Harworth Group (LSE:HWG) — Half Year Results

0:01 Good afternoon, ladies and gentlemen. Welcome to the HARWORTH GROUP PLC Half Year Results Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time just using the Q and A tab situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, company can review your questions or publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. If you give that your kind attention, I'm sure the company would be most grateful. I'd now like to

0:32 hand over to the management team from HARWORTH GROUP PLC. Kitty, Linda, good afternoon. Good afternoon. Thanks, Mark, and good afternoon, everyone. Thank you for joining us today for HARWORTH's half year results presentation. So in this slot, we're gonna cover the results and operational performance for the first six months of 2024. But first, I'd say just a bit more of an introduction for those of you who don't know us. I'm Linda Shillor, chief exec of HARWORTH, joined the company in November 2020, and I'm delighted to present to be presenting today alongside Kitty Patmore, who's our chief financial officer who joins the company about nine months before I did back in 2019. We're delighted to be with you today. So next slide, sort of turning to the agenda. Oh. We both pressed. We both clicked forward at the same time. Sorry about that.

1:19 It's been an so it's been a really exciting six months for us here at HARWORTH, and I look forward to sort of walking you through the progress. This slide shows what we're gonna sort of take you through. I'm gonna start sort of in traditional fashion with an overview of the first half and briefly cover the financial results, the operational achievements of the business, and the progress that we are continuing to make against our strategic pillars. And I'll talk a little bit more about how our growth strategy has evolved. So some of you will remember in the trading update back in June, we talked about actually the Microsoft transaction, but also an ambition to sort of grow our industrial logistics portfolio. I'll then provide further details on the portfolio and the progress made in each segment in driving value creation in the first half. And then hand over to Kitty, who'll take you through the detail of the financial results before I talk a little bit more about that path to a billion of EPRA NDV and our outlook for scaling the business beyond.

2:12 We both look forward to taking your questions at the end. So if you sort of submit those, we'll sort of get to them at the end of the presentation. And we will, as Mark said, try to answer as many as we possibly can. So on to the strategic updates really sort of the highlights from the first half. I'll start by saying that Kitty and I are really pleased with the progress that the business is making in delivering our strategy and the underlying growth that the teams have delivered in the context of what's been a pretty static market. And if we work across this slide from the top left, in half one, we saw our EPRA NDV increased 687,000,000, which resulted in a 3.5% growth of EPRA NDV and an EPRA NDV per share of $2.2112 pounds oh, gosh. This is terrible. 212.3p.

3:01 Sorry about that. We continue to deliver strong returns, achieving a total return of 4% for the half. And we ended with a net loan to portfolio value of just 9.8%, which is higher than the year end. And while still being one of the lowest in the sector, but it's actually reflecting our development spend through to to the mid year. In the bottom left, you can see that we also continue to enhance our profitability, and we made an operating profit of 21,100,000, which is significantly higher than the same period last year. And that's been driven in part by higher valuation uplifts reflecting increased land sales, revenue from development management, and valuation gains on our investment properties. We also made significant progress on planning approvals. I don't think it'd be a long time before I've been able to make a a one of these presentations and say we've actually had a good year for planning. So we've achieved three consents on 3,300,000 square feet of industrial and logistics space in the year to date, plus 685 residential plots. And I'll come back to this in some more detail as we go through the next few slides.

4:05 But these planning approvals are really important because ultimately, they're increasing our consented pipeline ready for development. And finally, as I'm sure many of you recall, in June, we exchanged contracts conditionally on a 47 acre site. So this is the land sale with to Microsoft at our Skelton Grange site. It's our largest sale to date. And although there's still a lot of work for us to do, we've already made a start on-site, and we're looking forward to completing that transaction over the next two years and delivering the site for Microsoft. So from an operational progress perspective, this site sort of goes into a little bit more detail about what we've been doing so far this year. As you can see, there's quite a lot going on. So to pull out some of the key figures, again, working across from the top left, we achieved value gains of 47,000,000 across our portfolio, which is significantly higher than the 7,500,000 achieved in the same period last year.

5:00 This highlights the impact of our operational progress on planning across our sites and the high volume of sales achieved so far this year. For our service land sales, by value, they're 67% higher than the first half average since launching the strategy. And in total, we are currently a 145% of our budgeted sales, and that does include that landmark Microsoft land deal. And then that's ahead of our usual position at this time of year. So if we switch to the sort of bottom left, as mentioned in our June update, we intend to reinvest the proceeds from these land sales into our industrial logistics direct development program, and I'll come on to that in more detail when we talk about the evolution of the growth strategy. And then if you go to bottom right, turning to the planning progress, we've had strong first half on the planning front with a loss of our long awaited planning approvals getting over the line.

5:54 I've lost where I've got to, so just bear with me. No. You've got it. Yeah. As a result of Yeah. Yeah. As a result of these planning consents Okay. Sorry. I've just managed to scramble my paperwork. As a result of these planning consents during the period, 1,800,000 square foot of industrial and logistics space and 500 residential plots. And post period end, really importantly, we achieved an outline consent on an additional million and a half square foot of industrial logistics space at our Cinder Hill site and a further 185 residential plots. So really healthy progress through that planning sort of pipeline as as you'll see sort of in in later slides. And as a result of these planning consents, the consented industrial and logistics pipeline has actually increased to 8,100,000 square feet as of June, and it will be higher as we work through to the year end when we include the Cinder Hill post period end approval in this.

6:48 Of this pipeline, we expect to deliver 5,700,000 square feet by the end of twenty twenty seven, which we estimate will result in 800,000,000 of gross development value. All of our industry and logistics development underway is certified at EPC a and brilliant excellent, and that is supporting our transition to a 100% grade a across our investment portfolio as we expect to retain more of our directly developed property. So onto the next slide. We're having a bit of control issue here. Bear with us. This slide is a really simple one. It's a and it's just a really sort of quick, voice over on this. You know, if you look at the total returns on this slide, what you can see is that we've continued to deliver positive total returns for the last four years. We've outperformed the broader real estate market, and our tilt returns have continued to grow in the first half of twenty twenty four. And in fact, actually, as business year on year, we're probably one of the few in the sector that have either come out flat or actually sort of increased our rep per MDV, you know, sort of year on year.

7:54 From a strategic evolution perspective, so a bit more sort to talk through on this slide. So we we talked in June about how we've undertaken a review of our strategy now that we're at the halfway point. And our aim is to ensure that we continue to optimize the growth and returns, but that and that we still expect to meet our 2027 targets. But this evolution provides more detail on our journey to a billion of apprend EV by the end of twenty twenty seven and a look beyond that to 2029 given our confidence in the near term targets. The strategic pillars, as we've sort of shown many of you before, remain appropriate as the key drivers of growth. And just to sort of take each one in turn and walk through what some of the changes from a 2029 perspective are.

8:39 For industrial and logistics direct development, we continue to target 800,000 square feet of development on average by 2027. Now the status of our sites and the timing of us achieving planning and the requirements from a infrastructure perspective have always meant that this would involve increasing development between now and 2027 as we see those planning consents now starting to come through on the next generation of industrial and logistics sites. We're making good progress. We've now got eight key sites that we'll be delivering over the next few years, and we'll continue to use a variety of funding structures to deliver the product, but we expect to deliver more on balance sheet to support the growth of the investment portfolio. And second pillar from residential perspective, we still expect to continue with our plans to accelerate land sales whilst driving returns. And the proceeds from those sales are important that, you know, ultimately provide the funding for the industrial and logistics direct development pipeline.

9:35 Our land bank, which is the pillar three, is fundamental to our strategy, and we will continue to maintain strategic land pipeline through selective acquisitions. These will include strategic partnerships and capital light structures as this is what allows us to scale to meet our growth ambitions. And given that our intention is to ramp up our industrial and logistics direct development and grow the investment portfolio, Over time, we'd expect that strategic land to reduce as a proportion of our total portfolio so that by 2029, 80% 85% of our total land and property portfolio will be industrial and logistics.

10:10 And I'll talk about the momentum that we're seeing in those industrial and logistics sites over the next couple of slides. So just finding that fourth pillar, as well as repositioning our core investment portfolio to a 100 grade a by the end of twenty twenty seven, We're also targeting growing this portfolio to 900,000,000 at the end of twenty twenty nine. That was one of the things that we announced in our trading statements in the summer. And growth in this portfolio will be driven largely by the increased direct development and retention of commercial buildings, but also we'll be supplementing that with some selective acquisitions to both enable us to manage that growth trajectory, but also the transition to a 100% grade a in the core portfolio. The growth in recurring rental income that this generates from this larger income portfolio is expected to allow us to grow our dividend profile.

11:00 We don't expect the growth in dividends to increase to negatively impact our growth levels or returns, but what it'll do is allow us to pay greater income component returns alongside capital growth from our land and development portfolio. So into sort of the the sort of the the portfolios themselves. I want to spend a little bit of time about what's talking about what's happened in our London property portfolio. And many of you've seen these presentations before will be familiar with with this and how it creates value. But given this recent announcement on the strategy evolving, I thought it would be helpful to just take the opportunity to explore it a little further. So if you look at the land and property portfolio overview, we split, it into three main subcategories. We've got strategic land, we've got major developments, and we've got the investment portfolio.

11:50 Strategic land includes land without planning or land with planning secured, but where work has not yet started. Major developments includes land with planning where we started work on-site. And this can be land where we've got infrastructure underway to develop service plan, but it also includes land where we're building industrial logistics units or developing our mixed tenure products. Our investment portfolio includes completed industrial logistics building, and that provides a source of rental income. And then we've got this really small proportion that you can see we've helpfully called other. But this is largely income generating, and it includes some natural resources and agricultural land and some land with the opportunity for future energy and natural capital uses. On the right hand side, you can see the value generated as land moves through the development cycle. For example, the average value of our industrial and logistics strategic land without a planning consent is 7 pounds a square foot.

12:44 Once that strategic land has a planning consent, the average value increases to 15 pounds a square foot, and then we start to work on the site and shift as it shifts into major developments, which where where it's held at 30 pounds a square foot. Although it's really important to note that depending on the mix of size and the stage of each site in that major developments pipeline, the value of this part of the portfolio can vary. And at the top end, it sits up at around 60 pounds a square foot, which is obviously significantly above the 30 pounds a square foot average. But you'll see when we get to a later slide in this part of the portfolio, we've had a number of large sites that have recently received a planning permission, and they're at the beginning of their development journey, so all the values to come from them.

13:28 And lastly, if we look at the grade a properties in our investment portfolio, most of which have we built ourselves, and they're held at a 138 pounds a square foot, which is an increase from a 130 pounds at the year end. Similar process is followed on residential with values increasing from £7,000 a plot up to the point of service land, where our average sales price in the first half was 57,000 a plot. Now, again, the mix of what we're selling in any year can affect this average. And for example, at the top end of this range in the sort of year to date, we've sold around a £100,000 a plot. So the next few slides, we're gonna show you the impact of the portfolio level of our activities in the half year. So first strategic land. So the the strategic land portfolio concentrates on how we create value through securing planning permissions.

14:17 And you can see on this left hand graphic the stages that a site will progress through on its journey to consented land. And that's the process that we manage end to end within our teams at HARWORTH. A site moves through pre pined draft allocation before receiving an allocation. And then the allocation is quite a key milestone in the process because it means that our proposal has been allocated within a local plan. And this is a key point from which value of the site begins to increase as we start to work it through to concluding with a planning consent. The charts on the right show the movements in the portfolio in the first half of twenty twenty four with these portfolios both increasing in value. And you can see that 18,800,000 increase in the revaluation of the industrial logistics land and the 3,500,000 increase in the revaluation in the residential land.

15:04 And they really reflect the progress that we've made in planning as we move this through the stages from draft allocation to consented in the period. And most notably, at Gascon Wood, where we received a planning consent for one and a half million square feet of industrial and logistics space on a brownfield site in Yorkshire. We turn to the next slide. This pulls out the major developments and components of our portfolios. Remember, these are the sites which are undergoing infrastructure works to create service lines or we're building sort of buildings on them. These charts on the right show you that the valuations of the portfolios increased in the first half of the year with development spend on sites of 31,800,000, and that drove a combined revaluation gain of 16,000,000. The major activity in the period driving value in these sites has been actually the progress that we're sort of making with them. So by bringing forward development and land sales, and that includes that conditional sale of Skelton branch to Microsoft.

15:58 And just a reminder on that one, this site was originally purchased for around 3,000,000 in 2014. And upon completion, the scheme is expected to deliver an IRR in excess of 40%. And we gave a lot more detail on that announcement at the time in June, and we are gonna explore the skeleton site in more detail on our up and coming Capital Markets Day, which is gonna be held on the October 22 in Leeds. We've had residential land sales in the period of 489 plots, which actually demonstrating that continued demand from the house builders. And actually, the round of first half service land sales is 67% of the ahead of the first half average since launching the strategy. As I mentioned earlier, we've got really good visibility on exceeding our budgeted sales for the year, which provides an important indication of the service line values.

16:52 So this sort of gets to the guts of a lot of what we've been working to over the last three and a half years, which actually is how we're building momentum in that industrial and logistics pipeline. And the next generation of these sites are coming through now with planning progress year to date resulting in both Gascon Wood and Cinder Hill, which is a consent that came in just after the half year joining our near term pipeline. We'll be starting on-site works in these locations in the coming months, whilst infrastructure works are already underway at Chatterley,

17:22 Wingates and Skelton. And at the half year, we've got 2,200,000 square feet of enabling works underway and 600,000 of direct square feet of developments on-site or due to start shortly. The exciting thing about this slide is we've now got eight major sites coming live for development over the next eighteen months, and that's demonstrating the real momentum that we built in the industrial and logistics pipeline. And that feeds our capital growth and the building out of our larger investment portfolio as we move out towards 2027 and and towards 2029. And in total in these eight sites, there is the potential for over 1,000,000,000 of GDV to completion. And we've got a strong pipeline in the next wave of sites that that follow these that are in the sort of the the the balance numbers at the bottom. And the final slide before I hand over to Kitty is the investment portfolio, where we saw a like for like increase in of 2.4% annualized rental income. And the table at the bottom left shows the value gains achieved from revaluations of 8,200,000 as a result of management actions and increasing market rents.

18:27 As you can see from the operational metrics, the quality of this portfolio remains high. We have a weighted average unexpired lease term of around twelve years. An average rent per square foot has improved and our vacancy rates remain low. The net initial yield has increased slightly as a result of the lettings in the period, and the net equivalent yield continues to demonstrate the reversion potential of this portfolio. Our intention remains to be a 100% grade a on the core portfolio by the end of twenty twenty seven, which we'll we'll achieve by bringing through more directly developed grade a properties as well as selective acquisitions to enable us to dispose off the secondary or non grade a assets. And with that, I'll hand you over to Kitty to explore the financial results in more detail. Over to you, Kitty.

19:13 Great. Thanks, Linda, and good afternoon, everyone. As Linda said, it's been a busy first half for HARWORTH, and we've achieved a lot operationally and made progress against our strategic objectives. We're starting firstly with the p and l and our income statement. If you look first at the table on the bottom left hand side of of this slide, this shows the total property sales in the first half were £41,700,000. That is slightly lower than the first half of twenty twenty three. But just to pull out a slightly difference of makeup of those of those slides. In the first half of twenty twenty four, that was driven really by residential service land sales, whereas we had a a number of income sales in the first half of twenty twenty three. Because that service land driven, that results in a higher statutory revenue number.

19:59 So revenue from our income generation portfolio was lower during the half, and that reflects those income sales that we made in the first half of last year, which has reduced the annualized income annualized rental income. And combined with revenue from the rest of the income generation segments and development management income, that gave us underlying revenue of £59,000,000 and statutory revenue of 41,300,000. Looking forward, as Linda said, we've got a 145 of our budgeted sales for the year either completed exchange or in heads of terms, which is ahead of our usual profile at this time of the year. Admin expenses increased by 2,500,000 from the same period last year, and that's principally due again to to higher salary expenses, but higher number of employees with within the organization release. We ramp up a lot of the growth that we're going to talk about over the next couple of slides.

20:48 And and also cost inflation and progressing those strategic objectives. Increases in the fair value of assets held for sale and investment properties through the revaluation exercise that we did at half year resulted in other gains increasing to 30,700,000. And all of that combined gave us a profit after tax of 14,800,000, an increase of over a 100% on the same period last year.

21:12 Finally, the board has decided on an interim dividend of 0.489p per share. This represents a 10% increase on last year's dividend, which is what we've typically done. And it's actually now our dividends have increased both interim and year end now for 10% for the eighth for eight years and consecutively.

21:32 So turning to the balance sheet. Our upper end DV increased by 3.5% during the half year to GBP 212.3, representing upper end DV of GBP $687,000,000 and keeping us on track to reach that GBP 1,000,000,000 goal. This is largely driven by valuation gains generated primarily by management actions focused on leveraging the unique attributes of each of our development sites as Linda has spoken about. So that's creating opportunities to unlock the use with the greatest value, planning progress and demonstrating demand for our residential and commercial service land. Net debt at the half year was 80,500,000. That is slightly higher than it this time last year and also at the year end, but it's very much in line with the usual profile that we would see. We typically sort of start doing a lot of earthworks in in the spring, suspend over the course of of the year and quite often have that that q four sort of profile of of sales receipts, which brings that debt down at at the end of the year, which is why typically see a higher debt balance at the beginning of the year and lower year end.

22:34 And combined with the dividends, the upper end DV increase led to a total return of 4% during the period, which is a big increase on on the same period last year. So looking at funding and liquidity, our financing strategy remains to be prudently geared, and we have a target net loan to portfolio value at year end of 20% with a maximum of 25% during the year. At June, our net loan to value was 9.8%, so well within those levels.

22:59 This this slide also covers our our main financing facilities, and you can see that our major revolving credit facility runs until 2027. We've got plenty of headroom within that, and we'll continue to use site specific to about direct development and infrastructure loans to support alongside the use of those main corporate facilities. And then if we look on the next slide, this shows that the use and and drawings around that that debt profile over the course of the year. So you can see that that this bridges our net debt position from £36,400,000 at year end to 80,500,000 as of June. And the main driver of the increase is that left hand bar, which is the development spend on our sites. So that's everything that we're doing on our sites to progress them through to service land sales or to progress them through to having the built direct development, which enables us then to to fill into the investment portfolio.

23:51 There's also a movement in deferred consideration relating to service land sales, which is shown in the work cash and working capital column used in operations. And these increases in in the drawn data offset in part by sales proceeds received in the period. The chart also shows the headroom afforded to us by the by our cash and revolving credit facility. And at the half year, we had a £154,000,000 of cash and available facilities. So in summary, from a financial perspective, this is another strong set of results for the group. We continue to deliver growth in our net assets, net per NDV. We've got a solid financial position. We've got a low loan to value. We've got cash and and available facilities, and we've got no major refinancing requirements for a couple of years, all of which helps us to progress our strategy.

24:37 And I'll now hand you back to Linda to cover outlook and our road map to a billion pounds. Thanks, Kitty.

24:44 Brilliant. So before we go to questions, I'm just gonna spend the next few minutes summarizing our our progress and provide a view on the outlook for our sectors and what we think it means for HARWORTH. This slide looks at the journey to the billion Vendor NDV. And as I earlier, you know, we're confident that we'll reach that target by the end of twenty twenty seven. The building blocks together are the four strategic pillars that I talked through earlier. Our NDV growth comes from moving land through the planning and development cycles to create value from revaluation gains and the creation of investment properties. The land sales that we make through the year generate cash, they crystallize the profits and reinvest those proceeds to fund increased development. And we refill the pipeline importantly through selective acquisitions of strategic land that form the next generation of the sites to come through the cycle.

25:33 And if you look at the growth needed to reach a billion, so from this chart, that's the 46.46% in in the next three and a half years. It does feel like a big number, but actually when you compare that to the growth that we've seen over the last three and a half years, so 33%, we believe this is achievable, especially when you consider the macro environment that we've been operating in the businesses performed really, really well. We've proved our business model work so far and we expect to continue doing more of the same as we scale the business over the next few years. If I turn to the outlook slide, there's a lot going on at HARWORTH. I mean, there's a lot going on sort of elsewhere. And the election of a new government has brought a sense of stability to the markets, and its focus on growth and housing delivery and supporting policy reforms are generally positive for the real estate sector, but there is a lot to do.

26:25 Falling inflation, so I can see the initial interest rate cuts coming through with an expectation of more to follow is driving more confidence in the economic fundamentals that drive investments and importantly for us tenant demand. The real estate market indicators remains pretty stable through half one, and there's an expectation of further rate cuts feeding into tighter yields. And and and for the first time in a decade, all of the main MSCI in the indices are showing year on year rental growth. And that's adding the sense that the real estate sector in The UK is is set to come out of the trough, which in turn is waking up investor interest in the section. We've we've been we've been seeing that on the ground. The structural and supply that we've seen in previous periods, both in both industrial and logistics and residential markets has continued and we will believe will continue for the foreseeable future. And we have seen relatively stable markets in half one with pricing holding firm and rents continuing to increase.

27:20 But on the downside, wage and some construction cost inflation is proving to be quite sticky. And the real estate sector is not alone in an ongoing skill shortage, which is something that can't be fixed overnight as volumes, as expected begin to normalize through 2025. Increased investor and occupier confidence is also tempered by the extent of the public sector finance deficit and the concerns that overtaxing and reduced spending could slow the recovery. But when we look at this, all of that said from a HARWORTH perspective, you know, we're a long term through the cycle business. We're well seasoned in adapting to changes in the markets and policy environments. Some of the sites that we're buying today, we won't be through planning for fifteen years. And so it gives you sort of the horizons that we work to. And as again, I hope we've shown that we've got a strong track record of delivery. We've got consistent outperformance through some really challenging periods in recent years where we've held flat or increased our rep rate NDV year on year.

28:17 In the absence of market tailwinds, this is all down to management actions and what we can do and the skill of our people, and I think that's evident in the results that we've continued to deliver. The business is in really good shape, as Kitty said. We've got a strong balance sheet, that low LTV. And at the half year, 8,100,000 have consented industrial logistics land, and that's the thing that will propel our growth through 2027 and beyond. And we are confident in achieving our strategic target of a billion of EPRA NDV in 2027 and the £900,000,000 investment portfolio that we announced in the summer by 2029. So with that, I'd like to say a big thank you for taking time. Sorry, I couldn't walk and chew gum at the same time earlier on. I managed to shuffle my paperwork. But thank you for taking time to join us today, and we'll now turn to questions.

29:02 That's great, Linda. Kitty, thank you very much indeed for updating investors. Could I please ask investors to continue to submit your questions just using the Q and A tab just situated on the right hand corner of the screen. Just want to remind you that recording this presentation along with a copy of the slides and the published Q and A will be available via your Investor Meet company dashboard. Kitty, Linda, as you can see, you've had a number of questions from investors this afternoon. So thank you firstly to everybody for your engagement. If I may just hand back to you to read out those questions and give a response where it's appropriate to do so, and I'll pick up from you at the end. We got the great fun of reading them out to each other because I know this first one's one for Kitty. So they're Kitty. This has come from Sam. I believe the next debt the net debt has risen to 80,500,000, and net LTV stands at 9.8%.

29:48 Given your available liquidity of 154,200,000, do you foresee any need to increase debt further in the short term, or is the current liquidity sufficient to fund your plan, Greff? Yeah. I I think the the the current sort of liquidity that that we've got places is in a really strong position going forwards. And and that's partly because of the way that HARWORTH funds itself. So if you think about that, that's the slides that where we're looking at sort of development spend, and then we're looking at sort of sales proceeds coming in. We very much start from a basis of of thinking about how we can self fund our growth. And we've been very good at that and and managing that loan to value over the last couple of years. So really trying to match the sales proceeds with spend. Going forwards, as we do more and more development, we we will use the the balance sheet and some of those facilities a little bit more. So we have a stated of ambition around leverage to be sort of around 20% at the end of the year or no higher than than that. And I don't see a need to to change that in order to deliver this growth strategy at this stage. So it will continue to be sort of more conservative.

30:54 As we have a bigger investment portfolio towards sort of the the end service we go beyond 2027, That will give us the opportunity to to maybe sort of put a little bit more in, but but certainly sort of nothing nothing being a huge fundamental fundamental change. So it will be continued to be funded from cash sales so that that will be service land. It includes things like the Microsoft deal that that we talked about as well, which is a a huge components of coming forwards, and then use of the the facilities that we've got already. Okay. So then I think the the next one, probably ones that's sort of for Linda is it's really around government policy. So how do you how do we expect sort of potential changes in government policy or funding, particularly around housing and infrastructure to impact our strategic plans for both industrial and logistics and residential developments?

31:43 So So I think the the answer to this is like, you know, we don't know exactly, you know, what's gonna come out both in terms of policy reform and planning reform as as we as we go forward. What I would say sort of from the top is is, you know, of we were optimistic actually as as a sector, you know, the the proposed reforms, the focus on growth, the focus on housing and and actually sort of building actually is really positive for the real estate sector. And as we as we work through the national planning policy framework consultation that's out there at the moment, obviously, the government doing their spending review, we'll start to sort of see more details form as we go forward. From a HARWORTH perspective, I think it's just just harking back a little bit to what I what I said towards the end of of my last section of the presentation is long term through the cycle as a business. So we go through many governments and through many attempts at planning reform actually on sort of most of our typical sites.

32:37 But the scale of our consent of pipeline is really important here. So these are sites that have a planning consent that we can get on sort of sites and we can actually start the development and that we're pushing on, particularly opening up and scaling up that industrial logistics parts of our portfolio. From a resi perspective, I think, you know, the government will to balance in any of the reforms that it makes, you know, the difference between affordability in different parts of the country. So what's unaffordable in London, the Southeast, you know, of on on the same metrics also what we build, you know, sort of in the in the regions is actually quite affordable at day one. So having some mechanisms and checks and balances in there that, you know, don't just drive, you know, sort of building and an increase in affordable homes, but actually focus on, you know, sort of the viability and some of the regional disparities, I think, will be really important. And and we've yet to see what the governments are gonna sort of come out and publish with that.

33:29 I I think the answer we had a similar question at our presentation this morning that I honestly gave is I've been around a long time. I've been through a lot of governments and planning policy changes. A business like HARWORTH actually, you know, we're seasoned at working through both political cycles and and changes and planning reforms. And the long term nature of our site means actually, you know, sort of we have time to adapt as we go. And as you can see, you know, we consistently actually deliver quite successful outcomes when it comes to when it comes to planning, and that's the key. You know, if you haven't got planning, you can't build anything. So we're very focused on making sure that we work within any policy and we drive the business forward. See. And then the next question that follows on a little bit from that is surrounds the the pipeline.

34:14 So we've got sort of a huge pipeline of thirty thirty eight point eight million square feet of industrial logistics, 26,000 sort of residential plots. How do we prioritize these developments and and then sort of, you know, how can the planning sort of how how can the planning system and moving projects through that? So what challenges do do we come up against? So it's a it's a great question. And if we go back to the HARWORTH of sort of three and a half years ago, sort of around the sort of time I joined and actually sort of, we have been going back to when Kissy joins as well. We probably wouldn't have been able to sit here actually sort of saying we've got eight sites that are consented. There are now moving into the various stages of production. And one of the things we've been really, really focused on is not just building that long term pipeline, but actually pushing more through planning.

35:01 We brought more resource into our planning teams to do just that. Planning applications are taking longer to work through the process. They're more complicated. And a lot of the stuff we're talking about, I mean, single one of those sites, you know, sort of that has come on, you know, sort of in recent years, you know, sort of is basically a million square foot plus. So these are big sites and they're big and quite complicated sites. So there is a volume piece of this, you know, make sure you've got a land bank that's big enough to have, you know, sort of half a dozen plus sites open at the same time producing sort stocks. So we can manage, you know, we're not in half a dozen at the same time doing infrastructure that we'd actually got that mix where we're doing infrastructure on some, we're building on others. We're exiting the AMP being a great a great example of, you know, sort of a site that we're coming towards the end of now with just the last couple of buildings to to go on-site. So there's a portfolio piece here where we look at, you know, sort of stage each of our sites have the capital that's needed and actually make sure make sure that we've got a balance.

36:04 The challenges, I would say, probably the last five to seven years have really been about planning resource in local authorities. So that would be top of my Christmas present list, you know, for any government to fix as part of planning reform. And actually, I just think the increasing complexity, you know, sort of in terms of processing a plan application actually through through the system, you know, sort of with stuff like biodiversity net gain, nutrient neutrality, all these things actually come into play in a way that they they didn't previously. But we have resourced our teams to have more planning resource and focus, more technical resources supports that process. And then out the other side, we've hired more development and project managers to enable us to build it out and actually sort of manage that development across the portfolio. Yeah. That's neat. And that makes sense. And then and then we've got sort of a question really around significant developments and and regional exposure. So we've got developments across sort of on on the New York share and and Northwest in in particular that are coming forward over the next couple of years. How do we think about regional diversification and other plans to to expand into other regions?

37:11 Or will we continue to concentrate on on this particular footprint? Yes. So they're quite big regions actually. I mean, Yorkshire itself is is huge as a region. And actually our Midlands region, they seem to sort of that's the team seem to don't see a boundary, you know. So actually, our further south site is on the is actually on the A 14, you know, which is which is a site which is a site at Rothwell. We've got Junction 15 on the M 1. So certainly over my time in the company, we basically sort of extended, you know, the reach of our existing regions. We, mean, a lot of this is about finding the right site in the right place and making sure that you're on, you know, you're on motorway networks, rail networks. You've got great connectivity, and you'll find this next generation of sites that we're bringing through has uber strong credentials in all of those spaces.

37:58 We do look at other regions where we get opportunities, you know, really for us, it's about can we service the site from where we are or do we need to sort of use it as a basis to build another region and some of the conversations conversations that that we we have. Have. Is it accretive to the portfolio? Does it help us to manage risk? And actually, over time as that portfolio grows, you know, sort of we will continue to ex to expand our reach. But where we sit today, we've got good geographic spread. We've got a good diversity of product actually that we can produce. You know, we won't retain all of it that we build. Some of it will be built to suit. Some of it will be, you know, for for an occupier owner. Some of it will be built for investors. And sometimes we might just sell a face to somebody else, you know, depending on the the balance of risk and concentration across our portfolio.

38:47 So we do monitor it at a portfolio level. And, you know, if we can find a great site, you know, whether it's in our existing geographies or outside those, we will always try and secure that if we can deliver it effectively and it drives the returns. So I think I think the last one is for you, isn't it? Might be for me. Yeah. So we've got some questions around questions around dividend. Yeah. Yeah. Yeah. So so I I so I've touched on it briefly in in the presentation. We've increased our our dividend by 10% for the interims. That's a theme of the existing dividend policy. We continue to review it as a board. But certainly for since relisting in 2015, it's been about showing that progressives of dividend growth, the discipline of of having that growth and ensuring that that we can continue to to grow it as a result of sort of recurring income out of the investment portfolio and also supported by the capital growth of of the company as well. I think so one of the things that we were thinking very very strongly about when we when we sort of revisited the strategy is you'd expect that we would do sort of on a on a regular basis. But particularly when we started to talk in in June about beyond 2027 and wanting to have a larger investment portfolio.

39:59 That's partly driven by a desire to have a slightly higher level of increased recurring earnings. So we'll have more rental income coming through on a regular basis from long term leases on our grade a properties. And that will give us an opportunity to increase that dividend as well. So we'll need to sort of increase the size of the portfolio, but then we expect to be able to see some growth in in dividend, which will give investors a bit more of a balance between sort of an income return. And also, hopefully, still sort of the excitement will still be doing all the same sorts of things like like deals to Microsoft and and service of land sales as well and delivering that that capital growth alongside. So that's something that's very much sort of in in our thinking as as we progress going forward. That's great. Linda, Kitty, thank you. You've taken all the questions from investors. Thank you once again for everybody for your engagement.

40:48 Linda, Kitty, I know investor feedback is important to you both. I'll shortly redirect those on the call to give you their thoughts and expectations. But before doing so, perhaps if I may, Linda, just come back to you for a couple of closing comments. Yeah. I say thank you for your time this afternoon. And just to sort of reinforce really, I mean, we're still really excited about this business and what we can do. And we do feel like we're still in the foothills, and there's an awful lot that it can that it can continue to give. It has continued to grow really successfully. We've continued to deliver market leading performance through the cycle. You know, we're doing it really consistently. We've built a machine that can now sort of keep churning through these sites. And I think we've got ourselves into a great strong position and actually quite an exciting place as we look forward.

41:33 That pivot into, you know, sort of developing more industrial logistics and holding it is actually supported by where our land bank is, you know, you know, over 38,000,000 square foot of of pipeline actually sitting in that land bank actually developing in that and opening that up is just a natural evolution of our of our strategy. We are on target to hit that billion of EPRA NDV by the end of twenty twenty seven and grow that income portfolio to 900,000,000 in '29. Just a reminder, Capital Markets Day is October 22. We'll be at Skelton Grange, you know, sort of which is the site that we're working on prepping and delivering to Microsoft. And if any of you could make it there, we'd be delighted to see you there. But thank you for your time this afternoon. Thank you. That's great. Linda, Kitty, thank you once again for updating investors. I would please ask investors not to close the sessions, we'll now automatically redirect you to the opportunity to provide your feedback in order that the company can better understand your views and expectations.

42:27 So I take a few moments to complete, but I'm sure it'll be greatly valued by the management team. On behalf of the management team of HARWORTH GROUP PLC, I'd like to thank you for attending today's presentation. Wish you all a very good afternoon.