfect world, we might want freehold, but actually having a split of freehold and PPAs allows us to marshal our capital and give ourselves optionality. So does that answer your question? I think he's gone.

Next question comes from Chris Spearing from Liberum.

Just a question about opportunities that you expect to emerge over the next 12 months. Obviously, the balance sheet is in very good shape with the LTV at 12%. So do you expect the focus to be on strategic land acquisitions or on income-generating assets?

I think our focus will be on both. You probably were listening very carefully. I know what you like, Chris. I did mention about opportunistic purchases. Now in the normal dynamics of the market, I would expect income opportunities to come first because the sort of the cycle time for the sale of income assets is a lot quicker. So if there is distress in the market, if people have got -- if other people got themselves overgeared, the income assets are normally more easily salable, they will come to the market first and we will look at those very carefully. And where we see value, where we see those income assets being complementary to our existing portfolio, as you say, we have the balance sheet, and we'll be opportunistic in our review of those. What I'm actually hoping, just going back to the previous question, is some vendors that maybe wanted to stay in for the longer term and were wanting us to go down some sort of option routes or planning promotion agreement route, some of those vendors may just now want the cash. And so we will look for opportunistic purchases on the strategic land side as well. So there could well be opportunities coming out over the next few months. And yes, we do have the balance sheet to be able to capture some of those.

Great. I actually just had another question, sort of relating to planning as well, Owen. And what needs to change to actually reduce the planning headwinds that you talked about? And how likely is that to happen in the sort of short to medium term?

Well, the changes already happened because we now have a clear, strong leadership at national level. Please don't read anything into my political leanings on that. But obviously, having a government with a clear majority, means that they can give clear direction to local authorities at a local level, and if necessary, intervene if those local authorities aren't bringing those local plans forward. The reason why I talk about continued headwind is when you have these sort of shocks and people abandon local plans, it does take a year or 2 for these plans to be rewritten, republished and consulted on again. So there is an inevitable delay. But even with the Chancellor's statement just last week, he is giving clear direction that they want housebuilding, in particular, to accelerate. So councils that are failing to deliver on their obligations to provide a land bank will get sanctions if they don't bring a local plan into place. So I say the action has happened, it will just take a year or 2 for that to unwind.

[Operator Instructions]

Okay. Looks like I'll thank everybody for attending. As ever, if you think of questions after the call, we -- our roadshow starts this afternoon. It will all be by telephone calls or video conference, but speak to brokers or speak to FTI, and we look forward to speaking to you all soon. Many thanks.