Morning everybody. We're going to have the normal running order.

I'll start off with an introduction and then an overview of performance. Then Darren's going to go through financial and land promotion.

Then I'll come back and do development and Stonebridge and finish off with outlook. Our focus on high-quality land, prime developments, and premium homes has helped us to achieve total land and property sales of over £350 million or our share £193 million.

Demand from housebuilders has been particularly strong for our prime residential land even though the housing market has been slow. I'm pleased to say we've seen a significantly better planning environment since changes were made to the NPPF, and our early investment in Hallam back in 2024 has already started to pay off, allowing us to nearly triple the amount of planning applications made last year to 11,000 plots.

Planning's also been secured for Golden Valley, and our industrial-focused JV Origin is performing well, with initial schemes completing on time and budget, and we're committing more, we're managing to grow our development program. We completed on both the first tranche of the Stonebridge acquisition, becoming the majority owner, and on the sale of Henry Boot Construction.

We continue therefore to simplify the group structure and increase our focus on our core activities. Clearly, Stonebridge hasn't performed very well.

However, we've taken action and believe fundamentally it's a business that'll contribute to the group's growth and return in the future. Throughout this period, our balance sheet's remained rock solid.

Our NAV is just over £3 per share, and as you all know, it's very conservatively assessed because all our land and developments are held at cost. Going through the operational performance, I'm pleased to say that last year as a whole we delivered a performance in line with market expectations against at times a challenging backdrop.

There've been some great achievements in the year and some areas where I know we've got a plan, but also we need to do better. Hallam did exceptionally well, selling a record of nearly 4,000 plots, exceeding its budget by 13%.

We also replenished our consented sites ready for sale by achieving planning on nearly 4,200 plots. As I said, we submitted applications for 11,000 plots, and our aim is to achieve a similar amount this year.

Our land portfolio's increased to 106,000 plots, and our consented stock now stands at just over 9,000. As I said last time, we continue to put more emphasis on securing planning consents and increasing plot sales because we think that the portfolio is big enough, it's got scale, and it's got balance.

Turning to development, in the current environment we've been very disciplined and selective over new projects, we've completed on £33 million of development. Origin's performing well, with over 700,000 square feet of industrial either recently completed or committed.

Lettings are being achieved ahead of business plan. The investment portfolio generated a great total return of just over 11%, and again, that's well ahead of the index.

Looking at home building, Stonebridge completed on 185 homes, materially below our expectations, which isn't good enough. While selling prices were in line with budget, we experienced soft trading conditions, with delays in securing detailed planning permissions impacting the opening of new sites.

We also saw some cost overruns. However, we see great potential in this business, and to support this, we've added nearly 1,000 plots to the land bank.

We've also started a reset towards the end of 2025 and expect to return to a small profit this year. Where does that mean we all got to?

It means once you add in construction and deduct central operating costs, group operating profit was £33 million. Now just want to spend a minute on the medium-term targets.

Although progress has been made against some of those objectives, persistent economic and political uncertainty has made it difficult to achieve them in the original time frame. Also, as Darren's going to explain, there's been a reclassification of the group's main borrowing facility, meaning the capital employed measurement has increased.

This, together with simplifying the group structure plus the improved outlook for Hallam, means we're going to look to refresh these targets during 2026. In particular, we need to look at the capital employed and return targets.

On returns, I would add that as the vast majority of our sites are held in promotion and development agreements, options, or discounted freehold, all of which is held at cost, I remain confident that when normal levels of volume return to our markets, we can generate attractive gross margins. Also, we will look to increase the land promotion plot sales targets that we expect to achieve in the medium term.

Looking at HBD, with the start of phase 1 of Golden Valley late this summer and other industrial projects, we anticipate committed developments rising to around £150 million, our share. Much of that profit will flow into next year and beyond.

The investment portfolio, as I've already alluded to, is one of Henry Boot's successes. We continue to be patient in growing it, with the emphasis on performance, not size, but it's still expected to grow from the £120 million as we complete on Origin developments.

If you look at Stonebridge, if you exclude 2025, over 10 years output has increased by an average of 24% per annum. We still believe it is a growth business.

We're still clear that operating in three regions and in a stable market, we can get to 600 homes per annum. As we change the group, we also need to change the way we work.

In anticipation of the sale of HBC, the integration of Stonebridge, and our ambition to create a more agile and robust organization, we started our Future Ways of Working program in March of last year. The program is designed to drive efficiency, improve collaboration, and the sharing of expertise and resources across all of our three core businesses.

This includes reshaping teams within the group to result in a leaner central function where we've reduced heads by 23%, and we've also reformed our executive committee. We've also implemented for the first time the first phase of Dynamics 365, bringing all our data together to be used more effectively for decision-making.

The program has already delivered a reduction in central overheads of 20% in 2025, with further savings anticipated in 2026. Darren, over to you.

Thank you, Tim, and good morning, everyone. This year, we are presenting our financial results including discontinued operations.

Hopefully, this'll give a clearer picture of performance over the period. Discontinued operations are Henry Boot Construction, which we sold on the final day of last year.

We performed well in a challenging environment, although revenue reduced by 6% to £307 million as a result of lower new home sales, which were partially offset by higher strategic land disposals. A reduction in admin expenses was offset by lower gains on property sales and revaluations, resulting in operating profit being marginally lower at £33 million, with underlying profit of £28 million, and that excludes valuation movements on completed investment properties.

Our return on capital employed was 7.5% before the revised classification of the group's main borrowing facility that Tim mentioned. That is reconciled on a slide in the appendix for anybody looking for the detail on that.

As Tim's already also mentioned, we've significant opportunities across our portfolio, and through the cycle, we continue to believe we can deliver attractive returns. Earnings per share increased by 1% to 17.6p, and we have increased the dividend by 2%, with our decision to hold the final dividend at last year's level, consistent with our policy to invest selectively while acknowledging the importance of delivering an income return to our shareholders.

Looking to the balance sheet, investment property, including our share of joint ventures, has increased to £119 million, and that's after more than £15 million of profitable sales during the period. We've seen further strong rental growth for our industrial assets and made good progress growing our Origin joint venture.

Inventories increased by £35 million as we added to our consented land bank within Stonebridge Homes. We anticipate our investment will be more limited this year as we look to recycle capital from both work in progress and via selective land sales to optimize site size and increase outlet numbers over the medium term.

Following net investment in land and developments and the sale of Henry Boot Construction, net debt increased to £108 million, with 20% gearing, slightly above our target range of 10% to 20%. We expect gearing to move back towards the top end of our target range this year as we look to complete several disposals across the group, although again, this will be largely H2 weighted.

In January 2025, we completed the acquisition of 12.5% of Stonebridge Homes, taking our ownership to 62.5%. As a result of this and the distribution of dividends, our underlying net asset value per share excluding the pension surplus was flat at 312p.

Looking at the cash flow, the cash flow bridge here shows how cash from operations, investment property sales, and debt funding have allowed us to continue to invest in home building and property development within our Origin joint venture. Cash inflows from operations totaled £9 million as returns in the period comfortably covered payments for interest, tax, and dividends.

Along with this, profitable sales of investment property generated £15 million, and this cash generation has been recycled into £37 million of investment in inventories to grow land and work in progress in Stonebridge. Investment in our development program and funding of planning costs within Hallam to bring forward sites for sale has been broadly self-funded from disposals, recycling capital back into inventory, which is broadly flat over the year for those businesses.

As previously mentioned, we purchased a further 12.5% of Stonebridge. That was for a fixed sum of £10 million, with future fixed payments and, importantly, final performance-related adjustments expected to conclude in 2031, following us taking full control at the end of 2029.

Whilst we continue to grow our Origin joint venture, this is actually largely funded from returns on land disposals into the joint venture itself, with net cash generated of £1 million. Other working capital increased by £22 million following land sales to housebuilders on deferred payment terms and the sale of Henry Boot Construction.

As such, we ended the period with net debt of £108 million. If I can move on now into the operational review and starting with land promotion.

Hallam sold a record 3,957 plots in the period, and this demonstrates strong demand for our prime deliverable sites from housebuilders. At an average gross profit per plot of £11,400, we achieved an operating profit of £32.9 million, an absolutely amazing result, 34% up on the previous year.

This result was achieved from sites sold which took an average of 13 years to deliver, but which achieved an average ungeared IRR of 27%, again, an absolutely fantastic result. Over the term, our land promotion business has delivered significant returns, with the return on capital employed averaging 17% over the last 10 years and above the group's target range.

Whilst there have been annual variations, even during the initial COVID period, the business achieved double-digit returns. The scale of the portfolio allows us to mitigate site-specific risks, and whilst we are clearly correlated to demand in the housing market, this can be mitigated to some extent through forward sales.

As we move forward, our focus is on continuing to secure planning permissions and increasing sales, whilst continuing to grow the portfolio at a modest level. Following the government's revision to the NPPF, we have seen positive changes to the planning system, which have significantly increased our ability to secure outline consents.

The planning environment has been positive for securing outline consents, and during 2025, we achieved planning for nearly 4,200 plots, a 39% increase on the previous year. This is also a significant increase when compared to the 3-year average of around 600 plots to the end of 2023, given we saw the positive impact of planning changes start to come through in late 2024.

We've been successful in utilizing the appeal system to unlock more sites, and we've won appeals on nearly 3,000 plots across 7 sites in 2025. This included 1,000 plots in Ashford in Kent in December, which is currently under offer.

Then we made good progress on our target of submitting 10,000 plots into planning last year, with just over 11,000 plots submitted, and we expect to submit a similar level this year. Plots with planning increased to over 9,000, and with a further 19,000 plots awaiting determination in this supportive environment, we expect our stock of plots with planning to increase over time.

We continue to manage one of the largest strategic land portfolios in the country, with over 105,000 plots, of which 76% is in the Midlands and South, where values tend to be higher. With a balance of freehold and promotion agreements, we're able to manage capital investment appropriately between risk and reward, taking advantage of the right time in the cycle when acquiring freehold land, which is more capital intensive.

Our use of planning promotion agreements provides a capital-light investment structure and gives us our USP against housebuilders by marketing the site to drive best value for our landowners. Our 5-year average plot sales are running at almost 3,100 plots per annum, and we anticipate plot sales of over 4,000 this year, which will increase our rolling average closer to our medium-term target of the 3,500 plots.

Sales in the period delivered an average of £11,000 gross profit per plot, driven by a particularly profitable freehold sale in Ambaston, bringing the 5-year average back up to £10,000 per plot, a level that we believe remains achievable over the medium term. Whilst we anticipate volume of plots in 2026 will increase, the anticipated sales mix, with a higher percentage of promotion agreements and a lower share of freeholds, is likely to result in profit per plot being lower than our typical rate of £10,000 per plot, with a corresponding impact on operating profit.

With our portfolio all held at cost, with no gain on securing planning recognized until the land is sold, this continues to reflect a significant uplift in value not recognized in our balance sheet. As shown in the table at the top, based on the recently achieved gross profit per plot of £10,000, the 9,000 plots that we have with planning have the potential to deliver gross profit of £90 million over the short term.

In addition to this, we have almost 20,000 plots awaiting determination. This significantly derisks 27% of our total land bank and has the potential to deliver a further £196 million of gross profit.

The full portfolio over time has the potential to deliver over £1 billion of gross profit. As we did for the first time at the interim results in September, we're presenting an illustrative net present value for the total portfolio, which can be seen in the table down at the bottom.

These figures are based on a range of gross profit per plot, but using average hold periods and making adjustments for overheads and tax. The matrix also includes a range of discount rates.

If we use £10,000 per plot, this shows a potential discounted profit after tax to come of £181 million to £256 million, which is equivalent to an overall NAV uplift of between 43% and 61%. Whilst there are of course risks to unlock this value, the business has a strong track record of mitigating these, and with a portfolio of over 200 sites, is not reliant on a few large schemes to deliver returns.

On that, I shall hand you back to Tim.

Thank you, Darren. I'm going to turn to property investment and development.

We completed on £119 million of developments, our share £33 million, with 32% of the schemes having been pre-let or pre-sold. Understandably, we've been selective in starting developments, with the majority of our completions coming from Origin, which I'm going to provide more details on the next slide.

Our committed schemes now total £66 million, our share £18 million. Our share of the estimated total profit is £4 million or 28% profit on cost, of which only 30% has been taken to date.

In the case of Origin schemes, this doesn't include the profit achieved in transferring the land to the joint venture, nor the potential to earn promote fees. We will remain selective in building up our committed program, but as I'll explain, we've got significant near-term opportunity from our £1.4 billion pipeline.

Now, in terms of Origin, the initial JV was seeded with 3 sites with a combined total of £100 million GDV or nearly 450,000 square feet of industrial, all the schemes recently completed on time and budget. In line with the ambition to scale up Origin, at the end of 2025, we added a further 3 schemes, totaling around 260,000 square feet with a GDV of £56 million.

That total is £156 million, our share is £39 million. At the total of 700,000 square feet, I'm pleased to say 134,000 square feet is let or under offer, and lettings, as I've said already, are ahead of business plan.

Now, I've talked about the strong pipeline, and that puts us in a good position to respond quickly to market conditions. I'll talk you through these 3 schemes, starting off with Golden Valley, where working with our partner, the Cheltenham Borough Council, we expect to obtain detailed consent shortly on phase 1.

We've agreed terms with the anchor tenant and other occupiers in the cybersecurity field, and the scheme is fully funded by the public sector. We're aiming to start on site late summer.

Then last year, we secured planning to develop Freeport 36, a 5.5 million square feet industrial and manufacturing park with buildings ranging from 40,000 to 1 million square feet in size. This is in partnership with the landowner, St John's College, Cambridge.

We've already got occupier interest, and again, we're aiming to start on site later this year. Then finally, as we pivot our urban development to more specialized cyber and tech subsector, in conjunction with the Imperial War Museum, we've submitted planning to develop AvTech Duxford, a 430,000 square feet campus close to Cambridge dedicated to developing low- and zero-carbon aircraft technology.

As I said, the investment portfolio's been one of our successes. Our total return was 11.1% in 2025, again, ahead of the index at 7.1%.

The line graph, as I usually show, shows that our total return compared with the index since the start of 2020 is 7.8% versus the index at 3.8%, we're outperforming the index by over 100%. During the period, we secured £17.7 million worth of sales at an average 12% premium to book.

The largest scale sale was Scammodale, where we secured planning for a new 245,000 square feet industrial. The property was sold for £9.5 million, achieving an IRR of 25% per annum.

Post period, we completed the sale of a supermarket that we'd previously developed in Warminster for £8.6 million at a 7% premium to valuation. Looking at Stonebridge, Stonebridge completed on 185 homes in 2025 at an average private selling price of £403,000.

The majority of the operating loss was due to completions being materially below our expectations of 240 to 250 homes. Completions were lower due to several reasons.

As the housing market was subdued last year, and our net private reservation rate was also affected by trading from outlets where we were towards the end of our sales program, in essence, we weren't offering the full range of homes on those sites. Delays in securing detailed planning also reduced the opening of new sales outlets.

We operated from an average of 9 outlets compared to the budget of 12. In addition, around 30 completions moved into 2026 as build schedules were delayed by utility connections and changes in planning conditions.

The remainder was caused by cost overruns related to unusual ground conditions and additional costs associated with extended site durations. Again, those extended site durations were caused by slower sales rates.

In response, we've increased contingency within schemes to better reflect project delivery time. Since becoming the majority owner, we've identified key priorities to improve and professionalize the business.

This includes making major changes to the senior management team in particular. We've replaced the managing director with the interim appointment of Ed Hutchinson, our MD of HBD.

Ed has got extensive experience in building and construction processes as well as land acquisition and planning. He's already making an impact on the business.

We've also replaced the FD with an experienced senior member of Henry Boot's finance team. Supported by group functions, we're investing in our Stonebridge people and systems to strengthen our capability and customer experience.

We're also focusing on enhancing operational efficiency to create stronger links between teams. Then using Hallam Land, we've reviewed the land portfolio to better align scale and location with our premium home strategy.

Whilst it's still early in the year, we've seen an improvement in trading, with the sales rate for the 11 weeks to the 15th of March at 0.43. That's up 25% year on year.

This week, which has just ended, and that wasn't in the sales figures, guess what? One of the best weeks we've ever had, and that would increase the sales rate year to date to 0.5.

Our guidance for 2026 is completions of between 200 and 220 homes. Finishing off with outlook.

As we consider our markets at the start of this year, we've been encouraged by the continued demand for our high-quality land, early signs of letting activity in HBD, and sales rates improving at Stonebridge. However, we'll need to see how prolonged the conflict is in Iran to gauge the extent, if any, on the effect of the outlook for 2026.

Regardless, we continue to make good strategic progress by focusing on quality projects within land promotion, development, and home building. Hallam remains a core driver of value, where we're growing its store of worth.

We expect to have another good year, although we anticipate a sales mix with a higher percentage of promotion agreements and less freeholds, our profit per plot is likely to be lower. HBD is preparing to commit to more of its near-term developments, with industrial remaining a key focus through Origin alongside nationally significant schemes like Golden Valley.

We anticipate Stonebridge Homes will begin to recover during 2026, as I've said, making a small profit. With a clear reset plan, we believe we'll get back on track to achieve our medium-term growth targets.

As in previous years, we expect our performance to be half-two weighted. However, there are significant opportunities across our portfolio, plus the benefits of a rock-solid balance sheet, leaving us well positioned to not only deliver against market expectations for 2026, but also to get back on track to hitting our growth and return targets in the medium term.

Thank you.

We've got some questions, and I think we'll wait for the mic,

I feel as though Tom just beat Adrian to the draw. Okay.

Thank you. It's Tom Musson at Berenberg.

Maybe if I ask one first on Hallam Land sales in 2026. Sounds like from what you're saying, you might have some visibility on gross profitability levels just given the mix of land types that you're talking about.

Are you able to perhaps quantify how far below that £10,000 profit per plot average you might expect to transact on this year?

Do you want me to?

Yeah.

Go on. We've got first of all, we've got pretty good visibility.

We've got 15 sites that we anticipate that we will sell this year. The majority of those sites have either exchanged or under offer.

Then a minority of them are either in the market or about to go to the market. If you think about it, that makes sense, doesn't it?

Because selling big bits of land takes some time. We're getting our ducks in a row.

We do know the mix of the likely profit per plot, so long as of course we achieve the prices that we are anticipating. I've got to say, so far this year, we've had a good run, and you saw the demand that we had for our residential land last year, the housebuilders want to buy land.

We've got a view on what the profit will be, and it's likely to be about 20% below the long-term average. Got anything that you want to add?

Yes, the chart on slide 13 where we show the 5-year kind of profit per plot returns, if you go back to '21, '22, those were years when we were kind of heavily weighted to the promotion agreements, and they were kind of £6,000 to £8,000 gross profit per plot. I don't think we'll be down at the 6, to Tim's point, we'll probably going to be kind of around that 8 mark.

That's very helpful. Thank you.

Maybe just one on the balance sheet. Appreciate you're targeting the top end of the 10% to 20% range by the year-end.

Just wondering what the pro forma is on gearing today, just given that we've had the Warminster Waitrose sale, but also the additional tranche paid for Stonebridge in February. Maybe just then given capital commitments, should we expect that gearing moves still a bit higher at the half-year before coming down again in the second half?

It's very much going to be dependent on the transactions we get through between now and the half-year. Clearly, we are a transaction-led business, and some of those, certainly in Hallam Land, land sales are quite significant in terms of cash.

Where they land, either side of the half-year, can make quite a bit of difference to where our gearing might be. As we've said, we're H2 weighted, I'd certainly like to think we're targeting gearing back down towards that top end at the end of the year.

Through the midpoint, I'd like to think we can keep it stable from where we started, but it will be very much dependent on where the Hallam Land disposals in particular fall either side of the half-year.

Yeah. Yeah.

Tom, sometimes there's a mismatch, isn't there, between investing in the business and you can see today that we've continued to invest in the business and then getting cash back as we sell. We're just trying to manage that cash flow.

Helpful. Thank you.

Adrian.

Morning. A couple of questions, if I may, on Stonebridge.

Average number of sites in '25 was 9. You were targeting 12.

Could you perhaps give an indication of where you'd like average number of sites to be? A good start to the year in terms of sales rate.

Is that skewed to any particular sites, or is it sort of a relatively even spread of sales rates across all of the sites? Then the last one, you talked about ground conditions hindering activity in '25.

Was that weather-related, or was that geology?

Yeah. Right.

I'll have a go at that. In terms of sites, as I said, we traded from 9 on average last year against a budget of 12.

We're looking to trade from 14 this year, but 3 of those will already be close to closing. Depends on how you work out the average, but probably going to be over 11, we will end up trading on average on more sites in 2026.

Then obviously, what we're trying to do in '27 and '28 through building up the land bank, which we've done last year, but we were doing it the year before as well, try to grow those outlets like all housebuilders are doing at the moment. Then in terms of the good start to the year, if you looked at the weekend, we had sales on every single site.

You always have some sites that you think are better than others, that's the natural way of a portfolio, but in our budget, we're not relying on certain sites to knock out the stars to achieve it. Bearing in mind what we went through last year and bearing in mind that Henry Boot now has the majority ownership, we're trying to be pretty balanced in the assessment of our budget, we're not going to be relying on just one or two sites.

Then you asked about the site conditions. They were peculiar to the sites.

It wasn't about the weather.

It was well, two elements. One element was the geology, and the other element was a change in building regulations that meant we had to do more work in the ground to meet those regulations.

Yeah.

Thank you. Christen Yong from Deutsche Bank.

Two from me, please. We'll maybe stick to Stonebridge to start.

I suppose, Tim, looking back, you sort of pointed to the strong growth up until 2024 in Stonebridge and then the various things that went wrong in 2025. I suppose what do you think is the catalyst?

Was that just a lot of bad luck? Was it, had there been some management changes, had there been some strategy changes?

Just thinking on reflection, why was '25 when it happened, and what is sort of changing? Obviously, you touched on the management, but in terms of strategy looking forward.

The second one is obviously, you guys trading on a reasonably decent discount to book, and the ROCE is lower than you'd want it to be. If I look at Hallam, fantastic ROCE.

Obviously, it's very poor in some of the other parts of the business. I was just wondering if there's anything you can do there, for example, reducing capital employed, selling assets, et cetera, just to return or to improve ROCE in some of those other parts of the business?

Yeah. Okay.

Right. I think with Stonebridge, it's often the ways, isn't it, that there are a range of things that affect performance.

I talked through those, was open in the presentation. I think that first of all, in hindsight, we set a pretty challenging budget, and in setting that budget, probably there was just a bit of the market is going back to normal, and it didn't.

It was an awkward market for everybody. Actually, if you look at the stats, if you're selling premium homes, it was just a bit harder.

The market definitely didn't help. When I kind of look at a mental bridge between the operating profit and the loss that we made, the majority of it was about completions, and then the big part of that majority was about the market.

Then also in terms of completions, I've talked about the fact that we had 30 plots that went over to the next year, and we didn't trade from enough outlets, and that's a planning issue. We're good at planning, aren't we?

The planning sometimes, in terms of getting detailed planning consent, is very hard. That's the big part.

Then if you look at it again, in terms of performance, we had some cost overruns, which I talked about. Then also, because we've gone into the business and looked in detail at the delivery programs, we also want some extra contingency, and that then becomes a cost on you.

What's that? That's partly bad luck on some of the costs, partly, as Darren's explained, changes in building regulations, you can't do anything about that.

Then I think that also what we can do is we can be more thoughtful about how we plan and build out schemes. Also, I think we can be more thoughtful how we promote the sites and train and develop the sales team.

That then goes to, was the business being run the way that we wanted to run the business going forward? No, it wasn't.

Part of that is management. As we've materially changed the senior management team.

The MD, we're in the process of changing the MD. We've got a fantastic interim MD, Ed Hutchinson.

Darren, we've changed the FD. We've also decided that we don't need an overall operations director.

We will have changed the SMT. We will have reduced it from 11 people to 7 people.

That's not about cutting costs, that's actually about increasing efficiency so that the MD knows who they're managing, has got a reasonable team to manage, and that they're collaborating. I think that we've recognized that it wasn't going to plan, started to really, really get to the bottom of it in the summer, started to act on it in the early autumn, and then we've got what we're calling a fresh start plan in the business, because we want it to be positive, we don't want it to be negative.

We've got something called a fresh start plan, where we're really, really clear about what the priorities are. Also, this is definitely Henry Boot.

Henry Boot, everybody's in it together, and everybody is aware of what we're trying to achieve, and everybody's motivated and partly responsible for the success. We're definitely bringing that into Stonebridge, and I think as a result, the team will be better.

I've spent quite a lot of time in Stonebridge, as has Darren. Considering being open, I'm responsible, I'm not saying it's just them, but bearing in mind they've not had a good year and bearing in mind there's been a lot of change, they're up for it.

What I think is good is that we've gone around and we've agonized over the homes. I've actually gone and seen customers and I've asked them about the homes, and you know what?

People like our houses. People like the layout, they like the locations, they like the size of it, they like the quality.

Fundamentally, it's good. What we've got to do is we've got to be slicker at building and selling and keep our customers happy, and we can do that.

I think you've talked about what's happened, management change. Then what was your final question on Stonebridge?

It wasn't Stonebridge, it was more around the return on capital employed. Just capital, I suppose, in general, whether you can release that.

Yeah. Look, I'm going to let Darren talk in a bit of detail, and by the time I've finished, you'll have been able to write a dissertation, won't you, in great detail.

Let Darren talk about it. Look, first of all, Christen, you've been following Henry Boot for quite a long time.

The reason why we have more than one business is that we all know that businesses have good moments and not so good moments. We like the diversity that the three businesses have, and they are not mathematically absolutely diversified, but they definitely have some differences.

If you look at Hallam, that will be the best year they've ever had, right? Then with HBD, I think HBD have done very well.

Their return on capital employed will not be sparkling, it'll be about 4%. They're a commercial development business, and commercial development has been in a subdued market.

The values haven't been falling, but the levels of activity, even in the industrial market, which is the standout market, have not been high once you've taken out the big lettings to the Amazons of the world and the big investment deals where Blackstone have been buying up platforms. The day-to-day market, it's an okay market, but there's not a lot of activity.

As a developer, we rely on activity. We've got to do lettings, and then we want to sell buildings and recycle capital.

I think that HBD, in the circumstance, have had a good year. The investment portfolio speaks for itself.

This year, really, Stonebridge has made a significant difference, hasn't it? You can do the maths.

If Stonebridge had performed in line with its budget, our return on capital employed would have been very, very decent. Then, yeah, we have to keep on thinking about how we can boost our return on capital employed.

I said it in the presentation, the one thing that gives me confidence is if you look at our portfolio, it's rich with opportunity. We've got our land portfolio, and you can tell we've got our CFO models that to within an inch of his life.

Then we've got a development pipeline, and we know all those projects on that development pipeline. Most of them, the capital employed in the development pipeline is about £60 million quid, yeah?

We've got £1.4 billion of potential development for £60 million. That is not bad.

We have appraisals on all of those, and they all make money. What we've got to do is we've got to have a degree of active market so that we can develop and we can let and we can sell on.

I think that the development business will restore its return on capital employed. Then again with Stonebridge, I think, still got to get a bit bigger before it starts helping us materially with the return on capital employed.

I think that we can achieve that. Just because of a bad year, I'm not dismissing it, but just because of a bad year, I don't think that will knock us off what we can achieve in the medium term.

Therefore, I get to the place where I look at the returns on capital employed that we have historically achieved, and I think there's no reason why we can't do that in the future. We'll have to get through a period where there's uncertainty, there's some cost in the system, and also there's some low levels of trading.

Now, if Darren can think of anything that I've missed, but he'll give a more financial answer to it than me.

I think Tim makes a valid point, and the returns are a big part of our return on capital employed, clearly, and we need to get back to our markets being in a place where they're really delivering what we know they can deliver to drive that metric. I think you're absolutely right there in terms of self-help and what we can do to look at the balance sheet ourselves and where we're deploying capital, which I think is probably a mix.

If you take Hallam at the moment, we've just said they've never had such a good run at obtaining outline planning permissions. We've increased submissions fourfold over the last year and a half of what we are putting into planning, and a planning application is not a cheap exercise.

They've done really well at recycling returns to maintain their capital employed broadly flat, but we definitely don't want to be pulling back on their activities at the moment whilst the environment for them is so good. Hopefully, we'll keep capital employed flat, but definitely don't want to see that actually coming down in any way.

I think on property development, the business knows the market that it's in, and as Tim's pointed out, it's definitely a very capital-light model for the pipeline of opportunities we've got. At the same time, that doesn't mean they won't look at what is in the investment portfolio, what is in the opportunity pipeline to see whether or not they can return capital to the group.

Warminster, for example, great example of a sale that they've looked at in the investment portfolio, looked at when might be the best time to actually exit that asset, and in the environment we're in, absolutely great result to be able to sell that now. I think Stonebridge then is the final one where, given the results and returns of last year and given the reduction in volume, what they actually were incredibly good at last year is obtaining land.

We've invested a huge amount in that business in land. The capital employed is therefore now, I'd say, at the limit of where we want to go with that business at this current time.

As we move forward, the focus will be on getting the outlet numbers up. If some of the larger sites that we've acquired over the last year, we're able to sell some of the future phases that don't impact short-term delivery and either return funds in to reduce capital employed or actually recycle those into other smaller sites where we can then look to start increasing outlet numbers, I think that's the one where it's a bit of a balancing game for us as we move forward.

Good. Sam, I'm surprised you've got energy left after that long-winded answer from management, but go on.

Really just a follow-up on the last answer from Darren, actually. In that context of not putting more capital into Stonebridge, or materially more, going forward, what's the right length of land bank for that business, assuming you still want to eventually reach 600 plots per annum?

We definitely want to reach 600 homes per annum. That ambition hasn't reduced.

Look, we're growing from a small level, aren't we? We've been building the land bank up as we go.

I think an ideal for us is probably going to be 4 or 5 years in the land bank that's coming forward, but where we're at right now with the volumes that we've achieved and then the way the land bank's grown, we've definitely pushed beyond that. It's twofold, isn't it?

If we can get the outlets up, get the actual volumes back up, all of a sudden the land bank perversely resets itself to where you want to be.

Great. Thanks.

Okay.

Richard.

Conscious of time. A few questions on here, I'll just go through them in no particular order.

Could you discuss the pension scheme and when the next valuation will take place and whether you expect to remain in surplus?

That's definitely coming my way,

isn't it?

We've just signed off on the last valuation, which is effectively at the end of the previous year, we've got 2 years until we're into the next valuation process. At the end of last year, we got a £9 million surplus.

That's come down given the economic environment we're into £3 million surplus at the moment. But 90% of the liabilities in that scheme are now hedged, and therefore, the actual impact on the scheme of those global movements is a lot less than it ever used to be.

Therefore, I would hope, never say never, but I'd hope that we stay in surplus now under the valuation methodology. The valuations follow different standards, and what we are looking at is the long-term game of being able to exit the scheme.

On an exit valuation, we do still have a deficit, we're probably at £89 million, which means for me, I'd like to think in the next 4 or 5 years maybe, we'll be able to look to get out of that scheme.

Great. Thanks.

Next question. Grateful if you could help us understand the decision to substantially increase the land bank of Stonebridge in 2025 when you could see the soft trading and delays in opening new outlets, and now subsequent decision to dispose of land at Stonebridge.

Secondly, does the management believe that the transaction structure to acquire the 50% of Stonebridge based on 1.6 times tangible gross asset value and not linked to profitability was the right structure? Yeah.

Okay. Yeah.

I think that in terms of carrying on buying land in 2025, it was the right thing to do because we want to get into a position where we've got enough land so that we can get to 600 homes per annum. Also, sometimes you have opportunities to buy land that fit into your regional network and you have to take them.

To be absolutely clear, and I believe Darren has in both the presentation and in answering questions about Stonebridge, we've bought some land and some of those sites are large, and it's a pretty well-known tactic to look to either partner or to sell off some of the parcels of that land to other housebuilders. We're not doing anything unusual there.

In fact, it's the right thing to do. Then in terms of the transaction, at a strategic level, absolutely the right thing for us to do.

I talked about the growth that we've seen in Stonebridge, and we firmly believe that we'll continue to see growth in Stonebridge. That growth going forward, even off the 270 homes that we did in 2024, would be at between 15% and 16% per annum.

There are not many growth businesses that you can take control of. At a strategic level, it fits well into us.

We haven't really talked about it today, but don't forget, Road Link is running off, and we don't have HBC anymore, we do have to look for parts of the business to grow in order to cover that cost. Then in terms of the price, the absolute right thing in terms of the price was it was performance led.

If we look at what we thought we would pay through modeling when the deal was agreed in December 2024 and what we think that we will pay today, it is materially lower. That performance does bite, yeah?

Then I think the other thing that we did and we were trying to take control of something, and there's always a premium to take control of something, what we did was we were very, very thoughtful about the phasing. We will have control of that business, but we will not pay the final tranche of the payment until 2031, and that will help return on capital employed.

Am I disappointed that we didn't have a good year last year? Yes, I am.

That's right for me to say that, isn't it? Have we got a plan for growing and recovering Stonebridge?

Yes, we have. Is it the right thing strategically for Henry Boot in the medium term?

Yes, it is.

Great. Thanks.

I'll just quickly whiz through these. Should interest rates climb during 2026, what impact do you think this will have on completions at Hallam and Stonebridge Homes?

Do you expect the trend of securing planning via appeal to continue as a high proportion of planning wins during 2026?

Okay. Look, I'll do the planning one, you do the interest rate one.

In terms of planning, we believe that the environment to get outline planning consent, not detailed consent, outline planning consent, and that is what Hallam does, we think that that is as favorable as it's been in many generations. Then do we think that that means that the route to get planning through appeal will continue to be successful?

I want to say we did 7 sites 7 sites last year on on appeal, yeah? Henry Boot, we we generally work with authorities, we do not often go to appeal.

The reason why we're going to appeal is that we're assessing it, we're being logical, aren't we, we're assessing it and we're thinking, yeah, we can win these appeals, and if necessary, we will go again and we will appeal. One of the reasons why planning authorities have responded pretty quickly to the changes in the planning policy is because they know that if they don't, they'll have people like us taking them to appeal, and the chances are they will lose those appeal.

Yeah? So £64,000 question, interest rates.

Clearly, our markets are interlinked to interest rates, particularly around the mortgage products and the sale of homes in Stonebridge. I think if you look at commentators at the moment, whether interest rates are set to go up or come down is a bit of a mixed view at the moment, and to some degree, anybody's guess with what goes on from here.

I think the initial reaction that we've seen the market starting to increase mortgage product rates on the long-term forecast debt cost, particularly in response to what is happening in the Middle East, has had no immediate impact from what we've seen. In fact, as Tim's just said, we've had our best-selling weekend ever in Stonebridge Homes just gone, and it feels like where rates are currently at is manageable for most households.

We'll have to see how the Middle East continues and unfolds, and if that is prolonged, then we could start seeing an impact, clearly. I think from the Hallam side of things, however, most of the housebuilders are, I think, in a similar position to us, currently seeing good kind of upticks in activity levels.

I think what a lot of them are suffering from at the moment, similar to what we've been speaking about, is the number of outlets they can secure and get open, which I think is why we are continuing to see good levels of interest for Hallam Land sites. I think as we move forward, that will therefore be less impacted by any movement on interest rates unless there's a significant shift in the market.

Yeah.

I know you've got an eye on time, Richard, but everything that I read says that monetary policy is still restrictive. Look, who knows?

With war in Iran, inflation could go up and the bank could adjust because of that. Still, it feels, based on the slow growth of the economy, the fact that the interest rates are likely over a medium term to be restrictive, still feels as though interest rates in the medium term, well, might adjust for events, but they should still come down a bit.

Look, who knows? If that does happen, that'll be very, very good for our markets.

Great. Thank you.

Okay. Had quite a few questions today, haven't we?

Thank you very much. Good to see you all.