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

Good morning, everyone. Welcome to Harworth's preliminary results presentation for the year to December 2020. For those of you who have not met me yet, I'm Lynda Shillaw and I was delighted to join Harworth as Chief Executive on the 1st of November last year, which just happened to be the week that the U.K. went into its second national lockdown. And while not the easiest way to join a company, what once would have been really challenging was made easier by the way that the business had already adopted to remote working. And like many businesses, we are still using the technology today. In terms of the agenda for today, I will start by making a few opening remarks and observations based on my time so far with Harworth, including a quick overview of 2020 for the group. And then I will hand over to our CFO, Kitty Patmore, who will take you through the details of the financial and operational performance of the group during 2020. I will then come back towards the end of the presentation to talk about the outlook for our core markets, why I believe that Harworth is strongly placed to benefit from the trends that we see and why I'm so excited to have joined the company at this point in its history. Just a quick point of administration before we continue. We have a Q&A at the end of the presentation, and you can log your questions using the facility on the webcast as we go, and we'll pick them up from there at the end. I'm sure that most of you are reasonably familiar with Harworth and its business. But as a relative newcomer, I feel that Slide 4 is a good summary of what first attracted me to the company and why I believe that Harworth is such a special business. Firstly, the what. Central to our business is our ability to assemble strategic land and take it through the planning process, securing consents and driving value for investors. We take a long-term view. Our projects have long time horizons. We invest in our sites to deliver necessary remediation and infrastructure works and bring the service land to the market in managed phases, driving further value for investors and delivering regionally significant schemes for communities. Secondly, the how. We deliver great places through the expertise and experience of our people. Our teams typically live in the areas in which they operate. And importantly, they know and understand the local communities and the local economies. To deliver successful developments, we work closely with communities and in partnership with the local authorities who are key in supporting and granting consents for our schemes. We have a long track record of reliably delivering high-quality schemes and positive outcomes. This is very important to our business and to our people who have a very strong sense of purpose and take great pride in creating and delivering sustainable communities in which people want to live and work. We have the tailwinds of strong demand in our core sectors. And we are aligned with 3 of the most important elements of the government's agenda: increasing the supply of good quality affordable family homes; creating jobs, particularly in the regions in which we operate as part of the plan to level up regional inequalities; and supporting the growth of post-industrial green economy as the country emerges from the global pandemic. One thing that has stood out for me from the day that I joined the business is our strong sense of purpose and the commitment of the Harworth team to that purpose. For me, this underpins the many strands of ESG which seem to naturally run through Harworth, both in what we do and the way that we do it. We have encapsulated ESG principles in the way that we deliver sites, and it has been fully embedded into our investment process since we listed in 2015. Living our purpose can be illustrated by the 4.5 million square feet of employment space that we have created, much of it in deprived parts of the country. Our master plans have to date released plots to housebuilders on which 5,000 family homes have been or are due to be built. It can also be seen in how we remediate former industrial sites, creating circa 800 acres of country parks and public open space across our sites. We work with local communities and stakeholders throughout the whole development life cycle of a site, and we'll continue to do so beyond this with our ongoing curation of the spaces that we create and continued involvement in the communities. Our purpose is alive in our people and the way that we do business. In my short time at Harworth, I've not met anyone who is not immensely proud of what we do and what we deliver. and importantly, that we deliver it in the right way. Before I hand you over to Kitty, who will review 2020 in more detail, I will summarize a few key highlights for Harworth, in what for our business and our people was a very extraordinary and challenging year. The fact that Harworth is able to report such strong results in the face of such a challenging year is testimony to this underlying strength of our business and our core markets, as well as the hard work and dedication of our teams. We are delighted to report that notwithstanding 2 national lockdowns during the year, we were able to continue to safely operate and progress our key development sites and by the year-end, complete the major sales in our revised budget. Demand in our core markets has remained strong despite the economic effects and disruption caused by the pandemic. Our income team achieved an excellent rate of rent collection of 96% for the year as a whole, thanks to their proactivity and our excellent relationships with our tenants. Active asset management drove further value and income growth in our income portfolio, and this was further boosted by acquisitions made during the year. Our property valuation gains reflects a year of profitable sales and resilient rent collection, with our EPRA NDV per share increasing by 2.8% on 2019 to 160p. And finally, as you will have already seen, Our Board is pleased to recommend a 2020 final dividend of 1.466p per share. This includes a payment for the 2019 final dividend, which was canceled at the start of the pandemic last year. I will now hand over to Kitty, who will talk about 2020 in more detail.

Thanks, Lynda, and good morning, everyone. Starting with Slide 8. This shows our financial highlights for 2020. Over the year, EPRA NDV per share has grown by 2.8% from 155.6p o 160p per share. The main components of this growth is from our value gains, which in 2020 were GBP 22.3 million. This has resulted in a total return of 3% for the year. With the onset of the pandemic last spring, we started development works a little later on site than originally planned as we paused to see how everything would unfold. Despite this, we were still able to complete strong sales of GBP 75.8 million. Our operating profit increased to GBP 27.8 million, and we were pleased to see our annualized rents continue to grow to GBP 19.8 million from new acquisitions and asset management initiatives. Profit excluding value gains of GBP 3.5 million, in line with 2019. And we finished the year with net debt of GBP 71.2 million and a net loan-to-portfolio value down to 11.5%. As Lynda has mentioned, the Board has recommended a final dividend of 1.466p per share. This comprises 2 elements: firstly, a 10% growth in the 2020 final dividend; plus secondly, the amount of 2019 final dividend, which was canceled in April last year. This increased total dividend reflects confidence in our business and the year ahead. Combined with the interim dividend paid in Q4, this gives a total dividend for 2020 of 1.8p. Turning to Slide 9. This provides a breakdown of our value gains across the portfolio. As we spoke about on the previous slide, value gains are the largest component of our EPRA NDV growth. They include both profits on sales made in the year and gains on revaluation. In 2020, we delivered value gains of GBP 22.3 million. This was split between GBP 6.7 million profits on disposal and GBP 15.6 million of revaluation gains. 2020 was a year of 2 halves for the property valuations. In the first half of 2020, the valuation of our major development sites reduced when market uncertainty was reflected in lower valuations on our residential major development sites and we reported valuation losses of GBP 23.2 million in our interim results. Over the second half of the year, we took management actions to drive value, focusing on continuing to remediate sites and invest in 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. We completed a number of major sales -- sales to major housebuilders at the end of the year and has helped to underpin the year-end valuations. On the commercial major development sites, the strength of the industrial market along with our activity on sites continue to bolster these valuations. Despite the strong progress across our sites generating value gains, these gains in half 2 only partly reversed the half year value reduction on our major development sites. This is because uncertainty remained in some parts of the residential markets, although we are pleased that no sites reported reductions in end sales values or gross development value. We, therefore, expect this to correct over time. The valuation reduction on the residential sites, which has not been unwound, totals GBP 14.5 million against the total residential major development site valuation of GBP 178.7 million. Value gains in strategic land reflect progress of planning applications and demand for commercial strategic land. This includes value gains we secured on new acquisitions that we made during the year. There were also several profitable land sales, including the sale of part of the site at Skelton near Leeds to Wheelabrator in April. GBP 19.7 million of value gains were delivered by our Business Space and Natural Resources teams in 2020. This reflects a responsive asset management and letting strategy in an active industrial and logistics market. In total, value gains in the second half of the year were GBP 45.5 million, showing a strong recovery, which when combined with the half year value losses, gives us total value gains for the whole of 2020 of GBP 22.3 million. Slide 10 looks at how our growing rental income continues to cover the overheads of the business. Our profits from capital growth and income generation sales on a statutory basis when combined with our rental income, rental costs and overheads provides our operating profit. In 2020, growth in the annualized rental income from GBP 15 million to GBP 19.8 million helped to support our operating profit, which also increased in 2020 to GBP 27.8 million. Overhead costs increased with the planned continuation of the regional team rollout and additional COVID-19 expenses. Our profit excluding value gains, or PEVG for short, reflects the underlying profits of the business, excluding those from disposals and gains or losses from the revaluation of our property portfolio. PEVG was GBP 3.5 million in 2020 which is consistent with 2019. Tax continues to be higher in 2020 as it was in 2019 with profit on sales and deferred tax. And as you can see from the table, the profit excluding value gains continue to cover our group overheads and interest. Slide 11 gives an overview of the portfolio, which remains diversified. We will talk about the different sections of the portfolio over the coming slides. But as you can see from the pie chart on this page, the total portfolio is now valued at GBP 618 million. 56% of the portfolio is from our capital growth part of the business, which comprises strategic land and major development sites in the green and the orange segments. 44% of the portfolio is our income generation part of the business, comprising Business Space, Natural Resources and our legacy agricultural land in the red segment. Over the coming slides, we're going to look at a few case studies and the highlights of 2020. However, in addition to this, in the appendix, we've included some further information on our larger sites by value with their stages of development. So turning to Slide 12 and the first slide on our strategic land portfolio. This graph shows that the long-term pipeline of Harworth has continued to grow and now stands at the highest level to date with over 30,000 housing plots and over 27 million square feet of industrial and logistics space in the pipeline. The housing plots or commercial space that we hold with planning consent broadly sits within our major development sites. The strategic land portfolio, which is sites without planning permission, contains around twice as many housing plots or industrial and logistics space. To illustrate this, around 9,000 housing plots have planning consent and sit within our major development sites with a further 21,000 housing plots that are in our strategic land portfolio. Similarly, 9.2 million square feet of industrial and logistics space has planning consent but a further 18 million square feet sits in our strategic land portfolio. This demonstrates the value that can be driven from the existing portfolio as we use our expertise to bring sites from strategic land through planning, to service land and development sales as major development sites. On Slide 13, we look at acquisitions during 2020 when we acquired land and property for a total consideration of GBP 50.5 million. This included the interest in a joint venture for a strategic commercial land site in the Midlands with the potential to bring forward over 3 million square feet of prime logistics space subject to planning. In total, land acquisitions in 2020 added a further 3,293 plots and over 3.4 million square feet to the pipeline. Demonstrating our track record of acquisitions, the portfolio now stands at over 50%, which has been acquired rather than inherited from UK Coal. We are seeing a good pipeline of opportunities in 2021 so far, including from corporates, private landowners and charities, and are actively seeking to continue to grow the portfolio to provide future returns. Moving on to Slide 14 and the first of our slides on the major development sites. This shows our progress in making commercial land sales in the year. The largest sale is at Skelton near Leeds were a sale in April saw 19.5 acres sold to Wheelabrator for an energy for waste plant. Other sales at Logistics North, Kellingley and Riverdale meant that total commercial land sales generated GBP 15.4 million of receipts for Harworth Group. Planning was secured at Gateway 36 in Barnsley in the first half of the year and continues to progress at Wingates in the Northwest. We completed 2 new Costa Coffees and we have commenced direct development of a new energy-efficient building at Logistics North, which is due to complete this spring. We have been working in 2020 on our base building specification. And this is the first of our new enhanced specifications. Where we can see strong market opportunity and demand across our commercial portfolio, we will look at bringing forward new logistics development to create additional value. In the first of our commercial case studies on Slide 15, we look at one of our flagship developments at Logistics North. In 2020, a plot was sold to A&F Forecourts, and we started the development of the new building on Plot H, as I have just mentioned. 5,500 people are now employed on the site. And at Logistics North, we have also developed an innovative surface water drainage system, which we're now rolling out into our new developments. Once completed, Logistics North alone will add over GBP 450 million of gross value to its local economy. The photograph shows the extensive Country Park at Logistics North with its network of parks. With environmental factors and staff wellness rising rapidly up the agenda of industrial and logistics occupiers, we believe in bringing our place-making skills beyond residential sites. So the employment communities should also benefit from attractive working environments. Turning to Slide 16. In 2020, we were delighted to launch Konect at Kellingley. Kellingley, a former Colliery site is unique, and this is as a distribution site connected in 3 ways: by road, rail and water, on the left, right and bottom of the image, respectively. This is helping to diversify the transportation of freight in the region. The master plan secured by Harworth in 2019 totals 1.5 million square feet of logistics and manufacturing space. And the image shows our vision for the site. In 2020, enabling works commenced and 3 acres were sold to the Coalfields Regeneration Trust. We plan to build small industrial units to support small and medium-sized enterprises. Once completed, Konect will add GBP 274 million of gross value to the local economy. Slide 17 delves into the detail on our residential land sales across the year. We made 5 sales across 4 major development sites for a total consideration of GBP 44.5 million And these sales will deliver new homes across our regions. This year, we sold plots at Coalville to 2 housebuilders who were new to us at Harworth, Redrow and then Bellway. We worked with Avant at Waverley and Micklefields and brought forth David Wilson Homes as the second housebuilder onto our Thoresby Vale site. This means we have now worked with 17 separate housebuilders across our developments, showcasing the popularity of our land product. Slide 18 case studies our Thoresby Vale site, which saw David Wilson Homes join Harron Homes on our site next to Sherwood Forest in Nottinghamshire. The first homes are now built at this site only 5 years since the closure of the Midlands' last deep mine. 2020 has seen the restoration of the huge former spoil heap into a new 350-acre country park. This is almost complete and will be open to the public in due course. Illustrating how we use sites broadly, one of the former buildings has been used in 2020 by a new modular housing company, Blossom Homes, who are developing their modular housing product using low-carbon concrete alongside new construction methods. The photo on the previous slide shows the modular homes being built. Their first house will be used as a 5G Innovation Hub by Harworth along with our partners, including Nottinghamshire County Council, Nottingham Trent University and Birmingham City University, and it will provide a test and research center for 5G technology including its use in homes. In the second of our residential case studies on Slide 19, we look at our Micklefields site, also known as Flass Lane in Castleford. In 2020, we sold the final phase of land to Avant Homes, meaning that over 5 years, we have secured planning, put in infrastructure and sold land to enable 550 homes to be built. As part of our infrastructure works, we enabled the delivery of the relief road through an innovative partnership-led approach with Wakefield Council, creating significant improvements in public transport, access to local facilities and joining together of communities. Now Slide 20 provides a greater see-through of our income portfolio to give some more color on this part of the business. Our income portfolio continues to be derived from business space, our natural resources portfolio and agricultural land, but with our core income coming from our industrial and logistics business space portfolio 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 in 2020, we made 4 income acquisitions across the business space and natural resources portfolios totaling GBP 40 million. Where appropriate, we continue our churn strategy with sales of lower-yielding properties where business plans are complete. At the end of the year, this left us with an income portfolio with a blended gross yield of 7.3%. Our asset management work also meant that in our business space portfolio, We have a low vacancy rate of 4.5% and a weighted average on expired lease term of 12.5 years. Rent collection over the year has been very strong with an average collection of 96%, a result of active asset management and close tenant relationships. Slide 21 provides more detail on the largest of our income acquisitions in 2020, the purchase of an industrial site in the northwest at Knowsley. We purchased this well-located property in November for GBP 26 million at an attractive Net Initial Yield of 7.7%. The site provides GBP 2.1 million of rental income as well as asset management opportunities to work with tenants. There are also over 4 acres of vacant land, which have the potential for redevelopment in the future. Lastly, moving on to Slide 22. All of this activity has been funded whilst 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 developments and acquisitions. Net debt increased over the year by only GBP 0.3 million, as we matched our sales proceeds to developments and acquisition spend during an uncertain year. Along with progress on our sites, the result was a year-end net loan-to-value of 11.5% down from 2019. This low leverage provides flexibility on business decisions. We may consider taking higher leverage on a short-term basis to enable us to bring forward stand-alone development projects in the future to maximize value. We finished the year with undrawn debt and cash headroom of GBP 62.7 million, which provides a solid platform for growth going forward. I'll now hand back over to Lynda.

Thank you, Kitty. I would now like to conclude today's presentation with a few observations about the outlook for our core markets, some of the broader political and environmental trends and what this means for Harworth. Finally, I plan to wrap up this morning's presentation by summarizing why I believe that Harworth is well positioned to thrive and prosper over the coming years. Slide 24 looks at the industrial and logistics market. Demand for industrial and logistics space remained very strong during 2020, and this has continued into 2021. Both investor and occupier demand is challenged by the lack of supply. It is well documented that the pandemic has accelerated trends such as the decline of elements at the High Street and in doing so, boosted the relentless growth of e-tail, both from traditional e-tailers and also businesses who have adapted by diversifying their channels to market. Brexit is also driving occupier demand for space due to onshoring and the shortening of supply chains. I refer you to the 4 graphs on the slide, which have been compiled from data provided by the research departments of the major agents. All show a very similar picture of low supply, particularly of quality grade A space, with take-up in 2020 being the strongest on record. And as can be seen in the charts on the top half of the slide, requirements rose sharply towards the end of 2020, and there is less than 10 months' worth of supply in the market. We see the current demand-supply situation continuing for the foreseeable future. And we believe that our quality, well-located developments are also benefiting from the place-making skills, which we have transposed from our residential sites to create attractive working environments with green spaces that can be enjoyed by those who work there. Looking ahead, given the strength of the market, where we can see strong opportunity in demand, we will bring forward new industrial and logistics developments to create additional value. Slide 25 shows that the U.K. residential property market saw a strong recovery after the first lockdown as government stimulus through the stamp duty holiday and Help to Buy kicked in. You can see in the 2 graphs on the left-hand side of the slide, which show year-on-year transactions and 2020 starts and completions. The graph on the bottom right of the slide shows the number of homes granted planning consent in 2020 remains significantly lower than the run rate of the preceding 3 years. There are also large differences in regional affordability ratios. The regions in which we operate offer more affordable new housing than much of England and in particular, the Southeast. The graph in the top right corner of the slide shows Savills' 5-year house price forecast by region. All of the areas in which we operate are forecast to see the highest growth rates in the country and all are in excess of the forecast national average rise of 21.1%, which is represented by the straight line. Sentiment for 2021 from the housebuilders have been very positive to date with healthy forward sales through Q1 and into Q2. This, supported by the short-term extension of the furlough scheme, the latest changes to stamp duty and, in particular, the new mortgage guarantee scheme, where multiples of salary are more easily achievable on more affordable housing should support the housing market in the regions. The pandemic and the need for many people to work from home has also highlighted the importance and the value of green spaces, be they private gardens or public open spaces where people can exercise and relax. Our master plans deliver exactly such developments. They're well planned with green spaces and the necessary infrastructure to create vibrant new communities. Delivering their ambitious target of 300,000 new homes per year remains a government priority. However, in the medium term, the U.K. housing market for affordable family homes is likely to remain structurally undersupplied. And we see demand for our quality engineered land remaining strong during 2021 and beyond. Slide 26 shows that what Harworth does and how we do it is an enabler to the delivery in the regions of the government's agendas of leveling up the U.K. economy, addressing economic, generational and regional inequalities and increasing the supply of housing, particularly for first-time buyers. As a master developer in some of the regions targeted by the government, we intend to use our strategic land banking capabilities to play a leading role in helping to deliver houses and jobs in these areas. Harworth has a strong track record of regeneration and bringing new industries into former industrial areas, working in partnership with government and other key stakeholders to bring in high-caliber businesses who can create skilled jobs. This can be illustrated by the Advanced Manufacturing Park at Waverley where around 4,000 people are now employed, a number that is still growing compared to circa 900 when Orgreave closed operations in 1990. Our strong ESG credentials and skill set, which focuses as much on the how as the what means that we are ideally placed to create sustainable developments, revitalize local economies, and help the regions to implement the government's growth agenda. In closing, I would like to make a few concluding remarks on why Harworth is well placed over the coming years to grow and thrive and to continue to deliver long-term, market-leading, through-the-cycle returns for our investors. As will be clear from my earlier comments, I am hugely excited to have been given the opportunity to lead Harworth through the next stage of its development and growth. It is very clear to me that Harworth is one of a kind. We are unique. We have a significant strategic land bank, a clear regional and sector focus and our core markets have strong fundamentals with structural undersupply. You can see on this slide the extent of our regional coverage. We have a through-the-cycle business model with a pipeline of both short-term and long-term sites, and we continue to assemble sites to enable us to deliver long-term value for investors, which can be seen in our continued year-on-year EPRA NDV growth. We have a highly engaged and motivated expert team with a strong corporate culture. Our team all believe passionately in what they do and care about the way that we do it. Our purpose is aligned with a number of key government priorities in housing, in regional leveling up and in developing green industry. ESG in its broadest sense is something that has long been part of Harworth. And many of its strands are embedded in our processes and our culture and are core to our purpose. We are soundly financed with a low LTV and good levels of headroom, which give us the capacity to invest for future growth and continue to deliver market-leading returns. 2021 has started well for Harworth. We're seeing strong demand for our service land. We are continuing to make good progress across our portfolio and we are working on a number of potential acquisitions. Last but not least, like any new CEO, I am in the process of reviewing the business. The work on this has started and will conclude in the summer. As a business, Harworth has good bones, a strong purpose, a track record of delivery and a belief that what we do is important to the regions and the communities that we operate in. I hope that you can tell from my enthusiasm for the business that this will be evolution, not revolution. And that we are focused on ensuring that we continue to optimize returns for our investors from our existing portfolio at the portfolio and grow the business sustainably in line with our purpose. With that, I would like to say thank you very much for listening to our presentation today. And Kitty and I will be delighted to take any questions that you might have. So we'll now have a look at the questions that have come through whilst we've been speaking.

Thanks, Lynda. See if I can make this technology work. So the first question that we've got from Colm Lauder at Goodbody is around some of the income portfolio. We've got a couple of questions on sort of the income statement in particular. And Colm has asked if we can comment on the fall of coal fines income, which Colm has picked up that although we've grown rental income over the course of the year, actually, the total revenues from the income generation part of the business dropped slightly. And he's absolutely right that, that's down in coal fine income, which is about GBP 4 million lower this year. So should this be expected going forward? And I think that's absolutely right. For us, it's not a core part of our business anymore and we've been acquiring sites. As you can see, over 51% of the portfolio is now sites that have been acquired, not from UK Coal sites. So it's definitely something that we're transitioning away from. And what gives me great comfort is that we've grown our annualized rental income from the business space and natural resources portfolio quite substantially. So that's gone up to GBP 19.8 million. And that really gives us a much more consistent level of recurring rental income to look at, gives us the opportunity to drive value gains as well as we grow rental income off those properties. And it's also something that sits very comfortably with us from an ESG and a purpose perspective as well. And we've also had a question about sort of expenses and increase in administration costs, and I think I can give a little bit of comfort on that for everyone. So the administration costs went up this year because we continued the planned rollout with our regional offices. That's absolutely key for us. It's something that we set as a strategy a few years ago. This has resulted, as you can see, in a big increase in our pipeline portfolio and continuing to deliver value gains by having teams on the ground in the Midlands and the Northwest to drive those projects forward. And there were also some COVID-19 expenses. So excluding those COVID-19 expenses, actually, the increase was fairly minimal in those administration costs. And so, we've got a question from James Carswell at Peel Hunt as well. And James says, "Were the revaluation gains in the income-producing portfolio driven by yield compression or rental growth? And what is the current valuation yield on the industrial and logistics side?"

So well, I mean, the reality, James, is, it was probably a little bit of both. We bought really well. And we bought assets, as we always try to, that have actually got some really sort of great asset management opportunities, not just in the standing assets themselves. But you'll see from Savills that there's also the potential to actually bring forward development there.

Yes, absolutely. And Chris Spearing at Liberum has just sort of said, "You made a comment that Harworth is well placed to benefit from the government's leveling up agenda. How do you expect this to impact Harworth's operations?"

I think there's a number of factors to this. So we are actually starting to see some of the government funding come into the regions and come into local authorities. For example, the station at Waverley, the railway station at Waverley was named in the infrastructure fund, and you're starting to see the towns when the monies actually work their way into the regions. Local authorities are also very focused on continuing to bring affordable housing forward in their areas. And so we work really closely with them to sort of unlock not just our sites but actually to see where we can support the delivery of some of the sites and some of the objectives that we have.

Right. And a question on housebuilder demand. So you mentioned the demand from housebuilders increased in the last few months on the back of a strong rebound in new home sales. So how we expect to see the speed into Harworth's land sales, both in terms of volume and returns in 2021? And I think that's absolutely key. We saw strong sales at the end of last year, which really was that transition of the housing market. We've sold now to 17 different housebuilders, and we've got strong relationships, and you'll have seen some recurring relationships and sales with those housebuilders as well as bringing new ones onto the book as well. We are seeing demand in 2021. The housebuilders have got strong forward sold order books. And really, that underpins that desire for housebuilders to buy service land that we produce that's really easy for them to work on in good locations where there's good demand from local house-buyers. So that's something that we think our sites are very well placed to take advantage of over the course of this year.

Yes. And I think I'd just add to that one. We've got strong relationships now with 17 major housebuilders and a number of the transactions that we do are repeat transactions.

Yes. Absolutely. There's a couple of questions on logistics developments as well, Lynda, around whether we would expect to see an increase in logistics development and what that might look like for us across the portfolio. And the fact that I mentioned that project-specific debt fell over the short term. And do you wants to take the logistics development and I'll do the debt?

Okay. So we're on site with Plot H and Logistics North as sort of Kitty sort of spoke about earlier. And we're also continuing to look across the portfolio that where the market fundamentals are right and where we can sort of basically sort of live within our risk and return expectations. Actually, there are developments that we would like to bring forward as we go forward, so not just in this year, but actually in the next -- over the next sort of couple of years. From a funding perspective, I'm going to hand back to Kitty, who will take that one.

So you'll be aware that we've used -- alongside our main corporate facilities, we've used project-specific debt in the past. So for instance, on the Plot H building that we're bringing forward at Logistics North at the moment, We've got an evergreen debt facility, which helps us to deliver that development, so it's development finance for us to do so. And we've done similar things on the Advanced Manufacturing Park as well in the past, as well as working with Homes England on some of our residential sites. And I think it's that, that at the moment, when I look at that, there's quite a bit of development finance that's attractively priced at the moment. And if that helps us to do more on our sites and to make our capital work harder, then that's something that we would look at. The reason that I say it's fairly short term is because the way that those transactions work is that we spend to build the building. And then once it's complete, we would refinance it in our corporate facilities or sell the completed building as well. So it's a point-in-time leverage that would come back down again. And I think, Lynda, we should -- there's one last one that might be sort of a nice place to finish, which is from [ Matt ] at Peel Hunt, which says we're going through a review at the moment. So could Harworth speed up the rate at which it works through the land bank and given demand for industrial and residential in our markets, what would hold that back?

Oh, Matt, I think that's a mean question. Okay. I think one of the things that the review itself is looking at is actually, can we speed this up. And sort of probably there are a number of constraints around that, whether it's resource in the team, whether it is actually our funding capacity, whether it is our risk appetite. So fundamentally, we're trying to make sure that we use the capital that we have as efficiently as possible to drive the best returns. And I think where we see an opportunity to accelerate and to grow, we'll actually make that case and bring it forward and make sure that we actually get what we need to deliver it.

Absolutely. And I think the great thing is, as you called out, Matt, we've got really strong structurally supported sectors. We're seeing already demand from the residentials, housebuilders for residential land. And you can see the strength of the commercial, industrial and logistics markets as well. So it's a really solid platform with which to go from. But as always, it's just making sure that we maximize the value creation.

Thank you, everybody.

That's no further questions. So thank you very much.