Cairn Homes Stock

Welcome to the Cairn Homes 2026 Interim Results Analyst and Investor Call, which will be hosted by Michael Stanley, Chief Executive Officer; and Richard Ball, Chief Financial Officer. [Operator Instructions] Please note that today's call is being recorded. I would now like to hand the conference over to your speaker today, Michael Stanley, Chief Executive Officer. Please go ahead.

Thank you. Good morning, everybody. Thank you for joining us for our 2026 interim results and outlook. I'm delighted to be here with Richard Ball, our CFO; and Ailbhe Molloy, our Head of Investor Relations. We've spent over 10 years building Cairn Homes to our current position. The results today show the fruits of our investments and reflect the hard work and ambition of the Cairn team. We are delivering new homes more efficiently. We're better utilizing our own resources, and this is clearly reflected in today's upgraded ROE guidance. H1 revenues have grown by 60% year-on-year, while operating expense growth was just 7%. In our presentation today, Richie and I will outline the reducing capital intensity of our business and how this will deliver strong cash flows and increasing returns for this year and beyond.

So let's turn to our interim results. We'll start on Slide 4, where we've highlighted some of our key trading KPIs from the first half of 2026. Revenue for the first half came in at EUR 455 million, up 60% from H1 last year. 1,139 homes were sold, also 60% -- circa 60% more than last year. We sold new homes to our widening range of customers across 19 developments in the urban and suburban areas of Dublin, the Greater Dublin area, Cork, and Galway City.

Looking forward, our current order book has grown to over 5,000 new homes, an increase of over 900 units year-on-year with a value of nearly EUR 1.9 billion. We have very strong visibility for our future growth. Our ASP for the period, as you can see, remained stable at EUR 393,000, up just 1.6%. This is despite build cost inflation, which is currently running at about 2.5%. In an inflationary environment, we have controlled ASP growth while increasing sales and improving our operating profit by 75% to just under EUR 75 million. Our operating margin for the first half grew to 16.4%.

Cairn is a trusted brand and more homebuyers are choosing our well-located, competitively priced homes. This is clearly evidenced in our weekly private sales rate of 3.7 new homes per active sales development. EPS was EUR 0.093, up 82% year-on-year, reflecting strong earnings growth and improved operational leverage.

Moving to Slide 5, which covers some additional financial highlights, shareholder returns and our improved guidance for 2026. Net debt has reduced significantly year-on-year, falling from EUR 307 million to about EUR 194 million. And operating cash flow was EUR 22.4 million, which is an improvement of over EUR 140 million year-on-year. This is a material shift. The increased net investments in WIP and land that we have made over the past number of years, particularly in 2025 is now unwinding as Cairn scales. I will talk to you later about our forward-looking land replacement strategy, including more detail on our increasingly low cost -- our increasing low-cost strategic land bank and our improving WIP turn.

Our net assets have grown by close to EUR 100 million to EUR 863 million. We are also today increasing our interim dividend by 10% to EUR 0.045 per share. And we are announcing a new EUR 50 million share buyback program starting today. These both signal the strong cash generation and financial flexibility we have to reward our shareholders. And as outlined on this slide, we are also today upgrading our full year 2026 guidance.

Moving to Slide 6 now and our sales pricing and product mix. The table on the left clearly illustrate the consistency of our ASPs since 2024. While our house prices have grown by a little over 4%, our apartment and duplex pricing has remained flat. We are now also delivering homes across a much broader land bank with 30 selling sites in the full year 2026, as well as launching new phases of our existing large developments during the year, we are also bringing 13 brand-new schemes to the market in 2026. Overall, the number of houses we are delivering is growing, and we will continue to do so over the next 12 months as we prioritize increased delivery of owner-occupier homes, the majority of which will be for our first-time buyers.

Moving on to Slide 7. We have outlined our growing realizable market. More buyers are choosing our homes, and our market share is increasing. We do deliver industry standing -- industry-leading quality and affordability with a growing brand affinity. We are unique in our delivery of large, well-located, mixed tenure developments situated near multimodal transport links. Our wide range of unit typologies together with the multiple tenures our homes are designed for significantly broadens our realizable market.

We are a committed partner of The Housing Agency in Ireland in making the recently introduced Croi Conaithe Cities scheme a success. This is a targeted initiative, which is unique to the Irish market. And along with recent VAT reductions on apartments and changes to design guidelines to improve density, this clearly illustrates the government's intent in ensuring that apartments play an increasingly important role in meeting future housing needs. Combined with this significant buyer support, our own low-cost apartment delivery model opens up the possibility of ownership in our cities to an expanding cohort of new customers.

We've included some feedback in the center of the slide from one of our recent Croi Conaithe launches on the edge of Dublin City. And this highlights some of the benefits of apartment ownership in urban locations, including that 70% of our new apartment owners will be moving from private rental. 65% will take public transport to work and 45% work in the central Dublin City. On the right-hand side, we call out a very important underpin to realizable demand. Over the next 5 years, we are targeting that circa 60% of our owner occupiers homes will be priced below the government price caps of the First Home and Help-to-Buy schemes. These 2 critical supports for our first-time buyers have been extended, and we will continue to ensure that the majority of the increasing number of starter homes we deliver will qualify.

Slide 8 illustrates Ireland's strong economic performance. The macro backdrop for housing is certainly supportive. As you know, Ireland is one of the fastest-growing economies in Europe over a multiyear period, and we have transitioned to a leader in housing delivery investment. Domestic economic indicators remain supportive. Demand continues to be underpinned by a strong economy, population growth and changing demographics. Our government has the fiscal capacity to continue to invest in housing delivery into the future. They have committed EUR 36 billion in housing and investment infrastructure to 2030 alone. On a per capita basis, this level of investment is now the highest in Europe and approximately 3x the EU27 average. Employment, incomes and mortgage availability continue to support housing need. Population growth and falling household size are also increasing long-term housing requirements, and these trends are informing our own design and delivery strategy.

I now move to Slide 9, where Ireland's supportive policy environment is unlocking supply. Key challenges remain, but there are clear signs that wider policy measures are beginning to address some of the key constraints on housing delivery. Planning reforms are helping reduce delays and improve certainty. And as I mentioned earlier, policy and funding interventions are improving apartment activation rates, as you can see on the slide. Infrastructure investment is increasingly focused on unlocking housing delivery at scale. Over the past 2 years, government policy has evolved from planning-led housing policy to an increasingly infrastructure-led and aligned delivery model.

Water, transport, energy, site servicing are now more widely recognized as prerequisites to achieving housing need. A really good example is illustrated on the map shown here on the right-hand side of the slide. The Housing Activation Office, recently formed, allocated close to EUR 1 billion of new infrastructure funding to speed up the activation of 86 large housing developments across Ireland. 7 of our own planned developments will benefit from this funding and speed up our own delivery time lines.

On Slide 10, we've outlined some of our current key sustainability highlights. We continue to be a leader in sustainable construction. Our commitment to sustainability is delivering clear results. Some highlights from H1 are outlined on the slide here. Nearly 5,500 people are now employed across Cairn sites. And this is supported by a growing apprenticeship academy of nearly 350 active or qualified apprentices. We recognize the importance of a diverse workforce and continue to prioritize our own diversity. We are immensely proud of our talented team. It's important to us that when we deliver homes, we create thriving communities.

Our focus on placemaking is evident in our Homes Together and Cairn and Community Games initiatives. Now we look at our continued investment in innovation on Slide 11. Our investment in innovation is centered on improving affordability and access to housing for our customers. Along with our design and supply chain partners, we work to understand our customers and markets and how they will evolve. On the right-hand side, you see a selection of images of our newly opened innovation hub and our training rig. Based in Seven Mills, our innovation hub provides a home for collaborative innovation, allowing us to harness our subcontractors and partners and their know-how, the knowledge within our growing Irish, U.K. and expanding European supply chain, our design partners and professionals and also to explore new ways to leverage AI and digital design technologies.

Moving to Slide 12. I'd like to spend a little bit of time here as we illustrate how capital intensity of our business is reducing while still driving significant growth and ROE progression. We have built a differentiated land acquisition capability. We source large-scale sites, typically 500 units in locations with enabling infrastructure. We've built relations with landowners who see us as a partner of choice. Today, we now own a land bank of 18,000 units across 38 sites. And most importantly, these are at an average plot cost of EUR 37,000. We've now added a capital-light strategic land bank of circa 2,750 units. And we have an additional strategic pipeline of 6,500 units. Our deal structures within this strategic pipeline have evolved and include low-cost land options, deferred considerations, contracts, conditional on zoning and planning and joint ventures.

Our WIP turn is also improving, and WIP investment is partially recovered through forward funds as we build some of our larger apartment developments for our state partners. Our brand scale and multiyear order book also derisk our capital investment. All of this contributes to our unique ability to recycle and replace our invested capital at pace. The returns accretive growth that we are delivering is demonstrated today in our upgraded full year '26 ROE guidance of circa 17%.

I'm going to hand you over to Richie, who will brief you through our financials for the period.

Thank you, Michael, and good morning, everyone. Our business today is in a strong financial position, and we have great confidence in our future. This underpins our increased guidance for 2026, an increase in our interim dividend by 10% to EUR 0.045 and the announcement of a new EUR 50 million share buyback, which will commence today. As you can see on Slide 14, we delivered a record first half with growth across every major earnings measure. Revenue increased 6% to EUR 455.5 million, driven by 1,139 closings, up 61% year-on-year.

Gross profit rose 54% to EUR 96.9 million, with gross margin of 21.3%. We have built the platform to support a much larger business. With overheads up only 7% in H1, operating profit grew 75% to EUR 74.8 million and operating margin increased to 16.4%, highlighting our operational leverage. Profit after tax rose 84% to EUR 58.4 million, driving an 82% increase in our earnings per share to EUR 0.093. Net asset value increased 13% to EUR 860.3 million or EUR 1.37 per share. We also declared an interim dividend of EUR 0.045 per share, which will be payable on the 2nd of November.

Moving to Slide 15 and our revenue and sales performance KPIs. Our sales pipeline provides strong visibility over both near-term delivery and the recovery of capital invested and work in progress. The total closed and forward sales pipeline stands at 5,020 units with net revenue of EUR 1.9 billion, up 23% year-on-year. Of these, 3,881 units worth EUR 1.44 billion in net revenue are in the order book for the remainder of 2026 through to 2028. That depth of demand is important as we scale output. Over the last 12 months, closing WIP increased EUR 48 million to EUR 483 million, while the value of forward sales increased EUR 174 million to EUR 1.44 billion, giving 3x coverage. We have exceptional visibility. Our investment is supported by a strong and growing forward order book, giving us confidence in the timing and quality of future cash conversion.

And next to our balance sheet on Slide 16. The key point is that our balance sheet remains asset-backed and is conservatively leveraged. At the same time, it gives us the capacity to support our growth ambitions into 2027 and beyond. At 30th of June, land held for development was EUR 693.3 million and construction work in progress was EUR 482.9 million. Net assets increased EUR 24 million to EUR 860.3 million as we continue to strengthen our equity base. At the end of H1 and given our strong H1 cash flow performance, debt to gross asset value was 18.6%, tracking below our year-end target of circa 20%. We continue to have significant funding capacity with EUR 500 million of committed debt facilities and no maturities until June 2029, following our recent EUR 42.5 million loan note refinancing. Overall, the balance sheet gives us the capacity to fund disciplined growth while also allowing us to accelerate returning capital to shareholders.

Moving to Slide 17. This slide shows the investment in scale is translating to a stronger cash generation as expected. EBITDA increased 68% year-on-year to EUR 78.6 million. After a net EUR 69.1 million investment in work in progress, we generated EUR 22.4 million of operating cash flow in the first half. That compares with a net flow of EUR 118.6 million last year, an improvement of EUR 141 million. We returned EUR 36.8 million to shareholders through dividends during the period. Even after returning significant capital to shareholders, net debt reduced by EUR 112.9 million year-on-year to EUR 194.5 million, highlighting our improved capital efficiency.

On Slide 18, we outline how we deploy capital with a clear objective: grow the business, preserve financial strength and increase shareholder value. To fund our future growth, we are recycling our capital with greater efficiency. More than 90% of additional WIP spend is targeted to be recovered within 12 months, while our target recovery period for net land investment is 3 to 4 years. Our track record of value creation is clear. ROE has increased from 5.7% in FY '21 to a target of 17% in FY '26, delivering returns that are roughly 3x higher than FY '21. We have a strong balance sheet that provides resilience. We intend to maintain low leverage with year-end debt to gross asset value of approximately 20%. That is consistent with the 17.8% at the end of 2025.

Lastly, we are returning surplus capital. We remain committed to progressive ordinary dividends as evidenced by our 10% growth in our interim dividend announced today, supplemented by additional returns through share buybacks after funding growth. Our priorities are clear: grow efficiently through disciplined capital allocation and operational leverage, maintain resilience with a strong balance sheet and financial flexibility and increase shareholder value through value creation and capital returns.

I will now hand you back over to Michael to bring you through our raised guidance.

Thank you, Richie. Let's finish up on Slide 20 and talk about our outlook. Demand is real and sustained. Our platform is built to deliver whilst maintaining the quality and placemaking that we've earned a reputation for. We have great visibility through our record order book into 2028. We're investing in our platform, our people, our systems, our innovation and our communities. And we want to make ourselves even more efficient and drive long-term sustainable growth. We are generating increased cash flow, as Richie talked about, to fund this growth and reward shareholders simultaneously. And we are strategically positioned in our market to service the housing needs Ireland faces. And finally, to wrap up, we are pleased today to be upgrading full year 2026 guidance on key financial metrics. Revenue to circa EUR 1.08 billion, operating profit of circa EUR 185 million and ROE from 16.5% to 17%.

Thank you for your time today. And I'm now going to hand you back to Madalina for questions from people on the call. Thank you.

[Operator Instructions] And this one comes from the line of Shane Carberry from Goodbody.

Thank you very much. And well done, guys, on what a really great set of H1 results.

Hi, Shane. How is it going?

All good. Thanks, Michael. And 2 for me.

Yes, thank you. And Shane, before we start, I just want to say we're joined here today by our new Director of Finance and Treasury, Elaine O'Brien, helping us out for the first time on our results. And the great Declan Murray, who needs no introduction, who told me yesterday, this is his 21st results with Cairn. So welcome, Elaine and Deck.

Thanks, Michael.

Go ahead, Shane.

Brilliant. Thanks all. And first question, I guess, just in terms of the capital allocation story and Slide 12 is really helpful in that facet. Just, I guess, digging a bit deeper into kind of capital allocation priorities from here. Obviously, there's this drive to reduce the capital intensity. How should we think about priorities in '27 when I think about excess capital returns versus investment in the land bank? Is it more land bank investment being through these kind of capital-light strategic land bank sort of models, is how I should be thinking about and that will help us frame the kind of capital allocation story for the business through the next 18 months or so?

And then the second one, I guess, look, there's going to be a lot of policy discussion in the lead up to the budget. In particular, I wanted to dig a little bit deeper on Croi Conaithe. It seems to be working pretty well. Is it genuinely unlocking kind of new apartment schemes that might not have otherwise been viable? And do you think it becomes a bigger function of the market going forward?

Yes. I suppose starting there, it has to be. If you look at the government's target in the sort of 50,000 units a year to achieve that, we have to be delivering about 25,000 apartments a year. We're kind of hovering around a run rate of between 9 and 12. So the number of apartments has to more than double over the next number of years, Shane. A lot of those apartments are for affordable rental supported by increased delivery through the affordable housing associations, the Land Development Agency. And they have a very important role.

But I think this government is really intent on increasing homeownership across the full spectrum of housing typologies and particularly apartments. So Croi Conaithe is unique to Ireland. It's an incredibly impactful initiative, we believe, and it is working because it moves people from homes that they rent, apartments that they rent, often costing EUR 2,000 to EUR 2,500 per month, and you'll see some information in the appendix of our presentation today, which show that with support and at the price points we're delivering these apartments at, Shane, people can own apartments for as little as EUR 800, EUR 900 a month mortgage. So incredibly impactful. We're massively supportive of it. The scheme that we talked about and the customer feedback is the largest so far delivered under Croi Conaithe.

We're delivering well in excess of 200 units, actually in Seven Mills. And our first launch of plan of those apartments we had inquiries from over 4,000 people. So young people in Ireland are really keen on this initiative and they're really keen to live close to where they work and close to city center. Richie, anything to add on the capital allocation piece around that sort of growth of our capital-light strategy? It's just really, for us, a sensible way for us to think about increasing our capacity in land bank.

Yes. I think -- and obviously, look, Shane, you would have known our last net sort of share buyback was actually back in 2024, and then we made a material net investment into our WIP in '25, about EUR 167 million, which is obviously translating into a very strong cash generation profile for the business. Combined with that, and obviously, our reduced capital intensity, which has been driven by our land strategy, which we continue to focus on and which we have communicated consistently over the last 12 months. And also just that more efficient WIP turn. But the big focus for us is our ROE returns and making sure that our capital investment decisions are accretive to returns to shareholders.

Yes. The only thing I would add is, look, it's -- the land market is probably more active in the last 6 to 12 months than it's been for a number of years. That's really positive. That's reflecting on the level of demand that's out there and how smaller to midsized builders are starting to expand and scale. That's really, really positive. All of our land is bought off market. And our ability to pivot to strategic land buying is because we're recognized as a very credible partner.

And we're probably one of the few people that can go after those really larger sites in urban areas and on those multimodal transport things. and continue to drive value. But we're really happy with our position. Today is the time to have a large land bank, particularly at an average cost of EUR 37,000 per unit, Shane.

We are now going to take our next question. And this one comes from Jonathan Coubrough from Deutsche Numis.

I want to say welcome, Elaine, and it's great to have Declan on. Hope you are doing well.

First question for me would be on the -- a follow-up question on the land buying. And you've told us today how your land sourcing is becoming much more capital efficient. How will working capital evolve as the land under option increases? And when you think about your net debt target at 20% of GAV, would that change much if payables increased with your land options? And then the second question would be on the order book of over 5,000 units. Are there any large schemes within that to call out? And does that include units for delivery beyond 2027 at this stage?

On the order book, yes, it certainly does into 2028. Obviously, a smaller portion, Johnny. Richie, I'll pass over to you in a second. I suppose how do we think about land and its relationship to our improving WIP turn, Johnny? I suppose put simply, obviously, if you look at Cairn historically, we've had a large wholly owned land bank. It's appropriate as we grow and scale and we become a bigger business that we evolve that strategy. And we find lower cost options and a lower cost to land. It doesn't mean that we won't acquire sites directly, but more and more of the land will be bought using these mechanisms.

And really what that means is, and I referred to land often that might be bought subject to zoning or planning. The length of time the land spends in our balance sheet to the point at which we can monetize that land and deliver homes has significantly reduced. So it's a higher WIP speed. It's a better WIP turn for most of our developments because we can derisk them before we go on site. And also, we can enter into joint venture opportunities with existing large landowners that might not want to sell their land, but might want to partner with a company that they trust to deliver that project over multiple years, particularly if they know that, that land needs to be unlocked through the system.

Cairn are probably recognized as a business that over 11 years now have built up the credibility and the relationships to help unlock land. Ireland is a complex market. We have 31 local authorities. We have a lot of different state entities. And our ability to be able to navigate those, Johnny, I suppose, is important and I suppose aids that land strategy. On the WIP side also, we talked a little bit about forward funding.

So this is a massive benefit to our balance sheet because what it means on a go-forward basis is a significant portion of our WIP is actually paid for on a monthly basis as we build out larger schemes. We will self-fund our own private sales for both houses and apartments, Johnny. But a lot of the schemes that we are on for estate partners, for AHBs and the Land Development Agencies and we're on numerous schemes, large apartment schemes.

Today, I think we're building on about 13 or 14 very large apartment developments. And a significant portion of them are funded monthly through a forward funding mechanism. And in a lot of cases, through that structure, Richie, we also sell down the site to the customer as well. So we're monetizing the land before we even commence construction on the site and then our WIP is being paid on a monthly basis.

Anything to add there, Richie?

Yes, just on your land creditors point, Johnny, obviously, look, as we outlined today, our debt to gross asset value of circa 20% for the year-end. A lot of those land transactions and those options arrangements that we have, there's obviously certain conditions in there, which obviously can be triggered at different points of time with regard to zoning or planning. So yes, so within a period, there may be some additional land acquisitions. But we're really thinking about as we go forward in the next couple of years, we don't see the material net investment back into land that we would have seen over the last 24 months. And I suppose that's the really important point.

Yes. And I suppose important to say in a forward order book, we're not changing our approach to our private market. We only sell private homes that will be ready to occupy within the following 3, up to maybe a maximum of 6 months, but very rarely. So we are pleased to say, Johnny, that, that forward order book will continue to grow as we work through the autumn selling season. We had a very successful weekend last weekend on a number of launches. It's great to see demand so strong, returning after a great summer. So our order book will continue to grow, and we'll grow with more of our kind of short-term or should I say, near-term private sales between here and probably the end of October and into November.

We are now going to take our next question and this one comes from Colin Sheridan from Davy.

Congrats on the results. I have a couple left, if that's all right. The first one, just on build costs, if that's all right. I mean something that's been pretty benign, given what's going on in energy markets certainly in the year-to-date. And again, you reiterated what you said back in July. Maybe talk a little bit about whether there's any pressures out there, anything in particular, anything that might be worrying you at this point in time.

The second one, just following up on your comments on the land market, Michael. I mean, clearly, you're not playing as much in there, quite as much as you were maybe in the last couple of years. But given your comments on how active the market is itself, pricing-wise, are you seeing anything that looks really attractive? Or is there any kind of areas of concern there in terms of viability with the activity that's going on?

Colin, yes, look, the land market is more buoyant. Land that is -- a very large portion of it is on market, Colin, because I suppose landowners know that there is more buoyancy and there is more demand and plot costs on average are probably certainly close to double what our existing land bank cost is. There is a lot of activity in land, but we buy off market. And we don't need to replace at such a heavy rate because we've been working for a number of years now and talking about those kind of option deals and different ways to replace land more strategically, I suppose, Colin.

What's our worry on build cost inflation? I suppose the longer it lasts, Colin, you probably worry a little bit that what are currently kind of more surcharges in the market, more temporary kind of relief and support for our supply chain turn into kind of more permanent increases. That's certainly a watch out. So the longer this lasts, Colin, the more uncomfortable, I get. I suppose that some of those costs we're seeing become a little bit more sticky. We're not an economy. So transport costs hit us, and this is mainly a transport type crisis more so than, let's say, raw material problem. You might remember, natural gas really drove up energy costs and particularly manufacturing energy costs.

It hit a lot of our materials much harder than this time around, and this is more of a transport cost challenge for us today. So look, we'll keep an eye on that, Colin. I mean, how is Cairn better protected today? We've probably doubled the amount of materials that we purchase in the last couple of years, Colin. We're sourcing an awful lot more from Mainland Europe. That might be higher transport costs, but we can source much better, lower cost materials from Eastern Europe, for example. And that's certainly supporting some of the numbers we've been able to come out with today. And yes, I suppose the growth and the scale of our business is just helping to mitigate some of that increase of 2.5% we're seeing in the build costs. Richie?

Yes. Look, as you mentioned, Colin, look, we've been very consistent throughout the year with regards to build cost inflation. Obviously, last trading update, obviously, we're calling at 2.5% up to July, but as we look forward, we're happy with that 2.5% for '26. But obviously, as we go forward into 2027, we're not as highly procured as we are for this year where we're procured maybe 95% for '26.

But 50% procured, isn't it?

Yes.

We are now going to take our next question. This one comes from Harry Goad from Berenberg.

I've got a question, please, on the return on equity. And obviously, you talked about a new target of 17% today. And then I think just some of the comments you made, you talked more around issues around capital efficiency and volume growth and some of the things you're doing in terms of land investments. Is it sort of fair to assume that if you look out over the medium term, that, that number can move higher? Or do you feel sort of 17%, 17.5% is the sort of steady state ROE for the business?

Look, we are really comfortable that our ROE rate is going to be stable. And that 17% to 17.5% rate is a good reflection of how efficient we are. And at this point in time, Richie, we're comfortable with that guidance.

Yes. Obviously, look, as you would have seen on the slide, Harry, about our track record and the growth in our ROE over the last number of years. And we've obviously clearly called out that's a very key performance measure for us. I probably back into what we're seeing even on any new transactions on the land side that we're doing them on the terms that they're accretive to those returns. But I think the point is that upgrade today from that 16.5% to 17% for FY '26.

There are no further questions for today. I will now hand the call back to Michael Stanley for closing remarks.

Thank you. Thank you all for joining us. We look forward to seeing many of you in person over the next week or so. And most importantly, thank you all for your continued support. Chat soon.

Thank you. Bye-bye.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Welcome to the Cairn Homes 2025 Preliminary Results Analyst and Investor Call, which will be hosted by Michael Stanley, Chief Executive Officer; and Richard Ball, Chief Financial Officer. [Operator Instructions] Please note that today's call is being recorded.

I would now like to hand the call over to your first speaker today, Michael Stanley, Chief Executive Officer. Please go ahead.

Thank you, Sandra. Good morning, everybody, and thank you for joining us for our 2025 results and outlook. I'm joined here in Cairn today by Richard Ball, our CFO, and Ailbhe Molloy, our Head of Investor Relations for this morning's presentation.

We're very pleased to be reporting on a strong set of results for '25. The business is now in its second decade, and I believe we've established ourselves not only as a leading Irish homebuilder, but a leading Irish company.

As we enter our second decade, we will retain our ambitious approach. And you will see from today's presentation that we intend to increase our annual unit output by 35% over the next 2 years without making any compromise to the quality of the homes we build and the reputation we have earned.

I'll start with our 2025 highlights on Slide 4. We've had a strong year and delivered revenue of just shy of EUR 945 million from 2,365 new homes sold in that period. We witnessed exceptional demand for the homes we are building in great locations, and our multiyear order book has grown to EUR 1.32 billion, with a significant portion of that growth coming from first-time buyer sales.

We launched 11 new private schemes in 2025 and achieved a very strong average weekly sales rate of 4.2 new homes. We've increased our gross margin slightly to 22.1%. And more importantly, our efficient operating model is delivering an improved operating margin of 17.8%.

Moving now to Slide 5. Our scaled operating platform is now active across 25 developments in Dublin, in the surrounding counties around Dublin, in Cork and in Galway. We've grown our headcount by 30% to 600 people working in the company today. And we've had a successful year in planning with over 3,650 new homes granted full planning permission. Our WIP investment in the period has also increased to over EUR 800 million, and we've managed our build cost to circa 1% for the full year.

Our performance in recent years has significantly bolstered the strength and size of our balance sheet. With total assets of EUR 1.3 billion, including land and WIP investment of over EUR 1.1 billion, the financial strength that we now have gives us a solid foundation and will support the sizable increase in our housing output that we are outlining to you all today.

We are delivering for our shareholders with ROE again increasing in 2025 to 16.6%, and we'll be returning EUR 0.10 per share in dividends, including our proposed final dividend of 5.9% (sic) [ EUR 0.059 ], which we will pay in May. This represents a year-on-year dividend growth of 22%.

Slide 6. We are also pleased to be upgrading our full 2026 guidance on revenue, which is now expected to be between EUR 1.05 billion and EUR 1.08 billion, and operating profit increasing to between EUR 180 million and EUR 185 million.

Looking beyond 2026, we are firmly positioned to achieve output of circa 6,000 new homes in the next 2 years, including 3,200 new homes in 2027. This is clear evidence that our strategy of delivering large mixed tenure schemes in areas of high demand, strong employment and multimodal transport links is certainly bearing fruit.

And I might bring you now to Slide 7 and more detail on our growing order book. We already have just over 2,000 new homes closed and forward sold for 2026. Weather conditions have brought a somewhat challenging start to the year for us, but we're an agile business and remain confident that we can recover lost time to meet our upgraded guidance for this year. Our order book also includes forward sales of 1,374 new homes and over EUR 500 million of revenue for '27 and '28.

Might spend a little bit of time on Slide 8. Cairn recognizes that affordability is a very significant challenge for many of our customers. We are continually challenging ourselves to manage cost inflation, and we constantly seek ways to make our homes available to as wide a market as possible.

If you look at the slide, in the last 5 years, we have delivered very close to 9,000 new homes. Cairn's average selling price has increased by 4.9% during that period. This is a considerable achievement when one compares this to the broader market for new homes in Ireland with sales increasing -- sales prices increasing by nearly 30% in that same period.

Internationally, on the right-hand side, you'll see that European house price growth is 25% in the 5 years to 2024, slightly lower than Ireland, but certainly illustrating that they clearly face similar challenges.

You'll also see in the right-hand side of the slide, there are other benchmarks we test ourselves against, including industry indicators that are used to track construction costs. The Tender Price Index has increased by close to 39% in the 5 years to '25 and the Capital Goods Price Index has also increased by 28%.

By any of these comparisons, Cairn's scale, our efficient operating platform and our constant drive to prioritize affordability is paying dividends. And now before I hand you over to Richie, I wanted to bring you through -- to Richie to bring you to our financial performance, I wanted to update you on some of the recent evolving trends in housing policy and in particular, how some of these positive policy changes are particularly relevant to Cairn.

On Slide 9, I was going to talk about the government's policy on higher densities and better land use. Their Delivering Homes, Building Communities housing plan provides a full suite of measures to encourage more sustainable land use and in support of the significant infrastructure investment plan for Ireland in the near term.

This is a necessary departure from the past decades, which had a low-density bias, and the majority of homes in that period being delivered were own-door houses. Many factors have played into this bias, including the higher cost of apartment delivery, lack of realizable demand for apartments, capital constraints affecting homebuilders and difficulties getting higher density schemes through our planning system.

New government policies are now designed to address many of these challenges. And thankfully, it is now accepted that own-door housing output is unlikely to breach current levels in the years ahead and increasing apartment output is the only credible way for the government to achieve housing targets.

This certainly aligns with Cairn's strength. Approximately 90%, about 88% of currently available residentially zoned land in Ireland is now strictly mandated for medium and high-density delivery, meaning the vast majority of development sites in the coming years will have to include a high proportion of apartments.

You'll see from the slide some examples and the density that we are achieving in our projects. These new, more sustainable developments that we are building today include energy-efficient apartments we are delivering on behalf of state-funded partners, also apartments that we're now delivering for private buyers through the new impactful Croi Conaithe scheme and duplex and houses that we sell to private buyers. This approach allows us to create thriving mixed tenure communities that meet density guidelines and results in more sustainable land use.

And finally, for the moment on to Slide 10, where we consider the government's current stake in housing in Ireland. Today, the Irish government only owns 10.4% of our total dwelling stock, which, as you can see from the graph, is considerably lower than similarly sized, comparable European countries such as Denmark, Austria and the Netherlands.

The tenure we feel that is impacted most by this deficit is affordable combination, which must be boosted to meet the housing needs of our growing working population. Again, Delivering Homes, Building Communities states that the social and affordable pipelines of the affordable housing associations and the land development agency will be primarily for apartments.

Based on this clear policy direction, we expect that up to 75% of new dwelling added to the state's ownership by 2030 will in fact be apartments. It is important to emphasize that while the government is playing a larger role, you will see on the right-hand side, they were responsible for only 13.1% of all residential transactions in Ireland in the 5 years to 2024, which includes both new and secondhand homes.

Over 65% of all homes are still being delivered for the private market. And the data table shows the output of new home completions from 2020 to 2024. You may be aware that in 2025, the output had increased to 36,000 units. But it shows how much the state is acquiring or building from the overall market completions and transactions.

I'm going to now hand you over to Richie, who will bring you through our financial highlights.

Thank you, Michael, and good morning, everyone. I'm delighted to be presenting a strong set of results for full year 2025 to you this morning. As Michael mentioned earlier, the management team has great confidence and ambitions for the outlook of the business. This confidence is reflected in the upgraded market guidance for 2026 and the introduction of unit guidance for 2027.

Moving to Slide 12. You'll see strong growth in our revenue up 10% for the year, delivering a total revenue figure of EUR 944.6 million, a gross profit figure of EUR 208.8 million with a gross margin of 22.1%, up 40 basis points from the prior year. That delivered an operating profit of EUR 168.6 million, which is a 12% increase in the period.

And our profit after tax grew 16% to EUR 132.7 million, giving an impressive earnings per share growth of 19%. We've today proposed a final dividend of EUR 0.059 per ordinary share, which is an increase of 22% from last year and represents a payout ratio of 47%.

Moving to the next slide, cash flow highlights. When we last spoke to you in September, we called out the significant investment that we made in H1. That has then translated into a cash generation into H2, where we delivered EUR 189.3 million of net cash from operating activities, which has given us a full year net cash from operating activities of EUR 70.6 million after we made a net investment in work in progress for the year of EUR 167.4 million and made shareholder returns of EUR 54.7 million.

Following are the key highlights on Slide 14. Total investment in land and WIP stands at EUR 1.12 billion, reflecting significant scale of future delivery capacity. Net debt of EUR 171.3 million remains modest relative to the asset base with debt to GAV of 17.8%.

We have EUR 500 million of committed debt facilities with an average maturity of nearly 4 years, which provides substantial financial flexibility. We grew our balance sheet in the period as net assets increased to EUR 836.7 million, an increase of EUR 78.5 million year-on-year.

Moving to Slide 15. As you can see, our average selling price and unit mix, we are delivering homes at extremely competitive price points against the broader market. Both houses and apartments for the period sold modest pricing increase at 1% and 2%, respectively, while still generating attractive margins.

In 2025, 63% of our delivery was apartments, and we continue to grow our low-density housing to 24% of output. We expect our mix to transition to 50% apartments and 50% duplexes and houses in the medium term, as previously highlighted.

Cairn significantly increased investment in the business last year. And as detailed on Slide 16, work in progress investments amounted to EUR 801 million, a 65% increase year-on-year, underpinning a EUR 1.32 billion closed and forward order book, which is up 33% from 2024. This demonstrates strong momentum, confidence in demand and clear visibility on near-term revenues.

Moving to Slide 17. Cairn controls a land bank of 18,400 units across 39 sites. The land bank is split between 13 high-density sites with an average plot cost of EUR 43,000 and 26 low-density sites with a lower average plot cost of EUR 33,000. This mix allows Cairn to optimize returns across different market segments and respond to demand and policy trends.

The overall average plot cost of EUR 37,000 reflects a disciplined approach to land acquisition and a historic low cost land bank. We also have circa 2,000 unit strategic land bank, which reduces upfront capital requirements and are accretive to returns.

In addition, Cairn has a land pipeline of circa 6,000 units across 12 sites, which are a combination of options, partnerships and JVs in exclusive negotiations. These sites provide long-term growth without near-term balance sheet strain. The strategy positions Cairn as a counterparty of choice for off-market and structured land deals, allows us to leverage our platform capability by influencing the design and planning results while enhancing our returns.

Moving to Slide 18. We are a long-term, ambitious and sustainable business, which has consistently delivered multiyear growth in volumes, revenue and profit. Our approach to capital allocation supports and underpins this growth strategy. We prioritize a strong and resilient balance sheet as demonstrated by our 16.5% return on equity.

We invest significantly in our 2 main raw materials, WIP and land, focus on investments to support and drive our long-term sustainable growth. We are actually implementing our land acquisition strategy, as you've seen on the previous slide, which is underpinned by our disciplined capital deployment approach.

We deliver shareholder returns. We make progressive ordinary dividend payments underpinned by a policy, and we distribute surplus capital to shareholders after investing in our business and paying dividends. In total, we've returned over EUR 490 million to shareholders since the start of 2019, including a final proposed dividend of EUR 0.059 announced today.

As you've heard from both Michael and myself, we remain very confident about our future outlook as evidenced by the issuing of our upgraded guidance for FY '26 as follows: revenue of circa EUR 1.05 billion to EUR 1.08 billion, and operating profit of circa EUR 180 million to EUR 185 million, a return on equity of circa 16.5%. And the introduction of unit guidance of circa 3,200 for 2027, resulting in a 35% increase over a 2-year period.

I will now hand you back over to Michael.

Thank you, Richard. Just a few slides to cover and wrap up our presentation this morning.

On Slide 20, very pleased to announce that our sustainability strategy and execution going forward will now be led by the newest member of Cairn's leadership team, Madeleina Loughrey-Grant, who joined as our new CSSO in recent months after a long and very successful career in our industry in the U.K. And no doubt, Madeleina will ensure that sustainability remains a part of our DNA, and I know she has plans to further increase our influence in this really important area.

Some highlights and recent highlights are included in the slide, including our A CDP score, the reduction in our gender pay gap. We're proud that over 270 apprentices are now registered on the Cairn Apprenticeship Academy program. We've been recognized as a leader in European homebuilding in promoting and building to Passive House standard. We are also recognized recently as one of Ireland's Top 5 Best Large Workplaces.

On Slide 21, I want to look back on the decade of growth in Cairn. As you can see from the graphs, Cairn has experienced phenomenal annual compound growth across numerous KPIs since our first full trading year in 2016, including our revenue, which grew by a compound rate close to 42%, and our housing output by a similar level. We've also grown our earnings per share at an annual growth rate of 56% and our ROE at a rate of 48%, having breached our 15% target in 2024.

I want to acknowledge and thank the entire Cairn team, both past and present, for this success. And to conclude now on Slide 22, we are very confident about the outlook for our business, notwithstanding current geopolitical uncertainty. This confidence is based on a number of factors. Fundamental to this is a decade that I've just illustrated and the industry-leading platform that we have today as a result.

There is significant momentum in our business. Our reinvestment policy is delivering at pace. We have good visibility through our growing order book. There is a strong and sustained policy backdrop to housing delivery in Ireland, and there is exceptional demand for our new homes.

That concludes myself and Ritchie's presentation today. And I'll hand you back to Sandra now to start the Q&A. Thank you.

[Operator Instructions] We will now take the first question from the line of Shane Carberry from Goodbody.

Well done on a fantastic FY '25 set of results. If I can go with 3, please. The first one, maybe just a bit of an update, Michael, in terms of where we stand from a land market perspective, what you're seeing currently? And how we should think about kind of the land purchasing strategy through 2026, given how you've kind of bolstered the land bank over the last couple of years?

The second then, I just want to expand on Slide 8 a little bit more. I think it's really interesting to see kind of the level of pricing from Cairn versus the rest of the industry. How should I think about that? Is it really just a scale point? Or is there a little bit more kind of going on there in terms of where you've been able to keep prices at a more affordable level versus the rest of the industry?

And then the third point is really just, I guess, around Slide 9 and you kind of go through the government policies regarding kind of high-density. Does that make you think any differently about the kind of mix going forward? I know you've kind of reiterated that the medium-term mix guidance. Will that be a little bit more gradual now towards the kind of 50-50 split given the initiatives and policy in place from a high-density perspective? Or just does it make you think any differently about the mix going forward would be helpful.

Yes. I suppose let's start on the high density one, if that's okay, Shane.

I mean, I suppose what we're trying to put across today is we have been, I suppose, speaking to government for many, many years now about what we saw as a kind of almost a natural cap on the number of homes that could be built at lower densities, particularly in locations closer to employment, urban areas, close in -- in and around our cities.

And there was very obvious reasons why and probably nobody's fault necessarily that apartments weren't being built. What we've seen over the last couple of years is a real recognition of that. You'd be aware, for example, that the government have tweaked guidelines for apartments to try and make them more viable in terms of how they are designed. They still -- they are still at an incredibly high standard by any international comparison.

Streamlining the planning system is a massive help also. But what's particularly helpful is the fact that now we're seeing more realizable demand. We've had a lot more incoming, Ritchie, in the last 12 months from PRS capital looking at Ireland again, we've seen some transactions in the multifamily area.

And we believe Croi Conaithe is very impactful because I think Croi Conaithe recognized that not all homebuyers, many of them do want houses, and we have to recognize that the average home first-time buyer of a Cairn home has probably grown from about 31, 32 years of age up to 38, 39 years of age in the last number of years. So people are older, unfortunately, buying their first home, but many people are now choosing to purchase an apartment.

And what we saw in our first couple of Croi Conaithe launches, which is very encouraging, was younger working people buying apartments. So that's how we think about mix, I suppose, Shane. We will continue to absolutely prioritize homebuyers and private homebuyers. But thankfully now, we're able to offer them apartments as well as houses and duplexes. So that's the point we're trying to put across today.

I think, thankfully, if I think about the land market in 2 ways. Firstly, our land market, we can afford now to be very strategic. We have a large land bank. We're still building a land in Seven Mills that we bought, for example, in 2016. And that certainly helps us with our margins. And we've managed to replace a lot of great land, but now we can think about replacing our land with more strategic opportunities and Richie talked a little bit about that in our presentation. Almost all of those transactions are off market.

I think Cairn has built a reputation over the last 10 or 11 years as a trusted acquirer of land. Many private landowners who are seeing some of the land rezoned want to get Cairn involved in that journey, and we can step in and do option deals, which is where most of the growth will probably come in our land bank.

So you now see a land bank that's wholly owned, a land bank that is more strategic and a pipeline that's mainly strategic and also will include some new joint ventures.

So as we go through this year, I think our shareholders can expect to see more information filtering through on the pipeline of particularly partnerships and new joint ventures, Richard, that we're working on. And more broadly in the land market, I'm encouraged that it's much more active in the last 6 to 12 months.

It probably, again, maybe is a reflection of positive government policy that there is more realizable demand. But we're seeing more activity in the land market. We're seeing other homebuilders acquiring land. And I think that's very positive. We've certainly seen a tick up in transactions in the land area.

In terms of how we control our cost, look, this has to be how a homebuilder must think today. What we've tried to put across in this slide is that all developed economies face the same challenge. And unfortunately, throughout Europe and indeed Ireland, the average cost of a home has now moved up to, in most cases, between 7 and 10x average salary in those countries across the board.

So it's not a unique challenge in Ireland. And when homes -- and when some of the costs that we're facing and that we project are going to continue to challenge us and our industry more broadly, we have to work exceptionally hard to try and control those costs. We do that in multiple ways.

I mean we design and deliver our homes based on the knowledge that we've built up over a decade. We understand we were probably first to market on standardizing our unit types, streamlining our supply chain, partnering with our subcontractors. We've had a very active innovation strategy for a number of years, looking at product replacement, off-site manufacturing techniques that are all now embedded in our operation platform.

And on a daily basis, we have 5,000 or 6,000 people working on our sites. So we have an incredible advantage in Ireland when it comes to our procurement, our scale, our partnerships. So it's a long answer, Shane, but all of that plays into the results you see or saw today on Slide 8, which is about 4.9%.

We will now take the next question from the line of Jonathan Coubrough from Deutsche Bank.

Can you hear me okay?

Indeed, Jonny.

Great. Yes. Firstly, in terms of the WIP investment, it would be helpful to hear how much of that has gone into houses versus apartments and how much into your first-time buyer products that perhaps it's hard to disaggregate it on your mixed-tenure sites, but any detail you can provide on where that WIP is being invested would be very helpful.

And also going back to the land bank in the results statement, you provide detail on your wholly owned land bank in terms of average plot cost. I'd just be interested to hear how you think margins would compare in your strategic land bank and the strategic pipeline as well.

And then just to round that off, you mentioned there, Mike, you've got a very long land bank and so you're able to be strategic. Do you have a target for how many units you'd like to have under option? Or is it just going to be opportunity led?

Yes, it's a good question. On the last one, I might hand over to Richie just on WIP and chat a little bit about the profile of our work in progress and indeed, some of the projects that are probably fair to say are supported with forward-funding as well, which helped that.

But I suppose in terms of the go forward, we're not going to set a target, and the strategic land options that we'll take on have to be for us in the right locations. They have to be accretive. The good news is that most landowners see Cairn adding significant value and want to get us on board early days.

In some cases, for example, some of the land we're auctioning isn't even zoned yet for residential housing, but that's part of our expertise is being able to identify those opportunities and help journey land through zoning and then on to full planning and construction.

So I would say more of our -- if we look forward, I think it's fair to say, Richie, we don't see a massive capital investment in new land in terms of the type of land acquisition we saw in '25.

But we'd like to see, with our unit output now going over 3,000 units from next year, you'd certainly like to see the entire land bank, including strategic land sitting at about 20,000 unit level, but 30% or 40% of that could be strategic or joint ventures where in some cases, on those JVs, we're not building on Cairn land.

Do you want to talk about WIP and maybe the land bank, any of your thoughts, Richie, on the land bank?

Yes, to start with, so the WIP investment, obviously, look, you saw numbers that obviously increased our WIP investments quite significantly and obviously up to EUR 801 million. The big growth probably from FY 2024 on a relative basis was increasing into housing demand. So we would have seen a big uptick in WIP investment into our housing from '24 into '25.

But obviously, we continue obviously to do and execute a number of other forward fund contracts with state-funded partners as well. So that also fed into some of the growth in FY '25. And I suppose, look, the big call out then on that is just obviously what our closed and forward order book looks like and that growth of about 33% that we've seen from '24 as well, which has been very positive.

I think one point to just add to what Michael's comment just on the land acquisition and probably the replacement cost of our land bank and can we still generate accretive returns? And the answer is yes, we can because if when we're structuring these land acquisitions now, we have better optionality with regard to initial capital outlay upfront.

And we're also obviously able to execute and look to execute some forward fund contracts as well, which obviously drive -- which drive a return on equity profile. You may obviously give us some size on the gross margin side, so that's fine if you're getting your WIP paid for.

We will now take the next question from the line of Colin Sheridan from Davy.

Thanks for the presentation. A few from me, if that's all right. First, just on build costs. Clearly, a great result in 2025. I guess, given the environment that we're in at the moment and maybe looking down higher energy costs, maybe give us a feel for how well contracted and hedged you are for going forward '26 and maybe into '27 at this point in time?

The Second one then, just on the '27 guidance. I mean, clearly, it's a measure of how confident you are yourselves that you're talking about those volumes already. And maybe just give us a little bit of color in terms of those targeted 3,200, how many are fully planned? How many are already on site? How many are maybe in the order book? That kind of color would be really good.

And then maybe just a quick one on the order book. I mean, clearly, huge growth into the end of the year on that front. I wonder on the private side, are you kind of reaching the limits in terms of how far forward you can sell those units with kind of mortgage approvals. And given how really large the order book is relative to, say, the revenue for this year? Some color on that would be great.

Yes. I might come back to Richie just on the outlook and on the build cost, the environment externally and how we think about that. Look, I think what you're going to see, actually, Colin, is you're going to see that order book continue to grow for us. And the majority of that growth as we go out throughout the year is going to be in private sales.

What we're seeing is customers with more realizable demand now, Colin, that includes Croi Conaithe, which I mentioned earlier, where buyers of apartments are able to, in some cases, purchase a 2-bed apartment for a mortgage that's averaging just sub EUR 1,000 a month for 2-bed apartments in locations that might rent for EUR 2,000 to EUR 2,500 a month.

It's an incredibly compelling proposition for new homebuyers. And thankfully, we've seen significant take-up on our first home -- the government's First Home Schemes and Help to Buy. So what we're seeing is buyers well positioned to forward purchase and know that they've got a home acquired that might be ready in 3 to 6 months. So you're going to see that order book growing.

Our 3,200 projection for 2027 is all on active sites, Colin, not on sites we haven't yet commenced. So we're very comfortable. We wouldn't go out with that guidance if we weren't absolutely comfortable with that number. It is a significant step up, but we invested and prepared ourselves for that.

We were very clear with our shareholders that we were prepared to forego buybacks in a period when we really liked our opportunity. We liked our investment into our business at the type of ROEs and the growing ROEs we were seeing as a business, that was very compelling for us. And we're really pleased that's paying off for our shareholders.

Yes. I'll just probably cover the build cost inflation point. Obviously, we called out this morning, obviously, what we realized on inflation. Last year, we're, obviously, circa kind of 1% compared to kind of broader industry was at 2%. And when we move forward into '26, we're 75% procured on our active sites and probably about 50% procured on 2027.

The only thing I'd add, Colin, which I suppose, just in terms of that growing order book, it's also fair to say that we have focused a significant amount of our land acquisition towards low density, and we're growing our first-time buyer market share quite aggressively. But that's not at the expense of the compelling products and apartments we offer for the state.

The Land Development Agency and ASPs are not going to address the affordability challenge buying houses and small apartment schemes. They need scale and they're bigger now and professionally run operating platforms, and they need large apartment schemes in urban areas to address the challenge. You all know the type of level of applications they get for new crowd projects and the level of demand for affordable rental.

So that's still a very strong growth area for us. Ritchie mentioned the number of projects we now have on the forward fund. That's really supportive of the growth as well. I'm not sure we could grow as aggressively if it was all being funded from our balance sheet, Richie, and it just supports that higher growth rate.

We will now take the next question from the line of Edward Prest from Berenberg.

I've got a couple, please. Firstly, with a sales rate of 4.2%, it looks to me as though you are selling at the -- very much at the rate you can build. Are there anything -- any limiting factors that are sort of -- any potential road bumps that you think could hold up your build rate? I'm thinking kind of infrastructure and labor availability down the line.

And then secondly, as you approach 3,000 homes in the -- 3,000 and 3,200 homes in the coming years, do you think of a limit in terms of the number of homes that you could -- sort of you could look to before you might start to cannibalize existing sites kind of with your current footprint?

I suppose on the build cost one, I'm not sure we fully understood, the last question either, Ritchie, on the kind of geopolitical. Look, it's obviously a big watch out for us when we think of about our go forward. We'll have to see how the situation evolves.

We are about 75% procured for this year and 50% into next year. But as that situation evolves, it could have a significant impact on our supply chain. So it's something that just we have to be aware of, and we'll monitor it closely.

Beyond that, in terms of -- on that watch out for us, we don't see a limit to what we build, but we do think about relative market share. And I suppose one of the ways we can answer that question is Cairn today is a 3,000 unit business in a market that's likely to be growing to 40,000 units a year. That's still a relatively small market share for the business.

And if housing output grows to 50,000 units or beyond, we certainly don't see limits to our growth. But I think as I said in the intro, we have to -- we've worked hard to build a brand reputation. We've got to protect our quality.

And I think some of the CAGR rates we showed and those graphs of the 10 years just shows how considered we were in how we grew our output. We didn't necessarily grow our output in big chunks because we want to retain that quality and we care a lot about health and safety, obviously, as well, which is critically important. So that's a couple of the points that you asked.

Yes. I think there -- you just obviously referenced the sales rate. And yes, obviously, you would have seen and heard this morning going through the presentation, look, demand is exceptionally strong in the market. So hence why the sales rate is so strong. And are there any headwinds in -- that could impact that?

Look, obviously, what we spend a lot of time in the business is planning to try and get ahead of some of those roadblocks. Some of those roadblocks could be outside of our control from a connections point of view. But barring that part, what we're seeing right now, I suppose we're reasonably comfortable with our launches coming up in the next number of months that we would hope to see similar sales rates.

Yes. And you're referring there to energy connections, like we've seen an improving landscape very much with energy providers in Ireland. Water infrastructure is improving. The government set up an infrastructure task force to address many of the challenges around infrastructure, which I think was a massively positive move.

And that committee are staying on to help support the implementation of significant infrastructure spend in Ireland over the next 2, 3, 4 years. So -- and thankfully, the Irish government have the capital available to invest in the infrastructure. So we'd also say that's really supportive of us and our growth opportunity.

Thank you. There are no further questions at this time. I would now like to turn the conference back to Michael Stanley for closing remarks.

Thank you, Sandra. Thank you all for joining. Look forward to seeing you in person, many of you over the next couple of days or catching up with you over Teams. Thank you for your continued support for Cairn and for our business and wishing you a good day. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Welcome to Cairn Homes 2025 Interim Results Analyst and Investor Call, which will be hosted by Michael Stanley, Chief Executive Officer; and Richard Ball, Chief Financial Officer. [Operator Instructions] Please note that today's call is being recorded. I would now like to hand the call over to your first speaker today, Michael Stanley, Chief Executive Officer. Please go ahead, sir.

Thanks, Nadia. Good morning, everybody. Joined this morning by Richard Ball, our CFO; Ailbhe Molloy, our Senior Investor Relations Manager; and Deca Murray, our Head of Finance, who will no doubt chip in later on Q&A and help us out. Thanks, everyone, for joining.

Since we last presented to you, Cairn has celebrated 10 years in business. I'd just like to start by saying my colleagues and I are proud of what we have built, built the business to a market leadership position, where today, over 30,000 people live in a Cairn home. That's only half the story. As you'll see from today's presentation, hopefully, the momentum of the business has increased. Our strategy is working well. We have doubled down on work in progress investment, which, as it unwinds, will lead to a strong second half for this year and certainly bodes very well for 2026. Most importantly, I suppose, Cairn continues to play an influential role in addressing the acute housing shortage in Ireland.

So we go straight to Slide 4 in our H1 operational highlights. Today, we have recorded a closed and forward order book valued at EUR 1.54 billion, which comprises over 4,000 new homes. This has grown by, as you can see, EUR 625 million and about 1,700 new homes in the year-to-date. Our private weekly sales rate of 4.1 new homes sold per active site is just one strong indicator of the consistent and realizable demand for the homes that we are building, particularly from our first-time buyers. We delivered 708 units in the first half of this year, generating revenue of EUR 284.5 million. This is expected to grow to approximately EUR 660 million in what would be a very strong H2. This heavier weighting towards H2 is a reflection of the number of new projects we commenced in the second half of last year and in H1 of this year and that is in support of our increased output, including which I'll chat a little bit about, our regional expansion.

Our gross margin is slightly higher at 22.2% with build cost inflation of approximately 1% to 1.5% now expected for full year 2025. This is a reduction from our initial outlook earlier in the year of approximately 2%. We delivered an operating profit of EUR 42.7 million, which we now expect to grow to between EUR 160 million and EUR 165 million for the full year, following our upgraded guidance announced this morning. Today, we are also declaring an interim dividend per share of EUR 0.041, an 8% increase from our 2024 interim dividend per share. And we are pleased to say that our dividends to shareholders will continue to increase as we continue to grow our profits.

And moving on to Slide 5. I believe the strong sales performance is reflective of the quality and location of our new homes and most importantly, our competitive pricing. As you can see from the slide, our average sales price of EUR 387,000 is almost identical to our H1 2024 average. We invested EUR 381.5 million in WIP in H1, which is 2.9x covered by the value of our forward order book at EUR 1.26 billion. The combined value of our WIP and land is circa EUR 1 billion, which will continue to support our growth ambitions. On our land bank, we have a current land bank that will deliver just shy of 17,000 new homes. Our land acquisition strategy has evolved. We have chatted about that before.

However, we do see and continue to see value in direct off-market land purchases and we now have a growing strategic land bank. The more capital-light strategy has been achieved through option agreements that we have contracted and joint venture agreements we have entered into with large landowners who certainly see Cairn as a preferred partner. And as I mentioned, due to the momentum of our business, we are today upgrading our 2025 guidance and providing strong 2026 guidance for the first time.

I'll pass you over to Richard who'll bring you through our half year performance and maybe more detail on that upgraded guidance. Thanks, Richard.

Thank you, Michael and good morning, everyone. I'm delighted to be presenting a strong set of results for the first half of 2025 to you this morning. As Michael mentioned earlier, the management team has great confidence and ambitions for the outlook of the business. This confidence is reflected in the upgraded market guidance for 2025 and the new market guidance we are providing for 2026 for the first time today.

Moving now to Slide 7. Our first half trading performance was in line with expectations, reflecting our historically normalized H2 weighted trading, transaction timing and mix. EUR 285 million in revenue was delivered in the period, including 708 unit sales. We delivered a strong gross margin of 22.2%, some 20 basis points higher than the same period in 2024, highlighting our scaled platform efficiencies. Our OpEx investment was EUR 20.5 million, resulting in operating profit of EUR 42.7 million, delivering an operating margin of 15%. With our improved FY '25 operating profit guidance, we're expecting a year-end operating margin of circa 17%, which is strong relative to our peer group. Finance costs were at EUR 6.1 million and profit after tax was EUR 31.7 million. Net assets remained relatively flat with NAV growth of EUR 0.04 per ordinary share to EUR 1.22. We announced an interim dividend of EUR 0.041 per ordinary share today, which is an 8% increase on the same period last year.

On Slide 8, you will see that we have closed and forward sold 4,092 units with a net sales value of EUR 1.54 billion, of which nearly 83% relates to H2 2025, 2026, 2027 pipeline, as we continue to actively pursue other opportunities. We always seek to derisk our WIP investment through our sales strategy. And as you can see in the lower table on the slide, our half year 2025 closing WIP of EUR 435 million is 2.9x covered by forward sales in our order book, back within the normalized ratio -- cover ratio of 2 to 3x.

On Slide 9 now. We completed the refinancing of our syndicate facility in February, increasing it by EUR 75 million to EUR 402.5 million and extending duration to 2029 with an option to extend for a further year. We also refinanced our private placement in July, meaning we now have access to EUR 500 million of committed facilities to support our continued growth with an average maturity of 4.5 years. When I last spoke to you in February, I advised that we will be making a significant investment in WIP across a number of our recent new site commencements, which will increase our H1 2025 net debt. We subsequently invested a net EUR 188.6 million in WIP, growing the investment to EUR 435 million at period end, which resulted in debt to gross asset value of 27.7%. This net debt position will reduce in the second half of the year.

On to Slide 10. We used EUR 118.6 million in operational cash flow in the first half of 2025. Following shareholder returns of EUR 29.4 million in the period and our investments in WIP, our closing net debt was EUR 307.4 million, meaning we had available liquidity of over EUR 150 million as we started the second half of the year. Now I'm going to take you through our capital allocation priorities on Slide 11. We are a long-term ambitious sustainable business, which has consistently delivered multiyear growth in volumes, revenue and profits. Our approach to capital allocation supports and underpins this growth strategy. We prioritize a strong resilient balance sheet efficiency as demonstrated by our 16% return on average equity target for 2025, a new committed and flexible EUR 500 million debt facility and monetizing our land bank and quick asset turn of acquisition sites to drive significant cash generation.

We invest significantly in our 2 main raw materials, WIP and land, a focus on investment to support and drive our long-term sustainable growth. We are actively implementing our land acquisition and partnership strategy, as Michael referred to earlier, which is underpinned by our disciplined capital deployment approach at the start of any transaction, with additional consideration linked to value-enhancing milestones like [indiscernible]. This strategy allows us to leverage our platform capability by influencing the design and planning results while enhancing our returns and growing our strategic land bank. We deliver shareholder returns. We make progressive ordinary dividend payments underpinned by our policy and we distribute surplus capital to shareholders after investing in our business and paying dividends.

In total, we have returned over EUR 450 million to shareholders since the start of 2019, including the interim dividend declared today. Our share buyback program since 2019 have acquired over 23% of the issued share capital of the company at an average share price of [ EUR 1.29 ], which has been significantly accretive to earnings per share and equity enhancing when compared with the closing share price of EUR 2.16 last night, a 67% difference.

Next, on Slide 12 and our upgraded guidance for 2025 and our new guidance for 2026. 2025 will be another year of growth in volumes, revenue and profitability of our business. And we are upgrading our operating profit guidance to circa EUR 160 million to EUR 165 million, up from EUR 160 million released during the year. As you've heard from both Michael and myself, we remain very confident about the outlook for the business as evidenced by the issuing of guidance for FY '26 as follows: revenue of circa EUR 1.02 billion to EUR 1.05 billion and operating profit of circa EUR 175 million to EUR 180 million and a return on average equity of circa 16.5%. As you can see from our release, we're quoting 2 ROE numbers as we're transitioning to an average ROE calculation from FY '26 onwards, which we feel is a better measure as to how our equity return should be calculated going forward and is in line with our peer group.

Finally, I'd like you to bring through some of our sustainability progress on Slide 13. Sustainability remains a high priority for the leadership team here at Cairn and we continue to demonstrate progress within our multifaceted ESG program. There are a few key highlights on the slide but the one that jumps out at me is the 202 apprentices now registered on the Cairn Apprenticeship Programmme of Learning and Bursary Support and building and securing a pipeline of future talent into our industry. We also released our first building sustainable community paper, which documents several case studies and stories from our partners, employees and demonstrates our commitments to our customers, communities and planet.

I will now hand you back over to Michael, who will bring you through some operational highlights of the business.

Thanks, Richard. I'm going to bring you to Slide 15 on our operational highlights. As I mentioned earlier, we have seen very significant growth, as you can see from the slide in our order book year-to-date, an increase of 1,700 new homes. We've expanded our regional footprint. As you can see from the right-hand side, which shows our geographical sales analysis and we will commence new developments in Cork and Galway this year, further developments. This strategy and our very strong spring sales rates across our numerous private launches have contributed to this increase.

First-time buyers are a core market for us and we have experienced very strong absorption rates, as you can see, of between 3.1 and 4.9 sales per week per active site. The addition of first-time buyer sales of apartments through the new Croí Cónaithe city support is very welcome and certainly adds to our customers' buying options. And I'll speak a little bit more about this important government initiative later in the presentation.

I'm going to bring you to another slide, which is a photograph on the next page. This is Seven Mills, which we are very proud to say is fast becoming Ireland's largest new town. And I think the photograph here illustrates what we've achieved in just 2.5 years since we commenced that development in January 2023. The scheme has also contributed over 300 individual sales this year. And most importantly, 3,500 people will be living in homes here by the end of this year.

Moving on to Slide 17. This is really all about our ASPs and how competitive we can keep our attractive ASPs, while generating consistent margin. Certainly, our low-cost land bank, our scaled operating platform, the productivity, which we'll chat a little bit more about and our procurement efficiencies, all enable us to keep our sales pricing consistent year-on-year. Our apartments, of which a growing number are being delivered to passive house standards, are being delivered at a price point that is, we believe, significantly lower than other delivery options open to our state partners. Apartments for private ownership will also play a bigger role in our future output with construction commenced on our large site in Montrose and with our increasing focus on providing apartments for our first-time buyers, as I mentioned previously. As you can see from the pie chart, we do expect our mix to transition to approximately 50% apartments and 50% houses and duplexes in the medium term as we continue to grow our low-density housing output in Dublin and the regions that I've outlined.

Turning on to Slide 18. The challenge remains and in order to achieve the estimated annual requirement of houses in Ireland of 60,000 homes a year, apartment completions must increase. Just to talk a little bit about the impact of land and available land in Ireland to achieve this target. As you can see from the right-hand side, 88% of unbuilt residentially zoned land in Ireland today has a density target of between 35 to 100 units per hectare. This is set by local authorities. And permission -- and it's set really to encourage sustainable land use. And permission, what this means is that planning permission will not be granted unless applicants and their designs hit these targets. And that means that developments must include some or in the case of the upper end of that density range, all apartments. As a result, we believe the growth in low-density housing output could be stymied in the years ahead. And it's likely that the only viable route to achieving higher output in Ireland will be achieved by increasing apartment completions from the current rate of 8,000 per year to as much as 25,000 to 30,000 per year.

The government's Croí Cónaithe scheme, which supports private ownership of apartments will certainly help as will other government initiatives, many of which are designed to crowd in more private capital, which is definitely needed to achieve these numbers. Supported by Croí Cónaithe, we expect to deliver 860 apartments across 6 developments in the near term. In June, we launched our first development in Douglas, County Cork and sold over 70 apartments in 1 weekend. The average gross selling price of those apartments net of that Croí Cónaithe support or subvention was EUR 316,000.

Moving on to Slide 19. On the top left-hand side of the page, you can see that Ireland's -- the Irish state lags behind many of its European peers in its ownership of occupied dwellings and it only stands at 10% ownership. What does this mean? What it means really is many large economies in Europe have grown state provided affordable key worker accommodation to augment their social housing stock. Considering the strength of our economy and near full employment, it is imperative that the government increase both its ownership share and influence, particularly, we believe, in affordable rental through AHBs and the LDA. On the slide, you will see some examples of the large apartment schemes we are currently delivering for our state partners. These are being delivered at pace and at competitive pricing. The average net of price -- the average net of that price of EUR 376,000 has remained stable since 2022 and that's despite build cost inflation and our switch to passive house standards on many of these projects.

Moving on to Slide 20. Our WIP investment, as Richie talked about, this year, has grown substantially to EUR 381.5 million. The unwind of this -- much of this investment will deliver a very strong H2 performance. As I mentioned in the highlights, we reduced our BCI forecast from 2% to between 1% and 1.5%. We have fixed our cost on circa EUR 1 billion of our future procurement. And with over 95% procured across all current live sites for 2025 and 70% across all current live projects for 2026, we're in a strong position. Moving on to Slide 21. This slide outlines how the knowledge we have gained over a 10-year period, as I mentioned earlier and lean construction methods are driving our industry-leading productivity. One measure of this productivity is the ratio of homes built per 100 employees. Cairn builds 36 homes for every 100 direct employees and subcontractor employees. And this compares very favorably to an industry average of 29 homes per 100 employees. I think this is a good indicator of how we are relentless in our drive for continued improvement.

We've achieved this leading position through our ways of working, leveraging our approach to key areas, including post-planning optimization, digital technology, off-site manufacturing and our newly implemented DataScope system, which allows us to measure and improve our workforce productivity. What this delivers is an average completion rate of 3.3 apartments and 2.5 homes per week across each of our sites currently.

Moving on, the government introduced a suite of impactful policies and initiatives since we last spoke to you. I want to now touch on some of these key policies and how we are ideally positioned to support these as well as outlining the strong macro environment we're operating in. On this slide, you can see the increased committed capital funding allocated to the Department of Housing, Local Government and Heritage under the revised National Development Plan. The revised plan outlines a total capital investment in Ireland of EUR 275 billion over the period 2026 to 2035. EUR 36 billion of this has been allocated to Department of Housing for the period '26 to '30.

The department's annual capital budget will increase to EUR 7.3 billion in 2026 and thereafter to EUR 7.4 billion. The macro environment continues to be very positive for us. Economic growth is forecast to continue. Exchequer returns remain strong. Ireland is operating at near full employment. Importantly for our customers, the mortgage market conditions remain strong with a backdrop, we hope of continued falling interest rates. Household savings continue to increase at a pretty phenomenal rate and our population growth remains at historically high levels, driven largely by [ emerging ] migration.

I'll move on to Slide 23. This outlines some of the key policies and legislative initiatives that are being introduced and have been introduced in 2025 by government. And we believe we're strategically aligned and ideally positioned to support these policies. We are Ireland's largest self-build apartment developer with industry-leading efficiency and output and we embraced the new design guidelines that have been introduced. And this will lead to building lower-cost apartments and delivering better value for money for our state partners and for our private customers. We have a strong planning record and enable -- that will enable us to respond quickly to the new regulations and legislative changes with the additional headroom for density providing an opportunity for us to increase our output further. Most importantly, we have the balance sheet and permanent capital base to respond to government changes and deliver volume growth in the medium term.

So moving on to the last slide, I suppose, is really, for us, a reflection. We are 10 years in business. We've included some of the highlights that we see and some of our achievements. As I said earlier, on behalf of my colleagues and I, we are very proud of what we've achieved. And we want to thank you, our shareholders, for your continued support during that 10-year period and we look forward to seeing many of you over the next few days.

Thank you for joining us this morning, and we'll move over to Q&A, Nadia. Thank you.

[Operator Instructions] And now we're going to take our first question, and it comes from the line of Shane Carberry from Goodbody Stockbrokers.

Just 2 for me, if I could. The first one, just in terms of the land market and just to get a bit more color generally there and how the type of opportunities that are coming across your desk now have evolved? And then just the second one, just with regards to the planning environment and kind of any update you can give us there, Michael, in terms of how things have evolved since you last spoke to us, would be really helpful.

Thanks, Shane. Yes, the land market, it has been interesting over the last 6 or 12 months, Shane. Look, I suppose the challenge remains for the industry, the -- I suppose, outside of the 2 PLCs and a couple of very large private companies, it's very, very hard for the broader market, the sort of the rest of the housebuilding market to acquire large strategic sites. So if sites are smaller infill sites for anything from 30 to 75 to 100 units, they're massively competitive. Those lot sizes might, Shane, be EUR 5 million to EUR 10 million and lots and lots of smaller builders are in that bracket. And I think what we're seeing is where there's larger and more strategic land opportunities, if you take, Donabate, last year, we bought off market for EUR 50-odd million on a subject to planning deal. Those sites don't go to market, Shane. They, by and large, come directly to us. That's really due to, I suppose, landowners knowing that we are a genuine buyer of those larger strategic sites. We can get good value at those sort of price points and we have very little competition.

And we've probably built a credible track record in -- and reputation and some of it comes through historical relationships as well, including, for example, this year with the Cosgrave family, a brilliant housebuilding company over many, many decades. And we were very fortunate to do some land acquisitions with the Cosgrave family. So there -- that's a big part of how we get there, Shane. But also -- and both Richie and I and working with our Chief Investment Officer, Ger Hoare, over the last 12 to 18 months have appreciated that. We don't always just want to write the check upfront for development land. If land needs to be brought through rezoning or through the planning process or derisked through infrastructure, there is good opportunities for us to either joint venture that land with a large landowner that maybe doesn't have that skill set, rarely does. There's still a lot of unnatural owners, as we call it, of large residential land in Ireland. And they see us as a partner of choice with a track record and scale. And we can also do something similar on what we call option deals on strategic land, Shane.

So it's an interesting market but we have a much more diverse and I suppose we have different ways to acquire land. And we believe that will give us a strong medium- to long-term underpin for the margins we're generating. We're still building on many schemes on land that we bought in 2016 and '17. That certainly helps when it comes to our margin. The planning environment, Shane, is improving. The LRD process is working pretty well. Obviously, it's taken time and -- but we are seeing really good engagement from local authorities. Most importantly, local authorities have been asked to look at significant headroom now on their own targets within each local authority and they've been asked to go out and zone more land and create more headroom. And this, we believe, will create more good land opportunities for us in the years ahead. When you look at Cairn's performance, I think we've had about 2,600 units this year granted full planning permission across 8 grants, I think, this year, Shane. So it's been a great year for us on planning and we're very pleased the system is working better.

And the question comes from the line of Colin Sheridan Colin from Davy.

Congratulations on the 10 years. Just a couple from me, if I can. Maybe just talk a little bit about house price inflation. Obviously, it's at least enough to be covering the modest build cost inflation that's going on given the margin moves. Just wonder how you're seeing that in different segments at the moment? And what's your strategy for pricing when it comes to the most recent launches, what kind of opportunities are there? And I guess, secondly, one of the themes that's coming across is the reemergence or increase certainly in first-time buyer exposure from the company. Just wondering where -- what's driving that? Is it just down to policy changes? Is it the nature of the land opportunities that are coming? It's just more first-time buyer oriented? Just trying to get a feel for what's driving that trend.

Yes, I'll just maybe start with the second one, Colin. I mean look first-time buyers is what we built our business on. Obviously, we acquired a very large land bank, Colin, back in 2015, '16, as I mentioned earlier. I think we certainly had first-mover advantage. We focused very clearly at that time on trying to acquire as much low-density land as possible. We focused on bigger sites, as you probably know, in urban areas and close to transport links. And a lot of it was low density. And in the early years, a very high percentage of our apartments -- or of our output was low density. But I think we recognize quite clearly, and I think it's a strategy that stuck to us, Colin, that over time, and this is not just an Irish -- this is sustainable land use and trying to ensure that land use is appropriate. And trying to hit higher densities would, in time, become a much bigger part of Ireland's housing output and a necessary part in order to hit our carbon targets, et cetera, et cetera, as I say, to even support the massive level of investment in infrastructure, including rail infrastructure and electrified rail lines.

We all know how important transport is and other infrastructure like water and power infrastructure. So hitting appropriate densities, we always felt would be direction of travel. And I suppose, Colin, that's why we put a lot of focus in those middle years to increasing our capability on apartment developments. However, I did mention earlier that it's going to be difficult to see the broader market increasing first-time buyer output and housing output, which means it's going to be in demand. So where we can acquire large sites and where we can, I suppose, supplement our land bank, which we built through with lower density opportunities, particularly scaled ones, we want to do that because that's where continued demand is. I mean, just to put it, I suppose, one perspective on how we think about it, Colin, this -- I think it's close to 400,000 people in Ireland today earning between EUR 50,000 and EUR 90,000. And they are in the main working -- between the age of 25 and 40 and homeownership rates are as low as circa 10% or 15% for that cohort.

So there's going to be massive demand from FTBs. It's our job to try and step up and provide as many of those homes as possible. But we remain committed to apartment delivery. And we're really pleased that our first-time buyers now through Croí Cónaithe have the option to buy apartments because many of them will find it difficult to be able to at salary levels of EUR 70,000 or EUR 80,000, be able to get access to a mortgage to buy a 3-bed semi or a 4-bed semi. Chat a little bit about HPI comment. I mean it's -- our model is -- our model has been consistent. We want to deliver as many homes as we can, at competitive price points and at price points where those customers can get a mortgage and we're a strong believer in realizable demand. And the more competitive our price points are, the higher sales rates and that's our model. We deliver big sites, touched on Seven Mills earlier on, 300 unit sales this year, that would be 400 by the year-end and we want to be achieving 600, 700 unit sales from next year on a scheme like Seven Mills.

So pricing is important. House price inflation in the secondhand market is a lot higher in Ireland at the moment for the last couple of years than the new homes market. But I think it's a great indicator, is the broader market is seeing new homes HPI at 4% and our HPI is flat or close to flat. That tells me that we're running a more efficient business and we're using our advantages to deliver more homes.

[Operator Instructions] And the question comes from the line of Shane Carberry from Goodbody Stockbrokers.

Just a follow-up with one more, and it's kind of on the back of Colin's HPI question. Just in terms of the other side of that equation, obviously, you gave more kind of confident guide from the build cost inflation side of things. Just wondering if you could talk me through the dynamics of that more confidence guidance. Is that just underlying build cost inflation being a little bit lower? Is it levers that you're pulling in the business? Just a little bit more color there would be really helpful.

It's a bit of both, Shane. I think it definitely is delivered in the business. When you see our WIP spend increase as much as it is, obviously, we're procuring more. We talked in previous updates about how we've moved to a more evolved procurement model and a centralized procurement model but we're able to negotiate better, particularly in Europe on imported product, for example, when we're bringing in either large components or even what we're delivering off-site. There's going to be a few headwinds. There could be some increases in the year ahead on labor costs. We're conscious of that. Timber prices look like they're moving in the wrong direction for us.

It's -- we're not -- we're conscious that we could be -- we could need to work hard to keep our pricing where it -- our pricing where it's at for our customers. But on the flip side, policies like we just spoke about earlier, help like the new apartment guidelines that will allow us in time to deliver and design more efficient apartment typologies and get some of that build cost inflation back. So it's a balance of how we approach our design, our value engineering, all the things we spoke about and then being conscious that there will always be headwinds. No one is saying we're completely out of the out of the woods on what's happening in international trade, for example, we're conscious of that. We haven't seen a big impact on our business but we remain vigilant.

Richie, you have -- anything you want to add on that?

Yes. I think the other point, Shane, there is, obviously, as Michael referred to, is a significant increase in our WIP investment this year, which has allowed us to sit down with our partners who are -- most of our subcontractors and map out their business plans. So we definitely get benefits from that and giving them the more clarity we can give them, the better, obviously, pricing power we can achieve for the business.

It's a good point, yes.

[Operator Instructions] To speaker, Michael Stanley, for any closing remarks.

Thank you. Thanks, Nadia. Thank you all for joining. And as I said earlier, we look forward to seeing many of you on the road over the next week or so. Thank you for your continued support and chat to you all soon. Bye-bye.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.