Good morning, everybody, and welcome to Harworth's half year results presentation for the first six months of 2022. I'm Lynda Shillaw, Chief Executive, and I'm delighted to be joined here today by Kitty Patmore, our Chief Financial Officer. I would like to thank everyone who has joined us here in the room, today for the presentation and extend a warm welcome to everyone watching online too. This slide shows our agenda for today. I will begin with an overview of our performance during the half and comment on our markets and progress against our strategy. I'll then hand you over to Kitty to take you through our financials, and I'll then provide a brief operational update before finishing with our outlook. We'll then close the session with some Q&A.
Just a reminder, if you're watching online, you can submit questions through the webcast browser, and we'll aim to answer as many of those as we can at the end. By any measure, it's been a really strong six months for Harworth. We undertook a record level of direct development in our industrial and logistics portfolio. We continued to accelerate our residential sales, progressed a number of strategic initiatives, and made several acquisitions to grow our development pipeline. It is these management actions, supported by strong structural growth in our markets, that have materially driven our valuations in the first half. This means we are well on our way towards achieving our ambition that we outlined a year ago to grow our EPRA net disposal value to GBP 1 billion. However, in recent months, the near-term outlook for the UK economy has weakened.
While there is little that we at Harworth can do to change this, we can monitor and respond to its impacts. We are confident that Harworth is really well-placed to do this, and we've outlined on this slide some of the differentiating factors that underline our resilience. These include the fact that we sell serviced land, which has been taken through the planning system, remediated, and is ready to build on, and is therefore de-risked for house builders. The diversification of our product range. The fact that we own the majority of our sites freehold, which allows us to determine the scale and pace of development each year to match our risk profile. Also our strong financial position.
Against this backdrop, our purpose and focus on sustainability remain as important as ever, and I will provide an update on the great work we're doing here in our year-end results. Slide 4 provides some of our highlights for the period in more detail. Our industrial and logistics pipeline now totals 32 million sq ft, and we've really gone through the gears on our direct development strategy with over 430,000 sq ft completed after the period end. This included our Bardon Hill site in Leicestershire, which embeds net zero carbon principles and is already 92% pre-let. Our residential pipeline represents just under 29,000 plots, and here we've had a successful period for sales, having already completed, exchanged, or entered heads of terms on over 100% of our budgeted sales for the year.
Staying with residential, we also launched our single family Build to Rent portfolio of up to 1,200 homes on 10 sites, and we're delighted with the response we've received so far from potential investment partners, and we're targeting exchange on this portfolio by the end of the year. We grew our pipeline by almost 4 million sq ft and added over 1,100 plots through a number of exciting land assembly acquisitions during the period. Our investment portfolio continued to post robust operational metrics with very high rent collection, reduced vacancy, and significant rental uplifts on leasing events. Finally, our people. They have been and will always be critical to our success. To this end, we've increased resourcing across our central and regional teams, and we've also created some new roles with Peter Henry appointed as our first Director of Sustainability.
I would also like to welcome Marzia Zafar, who joined our board in June as a Non-Executive Director and brings with her further sustainability and energy market expertise that we're already benefiting from. The strong first half performance was against a backdrop of continuing tailwinds in our focus markets. In industrial and logistics, the chart in the top left shows that the first half set a new record for take-up, with just under 29 million sq ft transacted across the market. The chart below shows at the same time the occupier base is becoming more diverse, with increasing demand from third-party logistics companies and manufacturers more than offsetting a decline from online retailers. This is likely driven by the rise of onshoring and nearshoring, which continues to be a driver of demand across the market.
Looking at the residential sector, first half reporting from UK house builders and industry data showed that although the strong momentum in the market was easing, order books remained strong, cancellation rates were still low, and build cost inflation was continuing to be offset by house price inflation, as the chart in the top right shows. Supply of new homes still remains close to record lows, with a mix of factors such as planning delays, a shortage of labor, a lack of near-term sites, and supply chain issues all restricting supply. Particularly relevant to our new single-family rental portfolio, the BTR market remains strong, with investment volumes in the first half setting a new record as an increasingly diverse range of investors look to gain exposure to this structural growth sector.
This slide shows a scorecard for the first half, with the four growth drivers of our strategy down the left-hand side. You can see from the middle column highlighted in green just how much we stepped into the delivery of our strategy in the first half as we progress towards our 27 ambitions shown in the right-hand column. We have over 600,000 sq ft either completed so far this year or currently under development, more than in any previous period, and are well on our way to reaching our ambition of an average of 800,000 sq ft per annum. We've had a very active half for plot sales, completing over 1,600 as we took advantage of particularly strong house builder demand. Again, this shows the significant progress towards our ambition of 2,000 plots to be sold per annum by 2027.
Thanks to the acquisitions we made in the half, we maintained our land supply of 12-15 years. Finally, following the completion of Bardon Hill, approximately a fifth of our investment portfolio will be Grade A space. As you can see from the bottom of this slide, we are well on our way to reaching our GBP 1 billion EPRA NDV goal. Before I hand over to Kitty, I just wanted to spend a few moments on our outlook. Over the last couple of years, Harworth has consistently delivered a strong performance despite an unprecedented macroeconomic backdrop. The business has shown its ability to sustain its performance in an uncertain environment. This resilience is not by accident. It is the result of our deliberate management actions to identify a strategy for growth, focus on the right markets and products, build expertise, and maintain strong relationships.
We are beginning to see signs that both the residential and industrial and logistics markets are coming off their record highs. More recent indicators suggest that the impacts of rising interest rates on mortgage affordability, increasing inflation on household budgets, and the withdrawal of government support, such as the Help to Buy scheme, are likely to begin to impact house prices. Albeit, the fundamentals of long-term undersupply supporting pricing are still there. In the industrial and logistics sectors, yields are forecast to move out as debt markets tighten and interest rates rise. Supply chains and labor markets also remain constrained, and this is likely to impact the pace of delivery and limit supply, reducing choice for occupiers and supporting rents. These conditions will have an impact on valuations, and as previously flagged, we expect our 2022 gains to be first half weighted.
That being said, investors still have a substantial amount of capital to deploy into the right product in the right sectors. Harworth's products are in two of the most resilient real estate asset classes, and fundamentally, both are still under supplied. The scale of our portfolio and ownership allows us to drive value from our management actions. By controlling the phasing of our sites, we remain well-positioned to deliver through the cycle. Our strength comes from our long-term focus and our ability to work through and adapt to changing market conditions. With that, I'd like to hand you over to Kitty to take you through the financials. Ooh, thank you.
Thank you, Lynda, and good morning, everybody. I'm delighted to be reporting a strong financial performance for Harworth in the first half, and now I would like to take you through this in some more detail. Starting with our balance sheet. Our EPRA NDV increased to GBP 724.8 million at 30th June 2022, equating to 224.7 pence per share. This represented a 13.7% increase on our EPRA NDV per share of 197.6 pence, as at 31st December 2021. This growth was predominantly driven by an increase in portfolio valuation. As seen in the property portfolio, a mark-to-market adjustment on development properties line of this table. I'll provide some more detail on these movements in a moment.
These gains were partially offset by an increase in deferred tax liabilities due to unrealized gains on investment properties. Net debt was GBP 67.8 million, increased from the position as at 31st December 2021. This is typical for our development spend profile. However, with increased sales, this is lower than at the same point last year. Combined with the dividend, growth in net per NDV led to a total return of 14.1% during the period. Slightly below the prior period, but still high compared to historic levels. Turning to the income statement. Sales of serviced land and property, in addition to income from rent, royalties, and fees, resulted in group revenue of GBP 62.6 million, which compares to GBP 18.9 million in the prior year period.
This increase derived primarily from accelerated serviced land sales in the half, which, as Lynda has already touched on, was the result of us taking advantage of particularly strong house builder demand. Saw total property sales increase from GBP 11.5 million in the first half of 2021 to GBP 39 million in the first half of 2022. You can see from this slide that we have a robust sales profile for the remainder of the year. Revaluation gains are an important component of our performance, seen in both the income statement and the balance sheet. In the income statement, we can see the increases in the fair value of assets held for sale in investment properties. These consist predominantly of our investment portfolio, our Strategic Land and Natural Resources portfolio, but it does not include any increases in fair value of our development properties.
Admin expenses increased by GBP 2.2 million from the first half of 2021 to GBP 10.9 million. This is principally due to higher salary expenses resulting from increased employee numbers, reflecting the growth in the group as we pursue our strategy. Admin expenses expressed as a percentage of revenue remained in line with the 2021 financial year, at 17%. All these factors resulted in a profit after tax of GBP 79.1 million, compared to GBP 56.4 million in the prior year period. Finally, the board is recommending an interim dividend of GBP 0.00404 per share, reflecting underlying growth of 10% in line with our progressive dividend policy. Looking now at our valuation gains in some more detail on slide 11.
Total revaluation gains in the first half were GBP 110.3 million, resulting in a total portfolio value of GBP 888.7 million as at 30th of June 2022. In major developments, those with the planning permission and where works have commenced, gains of GBP 53.9 million were driven mainly by development progress, particularly at our Bardon Hill site, but also as we progress the sale of our Kellingley development and continue to see robust house builder demand. In strategic land, typically sites that do not currently have a planning consent, a valuation increase of GBP 42.3 million was driven predominantly by our Ironbridge site, which moved from demolition and remediation through to the development phase. The master planning of other earlier stage sites and continued market demand for well-located industrial and logistics sites also contributed.
Asset management initiatives drove a GBP 14.7 million gain in the investment portfolio, while valuations remain broadly consistent across our Natural Resources and agricultural land sites. Slide 12 will be familiar to many of you. It shows the breakdown of our GBP 889 million portfolio as at 30th of June 2022. Industrial and logistics land and properties shown here in shades of green account for around two-thirds of our portfolio by value, and our residential land and property shown here in shades of blue accounts for around one-third. The slide shows that the strategic land sites are valued at around half that of the equivalent major development segments. However, these strategic land sites have three-four times the number of plots or commercial square feet that can be delivered on the major development sites.
This underlines the potential in the portfolio and the value that we create as we take sites from planning into the development phase. The investment portfolio shaded here in the darkest green now totals GBP 294 million. This continues to be an important component of our financing strategy. As development sites reach practical completion, such as Bardon Hill, they will be transferred to this portfolio. Together with the Natural Resources portfolio, it creates a recurring income source to service debt facilities supplemented by sales proceeds. This slide bridges the increase in our net debt position from GBP 25.7 million, as at 31st December 2021, to GBP 67.8 million, as at 30th June 2022. As is typical in the first half of the year, development spend and cash and working capital increased net debt levels.
This was partially offset by sales proceeds received. The chart also shows the headroom afforded by our cash position and revolving credit facility, which I'll provide some more detail on now. Harworth financing strategy remains to be prudently geared with a target net loan to portfolio value at year end of below 20% and a maximum of 25% during the year. At period end, our net loan to portfolio value was just 7.6%, slightly higher than December 31, 2021, but below our position at the same point last year and well within our target levels. Earlier this year, we agreed a new senior debt package comprising a GBP 200 million revolving credit facility together with a GBP 40 million uncommitted accordion. This facility replaced our previous revolving credit facility.
We added HSBC to our lending club, and it provides the group with additional firepower and flexibility. Alongside this, we continue to enter into site-specific development and infrastructure loans, as you can see from the table of our drawn debt on the right-hand side of this slide. In summary, the first half of 2022 saw a strong financial performance for the group. As we move into the second half, we move in a solid position with low gearing and cash and available facilities of GBP 144.4 million, increased further by GBP 54 million since period end with the sale of our Kellingley site, with no refinance requirements for a further four years. We will continue to monitor closely the external environment, and we will use our skills and flexibility to target our capital to drive long-term value for our shareholders.
With that, I'd like to hand you back to Lynda to take you through the operational review.
Thanks, Kitty. Now I'd like to provide some more detail on our operational progress during the first half. Slide 16 provides an overview of our 32 million sq ft industrial and logistics portfolio, of which approximately two-thirds is held freehold or in joint ventures. Around a quarter of our pipeline is consented, and this comprises sites such as Bardon Hill in Leicestershire, which we completed after the period end, as well as larger sites such as the Advanced Manufacturing Park and Gateway 36, both in South Yorkshire, where over 200,000 sq ft of development is currently underway as part of the next phases of both sites. Over 6 million sq ft of our pipeline is in the planning system, awaiting determination, and this includes 3 million sq ft across our Gascoigne Wood, Skelton Grange, and Houghton Main sites, where we are targeting determination in the next 6 months.
The remainder of the pipeline is either in land assembly or pre-planning phases, including sites such as Rothwell in Northamptonshire, where we have acquired a further small parcel of land in the period and are currently engaging with local stakeholders in advance of submitting a planning application. Finally, we continue to make good progress with sales so far, completing, exchanging, or entering heads of terms on 97% of our budgeted industrial and logistics land sales for the year. As Kitty has mentioned, we were delighted to complete the sale of our Kellingley development site last week for GBP 54 million. Turning to our residential portfolio, which has the potential to deliver almost 29,000 housing plots, with around a quarter of these already consented. As we've touched on already, it has been a very active period for plot sales.
We took advantage of significant house builder demand during the first half, and we completed the sale of over 1,600 plots, including our largest serviced land sale to date to Barratt and David Wilson Homes at Waverley. That parcel has the potential to deliver up to 450 new homes and marks one of the final phases of land sales at the site, where ultimately, around 3,000 homes will be built in total. We were also excited to market our first phase of serviced residential plots at our Ironbridge site during the period, and we saw a highly competitive bidding process amongst house builders. We significantly advanced placemaking works across some of our largest residential sites. At Waverley, a new 150-bedroom hotel is under construction, and we've received planning for a new primary health facility at the site.
Development is also about to begin of Highwall Park, a new 1.5 kilometer linear park running through the heart of the site, which will connect the AMP to the Waverley Lakes. Meanwhile, at our 2,000-home South East Coalville development, planning has been submitted for a new 420-place forest school at the site to sit alongside a new local center and extensive green space. Elsewhere in the residential space, in May, we launched our single family Build to Rent portfolio to take advantage of this rapidly growing market, for which Harworth developments are particularly well-suited. This portfolio represents a unique forward funding and long-term investment opportunity for a prospective partner to deliver up to 1,200 homes across 10 sites in Yorkshire, the Midlands, and the Northwest.
These sites have already benefited from Harworth's investment as well as its master planning and placemaking expertise, which have delivered green space, recreational facilities, and well-designed public realm. For existing residents, the introduction of the BTR product is expected to further add to the vibrancy and attractiveness of these communities. Launching this portfolio allows us to accelerate the delivery of our residential sites because the BTR product can be built out alongside the residential plots that we sell to house builders, rather than having to phase the development to take account of local sales absorption rates. It's also good diversification in the event that we see a softening of the traditional build to sell market. We have received really strong levels of interest from prospective investors since we launched the portfolio to the market.
We have a target date at the end of the year to exchange contracts with the build-out and phased handovers to take place over the subsequent three years. We're making good progress and look forward to updating you later in the year. Our GBP 294 million investment portfolio is a key part of Harworth's funding structure and growth strategy. This portfolio delivers an annualized rent roll of GBP 18 million and continues to post robust financial metrics. You can see from the charts in the top right of this slide that the occupier base is diverse, focused on sectors such as logistics, chemicals, and manufacturing. During the half, we completed close to 50,000 sq ft of lettings, adding close to GBP 100,000 of annualized rent and transacted at significant premiums to previous passing rent and ERVs.
This was then followed by significant leasing activity at Bardon Hill after period end, and once these leases are completed, they will add GBP 2.2 million in annualized rent and increase the Grade A proportion of our investment portfolio from 11% at period end to 19%. As you can see from the bottom right of this slide, that the operational metrics also remain strong, with a long weighted average unexpired lease term of over 11 years, a low vacancy rate of 3.9%, and continued strong rent collection. To conclude, Harworth has made a strong operational and financial progress in the first half. We have seen a significant increase in our EPRA NDV, which has brought us even closer to our ambition to reach GBP 1 billion. This progress has been driven by our management actions with support from strong market conditions.
We remain closely attuned to the current macroeconomic backdrop and are confident in the resilience of our market, our products, and our business model. What is more, we have the team in place as well as the financial strength and flexibility to respond to challenges, manage risks, and pursue opportunities as they present themselves. Harworth is a through the cycle business focused on creating sustainable places where people want to live and work. What we do in the regions really matters, and it is through delivering on our purpose that we continue to deliver value for all our stakeholders. Thank you very much for your time, and with that, I would like to open up to questions. We'll take them first from those in the room, and then we'll go to questions received online if we have time. Thank you.
Thanks. Morning, it's James from Peel Hunt. Maybe just two questions, if I may. I mean, Lynda, you opened up by saying, you know, some of the ways the company can mitigate the softening market conditions. I'm just wondering if you have started to change anything in terms of the operations? Have you slowed down any developments? Have you reconfigured any, say, logistics to focus on smaller shares that maybe tenants would be more willing to sign in this market, or are we not at that stage yet? Maybe the second question, just on the development side. Can you just remind us what, broadly speaking, the kind of margins you're developing at or the yield on cost? 'Cause I suspect there's a pretty healthy margin there compared to what investment yields are today.
I'll do the first one. Kitty can do the second one if that's okay. So the answer is, as yet, no, we haven't changed anything that we're doing. And if you think about it, you know, we're developing at all ends, but our risk appetite is firmly, you know, on stuff like Bardon, which we sort of did – we started speculatively. Similarly at AMP and Rockingham. It's very much smaller multi-let side. And actually we've got real success and a great track record in doing that, and it's the sort of product that we like to hold in our investment portfolio. As you start to sort of move up the size of boxes, you know, we tend to seek pre-lets, or forward, and forward funding.
Actually, you know, sort of make sure that we've got the sort of right relationship with occupiers, some of whom actually want to own the product that we create from them. I don't think we're at that stage, but I think we've got enough capacity and breadth in our portfolio to continue to do all of those things, but actually at different rates to adjust to the market.
In terms of development margins, we're typically looking at yield on cost between 5%-7%, James. Bardon Hill, which was entered into contracts a little bit of time ago, was sitting sort of at the top end of that. We're sitting sort of on current sort of schemes on site, sort of more in sort of the middle of that now.
Thanks, James. Colin?
Thanks, Eva. Good morning, Lynda, Kitty. Thank you again for the presentation. Colin Sheridan from Goodbody. A couple of questions, and maybe just following on from James's point on looking at sort of yield on costs and the how you derive some of those gains you've achieved over the last six months. When we look at from a valuation standpoint, you've got your market-derived gains in terms of the appetite from investors pushing yields down, market rents rising. Then, of course, you've got the asset management input from your side. I know you won't be able to give me exact figures, but in terms of your own sort of thought process, and you look at, say, GBP 110 million of total valuation gains you achieved this half, how much would you derive to sort of market movement versus asset management initiatives?
The importance of that question is thinking of what happens next. If we are into a softer market, there's obviously a lot of inbuilt value creation in the portfolio feeding through, and therefore, will some of those asset management initiatives offset potential weaknesses in the market?
Okay. Should we do that in reverse? Shall I start at the end, and then we'll work back to the front, if that makes sense. I think if you, if you look at our model, and the reason this business is so resilient is, the market doesn't decide what land to assemble and where to do it. Doesn't actually walk it through allocating, getting a planning allocation, and through the planning process or actually, you know, decide the volume of what you're gonna develop and when or whether you're gonna sort of sell a phase. Actually, that is all what we do. That's our model. That's the management actions. Those are the things that fundamentally, regardless of what's happening from a yield perspective in the market, a valuation perspective in the market, we continue to do.
That is really, that's the bedrock of the company, and we take a really long-term view. Some of these sites, you know, sort of, are 20 years, you know, from us actually assembling them at the beginning to actually sort of working them out in the end. I mean, Waverley is probably closer to 40, actually, in reality. That model, I think, is really resilient, and it means that even when, you know, you've got sort of, you know, sort of yields moving out, we still focus on those underlying management activities that drive value and keep progressing our sites. Same with at the point that we come to sort of start to invest in infrastructure.
When the cycle's tougher, because we are a through-the-cycle business, you know, sort of we just pull, you know, sort of, the levers in a slightly different way and we make sure that we are investing the group's resources, so people and capital, in those things that are gonna drive value gains and support the delivery of returns. I mean, do you wanna sort of pick up on the wider points.
I mean, in the period that we've just had of GBP 110 million, sort of those value gains were predominantly driven by sites where we had management actions. I think you're absolutely right, Colin. You can't absolutely separate the two and obviously value gains are driven to the best effect when you have both aspects there. But certainly sort of most of the value gains came from sites where we were active on them, whether we were bringing forwards developments, whether we were progressing sort of planning applications, we were regearing leases, maybe sort of planning the site forwards and then working out at what point it was the right time to market the site to house builders and getting that in front of house builders as the right product in the right way.
I think sort of very strongly over the first half of the year, we can demonstrate that those sort of asset management capabilities, which will stand us in good stead for the future.
Okay. One more question from me, and Lynda, perhaps it's more for your sort of crystal ball view in terms of where the market is. We've been asking a lot of the industrial sort of players, this sort of view is that, you know, we're in a market now where costs are going up, therefore construction is likely to go down. Despite the fact we might have a period of yield expansion feeding through, there is a possibility that actually rents could tick up because of the new less supply space coming in the market. Firstly, do you see that coming through in your locations? If not, what are your sort of views in terms of where rents might get to in the logistics space?
I think, you know, the regears and lettings that we have done, you know, in the first half, you know, sort of show that we're still sort of ahead of sort of ERVs or passing rents. Certainly sort of at the Bardon, for example, you know, the lettings there were ahead of our ERV assumptions. We're still seeing quite healthy demand from occupiers, and not just occupiers for the product that is immediately there. You know, when we have very little vacancies, you'll see in our investment portfolio. When we have had units come vacant, we've had quite an intense bidding process from occupiers for the space.
Actually when we're looking at some of the sites that may be further away in delivery, so the Chatterley Valleys and Wingates of this world, we've got occupiers who actually have a requirement that's sort of sitting out 24 months out, you know, that are basically actively looking for sites that could actually deliver and to meet their requirement. I think, you know, sort of it's one to watch carefully. My gut tells me that you're still gonna see some rental growth because you've got constrained supply. I think really the combination of rising interest rates and rising inflation on businesses is probably sort of, you know, the, you know, there's a point where actually that may well sort of offset the ability to keep driving rent increases. It doesn't feel like the market's there yet.
It doesn't feel like those sorts of economic conditions are quite biting in the way that probably we've seen them done historically. I think that's because there's just a fundamental undersupply, and you've got companies that need to, you know, they need bigger space, they need better space, or they're actually sort of new. We're seeing a number of companies that are new into the UK market or are wanting to expand with new facilities in the UK market. All of that means that supply-demand imbalance, well, I think is supporting rents.
John Mozley, Liberum. Can I just kind of follow on from that, from Colin's points? What's actually happening in terms of the shift in tenant demand? Obviously you show that chart where online retail or general retail has shrunk as a percentage of tenant demand. Is there enough of an increase from other players in the market to keep demand at the levels that we've seen in the last few years?
It's a really good question. I mean, from a Harworth perspective, we're not exposed really to online retail. You know, you'll have seen that as we presented as we went through COVID. So a lot of our tenants tend to be very much in that sort of manufacturing, advanced manufacturing, logistics and transport, chemicals sort of space. I think the sort of sites that we have actually lend themselves in locations you know sort of to deliver that. That's actually where we're seeing you know the demands.
From third party logistics, from manufacturers, like I say, from companies that maybe are not based in the UK and want to form a manufacturing base, or some from some companies who are looking to basically sort of switch into, you know, almost like a twenty-first century sort of product, you know, to sort of that that's needed in the market. Particularly in the energy sector, I suppose is where that sits. In terms of where our portfolio stands today, we haven't got a massive exposure to retail. I think actually the sectors that are driving the growth that you saw on that slide earlier are the sectors that we're probably, you know, sort of more engaged in than anybody else actually.
Can I ask a second question on house builders and their behavior patterns? Obviously, you know, the stock market has completely clobbered house builder share prices over the last six-nine months. The actual businesses seem to be still performing relatively well. Are you seeing change in demand patterns from house builders for serviced land?
No. I mean, you know, sort of as we've gone through this year, I mean, you know, Ironbridge most recent, so we were running the process on Ironbridge over year-end, you know, really strong, healthy interest and competition for that site. I think again, you've got to look at the product. You know, our product is really resilient. It is de-risked, you know. From a house builder perspective, you know, they haven't got to, you know, work it through planning. They haven't got to put the infrastructure in. They haven't got to hold something that might deliver 3,000 units and because we basically have done all of that, and we're selling it in phases.
That is actually quite attractive as a product to house builders in terms of their ability to get straight on site and actually start to deliver product into the market.
We've got some questions online.
What was our question?
Thanks, Eve. Okay, thank you. The first question comes in from Matthew Saperia at Peel Hunt. Matt asks, "Does the increase in energy costs provide opportunities to bring forward energy solutions such as solar and wind farms across the portfolio, where perhaps they weren't the best use of land before?
Okay. Morning, Matt. I think the simple answer is yes. I referenced earlier that occupiers are looking for better products, and actually product that actually is much more sustainable and much more energy efficient is part of that, including you know sort of product that enables some form of generation. Actually, that is happening in the market as we speak. From a Harworth perspective, you'll recall that we're working on our Natural Resources strategy. And you know, you can do a lot of things with land. You know sort of, it's not just about vertical development. Actually, you can use land for energy and energy generation, which we have done in a proportion of our portfolio historically. For us, it's looking at how we better integrate that into developments going forward.
Both the infrastructure side of it, but also the potential for some generation on the sites as well. I think that's absolutely coming. I think that's gonna be a big shift that we're gonna see over the next five-10 years in the U.K. market.
Thank you. The next question is from George Nikolaou at Gravis. Also on the Natural Resources portfolio, George asks, "Would the board consider potentially selling it to crystallize profits and recycle capital?
Sarah, do you wanna go on this, or do you want me to go?
Yeah. Well, I mean, I think, as Lynda's just touched on, we've got 14,000 acres across the portfolio, and we're always looking at the best way that we can use that land. The Natural Resources portfolio gives us an opportunity to generate further value, perhaps through pursuing alternative sort of structures than we've looked at before. I don't think necessarily we would look at selling that land to generate cash. What we're more likely to do is to try and realize more value out of that land and continue to sort of pursue our development strategies across our major development sites, which in turn will crystallize sales proceeds and recycle that back into the portfolio.
Thank you. The final question is, the release mentioned some significant planning applications awaiting determination. How confident are you in receiving approvals for these, and is the planning system becoming more of a constraint for you?
They're all applications on sites, you know, sort of where in that local geography there is a requirement for employment use. I think the sort of challenge with the planning system at the moment is it's a bit clogged up. It is slower. I think you'll have seen this from house builders and anybody else who's been sort of presenting their results over the last sort of six-12 months. You know, that's because of, I think, the volume of applications that are in the system, so a mixture of domestic as well as sort of commercial applications in the system. I think, you know, we just have to work through the process. Part of what we do is planning, so securing our applications and actually securing consents.
We've got specialist planners in our regional businesses and in our central teams. We've got a really high success rate when it comes to planning. It is just one of those things that takes time and from a planning officer perspective, they're considering probably a whole range of things today in determining an application, whether it's biodiversity net gain or, you know, sort of nutrient neutrality. You know, sort of when it comes to determining an application which actually does slow the process down. Planning's planning, I'm afraid.
Thank you very much. That's all the questions we have from online.
Thank you. Any more from the room before we close? Okay. Well, with that, thank you everybody in the room. Thank you everybody who joined us online, and, I'm sure we'll see a lot of you over the next few days in the Investor Roadshow. Thank you.