Springfield Properties Plc (SPR) Earnings Call Transcript & Summary

[Audio Gap] for Springfield's full year '24 results investor presentation. Before we kick off, just a bit of housekeeping. This presentation is being recorded and will be available on the Equity Development website in due course. You can also access our analysts research and forecast on our website. [Operator Instructions] And I will now hand over to management to go through the presentation. Thank you, guys.

Thanks, Ritch. Welcome to our results presentation for financial year 2024. Apologies for the delay. I'm blaming [ Andy ] for that. So if we can move on to the next slide, please. Okay. To my left there's -- on you're right there's Sandy Adam, Chairman and Founder of Springfield Properties.

Good morning.

Iain Logan, the CFO.

Good morning.

And myself, CEO. Okay. This time last year, we were here, and we're probably at a low point in the housing cycle. We were upfront about it. We had just come back from summer holidays and 3 weeks of sales haven't kind of picked up. So we came to the market, and we realized, at that point, we needed to change our plans. So we set a new ambitious plan with some challenging decisions and the tasks to undertake. So we decided we were going to sell land, we were doing stock split and we're going to focus on getting debt down. And I'm pleased to announce today that we've exceeded our targets that we set out for the year. So the #1 target we set to the market was to get our bank debt down and we set a target of GBP 55 million, and we were able to get the bank debt down to GBP 39 million. And we will explain how we got to that point where we're GBP 15 million ahead of our target. Our trading results are ahead of expectations. And we've kind of followed the rest of the market with our results. One of the ways we managed to realize value was from our long high-quality land bank. And we set ourselves a target -- we set GBP 25 million -- to sell GBP 25 million and we actually secured profitable land sales of GBP 28 million, all above book values. One of those deals was a transformational agreement signed with Barratt Developments for Durieshill Village and we'll explain a bit more about that through the presentation. And so it leaves us with our large owned land bank of 5,500 plots, 90% of which has planning permission. And we have a strategic land bank of some 31,500 plots. We have significant landholdings in the north of Scotland, which is set to benefit from significant investments in the infrastructure in the electricity network from the U.K. Decisive action was taken through the year to reduce costs and to manage working capital across the business, and Iain will give a bit more detail on that. Good news, we have seen an improvement in private housing since year end. It's now 2 years since Liz Truss did her famous mini-budget and mortgage rates went up and we're now 2 years past from there. This summer holidays, we actually saw probably a 20% increase in our reservations compared with the same period last year. So the signs are pretty positive on that front. In affordable housing contracts, we set ourselves a target to go back into affordable after closing it due to a dissatisfaction with inflation -- build cost inflation and the prices we were getting. So both of those things turned in our favor, and we were able to sign up GBP 50 million in contracts during the year. All of these actions and all of these results that we got gave us the confidence to go back to declaring a dividend and give a return to our investors. Iain?

Thanks, Innes. Before we go into some of the detail, as Innes said, I'm pleased to report that we exceeded both our key targets for the year, which is a profit before tax and exceptionals of GBP 10.6 million against the market expectation of GBP 10 million. And importantly, again, as Innes said, we've ended the year with net bank debt of GBP 39.9 million versus our stated target at this time last year of GBP 55 million. Go down to some of the detail on the table. Revenue was GBP 267 million versus GBP 332 million. The main reduction was in private housing. Again, this follows the trend of other housebuilders. That revenue reduction was offset by the land sales Innes mentioned of GBP 28 million. Those were real positive for the group and that they demonstrated the ability to monetize surplus land bank quickly. So that was a really good result for us. Gross margin improved from 14.4% to 16.3% with improvements in affordable housing margin and also the profitable land sales. Given the challenging market conditions, we've reduced our overheads from GBP 28 million to GBP 26.5 million. We flagged in the half 1 last financial year that we had created GBP 4 million of annualized overhead savings. Some of that came through last year and the remainder is coming through this year. We continue to keep a close eye on our overheads and make sure they're appropriate for the size of the business. Operating profit came in at GBP 18 million against GBP 20.7 million in the prior year. And if you go to the bottom of the presentation slide, net bank debt again, GBP 39.9 million versus the previous year level of GBP 62 million. So that's something we're very pleased to land on. Next slide, please. On private housing, you can see our completions are down. Again, we've mentioned that that's in line with the latest standard. And average selling price increased from GBP 293,000 to GBP 316,000 with increases across almost all of our brands. Most of that was due to housing mix. But as you'll see from a slide later on, pricing in Scotland is holding up very well at the moment. On affordable housing, again, our revenue was down, and that was a result of the actions we took a couple of years ago where we had a planned pause on signing new contracts. However, with build cost inflation more stable, we've been signing new contracts, as we've announced over the last 12 months, totaling over GBP 50 million. And those are on terms that are more favorable for us in terms of shorter period contracts where we can have more certainty on our cost and the ability to have -- to have better ability on our margins. Contract housing, again, the revenue was down. In the prior year, we had PRS income in Bertha Park, which we don't have in the current year. And also Bertha Park had a planned pause in our new private phase until market conditions improved. We've now launched that private phase housing, which is selling well. So as we went to '25, we'll expect to see those contract housing revenues increase again. Next slide, please, Ritch. This slide evidences the positive action that was taken last September and the strategic approach to reduce our bank debt. So we've gone from GBP 62 million to GBP 39.9 million. The main inflows are the land sales that we've talked about of GBP 25.6 million of cash and the operating profit of GBP 19 million. We've also got a positive working capital inflow of GBP 5.3 million which, again, evidences our strategy of controlling the balance spend on sales and that's come through positively for us. In terms of outflows, the two main outflows were bank interest and tax payments of GBP 8.5 million and GBP 12 million in deferred consideration payments. Next slide, Ritch. Again, the balance sheet falls out really of the reduction in the net bank debt. So you can see what our assets look like. Our net assets at GBP 158 million at the year-end, again, is an important number for us. The one other point I would highlight on that is this time last year, we took out a term loan for GBP 18 million to give us that extra comfort. We don't really use that term loan at all, and we repaid that earlier in May, similar to we said in the call, at times where we take out emergency funding that wasn't required.

So on the next slide, you see our land bank distribution. Land is the key to our business, and it gives us control. It's a store of value that we could call on in tougher times which is what we've done this last year. On the next slide, as we've said in the past, this year, it was a year we're getting our debt down and part of this involves selling some of our own land bank. So you can see on the table on the right-hand side that our number of plots have fallen. However, we still retain one of the largest land banks in Scotland, both in terms of numbers and in terms of year supply. On our owned land, we've got a 6-year land supply, 5,500 plots. And if you add on to that our contracted land, we've got a further 8 years supply, 7,000 plots and our strategic options are vast. All of our land sales this year have been above book value and don't affect near-term sales. Our land bank store of value that we've been able to call on through this last year tough times has been invaluable. And with the market looking brighter again now, we can look at opening up more sites again next year.

Okay. Earlier I mentioned one of the large land deals we did was with a new village in Durieshill. This is the background here was over 5, 6 years, we've managed to achieve planning permission for over 3,000 homes. And to the point to the end of last year, we had spent some GBP 20 million of work in progress buying land and getting it through planning. Now trying to get it to the stage where we would be selling houses, we probably had another GBP 25 million to GBP 30 million worth of infrastructure that has to be put in. It's a big village, it needs a lot of infrastructure. So what we did was we got in discussions quite early on, and we were looking for a partner with a good reputation and preferably with deep pockets. So Barratt actually met that criteria, and we got into discussion with them and the agreement we have was that we would sell them enough land this year -- this financial year, to raise GBP 10 million. So we take our work in progress down from GBP 20 million to GBP 10 million. And then we agreed that they would put in all the infrastructure and we would pay them for our half of that infrastructure using the land that we already yield. So instead of us putting out GBP 50 million over 2, 3 years needed to get house sale, now we've actually gained GBP 10 million, and we will get our house sold. We have a partner in whom we have a lot of faith in, they're a 5-star house-builder and we've done deals with them in the past. They build good product, and they have the deep pockets that will be required to get the infrastructure in and going, and they've got experience of doing it. So it is a deal that derisks this project completely for us, but also accelerates the sales. We will still retain 1,500 plots here and they will have 1,500 plots as well. So it's 15, 20 years supply, so plenty to keep us going for many years ahead. Okay. One of the things that has kind of became apparent over the last year is just what's happened to the, if you like, the target to get to net zero for 2050 for U.K. Now what had happened was a year ago, I went to a presentation in Inverness at Eden Court and there was the four port chiefs such as the Nigg, Ardersier, Inverness and Cromarty and it was Roy MacGregor from Global, and Lewis Gillies from Haventus and Sinclair Browne and [ John ], all stood up and gave presentations as to what freeport status meant. So they've been awarded freeport status, which basically has favorable tax rates and encourages development. And my understanding is that these guys are talking about creating 8,000 to 10,000 jobs. We should really check out if this is real, if this is going to happen. So we went out to see Roy and Lewis and Roy took us through just what Global Energy Group were doing and there is Sumitomo working next door to them building a GBP 350 million cable factory. The cables are used to connect offshore to onshore, offshore wind. We then went to Ardersier and we saw 300 acres and $300 million that's being spent just to get it back to port. And then further investment will be coming through that there's manufacturing, assembly and great ideas. And basically in that area, the estimate is something like GBP 3 billion are going to be invested to assist the U.K. with its renewables. Now about 2 months ago, the story took another twist when we basically rented an office downstairs in Elgin to Balfour Beatty and they kind of came upstairs and said, we won a contract to laying the -- or upgrading the power lines between Beauly and Peterhead and we're going to have 800 workforce coming up, and those 800 workforce will need accommodation, temporary, permanent, rented. Can you help us with that? And we said, yes, sure, we can certainly look into that. And then another month, 6 weeks later, [indiscernible] got in touch, another engineering company. And they got in touch and said, we're upgrading the Beauly and Peterhead line and we're going to need -- over 800 employees coming up and we're going to need accommodation for these guys. And I kind of thought, okay, I obviously don't know whom I should trust because we've had Balfour Beatty saying this. But they're saying, no, no, we're doing the substations, they're doing the plants, 400 kV, we're the substations, when you switch the power banks, we can get your views for domestic use and the likes. So then there's 1,600 houses. So we got in touch very quickly with SSE and Scottish government process network to find what was the project. So to the right there on the map, you can see all of these yellow lines. And if you know the geography of Scotland, you go, obviously, the Shetland line up there, that line represents an offshore cable that's connecting the wind that's generated in Shetland and coming on to the north of Scotland and it comes in at Spittal. Just to the left of that, you can see [indiscernible] and then it's going to Dornoch and then it works its way down from Spittal to Beauly. Then from Beauly, it works its way over to Stornoway, Western Isles. You can see it go then to Drumnadrochit [indiscernible] and then from Beauly to Peterhead and then from Peterhead it goes down to Dundee. From Dundee it goes to [indiscernible] and the reason I mentioned all those areas are, those areas are exactly where we have villages and the power lines basically follow roads. And we have sites from Beauly, Drumnadrochit, Inverness, Nairn, Dores, Elgin, Buckie, Keith, Aberchirder, Turriff, and all the way through. So we spoke to SSE, I actually say that there's also [indiscernible] which will effectively be batteries for power. And effectively, the situation is [indiscernible] something like 10 gigawatts of energy and they use about 5 and then tries to ship the rest. But all of the power lines aren't enough to take it way. So there needs to be a significant investment to upgrade those power lines. And the ambitions over the next 5 to 6 years, and it's kind of U.K.-led with the initiative, is that they're adding another 15 to 20 gigawatts of power. And the amount that will be spend in the North of Scotland to upgrade all the networks is something like GBP 22 billion. And the size of Scotland is something like GBP 12 billion. So altogether, this is the same amount of investment as HS2 originally started up. So it's a massive investment, and it's going to need a lot of workforce to come. Now in the Highlands and [indiscernible], we currently have about 80,000 houses. Now direct jobs being added here, whether it's 14,000 or 16,000, you can see the impact of 15% to 20% newer accommodations will be required, and these are all new employees. It's not going to be displacement of jobs. This is a new job. So we have great landholdings in this area, and there will be fantastic opportunities here. So you will notice that we did not sell any land in the north, and this is exactly why. So we are in very close contact with SSE, with Balfour Beatty, with [indiscernible] with the freeports, we are looking at what their needs are, we are speaking to SNIB, Scottish National Investment Bank, which leads us to some private agency. And we are looking at ways of investing in the accommodation so that we can meet the market. There is clearly going to be a big boost to the economy here. And it's a very exciting prospect for us. Okay. On to the next slide. Private housing. We have seen, let's say, 2 years since the mini-budget, as I said, we've seen a Bank of England reduction. We saw ECB reduce last week, I think we're expecting U.S. to reduce their rates, probably not expecting Bank of England to reduce their rates. So inflation did stay at 2% -- around 2% today. But I think it's fair to say that there is slightly more optimism, and we are seeing certainly from footfall and from reservation rates, a return of confidence amongst the buyers. It's been 2 years of a lull. We do have a shortage of housing and people do need to move, and people do need to -- their families grow. And so we are seeing better footfall and better reservation rates. We did curtail all the speculative private housing development for the period, but we are now starting new sites again, and we're reacting to what the market is telling us. Selling prices have held up. Scotland prices, we'll see through there, they increased by 2% in the year. We give about 1% or 2% incentives. So we did not really have to give too much away, but we are trying to increase sales. We do have a new house type coming through for the group in '24, '25, which will be an incredibly efficient house, and it will be right across the board for all of our brands. And it actually means that we'll have a quality, we'll have a great chance to improve from its already high level. We will have consistent build approaches to rightsize the business, and we're really excited about the new product that's coming to market. We're going to continue to offer a high level of spec that we offer with slightly extra space compared to some of our competitors and we hope to -- improved to 96%, which is up from 94% in '23 for customer satisfaction. And we did receive In-House Gold Awards for all our brands last year. Affordable housing, as stated earlier on, we did recommence and we managed to secure some GBP 50 million of contracts there. We've seen a reduction in cost/price inflation, which makes us more attractive. We're seeing lots of good news and lots of noise from England, about 300,000 house target and affordable housing commitments by Labour government. At some point, this commitments will work their way to Scotland. So we're quite pleased that there is a need, and the government appears focused on delivering affordable housing and certainly, we're seeing contracts being signed. The fundamentals of the affordable housing are still strong. We did have 2 poor years which we refer to historically. But we do believe now that we've got good margins going forward, good contracts and we've got a good land bank to take -- to make the most of this opportunity, and broadly continue with that. We do have a good relationship with the Housing Minister, and we do benefit here whenever possible. Okay. The housing market in Scotland. We have an emergency in Scotland. My solution will bore houses, very simple. As we many governments have tried to build more houses and who's quite challenging for us to achieve. And Scottish government remains committed to supporting it. I think it to our Chairman, the changes that we've seen, we've got [ John Swine ] Excellence Minister Kate ex Finance Minister. There is, in my view, a much more business-oriented kind of view and experience amongst the leaders there. So we can hope to see better things for the economy. Certainly, we've been invited, I think it's us in another housebuilder along the housing task -- to help this emergency. And we've got a foot in the door there, a lot of pension funds and PRS providers. So we are doing our best to try and influence and encourage a government to do the right things. The rent caps that we've seen have been noticed in the last few weeks from [ C4b ] so there's going to be exemptions for the PRS businesses on the rent cap so that they will be able to invest again in Scotland. And that can only get better than it's just now, which is at 0. So that would be of [indiscernible]. Bank of England base rate reduction, obviously, that leads to mortgage reductions. We're seeing mortgages about 1% lower than they were this time last year. I do believe that interest rates are going to continue to fall. And we're obviously well placed [indiscernible]. Scotland, one of the important things that we always kind of come back to has gone a little more affordable than the rest of the U.K. We are at full employment. And we're currently [ 4x salary ] to mortgage rate versus 6 for the U.K. as a whole. So we are [indiscernible]. Okay, then ESG. Obviously to take us to very seriously. And just today, I was reading the press and journal. And I can just say on our ESG front that essentially [indiscernible] cats or dogs. It is not all we do. We are not associated with that story. So [indiscernible]. So all of our rooms are both using NMC, which is -- a methods of construction relating the panels and we assemble it on site. We find this a very efficient way to build a house. We use air source heat pumps, ground set pumps. We -- 22% of our site workers are currently undertaking apprentices. We recognize we have a responsibility to trade, and it's something that's very good for our business if we're treating our own people. And we have electrification of our fleet and obviously, we follow all of the governments as acquired. Sam?

So to sum up, as you've heard, we've delivered on our objectives for the last year. We've put the company back into a strong strategic position. We're seeing recovery in both private and affordable markets. We retained a large land bank in strategic positions. Our strategic alliance with Barratt at [ Jury's Hill ] is an excellent deal for us. We see a huge opportunity coming in North Scotland where we have a dominant market position. We are on track to achieve a strong increase in profits for this next year. And the current situation, I'm confident in the future and the increasing opportunities available to us have given us the confidence to restore a dividend.

Okay? So I would just like to thank all of you who have invested or encourage you to thinking of investing and we'll now move to questions, Rachel.

Thanks, guys, for that comprehensive run through the presentation. We've got a number of questions coming through. I'll try and keep those banded together. So let's start with private housing. Are you seeing a pickup demand across all regions, Scotland or any specific areas?

We did a general upturn across most regions. The biggest upturn has been in the central belt, which probably had the biggest downturn. So the north held up a strong throughout the last 2 years. Certainly in the [ money area and Houdin area ] we would kind of held our sales position. We did open new sites because we already expected stuff. So that affected sales rates. But in Central though, we did see a downturn, but we haven't seen in recent weeks and since June of [indiscernible] since the always decision on rates. You have seen an upturn in central bank. That's some of the feedback I get from my colleagues across Scotland as well.

Great. And staying with private. Would you say that private reservation rates -- back to normal? Or is there still more recovery potential to come through?

Normal, define normal. We had -- I mean, normal. The last normal we had was probably 2018, 2019. And I think we're still a bit behind that. I think Scotland-wide, we're probably 0.5 reservations a week. This is as an industry. And we were [ starting ] higher than that [indiscernible] but then when you follow on from that to call the gear and then you frenzy after call within any of the list. First, you've got the big downturn. So no, I think we certainly welcome a further increase in sales rates. But we're at a level where we're above our targets and our targets are out there and projections. And if we're doing better than that at this point in time, then we've got the overheads, we've adjusted those to make sure they fit with our sales now. So any increase in our sales, we think we'll get some capacity for improvement from where we are. So it could be better, of course, good, but it's nowhere near the kind of trends of '21, '22.

Right. And going forward, do you expect your mix of private and affordable to stay roughly where it is at the moment? Or do you think there's more growth potential on one side of the business than the other?

And [indiscernible] what probably was affordable, I think there is scope for us to increase over the next 2 years. Probably, the issue there we have is we've got -- government probably happening in '26. So budgets will get a bit confused. So we've certainly got the land. We've certainly got the holding [indiscernible] why I would expect to see with the work coming the north is an avenue of potentially PRS that we don't currently have. I think there is an opportunity to build housing that we'll be able to accommodate the workers that are coming up. We don't know exactly what's following that take, but we're certainly looking at that, and that's something not in our figures at this point in time as you see a great opportunity there. Because those job -- I mean, the electrification and the updating of the network as Scotland goes to try and get to 3 gigawatts, which is a target by 2050, which will then effectively supply the whole of U.K. Scotland currently uses about 5 gigawatts in [indiscernible] England would be 45, 10x the size of Scotland. Then the kind of national security aspect to that and us becoming self-sufficient is really important. So then the other important thing about that is that almost becomes a -- cyclical business up north because those jobs in the investment in the Freeport, it's not really depending what the -- is doing because it's government money that's going to be coming in. So that's something that we really are excited about, and we see a great potential.

Right. It's something we often hear housebuilders talking about and that's planning. How -- is the platform coming through? What's the outlook like?

Yes, keep getting more and more cities to ease the planning and to speed that up. [indiscernible] we've never seen any evacuations. It's been up. But the important thing is why we smile, we joke about it, the kind of things to just point out is we've got 5,500 plots that we fully own, 90% of planning with further few thousand, the half planning that are contracted. So any changes to planning and any slow planning. Now we -- our land bank we have is a positive because we already have that asset, and that's -- as Sandy said, we can unlock value from that. The potential for our capital gains tax increase to 40%. It's not going to lead to lots of farmers selling the land post October or post November. So we already have land. So we think we're in a very strong position for whatever earnings -- away. It's not what we would want long term. Clearly, short term, we're well placed to meet those challenges where people with smaller land banks [indiscernible] and the way of planning are not in that position. So rather than just criticize the planning system and say that it's a huge negative, there is a positive in what we've done by banking land to this point.

Great. That was one of the follow-on questions about the impending budget. And do you foresee any potential changes that could impact you? And I guess you've mentioned a couple of gain stocks. Anything else?

Yes. I stopped second guessing government a long time ago. you see we have a chat [indiscernible] government. I think Rachel is not really for public consumption.

Probably not. We move swiftly [indiscernible]. And surprisingly, there's a lot of questions coming about the north of Scotland. So what does the competition in the north of Scotland look like with respect to other housebuilders?

Again, [indiscernible] the housebuilders, but it's all about land and planning and being able to react quickly. The upgrade -- the initial upgrade is period [indiscernible] and substations. One of these substations, for example, one of Buly, it's a [indiscernible] by 400 meters. So this substation, that size of it. And its peak in '28. It's going to have 597 [indiscernible] on it. So that's just an example of the kind of bodies that are coming there. But it is happening, and it's starting in '26. And there is -- people are going to have to [indiscernible]. So it's actually restriction that are very aware that if they have an impact in the communities, they want it to be a positive one. So they are very [indiscernible] isn't the hotel rooms. There isn't the rental market for the influxes coming. So they're very aware that we're going to have to seek innovate solutions. [indiscernible] council and [indiscernible] council have been very positive and proactive as well. So I can see a very positive -- everyone -- players are working together, trying to find solutions with regular meetings. And I can only see that as the positive. The other housebuilder, they may want to get in there, you need land and you need land with planning. You need deals with land on, and we have all of those things in place. So I think we're not being [indiscernible] and there's enough this year, and there's enough [ work, time ]. Going to need everyone to be -- to doing things here. It's such a massive impact that is enough for everyone, but we're very well positioned for it.

Right. And specifically with regard to Springfield, have you got the required management structure in place in the North of Scotland and have you got the capacity? Or will you need to invest more?

I mean we're going to have to grow. I mean if we're increasing output, then we're going to need more people. We do have the 2 most established housebuilders in the region, talks of almost 100 years old and have been building a #1 builder in the Highlands for many, many years. Springfield, obviously, in money. We've been here for as along as Sandy has been going. So yes, we -- I signed [indiscernible] management. So yes, we know the area. And I -- at January would clearly we know that area as well is not better than anyone. So we know the -- we have great relations with the councils, great relations with the supply chain. So yes, I think we're very well equipped to deal with any upsurge.

We certainly have a good thing coming for the Highland and the money area. And it's going to bring in challenges as well as opportunities. But we just got the mindset as best we can, but it's better to have that challenges and opportunities than there are no opportunities. So just we're certainly very well pleased to think take advantage of it.

Fantastic. And would you consider any further land sales in general and specifically in the North of Scotland?

No. We set target for getting our debt down. And every time I sell a bit of land, we sold surplus land that wasn't in a sort of 2-, 3-year plan. Every time we sell land, we're losing 20% margins that we would have made ourselves. Now that is our debt. We set a target 55% and then down to [ 40% ] the year after. We've actually got our debt down to where we wanted to be a year from now. So we've got that to where we need it. We pressed that lever. We made profitable land sales. Each one was above book value. We've demonstrated [indiscernible] our value of our land bank could be and what the value of the business could be. So yes, I don't think there's a need to it. But like anything, if things change and we need to use that lever again and we still have that lever, but certainly, selling land to someone else doesn't make any sense in the North at this point in time.

Absolutely. And...

You would do the comparison of what's the interest on our debt compared to the return you can make from that land, and it's very much in favor of the return we make than the land.

Absolutely. And it sounds like you've got plenty to that. But as ever, we've had the question, any further M&A activity do you think? Is that on hold for the moment.

Well, we've -- the last and this year, unfortunately, the M&A that's coming -- or the opportunities are coming are small, medium-sized housebuilders that are and [indiscernible] all being the obvious one and we looked at our sites, wasn't for us. But we will always look at opportunities and if opportunities come along and they represent value, and we think they'll offer a good return to shareholders, then we will look at them and [indiscernible] acquired today and prior equities acquired color for 1.35 today. So it's clearly that kind of activity going on in the market just now. Yes. But something that we're seeing the small and medium sized housebuilders really struggling just now. But I don't want to be -- if opportunities come along and we can see value some [indiscernible] then obviously, we'd look at it. Buying land is what we do.

Thank you. And Sam, I've got some wider questions. Does West Minister's -- sorry, does Westminster's housing policy have much direct influence on Scottish housebuilding prospects?

I think it will do if [indiscernible] charge in Scotland in 2 years' time. I think [indiscernible] could be argued it works really well if you've got the same party power and so this is in charge at West Minister because then there's no one to blame. I [indiscernible] all on things. So you would think if the policy of labor at Western Minister is one thing then you would think Scotland before. For the 2-year interim period, I can't see the S&P doing a labor do because that would then make plus a point in S&P for just doing exactly things labor. So again, it's certainly difficult to guess these things, but Scotland housing has devolved in Scotland, and they make their own decisions. And in the [indiscernible] Housing Minister, he's a lot more proactive and engaging with the housing in [indiscernible] and housebuilders. And like I say, [ John Sweeney and Cape ] have made very significant noises about housing as [indiscernible] raises need in England. So yes, I do think housing is right up in the priority. But clearly, the 2 things go that are health and education in Scotland, the infrastructure. We -- through housebuilding, we can pay for education and schooling. And we help in -- infrastructure as an industry. We have improved the [indiscernible] from society, shall we say. So it's important to invest in housing. There's so many social assets come with them. One of the things that does happen if that labor spent a lot more on affordable housing in England is consequential speed through to Scotland. And in the past, that money has been ring-fenced for housing, but there's no guarantee that, that will continue to happen. But obviously, we hope it does.

And just a question on the PRS market. How quickly do you envisage that, that could return?

There's housing bill that's coming through. And until that housing bill is approved, there is uncertainty. And as long as uncertainty is there, I don't see [indiscernible] coming through. So it's 6 months to a year. The longer it takes, the more pent-up demand there is. It's not -- I think we now listening on this the private landlord with additional dwelling [indiscernible] gotten 6% with the mortgage interest relief no longer allowed. There's not a lot of people investing. We used to have 8% of our sales used to be to invest the market. It's down 1%, 2% maybe, maybe even less than that next. So any changes to PRS. And remember, we could name [indiscernible]. We did one of Sigma's only -- I think they're only the 2 schemes in Scotland and we know how many of them they've done in England. And if you speak to the segment, you know that there are Scottish-based company they're longer 2 sites in Scotland that's [indiscernible] I don't would love to do more in Scotland as we cast with legal in general [indiscernible]. So there no really a government's [indiscernible] and the sooner the housing bill gets through to that.

Great. Well, thank you very much for answering those questions. That concludes the presentation for this time around. Thank you very much for your time, gentlemen. And we look forward to hearing from you again next year, and I hope everyone can join us for the webinar in February 2025.

Yes. Thanks your support, everyone.

Thank you. Bye-bye.

Thanks, guys. Okay. The housing market in Scotland. We have an emergency in Scotland. My solution will bore houses, very simple. As we many governments have tried to build more houses and who's quite challenging for us to achieve. And Scottish government remains committed to supporting it. I think it to our Chairman, the changes that we've seen, we've got [ John Swine ] Excellence Minister Kate ex Finance Minister. There is, in my view, a much more business-oriented kind of view and experience amongst the leaders there. So we can hope to see better things for the economy. Certainly, we've been invited, I think it's us in another housebuilder along the housing task -- to help this emergency. And we've got a foot in the door there, a lot of pension funds and PRS providers. So we are doing our best to try and influence and encourage a government to do the right things. The rent caps that we've seen have been noticed in the last few weeks from [ C4b ] so there's going to be exemptions for the PRS businesses on the rent cap so that they will be able to invest again in Scotland. And that can only get better than it's just now, which is at 0. So that would be of [indiscernible]. Bank of England base rate reduction, obviously, that leads to mortgage reductions. We're seeing mortgages about 1% lower than they were this time last year. I do believe that interest rates are going to continue to fall. And we're obviously well placed [indiscernible]. Scotland, one of the important things that we always kind of come back to has gone a little more affordable than the rest of the U.K. We are at full employment. And we're currently [ 4x salary ] to mortgage rate versus 6 for the U.K. as a whole. So we are [indiscernible]. Okay, then ESG. Obviously to take us to very seriously. And just today, I was reading the press and journal. And I can just say on our ESG front that essentially [indiscernible] cats or dogs. It is not all we do. We are not associated with that story. So [indiscernible]. So all of our rooms are both using NMC, which is -- a methods of construction relating the panels and we assemble it on site. We find this a very efficient way to build a house. We use air source heat pumps, ground set pumps. We -- 22% of our site workers are currently undertaking apprentices. We recognize we have a responsibility to trade, and it's something that's very good for our business if we're treating our own people. And we have electrification of our fleet and obviously, we follow all of the governments as acquired. Sam?

So to sum up, as you've heard, we've delivered on our objectives for the last year. We've put the company back into a strong strategic position. We're seeing recovery in both private and affordable markets. We retained a large land bank in strategic positions. Our strategic alliance with Barratt at [ Jury's Hill ] is an excellent deal for us. We see a huge opportunity coming in North Scotland where we have a dominant market position. We are on track to achieve a strong increase in profits for this next year. And the current situation, I'm confident in the future and the increasing opportunities available to us have given us the confidence to restore a dividend.

Okay? So I would just like to thank all of you who have invested or encourage you to thinking of investing and we'll now move to questions, Rachel.

Thanks, guys, for that comprehensive run through the presentation. We've got a number of questions coming through. I'll try and keep those banded together. So let's start with private housing. Are you seeing a pickup demand across all regions, Scotland or any specific areas?

We did a general upturn across most regions. The biggest upturn has been in the central belt, which probably had the biggest downturn. So the north held up a strong throughout the last 2 years. Certainly in the [ money area and Houdin area ] we would kind of held our sales position. We did open new sites because we already expected stuff. So that affected sales rates. But in Central though, we did see a downturn, but we haven't seen in recent weeks and since June of [indiscernible] since the always decision on rates. You have seen an upturn in central bank. That's some of the feedback I get from my colleagues across Scotland as well.

Great. And staying with private. Would you say that private reservation rates -- back to normal? Or is there still more recovery potential to come through?

Normal, define normal. We had -- I mean, normal. The last normal we had was probably 2018, 2019. And I think we're still a bit behind that. I think Scotland-wide, we're probably 0.5 reservations a week. This is as an industry. And we were [ starting ] higher than that [indiscernible] but then when you follow on from that to call the gear and then you frenzy after call within any of the list. First, you've got the big downturn. So no, I think we certainly welcome a further increase in sales rates. But we're at a level where we're above our targets and our targets are out there and projections. And if we're doing better than that at this point in time, then we've got the overheads, we've adjusted those to make sure they fit with our sales now. So any increase in our sales, we think we'll get some capacity for improvement from where we are. So it could be better, of course, good, but it's nowhere near the kind of trends of '21, '22.

Right. And going forward, do you expect your mix of private and affordable to stay roughly where it is at the moment? Or do you think there's more growth potential on one side of the business than the other?

And [indiscernible] what probably was affordable, I think there is scope for us to increase over the next 2 years. Probably, the issue there we have is we've got -- government probably happening in '26. So budgets will get a bit confused. So we've certainly got the land. We've certainly got the holding [indiscernible] why I would expect to see with the work coming the north is an avenue of potentially PRS that we don't currently have. I think there is an opportunity to build housing that we'll be able to accommodate the workers that are coming up. We don't know exactly what's following that take, but we're certainly looking at that, and that's something not in our figures at this point in time as you see a great opportunity there. Because those job -- I mean, the electrification and the updating of the network as Scotland goes to try and get to 3 gigawatts, which is a target by 2050, which will then effectively supply the whole of U.K. Scotland currently uses about 5 gigawatts in [indiscernible] England would be 45, 10x the size of Scotland. Then the kind of national security aspect to that and us becoming self-sufficient is really important. So then the other important thing about that is that almost becomes a -- cyclical business up north because those jobs in the investment in the Freeport, it's not really depending what the -- is doing because it's government money that's going to be coming in. So that's something that we really are excited about, and we see a great potential.

Right. It's something we often hear housebuilders talking about and that's planning. How -- is the platform coming through? What's the outlook like?

Yes, keep getting more and more cities to ease the planning and to speed that up. [indiscernible] we've never seen any evacuations. It's been up. But the important thing is why we smile, we joke about it, the kind of things to just point out is we've got 5,500 plots that we fully own, 90% of planning with further few thousand, the half planning that are contracted. So any changes to planning and any slow planning. Now we -- our land bank we have is a positive because we already have that asset, and that's -- as Sandy said, we can unlock value from that. The potential for our capital gains tax increase to 40%. It's not going to lead to lots of farmers selling the land post October or post November. So we already have land. So we think we're in a very strong position for whatever earnings -- away. It's not what we would want long term. Clearly, short term, we're well placed to meet those challenges where people with smaller land banks [indiscernible] and the way of planning are not in that position. So rather than just criticize the planning system and say that it's a huge negative, there is a positive in what we've done by banking land to this point.

Great. That was one of the follow-on questions about the impending budget. And do you foresee any potential changes that could impact you? And I guess you've mentioned a couple of gain stocks. Anything else?

Yes. I stopped second guessing government a long time ago. you see we have a chat [indiscernible] government. I think Rachel is not really for public consumption.

Probably not. We move swiftly [indiscernible]. And surprisingly, there's a lot of questions coming about the north of Scotland. So what does the competition in the north of Scotland look like with respect to other housebuilders?

Again, [indiscernible] the housebuilders, but it's all about land and planning and being able to react quickly. The upgrade -- the initial upgrade is period [indiscernible] and substations. One of these substations, for example, one of Buly, it's a [indiscernible] by 400 meters. So this substation, that size of it. And its peak in '28. It's going to have 597 [indiscernible] on it. So that's just an example of the kind of bodies that are coming there. But it is happening, and it's starting in '26. And there is -- people are going to have to [indiscernible]. So it's actually restriction that are very aware that if they have an impact in the communities, they want it to be a positive one. So they are very [indiscernible] isn't the hotel rooms. There isn't the rental market for the influxes coming. So they're very aware that we're going to have to seek innovate solutions. [indiscernible] council and [indiscernible] council have been very positive and proactive as well. So I can see a very positive -- everyone -- players are working together, trying to find solutions with regular meetings. And I can only see that as the positive. The other housebuilder, they may want to get in there, you need land and you need land with planning. You need deals with land on, and we have all of those things in place. So I think we're not being [indiscernible] and there's enough this year, and there's enough [ work, time ]. Going to need everyone to be -- to doing things here. It's such a massive impact that is enough for everyone, but we're very well positioned for it.

Right. And specifically with regard to Springfield, have you got the required management structure in place in the North of Scotland and have you got the capacity? Or will you need to invest more?

I mean we're going to have to grow. I mean if we're increasing output, then we're going to need more people. We do have the 2 most established housebuilders in the region, talks of almost 100 years old and have been building a #1 builder in the Highlands for many, many years. Springfield, obviously, in money. We've been here for as along as Sandy has been going. So yes, we -- I signed [indiscernible] management. So yes, we know the area. And I -- at January would clearly we know that area as well is not better than anyone. So we know the -- we have great relations with the councils, great relations with the supply chain. So yes, I think we're very well equipped to deal with any upsurge.

We certainly have a good thing coming for the Highland and the money area. And it's going to bring in challenges as well as opportunities. But we just got the mindset as best we can, but it's better to have that challenges and opportunities than there are no opportunities. So just we're certainly very well pleased to think take advantage of it.

Fantastic. And would you consider any further land sales in general and specifically in the North of Scotland?

No. We set target for getting our debt down. And every time I sell a bit of land, we sold surplus land that wasn't in a sort of 2-, 3-year plan. Every time we sell land, we're losing 20% margins that we would have made ourselves. Now that is our debt. We set a target 55% and then down to [ 40% ] the year after. We've actually got our debt down to where we wanted to be a year from now. So we've got that to where we need it. We pressed that lever. We made profitable land sales. Each one was above book value. We've demonstrated [indiscernible] our value of our land bank could be and what the value of the business could be. So yes, I don't think there's a need to it. But like anything, if things change and we need to use that lever again and we still have that lever, but certainly, selling land to someone else doesn't make any sense in the North at this point in time.

Absolutely. And...

You would do the comparison of what's the interest on our debt compared to the return you can make from that land, and it's very much in favor of the return we make than the land.

Absolutely. And it sounds like you've got plenty to that. But as ever, we've had the question, any further M&A activity do you think? Is that on hold for the moment.

Well, we've -- the last and this year, unfortunately, the M&A that's coming -- or the opportunities are coming are small, medium-sized housebuilders that are and [indiscernible] all being the obvious one and we looked at our sites, wasn't for us. But we will always look at opportunities and if opportunities come along and they represent value, and we think they'll offer a good return to shareholders, then we will look at them and [indiscernible] acquired today and prior equities acquired color for 1.35 today. So it's clearly that kind of activity going on in the market just now. Yes. But something that we're seeing the small and medium sized housebuilders really struggling just now. But I don't want to be -- if opportunities come along and we can see value some [indiscernible] then obviously, we'd look at it. Buying land is what we do.

Thank you. And Sam, I've got some wider questions. Does West Minister's -- sorry, does Westminster's housing policy have much direct influence on Scottish housebuilding prospects?

I think it will do if [indiscernible] charge in Scotland in 2 years' time. I think [indiscernible] could be argued it works really well if you've got the same party power and so this is in charge at West Minister because then there's no one to blame. I [indiscernible] all on things. So you would think if the policy of labor at Western Minister is one thing then you would think Scotland before. For the 2-year interim period, I can't see the S&P doing a labor do because that would then make plus a point in S&P for just doing exactly things labor. So again, it's certainly difficult to guess these things, but Scotland housing has devolved in Scotland, and they make their own decisions. And in the [indiscernible] Housing Minister, he's a lot more proactive and engaging with the housing in [indiscernible] and housebuilders. And like I say, [ John Sweeney and Cape ] have made very significant noises about housing as [indiscernible] raises need in England. So yes, I do think housing is right up in the priority. But clearly, the 2 things go that are health and education in Scotland, the infrastructure. We -- through housebuilding, we can pay for education and schooling. And we help in -- infrastructure as an industry. We have improved the [indiscernible] from society, shall we say. So it's important to invest in housing. There's so many social assets come with them. One of the things that does happen if that labor spent a lot more on affordable housing in England is consequential speed through to Scotland. And in the past, that money has been ring-fenced for housing, but there's no guarantee that, that will continue to happen. But obviously, we hope it does.

And just a question on the PRS market. How quickly do you envisage that, that could return?

There's housing bill that's coming through. And until that housing bill is approved, there is uncertainty. And as long as uncertainty is there, I don't see [indiscernible] coming through. So it's 6 months to a year. The longer it takes, the more pent-up demand there is. It's not -- I think we now listening on this the private landlord with additional dwelling [indiscernible] gotten 6% with the mortgage interest relief no longer allowed. There's not a lot of people investing. We used to have 8% of our sales used to be to invest the market. It's down 1%, 2% maybe, maybe even less than that next. So any changes to PRS. And remember, we could name [indiscernible]. We did one of Sigma's only -- I think they're only the 2 schemes in Scotland and we know how many of them they've done in England. And if you speak to the segment, you know that there are Scottish-based company they're longer 2 sites in Scotland that's [indiscernible] I don't would love to do more in Scotland as we cast with legal in general [indiscernible]. So there no really a government's [indiscernible] and the sooner the housing bill gets through to that.

Great. Well, thank you very much for answering those questions. That concludes the presentation for this time around. Thank you very much for your time, gentlemen. And we look forward to hearing from you again next year, and I hope everyone can join us for the webinar in February 2025.

Yes. Thanks your support, everyone.

Thank you. Bye-bye.

Thanks, guys.

Okay. The housing market in Scotland. We have an emergency in Scotland. My solution [indiscernible] houses, very simple. As we -- many governments have tried to [indiscernible] houses and it's quite challenging task to achieve. And Scottish government remains committed to supporting [indiscernible] I think [indiscernible] the changes that we've seen, we've got John Swinney, ex finance minister [indiscernible] to his ex finance minister [indiscernible]. In my view, a much more business-oriented kind of view and experience amongst the leaders there. So we can hope to see better things for the economy. Certainly, we've been invited, I think it's us and another housebuilder along the housing taskforce that help solve this emergency. And we've got a foot in the door there, along with pension funds and PRS providers. So we are doing our best to try and influence and encourage a government to do the right things. The rent caps that we've seen that have been noticed in the last 2 weeks from [indiscernible] there's going to be exemptions for the PRS businesses on the rent cap so that they will be able to invest again in Scotland. And that can only get better than it's just now, which is at 0. So that would be hopeful. Bank of England base rate reduction, obviously, that leads to mortgage reductions. We're seeing mortgages about 1% below than they were at this time last year. I do believe that interest rates are going to continue to fall. And we're obviously well placed for that. Scotland, one of the important things that we always kind of come back to has gone a little more affordable than the rest of the U.K. We are at full employment. And we're currently 4x salary to mortgage rates versus 6 for the U.K. as a whole. So we are [indiscernible]. Okay, then ESG. [indiscernible] ESG very seriously. And just today, I was reading the press and journal. And I can just say on our ESG front that Springfield [indiscernible] any cats or dogs. It is not all we do. We are not associated with that story. So [indiscernible]. So all of our homes are both using NMC, which is [indiscernible] methods of construction mainly relating the panels and we assemble them on site. We find this a very efficient way to build a house. We use air source heat pumps, ground source heat pumps. We -- 22% of our site workers are currently undertaking apprentices. We recognized we have a responsibility to trade, and it's something that's very good for our business if we're treating our own people. And we have electrification of our fleet and obviously, we follow all of the governments [indiscernible]. Sandy?

So to sum up, as you've heard, we've delivered on our objectives for the last year. We've put the company back into a strong strategic position. We're seeing recovery in both private and affordable markets. We retained a large land bank in strategic positions. Our strategic alliance with Barratt at Durieshill is an excellent deal for us. We see a huge opportunity coming in the North Scotland where we have a dominant market position. We are on track to achieve a strong increase in profits for this next year. And the current situation and confidence in the future and the increasing opportunities available to us have given us the confidence to restore a dividend.

Okay? So I would just like to thank all of you who have invested or encouraged you to thinking of investing and we'll now move to questions, Rachel.

Thanks, guys, for that comprehensive run through of the presentation. We've got a number of questions coming through. I'll try and keep those banded together. So let's start with private housing. Are you seeing a pickup demand across all regions in Scotland or any specific areas?

We've seen a general upturn across most regions. The biggest upturn has been in the central belt, which probably had the biggest downturn. So the north held up quite strong throughout the last 2 years. Certainly in the [indiscernible] area, we would kind of held our sales position. We didn't open new sites because we've already [indiscernible] so that affected sales rates. But [indiscernible], we did see a downturn, but we certainly seen recently some [indiscernible] decision on rates. We have seen an upturn in [indiscernible]. That's some of the feedback I get from my colleagues across Scotland as well.

Great. And staying with private. Would you say that private reservation rates near back to normal? Or is there still more recovery potential to come through?

Normal, [indiscernible] normal. We had -- I mean, normal. The last normal we had probably achieved 2018, 2019. And I think we're still a bit behind that. I think Scotland-wide, we're probably 0.5 reservations a week. This is as an industry. And we were [indiscernible] higher than that [indiscernible] but then when you follow up from '19 to COVID year [indiscernible] frenzy after COVID [indiscernible] any of the list. First, you've got the big downturn. So, no, I think we certainly welcome a further increase in sales rates. But we're at a level where we're above our targets and our targets are right there and [indiscernible]. And if we're doing better than that at this point in time, then we've got the overheads, we've adjusted those to make sure they fit with our sales [indiscernible]. So any increase in our sales, we think we'll get some capacity for improvement from where we are. So it could be better, of course, good, but it's nowhere near the kind of [indiscernible] '21, '22.

Right. And going forward, do you expect your mix of private and affordable to stay roughly where it is at the moment? Or do you think there's more growth potential on one side of the business than the other?

And [indiscernible] probably was affordable, I think there is scope for us to increase over the next 2 years. Probably, the issue there we have is change in government probably happening in '26. So budgets will get a bit confused. So we've certainly got the land. We've certainly got the holding [indiscernible] expect to see with the work coming into the north is an avenue of potentially PRS that we don't currently have. I think there is an opportunity to build housing that we'll be able to accommodate the workers that are coming up. We don't know exactly what's following that will take, but we're certainly looking at that, and that's something not in our figures at this point in time as you see a great opportunity there. Because those jobs, I mean, the electrification and the updating of the network as Scotland goes to try and get to 50 gigawatts, which is a target by 2050, which will then effectively supply the whole of U.K. Scotland currently uses about 5 gigawatts [indiscernible] would be 45, 10x the size of Scotland. Then the kind of national security aspect to that and us becoming self-sufficient is really important. So the other important thing about that is that almost becomes a noncyclical business up north because those jobs in the investment in the Freeport, it's not really depending what the economy is doing because it's government money that's going to be coming in. So that's something that we really are excited about, and we see a great potential.

Right. It's something we often hear housebuilders talking about and that's planning. But how is the planning reform coming through? What's the outlook like?

Yes, we keep getting more and more [indiscernible] planning and to speed up. [indiscernible] we've never seen any evacuations. It's been up. But the important thing is why we smile, we joke about it, the kind of things to just point out is we've got 5,500 different plots that we fully own, 90% of planning, we have a further few thousand, the half planning that are contracted. So any changes to planning and any slowing up planning. Now we -- our land bank we have is a positive because we already have that asset, and that's -- as Sandy said, we can unlock value from that. The potential for our capital gains tax increased to 40%. It's not going to lead to lots of farmers selling the land post October or post November. So we already have land. So we think we're in a very strong position for whatever hurdles are put in our way. It's not what we would want long term. Clearly, short term, we're well placed to meet those challenges where people with smaller land banks [indiscernible] and the way of planning are not in that position. So rather than just criticize the planning system and say that it's a huge negative, there is a positive in what we've done by banking land to this point.

Great. That was one of the follow-on questions about the impending budget. And do you foresee any potential changes that could impact you? And I guess you've mentioned a couple of gain stocks. Anything else?

Yes. I stopped second guessing government a long time ago. You see we have a chat with government. What I think Rachel is not ready for public consumption.

Probably not. We move swiftly [indiscernible]. And surprisingly, there's a lot of questions coming about the north of Scotland. So what does the competition in the north of Scotland look like with respect to other housebuilders?

Again, there are a lot of the housebuilders, but it's all about land and planning and being able to react quickly. The upgrade -- the initial upgrade is [indiscernible] substations. One of these substations, for example, one of Buly, it's [indiscernible] by 400 meters. So this substation, that is the size of it. And its peak in '28. It's going to have 597 employees on it. So that's just an example of the kind of bodies that are coming out there. But it is happening, and it'll start in '26. And there is -- people are going to have to [indiscernible] actually restriction [indiscernible] very aware that if they have an impact in the communities, they want it to be a positive one. So they are very [indiscernible] isn't the hotel rooms. There isn't the rental market for the influxes coming. So they're very aware that we're going to have to seek innovate solutions. [indiscernible] council and [indiscernible] council have been very positive and proactive as well. So I can see a very positive -- everyone -- the key players are working together, trying to find solutions with regular meetings. And I can only see that as the positive. The other housebuilder, they may want to get in there. You need land and you need land with planning. You need deals with land on, and we have all of those things in place. So I think we're not being [indiscernible] and there's enough this year, and there's enough [indiscernible] We are going to need everyone to be -- doing things here. It's such a massive impact that is enough for everyone, but we're very well positioned for it.

Right. And specifically with regard to Springfield, have you got the required management structure in place in the North of Scotland and have you got the capacity? Or will you need to invest more?

I mean we're going to have to grow. I mean if we're increasing output, then we're going to need more people. We do have the 2 most established housebuilders in the region, talks of almost 100 years old and have been building a #1 builder in the Highlands for many, many years. Springfield, obviously, in money. We've been here for as along as Sandy has been going. So yes, we -- I signed [indiscernible] management. So yes, we know the area. And [indiscernible] we know that area as well is not better than anyone. So we know the -- we have great relations with the councils, great relations with the supply chain. So yes, I think we're very well equipped to deal with any upsurge.

We certainly have a good thing coming for the Highland and the [indiscernible] money area. And it's going to bring in challenges as well as opportunities. But we just got the mindset as best we can, but it's better to have that challenges and opportunities than there are no opportunities. So just we're certainly very well pleased to think take advantage of it.

Fantastic. And would you consider any further land sales in general and specifically in the North of Scotland?

No. We set target for getting our debt down. And every time we sell a bit of land, we sold surplus land that wasn't in a sort of 2-, 3-year plan. But, every time we sell land, we're losing 20% margins that we would have made ourselves. Now that is our debt. We set a target of 55% and then down to 40% the year after. We've actually got our debt down to where we wanted to be a year from now. So we've got that to where we need it. We pressed that lever. We made profitable land sales. Each one was above book value. We've demonstrated [indiscernible] value of our land bank could be and what the value of the business could be. So, yes, I don't think there's a need to do it. But, like anything, if things change and we need to use that lever again and we still have that lever, but certainly, selling land to someone else doesn't make any sense in the North at this point in time.

Absolutely. And...

You would do the comparison of what's the interest on our debt compared to the return you can make from that land, and it's very much in favor of the return we make on that land.

Absolutely. And it sounds like you've got plenty to go up. But, as ever, we've had the question, any further M&A activity do you think? Is that on hold for the moment?

Well, we've -- the last and this year, unfortunately, the M&A that's coming -- or the opportunities that coming are small, medium-sized housebuilders that are [indiscernible] the obvious one and we looked at our sites, wasn't for us. But we will always look at opportunities and if opportunities come along and they represent value, and we think they'll offer a good return to shareholders, then we will look at them and [indiscernible] acquired today [indiscernible] acquired [indiscernible] for 1.35 today. So it's clearly a lot of that kind of activity going on in the market just now. Yes. But [indiscernible] we're seeing the small and medium sized housebuilders really struggling just now. But I don't want to be -- if opportunities come along and we can see value similar then obviously, we'd look at it. Buying land is what we do.

Thank you. And, I've got some wider questions. Does Westminster's -- sorry, does Westminster's housing policy have much direct influence on Scottish housebuilding prospects?

I think it will do if [indiscernible] charge in Scotland in 2 years' time. I think [indiscernible] could be argued, it works really well if you've got the same [indiscernible] this is in charge at Westminster because then there's no one to blame. [indiscernible] things. So you would think if the policy of labor at Westminster is one thing than you would think Scotland before. For the 2-year interim period, I can't see the S&P doing a labor do because that would then make plus a point in S&P for just doing exactly things [indiscernible]. So again, it's certainly difficult to guess these things, but Scotland housing has devolved in Scotland, and they make their own decisions. And [indiscernible] Housing Minister, he's a lot more proactive and engaging with the housing in [indiscernible] and housebuilders. And like I say, [indiscernible] have made very significant noises about housing [indiscernible] in England. So yes, I do think housing is right up in the priority. But clearly, the 2 things go in that are, health and education in Scotland. The infrastructure, we -- through housebuilding, we can pay for education and schooling. And we help improve infrastructure as an industry. We have improved the [indiscernible] society, shall we say. So it's important to invest in housing. There's so many social assets come with them. One of the things that does happen if that labor spent a lot more on affordable housing in England is a consequential speed through to Scotland. And in the past, that money has been ring-fenced for housing, but there's no guarantee that, that will continue to happen. But obviously, we hope it does.

And just a question on the PRS market. How quickly do you envisage that, that could return?

There's housing bill that's going through. And until that housing bill is approved, there is uncertainty. And as long as uncertainty is there, I don't see PRS coming through. So it's 6 months to a year. The longer it takes, the more pent-up demand there is. It's not -- I think we now listening [indiscernible] the private landlords with additional [indiscernible] gotten 6% with the mortgage interest relief no longer allowed. There's not a lot of people investing. We used to have 8% of our sales used to be to invest the market. It's down 1%, 2% maybe, maybe even less than that. So, any changes to PRS, and remember, we could [indiscernible]. We did one of Sigma's only -- I think they're only the 2 schemes in Scotland and we know how many of them they've done in England. And if you speak [indiscernible], you know that there are Scottish-based company, they're only 2 sites in Scotland that's [indiscernible] would love to do more in Scotland as we [indiscernible] with legal and general [indiscernible]. So the ball really is in government's court, and the sooner the housing bill gets through to that.

Great. Well, thank you very much for answering those questions. That concludes the presentation for this time around. Thank you very much for your time, gentlemen. And we look forward to hearing from you again next year, and I hope everyone can join us for the webinar in February 2025.

Yes. Thanks for your support, everyone.

Thank you. Bye-bye.

Thanks, guys.