Q2 2026 Costain Group PLC Earnings Call

August 13, 2026

Speaker #1: Right, good morning everyone, and thanks very much for joining Costain’s 2026 half-year results presentation. I’m going to start by sharing my reflections on the first half of the year, and then Helen Willis, our Chief Financial Officer, is going to come in and take you through the financial results and the financial performance.

Alex Vaughan: Right. Good morning, everyone, and thanks very much for joining Costain's 2026 H1 results presentation. I'm going to start with sharing my reflections on the H1 for the year. Helen Willis, our Chief Financial Officer, is going to come in and take you through the financial results and the financial performance of the business before I return to give you a bit of a strategic overview and update operational insight and an outlook for the business as we move forward. We're really pleased to have reported another strong set of results for the business in the H1. It really reflects the quality, the resilience, and the balance of the portfolio of business that we've got, and also how our teams expertly deliver our services. We've returned to revenue growth in the H1.

Speaker #1: of the business. Before I return to give you a bit of a strategic overview, an updated operational insight, and an outlook for the business as we move forward.

Speaker #1: Look, we're really pleased to have reported another strong set of results for the business in the first half. It really reflects the quality, resilience, and balance of the portfolio of business that we've got, and also how our teams expertly deliver our services.

Speaker #1: We've returned to revenue growth in the first half, and we've also grown operating profits and increased shareholder returns—again, thanks to the strong balance of cash and strong cash generation.

Alex Vaughan: We've also grown operating profits and increased shareholder returns, again, thanks to the strong balance of cash and the strong cash generation in the business. I think as we said in our results statement, the revenue growth in the H1 marks that beginning of a sustained period of growth for the business, built on the successful positioning of us in what are significant growing markets. I'm going to use a phrase a lot, but this is a really exciting time for UK infrastructure. In our markets, we've continued to secure a good number of high quality new contracts and extensions that underpins the fact that we've maintained our record forward work position of GBP 7 billion. For a business of our size, that is 6 times our annual revenue, which really underpins that confidence in the growth.

Speaker #1: In the business, I think, as we've said in our results statement, the revenue growth in the first half marks the beginning of a sustained period of growth for the business.

Speaker #1: Built on the successful positioning of us in what are significant, growing markets—I'm going to use this phrase a lot—but this is a really exciting time for UK infrastructure.

Speaker #1: And in our markets, we've secured high-quality new contracts and extensions. That underpins the fact that we've maintained our record forward work position of £7 billion.

Speaker #1: For a business of our size, that is six times our annual revenue, which really underpins that confidence in the growth. And the fact that the forward work visibility of 91%, not just for this year but for next year, gives us that confidence in how we're going to grow and move the business forward.

Alex Vaughan: The fact that the forward work visibility of 91%, not just for this year, but for next year, gives us that confidence in how we're going to grow and move the business forward. Our forward work also benefits from having added new customers. We've now added Port of Dover, Gatwick Airport, and National Grid in the H1 of the year, and we've also accessed new market segments. We've broken into the Great Grid Upgrade, and we've got a real presence already on the reservoir program. All of that really improves the strength of the group. We remain on track to deliver 2026 in line with expectations, and to deliver that step change in growth for 2027.

Speaker #1: Our forward work also benefits from having added new customers. So, we've now added Dover Ports, Gatwick Airport, and National Grid in the first half of the year, and we've also accessed new market segments.

Speaker #1: So we've broken into the Great Grid Upgrade, and we've got a real presence already on the Reservoir Program. All of that really improves the strength of the group.

Speaker #1: We remain on track to deliver 2026 in line with expectations, and to deliver that step change in growth for 2027. I just wanted to reflect that our first half-year results mark a continuation of the progress we've been making as a business.

Alex Vaughan: I just wanted to reflect that our H1 results mark a continuation of the progress that we've been making as a business, that momentum in the business. Based on 2026 full consensus, we're going to be delivering a full year 2026. We're on track to make it 6 years worth of growth and industry-leading margins as a business. As a result of the quality of the contracts that we take on and their nature, and the fact that they're cash generative, this has continued to strengthen our balance sheet. This consistent cash position, which is a feature of the type of business that we do, while strengthening the balance sheets, also allowed us to increase returns to our shareholders. Over the past 3 years, we've returned GBP 31.5 million in terms of shareholder returns, and that trajectory is going to increase.

Speaker #1: That momentum in the business. And based on 2026 consensus, we're going to be delivering for the full year 2026. We're on track to make it six years' worth of growth and industry-leading margins as a business.

Speaker #1: And as a result of the quality of the contracts that we take on, and their nature, and the fact that they're cash-generative, this has continued to strengthen our balance sheet.

Speaker #1: And this consistent cash position, which is a feature of the type of business that we do, while strengthening the balance sheet, has also allowed us to increase returns to our shareholders.

Speaker #1: Over the past three years, we've returned £31.5 million. In terms of shareholder returns, and that trajectory is going to increase and today we've announced a doubling of the interim dividend that we've got, which combined with the £20 million share buyback means in 2026 alone we'll be giving £36 £34 million worth of shareholder returns.

Alex Vaughan: Today, we have announced a doubling of the interim dividend that we have got, which combined with the GBP 20 million share buyback, means in 2026 alone, we will be giving GBP 34 million worth of shareholder returns. This continued momentum is now set to accelerate in the H2 of this year, as we have talked about with the step change in 2027. For the H2 of the year, we have pulled together this graph that shows that in water, we have spent last year and the beginning of this year just finalizing design solutions for a lot of the water infrastructure. In the H2, we are now getting into the delivery of that infrastructure, which is why you get the step up and you will see that really moving forward into next year as well, where we will be at full operational level delivering that water infrastructure.

Speaker #1: This continued momentum is now set to accelerate in the second half of this year, as we've talked about, with the step change in 2027.

Speaker #1: For the second half of the year, we've pulled together this graph that shows that, in water, we've spent last year and the beginning of this year just finalizing design solutions for a lot of the water infrastructure.

Speaker #1: In the second half, we're now getting into the delivery of that infrastructure, which is why you get the step-up. And you'll see that really moving forwards into next year as well, where we'll be at full operational level, delivering that water infrastructure.

Speaker #1: At Heathrow, we continue to expand the amount of work that we're doing to support their investment plans. And then from a road point of view, we've got the M60.

Alex Vaughan: Heathrow, we continue to expand the amount of work that we are doing to support their investment plans. From a road point of view, we have got the M60. We have spent four years in the design and consenting phase for the M60. We have now mobilized. We are on site. We started construction activities, and obviously the H2 you are going to get that, and then next year we are going to get a full year. We have also got the ramping up of the nuclear energy work we talked about last year together with that Great Grid Upgrade, and we have also got some of the local road contracts coming through. So a clear path for that increased growth coming through. The step change in 2027 really builds on our momentum, that clear visibility of that GBP 7 billion worth of forward work.

Speaker #1: We've spent four years in the design and consenting phase for the M60. We've now mobilized, we're on site, we've started construction activities, and obviously in the second half, you're going to get that, and then next year we're going to get a full, full year.

Speaker #1: We've also got the ramping up of the nuclear energy work we talked about last year, together with that Great Grid Upgrade. And we've also got some of the local road contracts coming through.

Speaker #1: So, a clear path for that increased growth coming through. The step change in 2027 really builds on our momentum, with clear visibility of that £7 billion worth of forward work.

Speaker #1: Our business is in great shape, and we're really excited. I'll now hand over to Helen.

Alex Vaughan: Our business is in great shape, and we are really excited, and I will hand over to Helen.

Speaker #2: Morning, everyone. I'm just relieved to have navigated the step there, so all good so far. Thanks, Alex. We've talked about momentum a lot, and it really does feel like that's coming through now.

Helen Willis: Morning, everyone. I am just relieved to have navigated the steps there.

Alex Vaughan: Thank you.

Helen Willis: All good so far. Thanks, Alex. We have talked about momentum a lot, and it really does feel like that is coming through now. As Alex said, we are on track to deliver the sixth consecutive year of profit growth with an industry-leading margin, which we intend to maintain. The balance sheet position continues to strengthen. We significantly increased shareholder returns, having resumed in 2023, and we are winning the right work. We have maintained that GBP 7 billion forward work book. Of course, we entered the FTSE 250 earlier this year. It really is exciting to be part of this. Even as a CFO, I can say that. Let me take you briefly through the headline financial results. Revenue up to just over half a billion, up 3.4% on prior year.

Speaker #2: As Alex said, we're on track to deliver the sixth consecutive year of profit growth, and with an industry-leading margin, which we intend to maintain.

Speaker #2: The balance sheet position continues to strengthen. We have significantly increased shareholder returns, having resumed in 2023. We are winning the right work, and we maintain that £7 billion forward workbook.

Speaker #2: And of course, we entered the FTSE 250 earlier this year. It really is exciting to be part of this; even as CFO, I can say that.

Speaker #2: So let me take you briefly through the headline financial results. Revenue is up to just over half a billion, up 3.4% on the prior year.

Speaker #2: Adjusted operating profit is up 3%, to £17.3 million, with no adjusting items, so that falls through to £17.3 million on a reported basis as well. Adjusted operating margin is consistent with the first half of last year, at 3.2%.

Helen Willis: Adjusted operating profit up 3%, up to GBP 17.3 million, with no adjusting items, so that falls through to GBP 17.3 on reported as well. Adjusted operating margin, consistent with the H1 of last year at 3.2%. Adjusted basic earnings per share increased by 3.6% to 5.7 pence, and that is primarily reflecting the increase in adjusted operating profit and a reduced share count following the share buyback programs. The group has adopted a new target dividend cover, as Alex mentioned, to 2.5 times adjusted earnings, and previously that was 3 times earnings. That would be paid one third H1 and two thirds H2, as we have in the past. We continue to maintain a strong balance sheet, as I mentioned, and net cash was GBP 164.4 million at the end of the half.

Helen Willis: Adjusted operating profit up 3%, up to GBP 17.3 million, with no adjusting items, so that falls through to GBP 17.3 on reported as well. Adjusted operating margin, consistent with the H1 of last year at 3.2%. Adjusted basic earnings per share increased by 3.6% to 5.7 pence, and that is primarily reflecting the increase in adjusted operating profit and a reduced share count following the share buyback programs. The group has adopted a new target dividend cover, as Alex mentioned, to 2.5x adjusted earnings, and previously that was 3x earnings. That would be paid one third H1 and two thirds H2, as we have in the past. We continue to maintain a strong balance sheet, as I mentioned, and net cash was GBP 164.4 million at the end of the half.

Speaker #2: Adjusted basic earnings per share increased by 3.6% to 5.7 pence, and that's primarily reflecting the increase in adjusted operating profit and a reduced share count following the share buyback programs.

Speaker #2: The group has adopted a new target dividend cover, as Alex mentioned, to 2.5 times adjusted earnings. Previously, that was three times earnings.

Speaker #2: And that would be paid one-third H1 and two-thirds H2, as we have in the past. We continue to maintain a strong balance sheet, as I mentioned, and net cash was £164.4 million at the end of the half, and that's £20 million higher than half-year last year.

Helen Willis: That is GBP 20 million higher than the half year last year, and that is after the increased shareholder returns. Revenue, as I mentioned, is up 3.4% on the half. That was following the expected small reduction on transportation, but more than offset by growth across all sectors in Natural Resources. Crucially, this marks a key inflection point, and we are confident of the step change in revenue growth in H2 this year, followed by a sustained period of growth thereafter. In Transportation, revenues and roads, as I said, reduced in line with expectations as several of our RDP framework projects completed. We expect to return to growth in the second half, as Alex was mentioning, as we go into construction phase on the M60 and on the M5 thereafter. Integrated Transport increased almost 40% as we really are hitting our stride with the work at Heathrow.

Speaker #2: And that's after the increased shareholder returns. So, revenue, as I mentioned, is up 3.4% on the half, and that was following the expected small reduction in transportation, but more than offset by growth across all sectors in natural resources.

Speaker #2: Crucially, this marks a key inflection point, and we're confident of a step change in revenue growth in H2 this year, followed by a sustained period of growth thereafter.

Speaker #2: In Transportation, revenues, as I said, reduced in line with expectations as several of our RDP framework projects completed. We expect to return to growth in the second half, as Alex was mentioning, as we go into the construction phase on the M60 and on the M5 thereafter.

Speaker #2: Integrated Transport increased almost 40%, as we really are hitting our stride with the work at Heathrow. There was strong growth in Natural Resources across all sectors.

Helen Willis: There was strong growth in Natural Resources across all sectors. In water, we see the transition from design into construction phase as we are into AMP8 regulatory cycle, and we are scaling up to deliver a strong pipeline of work in the H2 of 2026 and thereafter. Energy revenue increased by 25.7%, and that is driven by a range of services we provide, including design and delivery of the carbon capture program at BP and the management of gas mains replacement for Cadent Gas. Revenue increased on Defense and Nuclear by 3.6%, driven by our current delivery partnership roles. Adjusted operating profit, as I mentioned, grew 3% in the H1 to GBP 17.3 million, and that was really reflecting the increased revenue but maintaining the adjusted operating margin, so stable at 3.2%. We have seen the lower volumes, as I mentioned, in the RDP frameworks offset by Natural Resources revenue.

Speaker #2: In Water, we see the transition from design into the construction phase as we are into the AMP8 regulatory cycle. And we're scaling up to deliver a strong pipeline of work in the second half of 2026 and thereafter.

Speaker #2: Energy revenue increased by 25.7%, and that's driven by a range of services we provide, including the design and delivery of the carbon capture program at BP and the management and gas mains replacement for Cadent.

Speaker #2: And revenue increased on Defense and Nuclear by 3.6%, driven by our current delivery partnership roles. Adjusted operating profit, as I mentioned, grew 3% in the first half to £17.3 million, and that was really reflecting the increased revenue but maintaining the adjusted operating margin.

Speaker #2: So, stable at 3.2%. We've seen the lower volumes, as I mentioned, in the RDP frameworks, offset by natural resources revenue. And it should be remembered that last year we had a normal course of business contract closure benefits in natural resources.

Helen Willis: It should be remembered that last year we had a normal course of business contract closure benefits in Natural Resources, and so the level this year is a more normalized level, I would say. We have spoken about our targeted areas of investment in recent periods, and it is important to note that we have seen another period of increased operating profit despite continued investment across the business, ensuring that we are really well positioned for growth. I will take you through the cash walk, so moving from left to right, opening net cash of GBP 189.3 million and closing net cash of GBP 164.4 million. The first boxed area represents adjusted free cash flow at an outflow of GBP 1.4 million, and this outflow reflects strong operating profit offset by the timing of working capital around the period end, as well as a modest CapEx and tax outflow of GBP 3 million. Interest receipts were GBP 0.3 million.

Speaker #2: And so the level this year is a more normalized level, I would say. We've spoken about our targeted areas of investment in recent periods, and it's important to note that we've seen another period of increased operating profit despite continued investment across the business, ensuring that we're really well positioned for growth.

Speaker #2: And I'll take you through the cash walk. So, moving from left to right: opening net cash of £189.3 million and closing net cash of £164.4 million.

Helen Willis: I will take you through the cash walk, so moving from left to right, opening net cash of GBP 189.3 million and closing net cash of GBP 164.4 million. The first boxed area represents adjusted free cash flow at an outflow of GBP 1.4 million, and this outflow reflects strong operating profit offset by the timing of working capital around the period end, as well as a modest CapEx and tax outflow of GBP 3 million. Interest receipts were GBP 0.3 million.

Speaker #2: The first boxed area represents adjusted free cash flow and outflow of £1.4 million. This outflow reflects strong operating profit, offset by the timing of working capital around the period ends, as well as modest capex and a tax outflow of £3 million.

Speaker #2: Interest receipts were £0.3 million. These expenditures are shown separately from cash from operations and were £5.7 million for the first half. We've seen an increase in lease expenditure in the period as we invest in contracts ahead of planned growth.

Helen Willis: Lease expenditure is shown separately from cash from operations and was GBP 5.7 million for the H1, and we have seen an increase in lease expenditure in the period as we invest on contracts ahead of planned growth. There was significant increase in shareholder returns, which totaled GBP 15.4 million in the period. GBP 7.2 million was spent as part of the FY2026 share buyback program, and dividend payments of GBP 8.2 million, almost doubling against H1 2025 of GBP 4.9 million. Other financing costs, GBP 2.7 million, reflect the purchase of treasury shares to fund our employee share schemes, an increase in the H1 driven by both increased share price as well as volume of options and awards. We expect to see this continue in the H2 as the first of our SAYE schemes for a number of years, vests at the end of the year.

Speaker #2: There was a significant increase in shareholder returns, which totaled £15.4 million in the period. £7.2 million was spent as part of the FY26 share buyback program, and dividend payments of £8.2 million were almost a doubling against half year 25’s £4.9 million.

Speaker #2: Other financing costs of £2.7 million reflect the purchase of treasury shares to fund our employee share schemes, an increase in the first half driven by both increased share price as well as volume of options and awards.

Speaker #2: We expect to see this continue in the second half, as the first of our SAYE schemes for a number of years vests at the end of the year.

Speaker #2: We expect that adjusted free cash flow will increase in H2, reflecting the typical second-half weighting of adjusted operating profit. We expect our FY26 year-end net cash position to be around £170 million, after the step-up in the purchase of treasury shares I just mentioned, as well as enhanced shareholder returns in the form of the £20 million share buyback program and significantly higher dividend payment.

Helen Willis: We expect that adjusted free cash flow will increase in H2, reflecting the typical H2 weighting of adjusted operating profit, and we expect our FY2026 year-end net cash position to be around GBP 170 million after the step-up in purchase of treasury shares I just mentioned, as well as enhanced shareholder returns in the form of the GBP 20 million share buyback program and significantly higher dividend payment. The net cash position at the end of H1 comprised of Costain cash balances of GBP 94.8 million, cash held by joint operations of GBP 69.6 million, and borrowings of nil. The chart illustrates the maintenance of a significantly stronger balance through H1 when compared to FY2025 and H1 2025. The group's average weekend net cash balance in the period was GBP 177.3 million, a GBP 25 million increase on H1 in the prior year and GBP 28 million on the full year of 2025.

Speaker #2: The net cash position at the end of half one comprised Costain cash balances of £94.8 million, cash held by joint operations of £69.6 million, and borrowings of nil.

Helen Willis: The net cash position at the end of H1 comprised of Costain cash balances of GBP 94.8 million, cash held by joint operations of GBP 69.6 million, and borrowings of nil. The chart illustrates the maintenance of a significantly stronger balance through H1 when compared to FY2025 and H1 2025. The group's average weekend net cash balance in the period was GBP 177.3 million, a GBP 25 million increase on H1 in the prior year and GBP 28 million on the full year of 2025.

Speaker #2: The chart illustrates the maintenance of a significantly stronger balance through H1 when compared to FY25 and H125. The group's average weekend net cash balance in the period was £177.3 million, a £25 million increase on H1 in the prior year, and £28 million on the full year 25.

Speaker #2: In the first half of the year, we paid 97% of invoices within 60 days, as we have done in previous periods. You’ll remember, at the full-year presentation, I confirmed that in 2025 the group successfully concluded negotiations with its bank and surety facility providers to refinance a new four-year agreement of those facilities to September 2029, comprising a revolving credit facility of £100 million and surety and bank bonding facilities totaling £295 million.

Helen Willis: In the first half of the year, we paid 97% of invoices within 60 days, as we have done in previous periods. You remember at the full year presentation, I confirmed that in 2025, the group successfully concluded negotiations with its bank and surety facility providers to refinance a new four-year agreement of those facilities to 29 September, comprising a revolving credit facility of GBP 100 million and surety and bank bonding facilities totaling GBP 295 million. Further to this, in 26 May, Costain exercised the one year, optional extension clause, and this agreement was extended by a further year to September 2030, and the RCF facility remains undrawn.

Speaker #2: Further to this, in May 26, COSTAIN exercised a one year optional excuse me, excursion excuse me, extension clause and this agreement was extended by a further year to September 2030.

Speaker #2: And the RCF facility remains under so I'll continue strong financial performance, robust balance sheet and cash position, and the agreement reached with the trustee of the defined benefits pension scheme to remove the constraint of the dividend parity arrangement has enabled us to significantly increase returns to shareholders.

Helen Willis: Our continuing strong financial performance, robust balance sheet and cash position, and the agreement reached with the trustee of the defined benefits pension scheme to remove the constraint of a dividend parity arrangement, has enabled us to significantly increase returns to shareholders. The graph shows the year-on-year increase in shareholder returns, having resumed returns in 2023. The board undertook a review of its options regarding dividend and on 10 March 2026, confirmed its intention to pay a final dividend for FY25, in line with its target dividend cover of 3x adjusted earnings. The board regularly reviews its capital allocation policy, and following its latest review, the group has adopted a new target dividend cover of 2.5x adjusted earnings to be paid approximately one third H1 and two thirds H2.

Helen Willis: Our continuing strong financial performance, robust balance sheet and cash position, and the agreement reached with the trustee of the defined benefits pension scheme to remove the constraint of a dividend parity arrangement, has enabled us to significantly increase returns to shareholders. The graph shows the year-on-year increase in shareholder returns, having resumed returns in 2023. The board undertook a review of its options regarding dividend and on 10 March 2026, confirmed its intention to pay a final dividend for FY2025, in line with its target dividend cover of 3x adjusted earnings. The board regularly reviews its capital allocation policy, and following its latest review, the group has adopted a new target dividend cover of 2.5x adjusted earnings to be paid approximately one third H1 and two thirds H2.

Speaker #2: The graph shows the year-on-year increase in shareholder returns, having resumed returns in '23. The Board undertook a review of its options regarding dividends, and on 10 March '26 confirmed its intention to pay a final dividend for FY25 in line with its target dividend cover of three times adjusted earnings.

Speaker #2: The Board regularly reviews its capital allocation policy, and following its latest review, the Group has adopted a new target dividend cover of 2.5 times adjusted earnings, to be paid approximately one-third in H1 and two-thirds in H2.

Speaker #2: Based on the new target dividend cover of 2 to 2.5 times, and the completion of our £20 million share buyback program this year—which will be our third share buyback program—we anticipate doubling shareholder returns in FY26 to circa £34 million, compared to £17 million last year.

Helen Willis: Based on the new target dividend cover of 2.5x and the completion of our GBP 20 million share buyback program this year, which will be our third share buyback program, we anticipate doubling shareholder returns in FY26 to circa GBP 34 million compared to GBP 17 million last year. As at 12 August 2026, the group had purchased a total of 6.1 million shares for an aggregate consideration of GBP 12.1 million under the FY26 share buyback program. We shared this slide before at half year and full year results presentations, but I think it bears repeating. The effective management of risk in our portfolio continues to be central to how we manage our business. Over recent years, we have invested in strengthening our processes, controls, and assurance activities. We have invested in our systems, and we have invested in key capabilities across the business.

Helen Willis: Based on the new target dividend cover of 2.5x and the completion of our GBP 20 million share buyback program this year, which will be our third share buyback program, we anticipate doubling shareholder returns in FY2026 to circa GBP 34 million compared to GBP 17 million last year. As at 12 August 2026, the group had purchased a total of 6.1 million shares for an aggregate consideration of GBP 12.1 million under the FY2026 share buyback program. We shared this slide before at half year and full year results presentations, but I think it bears repeating. The effective management of risk in our portfolio continues to be central to how we manage our business. Over recent years, we have invested in strengthening our processes, controls, and assurance activities. We have invested in our systems, and we have invested in key capabilities across the business.

Speaker #2: As at 12 August 2026, the Group has purchased a total of 6.1 million shares for an aggregate consideration of £12.1 million under the FY26 share buyback program.

Speaker #2: We shared this slide before at half-year and full-year results presentations, but I think it bears repeating. The effective management of risk in our portfolio continues to be central to how we manage our business.

Speaker #2: Over recent years, we've invested in strengthening our processes, controls, and assurance activities. We've invested in our systems, and we've invested in key capabilities across the business.

Speaker #2: This approach has been applied to the opportunities we bid and win, all the way through to delivery on site and through to completion of our works.

Helen Willis: This approach is applied to the opportunities we bid and win all the way through to delivery on site and through to completion of our works. This approach has driven improvement in the quality of the forward work, the right risk profile, the right contractual terms, and hence the right conditions for predictable delivery results. It is this focus that has driven the path to higher margins, as demonstrated by our continued margin progression over the last few years. Costain continues to secure further significant strategic program awards and extensions to existing contracts and enjoys good visibility on future work. We have maintained our record forward work position of GBP 7 billion in the first half of the year. Our forward work position is greater than 6x our FY25 revenues, and we have seen a year-on-year increase of 25% and an increase of 67% over the last six years.

Helen Willis: This approach is applied to the opportunities we bid and win all the way through to delivery on site and through to completion of our works. This approach has driven improvement in the quality of the forward work, the right risk profile, the right contractual terms, and hence the right conditions for predictable delivery results. It is this focus that has driven the path to higher margins, as demonstrated by our continued margin progression over the last few years. Costain continues to secure further significant strategic program awards and extensions to existing contracts and enjoys good visibility on future work. We have maintained our record forward work position of GBP 7 billion in the first half of the year. Our forward work position is greater than 6x our FY2025 revenues, and we have seen a year-on-year increase of 25% and an increase of 67% over the last six years.

Speaker #2: And this approach has driven improvement in the quality of the forward work, the right risk profile, the right contractual terms, and hence the right conditions for predictable delivery results.

Speaker #2: It's this focus that's driven the path to higher margins, as demonstrated by our continued margin progression over the last few years. Costain continues to secure further significant strategic program awards and extensions to existing contracts and enjoys good visibility on future work.

Speaker #2: We've maintained our record forward work position of £7 billion in the first half of the year. Our forward work position is greater than six times our FY25 revenues, and we've seen a year-on-year increase of 25% and an increase of 67% over the last six years.

Speaker #2: This forward work position is built on long-term programs that enable us to deliver high consistency, continuity, and quality of work for our customers.

Helen Willis: This forward work position is built on long-term programs that enable us to deliver a high consistency, continuity, and quality of work for our customers. As at the end of H1 2026, the forward work comprises order book of GBP 3.5 billion and preferred bid book of GBP 3.5 billion. It includes no single stage lump sum contracts and is predominantly target cost contracts where the scope, design, and cost are developed with and agreed with the customer. This disciplined approach to contract selection ensures that our forward work consists of the right risk profile underpinning our predictable delivery results. We also continue to transform the balance of our contract portfolio. Reliance on central government spend, shown in the light blue, has reduced significantly, with a proportion of forward work falling from 64% to 29%.

Speaker #2: As at the end of H1 26, the forward work comprises an order book of £3.5 billion and a preferred bidder book of £3.5 billion.

Speaker #2: It includes no single-stage lump sum contracts and is predominantly target cost contracts, with the scope, design, and cost developed with and agreed with the customer.

Speaker #2: This disciplined approach to contract selection ensures that our forward work consists of the right risk profile, underpinning our predictable delivery results. We also continue to transform the balance of our contract portfolio.

Speaker #2: Reliance on central government spend, shown in the light blue, has reduced significantly, with the proportion of forward work falling from 64% to 29%. This is mirrored by increases in private and regulated forward work from 30% to 48%, and devolved government from 6% to 23%—all proportions, of course, of a much larger figure.

Helen Willis: This is mirrored by increases in private and regulated forward work from 30% to 48%, and devolved government from 6% to 23%. All proportions, of course, of a much larger figure. The diversity of our forward work position continues to build, with additions in H1 2026 coming from target growth segments such as electricity transmission with National Grid, reservoir program management work for Thames Water and Anglian Water, devolved authority rail with Transport for London and port infrastructure with Port of Dover. We continue to experience higher win rates than we have historically achieved, which combined with a strong pipeline of bidding opportunities across all sectors, gives us confidence that our high-quality contract portfolio will remain balanced and resilient going forward. This slide importantly illustrates the increased visibility for FY 2026 and FY 2027 revenues.

Speaker #2: The diversity of our forward work position continues to build, with additions in H1 26 coming from target-grade segments such as electricity transmission with National Grid, reservoir program management work, Thames Water and Anglian Water, devolved authority rail with TfL, and port infrastructure with Port of Dover.

Speaker #2: We continue to experience higher win rates than we have historically achieved, which, combined with a strong pipeline of bidding opportunities across all sectors, gives us confidence that our high-quality contract portfolio will remain balanced and resilient going forward.

Speaker #2: This slide importantly illustrates the increased visibility for FY26 and FY27 revenues. The forward work position is comprised of £1.9 billion of revenue across the second half of '26 and FY27, £1.7 billion over '28 and '29, and a further £3.4 billion beyond that.

Helen Willis: The forward work position is comprised of GBP 1.9 billion of revenue across the second half of 2026 and FY 2027, GBP 1.7 billion over 2028 and 2029, and a further GBP 3.4 billion beyond that. The result is 91% of consensus revenues are already secured for both 2026 and 2027. Circa 50% of the forward work will convert and be delivered over the next four years. This visibility allows us to plan resources and supply chain to support the anticipated growth. The bar chart also shows a broadly equal split across the two divisions over the next four years, supporting growth over all of our sectors. We are on track for a sixth year of profit growth. High quality and volume of our forward work, together with growth on existing frameworks, gives us good visibility for the future and profit visibility of circa 90% of our consensus for 2026 and 2027.

Helen Willis: The forward work position is comprised of GBP 1.9 billion of revenue across the second half of 2026 and FY2027, GBP 1.7 billion over 2028 and 2029, and a further GBP 3.4 billion beyond that. The result is 91% of consensus revenues are already secured for both 2026 and 2027. Circa 50% of the forward work will convert and be delivered over the next four years. This visibility allows us to plan resources and supply chain to support the anticipated growth. The bar chart also shows a broadly equal split across the two divisions over the next four years, supporting growth over all of our sectors. We are on track for a sixth year of profit growth.

Speaker #2: The result is that 91% of consensus revenues are already secured for both 2026 and 2027. Circa 50% of the forward work will convert and be delivered over the next four years.

Speaker #2: This visibility allows us to plan resources and supply chain to support the anticipated growth. The BATA also shows a broadly equal split across the two divisions over the next four years, supporting growth over all of our sectors.

Speaker #2: So we're on track for another six years of profit growth. The high quality and volume of our forward work, together with growth on existing frameworks, gives us good visibility for the future and profit visibility of circa 90% of our consensus for 2026 and 2027.

Helen Willis: High quality and volume of our forward work, together with growth on existing frameworks, gives us good visibility for the future and profit visibility of circa 90% of our consensus for 2026 and 2027.

Speaker #2: We're delivering industry-leading margins and have an ambition to deliver margins in excess of 5%. Our balance sheet continues to strengthen with net cash of £164.4 million, and we expect the FY26 year-end cash to be approximately £170 million after those enhanced shareholder returns.

Helen Willis: We are delivering industry-leading margins and have an ambition to deliver margins in excess of 5%. Our balance sheet continues to strengthen with net cash of GBP 164.4 million, and we expect the FY 2026 year-end cash to be approximately GBP 170 million after those enhanced shareholder returns. I will hand you over to Alex.

Helen Willis: We are delivering industry-leading margins and have an ambition to deliver margins in excess of 5%. Our balance sheet continues to strengthen with net cash of GBP 164.4 million, and we expect the FY2026 year-end cash to be approximately GBP 170 million after those enhanced shareholder returns. I will hand you over to Alex.

Speaker #2: I'll hand you over to Alex.

Speaker #1: Right. So thanks thanks very much, Helen. I'm now going to provide you sort of a a brief update on the strategy and then covered sort of the operational performance and business outlook.

Alex Vaughan: Right. Thanks so much, Helen. I am now going to provide you a brief update on the strategy and then cover the operational performance and business outlook. Our growth in revenues, operating profits, industry-leading margins, cash generation are derived from how we are expertly delivering the clear strategy we have got for the growth and value creation of Costain. We are focused on those markets where strategic long-term essential investment needs to be made. So that is around transport in creating greater prosperity and growth for the business, road, rail, aviation, ports, water, energy, and defense. We explicitly choose to only work for customers who want to work with their partners in strategic long-term partnerships where Costain has the chance to maximize the value that we can add to those customers.

Speaker #1: Look, our growth in revenues, operating profits, industry-leading margins, and cash generation are derived from how we're expertly delivering the clear strategy we've got for the growth and value creation of Costain.

Speaker #1: We're focused on those markets where strategic, long-term, essential investment needs to be made. So that's around transport—creating greater prosperity and growth for the business—road, rail, aviation, and ports.

Speaker #1: Water, energy, and defense. And we explicitly choose to only work for customers who want to work with their partners in strategic, long-term partnerships, where Costain has the chance to maximize the value that we can add to those customers.

Speaker #1: And we enhance the value that we bring to customers by ensuring that we provide services that basically engineer pretty amazing solutions for them, and expertly deliver them, whether that be as a construction partner or as a consultancy partner.

Alex Vaughan: We enhance the value that we bring to customers by ensuring that we provide services that basically engineer pretty amazing solutions for them and expertly deliver them, whether that be as a construction partner or as a consultancy partner. This strategy, with our strategic focus on growth in strong markets, predictable, best-in-class delivery, building that resilient customer mix, building a meaningful consultancy service, and being admired in everything that we do, is what is delivering a step change in our growth in revenues, operating profits, industry-leading margins, and will further enhance returns to our shareholders. I have talked about it being a really exciting place, infrastructure. The market focus, our market focus is built on the very clear visibility that we have on the investment that is going to be made in infrastructure.

Speaker #1: This strategy with our strategic focus on growth in strong markets predictable best in class delivery building that resilient customer mix building a meaningful consultancy service and being admired in everything that we do is what is delivering a step change in our growth in revenues operating profits industry leading margins and will further enhance returns to our shareholders.

Speaker #1: I've talked about it being a really exciting place—infrastructure. The market focus, our market focus, is built on the very clear visibility that we have on the investment that's going to be made in infrastructure, building on the government's infrastructure strategy that they launched last year to turn around and spend £725 billion over the next 10 years on infrastructure.

Alex Vaughan: Building on the government's infrastructure strategy that they launched last year to spend GBP 725 billion over the next 10 years on infrastructure. Our chosen markets represent the UK's critical economic infrastructure, those essential national needs where the largest amount of non-discretionary investment is being made. Our chosen customers in our markets, as I have said, predominantly operate through five-year business plan regulated periods. Really strong, clear visibility of what infrastructure. Many of them select to work with us on those five years or longer periods, and we do have contracts where we have 15 years worth of work visibility ahead.

Speaker #1: Our chosen markets represent the UK's critical economic infrastructure—those essential national needs where the largest amount of non-discretionary investment is being made. And our chosen customers in our markets, as I've said, predominantly operate through five-year business plan regulated periods, so there's really strong, clear visibility of what infrastructure is needed. Many of them select to work with us on those five-year or longer periods, and we do have contracts where we have 15 years' worth of work visibility ahead.

Speaker #1: As Helen has outlined, we continue to demonstrate a proven track record of winning more than our fair share of the work in these positions.

Alex Vaughan: As Helen has outlined, we continue to demonstrate a proven track record of winning more than our fair share of the work in these positions, and this drives the growth in the business. Having outlined the strategy that we have got and talked about the scale of investment that has been made in infrastructure, in the full year results for 2025, I set out a case study that brought our strategy to life around our nuclear energy market, and I am now going to share with you our water market as an example. Just to talk you through how we have uniquely differentiated ourself in the market in how we access that water market. Firstly, the market investment in water is incredibly significant in scale, as you can see, and it has increased significantly to GBP 104 billion for this regulated period.

Speaker #1: And this drives the growth in the business. Having outlined the sort of strategy that we've got and talked about the scale of investment that's been made in infrastructure, in the full year results for 2025, I set out a case study that brought our strategy to life around the energy, our nuclear energy market. And I'm now going to share with you our water market as an example.

Speaker #1: Just to talk you through how we have uniquely differentiated ourselves in the market in how we access that water market. Firstly, the market investment in water is incredibly significant in scale, as you can see.

Speaker #1: And it's increased significantly to £104 billion for this regulated period. And today the regulators announced another £3.4 billion—£3.2 billion—for our customers to support the growth in data centers, etc., to support economic growth.

Alex Vaughan: Today, the regulators announced another GBP 3.4 billion, GBP 3.2 billion for our customers to support the growth in data centers, et cetera, to support economic growth. So huge investment in this market. What is driving that investment is the urgent need to maintain and optimize what is a very old aged asset base. For us to meet even tighter regulatory standards by reducing water abstraction from rivers, but also to improve the water quality in the natural habitat. For them to respond to the challenges of climate change, perfectly timed for today. It is pretty hot out there. So we have either got high levels of rainfall that we cannot deal with, or we have now got two years worth of extreme drought and a shortage of water with higher temperatures. It is also to support the growth in demand.

Speaker #1: So, huge investment in this market, and what is driving that investment is the urgent need to maintain and optimize what is a very old, aged asset base.

Speaker #1: For us to meet even tighter regulatory standards by reducing water abstraction from rivers, but also to improve the water quality in the natural habitat.

Speaker #1: For them to respond to the challenges of climate change, it's perfectly timed for today—it's pretty hot out there. And so, we've either got high levels of rainfall that we can't deal with, or we've now got two years' worth of extreme drought and a shortage of water with higher temperatures.

Speaker #1: It's also to support the growth in demand; that £3.4 billion is to support data centers, housing, etc., that is driving that growth. It's also to ensure that we meet the 25-year plans to have a sustainable, long-term supply of clean water for the UK.

Alex Vaughan: That GBP 3.4 billion is to support data centers, housing, et cetera, that is driving that growth. It is also to ensure that we meet the 25-year plans to have a sustainable long-term supply of clean water for the UK. So it is a pretty important sector. Now, operating in the water sector requires you to have a differentiated expertise. You need to have an intimate understanding of the water industry, the water process, and the expertise. It really benefits to have really mature relationships with the customers who operate in this place, and positively, that is why the customers choose to work with their partners in those long-term partnerships, 5 to 10 years. Through our unique strategy, we have successfully positioned ourselves in all three of the critical market elements. We are involved in maintaining the existing infrastructure, optimizing its performance, and repurposing it to meet the changing needs of the customer.

Speaker #1: So it's a pretty important sector. Now, operating in the water sector requires you to have a differentiated expertise. You need to have an intimate understanding of the water industry, the water process, and the expertise. It really benefits to have really mature relationships with the customers who operate in this space, and, positively, that's why the customers choose to work with their partners in those long-term partnerships—five to ten years.

Speaker #1: Through our unique strategy, we've successfully positioned ourselves in all three of the critical market elements. We're involved in maintaining the existing infrastructure, optimizing its performance, and repurposing it to meet the changing needs of the customer. And trust me, today the phone calls we get—they've got very changing needs of how they can produce as much water as they can.

Alex Vaughan: Through our unique strategy, we have successfully positioned ourselves in all three of the critical market elements. We are involved in maintaining the existing infrastructure, optimizing its performance, and repurposing it to meet the changing needs of the customer.

Alex Vaughan: Trust me, today, the phone calls we get, they have got very changing needs of how they can produce as much water as they can. The contract we have got with United Utilities, we are delivering a wide range of replacement, refurbishment, asset upgrade services across their whole estate in the northwest of England. We secured the contract originally in 2019. We have since had two further extensions that has now taken it through to 2029. That is going to be a 10-year partnership, and we are obviously working to expand this across the other water companies. But at the moment, United Utilities are the only people buying this type of service. Moving to the regulatory capital delivery programs, we are working with the five major water companies across England: Northumbrian Water, Severn Trent Water, Southern Water, Thames Water, and United Utilities. Interestingly, GBP 3.3 billion of this GBP 3.4 billion worth of investment.

Speaker #1: The contract we've got with United Utilities—we are delivering a wide range of replacement, refurbishment, and asset upgrade services across their whole estate in the northwest of England. We secured the contract originally in 2019 and have since had two further extensions, which have now taken it through to 2029.

Speaker #1: That's going to be a 10-year partnership, and we're obviously working to expand this across the other water companies, but at the moment United Utilities are the only people buying this type of service. Moving to the regulatory capital delivery programs, we're working with the five major water companies across England: Northumbrian Water, Severn Trent Water, Southern Water, Thames Water, and United Utilities. Interestingly, £3.3 billion of this £3.4 billion worth of investment...

Alex Vaughan: Moving to the regulatory capital delivery programs, we are working with the five major water companies across England: Northumbrian Water, Severn Trent Water, Southern Water, Thames Water, and United Utilities. Interestingly, GBP 3.3 billion of this GBP 3.4 billion worth of investment.

Speaker #1: So this is where the significant investment is being made. And we work in designing and coming up with pretty incredible solutions to meet their needs, and then expertly delivering large programs of capital projects for them.

Alex Vaughan: This is where the significant investment is being made. We work in designing and coming up with pretty incredible solutions to meet their needs and then expertly delivering large programs of capital programs for them. We are also the technical assurance partner for Yorkshire Water. As a result of our expertise and reputations, we have worked with all of these companies on multiple regulatory cycles. The current contracts we have got for United Utilities, Southern Water, and Northumbrian Water go into the next decade. So they are pretty long in nature. Some of the relationships we have got span more than 30 years of a proven, trusted partnership. Now, coming to the third one, we are also a key partner building the UK's future strategic water assets.

Speaker #1: We're also the technical assurance partner for Yorkshire Water. Now, as a result of our expertise and reputation, we've worked with all of these companies on multiple regulatory cycles.

Speaker #1: And the current contracts we've got for United Utilities, Southern Water, and Northumbrian Water go into the next decade, so they're pretty long in nature.

Speaker #1: And some of the relationships we've got span more than 30 years of proven, trusted partnership. Now, we're also coming to the third one.

Speaker #1: We're also a key partner building the UK's future strategic water assets. As you know, we've just completed the Thames Tideway project—a pretty major strategic infrastructure asset that's going to allow the UK's capital to grow, expand, and flourish in a sustainable way.

Alex Vaughan: As you know, we've just completed the Thames Tideway project, a pretty major strategic infrastructure asset that's going to allow the UK's capital to grow and expand and flourish in a sustainable way. We're already a partner to Anglian Water, delivering their strategic pipeline alliance, which is to take water from some of the wet areas on the East Coast to some of those areas where there is not a lot of water. We've been doing that. The original contract began in 2020, and it's now been extended to last until 2030 as we drive further capital investment. The market, as you'll have seen, is now preparing for a long-awaited period of significant investment in reservoirs. 15 years too late, but we're getting on with it. We've already secured an important role in this market.

Speaker #1: And we're already a partner to Anglian Water, delivering their Strategic Pipeline Alliance, which is to take water from some of the wet areas on the east coast to some of those areas where there is not a lot of water.

Speaker #1: And we've been doing that. We won the original contract, which began in 2020, and it's now being extended to last until 2030, as we drive further capital investment.

Speaker #1: And the market, as you'll have seen, is now preparing for a long-awaited period of significant investment in reservoirs—15 years too late, but we're getting on with it.

Speaker #1: And we've already secured an important role in this. Not in this market, we are already the enabling works partner for Anglian Water and Thames Water on their reservoir schemes, supporting the development of what is going to be a £50 billion market investment.

Alex Vaughan: We are already the enabling works partner for Anglian Water and Thames Water on their reservoir scheme, supporting the development of what is going to be a GBP 50 billion market investment. Our focus on this critical investment, our markets, our customers, and service, has resulted in Costain building the strongest ever breadth and scale of water service that exists. This case study, again, shows how we position ourselves under our strategy in our markets and is typical of all the markets that we operate in, and I believe underpins the strength of our strategy. Now, I'm now going to talk about each of the divisions. Transportation has been an incredible successful journey over the last couple of years. We've now built a very broad transportation business. We're exposed in the roads market on the strategic highway and the local and devolved highway networks.

Speaker #1: Our focus on this critical investment, our markets, our customers, and service has resulted in Costain building the strongest ever breadth and scale of water service that exists.

Speaker #1: This case study again shows how we position ourselves under our strategy in our markets, and is typical of all the markets that we operate in. I believe it underpins the strength of our strategy.

Speaker #1: Now I'm going to talk about each of the divisions. Transportation has been an incredibly successful journey over the last couple of years. We've now built a very broad transportation business.

Speaker #1: We're exposed in the roads market on the strategic highway and the local and devolved highway networks. We're involved in rail, right across from the strategic infrastructure on HS2 to supporting Transport for London upgrade their rail infrastructure.

Alex Vaughan: We're involved in rail right across from the strategic infrastructure on HS2 to supporting Transport for London upgrade their rail infrastructure. We've broken into the aviation market, where we now work for all three of the major airport operators, Heathrow Airport, Gatwick Airport, and Manchester Airports Group. We're also now we've broken into the ports market that we're beginning to see expand as it supports trade with the rest of the world, but also to support the offshore wind market. So huge success. In roads, we've completed a number of contracts, but we're now mobilizing those two strategic highways on the M5 and the M60, as well as some of the devolved work that we've got. On rail, the HS2 contracts, just to remind you, we've got three contracts for HS2.

Speaker #1: We've broken into the aviation market, where we now work for all three of the major airport operators: Heathrow Airport, Gatwick Airport, and Manchester Airports Group.

Speaker #1: And we're also now—having broken into the ports market—beginning to see it expand, as it supports trade with the rest of the world, but also supports the offshore wind market.

Speaker #1: So, huge success. And in roads, we've completed a number of contracts, but we're now mobilizing those two strategic highways on the M5 and the M60, as well as some of the devolved work that we've got.

Speaker #1: And on rail, the HS2 contracts—just to remind you, we've got three contracts for HS2. We're in the middle of delivering the major civils program at the moment.

Alex Vaughan: We're in the middle of delivering the major civils program at the moment, with two tunneling machines making their way to Euston as we speak at great pace. We've also got the two systems contracts, one for the HV power upgrade that's going to power the whole of HS2, and the second one, the tunnel fit out from an M&E point of view. We've also had a breakthrough contract with Transport for London, which has been great because we've been working with them on roads, and they told me that we were doing an all right job. Actually said that we were doing a good job. Now we've broken through into their rail, and we've won a leading position on upgrading their stations and the step-free access program that they've got running there. Also in local roads, we're making good headway.

Speaker #1: With two tunneling machines making their way to Houston as we speak, at great pace. And we've also got the two systems contracts—one for the HV power upgrade that's going to power the whole of HS2, and the second one, the tunnel fit-out from an M&E point of view.

Speaker #1: But we've also had a breakthrough contract with Transport for London, which has been great because we've been working with them on roads, and they told me that we were doing an all right job.

Speaker #1: Actually said we were doing a good job, and now we’ve broken through into their rail. We’ve won a leading position on upgrading their stations and the step-free access program that they’ve got running there.

Speaker #1: And also, in local roads, we're making good headway. And then, from an integrated transport perspective, I've talked about the aviation and I've talked about Port of Dover already.

Alex Vaughan: From an integrated transport, I have talked about the aviation and I have talked about Port of Dover already. It is really pleasing to see us making this progress. If I look at the pipeline in transportation, it is incredibly strong. The future opportunities right across this broader business that we have built are very strong and we see a very positive outlook for transportation. Natural Resources is clearly benefiting from strong delivery performance and significant investment right across water, energy, defense, and nuclear energy. In energy, we are focused on future-proofing the existing gas network, supporting gas capacity resilience, and now growth of the UK's electricity network. Our performance for Cadent Gas has continued to be excellent, and we are progressing the delivery of BP's landmark great carbon capture and storage project in Teesside. Importantly, we have also broken into the electricity transmission distribution market in the H1, targeting those substation upgrade programs.

Speaker #1: It's really pleasing to see us making this progress, and if I look at the pipeline in transportation, it's incredibly strong. The future opportunities across this broader business that we've built are very strong, and we see a very positive outlook for transportation.

Speaker #1: Natural Resources is clearly benefiting from strong delivery performance and significant investment right across water, energy, defense, and nuclear energy. In Energy, we're focused on future-proofing the existing gas network, supporting gas capacity resilience, and now growth of the UK's electricity network.

Speaker #1: Our performance for Cadent Gas has continued to be excellent, and we're progressing the delivery of BP's landmark Great Carbon Capture and Storage project in Teesside.

Alex Vaughan: Our performance for Cadent Gas has continued to be excellent, and we are progressing the delivery of BP's landmark great carbon capture and storage project in Teesside. Importantly, we have also broken into the electricity transmission distribution market in the H1, targeting those substation upgrade programs.

Speaker #1: Importantly, we've also broken into the electricity transmission and distribution market in the first half, targeting those substation upgrade programs. And in defense, again on the back of the strategic investment plan for defense, where the CASD program investment has been ring-fenced, we're now actively continuing to deliver the AWE program and the Devonport upgrade. There's a strong pipeline of opportunities that have come straight at us on the back of that, which present huge opportunities for us in defense where we have a great position.

Alex Vaughan: In defense, which again, on the back of the strategic investment plan for defense where the CASD program investment has been ring-fenced, we are now actively continuing to deliver the AWE program and the Devonport upgrade and there is a strong pipeline of opportunities that have come straight at us on the back of that which present huge opportunities for us in defense where we have a great position. In nuclear energy, we won the work last year, a huge amount of work working for Sellafield, Urenco, and NRS who are part of the decommissioning and how we are driving growth in that market as well. Again, there is an outstanding pipeline of future opportunities across all of our market segments in natural resources, and we see a positive outlook for this division as well.

Speaker #1: And in nuclear energy, we've won the work last year, a huge amount of work, working for Sellafield, Urenco, and NRS, who are part of the decommissioning, and how we're driving growth in that market as well.

Speaker #1: Again, there's an outstanding pipeline of future opportunities across all of our market segments in Natural Resources, and we see a positive outlook for this division as well.

Speaker #1: So, in final summary and to close, the quality and balance of our contract portfolio and broader customer and service mix is delivering growth in revenue, operating profit, and strong cash generation.

Alex Vaughan: In final summary and to close, the quality and balance of our contract portfolio and broader customer and service mix is delivering growth in revenue, operating profit, and strong cash generation. Our strong balance sheet is increasing the net cash position, is allowing us to increase returns to shareholders via dividends and share buybacks. We will continue to benefit from the committed growing investment in target markets that we have chosen to operate in and have demonstrated our ability to enter new growth market segments and expand our serving offering with existing and new customers. As I have said before, our record forward work position of GBP 7 billion over six times our annual revenue gives us excellent visibility of the future revenue and underpins our future growth that we have been talking about.

Alex Vaughan: In final summary and to close, the quality and balance of our contract portfolio and broader customer and service mix is delivering growth in revenue, operating profit, and strong cash generation. Our strong balance sheet is increasing the net cash position, is allowing us to increase returns to shareholders via dividends and share buybacks. We will continue to benefit from the committed growing investment in target markets that we have chosen to operate in and have demonstrated our ability to enter new growth market segments and expand our serving offering with existing and new customers. As I have said before, our record forward work position of GBP 7 billion over 6x our annual revenue gives us excellent visibility of the future revenue and underpins our future growth that we have been talking about.

Speaker #1: Our strong balance sheet and increasing net cash position are allowing us to increase returns to shareholders via dividends and share buybacks. We will continue to benefit from the committed, growing investment in the target markets that we've chosen to operate in and have demonstrated our ability to enter new growth market segments and expand our service offering with existing and new customers.

Speaker #1: As I've said before, our record forward work position of £7 billion—over six times our annual revenue—gives us excellent visibility of future revenue and underpins the future growth that we've been talking about.

Speaker #1: Bringing this all together, as Helen has said, we're now at that key inflection point as a business, with growth coming in the second half of this year, a step change in 2027, followed by a period of continued growth thereafter.

Alex Vaughan: Bringing this all together, as Helen has said, we are now at that key inflection point as a business with growth coming in the H2 of this year, a step change in 2027, followed by a period of continued growth thereafter. The business is in great shape. It has a team who pride themselves on solving the most complex challenges and delivering them to best-in-class standards predictably. We have a growing momentum, and we continue to take advantage of the significant opportunities ahead. This is a very exciting time for the UK, and it is a very exciting time for UK Infrastructure. Thank you very much.

Speaker #1: The business is in great shape. It has a team who pride themselves on solving the most complex challenges and delivering them to best-in-class standards, predictably.

Speaker #1: We have growing momentum, and we continue to take advantage of the significant opportunities ahead. This is a very exciting time for the UK, and it's a very exciting time for UK infrastructure.

Speaker #1: So thank you very much. Finally, as I hope you're aware, we'll be hosting a Capital Markets event on the 19th of November here in London, where we're going to discuss more of these growth drivers and bring that to life in more detail. I hope to see as many of you as can attend that event.

Alex Vaughan: Finally, as I hope you are aware, we will be hosting a capital markets event on 19 November here in London where we are going to discuss more some of these growth drivers and bring that to life in more detail. I hope to see as many of you as you can attend that event. Thank you very much. We will take your questions. First, we are just going to move and sit over here. Charlie, you are going to hand the mic out.

Speaker #1: Thank you very much. We'll take your questions, but first, we're just going to move and sit over here. Charlie, are you going to hand the mic out?

Speaker #2: Thanks. I Hi it's it's Ed Press from Barenberg. I see I seem to have sat in the best seat. I seem to have sat in the best seat for this.

Edward Prest: Thanks. Hi, it is Edward Prest from Berenberg. I seem to have sat in the best seat. I seem to have sat in the best seat.

Ed Prest: Thanks. Hi, it is Ed Prest from Berenberg. I seem to have sat in the best seat. I seem to have sat in the best seat.

Alex Vaughan: There you go, yeah.

Edward Prest: Three from me, please. Firstly, you note that Costain continues to achieve higher win rates than it has historically. From your perspective, what is driving this? Is this down to a broader change in market dynamics, or is it a change in the perception of Costain from customers? Secondly, consultancy. You note in the statement that at 18.2%, that is an increase on where it was last year. Do you have an optimum level for consultancy revenue in mind? Is there still further increase to go, or do you expect some normalization to come? Thirdly, energy transmission. Are you able to talk about the competitive dynamics here? How difficult will the incumbents be to compete against, or does the massive growth in the sector represent an opportunity that you are able to capitalize on?

Ed Prest: Three from me, please. Firstly, you note that Costain continues to achieve higher win rates than it has historically. From your perspective, what is driving this? Is this down to a broader change in market dynamics, or is it a change in the perception of Costain from customers? Secondly, consultancy. You note in the statement that at 18.2%, that is an increase on where it was last year. Do you have an optimum level for consultancy revenue in mind? Is there still further increase to go, or do you expect some normalization to come? Thirdly, energy transmission. Are you able to talk about the competitive dynamics here? How difficult will the incumbents be to compete against, or does the massive growth in the sector represent an opportunity that you are able to capitalize on?

Speaker #2: Three from me, please. Firstly, you note that Costain continues to achieve higher win rates than it has historically. From your perspective, what's driving this?

Speaker #2: Is this down to a broader change in market dynamics, or is it a change in the perception of cost gain from customers? Secondly, consultancy—you note in the statement that it's at 18.2%. That's an increase on where it was last year.

Speaker #2: Do you have an optimum level for consultancy revenue in mind? Is there still further increase to go, or do you expect some normalization to come?

Speaker #2: And thirdly, energy transmission. Are you able to talk about the competitive dynamics here? How difficult will the incumbents be to compete against, or does the massive growth in the sector represent an opportunity that you're able to capitalize on?

Speaker #1: You're right. If I take those three.

Alex Vaughan: You all right if I take those three?

Speaker #3: Absolutely.

Helen Willis: Absolutely.

Speaker #1: Yeah. So look, what do I think is behind the higher win rate? I think a massive part of that is the insight that we have into the customers because we've worked for a lot of these customers for a long time.

Alex Vaughan: Yeah. So look, what do I think is behind the higher win rate? I think a massive part of that is the insight that we have in the customers, because we have worked for a lot of these customers for a long time. And we really get to understand their business. I think we work really hard on really getting underneath what is it that they want, what is their ambition from the investment, what do they need? And then I do think we are really good at coming up with solutions. We talk about ourselves as an infrastructure solutions business. We have got amazing people that come up with faster, more efficient, better solutions, and we work really hard on that. And therefore, the value we add. And we put a lot of hard work into it. I was asked on a media call earlier, do you ever turn work down?

Speaker #1: And we really, you know, we get to understand their business. I think we work really hard on really getting underneath: what is it that they want?

Speaker #1: What's their ambition from the investment? What do they need? And then, I do think we're really good at coming up with solutions. We talk about ourselves as an infrastructure solutions business.

Alex Vaughan: We talk about ourselves as an infrastructure solutions business. We have got amazing people that come up with faster, more efficient, better solutions, and we work really hard on that. And therefore, the value we add. And we put a lot of hard work into it. I was asked on a media call earlier, do you ever turn work down?

Speaker #1: You know, we've got amazing people that come up with faster, more efficient, better solutions, and we work really hard on that. Therefore, the value we add comes from the hard work we put into it.

Speaker #1: I was asked on a media call earlier, "Do you ever turn work down?" There is a lot of work we turn down every single month.

Alex Vaughan: There is a lot of work we turn down every single month. We are very selective on what meets our risk appetite, but also where do we think we can win. If we don't think we have got a reason to beat someone else, why should we bid it? So we are pretty rigorous on that. So I hope that answers your first question. Second one, optimum volume of consultancy. I think we are going to say more about that at the Capital Markets Day, definitely. Look, if we look at the decision-making tree, it isn't just about growing consultancy. It comes down to where can we have the best position with the customer? Where can we maximize the value, and therefore the return that we can get out of it, and how best should Costain position ourselves? And that is how we drive it. So we are certainly growing our engineering and design.

Speaker #1: We're very selective about what meets our risk appetite, but also, where do we think we can win? If we don't think we've got a reason to beat someone else, why should we bid it?

Speaker #1: So, we're pretty rigorous on that, so I hope that answers your first question. Second one: optimum volume of consultancy—I think we're going to say more about that at the Capital Markets Day, definitely. Look, if we look at the decision-making tree, it isn't just about growing consultancy, it comes down to where we can have the best position with the customer.

Alex Vaughan: Look, if we look at the decision-making tree, it isn't just about growing consultancy. It comes down to where can we have the best position with the customer? Where can we maximize the value, and therefore the return that we can get out of it, and how best should Costain position ourselves? That is how we drive it. We are certainly growing our engineering and design.

Speaker #1: Where can we maximize the value, and therefore the return that we can get out of it? And how best should Costain position itself? And that's how we drive it.

Speaker #1: So we're certainly growing our engineering and design that is grew 60% last year. and that's going to grow because we actually think we're a better designer than the traditional designers and that's something that we're investing in to grow but in terms of the delivery partner and some of the other services there's that decision to make whether we go for a capital program or whether we go for consultancy and that's based on where do we think's the best position to go there.

Alex Vaughan: That grew 60% last year. And that is going to grow because we actually think we are a better designer than the traditional designers, and that is something that we are investing in to grow. But in terms of the delivery partner and some of the other services, there is that decision to make, whether we go for a capital program or whether we go for consultancy, and that is based on where do we think is the best position to go there. So I wouldn't give you a fixed percentage at this stage, but as I say, we will say more at the Capital Markets Day on that. Energy transmission. Look, every market is competitive. I would love it if they weren't, but they are not. They are competitive. And I think we have got a great offer.

Alex Vaughan: That grew 60% last year. That is going to grow because we actually think we are a better designer than the traditional designers, and that is something that we are investing in to grow. In terms of the delivery partner and some of the other services, there is that decision to make, whether we go for a capital program or whether we go for consultancy, and that is based on where do we think is the best position to go there. I wouldn't give you a fixed percentage at this stage, but as I say, we will say more at the Capital Markets Day on that. Energy transmission. Look, every market is competitive. I would love it if they weren't, but they are not. They are competitive. I think we have got a great offer.

Speaker #1: So I wouldn't give you a fixed percentage at this stage, but as I say, we'll say more at the Capital Markets Day on that.

Speaker #1: Energy transmission—look, every market is competitive. I would love it if they weren't, but they're not; they're competitive. And I think we've got a great—well, we've got a great offer.

Speaker #1: We've got a great proposition, and we've certainly been successful so far on a couple of opportunities, which we'll certainly say more about again at the Capital Markets Day.

Alex Vaughan: We've got a great proposition, and we've certainly been successful so far on a couple of opportunities, which we'll certainly say more again at the Capital Markets Day. But yeah, look, competition is strong and healthy as always.

Speaker #1: But yeah, look, competition is strong and healthy as always.

Speaker #2: Cool. Thank you.

Edward Prest: Cool. Thank you.

Ed Prest: Cool. Thank you.

Speaker #1: Thanks.

Alex Vaughan: Thanks.

Speaker #2: Thanks very much. Ainsley Lemon from Invest. Just two from me, please. When we look at the visibility and secured work for next year, you've got 90%—one, just how unusual is that?

Aynsley Lammin: Thanks very much. Aynsley Lammin from Investec. When we look at the visibility and secured work for next year, you've got 90%. One, just how unusual is that? What's driving that visibility? Also, if we think about the margin, if there's a bit of cost inflation, how well-protected you are in terms of contract terms to pass on and deliver the margins you expect. Then the second question, just on share capital returns, obviously you reduced the dividend coverage to 2.5x. A bit more around your thinking there. The share price had a good run. Does that mean there's less chance of share buybacks? Is there going to be more dividends? Could that go down further? Just any color or insight there. Thanks.

Speaker #2: What's driving that visibility? And also, if we think about the margin, if there's a bit of cost inflation, how well are you protected in terms of contract terms to pass on and deliver the margins you expect?

Speaker #2: And then the second question, just on kind of share capital returns—obviously, reducing the dividend coverage to two and a half cents a bit more. Any thinking there? Is it, you know, the share price had a good run—does that mean there's less chance of share buybacks and it's going to be more dividends? Could that go down further? Just any color or insight there, thanks.

Speaker #1: I think the first one, you take the second one. You all right with that? Yep. So, look, in terms of visibility, I think what's great around the visibility is we've won the frameworks.

Alex Vaughan: I'll take the first one, you take the second one. You all right with that?

Helen Willis: Yep.

Helen Willis: Yep. So look, in terms of visibility, I think what is great around the visibility is we won the frameworks. We have now spent 18 months doing a lot of design work, preparation work, and we are now into starting the delivery. We have had long-term visibility of this work, and it is one of the points that Helen makes. We get asked a question about do you have the capacity to be able to deliver all this infrastructure? Well, because we have been able to see it coming for 3 years, and sometimes longer, we are able to plan because we have done that work. One of the great things is that we co-develop the solutions with the customer. So, we can identify risk, we can eliminate risk, make sure we are not carrying that risk. So effectively, the design is complete. We are then able to deliver it.

Alex Vaughan: Yep. Look, in terms of visibility, I think what is great around the visibility is we won the frameworks. We have now spent 18 months doing a lot of design work, preparation work, and we are now into starting the delivery. We have had long-term visibility of this work, and it is one of the points that Helen makes. We get asked a question about do you have the capacity to be able to deliver all this infrastructure? Well, because we have been able to see it coming for 3 years, and sometimes longer, we are able to plan because we have done that work. One of the great things is that we co-develop the solutions with the customer. We can identify risk, we can eliminate risk, make sure we are not carrying that risk. So effectively, the design is complete. We are then able to deliver it.

Speaker #1: We've now spent 18 months, you know, doing a lot of design work, preparation work, and we're now into starting the delivery. And so we've had long-term visibility of this work, and it's one of the points that Helen makes.

Speaker #1: You know, we get asked a question about, "Do you have the capacity to be able to deliver all this infrastructure?" Well, because we've been able to see it coming for three years, and sometimes longer, we're able to plan. Because we've done that work, one of the great things is that we co-develop the solutions with the customer.

Speaker #1: So, you know, we can identify risk. We can eliminate risk and make sure we're not carrying that risk. So, effectively, when the design is complete, we're then able to deliver it.

Speaker #1: So we're in that phase now of actually going to site and delivering a lot of that work. We've spent the last 18 months, and that's what gives you that visibility and that confidence.

Alex Vaughan: We are in that phase now of now going to site and delivering a lot of that work we have spent the last 18 months, and that is what gives you that visibility and that confidence. Just coming back to your cost inflation point. Look, the big drivers on cost inflation are the same thing that affects everyone at the moment. It is energy prices. Energy intensive industries. As do our clients, actually, we have protection from inflation, and our clients do as well in their budgets. So we are seeing that come through. But we do not just sit back and accept that happening. We work really hard with the clients to determine and go, "Okay, well, what are we going to do?" Because at the end of the day, they have got to try and manage their cash flow and their budget as well. But we have got protection.

Speaker #1: Just coming back to your cost inflation point—look, I mean, the big drivers on cost inflation are the same things that affect everyone at the moment.

Speaker #1: It's energy prices and energy-intensive industries we have, as do our clients. Actually, we have protection from inflation, and our clients do as well in their budgets.

Speaker #1: So we're seeing that come through. But we don't just sit back and accept that happening. We work really hard with the clients to turn around and go, "Okay, well, what are we going to do?" Because at the end of the day, they've got to try and manage their cash flow and their budget as well.

Alex Vaughan: We are seeing that come through. But we do not just sit back and accept that happening. We work really hard with the clients to determine and go, "Okay, well, what are we going to do?" Because at the end of the day, they have got to try and manage their cash flow and their budget as well. We have got protection.

Speaker #1: But we have got, we have got protection, and at the moment it is limited to energy prices.

Alex Vaughan: At the moment it is limited to energy prices. Share capital.

Speaker #2: Share capital.

Speaker #3: Yeah. So share capital allocation a capital allocation rather in the the divvy versus share buyback. I mean obviously this has been the first year that we've been able to be unconstrained in in how we've returned how we've planned to return to to shareholders.

Helen Willis: Yes. Share capital allocation, capital allocation rather in the divvy versus share buyback. Obviously this has been the first year that we have been able to be unconstrained in how we have returned, how we plan to return to shareholders. We had the dividend parity removed in January that we announced. So this has been the first year where we have been able to set those levels without constraint. Obviously a GBP 20 million buyback program this year, 10 previous year, 10 before that. I think three times policy was set way back when we did the capital raise, before I joined even.

Speaker #3: We had the dividend parity removed in January that we announced. So this has been the first year where we've been able to set those levels without constraint.

Speaker #3: Obviously, £20 million buyback program this year—£10 million the previous year, £10 million before that. I think the three-times policy was set way back when we did the capital raise.

Speaker #3: Before I joined, even going even before me, and you know, looking at the market, looking at the level of returns we want to make, we felt two and a half times was a sensible progression.

Alex Vaughan: Before you, yes.

Helen Willis: Even before me.

Alex Vaughan: Pre you.

Helen Willis: Looking at the market, looking at the level of returns we want to make, we felt 2.5 times was a sensible progression. I guess you could say it's a sign of our increasing confidence. Obviously we've got the cash balance to back it up, the growth is coming. You should really view it as a sign of that confidence. How are we seeing that capital allocation going forward? I guess, Capital Markets Day, we'll talk a bit more about that. That's not easy to say. I think we have got still the same policy. We're still investing in the business. That's really important. We do recognize the importance of those returns. We have talked a bit about M&A in the past, we're actively looking at that.

Helen Willis: Looking at the market, looking at the level of returns we want to make, we felt 2.5x was a sensible progression. I guess you could say it's a sign of our increasing confidence. Obviously we've got the cash balance to back it up, the growth is coming. You should really view it as a sign of that confidence. How are we seeing that capital allocation going forward? I guess, Capital Markets Day, we'll talk a bit more about that. That's not easy to say. I think we have got still the same policy. We're still investing in the business. That's really important. We do recognize the importance of those returns. We have talked a bit about M&A in the past, we're actively looking at that.

Speaker #3: I guess you could say it's a sign of our increasing confidence. obviously we've got the we've got the cash balance to to back it up and and the growth is coming.

Speaker #3: So, you should really view it as a sign of that confidence. How are we seeing that capital allocation going forward? I guess, you know, at Capital Markets Day we'll talk a bit more about that.

Speaker #3: That's not easy to say, but I think you know we still have the same policy. We're still investing in the business—that's really important.

Speaker #3: But we do recognize the importance of those returns. We have talked a bit about M&A in the past, and we're actively looking at that.

Speaker #3: We won't rush into anything, but you know we're well set to consider all of those elements of our policy.

Helen Willis: We won't rush into anything, but we're well set to consider all of those elements of our policy.

Speaker #2: Hi there, Max Hayes from Cavendish. Just two questions. So, you've spoken about AMP8 contracts moving from design to delivery during the second half. Just looking at the wider portfolio, how should we think about the timing of other projects in other verticals similarly moving from design to delivery over the next few years?

Max Hayes: Hi there, Max Hayes from Cavendish. Just two questions. You've spoken about AMP8 contracts moving from design to delivery during the H2. Just looking at the wider portfolio, how should we think about the timing of other projects in other verticals, similarly moving from design to delivery over the next few years? As they move into those larger delivery phases, just how you continue to build margin. Thank you.

Speaker #2: And then, as they move into those larger delivery phases, just how you continue to build margin. Thank you.

Speaker #1: Yeah. Look thanks Max. so look AMP eight I've talked about as you said so the M60s and other classic example we've spent four years working on the design consenting it's a it's a project that's going to be delivered in in a lot of people's back garden.

Alex Vaughan: Yeah. Look, thanks, Max. Look, AMP8 I've talked about, as you said, so the M60 is another classic example. We've spent four years working on the design, consenting. It's a project that's going to be delivered in a lot of people's back garden, or right next to people's back gardens, so it's taken a lot of planning. We've completed that, and it's the same with a number of the nuclear energy projects. A lot of work has been in the design phase. So we have this, and this is what we've got to look at. You have this period within the regulatory period that you get allocated the work, you then start designing and develop solutions, and then you spend.

Alex Vaughan: Yeah. Look, thanks, Max. Look, AMP8 I've talked about, as you said, so the M60 is another classic example. We've spent four years working on the design, consenting. It's a project that's going to be delivered in a lot of people's back garden, or right next to people's back gardens, so it's taken a lot of planning. We've completed that, and it's the same with a number of the nuclear energy projects. A lot of work has been in the design phase. We have this, and this is what we've got to look at. You have this period within the regulatory period that you get allocated the work, you then start designing and develop solutions, and then you spend.

Speaker #1: Or right next to people's back gardens. So it's taken a lot of planning, but we've completed that, and it's the same with a number of the nuclear energy projects.

Speaker #1: A lot of work has gone in there. So, it was a design phase. We have this, and this is what we've got to look at.

Speaker #1: You have this period within the regulatory period when you get allocated the work. You then start designing and developing solutions, and then you spend—and that's why you always see that curve is sort of like a wave, which actually the customers are now going to help flatten out.

Alex Vaughan: That's why you always see that curve is like a wave, which actually the customers are now going to help flatten out, that we get that. It's the same for Gatwick, we've won the contract, we're spending the time at the moment, but next year we'll go into the delivery phase of those contracts. So it's a pretty similar message right across the book, if that helps. The really important thing about how do we drive margins is really getting value out of that stage 1. The fact that we spend so much time, to spend four years on the M60, really working through the design, what's the best way to deliver it, how do we assure it, how do we make it predictable, means that when you get to the delivery phase, you've eliminated the uncertainty.

Alex Vaughan: That's why you always see that curve is like a wave, which actually the customers are now going to help flatten out, that we get that. It's the same for Gatwick, we've won the contract, we're spending the time at the moment, but next year we'll go into the delivery phase of those contracts. So it's a pretty similar message right across the book, if that helps. The really important thing about how do we drive margins is really getting value out of that Stage 1. The fact that we spend so much time, to spend four years on the M60, really working through the design, what's the best way to deliver it, how do we assure it, how do we make it predictable, means that when you get to the delivery phase, you've eliminated the uncertainty.

Speaker #1: We get that, and it's the same for Gatwick. We've just been—we've won the contract, we're spending the time at the moment, but next year we'll go into the delivery phase of those contracts.

Speaker #1: So it's a pretty similar message right across right across the book if that helps. just how do we the really important thing about how do we drive margins is really getting value out of that stage one the fact that we spend so much time to spend four years on the M60 really working through the design what's the best way to deliver it how do we assure it how do we make it predictable means that when you get to the delivery phase you've eliminated the uncertainty you've you've you haven't got design challenges you haven't got ground conditions you haven't got procurement challenges you've done all of that work which sort of means that you just go and execute it and and we call it assembly now you just go and assemble the solution.

Alex Vaughan: You haven't got design challenges, you haven't got ground conditions, you haven't got procurement challenges, you've done all of that work. Which sort of means that you just go and execute it, and we call it assembly now. You just go and assemble the solution. So that's really what is going to drive the margins and Helen has a great phrase.

Speaker #1: So that's really what is going to drive the margins, and you know, Helen has a great phrase.

Speaker #3: Well, I'll just build slightly, and then I'll give the magic phrase. I will.

Helen Willis: Well, I'll just build slightly, and then I'll give the magic phrase.

Alex Vaughan: Will you give?

Helen Willis: I will.

Alex Vaughan: Helen's got a great phrase in the business, which is what really helps us drive that.

Speaker #1: So, Helen's got a great phrase in the business, which is what really helps us drive that.

Alex Vaughan: Helen's got a great phrase in the business, which is what really helps us drive that.

Speaker #3: Yeah, so just to build on that, I think it's the quality of the portfolio gradually coming through. So you've got three elements.

Helen Willis: Just one build on that. I think it is the quality of the portfolio gradually coming through. You have three elements. The portfolio delivering exactly as Alex has described. We talked about still the tail end, I mentioned in the presentation about the RDP frameworks, which were signed back in 2016. As everything comes on in the right risk profile and right terms, as we have been working very hard on, you see that quality of the portfolio increase in the predictable delivery, making sure we are reaching all the milestones and gain shares, that gradually pushes that margin up. The biggest piece is, as we grow in scale, we will get, I think, a reasonably significant operating leverage uplift as well. Various factors contributing.

Speaker #3: So, the portfolio is delivering exactly as Alex has described. But we talked about still the tail end with—you know, I mentioned in the presentation about the RDP frameworks, which were signed back in 2016.

Speaker #3: So as everything comes on in the right risk profile and right terms as as we've been working very hard on you see that quality of the portfolio increase in the the the predictable delivery making sure we're reaching all the milestones and and gain shares that that gradually pushes that margin up.

Speaker #3: But the biggest piece is, as we grow in scale, we will get, I think, a reasonably significant operating leverage uplift as well. So, various factors contributing.

Speaker #4: Good morning. It's all happening on the right of the room today. Three questions, if I may. Firstly, a very helpful case study on water, but can we just revisit the nuclear one at the four-year and remind us how that is progressing, and what the order book is for nuclear?

[Analyst] (Panmure Liberum): Good morning. It is all happening on the right of the room today. Three questions, if I may. Firstly, a very helpful case study on water, but can we just revisit the nuclear one at the full year and remind us how that is progressing and what share of the order book is nuclear? Secondly, your FY27 visibility of 91% is pretty standout. Can you give us an indication of what the same number would have been a year ago, roughly? Thirdly, no talk about the pension, which is good news. Do you have any plans for the pension?

Joe Brent: Good morning. It is all happening on the right of the room today. Three questions, if I may. Firstly, a very helpful case study on water, but can we just revisit the nuclear one at the full year and remind us how that is progressing and what share of the order book is nuclear? Secondly, your FY2027 visibility of 91% is pretty standout. Can you give us an indication of what the same number would have been a year ago, roughly? Thirdly, no talk about the pension, which is good news. Do you have any plans for the pension?

Speaker #4: Secondly, your FY27 visibility of 91% is pretty standout. Can you give us an indication of what the same number would have been a year ago, roughly?

Speaker #4: And thirdly, no, no talk about the pension, which is good news. But do you have any plans for the pension?

Speaker #1: Okay, well let me talk about the first one, and I'll let you do the difficult ones. So, yeah, look, I mean, what we're trying to do with these case studies is sort of bring the strategy to life.

Alex Vaughan: Well, let me talk about the first one, and I will let you do the difficult ones. Yeah, look, what we are trying to do with these case studies is sort of bring the strategy to life. I think what it shows is a really strategic focus on what is the investment, what is it trying to solve, and therefore, where can Costain add best value, and not just sitting there saying, "Right, what do they want to build?" It is the wider challenges. I hope that came across in that. For nuclear, we are making great progress. If I look at, for Urenco, we are now moving into the delivery phase, having spent time with them on a lot of the uranium enrichment. It is not one big project, it is a series of about 30 individual projects on a program of work with them.

Speaker #1: I think what it shows is a really strategic focus on what is the investment, what is it trying to solve, and therefore, where can Costain add best value, and not just sit in there saying, right, what do they want to build. It's the wider challenges.

Speaker #1: and I hope that came across in that. And for and for nuclear we're making we're making great progress. So if I look at for your Enco we're now moving into the delivery phase having spent time with them on a lot of the uranium enrichment and it's a it's not one big project it's a sort of series of about 30 individual projects on a program of work with them.

Speaker #1: So we're doing that. In North Wales, we're doing some decommissioning work at existing old power stations for NRS, doing that, and then clearly with Sellafield, we've got this 15-year program, and we've been helping to mobilize.

Alex Vaughan: We are doing that. We have got, in North Wales, we are doing some decommissioning work of existing old power stations for NRS, doing that. Then clearly with Sellafield, we have got this 15-year program, and we have been helping to mobilize. The H1 of this year has been all about mobilizing it, get the client's team ready, get our team ready. We have now got the pipeline of opportunities that we are starting to develop and design to be able to deliver that. Then we have got a pipeline of some pretty exciting stuff, which hopefully we will be able to talk about soon. The UK government has made a very clear stay that it wants to have a sovereign capability around that nuclear capability. So they do not want to become reliant on other nations for the supply of anything within the nuclear area.

Speaker #1: So the first half of this year has been all about mobilizing it—getting the client's team ready, getting our team ready. We've now got the pipeline of opportunities that we're starting to develop and design to be able to deliver that.

Speaker #1: And then we've got a pipeline of some pretty exciting stuff, which—you know—hopefully we'll be able to talk about soon. You know, the UK government has made a very clear statement that it wants to have a sovereign capability around that nuclear capability.

Speaker #1: So, they don't want to become reliant on other nations for the supply of anything within the nuclear area. So what you're going to see is quite significant investment supporting the fact that we've got Sizewell C, but we've got SMRs, and that's a market that we are targeting to build a position in. But also, some of the wider—you've seen the uranium enrichment with Urenco is a clear thing that the government's saying, right, we're going to produce that ourselves. But there's a lot of other nuclear energy capability they want to build ourselves, that we're actively engaged on.

Alex Vaughan: What you are going to see is quite significant investment supporting the fact that we have got Sizewell C, but we have got SMRs, and that is a market that we are targeting to build a position in. But also some of the wider, you have seen uranium enrichment with Urenco Group is a clear thing that the government is saying, "Right, we are going to produce that ourselves," but there is a lot of other nuclear energy capability they want to build ourselves that we are actively engaged on. So yeah, pretty an exciting place to be.

Speaker #1: So yeah, pretty an exciting place to be.

Speaker #3: So, visibility. So, it's fairly usual for us to be at around about 90% for the current year, but the 91% for next year is much higher.

Helen Willis: Visibility. It is fairly usual for us to be at around about 90% for current year, but the 91% for next year is much higher. We have not given a number before, Joe, so I am not going to do that now. But it is significantly better, and I think it comes from where we are in the growth trajectory, where we are in terms of design going into construction, as Alex was describing on water and, for example, roads. We have landed those call-off contracts within the frameworks. We have landed the design work. We are actively going into construction. So that gives you really solid visibility into next year, and indeed the further year. So yes, it is bigger. It is nice to have that visibility, but really crucially, planning the resources around it, so we need to know we have got the right people in place, the right supply chain.

Speaker #3: We haven't given a number for before Joe so I'm not going to to to do that now but it is it is significantly better and I think it comes from where we are in in the in the growth trajectory where we are in terms of design going into construction as as Alex was describing on water and for example roads we've landed those call off contracts within the frameworks we've we've landed the design we're we're actively going into construction.

Speaker #3: So that gives you really solid visibility into into next year. And indeed the the the further year. So yes it's it's bigger it's it's nice to have that visibility but really really crucially planning the resources around it.

Helen Willis: That gives you really solid visibility into next year, and indeed the further year. Yes, it is bigger. It is nice to have that visibility, but really crucially, planning the resources around it, so we need to know we have got the right people in place, the right supply chain.

Speaker #3: So, we need to know we've got the right people in place, the right supply chain, and that's one of the reasons that we pay so well as well. You know, there's a lot of work out there, which is great, but obviously we've got some competitors who want the best as well.

Helen Willis: That is one of the reasons that we pay so well as well. There is a lot of work out there, which is great, but obviously, we have got some competitors who want the best as well. So we do everything we can to make sure we have got the best of both of those. Pension plans. It is great not to have to talk about it too much. No cash contributions ongoing with the triennial we landed in January. We are looking at, so what do we do with it, buy in, buy out versus run on, and we are actively doing some analysis at the moment. No concrete plans, but we are obviously looking at it and keeping it under consideration as you would expect.

Speaker #3: So we do everything we can to make sure we've got the best of both of those. pension plans. So it's great not to be able to talk not to have to talk about it too much.

Speaker #3: We're seeing no cash contributions ongoing with the triennial. We landed in January. We are looking at, so what do we do with it?

Speaker #3: Buy-in, buy-out versus run-on. And we're actively doing some analysis at the moment. So, no concrete plans, but we are obviously looking at it and keeping it under consideration, as you'd expect.

Speaker #4: Good morning. Andrew Nasi from Peel Hunt. A couple of questions—three actually. If we start off with customer diversification and activity diversification, which has been a key part of the strategy...

Andrew Nussey: Good morning, Andrew Nussey from Peel Hunt. Couple of questions, or three actually. If we start off with customer diversification, activity diversification, which has been a key part of the strategy, can you reassure us that on the day 1 risk-adjusted margin is acceptable and it's not been work secured in the hope of future workloads coming from that customer? Second question on road. If we look beyond the M60 and the M5, do you still see that as a growth market for Costain, particularly given the news for around focus on asset renewal and replacement rather than miles of new tarmac? Then the third question. GBP 70 million of cash tied up in joint operations. If that could be restructured in a way with your partners, would that then lead to a review of the capital allocation strategy?

Speaker #4: Can you reassure us that, on day one, the risk-adjusted margin is acceptable, and that this isn't work secured in the hope of future workloads coming from that customer?

Speaker #4: Second question on roads. If we look beyond the M60 and the M5, do you still see that as a growth market for Costain, particularly given the news around a focus on asset renewal and replacement rather than miles of new tarmac?

Speaker #4: And then the third question: £70 million of cash tied up in joint operations. If that could be restructured in a way with your partners, would that then lead to a review of the capital allocation strategy?

Alex Vaughan: Secrets out. I'll let you cover the last one. Just in terms of customer diversification, we very purposely turned around a couple of years ago and decided that this business needed to diversify. If you look back at Helen's slide, almost 70% of the business was the Department for Transport. Very big in rail, very big in road. To grow the business, we felt we needed to break into other markets, which we've successfully done, as you can see. We've grown, and again, if we look at the quality of the customers that we're buying, we're being very selective about who wants to work with their partners in strategic long-term relationships, not one-off contracts. Every opportunity that we look at in winning those frameworks has the same risk appetite applied to it as we do on any of our other work.

Speaker #1: Secret's out. I'll let you cover the last one. So, just in terms of customer diversification, we very purposely turned around a couple of years ago and decided that this business needed to diversify.

Speaker #1: It was, you know, if you look back at Helen's slide, you know, almost 70% of the business was the Department of Transport. You know, very big in rail, very big in road.

Speaker #1: And to grow the business, we felt we needed to break into other markets, which we have successfully done, as you can see. We've grown, and again, if we look at the quality of the customers that we're bringing in, we're being very selective about who wants to work with us. They're partners in strategic, long-term relationships, not one-off contracts.

Speaker #1: And every opportunity that we look at in winning those frameworks has the same risk appetite applied to it as we do on any of our other work.

Speaker #1: So we're very clear about this—we really always want a Stage One, where we basically get to jointly create the solution together before we commit to what the price and the budget is. That's a common way of working with customers, even the new customers.

Alex Vaughan: We're very clear about, we really always want a stage 1, that we basically get to jointly create the solution together. Before we commit to what the price and the budget is. That's a common way of working with customers, even the new customers, and then we can get into executing and delivering it. So there's no discount or adjustment made for a future growth opportunity. We look at every opportunity on its merits against our criteria, and generally everything. So if you look at this TFL rail contract, it's a program of work that's going to be delivered over the next 5 years worth of work to go and deliver it, and it will be in that same style, as will Dover, as will National Grid. Yeah, we certainly don't sacrifice returns just to get in with a customer.

Speaker #1: And then we can get into executing and delivering it. So there's no discount or adjustment made for a future growth opportunity. We look at every opportunity on its merits against our criteria.

Speaker #1: And generally everything—so if you look at this TfL Rail contract, it's a program of work that's going to be delivered over the next five years, worth of work to go and deliver it. And it'll be in that same style as, well, Dova, as well as National Grid. So yeah, pretty—so we don't, we certainly don't sacrifice returns just to get in with a customer.

Speaker #1: the road market look definitely the type of work so new great new build apart from the M5 which is going to be a great new build but it's being funded by a data by a data center who needs who needs the access.

Alex Vaughan: The road market, look, definitely the type of work, so great new build apart from the M5, which is going to be a great new build, but it's being funded by a data center who needs the access. The M60 is exactly what you've just talked about. It's an existing junction that requires a total redesign and a rephasing because it is, if you listen to a travel program, it is every single day, Simister Island will be on the news talking about how it's gridlocking Manchester because it's where three motorways come and converge, and that needs to be reconfigured. That is exactly the type of work that National Highways are going to be doing on their strategic network. It is about are there assets under distress that need doing, or are there congestion pinch points that need. That type of project will continue.

Speaker #1: the M60 is exactly what you've just talked about. It's an existing junction that requires a to total redesign and a rephasing because it is you know if you listen to a travel program it is every single day semester island will be on the news talking about how it's gridlocking Manchester because it's where three motorways come and converge and that needs to be reconfigured.

Speaker #1: That is exactly the type of work that National Highways are going to be doing on their strategic network. It is about other assets under distress that need doing, or are there congestion pinch points that need—so that type of project will continue.

Speaker #1: But we're seeing a lot more money being given also to the local roads. So the contract we've won for Norfolk County Council is to allow access for 4,000 new homes.

Alex Vaughan: We are seeing a lot more money being given also to the local roads. The contract we have won for Norfolk County Council is to allow access for 4,000 new homes. So we are seeing a lot of that going around the country about what unlocks either data centers, homes, or other economic drivers in the UK. We also do maintenance, so we maintain all of the highway infrastructure in the northeast of the country. So we grit the roads, we maintain them, we cut the grass. So there is a whole load of work that we do there that will continue as well. So we are pretty confident that that market is going to continue to be an attractive place for us, as well as the other exciting things that we have added to make us a much broader transportation business.

Speaker #1: So we're seeing a lot of that going around the country, about what unlocks either data centers, homes, or other economic drivers in the UK.

Speaker #1: And also, we do maintenance. We maintain all of the highway infrastructure in the northeast of the country, so we grit the roads.

Speaker #1: We maintain them. We cut the grass. So there's a whole load of work that we do there that will continue as well. So we're pretty confident that that market is going to continue to be an attractive place for us, as well as the other exciting things that we've added to make us a much broader transportation business.

Speaker #3: So, £70 million of cash is tied up in joint operations. So yes, we always talk about our cash as what's liquid. Cash does flow through from joint operations into ours, but obviously, it's not fully liquid.

Helen Willis: So GBP 70 million of cash tied up in joint operations. So, yes, we always talk about our cash as what is liquid. Cash does flow through from joint operations into ours, but obviously it is not fully liquid. It is a chunk of cash. It is from a couple of joint operations, one of which you will not be surprised to hear is HS2 with our JV arrangements with SCS, in SCS. So clearly, it would fundamentally change our liquid cash balance and therefore would lead us to consider it. But we do have to negotiate that. We do have to think about what is appropriate for ourselves and our joint venture partners in those operations. So it is absolutely something we are looking at, but not something we have any certainty on yet.

Speaker #3: It is a chunk of cash. It's from a couple of joint operations, one of which you won't be surprised to hear is HS2 with our JV arrangements with SCS.

Speaker #3: in SCS so clearly clearly it it would it would it would fundamentally change our our liquid cash balance and and therefore would lead us to consider it.

Speaker #3: But we do have to—we do have to negotiate that. We do have to think about what's appropriate for ourselves and our joint venture partners in those operations.

Speaker #3: So it's absolutely something we're looking at, but not something we have any certainty on yet.

Speaker #4: Johnny Cooper from Deutsche News. I'm just looking at your market pipeline, slide 20, and the reservoir program isn't on there. So, is that beyond 2032?

Johnny Cooper: Johnny Cooper from Deutsche Numis. I am just looking at your market pipeline, slide 20, and the reservoir program is not on there. So is that beyond 2032? I think you mentioned, Alex, GBP 50 billion program. Is that right? So could this replace your HS2 workload on a run rate basis and as we go into the 2030s? Probably a follow-up question from Andrew. Would this be JV'd and what would the cash dynamics be? Sorry, last one. More broadly, generally you have not seen big working capital swings in your business, but we are seeing some infrastructure markets like power become more cash generative. Are you seeing that in any of yours and could that be the case in water, for example?

Jonny Coubrough: Jonny Coubrough from Deutsche Numis. I am just looking at your market pipeline, slide 20, and the reservoir program is not on there. Is that beyond 2032? I think you mentioned, Alex, GBP 50 billion program. Is that right? Could this replace your HS2 workload on a run rate basis and as we go into the 2030s? Probably a follow-up question from Andrew. Would this be JV'd and what would the cash dynamics be? Sorry, last one. More broadly, generally you have not seen big working capital swings in your business, but we are seeing some infrastructure markets like power become more cash generative. Are you seeing that in any of yours and could that be the case in water, for example?

Speaker #4: I think you mentioned Alex's £50 billion program. Is that right? So, could this replace your HS2 workload on a run-rate basis as we go into the 2030s? And probably a follow-up question from Andrew.

Speaker #4: Would this be JVed and what would the what would the cash dynamics be? and sorry last one more more broadly generally you haven't seen big working capital swings in your business but we're seeing some infrastructure markets like power become more cash cash generative do are you seeing that in any of yours and and could that be the case in in water for example?

Speaker #1: Yeah, so, look, the reservoirs aren't on there because the regulator hasn't necessarily provided the capital for them. So what we've put on there is what the regulators have basically signed off, even though everyone knows — you know, I was in meetings with Defra last week talking to them about the reservoir program.

Alex Vaughan: Yeah. So look, the reservoirs is not on there because the regulator has not necessarily provided the capital for those. So what we have put on there is what the regulators have basically signed off, even though everyone knows. I was in meetings with Defra last week, talking to them about the reservoir program. So it is critical, those 23 reservoirs do need to be built. Look, and where Costain positions itself is quite key. So there will be some reservoirs that we will not go for. So for example, White Horse, for Thames Water, because they are looking for a DBFO partner, the terms and conditions are likely to be fixed price lump sum. That is the type of contract that we would not go for. Whereas there are others that are being funded by the water companies and they want to work in a similar way to the way we deliver the water infrastructure at the moment.

Alex Vaughan: Yeah. Look, the reservoirs is not on there because the regulator has not necessarily provided the capital for those. What we have put on there is what the regulators have basically signed off, even though everyone knows. I was in meetings with Defra last week, talking to them about the reservoir program. It is critical, those 23 reservoirs do need to be built. Look, and where Costain positions itself is quite key. So there will be some reservoirs that we will not go for.

Speaker #1: So it is critical, you know, those 23 reservoirs do need to be built, and Costain's position itself is quite key.

Speaker #1: So there'll be some reservoirs that we won't go for. So for example White Horse for Thames Water because they're looking for a DBFO partner the terms and conditions could are likely to be fixed price lump sum that's the type of contract that we wouldn't we wouldn't go for whereas there are others that are being funded by the water companies and they want to work in a similar way to the way we deliver the water infrastructure at the moment.

Alex Vaughan: For example, White Horse, for Thames Water, because they are looking for a DBFO partner, the terms and conditions are likely to be fixed price lump sum. That is the type of contract that we would not go for. Whereas there are others that are being funded by the water companies and they want to work in a similar way to the way we deliver the water infrastructure at the moment.

Speaker #1: but again you know where we've positioned ourselves with White Horse at the moment is we are the clients enabling works partner. So we've been doing all of the trials to proof prove the design of of the reservoir and also we're doing all the overseeing all the archaeological surveys and service diversions and all of that at the moment.

Alex Vaughan: But again, where we've positioned ourself with White Horse at the moment is we are the client's enabling works partner. So we've been doing all of the trials to proof, prove the design of the reservoir. Also we're doing all the overseeing, all the archeological surveys and service diversions and all of that at the moment. So again, getting in there. So where exactly we choose to position ourself will depend on risk profile, and also where we think we can add the most value. So yeah, that's sort of still up in the air. In terms of it replacing HS2, our HS2 contracts are going to continue until late in the 2030s. The growth in the balanced portfolio of the business is what fulfills any decline in HS2. So this isn't about one major project being replaced by another major project.

Alex Vaughan: But again, where we've positioned ourself with White Horse at the moment is we are the client's enabling works partner. We've been doing all of the trials to proof, prove the design of the reservoir. Also we're doing all the overseeing, all the archeological surveys and service diversions and all of that at the moment. Again, getting in there. Where exactly we choose to position ourself will depend on risk profile, and also where we think we can add the most value. Yeah, that's sort of still up in the air. In terms of it replacing HS2, our HS2 contracts are going to continue until late in the 2030s. The growth in the balanced portfolio of the business is what fulfills any decline in HS2. This isn't about one major project being replaced by another major project.

Speaker #1: So again, getting in there—so where exactly we choose to position ourselves will depend on our risk profile and also where we think we can add the most value.

Speaker #1: So, yeah, that's sort of still up in the air. And in terms of it replacing HS2, our HS2 contracts are going to continue until late in the 2030s.

Speaker #1: And the growth in the balance portfolio of the business is what fulfills any decline in HS2. So this isn't about one major project being replaced by another major project.

Speaker #1: If I look at the growth at Gatwick, I look at the growth, you know, in energy, and right across—when we look at our business, we can see an even more balanced portfolio of business in the future, even without HS2 in it.

Alex Vaughan: If I look at the growth at Gatwick, I look at the growth in energy and right across, when we look at our business, we can see an even more balanced portfolio of business in the future, even without HS2 in it. Although at the moment, we've still got HS2 in it for a long time.

Speaker #1: Although at the moment, we've still got HS2 in it for a long, long time.

Speaker #3: My goodness the frameworks that we've we've won I think it's important to to recognize that the there are call off contracts within the frameworks.

Helen Willis: The frameworks that we've won, I think it's important to recognize that there are call-off contracts within the framework suite and they're very large framework values. There's a much steadier stream of work that comes through from there, and they're all two-stage, where we're designing and then going into construction. So that diversity of customer sector, procurement cycles, and so on, just all helps to smooth the overall shape for Costain, so we don't have any cliff edges at all. Risk-wise, I guess we view that as an additional opportunity.

Helen Willis: The frameworks that we've won, I think it's important to recognize that there are call-off contracts within the framework suite and they're very large framework values. There's a much steadier stream of work that comes through from there, and they're all two-stage, where we're designing and then going into construction. That diversity of customer sector, procurement cycles, and so on, just all helps to smooth the overall shape for Costain, so we don't have any cliff edges at all. Risk-wise, I guess we view that as an additional opportunity.

Speaker #3: So, even though they're very large framework values, there's a much steadier stream of work that comes through from there, and they're all two-stage, where we're designing and then going into construction.

Speaker #3: So that diversity of customer sector procurement cycles and so on just all helps to smooth the overall shape for costing. So we don't have any cliff edges at all.

Speaker #3: And reservoirs, I guess we view that as an additional opportunity, so absolutely we'll look at it. But it's all about the risk profile, as Alex said.

Alex Vaughan: Yeah.

Helen Willis: So, absolutely we'll look at it. It's all about the risk profile, as Alex said.

Helen Willis: Absolutely we'll look at it. It's all about the risk profile, as Alex said.

Alex Vaughan: Working capital suite.

Jonny Coubrough: Working capital suite.

Helen Willis: Working capital suites. We wouldn't take anything on that is going to put us under stress. Everything that we're looking at at the moment is very similar in cash shape. It tends to be that we pay out our suppliers and then we receive in on a monthly basis. As I said before, the real key in this sector is managing the design, managing the scope, managing how you deliver on the ground such that you don't have issues with the customer, you don't have balances tied up in work in progress. Then the cash does flow in a fairly steady fashion.

Speaker #3: Working capital swings. We wouldn’t take anything on that is going to put us under stress, so everything that we’re looking at at the moment is very similar in cash shape.

Speaker #3: It tends to be that we pay out our suppliers, and then we receive in on a monthly basis. So, as I said before, the real key in this sector is managing the design, managing the scope, managing how you deliver on the ground, such that you don't have issues with the customer, you don't have balances tied up in work in progress, and then the cash does flow in a fairly steady fashion.

Speaker #1: Are we done? Well, rather than me standing there, if you don't mind, I'll just conclude now. Look, thanks very much for—thanks very much for taking the time to join us.

Alex Vaughan: Are we done? Rather than me standing there, if you don't mind, I'll just conclude now. Look, thanks very much for taking the time to join us. I hope it's a bit cooler out there for you when you do get out there. Look, it's a really exciting time for Costain. We've made tremendous progress in building a much broader business. Strength in the performance is coming through, and we've got a really exciting future. So thank you very much. See you soon.

Speaker #1: I hope it's a bit cooler out there for you when you do get out there. Look, it's a really exciting time for Costain. We've made tremendous progress in building a much broader business, strengthening the performance is coming through, and we've got a really exciting future.