MJ Gleeson (LSE:GLE) — Final Results

0:01 Good morning, ladies and gentlemen, and welcome to the MJ GLEESON PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so, and these will be available via your investor meet company dashboard.

0:32 Before we begin, I would like to submit the following poll. I would now like to hand you over to the executive management team from MJ GLEESON PLC. Graham, Stefan, good morning. Good morning. Good morning. Thanks. Thanks very much, Jake. So I'm Graham Prothero. I'm chief exec of MJ GLEESON, and I'm here with Stefan Allinson, CFO. And this is the GLEESON's presentation for our year ended for our final results for our year ended 06/30/2023. And thanks very much for for dialing in to listen. So if we jump straight into the presentation, we'll canter through this at a bit of pace and allow plenty of time for any questions that you may have. So if we jump on to that first slide, Stefan, the quick overview from me, and then, I'll hand over to Stefan to take you through the the financials, then I'll come back and give you a little bit of, a little bit more detail on operations and strategy and and our outlook.

1:43 So GLEESON Homes, has had I I would characterize it as an a a a robust performance in an interesting year. We started the year as a fast growing, house builder, but, one pretty much exclusively focused on the first time buyer market, and one that didn't allow, our homes to be sold for rent. So you could see that we were vulnerable to the twin challenges of the end of help to buy, which happened, in in March, and the the spike in mortgage interest rates, which obviously took place something like a year ago today, I think. Mhmm.

2:31 The the first of those we'd obviously seen coming, the Help to Buy points, nobody foresaw the the mini budget. But we've we reacted quickly. We changed a lot, and and I think the team has done, very well, shown great resilience. And we've achieved in the end what I'd describe as a moderate sales rate across the year, some periods, stronger, some periods weaker, and we were pleased to supplement that with our group's first multiunit, sales. There were a 115, completions in the total, and we'll talk about that briefly. We took advantage of the quieter market, that, less intense build, period that you'd seen for a couple of years prior following, in the in the post pandemic period.

3:25 And we took advantage of that to restructure the business, and that was both about putting right sizing the the the group, for the market we were facing into, but much more importantly, restructuring the the business to take advantage of the, the growth opportunities that we see lying ahead of us. We also, focused hard on our build quality and customer journey. I think, both of those we've lost a little bit of ground on both of those again through that intense period of in 2021 and 2022 when, anybody in the market will tell you it was as difficult to build houses at at as at any time in in, in living memory.

4:15 First, shortages of materials post the post COVID, and then, just shortages of labor, as volumes were were were pushed so high, in 2022. So that that made things very tough. As I say, we lost a bit of ground, I think, in in, in the quality we were delivering, not to any significant degree, but, certainly needed a bit of attention. We've made huge strides on that, in the last in the last nine months. I'm delighted to say that in the first, three months of our current financial year, the business is trading at a strong five star quality. We're also early signatories to the new homes quality code, and that's working very well for for the business. So overall, we're viewing the future with confidence, we do see a clear route to, to building 3,000 homes per annum in the medium term, and significantly more beyond that.

5:22 Over in Gleeson Land,

5:25 the demand pleased to say that demand for our prime, consented sites does remain strong despite what you may read in the headlines. There is some more caution, particularly among the the larger house builders, but they're still very much in the market for sites of the quality that we bring, in the areas, of high demand, where GLEESON land operates. That we're seeing a little bit of caution a little bit of increased caution, which, extends their due diligence, and the and they drag their heels a bit, obviously, so they don't have to part with the cash quite so quickly. But very definitely, we are still seeing the majors, and we're also seeing an increase of regional, homebuilders, who are taking the opportunity while the the majors step back a little bit.

6:14 The regionals are actually, filling their boots with with with the land opportunities. So, no shortage of demand for the land and still good pricing. We did sell three sites in the year that could very easily have been, six, but three examples of exactly what I'm saying around a bit of extended caution. One of those sites, that we had expected to sell in the in the year to '23 has actually already sold, in '24. And the and amidst the the hurly burly of all of that, we also took the opportunity, to extend our bank facility, in what I would describe as a skeptical banking market. Stefan and the team did a great job. We received, very strong support from our existing lenders, and that's, again, was about putting the balance sheet, in good shape to take advantage of the growth opportunity we see in front of us.

7:10 And so, just turning then to recent trading, which I guess is the, the slide that might, get most focus of of of everything we show you. Difficult to disentangle over the last couple of months what is normal summer. The normal summer distractions from fundamental market weakness. But we are definitely seeing a weaker market than than this, than this time last year. Gross reservation rates down by 15 to 20% year on year, and cancellation rates pretty much stable so that what we're actually seeing is net reservations, the important number, down by about 20%. But looking across the market, I think, 0.43, sales per site per week, probably is probably at the upper end of what you're hearing from most of our most of our peers.

8:07 But we believe it should be higher than that, and we have a number of initiatives, that we're pursuing, very proactively right now because we believe we have levers that we can pull that will improve our sales rate whatever happens in the in the wider, in in the wider market, the wider economy. And that's to do with, improving the, the product, the homes that we build, and we're delighted with our new our new ranges, and we'll talk about those briefly. We have, refreshed our marketing, to address a broader demographic, some important, factors to to think about there. We will be bringing a shared ownership offering to market. We don't currently have one. Everybody else does, and that will, that will bring a step increase in our sales rate. We already have a long list of customers who are waiting for that.

9:02 We will explore further multiunit sales, over the course of this year, just so and and that work that's appropriate, and we'll keep our sales rate where we where we want it to be. So at that point, I will pause and hand you over to Stefan to talk through the numbers. Stefan? Thank you, Graham. So as Graham said, we're actually pleased with the result this year. It was a robust result. The group delivered off operating profit of £33,600,000. That was down significantly on the prior year. But the fall in profits in GLEESON is probably lower than most of the house builders, and we are confident that we will, at some point, return to the strong growth trajectory that this group has previously delivered.

9:58 We saw net cash reduced this year from 33,800,000 to 5,200,000. There's a very good and deliberate reason for that, and I'll explain that when we come to look at the balance sheet. Very briefly, by division, GLEESON homes profits, operating profits for the year were 35,000,000, GLEESON land operating profits were 1,000,000. And I will turn to the divisional profits now. In GLEESON homes, we sold almost 14% fewer homes during the year. 1,723 homes were sold. But we sold them at a significantly higher price. So the average selling price, the ASP, was up 11.3%, and that was driven very significantly by underlying selling price increases.

10:57 So those of you that have been following GLEESON homes for a few years know that we had a bit of a price gap with where the market for house prices were, and we've been closing that gap. And that 7.6% was driven a little bit by underlying house price increases, but also closing that that gap. As a result, turnover was down four only 4%. Now if I break down the gross profit and overheads a little bit further, gross profit fell by just by just under 11%, and gross margin was lower at 27%.

11:42 And that lower gross margin was the result of build cost inflation, the increased use of incentives, although we're really not using incentives excessively or we certainly weren't in that year, and extended saturations. So in this slower market,

12:05 we are expecting to operate our existing site for much longer than we had previously anticipated. So the fixed costs that one has on operating on these sites will therefore be higher because those fixed costs are largely driven by time. Overheads increased by 12% to £51,800,000. And and we'll touch on this a little bit later, but we undertook a restructuring of the GLEESON homes business in the second half of the year. Now we had principal reason for that was to put in place a more robust standard operating structure that will allow us to more smoothly grow the business, but we also achieved some cost savings. So we took 3,200,000 out of the annualized cost rate that we run rate that we had in the first half of the year.

13:08 So as a result, Police and Homes delivered 35,000,000 operating profit. Margin was down to 10.9%, and ROCE also down at 16%. Now let me turn to the forward order book. So we had and it's worth taking a step back here. So in 2020 at the end of 2021, calendar '21, we we made a very deliberate decision to slow down the release of plots for sale and release them for sale later in the house build process. So when we had we were further progressed with house building.

13:57 And that was very deliberate. We wanted to improve the customer journey, but also take advantage of the house price increases, the very significant house price increases that we had been achieving. So, obviously, you release a plot later for sale, house prices a little higher, so you you sell your home for a little more. And that was very successful, but it did mean that we started at the beginning of last year. We started last year with a lower four door of only 618 plots, whereas a year earlier we had a forward order book of 841 plots. Now the consequence of that was that when we the market severe suffered a very severe slowdown in September following the, well, the disastrous Truss KwaTeng mini budget, that meant that we had a proportionately or relatively lower forward order book, which meant that volumes in the second half of the year were significantly impacted.

15:04 Now as part of that as a consequence of that slowdown, all house builders started to take action, and we were we were not alone in doing that. And we paused land buying, and we stopped site opening. So we didn't open any more sites, none in the second half and we and actually none in the second quarter of the year. So that meant we opened fewer build sites than we were expecting. So you can see on this slide that the number of build sites fell from 87 to 82. We did continue opening sites that for sale for sales that we had opened in the previous year. So you could see that the number of sales sites actually increased from 61 to 71 sites. So we were selling on 71 sites at the end of the year and building on 11 more sites than we were selling on.

16:08 Now what you'll see this current year is that that number of sales site will fall because, of course, we opened fewer very few sites last year. But the number of build sites will recover, and we expect to have we say between eighty and eighty five sites at the end of this year. I'm I'm I I would like to think we're towards the upper end of that. But the the average number of sites that we're selling on this year will be 63 compared to the 68 sites that we're selling on last year. But that 63 sites is the same number of sites that we were selling on in financial year to June 2022, a year when we sold 2,000 homes. If I look at the pipeline, so what is the pipeline that allows us to to return to our strong growth trajectory, which we're very confident we will do.

17:05 Well, whilst we paused land buying, it didn't stop us continuing to agree land purchase agreements. And you'll you'll know that one of the very attractive and unique features of our business is that we we start building on-site as soon as we acquire them, but we agree to purchase site on a conditionally purchased basis. So that means we enter into contracts with landowners. We then submit planning applications to for planning permission on our terms, and we only purchase the site, actually take legal title and make payment once we have acceptable planning permission on terms that we like.

17:56 So we continued growing the pipeline in the year, and you'll see that the number of owned plots in the year fell from roughly eight and a half thousand to just under 7,700. And that's because while we were continuing to agree site purchases, we didn't actually purchase that many sites last year. Now if I look at police and land, the business actually had a successful year in terms of achieving planning permissions, but it only sold three sites on behalf of GLEESON LAND's clients. So GLEESON LAND, you will be aware, I'm sure, that doesn't own any land. It simply promotes land on behalf of other landowners, and it takes unconsented land to residential residentially permitted land, which typically will increase the land value from an average of £10,000 an acre to a million pounds an acre.

19:03 Gleason land takes a takes a a a healthy but modest fee for its services. And when it sells sites, it's selling on behalf of those landowners. So in that sense, it doesn't have any land value not really, doesn't have any land value risk. It also has quite a small balance sheet, so its return on capital is usually very strong. Lin the year, only sold three sites, and those three sites the reason it only sold three is the major house builders were very cautious in their land buying following that trust Kwaiting mini budget. And planning continued to be congested. Planning system continued to be congested congested, and whilst we were quite successful, it slowed the whole process down. As a result, GLEESON LAND delivered a million pounds of profit.

19:56 Now let me turn to the balance sheet. There's some numbers in here and one in particular two in particular. Forgive me. I'll I will draw out. The first is the homes division, police and homes, WIP. So that's the work in progress, the build WIP. It's the amount of money we've invested on a site. That increased quite significantly by £57,000,000 to £214,000,000. Well, 30,000,000 of that was a deliberate decision that the business made almost eighteen months ago to invest early ahead of new building regulations that changed on the fifteenth of June this year. Now those new building regulations add about £5,000 per home to our build cost and to every other house builders build cost.

20:46 By investing £30,000,000, we were able to start the construction of 2,000 more homes than we would have started, and that saves us £5,000 for each of those 2,000 homes. So that's a £10,000,000 saving in our our costs for the homes we're building over the next few years by investing 30,000,000 a little bit earlier. And that £30,000,000 will unwind over the next two and a half odd years. But that 30,000,000 investment was the cause for our cash balance to fall from 33,800,000 to 5,200,000. If I look at cash flow, the principal number here that leaps out for you is the cash generated from operating activities.

21:33 It's negative 9,600,000. That's because the group's working capital was an outflow of 46,000,000. Well, typically, there is a working capital outflow. We are a growing business. And even though we have quite a low operational gearing that allows us to grow with without consuming a lot of cash, without increasing our working capital heavily. We do typically have a working capital outflow, but we have always had an operating cash inflow. This year is the one exception, and that's because of that £30,000,000 we invested during the year in anticipation to smooth the transition to new building rates. Now if I turn to dividends, we are declaring a final dividend of 9p per share this year. That brings to 14p the total dividend for the year.

22:34 Dividend that dividend will be covered 3.06 times, and that is within the company's capital allocation policy, in particular, its dividend cover policy, which we stated two years ago. Will we will pay a total dividend of between three times, and that will be covered between three times and five times by earnings. So 14 we intend to maintain that dividend cover policy, and 14p was the highest dividend that we were able to pay whilst maintaining that policy. Now our intention is we wish for the dividend to be progressive.

23:21 We would like to pay a higher dividend each year, but we are a growth business. And whilst we wish to pay a healthy dividend, we also wish to ensure we have sufficient cash to finance the very exciting growth opportunities this business has. So expect a a progressive dividend policy, but one that will be constrained by that dividend cover policy of between three times and five times. Over to you, Graham. Thanks, Devon. So turning then to operations and strategy. And before I get into, operations in detail, just a, a word on the, sustainability agenda. And we are I'm pleased to say, we are, well focused and well structured in, right across this agenda. There's much we could talk about, but I've just drawn out a couple of points, on this slide, which highlights for me.

24:26 So it it it is, and remains the, core purpose of the group, that a couple on the government's national living wage can afford to buy a material proportion of the homes on every one of our every one of our developments.

24:47 That is, as you can see, absolutely aligned with, target one of UNSDG 11, and it's it's both, it's something that's close to the heart of of not only the the board, but every member of the the the GLEESON team. And that's because we're proud of it. It's a profoundly sustainable purpose. It's also an excellent, commercial proposition, and so very, very important principle for us. Slightly newer news is the second point on the slide there, which is that we have, recently announced, that we are committing to a science based target. We've been accepted by the SPTI, and we will be agreeing and publishing those targets within, twenty four months. And and I think you can expect that we'll do it well inside that time zone. We're well on with that, that exercise.

25:45 So more we can talk about. I'm happy to take questions a a a little later, but, just move moving on conscious of time. I'll skip through this. We can talk about any of this, as I say, on the questions if if you'd like. But what we're seeing, customers, I would characterize it as still really adjusting to the higher to the higher cost of buying. It's really more about, in my view, confidence, and settling to the fact that the assets, the home, is structurally more expensive to own than it was. Interest rates are higher. They're not at all tie they're not at all time highs, and the asset, as as I hope to show you in a moment, does remain affordable, particularly a Gleason home remains affordable.

26:32 But what's unsettling customers at the moment and causing hesitation is actually the continuing volatility. And I have every hope that, the, the action we saw from the monetary policy committee yesterday might be the start of some stability, and we might get to the place whereby interest rates finally start to subside away from the headlines because it is the the continual speculation on whether rates are going up or going down that unsettles consumers, and gives them that hesitancy from taking the the the big decision to to move house to take on a new mortgage. First time buyers, are undoubtedly inhibited by the loss of help to buy. You're seeing that right across the across the market.

27:19 But, we've been delighted to see, a a a wider demographic buying our homes, and that's really, a key to, our confidence going forward. Prices remain firm. We are obviously, as Stefan said, making use of incentives, but nothing to that would scare the horses. We're probably currently running at an average level of about 3% of selling price, and and that says to me we've actually got more ammunition in the locker if we if we need to use it. The headline prices, we're not seeing any pressures from, either customers or from, indeed, from banks valuers, to to reduce those headline prices, and that's, that's a good thing. Mortgage avail availability remains good. As I say, to me, it's more about the the volatility in the headlines, around the rates of those mortgages, but there are plenty of mortgages out there for our customers. Build cost inflation, uneven.

28:18 We saw three to 4%, during the during the year, more in, products than materials, and our prediction, our expectation for calendar 2020, 2023 is that we will see an, an well, the something cost of materials and labor that go into building a GLEESON home, we think that will overall reduce by between 34%. Why is that different from what the nationals are the majors are telling you? Well, that's because they build nationally, and, undoubtedly, the labor market, in the North, is has eased more than in the South, and we are beneficiaries of that.

29:05 So, whilst materials are some are up, some are down, undoubtedly, our labor costs are are are are have eased, and that's what will drive the,

29:15 the the saving that we will see during the current calendar year. The politics and the planning and politics, remain tedious. Planning is congested as ever as ever, but we are good at that, at least. And then the key for us there, is to plan for difficult planning, I. E, not to not to overcommit our capital until we're, sure that, that the, planning is in is in place. And, yeah, disappointing outcome from the CMA market study. They will continue to rumble on, but I hope that they will eventually conclude what the previous four, studies have concluded, which is that the problems lie in the planning system and not not with house builders. Nutrient neutrality also rumbles on, and, again, just an example, with, in in the last couple of weeks of how, the real issues of getting homes built in the country continue to be subjugated to, grubby politics, with the parties fighting each other and and and playing politics with each other. So the proposed relief on nutrient neutrality, which was set out by Govan Sunak two weeks ago, was accepted by Lisa Nandy on for Labour who said, yes.

30:36 We'll vote for it. Five minutes later, our pops, Angela Rayner, who decided to have a bit of a game and, switched Labour's support to opposition, and that was it. That was that, that solution was, was dead in the water, excusing the pun. So there we go. We'll we'll carry on. If we can go to the next slide. So, police and homes. And as we both said, we were pleased to deliver 1,723 homes in the middle of the range that we indicated in February, and that was, supported, by the four multiunit sales. We'll talk about those, but, the first multiunit sales that, Gleeson had done, only a 115 completions in in the year, so so not a massive proportion of the of the total, but a useful contribution to our to our our revenue.

31:33 The the piece I just would pull out on this slide is that second bullet around the change in demographic. What we saw is that as as first time buyers hesitated, reduced to just 50% actually of the homes we sold in the last six months, that compares with the previous level of 80% and above. So you can see a significant shift, but that gap was filled, by a much wider demographic. So, over 20% of our sales was to customers over the age of 55. That's double of the the previous proportion. And similarly, an almost doubling of cash buyers who now represent, 10%. And that's all driven by the relative affordability of our product, the slightly improved quality, which is very deliberate deliberate step we've taken, and starting to see the benefit of marketing to a wider audience.

32:24 You can turn on to the next slide, please, Stefan. Thank you. Just touching on the restructure. What we did, as I say, two elements to it. It was partly about, rightsizing the business for a a more constrained market. So we dropped from nine regional businesses down to six. We're covering the same geography, no no reduction in that, and but we're doing it with with fewer fewer teams. And but much more importantly, this was about, standardizing our our our business, such that we're putting us in a in a place whereby we are we can confidently grow going forward. And that's really, if I can characterize it as, changing from being a a a very large, small house builder in the way that we were structured much more to being a small volume house builder. That's what we now look like. Our regions are standardized. They work in a standard way with the specialist teams at center, and we're confident that as we grow, that will maintain the quality of our products and the quality of our customer experience right across, from Mansfield to Manchester to Middlesbrough.

33:35 But it through all of that, importantly, that core purpose and our business proposition, remains unchanged. The customer, on can on on the national living wage can afford to buy a material proportion of the homes on any one of our any one of our developments. So moving on, and that's really that that corporal position as set out on this slide, and I would just, draw your attention to one, aspect. If you look at the chart on the bottom right, for an average first time buyer, buying a GLEESON three bed home, the their mortgage payments represent just 26% of their of their take home pay, which compares to a UK average of 39%. A GLEESON home remains, highly affordable.

34:22 Moving on. The so a number of things, that we've done to help us address that broader demographic. So we have worked hard, over the past eighteen months, to refresh our product. That means that we've just elevated the quality, such that these homes are now, highly competitive, and rep not only representing great value, but, instead of being in on the previous on the previous iteration, they were absolute lowest cost. But you could always you could tell the difference between a GLEESON home and the rest of the competition, because it because it was lowest cost. And what we've done is just slightly elevate, the the quality of the interior.

35:13 We've actually improved, in our view, the the appearance of the exterior, and that, such that if you took the label off, a GLEESON home would now compare, very favorably with any of the relevant competition. And that means that we are we can appeal to a wider, a wider demographic. So if you took a typical couple who may be looking at, say, an average three bed from one of the one of the majors, a bellwether or a Taylor Wimpey, They may have been priced out from that offer by the step up in the in in mortgage rates. They may have come across across to GLEESON and and said, great. We can we can afford this GLEESON three bed. We'll take it, but it's it's it it just feels a little bit cheaper, than than the Bellway home we were looking at. That is now not the case.

36:05 They they would move very happily into the equivalent GLEESON product, but, as I say, at the, at a materially lower cost. So we're excited, for the, the opportunity that that that gives us. And that attractive product, therefore, enables us to access the wider customer demographic. So it's now important, that we, take that product to that wider market. I showed you just now the broader demographic that had been buying leasing homes. That's almost in spite of us continue we we principally focused our marketing on first time buyers because that was our core market early, through those, three, four years into, 2022 when we achieved 2,000 units per annum.

36:54 It was absolutely appropriate that we targeted and marketed to, the first time buyer because there were more we we had a surface of of first time buyers. We didn't really need to address any other audience. But our product, particularly now that we've refreshed it, is actually suitable to a much wider audience and therefore appropriate that we broaden our marketing as well. And we're excited by what we can achieve if we actually go out and market to that wider audience who's begun to find their way to our product even with our narrow marketing. And just to share with you, what that might look like, so we are, if you look these are before and after propositions. So toning down the the kind of brighter, shoutier colors that you see on the left to the more neutral, slightly more mature proposition on the right.

37:44 We're broadening the cast of characters, the in in our in our imagery, as you can see in the lower lower picture there. And perhaps the most telling example, is our signage whereby, if you drove if you drove past that site, the image you could be forgiven for thinking, well, the what the the people those those those rather nice looking homes are built for are the smiley, young, fresh faced, first time buyers. Well, we very much welcome young first time buyers, but we also welcome second time buyers, downsizers. Anybody can benefit from a GLEESON home, and we are it's vital that we don't either overtly or subliminally encourage or discourage any particular cohort of buyers, and hence, we've gone to that slightly more neutral proposition.

38:37 It's just about to be rolled out, and we're excited by what that can achieve what can achieve for us. So a number really important that, as I said before, whilst the market, remains remains quite difficult out there, I do think my own view, I think the wider market as as, things calm down on in terms of interest rates, the wider market likely to begin to, recover itself, gain confidence. So we will see that potentially in the autumn. We'll see the effect of yesterday, but possibly more likely in the spring. Much more important for me, are the fact that we have a number of levers that we can pull for, self help. These are things that we can do, which will improve our sales rate whatever happens in the wider market.

39:26 So I've talked about our marketing. I've talked about our excitement for the refreshed product. We're also training an intensive program of retraining our sales teams. Unkindly, I could say they haven't had to sell a house for seven or eight years. They just, been taking the orders as as people queued up. Well, now we're having to fight for those sales. Really important. We're on top of our game, and so we're working hard to retrain our teams. We're also looking hard at our processes and our compliance with those processes to make sure that we're capturing every need, every, making sure we refer return every phone call. We don't drop the ball at any point in in in that in that chain. We've also removed, the restriction on renting our properties so that, if customers want to buy a property to let, we will do that.

40:19 And and I think that's that's, an an important evolution. It doesn't change our proposition, but just, again, make sure we're make sure we're marketing to the widest possible group of customers. A number of discipline around show home opening. We're making sure that our show homes, are are ready and open as soon as we start to market those sites. And we are bringing, as I said before, a shared ownership offering to market from next month. So a number of things that we're doing which which will improve our sales rate, whatever happens in the wider market. Finally, on on homes, we do see an opportunity, in the partnership sector.

41:05 So if what do I mean by that? That is where we, work with, partners such as and you can see, three types of of of typical partners on on the right. So Carlyle, Gatehouse, what they are is private institutions looking to invest in the private rent properties for private rent. Bradford is obviously a typical local authority, who are looking to acquire stock, and housing associations live in castles and coasts, who who want to buy again, stock in in in bulk. These all all three of these are are people to whom we made the multiunit sales, during the period. Now those multiunit sales are not partnerships transactions.

41:58 Please don't think I'm confused by the two. Those are bulk sales to liquidate stock in a market when, the private buyer, is is slightly more hesitant. But we were very careful in making those multiunit sales to choose, partners who we were certain would, a, share our values, so the communities we create, and we're we're very cautious as to who who we who we will sell multiple units to, and we're very confident in all of these partners. The other criterion we're looking for was that these are people who would like to work with us going forward, perhaps on more structured partnership style deals. And indeed, we are we are having conversations with these and others. What do we mean by that? And, typically, that would, represent some a a kind of structured, part forward sold, forward funded transaction whereby we might enter a site, a large site, and sell forward parts of the parts of parts of the development, but we would build that into our planning and appraisal for the development such that we would be prepared to accept a lower margin on the houses delivered to State Carlisle or to the housing association.

43:12 And for that, they would then share with us the, the the costs of entering that site. So the land purchase and the infrastructure to open up the site. So it changes improves our risk profile, improves the return on the site, and that's why we'd be prepared to accept a slightly lower margin on the part of the site that we forward sell. So very interesting additional potential additional route to market for GLEESON homes. We're exploring the opportunity. We're not committed to it, but it we do believe, that it gives it gives us an opportunity to accelerate the growth of GLEESON homes. Turning quickly to Gleeson Land. We've covered most of this in the in the earlier slides. We did sell, three sites during the course of the year.

44:00 And as I said, the lack of supply in the very high demand areas where GLEESON land operates can be supporting strong demand for the for those sites. We do have an excellent pipeline, of sites coming through, and we're confident, for this for FY twenty four and going forward. The we have, a new managing director in the business, Guy Gustafson, and he has, lost no time in setting out an exciting strategy to grow this business based around increasing our coverage, in our existing heartlands of the Southeast and Southwest, and and growing our coverage, into the Northern home counties and the Midlands.

44:45 And we're doing this by expanding, our boots on the ground, but also by developing, market leading research and data analytics capabilities, which help us both in identifying appropriate sites to promote and also whether it's a bid. A it's an important part of our of our strategy to to win in competitive bids. So just some stats on these slides. I'll pass quickly through them, but we do we did achieve six, planning consents, during the '20 during the, FY '23, which sets us up very nicely for for the current year. And, significantly, we, we're not not afraid, to take sites to appeal. So of those six, sites that were granted permission in '23, no less than five of those were won at appeal. A really impressive, track record. It's really a very high quality team that we have in GLEESON land, and finishing on just some, other stats, which you can, on the, I think, on the next slide, which you can, refer to, at at at your leisure, but you can see a very strong pipeline, some 18,000, plots to bring through.

46:00 And so just turning quickly to the summary, as I say, important that we implemented a successful restructure. We are cautiously and carefully managing our further investment insights, but Stefan and I are committed to getting that the number of sites up in GLEESON land in GLEESON homes because that's how we will grow the business by having sufficient outlets, and we do want to be ready for the recovery when it comes. But we've also got our we we we the ability to to put the brakes on if the if the doldrums continue for longer than anybody expects. GLEESON HOLMES expect to improve the our rate of sale by pulling levers in our own control. This is not waiting for the wider market.

46:46 And that, as I've shown you, is around the improved product offering, refresh sales and marketing, and we'll continue, to be agile with the incentives that we use. We will be launching our shared equity offering, and we'll deploy one or two further multiunit deals. Strong pipeline in GLEESON land and still strong strong demand. So we're confident that we have potential to scale up both of these excellent businesses, and we are, we do believe there's a clear route to 3,000 homes per annum in the medium term. And at that point, we will be happy to, take your questions. Graham, Stefan, that's great. And if I may just jump back in there, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dash board.

47:50 Graham, Stefan, as you can see there in the q and a tab, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But perhaps, guys, if I may just hand back to you just to make your way through those questions, give your responses where it's appropriate to do so, and I'll pick up from you at the end. Thank you. For sure. So the first one, I'll just be very brief because I think I've covered it during the presentation, but so the you're absolutely right. We were very careful about the part as we did, to make the, multiunit sales. We had a number of others, that we didn't pursue, and that's because, we want to, as I say, ensure we maintain the quality and character of our of our beautiful developments.

48:38 And so, we would we worked hard to make sure that the the, those partners would would, be aligned with that. But the the other benefits that you refer to are really around the potential to continue working with those those parties on a more structured basis whereby the slightly inefficient character of bulk sales, which is really shifting homes that you'd plan to deliver in the in the open market. If you're working in in a more structured partnership arrangement, you can plan, plan those that exit, that part forward sale right from the start, and that affects everything from your layout on the site to the to the nature of the homes that you build, right, your build route.

49:26 It just massively improves efficiency, and and returns. So, absolutely, we see, other benefits arising from selecting those partners. Typical question here, what does a typical promotion agreement include, and what what protections are you afforded? Typically, we will, pay a a fee to to to to the land vendor, to to, take that site on, that fee will not be refundable, but it will be deductible, from what we, when when we come to work out the the maths once we've successfully achieved planning, we will then get credit for the for the fee that we've that we've paid.

50:13 And that what that will do, it will give us a period of maybe five, maybe seven, maybe even longer years, in order to promote that site through the through the, planning system. The protections that we're afforded are that, we have exclusive right, we to to promote that site, and so we're not wasting our our money. We're not risking, that that, we do the work and somebody there somebody else then gets the benefit. And and, the only risk is that we we we get time expired, so that's why it's important that we set ourselves that that the fee we pay gives us the right to promote that site through the planning system for, a good long period, depending upon the time we expect, that that site to, to take to get through planning.

51:04 And then what happens is that once planning is achieved, we then market that site, and we are, we sell to the most generally, highest, but the most appropriate, most reliable bidder, and we are we then, receive a, a a b or a promote the a proportion of the sale price as a as a like, our reward for the successful promotion. So that's how that how that works. But we are protected through that process by that exclusivity. Delays in the planning process. Do I see this improving? And and what can we done to make the process more efficient? I would just distinguish two, two elements to that. So the delays that are affecting us, right now are, are not to do with the wider politics.

52:00 So the delays that affect us now are are basically to do with under resourced planning departments, and that means that and and also, the the the perpetual situation that, basically, the local demo the local democratic process means that everybody has a say, in in every aspect of the development right down to what what what bushes you plant outside the show homes. And that means that it is a is a long and tedious process, taking us on average fifteen or sixteen months to to get a a homes to get the planning permission we need to put a spade in the ground. And that, has been the same for two or three years. It just means that we have to plan for that to be a long and difficult process. It's pointless me whinging about it. We have to get on with it, but we are good at it.

52:55 The political piece that you see more of in the headlines is a is a wider and longer term challenge, and that's around the fact that the government this government in particular has subjugated important the important demand for need for new homes in the country to grubby politics. And the key there is, Michael Gove has removed targets from local authorities. He he describes it in any number of ways to suggest that he hasn't removed the targets, but in effect, he has. The consequence of that is if local authorities have no obligation from national government, to provide homes or to provide land to be developed for homes, then the natural consequence is they won't do that because their own voters will vote them out. Nobody wants homes built in their where they can see them. We all know that the country needs homes. Nobody wants them built in their backyard.

53:56 And so if there isn't, a law or a regulation in forcing local authorities to provide land for homes, the natural consequence over a number of years is that they won't provide that land, and we won't build any more homes. So that needs to change back. It is a it was a critical and appalling step that they took. It was for political, ends, and it needs to be reversed, but I doubt that it will be reversed until we get a new strong government. Just looking at a question on the, the the target of, 3,000 homes, and the question is, does that include partnerships, or will they be on top? Let's be clear. If if partnerships were not part of the, of of our proposal, we anticipate that we would we could readily achieve 3,000 homes, in the in the medium term. So we would achieve that with open market sales, but I anticipate, that much sooner than that, partnerships, will we will, start undertake some partnerships transactions, and that those should accelerate our move, towards achieving that 3,000 homes per annum. So I wouldn't commit to a particular proportion of particular time, but the 3,000 target was open market sales, and you could look at partnerships as being additional to that or accelerating that target.

55:22 Graham, Stefan, if I may just jump back in there, and thank you very much indeed for being so generous of your time then addressing all of questions that came in from investors this morning. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the investor meet company platform. But, Graham, perhaps really just before looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great. Indeed. Yeah. Look. Thank you very much for listening this morning. As I say, we're we're facing into uncertain markets, but we are very confident at GLEESON.

56:09 We because of the, the huge demand that we see in the affordable market that, in which we operate, we're confident both in the short term that we have levers we can pull to improve our rate of sale in the current market, and we're excited by what we see in the medium term, phenomenal growth, opportunity, probably the, the most exciting growth opportunity in the sector. We have the tools, the structure, and certainly the appetite to take advantage of that. So we're very excited. As I say, thanks very much for for listening to us this morning. Graham, that's that's great. Thank you once again, for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations?

57:07 This may take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of MJ GLEESON PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.