Springfield Properties Plc (SPR) Earnings Call Transcript & Summary

Good morning, everybody. Thank you very much for joining us today for Springfield's interim results presentation. Before I hand over to Innes and Iain to run through the presentation and also to talk through the transformational land sale recently announced, a reminder that this presentation is being recorded and you will be able to view it in due course on Equity Development's website. Also, you can access our analysts' research and forecast on our website. And you will be able to ask questions for management to answer at the end if you put them in the Q&A box at the bottom of your screen. I will now pass over to Innes and Iain to run through the presentation. Thanks, guys.

Yes. Thanks, Rachel. Can you hear me okay, yes?

Yes. Thank you.

Yes. And you can see us okay, yes? Okay. Welcome, everyone. We're here today. I'm Innes Smith, CEO of Springfield Properties. This is Iain Logan, CFO. We're here today to present the interim results for the 6 months ended 30th November 2024. Now normally, the focus would be on -- we've increased the profit in the 6-month period from GBP 2 million to GBP 3.8 million. We've got the debt down from GBP 93 million to GBP 63 million. We've got the margin from 14% to 17%. But clearly, we've had a very large transaction post period, which involves selling some GBP 64 million worth of land to Barratt Redrow. And that's going to accelerate the debt removal, which has been a target for the last 2, 3 years and will get us to a net cash positive position by FY '27 and will give us an opportunity to capitalize on a significant opportunity in the North of Scotland. Obviously, profit will be ahead of 2025 of the market expectations as a result of this transaction. So accelerating the removal of debt, we have -- over the last 3 years, we have sold land and we have talked about the target was to reduce debt. And we ended up -- we got in a discussion with Barrick Redrow, and we saw the potential for selling significant amounts of future land, which would clear our debt in total over the next 2 to 3 years and get us in a net cash position. The deal was for GBP 64 million. The cash will be received over 4 years with approximately 50% in the current financial year. And then we have further nonbinding discussions underway regarding sales of future land holdings on a number of sites. The land primarily is in Central Scotland, although there is on one of our larger sites in Inverness 130 plots that are part of the sale. The benefit to us I've already stated. It will remove the bank debt by financial year 2027. The profit will be ahead of market expectations. We are realizing what we believe -- our land asset in Central Belt, where there's huge competition, we are realizing the value for that. And that gives us the funds to effectively clear the debt and invest in the North. And the plan is to -- there's a call for sites, which we'll talk about later. The plan is to add to our land bank with this cash. Springfield will continue to have a large high-quality land bank with 7,800 owned and contracted plots with intention for further growth in the North of Scotland. So the significant opportunity in the North of Scotland -- just to take you back a period, around about 1.5 years ago, the Freeports were announced and the Freeport are basically 4 ports in the North of Scotland, which is the Nigg, Cromaty, Inverness and Ardersier. And these Freeports, they get customs breaks, they get rates breaks, they get National Insurance breaks, all sorts of breaks that encourage investment. Now obviously, the investment in the North is to do with the offshore wind potential, and all of the wind is offshore in the North of Scotland. So we went along and we understood from the Green Freeport that there was going to be 5,000 to 10,000 jobs created over the next 5 to 10 years. Just for example, we went out to the sites and we saw at Nigg Sumitomo Electric, they were building a GBP 350 million factory. They have just secured their first contract, I believe, to Shetland to supply the cable to that. And we went out to Ardersier, some 350 acres, and that's a new port. They're spending something like GBP 350 million through Haventus. And Cerulean Winds have picked Ardersier as the deployment port for their triple floating wind project. They are also at the moment -- from what I understand, Ardersier are looking to expand by 100 acres. They've got the planning application in just now. So clearly ambitious plans there. In addition to this, we are aware of -- I think it's 6 hydro schemes that planning is in for just now in the North of Scotland. Each one of them will need significant amounts of jobs. What also happened over the last year is we then discovered that SSEN, Scottish and Southern Electric Networks, are basically investing GBP 31 billion in Scotland, GPB 31 billion -- that's about the same as HS2 -- into upgrading the electricity network, and some GBP 20 billion of that will be in the North of Scotland. And effectively what happens is that all of the Highlands that you see at 275 need to be upgraded to 400 kV. The new substations need to be put in along the lines. And the initial contract is a line from Beauly to Peterhead. And clearly, if all of the wind is getting generated in the North of Scotland, it needs to make its way across the nation, and that involves going across to Aberdeen down to Dundee and eventually making its way to England. The increase in capacity for wind generation is going from some 10 gigabytes up to 30 gigabytes over the next 10, 15 years. And that -- at the moment, Scotland has the -- I think Scotland uses about 5 gigabytes, generates 10, but only 8 can actually be transmitted. So in order to get the transition, you need the transmission. So that is what is happening there. But that became very clear quickly. The contractors working for SSE are Balfour Beatty, BAM Nuttall and Murphy, a number of contractors, and they're going to need about 5,000 workers over the next 5-year period to implement these new pilots. Just for example, between Beauly and Peterhead, I think there's 3,000 pylons needed to be placed. All of them need site investigations, need roads built to them, need scaffolding, need bridges to get there. The activity is just massive. So all of these workers, because of the remoteness of the Highlands, are required to move up to the area, and we need to find accommodation for them. Now what has happened since was we had a -- a year ago, we had a new local plan which allocates housing in the Highlands, and it allocated 8,000 houses, which was clearly not enough. So the Scottish government has since introduced Masterplan Consent Areas, which means the council can actually identify things not in the local plan and can streamline and fast track it through the planning process to get more houses. But Highland Council actually commissioned a report. And just a quote there from the Housing and Property Committee of the -- the Chair of the Housing and Property Committee of the Highland Council: "The challenge is to double our current housing supply and accelerate the delivery of both public and private housing and availability of sites across Highland." So they are targeting delivery of 24,000 homes over the next 10 years. Clearly, that's a massive increase. Now because of our presence in the area -- and we go to the next page -- Springfield is very well positioned to promote land and to take positions. The other good thing about this area is that we're uniquely placed in this area. 23% of our staff are apprentices. We've got strong subcontract chains. The last month, I've met with the Chief of Highland Council, the Chief of Moray Council. We know all of the planners by name. We have -- we know all of the landowners. And we have very good connections there. And the other advantage about the North of Scotland is because you've got this call for sites going from 8,000 to 24,000, it's almost like an open goal to go and get land and get land submitted. So whilst we're selling land in the Central Belt, which is extremely difficult to get planning on, we believe we're selling it at a good price at a good time. We're actually going up to the North where there's a bit of an easier planning access. And the other thing is, the national housebuilders tend to be focused in the Central Belt. Only Barratt really go up to the North. None of the Persimmon, Cala, Bellway, Taylor Wimpey, Miller are actually operating in the Highlands. So for us, it's realize the value from our assets in Central Belt and reinvest in the North and gain a strong position. As I say, we're a historic and respected shareholder in the area, and we already know now --we have had significant discussions with Balfour Beatty, BAM Nuttall, SSE over how we can assist in housing the people in the area. We are looking potentially in the Highland area of identifying sites. And we've identified sites and a number of houses and potentially looking at doing a joint venture with a couple of partners, probably -- clearly, the Highland Council would be one and Scottish National Investment Bank would be the other. And the potential there is that the Highland Council would invest in it and it would get additional affordable houses. So there would be a legacy left behind. We would get the development value for the houses. And obviously, SSE would get the workers. SSE are very clear that they want to leave a legacy, because they recognize this influx of people -- there isn't the hotel space. There isn't the rental market. But what they don't want to be doing and what Highland Council doesn't want to see is house prices pushed up and no rental properties for locals, no affordable houses get bought and just huge pressure around local areas. So they're well aware of the impact to the community, and they have committed to contribute to 1,000 new homes, that's SSEN, as part of this project. Going over to the right, we have Moray. And at Moray, the proposal there is that we -- Moray has a good landholding of affordable housing, which we obviously have sites that are included in this. And their proposal is that SSE basically give Moray Council a grant, Moray Council hire -- or rent the houses back to SSE. And after 5 years, because SSE -- it's a 5-year project, would be looking at guarantying the rent for 5 years. After 5 years, then Moray Council would take on the affordable housing. We would obviously get the build and the development. And it would basically accelerate affordable housing. And that's a similar discussion we're having in Aberdeenshire. So we have spoken over the last number of months. I mean, I've been in Holyrood. I've met with Deputy First Minister. We've met with a number of finance operations. I won't name them in the public -- it's all of the obvious people that you would expect to speak to who are interested. And the PRS changes, we're getting the rent cap removed at the end of March. And that kind of opens things up because the new housing bill gives exemptions to private rent supply. So lots of opportunities. We've also spoken to entrepreneurs, and entrepreneurs are interested in taking some of our stock and just renting it out directly themselves. So the opportunities are great there. And it seems like a -- our business plan is -- we spoke last year, and I would have spoken about this, the business plan really has written itself. We've got new -- the NPF4, which has just led to very difficult to get planning in Central. So our strategic land bank that we've kind of built up there over the years is at a good price just now. In fact, when we look at what we've sold over the last 4 years, last year, we sold GBP 28 million of land. Prior to that, in the 2, 3 years, I think it was GBP 23 million. So that gets us to GBP 51 million. We've sold GBP 69 million this year. So that's GBP 120 million we've sold at around about 1.2, 1.3x book value. So I think the evidence is there that our land bank is value and our net asset value is genuine. GBP 120 million sales -- I don't know what evidence we need, although that's clearly not reflected in our share price. But we do believe -- and we've listened to investors that taking the debt out -- and it's important to note that when we take this debt out, Iain, there's still GBP 23 million of land expenditure over the next 2 years, is a very strong message to our investors and to our market. We're still left with a significant land bank, some 7,800 owned and contracted plots. But all of the future ones coming through in the future local plan in the North, that gives us 4,700 across the North of Scotland and 3,000 in Central Scotland, some of which we're in discussions with going forward. We will still have significant build over the next 2 years in Central Belt. We still have affordable contracts to pick up. We still -- Dundee and Bertha Park, we will be there for many years at our village sites. So we still have a presence there, albeit the focus and investment will be in the North of Scotland. So going on -- Iain?

Thanks, Innes. Good morning, everyone. I'm pleased to report for the 6-month period to 30 November 2024, we've increased our profits and reduced our bank debt versus the prior 6-month period. If you look at revenue, we were GBP 106 million versus GBP 121 million. The reason for the reduction in revenue was in Private Housing, where we opened the year with a slightly smaller order book. In terms of gross margin, that's increased from 14.7% to 17.7%. The reason for the increase is in Affordable Housing, where our margins have returned to double digits following completion of legacy contracts. We've also got land sales in the period, which have improved the margin. In terms of administration expenses, we continued to review these and we've made further savings in the period. Our operating profit before exceptional items has increased from GBP 5.6 million to GBP 6.4 million. And one of our key measures, profit before tax and exceptional items, has increased from GBP 2 million to GBP 3.8 million. In terms of our bank debt, that in the period is GBP 63 million versus GBP 93 million in the prior period. On to the next slide...

The slide showing, they've disappeared from our screen, Rach.

If we go on to the next slide -- can everyone see the slides?

We've lost -- yes, I think we've got a technical issue here. Sorry, guys. We're trying to...

We're just trying to get…

There is an IT person in the building to help us, so please be patient. Iain, are you any good at fillers? So can everyone still hear us? So it's the slides that are missing.

Hopefully, we should have the slides back in a minute to everyone. So just bear with us.

Okay. Apologies, apologies for this. There seems to be a technical hitch on Rachel's side. Iain, do you want to try and speak through this?

Yes, yes, I'm happy to carry on.

Go ahead. And apologies.

So the slides are on our website, if people can access them. So we're currently on Slide #9, and Slide #9 is the breakdown of each of the segments. So in Private Housing, I've mentioned that we've got lower completions in the period, and that is due to the fact that we've got the lower order book that we said. Our average selling price has been maintained at GBP 313,000 versus the prior year period. And our pricing across all our brands is holding up well. In terms of Affordable Housing, our revenue is slightly behind where we would expect it to be, and this is due to uncertainty among some affordable housing providers on access to funding. So I think we're about to get the slides back. Next slide, Rach. Yes. So in terms of Affordable Housing, the positive for us is that the government have approved the Scottish budget in December, and that will mean that from April onwards, there's increased funding for affordable housing. Also, the average selling price on affordable, as you can see, has increased. That's the result of the Scottish government grant per home, which has increased. Contract Housing is our site at Bertha Park in Perth, and the revenue there has increased from GBP 2 million to GBP 6 million as a result of a new private phase starting at Bertha Park. If we go on to the next slide. So what we can see here -- we've talked a lot about our bank debt. If you take the period from November '23 to November '24, you can see there's been a reduction from GBP 93 million to GBP 63 million. In terms of the inflows, the 2 main contributors that you can see are the land sales, which we completed at the end of last financial year, and the ongoing operating profit of the group. In terms of the main outflows, you've got GBP 12 million of land purchases. GBP 9 million of that was in the last -- in the current 6-month period, which is a real positive and it represents the confidence within the group that we're returning to purchasing land. The other outflow of significance is tax and interest paid of GBP 8.1 million. So overall, that slide is positive for us and it continues the strategic aim of bringing down debt. Next slide, Rach. This is the shape of the balance sheet, again, driven by the reduction in the bank debt. Other liabilities have increased slightly as a function of the fact that we've got a higher land creditor. This was a result of a transaction we completed in October last year, where we were able to secure additional land on favorable terms. And the next slide, Rach. This graphic shows how the net asset value of the group has grown since the listing. You can see some of the key bullets on the right-hand side. One of them is the annual growth rate. So the growth rate in net assets per year is 16% since listing. We've obviously paid dividends of GBP 23 million in that period. And the last bullet really net assets in total have grown from GBP 57 million to GBP 157 million at May '24.

And I think just reiterating that, looking at our land bank, again, we continue to grow the net asset value of Springfield year-on-year through -- I think the last 6 years have been quite -- 7 years have been quite turbulent times. But this value -- this transaction that we're doing, again, it's realizing value I think what is a good time in the Central Belt when there's heavy competition for sites. And it allows us to have a lot of firepower, clear the debt for going up to the North before -- and I do believe that as the -- we're taking a very reasoned and considered view as to the growth potential for the North and we're investing now and putting our money where our beliefs are and where the evidence is pointing. It's like an offensive, defensive move, if you like. And we think we can realize great value in the land bank just now and get good value going forward. Post completion there -- just -- we refer back to the 7,800 plots and the split between owned, contracted and the percentage with planning, which is obviously a significantly high number. Operational review. Iain touched Page 15. Iain touched on -- we've seen -- Labour got in, I think, in June, and we were expecting a bit of a honeymoon. And that lasted for a very short period I think it's fair to say. And it has been slow and a subdued economy and not really a good -- a great upturn. I think the signs going forward, we did see sales over December, as Iain mentioned, slow. And we're going to be slightly behind on the sales figures for this year. Albeit the last 3 weeks, we've seen strong reservations, but we don't think 3 weeks are really enough to forecast forward. We are seeing from other housebuilders positive vibes about the reservation rate. So hopefully, that will continue. We've obviously been extremely busy in the last 2 months as well working on the Barratt Redrow deal that was signed pretty much late December. So it's been a hard effort by the whole management team to get this across the line for the 17th of February. We are seeing sales prices holding up. We've got the new product coming through. But since year-end -- sorry, since November, we've obviously seen the interest reduction. We saw the vote 7 to 2 to -- voting for further reduction. I think it's now -- we're 2.5 years. And in that 2.5 years, a significant number of people have came out of their fixed rate mortgages. People -- I think the paradigm has shifted and people have had enough time to get used to interest rates. And ever the optimist, but I do believe that we're not going to go back to the -- we all went down by about 1/3 in our sales. I don't think we'll go back to those figures. But I do think there's reason for optimism and reason to think there's a pickup. We have a housing crisis that's been declared in Scotland. There is a need for homes. There is a need for housing. And I do think there is potential for a pickup on what we're doing on our private. Clearly, in the North with the increase in the influx of jobs there, then that -- that's almost anticyclical, and we'll do what it's doing despite what the economy is doing. The other important fact with private houses is that when we look at -- one of the measure people use is the salary to sales price. And in England, you're at 8.6. In Scotland overall, we're at 5.6. And I think in the North of Scotland, we're going to be lower than the 5.6. And what that shows is that there is a proven benchmark of 8.6. So there is potential for Scottish house prices to go further north. So that's a -- in both ways go further north. Apologies for the pun. Affordable Housing. Next slide, please. So we've seen a significant improvement in the gross margin. We spoke previously about the difficulties we had with long-term contracts and fixed sales prices and rising costs. Those have now gone. So the rate has gone from 3% to almost 15% on the margin. So that's good. The problem we had with affordable this year is that contracts we expected to be signed were delayed because Scottish government had slashed the budget for affordable housing. You can see a picture there for -- of me with John Swinney. It's not to kind of show off and boast. I've also met Kate Forbes on one of our sites, and we actually met Kate Forbes in Holyrood. And I genuinely believe from the conversations with them, they are very strongly focused on getting the business back, getting the economy and getting housing. They see housing as one of the key strategies to move the economy. Now what happened in December, despite the -- we obviously had about -- I mentioned GBP 15 million delays to affordable contracts. We've now signed 2, 3 contracts because the funding was reinstated. In fact, it was reinstated to a higher figure in December. And the commitment to get affordable housing moving again remains strong. We also have the removal of the rent cap, and that's coming in March 2025. And we have the housing bill coming through, which will have exemptions for private rented. So the chronic undersupply of affordable housing in Scotland is a key issue for government. They are committed to resolving that, and we have good land bank holdings to take advantage of that. So we won't catch up with all GBP 15 million this year, clearly, and that's kind of behind the results. But there's no reason to be concerned for next year. Housing market in Scotland. I've probably covered this on all of the earlier slides. Mortgage lenders now from products below 4%. One of the things I didn't mention again about the Green Freeport is one of the tax breaks that the tenants get is not to pay business rates, and business rates normally get paid to central government. But what's happening is there's a 5-year holiday, that any rates that would have been paid to central government are actually getting paid to the Green Freeport. And there's a fund being set up. And then once rates do start, all of the money instead of going to central government will go into this fund. Economists, and this is from Highland Council, are expecting that fund to grow into hundreds of millions. And that can be reinvested in housing and infrastructure. So that's another thing that will -- a fund that will help boost housing and boost the economy in the North. Moving on to the next slide, ESG. As you can see, we build our houses with timber frames, 100% sustainable 100% of our houses. And that's an air-source heat pump that we now -- all of our houses are built without fossil fuels as the energy provider. One of the good things happened with air-source was the dropping of the mandatory implementation in England, which means that the supply chain is going to get a chance to catch up. So we've been -- I think over 60 sites we've had these air-source heat pumps. We know what we're doing. We're going to have to focus very heavily on the North with apprenticeships and training people and making sure that we've got the skills to meet the demand that's coming. We've got a good track record of doing that, and we will continue to do that. But as I say, the ESG, we get better at reporting it. It's always been at the core ethos of Springfield to build good, efficient houses and treat people well and get on with the communities. So yes, we're now being able to communicate that much better now. The next slide. So just in summary, we -- clearly, we've done a transformational business deal with Barratt, who we've dealt with before, and we judge as good partners and we've had good relations with them. The focus is now going to be in the North of Scotland. We're going to use that cash to remove the debt and invest in the North of Scotland. We can continue to build a high-quality product and house. And we believe strongly and we're confident that we're well positioned to deliver shareholder value. So I'll now pass over to Rach, if you take control of it. Thank you.

Sorry about the little technical difficulty we had there. But if I can move to some of the questions. Can you hear me okay? Sorry, guys.

Yes, we hear fine.

Yes.

Fantastic. Thank you very much. I think you probably already covered quite a few of these questions. But one of the first -- obviously, the majority of the questions are around the North of Scotland. So if we can just focus on that for the time being. How easy is it for you to buy land in the North of Scotland and who from? I know you talked a little bit about it, but could you give us a little bit more detail, please?

Yes. So we -- currently in the local plan, there are some 8,000 plots. We already have options and positions on land not included in that local plan. But clearly, when you're increasing and there's a demand to move to 24,000 houses, that's a lot of land. Now our advantage is we have a finger on the pulse in the Highlands. And with the exception of 2 or 3 local housebuilders, we've got the firepower to deliver big infrastructure sites, which the smaller guys won't be able to do. We've got a track record of delivering -- when you look at Inverness site, when you look at Elgin site in the North, a track record of developing and delivering big sites. So we offer a genuine option to a landowner for something that will happen and can be delivered. The truth is that at this point in time, the bigger guys are not present in the area. They don't have the feet on the ground. They don't have the 30 to -- well, in fact, [ Telux ] are having their 100th year anniversary this year. So they don't have 100 years of contacts that are built up over many years with -- it's mainly greenfield sites in the North. It's not a brownfield area. So yes. So we're very confident with our -- with Sandy Adams contacts. Our Chairman knows a lot of people in the area. We know all of the land agents. We have very good relations with the councils. We know the planning people by name, and we're present. And we're regularly -- I mean, I had a meeting with Highland Council probably twice a month over the last 6, 7 months trying to work out how -- and we met with Moray Council obviously, as well now with Aberdeenshire Council -- how we can make sure that we provide the housing for the projects coming. And we all see it as really important. One of the important things when you're building houses is it's so much better to work with authorities that want to see development. That makes a huge difference. And we find -- Central Belt is tough. Obviously, the areas that we -- Perth and Dundee very progressive, very good areas, where we'll continue with. Apologies there. But it's difficult to get planning. The NPF4 new regulations, as usual, don't necessarily ease things up. I do think that there will be improvements made in that. That's why probably now is a good time to sell the land. Is it the peak? I don't know. I think it's pretty close to where the peak may be. But it's certainly we will really -- as I say, we sold over GBP 120 million of land at 1.2x book value. Barratt are buying 1/4 of our land bank here for half of the value of the market cap. The numbers are there.

Yes. I mean that leads me nicely on to another question. And I'm jumping around on the questions here. But Barratt paid approximately 60% of Springfield's market cap to acquire just under 2,500 plots. And someone has asked the question, with future potential land sales -- and this might not be for you to answer -- why didn't Barratt just look to buy Springfield?

I'm not Barratt, but I am aware CMA looked into their deal with Redrow, 6 houses in Shropshire or something. So I would imagine once bitten twice shy. The sites we've sold are future sites. It's just a land deal. I think acquisitions are quite difficult now with that CMA investigation. But certainly if we were looking at -- if I was looking at acquiring something, you'd be giving a second thought as to, "Okay, what will CMA say about this?" Because deal uncertainty would be a big issue for anyone, for a seller and for a buyer. And I'm not sure the CMA have particularly been helpful in what they did with the Barratt-Redrow. But we certainly -- I can't speak for Barratt as to why they haven't tried to buy us all.

Okay. I will move on. And I think you talked a little bit about it, what's the competition like in North Scotland. And you said yourselves and Barratt are the only major players out there. Are there other regional players?

Yes. So Robertsons would have a -- [ Kirk ] would -- but this is small -- small and medium-sized house builders are in the area. But when you are going from 8,000 then to 24,000, you've got a doubling. Now -- I mean we saw what happened to Aberdeen in the '70s and '80s when the jobs influx went there, and the big guys eventually did go up to Aberdeen. But they tend to be -- they're quite myopic. They're looking at what's in front of them and the land bank for this year and next year and how can you deliver the number of units. And I would imagine we've got a good opportunity to get in a secure position from land. And we've shown -- effectively we've never really called ourselves a strategic land bank seller. But when you look at what we've done over the last 5 years, effectively we have -- we've never really had that as part of our business plan of, "We're a strategic land bank, and this is part of the business and we're sellers," because it's very volatile and it's up and down. And we take opportunities when we get them. We think now is a good opportunity to do that. I do think if we can get good positions in the North, then who knows. When the likes of the nationals do start coming up to the area, then we'll have land that potentially is -- again, we can sell at 1.2, 1.3x book value. But that's all in the future.

Yes. And do you have the necessary skill set up in the North of Scotland and the supply chain, I guess, to kind of embark on the build?

Yes, it's a bit of a -- it's a bit of -- the network is getting built. There is going to be 5,000 people coming up. Ideally, we want to get ahead of the game and we want to be working in conjunction with the councils delivering the houses earlier and realizing value on a very coordinated, straight-line basis. There will be other housebuilders who will kind of wait for the buyers, mostly just to sell houses. We haven't really predicted any upturn in our private sales in the North. But I think there will -- there has to be an impact from an increase in private sales as well, but we haven't really put that in. Will there be issues with supply chain? Absolutely, if you're increasing. Will there be house price inflation? Will there be wages inflation? Yes, there'll be a lot of impact on that side of things. And that's where the North of Scotland maybe the -- the ratio between house price to -- sorry, salary to house price will increase over time. But we're as well positioned -- I would say we're the strongest in the area and we're well positioned to deliver on what's been asked. But there will be a lot of pressure on the area from -- obviously, if these guys look for 5,000 jobs and 10,000 skilled jobs are coming up to work on Freeports and -- all of these jobs will need post workers and Tesco workers and the like as well. So it's a substantial boost to the area. Now we -- I do believe there aren't many people who are as close to what's happening in the Highlands. I live in the Highlands. Sandy lives in the Highlands. And we know what has happened there and can see it very closely and -- up close in person. And I'm not -- maybe me speaking and shouting about it here maybe is raising other people's awareness. But I do believe that we can sort of deliver. Can you do the doubling of houses and get to the 24,000? That's like the 1.5 million questions in England. Can you get there? Fortunately, I'm not a politician. I don't have to say. But I can say we'll try our damndest to do as many as possible.

And you've obviously got the apprenticeship scheme, which you've always been quite strong on. I guess that will help from a workforce perspective, will it?

Yes. I mean it's self -- it's always been self-preservation there that it's a -- in Central Belt, it tends to be a supply model. We employ a lot more people in the North. Because in Central Belt, you've got a fluid workforce, you've got significant population. But in the North, if you're not training your guys where are they coming from -- if you're the main housebuilder in the area, which ourselves and [ Telux ] obviously are, then if you're not training them, who is? So we've always -- both of us -- [ Telux ] have -- they've got plumbers on the books. We've got scaffolders on our books. We've got a lot of in-house skills, painters, plasters, brickies, joiners, all in our books, our own kit factory, obviously. So yes. So yes, it will take hard work. It's not -- nothing is going to be easy. But I'd much rather have the challenge of we've got too many houses to build than we don't have enough houses to build, which has been the case for the last 2 years.

And in terms of the style of the houses, do you perceive that there'll be any difference? Will you have to design new house types for the North of Scotland? Or is your existing kind of portfolio what you'll go with?

It's a good question because the -- I think for the rental market and for the entrepreneur market and PRS market, then I think you are looking at potentially 2, 3 beds, say, smaller properties. But it will still be the same vernacular and they are still built to the high quality that we build. All sorts have fallen back into affordable ownership at the end of 5 years. Some of them will be. Then they'll need to be built to the affordable standards. So yes, we already have a new house type range coming through just now, which is what we were -- to comply with the '25 regulations -- '24, '25 regulations. So we're happy with our product, and we have a -- you tend to get a lot more story and half buildings and it tends to be -- tends to be slightly different vernacular houses when you get North of Scotland compared to Central Belt.

Okay. And what kind of impact do you think that will have on your margins, a similar increase, decrease or too early to say at the moment?

I would expect with a strong market and new people coming, new higher wages in the area, efficiencies, close locations to each other, if we're doing a lot of the -- if we're building a lot of houses for joint ventures or for councils, then there's efficiencies in that build. You're not dealing with 100 customers. You're dealing with one customer. So you don't need the same sales and marketing and you can build a lot more straightforward. So we should see efficiencies. We should see good margins, I would say. We should -- that is certainly what we would hope to see. It is a challenge in the Central Belt. It's a fight to get the land. We know what we're selling the land at. It's difficult to get the land, and it's a chase for customers. But if we've got a market where customers are waiting for houses and new people are coming into the area with higher wages, I think that's a good position and reason to be optimistic on margins.

Excellent. And just for those of us that don't really know too much about the Masterplan Consent Areas, can you maybe talk a little bit more about that and what the implications are for you?

Yes. So basically, what happened was 2 years ago the Inner Moray Firth Local Plan was being adopted, and it was for roughly -- about 8,000 houses, I think, were allocated. And Freeport had just been announced and the local plan took no account of Freeport. So we personally got together all of the heads of the ports and got all of the house builders in the area, got Chamber of Commerce, got the prospect, all of these groups to basically sign a letter and send it to all the councilors, all the MSPs, all of the MPs and say, "We've got a local plan coming in that is not capable to support the growth that is coming. And this will be damaging to the economy. And if we don't build more houses and get more allocations in there, then there's going to be pressure on housing. There's going to be pressure on rentals. It's going to affect tourism." And the council came back and the government came back and said, "What we're going to be implementing" -- and it's now legislation -- "is Masterplan Consent Area zoning. So that if there's an economic reason and a justification for it, then the council can streamline planning outside of what is in the local plan and outside of NPF4 and streamline it through the process." So it follows a different process and a different fast tracking, if you like. So it means that if you're not in the local plan -- the idea was to use this Masterplan Consent Areas whilst the call for sites that's going on just now -- so it was very quickly afterwards the Highland -- there was a conference in Aviemore last year, back end of last year, and there was a call for new sites. So there's another local plan going through which is trying to get to the 24,000. I would assume if they've got a report that says they need 24,000, I would assume. But the crazy thing is if they need 24,000, they need to allocate about 30,000 or 34,000. I don't know what the number is. But you always need to allocate more. So there's going to be plenty of opportunity for promoting through. And there's this stopgap legislation that can assist us through sites. And one of our sites in Elgin has been identified as a Masterplan -- potential for a Masterplan Consent Area zoning.

Okay. And when should we start to expect to hear announcements coming through from you? What's the expected time scale or time frame when we should start to see some news coming out?

Yes, I would expect in the next 6 months to be making statements as to what's happened. We've had weekly meetings, weekly conversations with financial institutions, with banks, with Scottish National Investment Bank. We've had weekly meetings with them. And Highland Council, as I said, we're meeting them twice. We know the -- Moray Council potentially going down the housing association route. And we've spoken to the housing associations and the providers of mid-market rentals. And so there is already a lot of work gone into that. The key is we have sites. Other people have sites as well. I mean there's plenty for a lot -- for all of us to go around. And we have promoted sites and they have got to the short list and we are in pretty detailed discussions. So I'd expect over the next 6 months certainly some announcements to be made. But this is, as I say -- but meanwhile, if the -- and it's important to say that predicting something like this and if you're forecasting something that's of this scale is clearly difficult. But because we're clearing the debt through the Barratt deal, then we're going to be in a strong position to do. And we've still got significant workload over the next 2 years in Central Belt and the North regardless of this. But we would -- certainly, I would expect to see something feeding through quite soon.

And a more general question just about market conditions. You talked about the recent increase in buyer interest. Is that in a specific region? Or is that across all regions?

The North has been -- just to separate, for this year, the North has been pretty solid throughout the year. The Central has been more subdued, the Central Belt. And yes. So I would have said the last 3 weeks, we've been -- well, in fact, the last 6 weeks, we've been above our target. But the last 3 weeks are the biggest increase. But the Central Belt certainly seems to be -- there's seems to be a bit of a pickup and a bit more activity. As I say, I think we're 2.5 years now and people have got used to the mortgage rates and they're waiting for them to come down. We saw the inflation news today. Does that mean interest rates are going down? We saw wages inflation yesterday saying it's higher than inflation. That's probably good for house prices, but how does it all work out? Then there's a point where there's a housing crisis and there's a housing shortage, and there's certainly strong messages from Labour government and strong messages from S&P, they want more houses. The easiest way to solve the housing crisis is build more houses, and freeing up land is a good thing, which is what's happening in the North. Now I think it will happen in the Central, but it's going to be a longer process. That's why I think selling the land that we've got just now is a good timing.

Yes. And we had a question. How has the collapse of the Stewart Milne Group affected Springfield, less competition, better availability of labor?

I think it's fair to say Aberdeen is quite a long way away from Moray, but when Stewart Milne had been in the -- Stewart Milne didn't have as many sites as people would think. So when Stewart Milne did go into administration, obviously, everyone looked at the sites they had. And most of the sites were in the Central Belt. There was 2 or 3 in Aberdeen, which is an area we've never worked. And they -- long time since they've been building in Highlands or Moray. So it really didn't have any direct impact on us. So yes, I think it's -- I think -- I can't remember who bought the sites, but there were sites in the Central Belt mainly. I think it was 2 or 3 in Aberdeen area. So not really at all.

Okay. And a general question regarding cash. Does the land sale make it more likely that dividends will increase or the policy will become more generous?

We have a -- in our analyst projections, we expect to pay a dividend at year-end. The key is returning the -- getting rid of the debt and returning the business to profitability. And we believe the actions we're taking are really strong actions that will do both of those things. And obviously, we want our shareholders to get dividends. They deserve a return for their investment. So that is certainly the intention.

Thank you. Well, that's all the questions. So unless there's anything you guys would like to add, I'd just like to thank you for your time. And I'm sure we'll all be watching with interest on the back of the fantastic Barratt land sale news.

I appreciate everyone's interest and tuning in for this. So thank you very much. And we'll continue with our plan. And as usual, you can contact me direct if you've got anything you want to speak about. So thank you everyone.

Thank you, everyone.

We look forward to catching up with you again in September.

Okay. Thank you very much.

Thank you. Cheers.

Thanks, guys.

Bye-bye.