Investor Update

Oct 29, 2020

Good afternoon, everyone. Thank you very much for joining this afternoon, and it's great to see so many with with us today. I have great pleasure in introducing Anna Smith and Michelle Notion. The CEO and the CFO of Springfield Properties, the only creative house builder in Scotland. They will be introducing you to the business and highlighting the investment opportunity. But first, as a student, one of our most fearing sound listed progressive and who has been covering the UK House builders for many years, will explain how the Scottish system is very different to the UK, and why Springfield's differentiated model is so attractive. So we're gonna aim to keep this to about 40 minutes so that there's plenty time time for Q and Next slide, please. So you're currently all muted. If you wish to ask a question at the end, the easiest method is to click on the raised hand symbol that you should see in the top right hand of your screen and I will invite you to speak. Or alternatively, if you wish to type your question, please expand the control panel by clicking on the orange arrow pointing to the left and enter a meeting to the question section, and I will then ask it on your behalf. If you want to download a copy of the presentation, you'll find out in the handout section together with a copy of Alice's latest research notes. You will receive an email after the webinar asking for your feedback So if you'd be kind enough to fill us in, I'd be extremely grateful. And please note that this webinar is being recorded. Many thanks for your time and over to you, Alastair. Thank you very much, Emily, and again, welcome to everyone and to Inessa Michelle. I imagine quite a few of the attendees will have had experience of a major UK, or should I say English house builders, without stealing too much of innocence in Michelle's funder, I'd like to provide a bit of context in order to highlight what I think our areas differentiation between the Scottish housing market and Springfield's, distinguished business model, which they'll go on to describe in detail with the English market and the approach of a larger quality, a house builder south of the border who you may be more familiar with. The following couple of slides summarize the economic dynamics underpinning the Scottish housing market the quite distinguished, legal framework in Scotland and briefly how Springfield's unique model biffers with the UK wide developers. The first slide looks at what I see as a positive dynamics underpinning the outlook for demand and particularly pricing in Scotland. And looking at the bottom, left hand chart, the, since the market emerged from the global financial crisis in 2009, prices in Scotland have risen by only 15% while for the UK as a whole, it's been, 50%. While London and the Southeast have been stronger, with the capital rising, almost doubling, and the midlands, roughly in line with the average UK, growth of 50% in the northwest, for instance, about 30%. So I believe, there's a lot of scope for catch up. That will be driven in particular by affordability If you look at the chart on the bottom right, corner, you'll see there's a marked difference in the household, income on the house price to household incomes. Ratio. It's 4 for Scotland, 5 for the rest of the UK and nine times for for London. So house prices are far more, affordable in Scotland, and I believe that over time, the, the the balance will even up. And pricing is particularly important for margins probably explaining why the, the English focused house builder's profitability, has, reflected margin growth rather than volumes, and a number of them in the recent past have been flattered by their exposure to Central London which for instance, Barrett and Redwood are now attempting to exit. Second slide, please. But there are also fundamental volume drivers in Scotland such as a forecast population growth and the relatively low home ownership rate, 58 percent in Scotland versus 63% in England. There's also lower population, density resulting in what could be deemed as a less competitive land market or more affordable land market and allowing those bigger homes with gardens that people are clamoring for, in the, in the wake of the, the COVID crisis. The next, the slide also, highlights a very different legal framework, in particular, the missive, system, where you, basically, you have, you know, contracted to a house purchase much earlier in the system, it's much more secure and less speculative in the more than in the more ad hoc English system where gazumping and gazundering have been the bane of many buyers and and sellers lives. This helps both sales to, first time buyers, but also allows for more certainty for those trading up, and to new homes. An important distinction is that Old Springfield homes are sold freehold. In in contrast to the controversial English leasehold practices, which prompted the competition markets and competition and market authority to launch an investigation into some of the biggest house builders recently. Inez will describe in detail Springfield differentiated model, including the focus in family homes and the village concept. However, one contrast with the number of, the biggest English hospital, as I'd point to, is that affordable housing is an end in itself rather than a means to an end. Springfield's private house building business provides a proportion of affordable housing as required by the section the s 75 planning requirements north of the border, which is the equivalent to the section 106, south of the border. But they also develop in partnership with local housing authorities, housing associations, and other public bodies with an attractive risk in capital profile, capital employed profile. It has also entered a new partnership with Sigma to provide a third, level of tenure of private rental. Finally, this is a personal, view. The housing designs are clean-cut and modern without some of the classical twelves at some English developers in Belgium. So over to you, and it's in Michelle. Thanks very much. Okay. Thank you, Alastair. I think thank you for asking me something to speak about. So just thanks to the the private investors for for joining us. We by a year and a half ago, we realized that we weren't reaching out and getting an opportunity to speak to you guys. So that's why we appointed Progressive Equity. So We now have their projections out, which you can see and see how the the business is projected to perform. And it's good today to get the opportunity to actually speak to you guys albeit not in person, but virtually so that we can tell you a bit about it personally, and you can also get to ask us some questions. So next slide. Okay. Just tell you a bit about it. Now I don't know if Sandy Adam is watching this, but if he is a flattery, we'll get you everywhere. Sandy is the the founder And if it wasn't for him, we wouldn't be here. 30 years ago, Sandy originally, a farmer discovered that planting houses was way more and planting carrots. So that kind of he went from there and used the money he made from one field to buy 2 fields and so on and so on. Sandy's still involved in the business, still the main shareholder, and Sandy has the final decision, on all land purchases. So this day, Sandy has still retained, I think, 99% of his shares that he had when we floated. So no none of the money that we've raised in going to the market has been been for Sandy, has all been for expansion of the business. Then we come to me and Chief executive officer. I've been in Springfield for 15 years, joined originally as finance director and a chart accountant originally qualified at KPMG. By 8 years ago, 9 years ago, became CEO, and, I also a member of homes for Scotland 2016, joined them in the executive board, which also gives a lot of information on the industry. Finally, we've got Michelle who you can see on your screen there. Michelle is a the CFO. An MBA qualified senior accountant, Michelle has been with us for 7 years and has been with us most of the, the growth that we've, we've recently seen, but good experience from other construction high schoolers. Next slide, please. Okay. Springfield is a leading Scottish high schooler where we're actually and kind of unbeknownst to a lot of people who are we build the 3rd largest amount of houses in Scotland. I think Barr and Persimon are higher than it's ourselves than it's the the other guys. So we're, you know, a pretty decent concern, in our market here. We're builder of private houses, which includes villages, which I'll go into later on, and affordable homes and affordable homes are effectively what used to be council homes where we work with housing associations or councils. We're always across the whole of Scotland, and today, we've sold about 6000 houses. We have a good reputation. We've got a gold standard in house award with over 95% customer approval and 69% net promoter score. 70% I think is considered world class. So that is strong. We've got a very strong financial record, up to 2019. We were a 21% growth on our sales. Earnings per share were 31% above IPO forecast. And we were on track to deliver our figures as of February 2020, a, for our year end May 2020 up until COVID obviously hit. We've made 2 strategic acquisitions since we came to the market in 2017, which expanded our operations into the east, which is Edinburgh and for the west, which would be Glasgow for for the non Scottish viewer here. We have a large land bank some 3,300,000,000, which we'll tell you a bit about covering most of Scotland, which is, I think, 15 years plus of a land bank which is obviously a long time. In Scotland, the same dynamics as across the rest of the UK, demand for housing is ice stripping supply, you know, 25,000 houses a year is what's been, by all by all bodies is is what's needed for the Scottish market, and it's been somewhere between 18,000 to 22,000 for most of the years. So there there is a big demand there. Scottish government is driving growth in the private and affordable housing, very much in affordable housing. We'll tell you a bit more about that as why the the Scottish government is, you know, promotes affordable council houses so strong. And finally, we returned to dividend paying this year cancelling the interim dividend in February for obvious reasons, and we were able to announce a dividend in our years. Results. Just over to the right there, you can see some of the brands we acquired, Dawn Hodes, and Walker Group, and then you've got the Springfield box. Next slide, please. Say about the the history of Springfield. I mentioned we started off as a a market garden company and, you know, that that had a big supermarket open next to it. So then, you know, the the obvious decision was to close down and, you know, develop houses and Sandy being entrepreneurial decided to build them himself and took on his own staff. Didn't use subcontractors. He employed people locally. We then launched our our choices program. Choices is enabled a lot by the Scottish Mississippi system, which I'll tell you about. But basically, if you go into our website, you can look at one of our houses and you can choose carpets. You can choose paint colors on walls. You can look at the kitchen worktops, the kitchen flooring, the the tiles, and you basically can tailor your house to, to your own your own requirements within reason, obviously, so there's an interactive model you can look. Right in about 2005, we decided get into the affordable housing market, we had realized that there were some pieces of land. Maybe maybe weren't perfect for private residential, but there was a demand from the council so we could worked that way, how we could make money on it. And we now have one of our, you know, one of our biggest customers is is the council and government, and they're reasonably good at paying. Within 2007, I can remember Sandy inviting me right to his house and growth. We've been growing about 30% a year. And he said, this is not gonna carry on. We need to start taking steps to try and protect the business. So at that point, we sold a third of our land bank to 1 of the big nationals. We focused more on the affordable housing, and we stopped building speculatively and played it safe. You kind of sat and looked a bit foolish for about 6 months. And then from nowhere, the the credit crunch came, and we were in a good position then because we had cash in the bank. And we had derisked our business. And from there, 2010, we we started buying sites from administrators, down in the central belt of Scotland, but have finished sites to to give us a presence there. And then 2011, a retro put another in a paper, basically, saying that the Scottish business was for sale for £50,000,000, and we sent a letter to to Steve Morgan Radio chairman and Managing Director, jumped out and said, look, we'd we're very, very interested in your business. We think we can take it on from you. We can't we can't pay 50,000,000. We're only turning over about 25,000,000 at that point. So what we'll give you is 5,000,000 upfront, and we'll pay you over the next 3 years when you sell each of these houses. For us, it represented a really good return on capital employed for them. It meant they could, you know, sell the business clearly. And fortunately, you know, Steve Morgan gave Sandy a phone back and said, yes, you've got a deal. Know, we want this done. Let's do it in 6 weeks. So we did the deal and, sure enough, 2014, we were able to pay them in full. And, you know, that kind of gave us a great Great, if you like, great central location. What I gave us was logistics, gave us a supply chain, and gave us a staff and it was a really good experience, say, acquiring that business. 2013, we secured Dundee. Dundee is one of our villages, I will tell you a bit more about villages as we get there. And 2016, we really went into the affordable housing a significant effort because the the Scottish government 2016 announced 50,000 affordable homes over the next 5 years. So next slide, please. Prior housing over these. We deliver private housing over various developments, various sizes, a, but the the most notable are the villages, and we have 5 villages, and they take up a large part of a land bank. And villages basically an area of land that council is identified on the edge of a time and, has its own amenities, its own facilities, has football pitches, might have a school, and might have medical practice, but various things, but it's a self contained area with its own name place. And what we found was round about 2004, 2005 that none of the, none of the nationals were looking at these. And we were a private company at that point, and we thought, well, this is a a good way of getting in there. We paid the landowners up over, you know, significant time periods, and what it gives us is control of very large sites. We are differentiated from our competitors by a high quality specification. We've got the excluded brand, which basically you know, bedrooms come with cupboards and gardens come with turf, and all of these things that you would expect as standard, we include them with our houses. So you get integrated microwaves and integrated dishwashers and washing machines, etcetera. We find certainly And it is an important point to me. We certainly found after the credit crunch by by offering a better spec, it was a a safer sale because the people that were buying houses at that point were the people with money and people with money tend to want better quality for the money. They don't want less quality and cheaper, cheaper homes. They want better homes, and that's what we offer. The private housing accounts for 68% of our group revenue, and what we have in Scotland is we've got a very high revenue but visibility with the Scottish Missive System. So sales are secured 3 to 6 months ahead of completion. Just to explain about the Missive System in Scotland, when you buy a house, you sign a contract, through your lawyer. And in order to sign that contract, you need to approve a funding proof of mortgage, and that missive is a legally binding contract that is extremely difficult to get out of. In the English system, you have the exchange contracts which basically you can reside in the, you know, week before handover. What that means is that we're sitting here in November, we've got a year end of May. So we can be very very confident as to how we're gonna do up to the to our year end because a lot of those sales are secured and messaged and, you know, that they're locked in. It means our work in progress has security against it, which is obviously a strong strong position to be in. Okay. Next slide. Just a bit more about our villages. We have a a village in Dundee, which has now got about 300 homes in it because I think there's an an appendix. There's a case study of that. We've got 300 houses built there, and you can see some of the pictures and what it looks like. We have one in park, which is up to 3000 houses, planning permission detailed for a 1000 houses. And we have one in Elgin site where we've also sold houses for the first time and another 2 in the pipeline. 1 Sterling, where we've got the largest planning permission. We believe everyone in Scotland detailed planning permission for 3000 houses, and we've got another one going through which is near Livingston, round about the Edinburgh commuter belt. They're situated in semi rural locations, including the commute commuter belt, round the Scottish cities. And what this gives us is it effectively gives us a dripping roast that once we have planning and once we secure the land and once we started on it, we have potential to do either land swaps with compared which we did with pursuing on our Dundee site, or we have potential to do sales to other house builders, which obviously The the the the target now that we've got this up to, I think it's about 15,000 plots in our land bank is to to sweat those assets as much as we possibly can. Moving on to the next slide. Just to give you a bit of background on the affordable housing, Again, I've touched on this, and I also touched on it. We we developed these in partnership with local housing authorities, housing associations, or other public bodies. This can either be, as part of a, we're installing what's called a section 75 agreement, which is alongside the private developments, so 25% of the site has to be affordable. Or it can be a 100 percent, dedicated affordable site. What happened in 2016 was that the Scottish government actually announced that they were gonna increase the affordable housing provision over the parliament return from 30,000 to 50,000, and we recognized that's a 67% increase in houses they were looking at providing. And clearly, that wasn't going to come from the, the fiber allocation because that wasn't going up by 67% So we went out and identified a number of affordable only sites, so we would basically look for a site in an area that was, you know, had transport, had schooling, had health care had health care facilities, but maybe, Peter wasn't in the best part of time, but it was gonna be an area that wasn't wasn't ideal for, private housing. So what we would do is agree a deal with the landowner that we would be able to promote this, for affordable housing. We would then go and knock on the door of the let's say we've identified a piece of land, is this something that interests you? And if it interests the council and We then had a customer type, we would then go through the planning. We would then on receipt of planning, we would buy the lands from the landowner. We would then sell the land with a linked contract to a construction contract to the housing association, and we then get paid over the next 12 to 18 months on a monthly basis. So cash flow wise, this is extremely positive. And, again, this accounts for something like 30 percent of our revenue, and what it gives us is great visibility on our sales going 12 to 18 months out. So again, you know, obviously, the the COVID happened, and we withdrew our projections, as most of the the market did, but We've recently reintroduced our projections, not our prediction, Alastair projections, obviously, which you can look at. And that's because we're we're confident that those projections can be achieved. And just to mention on the Scottish government, when I mentioned that the the set of target of 50,000 houses, the actually allocated £3,000,000,000 worth of funding for that. So effectively, there's a £60,000 grant for each house the way we control the costs on that are it's all our own designs. We've built, you know, probably about 2000 of these these houses. We know what we're doing on that side. The revenue is guaranteed because the revenue is set on benchmark prices, and we know how much our houses, how much we can get for each, for each house type, And then so the the real key is making sure that you've got control of the infrastructure and that you've you've done the right engineering work to make sure that it's still profitable. And we make a lower margin on this around about 17% as our target tends to range between 15% 17%, but obviously as it's, you know, Relatively, but it's very secure because it's blue chip money from the government. And you've got the security, the visibility, if you like, of the revenue forward, we we really do like this part of the business. Next slide, please. The next market we're looking at entering into is the the PRS market. Now we like I say, we came out to London in 2017, and we were asked by various investors about PRS. We didn't really know that much about it because it wasn't really was happening in Scotland, it was happening with flats. It wasn't really happening with housing, and it wasn't really happening in the area we worked in. And obviously looked into it and started to understand a bit. And then this year or last year, Sigma, who are big PRS movers in in England, managed to secure government funding, I think, about 30,000,000 from the building Scotland Growth fund, and they are now in the market to develop PRS. So they've done a lot of work with countryside. I think probably 3% of countryside business, about 300,000,000 is with with Sigma, and it works two ways. You know, Sigma will also give countryside work as well as, you know, countryside giving the Cigna the properties. So we signed a collaborative agreement with a stigma to provide houses. Now we're currently going through planning on our village in Perth, The reason we see PRS is very important is because this is a market that's it's kind of untested in Scotland, the families for for rental, but the way we see it with our village is because of the longevity of the village that will have it affordable, which is obviously, the revenue revenue is very visible and secured. We would then have our private side, which is more speculative, but then we've got the PRS in the middle, which would be very secure and we'd sell off in about 75 houses. And what that gives us from the the PRS side is, you know, their potential customers in the future for the private side And we think that's, you know, Sigma have a proven, proven model that's working very well in, in England. And using their simple life brand, we're very pleased to team up with that. Like I say, we've got one development that's going through planning, and that it'll be in the all information I obviously get here is in public domain. So that is actually going to planning over the next couple of months and is already going through the system. So we'd be hopeful to start that soon. So finally, I can hand over it, Michelle, and you can do some presenting. So the next slide just shows you a land bank. So as I said, you've got a large land bank, over fifteen thousand plots just under 50% off that land, it's in with has planning, and a GDP on that land bank of 3,300,000,000 pounds. Now on a 2019 results, that would be for 15, 16 years worth of lands, but as obviously as we grow that that main amount will come down. There's about 30% of that land bank owned, on the balance sheet. The rest is all contracted as you can see there as well, the split between our private and affordable sites. So private, we just have over 11,000 plots Again, just under 50% of that's planning and on affordable over 4000 plots with 48.7% with planning. And at the bottom, you can see how many sites we're on. So we're currently on 44 sites, 25 private, 19 affordable at in May 20, And, we have 36 future private sites and 28 to 44 private sites, and there's the GTP on them as well. And the map just shows you where we are in Scotland. So as you can see, in the north of Scotland, around inverness and Elgin, and then Central Scotland, some other sites and more towards the borders. We're not in Aberdeen, and we've we've really steered away from Aberdeen. It's just the oil situation. And, and, but we are with everybody else. Okay. Just to repeat the point, the the difference between Scotland and and England, and that's our message system, which gives us the secured revenue. You can just see two bar graphs there that you can see in Scotland. The the risk period when we get a reservation is the 1st 4 or 5 weeks before we get a missive signed. And then we've got the, you know, the house is is, you know, best case scenario is it's largely unbolt and, you know, the then we're we're just kind of under contract for the next 4 months while we we complete the house, and we we are able to make it bespoke to the customer, and they can choose their own kitchens and opaque colors and all of that. So there you compare it to the English system where there's a big risk system there, risk risk period where you're building the house. And I think this was best demonstrated with COVID where as most of you aware, on on March 22nd or 23rd, you know, Boris got up at 8 o'clock at night and said a few words about closing down and shutting down, and it wasn't really clear what was going on. But Nicholas Sergeant went on immediately afterwards, and it was very clear for us that we were shut down half 9 on a Monday March 23rd with the May 31st year end. So clearly, the next day was a bit of a panic and we had to shut all the sites down. But when we came back, And we came back later than in England. We came back in July effectively. I have all of the the misses and the handovers that we had for what would have been our 2 busiest months of the year people and me, only one misheard result, and that was because that couple had got divorced and and everything had gone badly wrong. So we didn't we didn't pursue that. There was no point in chasing it, but It just shows you how resilient the the the system we have is. The other thing that we're we're keen to emphasize now as Tara touched on is that in Scotland, we only sell freehold There is there is no leasehold. We don't do park exchange. We don't do shared equity, and we don't do any leasehold. Next slide. Again, I've got rather ahead of myself here. I kind of explained how the affordable housing system works. As I see, you identify a partner, your source of land, you come up with a package, you get the plan and consent from the effectively, the customer is the council that you're getting the plan and permission from, you find they're very favorable towards you because it's something that they want. We then sell the land and get the gold contract and deliver the quality homes on time. Next slide. Okay. Just a bit, again, about the strong growth drivers in the Scottish marks market, the demand has been outstripping supply. There's very low interest rates. And there has been good mortgage availability supported by Scottish Government Initiatives. I know there are recent stories in the press about mortgages being reduced and this is this is really a demand led thing and that they're getting too much demand on mortgages and they're trying to trying to slow down the slow down the market, but I think the figures, you know, regarding sales and level of demand is extremely strong. Help to buy in Scotland has already been extended to March 2022. It's important to emphasize that help to buy in Scotland is different to help buy in England. Helped find English is changing in March 21 to first time buyers only in Scotland helped to buy has is currently at 200,000 is the limit our sales are something like average sales price 232. So it's 15% of our sales that helped price. So it's not a major part of the business. It obviously helps. First time buyers get on, it's 15%. It's not the 20% you've got in England. And like I say, it's extended to March 22. The second thing we have is that you don't have in England as a first home fund, and that's on a house price up to 250,000, where you can get a £25,000 interest fee load on a new build or on a second hand home. So again, that helps first time buyers, and that too has been extended to March 22nd. We have the same stamp duty our land and building transaction tax code here, a 08 or 7 day holiday to March 30th, where you want us to see it in England. The 33% upsurge in demand following lockdown, let me just have a look. Yes. I will come back to that that further on. So we we have seen very first of all, the pent up demand from being shut down and having 3 months production taken out of the cycle. So, yes, it could be argued demand is down, by some, but production, 30% was taken out of the out of the system. So, you know, I I just the the imbalance is still there. Affordable housing, I think COVID has shown us that, you know, the housing supply and the the progresses of the house housing provision, death has an impact on levels of COVID spread. So all governments, English, and Scotland, and they're all looking at affordable housing policies and putting more money. It makes more sense to spend money on infrastructure than clearly affordable housing is one of those infrastructure things than to pay people for sitting at home. The final one is just the chart on the right there, which basically shows that there's been a shift in demand. I think we're all aware now that a shift in demand for the type of housing, but people are working at home more. Clearly, that balance is gonna change, but people, I do believe people will look at their the housing requirements and understand how important a good house and a good garden is. And here, you can see right at the bottom there is living closer to work is 8% of customers and or 8% of people said that was a an issue and, you know, 63% for a bigger gardener access to one. Clearly, And I have to say, we I mean, the villages we've we've gone into, it was because we think they're good places to live, but clearly they they absolutely fit into all of the criteria that the highlights of the the good points that are made here. So we feel we're well placed to take advantage of the, you know, the changing market. So the next slide, please. Okay. So again, we've obviously put our 2020 results out, We were delivering good results as we announced in our interims up until the COVID pandemic struck. We're on track to deliver a rough number of homes. And we've made really good progress in our village developments, and we'd managed to spread out geographic reach to, to reach some new areas. Our our integration of our businesses, Donna Walker, was all going very good, and affordable housing we were ahead spite losing 2 months. We were ahead of our figures. The land bank, we'd we'd significantly advance the land bank with 50% now under planning, as, Michelle had mentioned, and we had just entered into the private rented sector with the signing of a collaborative collaboration agreement with Sigma, and we had announced the final dividend, the 2p per share. Next slide. Okay. We feel we're strongly positioned the return from the lockdown. As I say, we I mean, the the story of what happened to us in lockdown, it was kind of 3 stages was first one was make sure the, you know, the people and the customer's staff general public or safe. So, you know, March 23rd, that that week was spent making sure everything was secure. Everyone's everything was safe and people were you know, we'd we'd made sure everything was as safe as it could be. And then stage 2 was making sure the business was safe. So what we then did was we had we had a look at our business, and clearly, we would have had a lot of revenue coming in in April May, and we were gonna have had a lot of outgoings from all of the work that had been done in January, February, March. So we went to our bank and we said we needed, an additional loan, and we asked for £18,000,000, which would cover us for 12 months with no sales. We we felt it was important to let the the market know that we had enough of facilities facility to see us through pretty much any eventuality because we we didn't see for one second that this would last 12 months. So we were able to do that. And the important thing there was that we were able to pay our supply chain and our suppliers. You know, we're a big player. So it's important where we can get funding that we carried on paying people who aren't responsible for businesses going bust, and we were able to keep our supply chain going and on-site, and that really did pay dividends when we came back because when we came back, the supply chain was in place and appreciated what we've done. We came back to we'd watched England 1 of the advantages, and it might not seem like an advantage at the time, but one of the advantages we had was watching England go back about a month before 6 6 before. And what they did was they opened up the supply chain, and we were able to see there was a lot of pent up demand and a lot of interest on Rightmove and Zoopla, and everyone was reporting good sales figures. What we saw was when we came back was exactly the same, with for our first quarter, which is June, July, August, our reservations were 24% higher than the previous quarter, last year. That's even more, positive when you consider that one of those months, June, we were closed. So it's really 2 months against 3 months. We're 24% up. Also, with my work with full and they did see how the industry is doing. And even now, if I look at the latest figures going back 13 weeks, the latest 13 week period is still 26% up same period last year. So we're still seeing strong demand, which is obviously a very good position to be in. The affordable housing market is looking very, very strong with good contracts and relationships in place and some good contracted revenue. We also took the time out to look at our business, and we made our business more so that we're ready for whatever could come our way. We combine 2 offices, our Walker office, and our Springfield central office, That resulted in some, some savings and some redundancies. And we've obviously done that consolidation now, and we've got a much more streamlined business going forward. We've got significant revenue growth anticipated for 2021, with substantial visibility, as I say, you know, when we if we did this for the market in October, we're now a month on from that. So we're even more visibility than we did then. We still we had a great land bank on March 23rd, and we've got a great land bank on 10th November. And with handovers resumed, the debt peaked about 70,000,000, I think, in May, May 31st, we've now got that back down to 41,900,000 as of September. So we're bank as as we had, with a missive system and with our, affordable work has got back to what it is. So I'll now hand over to Michelle to give you some key performance indicators and financial highlights. Next slide. So you can see there, just a good financial highlight. For our year end to May 20, and the first graph just shows you revenue profit before tax and gross margin. So for revenue and profit before tax, we're really just back to where we were at May team levels, obviously peak last year. And due to be in shock for 2 months that in terms of our gross margin, we've increased over the 2 years. So it's 15.7 at May 18. 18 at May 19 and then 18.9 at May 20. The graph at the bottom just shows you our completions and our average selling price. So similar for private homes, they were 419, very similar to where we read it in the 18. But actually affordable has stayed the same round about just over the 300 mark. So you can see that we weren't closed there for the 2 months and April May, we would have been so much higher and affordable. And in terms of average selling price, that has gone up for both private affordable over the 3 years. So in terms of private, when I have selling prices 22118 and natural rhythm to 236. To, May 20. And in terms of affordable, an average selling price is a 120,000, and that's brought risen to a 141,000. The KPI from the right hand side, revenue is a 144,000,000. Our completions are 727 over private and affordable. Gross margins, I've saved 18.9 percent, operating margin 8.4%. Our land bank, as we've talked about, is over 15,000 plots. With the GDV on that land bank of 3,300,000,000. Our return on capital employed is 8.3%. And that is due to the lower time it's come down from last year due to lower term and our higher than average capital employed. And the net debt at the end was just under 70,000,000, but we went to the market with an we were down to 41,900,000 and we're we're still below that at this point. Next slide, please. So here you can see just our our group results summary. I won't go through every line, and just to really point out that sexual items, you can see on our RNS and just the breakdown of that, but that includes our salary costs for our direct employees who were on furlough and our harassment staff, and it and offset against that is furloughed So that site comes out round about 400,000. There's a very small IFRS adjustment in there. But overall, our profit before tax at 10,200,000 versus 16,500,000 last year. The slide. If you can just stay there, please. The our projection, 2019, 20 well, sorry, outsource projections. I keep keep keep for getting that. Cost was predictions. 2000, I was we're round about 215, 216,000,000. So we're something like 70,000,000 down from those 2 months, obviously our busiest months, April and May not not happening. Now if you take a margin of 19% and that's 70,000,000, you get to about 13 mil 13,000,000 that you would expect to be off our profit. So we actually ended up being a 10.2 against 16.5. So we were able to recover things and The results were, you know, significantly better. We're we're on track for a very good year, even with that massive impact losing 70,000,000 of sales, which obviously have now fulfilled in this financial year. Next slide. And you can see there just the group balance sheet So total assets, a 198,000,000. Other liabilities at year end were sitting at 33,500,000. Now that comes down significantly from last year, that's due to us paying all our supply chain, making sure our subcontractors, and our suppliers were paid, and before the year end to make sure that we did we we, you know, nobody went out of business. Net debt sitting at 68,800,000, again, as a peak there, the the note will tell you again that we were down to 41,900,000. That movement is just down to the amount of completions we've had since we've opened back up. And overall net assets of $95,900,000. Next slide. Okay. When we came down to London in February, one of the things, it's kind of the day, the day COVID broke, but one of the things were talking to us, but it was ESG and what were our credentials. So we kinda quickly to to Google what is ESG, and we discovered it's environmental, social, and governance. And what we found was that we actually ticked almost every box, and we have, for many years, we've been promoting, building a good house and efficient house and doing the the right thing. So when we actually listed this, there's a couple of pages here. You know, 57 of our developments use air source heat pump as opposed to, to using gas. We all of our houses are wired up ready for electric car points to, to be put in. We manufacture kits off-site, in a factory. So it's all done off-site. We we've used waste recycled waste plastic in our roads. And so all of these things, we'd we'd already be doing these things because we we tend to live in the areas that we build. So we'd always done the right thing. It was kind of the always seemed the sensible thing to do. Our village is you can see there we won a, an award for the structuring new build large scale studs award. There you can see the pond that's actually serving to get all of the the waste the surface water drainage collected in that pond there. So it does a good thing. We've got a community liaison officer to deal with all of the customers in the villages. Something like 20% of our apprentice of our staff are in training or our apprentices. We recognize that we've got to train people and know, get the youth youth and, reskilling people where where where appropriate. Good enrollments for the schools. We've also got a green committee to make sure that we're, you know, trying to be as innovative as we can. So all of those things, you know, when we aim to to get out there in a more formal, formal ways so that our investors can see that we're, you know, we're we're doing the right things as a business. So just to to finish off with before the question part come and say, you know, summarize where, you know, we're Scottish high school that we're we operate in a different market. I know we're always putting the same table as our as our English counterparts, But, you know, our our work in progress because of the the revenue visibility and the the message system, we've got stronger, stronger, if you like, revenues, say, kind of, you know, revenues secured going forward. Our work of progress has sales against it. We have the affordable business, which is government money and cash flow very positive. We've got a very good land bank, which you spent a number of years, bringing on when we first came to market in 2017. The initial reason was to raise 25,000,000 to progress these villages because we are under capitalized for for doing that ourselves. And this person in a really good position to with that asset now, There's an inherent commitment to SG standards, and enhancing the position for sustainable growth. It is a key thing when people are buying houses to to see that, you know, you're doing the right thing. And we're on track again for 2021. Revenue to be significantly higher, and you can projections and see what we're projected to do. So I now hand over to Alastair and Emily who will take control of the meeting again. Hello? Thank you very much, Inif. So just as a reminder, to ask your question, click on the raised hand icon that you should see in the top right hand side of your screen, and I will be able to unmute you. Or you can type your question into the Q And A box, and I will ask it on your behalf. So we've already got a few questions coming. The first one is as you said in this, it was a good it was good for sites to go back in 2006 to 8. What were the warning sites that made you nervous? Yeah. Well, a lot of this goes into Sandy, and there's farming days of when they start tooling, whenever he wants to buy the kettle, that's when you don't buy. He was saying he was there as you can imagine. Condad, all the bulls are going, but the truth was, banks were coming and locking on your doors and offering you money, which is a warning sign, and Sandy's philosophy is when banks want to lend me money, you know, I don't want to borrow. I want to borrow. They're not gonna lend me. And we had we were putting, you know, the the there was high price inflation of 10, 15 percent a year for 2 years, 2007, 2008. We were getting delays in planning and then ended up making 10% extra. So that we were putting a house up for sale, and people were buying them and reselling them before moving in. There were people queuing up overnights and, you know, staying out in the cold, and we were we're providing baked invites to people in the morning because they'd been queuing all night. There were so many obvious factors that there was something just just wasn't right that was going on there. And, you know, the the the 125 percent mortgages, you know, Madness. Okay. Thank you. Next question. As you have described, Springfield is great. Have been supported by acquisitions. Do you see prospects for future consolidation in Scotland, either by Springfield or other Scottish or UK House Builders? The I think that the acquisition, I mean, we if we buy a piece of land, it takes us probably about 2, 3 years to, return or or any cash flow coming back. And if you go through planning a year, year and a half, then building the house and eventually you're getting money back, and it takes a long time to get a return to acquire a business, then, you know, and both you know, the three cases that we've acquired companies, Red Grove, Walker, and and Don, then we're doing the deal on the Friday. And by the Sunday, we're getting sales figures by the Friday, we're getting cash in the bank. So we don't really see it as acquiring companies where we're requiring land and people and supply chains and You know, and the the the land is a key thing there and that we wouldn't buy a company unless it's a good land bank. Will there be opportunities going forward? Yes. There will and will we be limited to just Scotland? Well, not necessarily. We've got bigger ambitions. There's a point where because we're doing a higher spec houses, there is a there's a point where you'll get to market saturation, and I think we we should be we should be willing to look at something, but only the key things, is it a good land bank, is it good people there as a business got a good reputation. And the most important thing for myself and Sandy, is it at the right price? You know, it's all very well and good. Someone's telling the company, but if their their expectations are unrealistic, then Michelle's not good working in Sandy to do it. And we wouldn't come to investors and say, look what we're doing, you know, unless it made sense. So, yeah, we're the the the entrepreneurial flare if you like the Springfield that the the growth that we've shown, we aim to continue that. And, you know, we're, you know, you know, we're very passionate about keeping the business going. Sure. William, would you like to ask your question if I muted you? You may need to unmute yourself. William? I might have to come back to him. In terms of net debt, how important do you think it will be to reduce it? And what tools have you got to achieve this? The the net debt, we're we're a growth company. And we came to the market with debt, and we gave projections, and the the key was getting that debt to where it dialed down to to, you know, less than 2 over the years. But what a growth money's never been cheaper tomorrow. And we do have a, you know, we do have a a core date there, but we would argue that that date is very manageable when you compare that debt to sales that are secured and have, the message system behind them and the affordable revenues kinda contracted out, We think that's a better proposition than someone sitting with purely speculative stock, which is what a lot of our competitors have. So we are trying to grow the company. We're trying to pay dividends and we're trying to get debt down. It's it's a it's a few fuels are being juggled there, and we recognize that for some investors who don't like that, we're we're not the company for them. And, you know, we're working towards, a 5 year plan. And the the one thing COVID has taught us is, you know, that the market will be the market and you will be in flavor or not in flavor. We just need to focus on making sure our business is doing the right things over the sort of medium to long term and, you know, along for the journey. If it suits you, if it's if it's not for you at this point in time, then, you know, okay. Go for the big guys. You won't get the growth and, you know, you won't get the you'll get the excitement either. K. Thanks. So Gavin has asked future sites of 64 when? Say again? Future sites of 64 when. K, Michelle. Do you wanna answer that? I'm in that draw the land bank. So they are they are over, you know, the next so many years if you take one of the sites of, you know, one of the villages of 3 thousand homes, that could be a thirty year site. But most of the sites will be much shorter, but the villages are certainly more longer term. So, it takes time to build a house. So there are that's that's how many sites we've got, but, and they will there'll be quite a few that are in the next, say, 3 to 5 years but there'll be more that are are further out. And just despite the falls in the share price, why have the directors not not bought any shares this year? The the one of the reasons for floating, was to to get more liquidity in the company and us buying shares actually defeats that purpose. It makes us more liquid. And most investors want to see more liquidity as opposed to less liquidity. So for me, trust personally, you know, we did we did buy some shares to try and get the market. And in the case, we still believed in it that ultimately, we want more investors to be, to be joining in with the business, and that would be, you know, that would be in conflict for that, for that objective. Sure. Okay. In your spouse's folders tend to have zero debt straight cash, seems you could sell land to Sigma to make it the same straight easier for analysts. Are you tempted from Gavin? No. Like I say, we're we're running our business for what is best for us, not for analysts and not so that we're compared on the same table as English householders. That's We're not wanting to do the same as them. They are, they are very good at what they do, and they have a business model that works well for them, but we are doing something different. It's I think if you look, you'll see ourselves, Gleeson, and countryside. We all do something a little different than the the big guys. Yeah. That's not saying we won't We won't do the same as them, but we get to the same life cycle that they're at, but we're not at that life cycle selling off land and giving away profits when we we don't need to. And like I say, our our debt profile compared to our work in progress with the, the security of missus and the affordable housing, I keep repeating that. I think is a safer option than purely speculative work in progress. Their figures turn very quickly if they have 3 months of those sales. What proportion of your sales are dependent upon health device schemes? Yeah. I think I said that about 15%. 15. 15. Just make sure. 50, 15. Okay. Next question. In more normalized times, what sort of gross and operating margins do you target? Okay. More normalized times. 2008 with the credit crunch, with the independence referendum. We've had breakthrough. We've had countless elections I don't know what a normalized time is. This is a genuine answer. The the margins we are at a are the the best margins we can we can achieve with with our market. The English margins, we know are better and they are better because helped to buy inflated. I also did a very good paper. You can look at it online, helped to buy inflated a lot of English house builders, and their reliance on Help to Buy. That's 20 percent work this way in the sales price and didn't really impact on the costs, immediately. So we, we believe our our margins are our the margins we wanted. Our margins historically, when you go back to pre 2018, were lower because the the retro sites that we had acquired because we were, okay, we kind of paid for them as we went, and we were left with the sort of slower selling ones. They did impact on our margins, but know, the normal hard deal rate we look at, as I say, is the other guys. It's been 20% 25% for private and 15% to 17% for affordable. PRS is a different margin again, and we just really need to to to understand that model a little more fully when we come to the final negotiations with them. Can you give an indication of whether you need more equity on the balance sheet to maintain your anticipated growth? I think if we were to if we were to require capital to give us sales bigger than the projections, I'll are showing, then we would go to the the market and raise the capital. So we don't need capital with the projections that are out there going, and basically our projections were delayed by a year or else is projected or delayed by year by COVID. So we're going out to 2023 to about a 100 240, 250,000,000. So We don't need equity for that, but if another opportunity came along, then we would go to the market and, potentially raise equity. Welcome to ask, were you happy with the Red Grove purchase? What were the margins like on a land? Okay. I think I think to say, if it wasn't for rego, I'm not sure we would have been sitting here. It gave us a huge geographic spread across the whole of Scotland, gave us some great some great individuals, who are still with the business now. It gives a central office. It gives a presence. And the the margin we made about 15% overall on that margin, and I said it was very low because we were paying as we were going, then we accepted lower margins because obviously, you know, it wasn't money down and then sell over the next 5 to 8 years. So, yeah, the retro deal was fantastic, and it certainly suited that point in time with the size of the business. Remember, we were 25,000,000, 30,000,000 turnover, and we were spending 50,000,000 on a, on a business, which was you know, one and a half, two times our scale. So it was quite, quite an undertaking. And, you know, in all of our acquisitions, it's they've all gone well, but we've we've learned a lot, and we've learned something every time. You know, things things do go wrong. You handle certain things. You would with hindsight, you would handle certain things differently, and you would deal with situations in another way, but I guess that's all part of the learning experience. And the the fact that we've now done 3 acquisitions, and, you know, they've all been successful by, by, by many, many different measurements, then I think we've we're very a lot more experienced in doing that, and we can be not compleasant that we need to stick to the same criteria as we have when acquiring something as we do going forward. And what do you think about the prospects for Scottish Independence on your market? Do you have any contingency plans? If someone could explain to me what Scottish independence actually is, I think the kind of like Brexit and and other things that the the word independence. I mean, I mean, are we gonna have walls and security guards at the borders and our own passports and our own currency and Who knows? And, and, and looking at people's emotions just out, is there any surprise people in Scotland are going towards, a a leader who's been reasonably clear with what she's saying and Boris Johnson. I don't care what your political aspirations are. Is it that they've got Michael Gould representing Scotland and, you know, for independent, what on earth would you have that man representing anything? He's hated in Scotland. So So, yeah, I wouldn't take the the poll that's being done at the moment as any as any real judgment as to what feelings will be like in a year or 2 years from now. But we dealt with the the independence vote the last time in 2013, 2014, and we were profitable throughout, and we were able to grow our business throughout What might it do? It might scare some of the English companies off and give us more opportunities. In in all before we actually, you know, in in all uncertain times that are opportunities. And, you know, and certain times tend to be when you can get the best deals. So no. And I I don't, like I say, I don't believe you know, Brexit will we'll see what happens with Brexit, but certainly when we went around our roadshow last time, it wasn't the the key question on everyone's lips. We will, you know, we will still need to buy things from England. They still need to buy things from us. And I whether it happens or not, we'll do it. Because it's important for both countries, England will still be Scotland's main trading partner, and it's important that if things do change that you know, I think as before, it didn't affect us before, and I I don't think it'll affect us again. Donald has asked. I invested with you some time ago, and I'm still losing money on my shares. What do you think the market is missing in terms of the week share price? I can only answer that if you compare us against the other guys on how we've moved, I mean, Taylor Wimpey at the peak were at 240, and they're a 100 and today, and everyone's saying brilliant, and they had a capital raise of 500 at 1.50. And, you know, we were at 1.51 5. So, you know, you wouldn't have been losing money when it was 15165 and COVID struck on, you know, February, March. So the world is for it is just now, and, you know, money has gone away from house builders. I mean, yesterday went up by 5% because the vaccine was found. Fundamentally, we would, you know, that if, you know, before COVID came, when we we've had Brexit, we've had COVID. So, you know, I don't know. I can't, I can't impact those things. I don't believe our share price is is performing poorly compared to the other guys. It certainly seems trending and tracking the same. So, Alastair, I mean, you you do a lot of comparisons. Maybe you can see us answer that a bit. Well, they have had the benefit some of several years of house price inflation, especially in the safe and safe where most of them were focused, that helped the margins, but as you said, the Help to Buy has helped them to profit, but, arguably Scotland's in a slightly different, cycle time wise, But, in terms of a company strategy, and I'd say this to any good company is, just keep to your netting and, the market will eventually catch up. Thanks, Alyssa. We're now we've got to 5 o'clock now. So we've come to the end. Sorry. I've got one quick question. Actually, I was hoping to ask myself, That's coronavirus and new working practices, changed your appetite to off-site manufacturing, which is, becoming, quite a buzzword south of Nevada. It's a good question. I don't know if it's a long enough night. Offside manufacturers inside and then, and in a building, I I think, for COVID, you're actually about building side because the it doesn't transfer as well. I think you you need to move on from, you know, at some point, COVID's gonna be either there's vaccines coming. I I wouldn't structure my business based on assumptions as to what's gonna happen with with with COVID sort of the medium term, but the The off-site manufacturer is just there for health and safety generally because you're, you know, you're you're not working in outside conditions. You can assemble things. You can you can work to more production line line operation. We've been doing it for many years. We do about a thousand kits a year in our kit factory, and then the kits are then assembled on-site and To get a house to win the war title, it's got a significantly quicker than the the English build model. So, yeah, it's not it's not something I really thought. I think you could argue both ways with that, Alice. A good thing or a bad thing with COVID, but COVID's just a bad thing full stop. Okay. Alright. Thank you. We've got one final question. So you mentioned the desire for greater liquidity. Is there any chance of persuading Sandy to sell some of his shares? Sandy is an entrepreneur, and we clearly don't think the share price is where it should be, and think the chances of getting Sandy to share with the share price is is a pound, and it was a pound 56 months ago with all the same same things in place. Sandy's not stupid. So I think he will sell, and he will sell when the the time is right. And over time, I think we will will make things more liquids, but I I can't see I can't see it in immediate future, but I can understand someone's eagerness to buy it at times. Well, thank you very much everyone for joining. I'm very grateful. And if you could fill out the feedback form afterwards, I'd be extremely grateful, and then we'll follow-up with the remaining questions with you all individually afterwards. In this, can I pass over to you for some final remarks? Yeah. Just say we thank you for your interest and thank you for looking into us. If you if you've learned anything about us or you, you, you like what you hear, then, you know, get in touch to to either Alastair or get in touch with us, say, we do, you know, from time to time and things are right. We will show people around sites. We need to do more roadshows and more speaking to private investors. That's why we we engaged Progressive Equity. Today that doing this was so we could reach out and speak to you and let you ask questions. There's No bad questions at all, you know, fair games. So we will continue doing what we're doing. We believe we've got a good offering here. We think we've got a great asset with our land bank of 15,000. We've got a good product, well respected by customers with a good brand and a good reputation. We've got good track record of delivering results and of making good acquisitions. And, you know, if you want to join us in the journey, more than welcome. If not, then maybe in the future. Thank you very much everyone.