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

Good afternoon, and welcome to Harworth Group plc Full Year Results Investor Presentation. Throughout this recorded presentation, [Operator Instructions] The company may not be in a position to answer every question received in the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to note the following poll. I'd now like to hand you over to Lynda Shillaw, CEO. Good afternoon to you.

Hi, thank you, Alessandro, and good afternoon, everybody. And I would normally say thank you for joining us, but it is just me this afternoon. Kitty sends her apologies, our CFO. She's had a bit of a medical emergency with her young son overnight, which has run through into today. So please be kind. I will attempt to answer as many of the questions that would come to the CFO as possible at the end. But as Alessandro highlighted, we might not be able to do all of those. So we'll come back to you in writing afterwards. But I suppose sort of just to kick off really and present to you sort of what Harworth has actually achieved during the year. So from a 2023 perspective, this slide actually shows the highlights. And you will see that actually, we delivered an EPRA NDV of 205.1p a share, so that was up 4.4%, total return of 5.1%. So up on '22, which in itself, although it doesn't look terribly shining, '22 was also a market-leading year. So 5.1% is a market-leading return for the business in a year where there were sort of many challenges, some of which I will sort of talk through as I present the rest of the deck. We closed the year with a really low LTVs. That was below where we exited December '22. So retaining that really strong balance sheet is actually sort of we work our assets through the cycle. And you can see if we work across the bottom of this slide that we managed also to bring some additional sort of supply into our industrial logistics pipeline, taking that up now to 37.7 million square feet. And our residential sort of pipeline is now sitting at 27,190 plots. So that's down a little bit on '22, but that is largely because during 2022, we actually accelerated some of the sales that we have planned for 2023 into the first half of that year. Those of you who may remember, it feels like a long time ago now, but the market was actually sort of pretty strong. And so we wanted to take advantage of that market in the first half of '22, and actually sort of push residential sell-through. The other stat that we're reporting on here for the first time, which is in the bottom right box is the reduction in our operational carbon emissions. So when we published our annual reports and accounts in May last year, we also published on that zero carbon pathway. And basically, sort of that is highlighting that we have seen a 24% reduction year-on-year in our operational carbon emissions. So those are the emissions that we make and control as a business, which is actually a pretty big step change. And that was largely achieved by switching to hydrogenated vegetable oil in plant to Ironbridge, where we had an awful lot of on-site remediation works ongoing, but also a bigger move towards electric vehicles and changing some of our energy contracts within our investment portfolio. And then the other step, which is sort of in the bottom right-hand corner, shows the potential gross value add to our portfolio to regional economies. We believe we're important to the regions in terms of the investment that we made but also the homes and the jobs that we create. And you can see that, that stands at GBP 4.8 billion if we built out our portfolio in terms of regional value add to the economy. So moving on to the next slide. This just illustrates over the last 5 years that we've consistently outperformed the sector. You can see sort of flagged above 2021 when we actually launched the growth strategy. You can see those sort of jaws widen as we've gone through '22 and into '23. But quite staggering, Harworth has basically delivered 40.6% of total returns sort of in -- since 2019 against MSCI or Property Index, which has delivered around 4.9%. And if you look at that in terms of weighting to industrial and logistics and residential sectors in the regions that we operate in, there's still a significant delta of something like 13% in terms of Harworth's outperformance. So if we look at the sort of the strategy, and this slide gives you an update against our strategic drivers, which are sort of the dark blue sort of arrows down the left-hand side of the chart. And then what you'll see is our performance in 2023, the ambition on the far right column as to where we want to be by the end of 2027. And actually, we've added sort of some detail in here in terms of how we're going to reach that ambition as we work through the sort of remaining years of our strategic plan. And I'll probably sort of say upfront that we are on track to deliver that GBP 1 billion of EPRA NDV by the end of 2027. You'll see looking at this, the eagle eyes amongst you will spot it. It's going to be a bit lumpy year-to-year as our sites are at different stages of production, and we're actually gearing up to bring some of the big industrial and logistics sites onstream. So in 2023, we only developed 193,000 square foot sort of during the year. Albeit, we were on site -- we're now on site with already to start a further 208,000 square feet. But importantly, the enabling works were underway during 2023 for 1.5 million square feet. So that's largest, our Chatterley Valley site. But there's other sites such as Gateway 36 and Droitwich sitting in that number as well. And that is a critical component, and I'll bring it to life in a slide later in the day. But that is an absolutely critical component of basically, how we drive this portfolio forward to basically sort of step up and go through the gears to reach that GBP 1 billion by the 31st of December 2027. You'll see we sold few plots in 2023 than we had in 2022. So we're at 1,170 plots. But we continue to make really strong progress with our residential site sales. So that number is lower year-on-year because, as I've previously said, we accelerated some of the 2023 sales into 2022. But also we have not completed the build-to-ramp portfolio sale in 2023, for reasons I'll go later in the deck. But that was a really respectable sort of performance in a market that was actually quite challenging, and we sold those plots through 9 transactions to 6 different housebuilders. In the first half of the year, mainly regional housebuilders in the market; in the second half of the year, it was the national sort of came back in for selected purchases. But all of those plot sales were sort of at or above 2022 book valuations. And actually, we also saw a really healthy 7 to 8 bids for each of the phases that we brought to market. So we were really pleased sort of with where we've got to. I'll talk a little bit more about mixed tenure products in a later slide. But just to pull out sort of on this slide that we -- in looking at that residential portfolio that we hold today, we think that around 20% of plots sold as we work through the remainder of the strategic plan will be to those mixed tenure products. And as we continue to sort of get those portfolios away, we'll refill that mixed tenure sort of hopper as part of our residential land delivery. And then the final point on this slide because I've talked about the land supply is about -- is how that investment portfolio is actually repositioning itself towards Grade A. Some of that is because we sold about GBP 70 million of assets during 2023 in the first half. So that will have taken out more secondary stock where we do not feel it is viable to upgrade them to EPC A. And we saw no redevelopment potential, so we took the opportunity to churn some of that stock out in the portfolio. And then they are being replaced those assets with the ones that we sort of developed last year, about 193,000 square foot and the 208,000 square foot is actually in the pipeline that you can see in the top left of this slide. And then if we move to the financials, if Kitty was here, she would be walking you through this slide. So this is the income statement. We've tried a slightly different format this year to just try and explain the key movements. But during 2023, we made total property sales of GBP 125.9 million. That's slightly down on where we were in 2022. And it is a different mix, a little bit more of the investment portfolio sort of sales in there than we had in previous years where it was very skewed to resi and that accelerated, and that acceleration of residential sales. But actually, that GBP 125.9 million is actually ahead of our 5-year average. From an income generation perspective, revenue from our income generation portfolio was lower during the year reflecting that successful sale of properties from the investment portfolio, but we also saw reduced income from areas such as coal fines and royalties. We're pretty much now finished with any coal fine revenue that will come in to Harworth going forward. But this, combined with fees gave us an underlying revenue of GBP 151.6 million. And the statutory revenue, as you can see, if you move from that bottom left-hand chart up to sort of the big chart in the middle, of GBP 72.4 million. The letting of vacant space on recently completed developments plus letting from vertical building to start this year, a further GBP 5 million of annualized headline rents into the portfolio as we move through '24 and into early '25. And that will make up for more than the difference of the rent that we've lost from the assets that we sold during 2023 and the one in early 2024. And if we look forward, what you can see is, we've got 72.1% of our budgeted sales for 2024 are now completed, exchanged or it had its terms. And this is pretty consistent with where we were at this point last year. I think it's really symptomatic of how we've been this long term through the cycle business. Not everything sort of neatly fits into the financial year, and we tend to be looking in any year at actually what we've got to line up for the year ahead, and in some instances of the year beyond that. And I know because we had a question on this next point that administrative expenses increased by GBP 5.3 million last year. So again, some of you, if you've heard us present before, we'll talk about how we basically have invested in additional headcount to scale up the business in order to be able to deliver that growth and that $1 billion of EPRA NDV. So that GBP 5.3 million was principally due to higher salary expenses from the full year impact of increased employee numbers. There's some cost inflation in there as we actually sort of basically scale the business up, and also sort of begin and maintain progress in those strategic objectives. So from a fair value perspective, increases in the fair value of assets held for sale and investment properties through the revaluation exercise resulted in early gains. So you can see that about halfway down the sort of the main charts in the middle, increasing to GBP 69.3 million. And all of these factors combined resulted in a profit after tax of GBP 38 million, which is a 37% increase on the prior year. And finally, just to sort point out to investors, the Board has decided on a final dividend of 1.02p per share, which brings the total dividend to 1.466p per share. And again, this is a 10% increase on last year's dividend, which has now increased by 10% for 7 consecutive years. So if we look at sort of the next slide and the increase in EPRA NDV. It increased by 4%, as I said, at the top to 205.1p per share, which means the underlying EPRA NDV of the business is now at GBP 662.9 million, which, as I say, is continued sort of to enable us to deliver that GBP 1 billion target by the end of 2027. And actually, it was largely driven, as I've shown a couple of slides next, by increases in valuations following planning progress and asset management activities by the team, unlocking some high-value uses on the site. Our net debt is lower due to London property sales and [ myself ] more than offset the development expenditure and acquisitions. And the EPRA NDV per share growth when you combine it with the dividend has resulted in this market-leading 5.1% total return. So valuation gains driven by management actions. If we start with industrial and logistics, what you can see here is in the bridges. And again, we're trying to sort of bring this to life with some sort of new charts. So hopefully, they're working for you guys as well. Has driven revaluation gains of GBP 60.6 million during 2023, representing a like-for-like growth of 29.3%. And this has been across our strategic land and major developments. So it's both. So strategic land is preplanning. And then once we get planning and we've made an active sort of start on site, the assets flip into major developments. And what's been driving this? So in the main, the sites that are listed here, so Ansty, Bennerley, Wingates and Skelton Grange. Ansty is a site that we have a contract for sale on, but it's subject to planning. And that site has now progressed into planning, and this is making pretty sort of some healthy progress as we go through -- as we come into 2024. But we're hoping we'll have a determination on that side by the end of '24, which will enable us to complete the transaction. So there's some planning progress there, and the valuation has moved up to reflect sort of progress through planning. Bennerley is the site, which we've held in the portfolio for quite a long time, which we now have a draft allocation on and we're actually moving that forward in the planning process. And then Wingates, which is one that many of you will have heard us talk about before, is the site that we have a planning consent on. And we went back for a revised rollout, which we got a revised content on, but it enables us to not just open the phase that we have consent for today of about 1 million square feet, but a subsequent 1.5 million square feet that sort of sits behind it. So it's a much better outcome for that Wingates site. So again, sort of the valuation of that site moved on to reflect those planning progress but also enhance [indiscernible]. And then Skelton Grange, which is the fourth site on here, is a site on the edge of Leeds where we got a plan [indiscernible] during 2023, which again has enabled us to really sort of move that site into the marketing phase. And we'll be on site doing enabling works as we go through 2024. So just from a Harworth perspective, I'd like to say, what you're seeing here is that dynamic of management actions in a market that really sort of didn't do very much, sort of largely, sort of still with -- from a capital growth perspective because yields continued to move out ever so slightly in the first -- in the latter stages of the year. And that really offset the rental growth that people are seeing across our portfolios. What you see here is the management actions and the things that we do to progress the sites are actually independent of that value generation. From an investment portfolio perspective, this slide is illustrating the fact that we have disposed of around GBP 70 million of assets. And actually, what you can see though is that the new leases that we have put in place and renewals and rent reviews that have taken place during the course of the year, have added GBP 2.1 million per annum of rent to our income, but have also actually sort of added around just over GBP 6 million of value to that portfolio. So that portfolio, like I say, is smaller than it was at this time last year. We will see that as we work through our strategy. We will sort of sell when we feel it's the right time to sell and then grow and rebuild. But underlying, we're seeing sort of healthy growth in rents both in terms of new leases on new stock but also renewals and rent reviews. And we saw about a 16% or 17% increase in rents against passing or ERVs on those transactions that we completed during the year. Residential is a slightly different story, and you will see sort of 2 of these charts combined that there are 2 things going on here. But from a strategic land perspective, we actually saw some revaluation increases in that land portfolio. So this is pre-planning the sites that sort of we're making sort of progress against nonetheless. But actually, in a market where residential house prices declined by about 1.8% over the year, it was a bit of a tougher market. We still saw healthy demands for our land products, and we were still making sales in line with our December 2022 book valuations. But if you look at the major developments bridge on the bottom right, what you'll see there is a small revaluation loss. And that really sort of reflects 2 things: one is transaction costs because your book valuations do not actually include transaction costs; but the other one was actually an adjustment to our cost plans. We've had 18 months now of sort of quite a lot of cost inflation feeding through. We're not sort of quite out of the woods yet. We've seen income costs come in on vertical build, but actually on civil's on the sort of infrastructure and the stuff in the ground, they've proved to be a bit stickier. And the way that we appraise our sites is on a residual valuation basis, and what we do is allocate some of the costs associated with later phases, particularly for amenity space. Actually, we are basically sort of budgeted for sort of right the way through the development of the site. And that means because we've taken lots of profit out of earlier phases of the site, but actually, there's an element of that is basically released to sort of fund some of the amenities as we work through the later phases of the site. We've had to update the cost funds to reflect what's been going on in the market. So you'll see an element of cost inflation that we weren't looking at a year ago was actually reflected in those valuations that we undertook during 2023. In the scheme of things, it's actually sort of quite a small number, but actually, that's the reason that the resi portfolio actually sort of moved back ever so slightly. And this slide, again, so some of you will have seen this before. So it shows the makeup of our portfolio, maybe sort of a bit more graphically. And there's 2 things. Left-hand side, the donut shows that around 2/3 of our portfolio is industrial and logistics, whether it is in the investment portfolio in the dark green, in the sort of top right. And then working through industrial and logistics, major development land and then through industrial and logistics strategic land. And then on the sort of the blue colors are our residential major development lands and strategic land plots. What's probably important to draw out on this slide, if we look at the table on the right, there's a couple of things. We're trying to show here how we -- as we progress sites, we generate value. So strategic land per plot is worth around GBP 5,000 a plot sitting in that sort of very pale blue color, sort at around 11 o'clock. When it's got planning and it's transferred into major developments and we're investing in infrastructure, what you're seeing there is actually the valuation shift to on average around GBP 34,000 a plot. And actually, sort of when we sell it, we're achieving sales prices of around GBP 53,000 a plot. Eagle-eyed amongst you will realize that, that GBP 53,000 a plot is probably lower than it was last year, but it's just a different mix of sites basically this time around. So you will see some of those -- that average fluctuates depending on the mix of sites that are being sold in any year. And if you flip into industrial and logistics, it's really a similar story. Strategic land is sitting at around GBP 7 a square foot. As we move it into major developments, it's progress through the planning process. We're starting to put infrastructure on-site. It moves up to GBP 29 a square foot. In the investment portfolio, the average is sitting at around GBP 89 a square foot for a built asset that's income producing. But the Grade A stock is close to GBP 130. So these are averages, and that investment portfolio is less mature than the residential portfolio. So as we produce this slide from year-to-year, you should start to see those averages sort of on -- from an industrial and logistics perspective actually continue to kick up. From a debt perspective, what this slide shows is sort of, as I mentioned at the top, our debt is very low. It's lowest in the sector. We've got significant headroom with GBP 165 million facilities and GBP 27-and-a-bit million of cash at this point in time. And that headroom, so gets recycled to basically sort of drive our investments in both future sites but also the fact that we own today in terms of infrastructure and vertical build, but we're in a good, strong balance sheet position as we sit here today. From a bank loan perspective, we've got 3 really supportive banks in terms of Natwest, Santander and HSBC. We have no refinance requirements until March 2027. We've got a blended -- our weighted average cost of debt is around 6.9%. And you'll see from the bottom of -- line of these 2 tables, that we've got some site-specific infrastructure loans that we put against -- the cycle loans were put against vertical development, which will need refinancing in 2024 but we'll refinance those from our RCF. The reason we've kept them for as long as we have is because they're actually slightly cheaper than the blended rate on our RCF. So it made commercial sense to do that. And then if I probably get on safer territory, which is back to the operational review as Chief Exec. What I'm hoping with the next few slides is that I actually just bring to life with you the momentum that's in the pipeline. And actually, the things that we will be doing to drive us to that GBP 1 billion. And again, this is a format of slides that we've used for the last sort of few presentations, and we hopefully find this sort of works for investors as well as it does for us. But this slide shows you our industrial and logistics portfolio. This 37.7 million square feet of space, which sounds absolutely enormous. But actually, we've added a bar, which is that planning status bar sort of at the bottom on the left-hand side, to show investors that actually 2/3 of that portfolio is in the planning system at some point. So whether it is a draft allocation, so a local plan that's been consulted on before it's adopted. And an allocation, which is the local plan that has been adopted, and therefore, you put your planning application in line with that local plan. Or the GBP 10.1 million in the planning system within applications at our sites such as Ansty, as I've talked about earlier, and Gascoigne Wood. And then we've got the GBP 6.1 million of consented sites at the front end. So the way to sort of think about this slide is the dark green blocks 1 to 5 are all sites that have a planning consent that are at various stages now or by the delivery. So the advanced manufacturing part we're building on, and we're building the next phases on. Same for Gateway 36. We've got the planning consent to build the next phases at Gateway 36, and we're marketing that now. And then Chatterley Valley, as I've mentioned earlier, we're on site doing the infrastructure works, which enable us to open that site up. There's about 1 million -- several million square feet to go up there. And then Wingates and Skelton Grange are the two of the sites that have got consent that we will move on to site this year to do those enabling works. And it's really important that sort of when you think about us growing to that 800,000 square foot per annum on average, we can't do it from the Advanced Manufacturing Park and Gateway 36 alone. So over the last couple of years, we've been -- we're working really hard to basically sort of broaden that industrial and logistics pipeline. So that we've got sites like Chatterley, Wingates and Skelton sort of coming on stream. But also not terribly far behind them sites like Gascoigne Wood, which is still in the planning system, hopefully, will come out soon. Planning application in for our sites at Cinderhill, and we'll be going in for planning on sites like Rothwell and Junction 15 and Northern Gateway as we go through 2024 and into 2025. So the more sites we have in production, the more volume that actually we'll be sort of pushing through. And that is actually how we're scaling this business up to get to that GBP 1 billion of EPRA NDV. The other thing to probably just pull out on this slide is that Wingates and Northern Gateway. So Northern Gateway is a site you probably will not have heard us talk about before. But we put it on this slide because it got allocated in the Greater Manchester places for everyone's strategic plan in the middle of our investor roadshow last week, actually. So -- and that gives us 2.5 million square feet of allocated space. That's half of a 5 million square foot joint venture to work into planning in early 2025, and then get on-site and develop as we get towards the end of our strategic plan period. Wingates, I flagged earlier that we had 1 million square foot with the consent, but actually, we've got another 1.5 million again as part of that places for everyone's strategic plan. So the reconfiguration of the road enables us to get into not just the front land where we have the consent but the back land as well, which gives us far more flexibility in terms of the product that we deliver. And these sites are all going to start to come on stream as we work through the next few years in terms of delivery. Front end of the plan, we've got about GBP 800 million of gross development value up to 2028. So there's a huge amount for us to go at. Some of which we'll build ourselves and we'll own. Some of which we'll build both forward fund and we'll build for institutional investors. Some of which we'll build for occupiers. Some of which we may sell a phase or sell a plot to basically sort of drive the site forward. But it's that mix of things that will -- which will enable us to drive returns but also sort of drive the growth of the business. And then from an investment portfolio perspective, just putting the metrics up here. So we sold 70 million last year and another site at the beginning of this year. But what this slide is really showing you is that the metrics will remain really robust. You'll see we're driving weighted average rents on year-to-year, and that's that new stock and the impact of that as well as the rent reviews that we've been progressing. You'll see the waltz is light. Sort of, again, has improved as that newer stock comes into the portfolio. Vacancy is really low at 1.2% across anything that hasn't been busy in the last 12 months. But the stuff that has been completed in the last 12 months is actually letting up quite nicely. And if any of you listened to us last year, we talked about the remaining plots at Bardon that was let during the sort of second half of last year. So that site is now fully let. And we've got one unit at Gateway 36 to let and then sort of more of the newer stock that's come through the Advanced Manufacturing Park. But I think it's also fair to say that occupier interest has really sort of ticked up since -- after the summer last year. So we've got some really strong interest, and we're seeing rents still push on from previous highs at all of these sites. And then this is the sort of residential version of the industrial and logistics slide that I talked to earlier. What you've seen at this is you've got an awful lot more sort of dark blue sort of numbers down the left-hand side in that table. And that's because this is a much more mature portfolio. And we've got a lot more sites with planning consents. So therefore, we've got a lot more sites in production. And as we move forward over the next couple of years, you'll see a similar sort of picture start to come through on that industrial and logistics side. The one thing I would say again is in terms of sort of what's the difference look at between the two is you'll see on the residential planning status pipeline that we have a much higher proportion that's unallocated than in industrial and logistics. That's a function of the planning system and residential consents are pretty much weaponized politically, locally. And it's slower and it's a bit -- and it's harder to sort of work some of these things through. That said, we have some acquisitions in legals, which should change the sort of weightings as we move through 2024. So a couple of really exciting strategic partnerships both of which already have an allocation and also a former brownfield site, which actually -- unusually for us, have an outline consent that will actually sort of be bringing into our portfolio as we work through 2024. Last couple of slides really now. For me, a planet and an ESG perspective, I've touched on what we've been doing on Net Zero Carbon Pathway and the carbon reductions. But in terms of Harworth and how we bring our sites forward, there is a really big focus on, basically, the sort of local communities and the communities that we create. And we've opened up a significant amount of acreage of new green space across our sites. We've opened up a ride -- learn-to-ride cycle track at Waverley in sort of the heart of the amenity. We're on site with the school at Coalville and at Olive Lane, which is also at Waverley. We've actually sort of now starting to build the health center, a lot of local shops, some offices and some of the housing that sits around that central hub in the middle of the site. We're important, as I said before, to our regions. Our portfolio can actually deliver over 76,000 jobs into the regions and GBP 85.2 million of business rates. And we work really hard with local authorities to make sure that we're delivering the right schemes and the right sort of products sort for them and what they want to grow in terms of employment and industry as well as housing. And then from a people perspective, we've had a busy year across a range of things, but looking at values, culture, behaviors but also actually making sure that we're training and developing our people through that [ growth ]. So to conclude, where we sit today, we're really enthusiastic and massively optimistic about actually this business' ability to continue to drive on and deliver against the strategic targets that we've set and to reach that GBP 1 billion target by the end of 2027. I hope I've shown you in the presentation that we can self-propel that through the land bank that we own and control and the skills that we have across our teams to unlock the best uses and the best values from those sites. We have got a proven track record of delivering through the cycle and actually, more importantly, consistently delivering above-market returns through the cycle, particularly in periods. You can see in the last couple of years where virtually, everybody else has gone backwards and we've managed to standstill and move forward, which I think is a testament to that long-term through-the-cycle approach, but our ability to take land and actually sort of working through the system. And that low leverage and strong balance sheet are really well positioned to drive value from the markets and actually fund our growth as we go forward. So that's the presentation. I'd like to hand back to Alessandro to just brief you all on how to submit questions. I will start with a couple that we have submitted in advance, actually, but I will do my best to answer as many as I can in terms of what has been coming from. Thank you.

[Operator Instructions] I would like to remind you that recording of this presentation along with copy of the slides and the published Q&A can be accessed via your investor dashboard. As you can see, we have received questions throughout today's presentation. And as you did mention, we have received a few ahead of time as well. Lynda, if I could just hand back to you just to maybe start with those pre-submitted questions, and then I'll pick up near at the end.

Okay. So I'll just read the question out that's being submitted and then sort of talk you through it. So the first question that we had was with the launch of both the affordable housing and net zero home strategies in 2023, can you discuss the anticipated return profile and return on equity for these strategies and how they compare with Harworth's traditional land sale model? So that was the first question. So I think just to sort of recap a little bit, both the affordable homes built-to-rents, net zero carbon homes, senior living, actually, when it comes, were all parts of our strategy to provide resilience to our product range and open access up to new growth markets. And that means that they reduce our dependency as we work through the cycle just on that traditional sales of serviced land to housebuilders, which actually when the housing market is really strained is quite an important sort of string to have to our bow. But they're also about the velocity at which we work through our sites. So actually, the more phases we can get on site together and as long as they're not sort of contaminating each other, enables us to drive land prices on, but actually enables us to basically drive returns because we're not holding a site for too long and actually sort of ultimately seeing that potentially start to drag on returns. In terms of the service land that is related to these products, we're actually sort of selling it in exactly the same way as we would to housebuilders. So sort of we are selling sort of land sort of at book value -- at valuation. So if we're selling land today, we will be looking at December '23 valuations. If you were selling land into 1 of these portfolios last year, we would have been looking at a December '22 valuations. And then on top of that, we take a development management fee, so there's an extra sort of slice of return for us as Harworth. The really important thing about this and why we sort of phase them and so we're very focused on actually bringing them forward together is because we want to maintain control of our sites, and we want to maintain control of our master plans. But actually, as we can accelerate and actually create really quite diverse communities, we can bring amenity forward like schools earlier. We can bring in sort of all these convenience stores and parks forward earlier and that place-making piece earlier, which does have a halo effect on the valuations of later phases of the site. So it's not something that we're doing at a discount. We're selling it. It could be a sale to a housebuilder or affordable homes or BTR because actually, we're getting that land value out, which is really important to us. And then on top of that, there's an extra slice of return, which comes from the development management fees. So that was the first question. The second question is looking at the industrial and logistics space. And after developing 432,000 square foot of industrial and logistics in 2022, the 193,000 square foot developed in '23 and the 208,000 started or about to start in 2024 reflects a reduction in growth, which is well below this 800,000 per annum. Yes, that is right. It's for a number of reasons. The question goes on to say, what is the barrier to scaling industrial and logistics. Our development economics and attractive market risk too high or is it timing and planning. There is a little bit of everything in there. We took a decision, we were on-site with spec as we exited 2022 at the Advanced Manufacturing Park. Their smaller units ranging from sort of 5,000 square foot to 40,000 square foot. So a product we're really familiar with. We pressed on and completed that, and we're in the process of letting those units up. But we took a decision not to start any more spec in 2023 but instead to focus because of the stage our sites were at on the infrastructure work to open up these sites such as Chatterley. The next site -- the next phase at Gateway 36, and we've got some land down at Droitwich, which was a former investment portfolio asset, which we plan to redevelop. So actually, we always knew when '24 will be very similar that we might be building less physical buildings as we went through '23 and '24, but we'll be really focused on opening up these big sites I've described earlier with site-enabling works and infrastructure, and we'll be marketing them as we go to secure the pre-let to sort of kick into that next stage of building. And that should scale up relatively quickly if we've unlocked and opened those sites up and got them ready for production. Market risk is -- I would say, in industrial and logistics, the market is pretty stable. Sort of institutional investors are back looking at product, but they're skewed to the Grade A, so the sort of stuff that we're building. Occupiers are back looking at products. And again, it's skewed to Grade A, the stuff that we're building. And in our markets, we've probably got less than a year's supply of stock. And obviously, it's like not a huge number of people building any spec at any scale as we have actually -- as we went through 2023. So there is a real opportunity as hopefully, we go through 2024 and market conditions continue to improve, but we'll actually have sort of quite a lot of firepower to go into '25 and through '26 and '27 from the site that we have. Planning is still painful, though having said that, we've had some glimmers of optimism in more recent weeks with a lot of local authorities actually producing their draft plans, and we've got quite a lot of sites now with draft allocations in the industrial and logistics space. So it feels like it's moving, but actually the whole process of a planning application as we've seen with Gascoigne Wood is pretty slow. With a portfolio our size, we've got all sorts of things moving all sorts of different speeds. Hence, we've got ourselves into a position where we can sort of kick on and start to build on some of these big sites. And then the next question is around admin expenses. So again, I've alluded to this earlier that they increased significantly in '23 versus '22 as we've invested in the team. And the question is, do we have the team and the infrastructure in place now to support scale in the business? Or will we be adding more? So 2022 was a big year for us. The reason you've seen the number jump so much in '23 is that's the first year where we've had the full year effect of the hiring activity that went on in '22. And we really did scale the business to basically sort of get us into a position to sort of drive forward. We will have to continue to hire selectively in areas such as project management and development and planning because our portfolio is growing, but also the number of sites that we will be active on will also be growing. So there will be some selective hiring in areas like that as we go forward. But we think the big jump sort of was the one that we saw between 2022 and 2023. I just have a look on this. Sorry, I'm having -- I've got no one to read the questions in advance, so just bear with me. So the -- there's a question here, which is the -- the GBP 5.1 million of annualized rent roll that will be added through the sites that are either where we've got vacancy. The new sites that are being built are still very vacant and we're letting them up. The stuff we're on site with this year or the stuff we're about to go on site with, and it's saying is that going to land this year and which sites and how many square feet are being transferred into investment portfolio to deliveries increased rents. Okay. So I can do this one. So that GBP 5.1 million will probably some this year. So we've already got about GBP 2.1 million of that GBP 5.1 million sort of sitting, waited to come in. And some, I think, I suspect we'll sort of trip into 2025. When we underwrite the development, we have a void period to let them up. And generally, all of this stuff that we're doing is sort of -- is coming in within the underwrite period. So it's quite hard sort of to build a building in the year and get it let an income producing in the year. We try really hard to do that. But actually, we're marketing buildings as we build them to secure that pre-let so that we get that income coming in as early as possible. So the GBP 5.1 million should ramp up as we -- we should ramp up towards that as we go through 2024, but some of that will come into 2025. The sites that we're talking about sort of in that are the 1 units let Gateway 36 at Barnsley, which is around 50,000 square foot, and we've got heads of terms out sort of on that and some pretty serious interest. We've got a number of units from the speculative development of the Advanced Manufacturing Park, which we're in the process of marketing and again, letting up, and we've got good interest, healthy level of interest there, actually. We've got 2 units which are pre-lets, which we're on site with building. So the income from those at the Advanced Manufacturing Park will come, and those units will transfer in, and that will sort of come through. And we've got a build-to-suit unit for an occupier who basically bought the land and we're building them in units. So that is theirs, and it's off the books. And the other sites that fit in that are some that we will start opening up at Chatterley in terms of the sort of smaller multiunit phase and also potentially Droitwich. So we've got a number of sites that will feed into that GBP 5.1 million and potentially beyond that depending on how much we can get on site as we go through 2025. And then we've got comparing industrial major development portfolio from the half year results to the full year results are material up with per square foot. That GBP 18 to GBP 29. Just let me see if I can go back to that slide. So you can see -- there you go. So you can see. And it's basically same, can we explain this large movements? So as I said earlier, strategic land is land that does not have a planning consent. It might be -- have a draft allocation or even be allocated, but we hold it as strategic land until the point that we have a planning consent, and we've made a meaningful start on site. And the big movers between sort of strategic land of major developments on industrial and logistics last year were Skelton Grange, where we got a consent during the year; Ansty, which has significantly sort of -- which significantly progressed during the course of the year, although that will largely still be sitting in strategic land; Bennerley and Wingates. So the big 2 really on that are probably sort of Skelton and Wingates actually. So that planning consent and that progress through planning, which de-risks the site has really sort of started to sort of shift the valuations on. And as I said, when I talked about this slide earlier, that industrial and logistics portfolio is quite immature in terms of the number of big sites that are in production and that we're building vertically on at the moment. You will see that to really start to ramp up, as I talked about on Slide 16. As we get more sites to the consent, and we get more sites where we're putting infrastructure works. And Chatterley infrastructure work will have been in that number as well. So that's what's really sort of moving it is planning consent, and it's actually sort of a infrastructure works, where we're sort of spending on that. And then I've got a question around how are we looking to balance the business going forward with home buyer demand protracted negotiations in industrial potentially being a drag. It's an interesting question, actually. So we like the fact that we do both homes and jobs and that we do them both at scale. As I said earlier, we think we're really important to our regions, and they think we're important to them in terms of what we deliver. Those more mature resi sites are really a key parts of how we fund ourselves. So actually, the cash that they throw off and sort of is basically recycled back into the business in terms of acquisitions, in terms of paying down our debt. So it comes in really nice and low at the end of the year. And in terms of basically sort of putting cash into infrastructure investment and development. So we see the sort of to -- sort of work to a slightly out of sort of think cycle, but they're both important to what we do. And we're continuing to build both portfolios to give us as we scale to GBP 1 billion sort of the cash that we need and the opportunities of scale that we need across the regions. So that's what I say, we like both and our acquisitions team target both. We might target a slightly different mix in terms of like maturities of sites depending on sort of what we think we need to sort of drive in a particular year of our plan as we look forward. But generally, sort of we are focusing our attention on still on both markets. From an industrial perspective and logistics perspective, it's slow at the moment in terms of like sort of time taken to get a deal done. Everything takes longer. But as the market sort of moves more into that growth mode, everything starts to happen faster. I mean we're only 24 months in the rearview mirror from speculative buildings being pre-let sort of a matter of months into construction or actually not even being started to spec because a build-to-suit deal had been agreed because nobody could wait for the stock. So when the market turns, it turns quite quickly. But as we look at our portfolio and we look at the sites, whether they're residential or industrial and logistics and the phasing of when they're in production, the 2 together basically enable us to continue to push forward and drive the returns. So I hope that answers the question. We've balanced the 2, and we are on top of it at a portfolio level in terms of pull-in believers that we need to pull if something is going slower, like we look at what we can speed up elsewhere. And then I've got a question on how can you accelerate the residential pipeline? It's a very good strategy question. We spent a lot of time looking at this back in early 2021. And we basically analyze the portfolio. We analyze the absorption rates for build-to-sell homes in the markets that all of our sites set in. And we've realized that some sites, maybe you could put, get phased away every other year because market absorption wouldn't take 200 new homes in a year being delivered on the site or even 100. Other sites, so Coalvilles, the Waverleys, Ironbridges is actually with the next one that does this, quite capable of having several different housebuilders on at the same time, producing product into the market. So that's where the mixed tenure piece comes in. What we realized is in markets where you might only be able to do 1 phase of sales every other year was actually you could do a build-to-rent portfolio in that market, and it doesn't compete with the build-to-sell product and you can actually build it at the same time. So that's actually how you start to accelerate your way through that residential pipeline, and you basically sort of drive returns by getting more sites out of the -- from more phases out of the front door earlier but also you're putting all your amenity in earlier, which is basically making a more valuable place to come in terms of sort of land sales later on. So it is that mix of both housing product. So if you got 3 different housebuilders, will be tending to build slightly different things at different price points, mixture at the end of 10 years. So that rental, affordable, senior living, net zero carbon sort of will come into the mix on that. Then I've got a question on, with the upgrade of the portfolio increasing Grade A assets to 37%, what's the target by the year-end? So we don't actually set ourselves an annual target with this. What we've got is a target to get to 100% modern Grade A by the end of our strategic plan period, which is the end of 2027 because actually, that will -- that's all determined by the phasing at which we develop assets and those assets that we choose to hold. But you'll see that, that will sort of shift up by another 208,000 square feet as we work through 2024, which I think is probably somewhere around 5%, I think, of the portfolio. I can't remember off the top of my head, actually the scale of the portfolio having sold some out. So you'll see all if of that stock is transferred in and sort of a manifold of the stock is like, you'll actually see that number tick up. But we're only going to be on site with 208,000 square feet as we go through 2024 as I flagged earlier. So that's basically sort of the maximum we can shift it up other than where we are working with tenants, and we're using a lease opportunity to basically sort of invest into some of the buildings. So we have done [ CRREM ] assessments on all of our sort of existing stock. That's not the news of that's been going on over the last couple of years. And that gives us a pathway to actually upgrade should we choose to, which we would only do if it's economically viable and sensible to do. But the portfolio is not in bad shape. 75% of the stock is at EPC C or better already. So it's not that big a leap with some of the existing stock that's not new actually to sort of to move it up. So I'd say, you'll see it move with the new stock coming in, but we don't set a specific target because you should see it really ramp up as we go through the later years of the strategy. Okay. So Northern Gateway is the next question. So I've got, is it possible to give a little more information on the approximate residential and industrial split? It's actually 2 sites. There's about 1,200 residential units on one of the sites on the resi side. And then on the industrial and logistics side, it's up to about 11 million square feet. So we own or control in joint venture sort of a significant proportion of that already and actually access to the land sort of around it. So that's the -- it's the key employment growth node for Greater Manchester out until 2040. So there's quite a lot to go out actually in relation to that site. And then I've got a question that says, "in terms of those sites or plots, including in draft allocation and allocation currently, what is the assumption that these sites and plots are successfully granted planning and moved to consented?" It's a really good question. All I'd say is, we're really good at planning, and we always get there eventually. So our assumption -- and when we underwrite a site in terms of acquisitions, we're looking at both acquiring and assembling sites that we believe have a very strong chance of being allocated and be able to be brought forward at some point here in the future. And at some point, we tend to think 2 planning cycles out. So if it misses the current 5-year planning period, it could possibly miss the -- the next 5-year planning period, but it will be in the one after that. So the maximum sort of time period we're generally thinking about it somewhere between sort of north of 15 years. And if you took a site like Northern Gateway, actually, which is a great example, we have been assembling places for everyone has been going through the process for a decade. So this is the spatial strategy sort of across Greater Manchester, we have been assembling that site for probably the best part of sort of 7 years. And I would say the same with Cinderhill and the same with a number of our other sites. So that's really sort of one of our real skills is assembling the right land in the right place at the right price and then actually sort of walking it through the planning system successfully. It doesn't always work to plan. At the moment, we've got some sort of go faster than we underwrote. There'll always be some that go a bit slow. But again, with the portfolio of our scale, we sort of managing that at a portfolio level, so we can take sort of sites doing different things to what we assumed and where necessary. So given the planning backlog slowdown -- backlog/slowdown is a key focus. What are the historic levels of planning success across the residential and industrial portfolios? It's 100%? It just takes time. We can't think of one that we have not got planning on eventually or we've just given up on. But like I say, I think it's really important to think about sort of what Harworth is. We're a strategic land and regeneration business. And as I've said, we assemble land today that we might not actually have allocated for 10 years and then we might not be building on for about 15. But look at the portfolio that you can see on Slide 16 and 18 shows you actually sort of how much has got a consent sort of what's the next step in the [ plume ] because we've got an application in and basically sort of then what's to come in the future. And it's about having a portfolio that is big enough to have enough sites in production and then continue to sort of work the other ones through sort of in the background. And that's what Harworth does. That's how we create value, and that's how you generate this market outperformance that we've been talking about. And the last question that is on here says, "is there any specific reason you feel like the stock market doesn't appear to recognize the potential current future value here as the share price still continues to trade at a significant discount enough?" It is very frustrating. My simple view, as Chief Exec of what I think is an amazing business with amazing potential is we just need to keep delivering consistently. We've had 5 years of consistently delivering market outperformance. So we've been growing our dividend by 10% for 7. We'll continue to do that dividend aristocrat 20 years in the making. So we're continuing to consistently do that. We're showing that we're executing really well on our strategy and sort of we just need to sort of keep going and keep growing that underlying sort of asset value in the company and eventually sort of the market will behave in a much more, I don't know, sort of sensible way in relation to stock like us. Management are doing everything they can and actually, sort of there is an issue with U.K. equity markets and our sector at the moment that's beyond Harworth or management. We've seen lots of institutional outflows that have not been sort of made up with the same quantum of institutional inflows. And there is a bit of a sort of pause here in terms of inward investors looking at the U.K. and thinking like, should I go, should I go? But the whole of the sector is actually sort of looking pretty cheap at the moment. And sort of I think interest rates are key. I think as we start to get some -- the interest rates coming in, maybe a little bit more and a little bit faster than the people were anticipating. If inflation keeps sort of coming down the way it has been, then actually, you should get some more momentum in the market. But I'm focused on long-term value growth sort of with this company and just the great things I think we can do with that.

Perfect. Lynda, thank you very much for answering all of those questions. You actually managed to answer every single one. We are at the hour, and I know you've got to go the hour, but just before maybe redirecting investors to their feedback. Could I just ask you for a few closing comments?

Okay. So I think what I'd say, just to really reinforce where I ended then. We believe we're on track to deliver that GBP 1 billion of EPRA NDV by the end of our strategic plan period. We can self-propel. I hope as I've shown you through the land bank and the stage that some of our sites are now coming to enables us to really kick on and scale up that volume in industrial logistics in particular. The skill set -- we've hired in a really challenging market through 2022. We've hired some fantastic people. That's absolutely critical to us continuing to be able to perform in the way that we are. This proven track record of driving and delivering above-market returns is really important, and we're very focused on continuing to do that. And that low leverage that really strong balance sheet, a number of investors over the last sort of 18 months have said to Kitty and I, whatever you do, don't muck it up. We've worked really hard, and we've been really deliberate at actually getting ourselves into a great place so that as things start to improve as we go through 2024, we can actually sort of unlock that firepower and actually sort of fund our growth basically. So exciting time, exciting years ahead. And I'd just like to thank everybody for joining. And I hope the CFO version of the CFO's -- of CEO's version of the CFO's slides haven't put any of you off. But if there's anything you think we missed, like I say, just submit questions to us in writing and actually we'll try and come back to you, but thank you for your time this afternoon.

Perfect, Lynda. Thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete but I'm sure be greatly valued by the company. On behalf of the management team of Harworth Group plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.