Watkin Jones Plc ($WJG)

Good afternoon, and welcome to the Watkin Jones Plc Half Year Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Alex Pease. Good afternoon.

Good afternoon, and thank you all for joining us this afternoon here to present our half year results for FY '26. So I'm Alex Pease, the Chief Executive, and I'm joined today by Simon Jones, our CFO. So in terms -- I'll just turn to the agenda. So in terms of the agenda today, I'll give you an overview of the business and the performance in the half year, what we've seen, the key themes that we'd like to sort of draw out in terms of our performance over that year and I guess, importantly, looking at the strategies that we're adopting and how we're addressing the current market conditions. I'll also then move into a bit of review of the wider investment markets that we operate and before handing over to Simon, who will take you through the sort of financial numbers and the outlook before we do a bit of a deeper dive into some of our key sort of operational divisions and some case studies, which I think help bring to life the business and some of the scale and complexity of projects that we're delivering. We'll then have a decent amount of time to do Q&A. And so we'll try to answer as many of the questions as possible. So turning to sort of the overview for half year '26. I think it will surprise no one to hear that the market conditions have unfortunately remained incredibly challenging for the U.K. economy generally, U.K. real estate and consequently, the markets that we operate in. I will touch on when I talk about the investment market, actually some cause for optimism. We did have some real positivity heading into Christmas this year. And I think it's worthwhile coming back to that because I think it showed that there's genuine investor interest in our sector still, but it is more the confines and the challenges that we are finding geopolitically, which is sort of driving, as everyone knows, inflation, gilt rates, interest rates and more negative sentiment and also the U.K. domestic politics, which is clearly creating a bit of stasis in the market as people try to understand which way the government will go and what we'll end up with. So it is a challenged backdrop. It'd be silly to say otherwise. But I think in light of that, we do view our half year performance as what we classify as a very resilient performance. We feel we've executed very strongly across a wide area of the business. And we are still a highly robust business in sectors that we believe people want to be in. So how does that manifest? Adjusted operating profit, just in the black, GBP 0.4 million, very much in line with FY '25 at the half year. We retained a sort of strong cash position, and we have actually reduced our debt in the period further. So our net cash at half year was GBP 61 million, which is a good strong position. We continue to work hard with our pipeline, looking to retain it to replenish it as we spend down on it. And when we come to the outlook, you'll see sort of the slightly changing complexion of the pipeline as we adapt to sort of market circumstances and diversification will be a big theme of the conversation today, and that will be well represented in how that pipeline is looking. As I said, in terms of execution, the business has maintained an absolute focus on making sure we've got good cost control, good cash control. We are really analyzing every area of the business continually to see if we can drive performance. And it's demonstrated very ably within our delivery execution. We complete -- we're due to complete 3 schemes in the year. We have been outperforming our target margins through outperformance on the construction side. And you'll see that our profit margin, our trading profit margin has actually increased to 14.2% in the half year, really as a result of a couple of deals that we did before Christmas, but also some very strong delivery execution. So that is clearly positive to see. We've talked about revenue diversification quite a lot over the last sort of 18 months or so. And I do genuinely believe we diversified early. We've recognized market challenges. We recognize that they might endure. And what we've been very keen to do as a management team is make sure that there is more resilience in the business and there are more income streams to target. So it is pleasing to see through our diversification activities, as we sort of forecast 2 years ago, we've been able to take them over 40% of our revenues from diversified activities, which will result in over GBP 100 million of revenue in FY '26. So pleased with the execution there. Again, as we said, transaction progress, liquidities in the market remain very difficult, but we have been able to secure 2 development-led transactions and 2 refresh transactions in the half year, and we've continued to look to progress pipeline and achieved 800 bed consents in the period as well. Fresh, Simon will talk about later. But again, they've had a solid half year. They've retained their units under management and are actively mobilizing a number of 1,700 bed spaces. So overall, whilst it's not easy, we do believe that we've delivered a good resilient performance in that half year period. I think turning to sort of, I guess, the strategy that we're adopting. I think it's important for people to remember, we do believe that we've got a relatively unique platform here. We've got huge amounts of specialist expertise across various value chains. And it's that expertise and those different strands, which have enabled us to diversify the model to try and counter the challenges of the last 4 years. We've done so principally by adapting models. So we've got our development partnership model which I'll recap and remind people on, and we've also got our refresh model. So development partnerships, in essence, we are combining our development expertise with our construction expertise, and we are looking to proactively deliver buildings for investors, which they might already own and have already got consent or we are looking at acquiring existing consented sites alongside investors and leveraging in that sort of development construction expertise. Why is this working? And why is this resonating with investors? I think really driven by 2 key things. One, we've got a lot of specialist expertise in how to design, optimize value engineer and deliver, I guess, more viable schemes. Viability is a huge challenge in the market, and we're able to unlock schemes where others can't through that skill set, connected with that is our supply chain. We've got a very strong supply chain, which we specialize in the residential for rent sectors, and that helps leverage our position as well. So that's one side of it. The other side, I think what the investment market has realized is that if they engage directly with contractors or pure contractors, it leaves risk gaps in the development stack. There are certain risks that contractors won't take because they're deemed as development risks, and that may well leave investors exposed. I think the ability to combine both development and construction means we can cover the entire risk curve for them, which is attractive. So that's why it's been resonating. I think refresh, I'll come to in more detail later. But again, it's working because there is a clear demand for people's buildings to be to have fire remedial works done, other remedial works done. They need to get their buildings up to speed in terms of ESG performance. And I think actually, the ability to reposition an asset in the current market when viability for new build is challenged, that's remarkably attractive. I think it also talks to capital. There's a lot of capital out there who are looking at value-add strategies and opportunistic strategies, and they see that the ability to buy assets, add value through CapEx, stabilize and then sell, that's an attractive strategy. So that's why I think that we've got traction there. And I think our key aim here is to be proactive. We don't believe you should sit still, let the market sort of forces dictate and wait for sunnier climes. I think we need to do more than that, and we want to put more volume through the business. We think with our platform, with our overhead structure, we've got the capability to put more volume for our business so we are making certain adjustments to how we set up the business to make sure that we are really targeting, originating, executing as well as we can in these sectors. The other side of it is we want to broaden the addressable market. So we're predominantly known for PBSA and build-to-rent. But over the last 2 years, we have been slowly looking at widening the number of markets that we can target and where we can leverage skill sets and supply chains, which have good match-offs with other sectors. So in the next slide, I'll talk more about that. But the key point here is we've diversified models. We're also looking to diversify into adjacent sectors, which are similar enough that we've got transferable skills. Therefore, we can broaden the addressable market. Therefore, we can try and put more volume through the business. And I think that is the right strategy when there's opaqueness in terms of exactly when markets will recover, when geopolitical environments will settle and when the U.K. sort of political horizon will settle. So that's the key strategy alongside that, just continuing to focus on execution and efficiency. We've done it well for the last few years. We've got to continue doing it well. Now is the time to double down on that and make sure that every penny counts. So let's move on to the next slide. So this slide really, I'm just trying to sort of identify what do I mean by adjacent sectors and markets. And some of these aren't entirely new news. We've got exposure to them. But I think it's just more emphasizing we're going to put more focus on to these and target them with, I guess, greater gusto than perhaps we have done historically. So university partnerships, we think, is an interesting area. Clearly, we specialize in PBSA. We have not specifically targeted university on-campus accommodation before. Why? Because the procurement process tends to be quite slow and drawn out and can be quite expensive. I think we like the sector because we think universities are more and more looking to partner with the private sector. We know that university financials are under pressure. It's been a tough market for them as well, and they are looking to partner with the private sector. We think our skill sets match off well, and we think we can lever both development partnerships and refresh into this space. So we've set up a new partnership-led team to help open avenues there, and we've had initial success. It's not contractually closed, but it's been publicly announced that we've been a preferred bidder alongside UPP to partner the University of Bristol in delivering nearly 900 units in Bristol. So we think it makes good sense to try and secure more of those opportunities. The next one, again, we've always retained some housebuilding capability within the business. And I think it's fair to say that single-family homes and the affordable side remain the most robust residential for rent sector in the U.K. at the moment, the fastest growing, and that's underpinned by the volumes of sales that you're seeing coming through. It's being driven there because capital is deeming it less risky, less risky on a sales basis, on a let-up basis and on a construction basis. It's more granular. They can understand it more. And I think if the capital is really focusing on it, it should be something that we look at in more detail. Again, we're already on site with 2 schemes, and we have one in exclusivity. And I think we are just really assessing what's the right strategy, there's a number of different ways we can approach the market, and we're not trying to launch this with a great fanfare and say we're going to do huge numbers. We're just looking at what's the right entry point, and we will be looking to increase volume in this area. Co-living, again, not new news. We have done a couple of co-living schemes historically. The reason why it's generating more interest at the moment, co-living is a subset of build-to-rent. It is smaller units, higher density. And as a result, it drives higher viability credentials versus perhaps other sectors like build-to-rent. So it's attracting more attention from the investors. And I think from a customer base, the smaller units drive more affordability on the rental process, but also major on community living and creating large communal areas to bring people together. So I think that's resonating as well from a customer base. So again, we're doing a few schemes. We've got a few in the planning pipeline. And I think we're just assessing making sure that there's an investment market that's really hungry for this product, and then we could well look to do more. I think I spoke for the first time last -- at the full year about hotels. And again, I think this is a really interesting hedge market for us. We're currently on site with 2 in London, and we're in legals or heads of terms on 3 other ones. I guess the important thing to emphasize here is we're not entering the hotel market and taking market risk. We're not claiming that we understand fully that investment market. We are doing this under sort of delivery partnership models, whereby we are delivering the product for investors who already have the sites and want to fund them and operate them. It's good for us because there's almost 100% transferability in terms of the skill sets within our business and also in terms of the supply chains that we utilize. So it's a hedge market. It utilizes all our skill sets and can generate some valuable revenues. So I think those are sorts of adjacencies, which I think hopefully demonstrates we're not moving too far out of our sort of area of comfort, but they clearly add a wider market to target. So I'm not going to spend too long on the market review, and I'm happy to answer further questions on it. I guess I referenced it at the outset. What gives us confidence that the market will come back at some stage when economics allow? Q1 this year was probably the most optimistic the market has been and the business has been for a good while. I think it was driven by some strong performance from us running into Christmas. We secured a couple of good sales. We've secured a couple of gateway consents to allow us to get on site. We were delivering well on the construction side, and we've also managed to get our results published and audited ahead of Christmas, which is the first time the business had ever done that. So there was a whole range of sort of internal reasons why we were feeling quite positive. And I think the most important bit was it was actually the conversations we were having with capital. I think back then, we were coming off the back of 3 interest rate cuts in '25. There was forecast at least another couple of cuts in '26, and inflation was trending down. And the capital that we really need to be active in the market, the core, the core plus capital, the lower cost of capital, there was hugely positive conversations about them getting ready to come back into the market and wanting to start deploying again. Unfortunately, we clearly ran into a pretty solid brick wall with all of the geopolitical events that everyone is well aware of, and that has really sort of blunted that sort of optimism and that sentiment and has inevitably pushed recovery right. But I think the fact that it really highlighted to us that capital is still there, capital still likes U.K. living and the sectors that we operate, I think that is a reason for optimism in the medium term. I think turning to PBSA, what are the key characteristics to draw out? I guess there's been quite a lot of noise about PBSA recently, particularly regarding Unite and their sort of share price operating at a big discount to NAV. I think it's a distraction, and it's not necessarily a barometer for the PBSA market generally. If you look at Unite from a real estate point of view, they're 96%, 97% let. They've got 2% to 3% rental growth going through. That is not a bad performance at all in a real estate forum and especially considering the sort of market backdrop. So I think student numbers, we are still getting increases in applications. So applications increased by 3%. There's clearly been a rise and a flight to quality to higher tariff universities. That is not a new trend. That's something we've been seeing for the last 5 years. And it's something that we've adapted our model to really target those higher-quality opportunities. So we feel we can pivot in line with that. I think what's interesting in terms of lettings, so there has been a little bit of softness in lettings in the last 2 years, principally driven by less international students taking up places. I think what's quite interesting is actually in terms of the let-up curve, -- we are now very much more in normalized pre-COVID letting patterns where letting start slow at the start of the cycle and ramp up as you get towards the academic start of the year. What happened post-COVID was that curve actually inverted. There was so much pent-up demand, so many people had delayed going to university that actually the curve -- the letting was very, very strong to start with as people rush to secure accommodation. That drove sort of very strong rental growth and then it sort of plateaued and leveled out. So I think we're much more in norm with the market conditions evolved. I think occupancy, people are reporting is holding up. It seems to be performing okay. And the big thing that we're all looking at is when will international numbers sort of pick up. And it's difficult to truly analyze what's going on in the international markets. Yes, there has been some domestic policy, which has perhaps detracted from its attractiveness to certain students. The reality is, though, if you look at a lot of think tanks, they look at it and say, U.K. should be a net beneficiary here because Australia, Canada, U.S., other sort of highly regarded international education markets, they all have more restrictive policies in the U.K. in terms of international students. So there could be a potential for us to outperform. I think personally, what is going on, the economies of these -- I guess, the large contributors to international students have all had a challenging time. That's possibly led for people to think we'll stay closer to home. We won't necessarily go to the additional expenditure. I think the geopolitical impacts have also played into that. So I think we all need to see how it plays out in the next couple of years in terms of those 2 numbers. But to our mind, U.K. higher education still is a global leader and will continue to attract internationals. On the supply side, again, I think something which people do need to be cognizant of starts on site, consents coming through, they're all getting towards historic lows. The challenges in the market have been felt by everyone, and that is resulting in a real dearth of new stock, which is coming to market. Alongside that, you've got older bed spaces. I think it's predicted 8,000 units will leave the market this year to move into other use classes, et cetera. And the new Renters Rights Act is also continuing to accelerate the exit of smaller investors in HMOs, all of which is supportive of a more medium-term sort of supply-demand imbalance, and we believe will help catalyze a market recovery when the economy allows. Build to rent, look, again, it's a fascinating sector. It's performing very well operationally, good levels of occupancy, rental growth still coming through. It's just been absolutely hit by viability. It's perhaps more impacted by viability than student and other sectors. That's driven units under construction fell nearly 11% year-on-year. Starts on site are really low. And again, we believe that will create pent-up demand because there's not a huge amount of product available in the market. An interesting transaction, the Ebb & Flow building in Reading, that recently traded at about GBP 200 million. And I think it kind of just highlights there is still good investor demand for trading assets, which are well built, well designed. Apparently, the yield on the GBP 200 million was a very sensible yield and just demonstrates this product has a customer demand and an investor demand. I think I've really touched on sort of the investor trends and sentiments. These slides really just highlight living is -- remains very high up on investor allocation lists and a keenness to continue to invest in these sectors. And again, that gives us sort of comfort as markets continue. So I'm now going to hand over to Simon, who's going to briefly take you through the financial results.

Thanks very much, Alex, and good afternoon, everybody. So just in terms of a high-level summary, on the income statement. You can see that revenue has come back slightly from 2025. Two sort of reasons really, Alex has alluded to the challenging market conditions we've seen over recent years. So we have had fewer transactions, therefore, less construction activity in the period than the prior year. But one key driver was the transaction we announced during the period, another [Technical Difficulty] joint venture in our Maslow JV, which is owned 95% by Maslow Capital and 5% by ourselves. That was in Bristol, Malago Road in Bristol. That was the sale. The transaction was completed by the sale of the subsidiary of the holding company that owns the asset. Under accounting rules, we can't recognize any revenue, just the margin. You can see that in the JV land sale line there of GBP 4.9 million because we didn't recognize the revenue, that effectively reduced our revenue that we have recognized on a consistent basis of 25 by about GBP 15 million, so about 50% of that. So that sort of explains the slight decline in revenue. But I think the encouraging thing is despite lower throughput in terms of volume, our continued focus on delivery, efficiency and cost control has seen margins increase by 3 percentage points, as Alex alluded to. That continued focus on cost, you can see there a slight decline of GBP 200,000 in overheads. We're very focused on costs, not only in terms of our operational costs, but our central costs as well. And those factors combined allowed us to report a resilient performance in line with 2025 at GBP 0.4 million. Moving on to cash flow. Strong robust cash position. We ended up, as Alex alluded to, GBP 67 million gross cash. We paid down some debt in the year, so just under GBP 6 million of debt, net cash of GBP 61 million. In total, allowing for the additional facility we have under our revolving credit facility, that means we're still in a very strong liquidity position with total cash and available facilities of just over GBP 110 million. In terms of our balance sheet, the net asset position largely in line with full year just under GBP 125 million or 45p per share. So a very strong balance sheet, significant amounts of cash on that balance sheet, as I've just alluded to. Just one thing really to highlight there. We continue to do our remediation on site, 4 projects on site, 2 expected to complete this year. So the net provision for the BSA came down GBP 8 million, reflecting that progress on site to GBP 38 million. So we just move on now to look at our pipeline. Alex alluded to the strength of our pipeline. We maintained it despite obviously using some of that pipeline in the first half. So we maintained it at GBP 2 billion. Importantly, the focus that Alex alluded to in terms of that sort of pivot of the business into refresh and development partnerships meant that combined development partnerships and refresh were up almost 20% in total and particularly encouraging that we had about GBP 500 million pipeline development partnerships. So a really strong base to augment our existing business over the next number of years. Moving on to the future. So of that pipeline of GBP 2 billion, -- about GBP 300 million is contractually secured and so will be delivered over the next 3 years, GBP 90-odd million of that will be delivered in the second half of this year. We've -- as I mentioned, we've got a strong growth in our development partnership and refresh pipeline. But in terms of our traditional -- more traditional sort of forward fund joint venture business, we're under -- sorry, we've got 5 further schemes in terms of development partnerships and refresh, having completed one in half 1 this year. Importantly, the integrated nature of our platform, we've retained that capability to do planning, to do development management. And that's allowed us to maintain and diversify that business into the new areas we've just talked about. But -- that obviously has some cost pressure, but we've worked hard to contain that, as I mentioned. And what we're trying to really do is pivot our business development away from using that capacity in slightly different ways in a capital-light way in terms of our refresh and development partnership revenue. And importantly, over 40% of our revenue has come from that, probably about a year earlier than we're expecting. Just moving back to the existing sort of transactional business. We've got 5 schemes, as I mentioned, in the market attracting interest. And really, depending on how the market conditions plays out, that's really going to determine where we end up in terms of the full year trading position. So just in terms of a summary, we end up with a strong balance sheet, significant amounts of cash, GBP 67 million gross, GBP 61 million net, having paid down about GBP 6 million of our debt and importantly, a strong liquidity position with over GBP 110 million of cash and headroom under our facility. So I'll now hand back to Alex just to go through some of our operational updates.

Thank you. So I'm going to be relatively swift through these slides because I'm conscious I can see a lot of questions coming through, and I want to make sure that we leave enough time for those. In terms of sort of the land and planning market, I think the land market surprises people quite often because clearly, all the charts show that land prices are going down, and that should drive more opportunity for the likes of us to take advantage. That is true to an extent. But unfortunately, what is happening is just because land prices are going down, doesn't mean vendors are accepting the lower land prices. And there's a lot of people sat on land, which they don't need to sell. And as a result, whilst pricing is going down, transaction volumes are also going down. So it's not quite the clear feed through. We do think there will be more opportunity coming through. We are continuing to look at new opportunities. We are not just looking at diversification. The real strategy for the business when markets allow is to have a fully fledged development business as we've always done, looking to make those higher returns and deliver pipeline, but we also want to supplement it and augment it with the more resilient, I guess, lower-risk strategies of development partnership and refresh. And I think that will be a better balance for the business going forward. But at this point, we've got to be very disciplined in how we buy land. So we're being disciplined and agile. We're focusing on prime locations, and we are looking to try and drive as much defensiveness and flexibility into land contracts, which will offer us downside protection in these. And there's a case study which sort of draws that out, I think actually might be the next slide. Yes. So this is a good example of a lot of what I've been talking about. It's a slightly diversified sector in co-living. It's a prime location on Broadway, Wimbledon. So it's a few hundred yards down the road from the tube station, huge amount of amenity around it. It's a 318-unit co-living scheme, which we are taking free planning. We think it's a sensible appraisal. We think it's adjusted to the market conditions. And the contract that we've exchanged on is a defensive contract in that it's conditional on planning, but it's also conditional on funding. So we need to take it through and achieve planning. So we'll put some capital expenditure into doing that. But if -- after we've gone through that process and we've gone through a sales process, there is just no investment market and we can't find a buyer, we do not need to put that asset on to balance sheet. So that's a good example of diversification and also land buying and a defensive sort of contract. So that's -- we did that in the half year. I think as we alluded to, delivery and the construction side, we think is one of our sort of key USPs in the market at the moment. It gives us that sort of multifaceted capability, and it gives us that capability to diversify. So it's a hugely valuable resource for us and that in-house sort of ability to design and value engineer is critical to combat the market as it is. I think lots of people ask us about the building gateways and the regulation, which has been a real sort of tough thing to deal with for anyone involved in residential buildings sort of over 18 meters. I would say that to our mind, the regulator is improving. It's under new leadership. They are getting things done. They're being pragmatic. It still takes too long. But equally, we recognize that we've got the skill sets within the business to actually sort of monetize it and make it a skill set that we can offer. And we have recently been selected on the project with the key differentiator being our capability of taking it through the gateways for the client. So I think we're trying to, as always, look for an opportunity out of a challenge. I think inevitably, and there's a couple of questions come through on inflation. The Iran conflict is going to drive inflation through build costs. It's inevitable that there will be some impact. And we have seen some inflation coming through in our numbers and through our subcontract packages. I guess the way we look at inflation, we are trying to be as sort of proactive and really sort of defensive as we can in our approach and look to limit its impact as much as possible. What do I mean by that? Well, we now do quarterly inflation Board committees where we assess the inflation, what's happening, what's the forward look, make sure that we feed that into all of our appraisals. We now include not just normal construction contingencies, but inflation contingencies in all of our budgets. So at the minute, even though we have seen inflation come through, we are absorbing it within our inflation contingencies. So it hasn't impacted the bottom line. Clearly, contingencies don't last forever. And if inflation is drawn out and does accelerate, we need to find other ways to be proactive to try and mitigate it. And I think the 3 key things we're doing here is we're looking to procure our subcontract packages as early as possible and much, much earlier than historically we would have done. There's a large-scale scheme at the moment, which we are delivering, which won't be delivered until September '28, and yet we're already 85% procured on that project. So that means we've secured 85% of the packages. They are fixing the prices, so they are carrying the price fix on that, and we offset the risk. So I think that's one key strategy. The second is in a number of circumstances, we've actually looked to forward buy materials that we will use. So we felt that steel would be a potential higher risk inflationary target. So in February, we forward bought enough steel to cover 3 future schemes. It's proved to be a good decision. Inflation has come through on that, and we are derisked on that element because we've invested it and we've stored it and we can utilize it. Clearly, that does use some cash, but obviously, it recycles as we go through the build, and we think that is a sensible pragmatic approach. I guess third opportunity for us is in that value engineering and design optimization. We are well skilled at finding alternative ways to build alternative materials, if required and using that to try and combat inflation. So a solid performance from delivery. And as I said, they have outperformed their margin targets this year, which is a real positive. The case study, I won't dwell too long on, but this is a large-scale scheme, nearly 718 build-to-rent units in Cardiff. This is a great sort of manifestation of our development partnership and our delivery expertise. We were invited into this deal by Legal & General, who wanted us to come in, value engineer, optimize the scheme and then take it off the incumbent developer, and we would be the developer contractor to deliver the scheme. We've now PC'd the first block ahead of program, and we are significantly ahead of program on the second block because as we've gone through the construction, we've been able to optimize the sequencing and our supply chain. And as a result, we will be able to deliver the building early, which will help our sort of our costs and our prelim costs. So a great quality project. It's fantastic to see in a really iconic location in Cardiff. Refresh, I think I've already touched on in terms of sort of we are looking to progress this and progress the volumes. I've seen there's a question on refresh in terms of how we're looking to do that. Well, we've been targeting PBSA as an initial market. We are now starting to see opportunities in wider markets as well. We are quite close in conversations on a hotel refresh job. So I think that addressable market to us is growing and the tracked pipeline that we have now sits at GBP 250 million of assets of revenue potential. That's nearly 10% up on the full year. So that visibility we have is growing. We are then sort of looking to convert and execute. And I think it's always important that you look at what you've done well, what you haven't done well. Decision-making in any deal in any sphere at the moment is slowed because of the market conditions, but we need to make sure that we are absolutely honed in on how we're originating and how we're executing it. So internally, we have repositioned certain resource to make sure that refresh is an absolute focus and not a sort of secondary part of someone's targets, just to put the additional targets so we can drive volumes. And look, as the slide says, in the last couple of weeks, we signed heads of terms or letters of intent on projects for revenues of over GBP 27 million, and that's 2 refresh projects. So we're starting to see some more volume come through, and that is going to be a continued push for us. I'm not going to take you through the sort of case study because I'm conscious of time, but this is a good example of -- this is a private equity partner buying a scheme, which in full knowledge that it needs comprehensive remediation, fire safety works, M&E enhancements and cosmetic refurbishment. They bought it. They bought us in to be that development partner. We will do the works actually whilst we'll do it keeping students in the building where possible. So we'll go block by block so they can maximize their income during that phase, and then they will look to stabilize that asset and sell it on. I've talked a lot about development partnerships, and so I'm going to skip over this slide. But as Simon said, that visible pipeline of GBP 500 million coming through is a positive. And we talked about the university deal at Temple Island. So again, I'm skipping through. I'll hand over to Simon just to sort of quickly take you through Fresh, and then we'll look to close and go to questions.

Okay. Thanks, Alex. So turning to Fresh. Fresh is our operational platform. It manages buildings principally on behalf of institutional clients in the PBSA co-living and BTR space. And it does more than that as well as being a profitable business for us, it also gives us a lot of insight into those markets as we're looking into new schemes. But it had a really successful half year, nearly 22,000 units under management and some clear sort of growth for the future. You can see there. Alex mentioned earlier, 1724 beds mobilizing for September 2026, over 800 for September 2027. So it's also important to us in the sense that we've got 2 refresh projects that came through from the Fresh scheme. So really showing the value of the integrated platform that we have that actually Fresh is delivering not only the operational capability, but actually additional refresh opportunities. We're also looking for the future in terms of a bespoke brand for build-to-rent. And in co-living, we're mobilizing our second scheme and increasing the pipeline. So with that, I don't know, Alex, if you just want to have any closing comments or just hand over straight to Q&A.

No, look, I think, yes, if we look at the summary, a resilient performance and execution. I think we are fighting very hard. There's huge efforts going into this business. And I think we are delivering results in excess of our peers and our rivals. It might not feel like at times, but there is absolutely some resilience coming through this business. I think we've got a platform that we can lever and specialist skill sets, and we are doing that, and we are looking to diversify and looking to be proactive in that strategy. I think that's absolutely a key thing for us. You can't let the market just do what it wants. We can't outrun the market, but we've got to find different ways to operate within it, and that's a firm belief of mine. We have capacity for growth and volume, and we've got to try and use it. So I think that is the right strategy for the current market. We should always be prepared to review strategies. But as I said, the way I envisage as hopefully markets come back and our BAU development business comes back, I will not turn my back on those sort of more granular, that more resilient income streams. I think that is a key thing for us. That would ultimately mean growing the business, but I think it would be a more resilient business, and I think that would be a positive. So that's where we want to get to. So with that, look, very happy to move to questions.

And there's a lot here. So I will look to try and get through as many as we can. So there's one come through. Land values are coming under pressure. How much headroom do you have on your land bank? Are all sites held still expected to generate a profit when developed? And how much would the market have to deteriorate before you start to record impairments? Do you want to cover that one and I'll finish.

Sure. So I'll talk a little bit more about the second part of that question. So I think the important thing to bear in mind is that generally, the land that we hold on balance sheet is land that we've secured through a subject to planning type deal, where we only buy it once we've got planning. Generally, what you see with land values is once you've got planning, you get planning game and therefore, the valuation increases. So that inherently gives us a little bit of headroom in terms of that deterioration in terms of land value because we hold it at cost on our balance sheet, not valuation. And you can see a couple of examples of that during the last year, in fact. The asset Alex has alluded to in Glasgow that we sold to the Maslow JV in September last year, we generated just over GBP 8 million of land profit. And that's because we bought that probably, if we're honest, not far off the sort of peak in land values in 2021. We sold it in 2025 and yet we recorded a profit of GBP 8 million. You can see the same. I talked about it in my finance presentation, a GBP 5 million profit on our Bristol transaction. Again, that was land profit. So I think naturally, we have on our land bank a degree of protection from the fact that those assets have largely got planning and therefore, the valuation at which they're held should be lower than the valuation with planning. Now we do have some smaller legacy assets that we're working through, which aren't a material proportion of the GBP 92 million of land and WIP on the balance sheet at half year. And there obviously remains the risk of some kind of deterioration. But at this point, it's really hard to determine where yields and land values will be towards the year-end. I don't know if you want to talk about the land value, the sort of land market itself, Alex.

No, I think you covered that well, and I talked a bit about what was going on in the land market. There clearly is downward pressure. But equally, there's not many willing sellers at those levels. So trying to pin a value is quite tricky. Hopefully, that answers that question. We've had one share buyback at the moment, very low price of shares. Look, we get that. Clearly, that is an opportunity. I think at this stage, the view of the team is, look, the markets are uncertain, Cash is king. We want to preserve as much cash as we can. We're going to carry on looking after the cash because we think we can deploy it into opportunity, and we want to make sure that we remain resilient. So I get it, and it will always be under review whether a mechanic like that should be employed. But I think we've -- when you've got such opaqueness in terms of the market recovery, I think it's more prudent to hold that cash and look to utilize it to generate revenues and margins as opposed to sort of through buybacks. So it will remain under review, but hopefully, people feel that is a pragmatic approach that we're taking. In terms of pipeline, what sort of period is this meant to be over? Would you kind of run through it briefly with regards to revenue and profit recognition? So I think we've covered a lot of that. I think in terms of the pipeline, that typically will spread over a 3-, 4-year period. That's not an exact answer, but it's -- some of the pipeline is stuff obviously already secured -- contractually secured that we're going to deliver. Some of it is due imminently to start on site and might be delivered over a 2- to 3-year period. And some of it is -- we are still looking to acquire the contracts on it or acquire planning on it. So that journey could spread out if you assume a 2- to 3-year sort of build period and, let's say, an 18-month planning period, that's how it can stretch out. So the pipeline does run over a sort of broad period of time. I think it's probably worth just touching...

I'll touch on the second. Just to add to that, obviously, I just alluded to the fact that of that pipeline, GBP 300 million is secured on site, GBP 90 million of it will be delivered this year. So it really depends on some of it quite short term. Some of it, we're working through planning. It might have to go through gateway. So that's going to be much more medium term. So there's a whole range depending on where it is, and you can see that segmented on the chart in the deck. In terms of land and profit recognition, revenue and profit recognition, just really building on what I just said a couple of moments ago. So typically, where we're doing a forward fund or joint venture type transaction, we will recognize any valuation of the land on the sale of that land upfront. So once we sell the land into that joint venture or to the third party. And then we recognize our build over the build period. So as we perform month by month, as it's valued, we recognized it based on the margin implicit in that build contract based on the costs incurred. So it could be over a 2-, 2.5-, 3-year period.

Okay. When will trading conditions enable dividends to return? Yes, I wish I knew. No, look, clearly, we want to get back to a progressive dividend policy. It is exactly what we want this business to do, and we want to return value to shareholders, and that's a clear objective. I think to echo my point previously, at this stage, we've got to focus on making sure that the business is resilient, that the business is moving forward and that there is room to grow and take opportunity of markets. The whole strategy here has been extend our runway, make sure we're there when the market turns and then we should -- we believe that we are incredibly well placed to take advantage. There's lots of competitors that have fallen by the wayside. There could be some real opportunities that is for us, the target at the moment. We want to get good visibility back in incomes coming through and market conditions recovered, and that will then be able to drive a return to dividend.

That is absolutely the intention as market, to return to a progressive dividend policy once we have visibility in terms of market conditions and profitability.

Yes, exactly. I've never understood why single-family homes have not been in huge demand. Queues around the corner for affordable rental buy units. Large companies like Legal & General failed in this area. Why is this? What's the stopper? So I mean I don't actually think Legal & General failed in this. I think Legal & General actually doing quite a lot in it. What did fail was they launched a factory to do fully modular built product, and that didn't work. And my own two pence worth modular remains tricky in the U.K. because planning is varied. It's very difficult to provide the same uniform product. Modular is all driven around uniformity. And we've got a lot of brownfield sites, which don't work that well for modular because they're not uniform. And the planning environments mean that actually they want differential units. They want differentiated units and that has been more challenging. But I think single-family generally is really picking up pace. And I think it's that recognition that people don't necessarily just want to rent a flat. They might want to rent a house. There's a huge tranche of people who want to be renters and they're not forced to be renters. And I think perhaps the market has been slow recognizing it. I think -- perhaps the housebuilders have been much less interested in it historically because their sales rates have been good and they haven't needed to bulk sale. And when you bulk sell, you do sell at a discount. So they haven't been sort of driven that way. But I completely agree that there's good demand there. It's growing, and that's why I want us to focus on it. Moving to the next one. Benefits and opportunities and refresh appear many and varied. There does seem to be slow progress given all the positives in the area and how you've spoken about it and your expertise given existing TAM and quite apart from adding further TAM. Would you please explain where you think the company is falling short and where it is just the situation process? Yes. Look, I mean, hopefully, I've touched on this already. I think we are doing a good job. From a standing start, we are growing revenues. I would like to think that revenues will grow this year and that visible pipeline is critical in terms of sort of being able to then convert it. So I think generally, markets are slow, decision-making is slow. That is one factor. The second factor is quite often, these are assets which need remedial actions and not necessarily sort of remunerative actions. So that makes decision-making on behalf of the investors sometimes a bit slower because is perhaps lower down their list of things they want to do, but they have to do them. I think the complexity of underwriting refresh opportunities is higher. You need to do more due diligence on an existing building than you would on a site. It's very important you understand the layers of the onion, the fabric of the building to make sure that you get it right and you don't have surprises as you go through. So there are a whole lot of structural reasons why the deals are taking longer. But then as I said, I think it's always important to reflect on what you're not doing as well as you could be. And our reflection is we perhaps haven't had as much focused resource really targeting the origination, really sort of targeting the key players in the market. And so we're just trying to enhance everything. I don't think we are fundamentally getting anything majorly wrong. I think it's more just doubling down on the attention, making sure our execution processes are well. We are putting a little bit more legal resource in to make sure that we don't log jam when we do have transactions that we've got the legal resource to process them through. So look, I'd like to think the pace will continue to grow. I think as we have a wider pipeline to aim at, it will continue to grow, and that's the challenge for the business that we've laid down. Okay. So... With the share price really constrained at the moment, what can you do to demonstrate to the market you're ahead of what they are pricing in? Look, I think we're just trying to communicate with the market. We're trying to be -- both mine and Simon's belief is we just got to be honest. We've got to call things out as we see them. We're trying to talk with honesty and candor about the challenges, but then we're also really trying to let people know we are being proactive. We do have different strings to our bow. We've got some more resilient income streams coming through. We're looking to grow them. So it's difficult because I think you look across all of the sectors and a lot of our investors are invested all across the U.K. economy and wider and there's challenges everywhere. So for us, it's just continue the communication and continuing to generate results. If we can grow development partnerships further, if we can grow refresh further, I think people will start to take notice that, that consistency is key. So I don't know if you've got anything.

I just think -- no, I completely echo that. I think the one thing to note is that we're not unique. So Alex alluded to Unite, their discount to NAV is about the same as Grainger is trading. It's a problem in the whole market across this sector. And I think everybody in that space is trying to communicate the benefits of the particular business model. It's just not really resonating yet.

So there's another one on buybacks, which hopefully I've covered. So I'm not going to go through that one. This one is quite long, and I'm tempted to read it because they're actually quite nice about management and what we're doing proactively. But I'm just trying to sort of skip through and find the key essence of the question.

I think it's talking about using our cash for alternative uses to generate returns, which isn't really part of our core strategy.

Yes. Okay. Yes, I can see that now. I do get it, but I think what we want to focus on is what we're experts in, and we want to leverage the overhead and the platform that we have into areas that we really understand and can add value. That's got to be the core. I don't want to diversify us into areas that we don't know and take punts that we don't understand. So I think the best execution for us at the moment is to continue doing what we're doing and try and find as many angles as possible to generate new revenue streams...

I mean, just to echo one point on that, I think this company is run on prudence. I'm glad to see the message we're getting across in terms of look, we're focused on cost. We're doing that sort of thing. I'm glad that's evident. So that's a positive.

This is a technical question. Given the ongoing costs and provisions for legacy cladding and fire remediation, have you looked at utilizing retrospective pumped cavity barrier products to such as...

Yes, we have and we've used it successfully.

Yes. No, -- this question is actually really important because we are obviously being a good actor and looking to remediate the assets where appropriate but the technology is catching up as well and the injector clad systems now make some of the remedial works much, much more efficient, much quicker and much more cost effective and along with that continues.

We have one scheme that we've done where the original cost was -- we ultimately did it for a fraction, 10%, 20% of what the full remediation would have taken the whole. So yes, we're absolutely using it, and we're trying to be as innovative as we can whilst maintaining building safety.

Yes. Okay. So that's that one. You said during the presentation, you want more volume. Are you open to using cash for JVs with REITs like Grainger plc or taking a strategic investment into these companies at large discounts to assets if you have the excess cash. So I think -- looking to do JVs with entities like Grainger, absolutely. We have done JVs. I think we are still guarded with our cash, but we have left equity in JVs with HGP in the scheme in Stratford. That's the Lloyds Banking Group backed business and equally a small amount of equity with Maslow. So if it unlocks deals, and we are very happy to put some equity in. I don't think we are going to be looking to invest in the REITs from a sort of share perspective. Again, it's echoing the point. I think we want to really focus on cash in the business.

Yes, we're property experts not capital markets.

Okay. I think you're doing a great job under challenging times. That's good. Really impressive the way you're looking to diversify to stabilize your revenue. Also very nice to see Simon and his family bought significant shares with their own money. That shows he truly believes in the viability and prospects of the business. I absolutely agree with your views on cash. This is what allows you to breathe and not panic, blah, blah, blah. My question is with regard to inclusion of the sale of the building when comparing this half year profit to last year, that seems like apples and pears to me, shouldn't they have been excluded for comparing underlying profit. I think I'll leave you to cover that one.

I think what this question is alluding to is why we included the profit on sale of the JV in our profit this year versus last year. I think I talked through the difference in accounting to a traditional forward fund versus joint venture. But the essence of our business is it can be quite lumpy. Typically, we'll take -- we can or have taken significant profits on land sales, and that's exactly what that joint venture is. So that is part of our underlying business, and that's why the profits can be quite lumpy. So I don't think I agree with that premise to say just because we've had a profit on a land sale, that's our underlying business. It should be excluded from our underlying business because that's part of the nature of the model. So I hope I've explained that correctly. So I think it makes it consistent. If you go back to full year 2025, you can see the profit on the sale of the Glasgow transaction that was GBP 8 million. And again, that was in underlying profit. It doesn't go through gross margin, but it does go through operating profit and I think rightly through underlying profit.

Okay. I think...

We just missed one on safety.

Yes. I was just going to do this one and then we can move on to that if we've got time. Has there been recent conversations with new investors with the entrance of new significant investors in WJG like Fulcrum Global? Well, look, absolutely, we continue -- we've spoken and met with Fulcrum and that they are -- they've built a position and they are interested in Watkin Jones and understand that they're actually sort of property developers in different markets in their own right. So they have obviously been a new acquirer of shares, which is positive. And we continue to engage with nonholders and holders alike and just look to sort of tell them what we're doing, why we are both passionate about the business, what the downsides are, what the upsides are. I think we're just trying to be very honest and that we want to continue to grow our investor base and make sure we've got a strong shareholders who want to come with us on a growth journey. That's what we all aspire to.

So I'll just answer this one on building safety.

Yes.

The question is what downside risk remains on building safety provision. Do you expect any further contributions from partners? So I think if you go back to sort of 2025 in our annual report, you'll notice that we reported on certain contingent liabilities. These were buildings where we weren't sure if there was a liability, if there was a problem -- we weren't sure if it was our liability, if there were any work was needing doing and those still need to be investigated. So to the extent there's any risk associated with those, they could -- that could turn out to be a further risk to building safety provision. That being said, we've got a degree of contingency. We've done well in terms of our procurement on site of those projects. So it will really depend on the interplay between how the spend goes on the other projects and whether or not there's any further liability. So can I sit here? I guess the nub of the question is, do you expect the safety provision to need to increase? I don't think anyone can say at this point. I think we're managing it well. You can see the provisions coming down. It hasn't gone up in terms of any new properties during the first half. But can anyone in this sector say for definite the provision won't go up? No, it's uncertain. We just have to take it quarter-by-quarter, half year by half year, and we'll say more of that at the full year.

Okay. So I think we've actually managed to get through all the questions. I think we're 2 minutes over. So I'll just close by saying, look, thank you very much for your time. Thank you for your support. It continues to be a tough journey through the market, but we really are giving it our all, and we think our strategies are right for the market, and we're going to continue to try and execute them. So thank you very much for your time.

Fantastic. Alex, Simon, thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.