Full Year 2026 Galliford Try Holdings PLC Earnings Call

September 17, 2026

Bill Hocking: Should we kick off? Morning, all. Nice to see you. Welcome to Galliford Try's full year 2026 results. I suppose just having a think about the video reel that you saw a bit of there and was running outside, it really, even now, still inspires me to watch the sort of stuff that we do all around the country every day and the contribution we make to the social and economic country, the productivity of this country. I think it is fantastic. One of the great things about construction is you can see the fruits of your labor generally for the rest of your life, and it is a great tangible thing that brings good people into the business and gives us a lot of the job satisfaction. Okay. Here is the agenda for today. Standard agenda. I will do the highlights. I will steal some of Chris's thunder at the front end.

Bill Hocking: Should we kick off? Morning, all. Nice to see you. Welcome to Galliford Try's Full-Year 2026 Results. I suppose just having a think about the video reel that you saw a bit of there and was running outside, it really, even now, still inspires me to watch the sort of stuff that we do all around the country every day and the contribution we make to the social and economic country, the productivity of this country.

Speaker #1: Should we kick off? Morning all. Nice to see you. Welcome to Galliford Try's full year '26 results. I suppose, just having a think about the video reel that you saw a bit of up there and was running outside.

Speaker #1: It really—even now—still inspires me to watch the sort of stuff that we do all around the country every day, and the contribution we make to the social and economic fabric of the country, to the productivity of this country.

Speaker #1: I think it’s fantastic. One of the great things about construction is that you can see the fruits of your labor, generally for the rest of your life, and it’s a great, tangible thing that brings good people into the business and gives us a lot of job satisfaction.

Bill Hocking: I think it is fantastic. One of the great things about construction is you can see the fruits of your labor generally for the rest of your life, and it is a great tangible thing that brings good people into the business and gives us a lot of the job satisfaction. Okay. Here is the agenda for today. Standard agenda. I will do the highlights. I will steal some of Kris's thunder at the front end.

Speaker #1: Okay, so here's the agenda for today. Standard agenda. I'll do the highlights. I'll steal some of Chris's thunder at the front end, you know, and then he'll take you through the numbers in a bit more detail.

Bill Hocking: He will take you through the numbers in a bit more detail. I will do a quick update on the strategy, then we will go to questions. The first thing is everybody, really, really pleased that we have delivered six now consecutive years of improvement in all of our key metrics. I suppose the key message from this slide is that we are absolutely confident in that trajectory continuing into the future. All the ingredients are there for us to continue to grow that order book. We have got a long line of sight into the future. We are well-aligned with the government's priorities of where they need to spend their money and where we need to improve the infrastructure of this country.

Speaker #1: I'll do a quick update on the strategy, then we'll go to questions. So, the first thing is, everybody, you know, we're really, really pleased that we've delivered six now consecutive years of improvement in all of our key metrics.

Speaker #1: And I suppose the key message from this slide is that we are absolutely confident in that trajectory continuing into the future. All the ingredients are there for us to continue to grow that order book.

Speaker #1: We've got a long sort of line of sight into the future. We're well aligned with the Government's priorities for where they need to spend their money, and where we need to improve the infrastructure of this country.

Speaker #1: And that gives us huge opportunities going forward to produce the goods, as we have done for the last six years, and to have more capital allocation optionality in that time.

Bill Hocking: That gives us huge opportunities going forward to produce the goods as we have done for the last six years and to have more capital allocation optionality in that time. In a nutshell, we are very well on track for our 2030 targets that you see down the bottom there. Okay. Here are the headlines. Very pleased. You have all seen this already, I presume, on the RNS. Revenue up at GBP 1.93 billion, up 3%. If you remember this time last year, we said revenue would be slightly flatter than the growth we had seen the previous years, and that is how it panned out. But still 3%, we are happy with that.

Speaker #1: So, in a nutshell, we are very well on track for our 2030 targets that you see down at the bottom there. Okay, so here are the headlines.

Speaker #1: Very pleased to see you've seen all this already, I presume, on the RNS. Revenue is up at £1.93 billion, up 3%. If you remember, this time last year we said revenue would be slightly flatter than the growth we'd seen in previous years, and that's how it panned out.

Speaker #1: But still, 3%. We're happy with that. More importantly, of course, because we're a bottom-line driven company, not a top-line driven company, we're much happier that the 3 is now 3.2—sorry, at the half year, is now 3.5 at the full year, and up from 3% in the previous full year.

Bill Hocking: More importantly, of course, because we are a bottom line-driven company, not a top line-driven company, much happier that the 3% is now 3.2%, sorry, at the H1 is now 3.5% at the full year and up from 3% in the previous full year. That is a really good performance and well on track, as I said earlier on, towards our 2030 targets. That produces adjusted PBT of GBP 55.9 million, up 24%, and a really good full-year dividend of 23.5p, which is up again, similar sort of number actually. We should have tweaked it to have 23.5 and 23.5% really. Anyway, up a very similar number, 23, 24% up on the same period last year. Cash has performed really well. GBP 216 million of average month-end cash, up 21%.

Bill Hocking: More importantly, of course, because we are a bottom line-driven company, not a top line-driven company, much happier that the 3% is now 3.2%, sorry, at the H1 is now 3.5% at the full-year and up from 3% in the previous full-year. That is a really good performance and well on track, as I said earlier on, towards our 2030 targets. That produces adjusted PBT of GBP 55.9 million, up 24%, and a really good full-year dividend of 23.5p, which is up again, similar sort of number actually. We should have tweaked it to have 23.5 and 23.5% really.

Speaker #1: So that's a really good performance, and well on track, as I said earlier on, towards our 2030 targets. That produces adjusted PBT of £55.9 million, up 24%, and a really good full-year dividend of 23.5p.

Speaker #1: Which is up, again, similar sort of number, actually. We should have tweaked it to have 23.5 and 23.5%, really, but anyway, up a very similar number—23, 24%—up on the same period last year.

Bill Hocking: Anyway, up a very similar number, 23%, 24% up on the same period last year. Cash has performed really well. GBP 216 million of average month-end cash, up 21%. Cracking order book, I will come back to the order book in a bit more detail as to what is in it, but a really good high-quality order book and of course, a new GBP 15 million share back that we announced this morning. All in all, everyone, we are in very good shape. Very pleased with our progress, and I will hand over to Kris to give you more detail on the numbers.

Speaker #1: Cash has performed really well—£216 million of average month-end cash, up 21%. Cracking order book, and I'll come back to the order book in a bit more detail as to what's in it, but a really good, high-quality order book, and of course, the new £15 million share buyback that we announced this morning.

Bill Hocking: Cracking order book, I will come back to the order book in a bit more detail as to what is in it, but a really good high-quality order book and of course, a new GBP 15 million share back that we announced this morning. All in all, everyone, we are in very good shape. Very pleased with our progress, and I will hand over to Kris to give you more detail on the numbers.

Speaker #1: So, all in all, everyone, we're in very good shape—very pleased with our progress—and I'll hand over to Chris to give you more detail on the numbers.

Speaker #2: Thank you, Bill, and good morning, everyone. I'm going to leave the 'tweaking numbers' comment in the past, I think. So, I'm really pleased to stand up here today and present our full-year results, and as Bill said, to report a sixth consecutive year of growth.

Kris Hampson: Thank you, Bill, and good morning, everyone. I am going to leave the tweaking numbers comment in the past, I think. Look, I am really pleased to stand up here today and present our full year results, and as Bill said, to report a sixth consecutive year of growth. It is a hugely positive set of numbers I am sure you will agree, demonstrating continued execution of our strategy and resulting in better-than-expected revenue growth, strong profit and margin improvements, and continued 100% cash conversion. But before I get into the financials, let me talk about The Rise here, a project completed and handed over to the client in July. This tower adopted off-site construction fabrication, modular integration, and digital tools to enhance build quality and efficiency. This is Cardiff's new tallest building.

Kris Hampson: Thank you, Bill, and good morning, everyone. I am going to leave the tweaking numbers comment in the past, I think. Look, I am really pleased to stand up here today and present our full-year results, and as Bill said, to report a sixth consecutive year of growth. It is a hugely positive set of numbers I am sure you will agree, demonstrating continued execution of our strategy and resulting in better-than-expected revenue growth, strong profit and margin improvements, and continued 100% cash conversion. But before I get into the financials, let me talk about The Rise here, a project completed and handed over to the client in July. This tower adopted off-site construction fabrication, modular integration, and digital tools to enhance build quality and efficiency. This is Cardiff's new tallest building.

Speaker #2: It's a hugely positive set of numbers. I surely agree, demonstrating continued execution of our strategy, and resulting in better-than-expected revenue growth, strong profit and margin improvements, and continued 100% cash conversion.

Speaker #2: But before I get into the final financials, let me talk about The Rise here—a project completed and handed over to the client in July.

Speaker #2: This tower adopted off-site construction fabrication, modular integration, and digital tools to enhance build quality and efficiency. This is Cardiff's new tallest building, and what I've really liked about it is that it's fitted into a really tight site, between the mainline train from London and major roads in the city.

Kris Hampson: What I have really liked about it is fitted into a really tight site, between the mainline train from London and between major roads in the city, a really tight site. But it really demonstrates how our capabilities and innovations can make previously unviable land available for great construction. Turning to the financials and getting into a bit more detail through the P&L to try and help you understand the story of the year. As I referred to earlier, we have delivered revenue growth ahead of expectations at 3%, up to more than GBP 1.93 billion, with the AMP8 transition smoothly navigated and an exceptional outperformance from our highways team, giving us our sixth period of total top-line growth. Exactly as we predicted, both of our core divisions of Building and Infrastructure turn the revenues into higher profits through strong margin progression.

Speaker #2: So, a really tight site, but it really demonstrates how our capabilities and innovations can make previously unviable land available for great construction. So, turning to the financials and getting into a bit more detail through the P&L, to try and help you understand the story of the year.

Speaker #2: As I referred to earlier, we have delivered revenue growth ahead of expectations at 3%, up to more than £1.93 billion. With the AMP8 transition smoothly navigated, and an exceptional outperformance from our highways team, this gives us our sixth period of total top-line growth.

Speaker #2: And exactly as we predicted, both of our core divisions—Building and Infrastructure—turned their revenues into higher profits through strong margin progression. At 3.5%, the divisional adjusted operating margin was up by 53 basis points, predominantly driven by commercial discipline and improved commercial terms in those newer frameworks, quality delivery projects from our risk-managed order book, and a growing contribution from our specialist services businesses.

Kris Hampson: At 3.5%, the divisional adjusted operating margin was up by 53 basis points, predominantly driven by commercial discipline and improved commercial terms in those newer frameworks, quality delivery projects from our risk-managed order book, and a growing contribution from our specialist services businesses. The key point for me here is that the diversification of our chosen markets means we are in more control of our overall revenue and profit outcomes. Let me pick some highlights from the slide. Adjusted operating profit at GBP 49.5 million increased by 21.9%, materially ahead of revenue growth. There were no exceptional items in the year for the second consecutive year. The 53 basis point improvement in divisional adjusted operating margin is particularly encouraging for us and gives us further confidence in our operating model as we move towards our 4% margin target for 2030.

Speaker #2: And so the key point for me here is that the diversification of our chosen markets means we're in more control of our overall revenue and profit outcomes.

Speaker #2: Let me pick some highlights from the slide. Adjusted operating profit at £49.5 million, increased by 21.9%, materially ahead of revenue growth. And there were no exceptional items in the year, for the second consecutive year.

Speaker #2: The 53-basis-point improvement in divisional adjusted operating margin is particularly encouraging for us and gives us further confidence in our operating model as we move towards our 4% margin target for 2030.

Speaker #2: Net interest income has increased to £6.4 million, up 45%, reflecting improved cash management on higher average cash balances. And as previously guided, the adjusted effective tax rate for the year was 25.0%, broadly in line with strategy corporation tax rates.

Kris Hampson: Net interest income has increased to GBP 6.4 million, up 45%, reflecting improved cash management on higher average cash balances. As previously guided, the adjusted effective tax rate for the year was 25.0%, broadly in line with statutory corporation tax rates. As Bill said, even after that higher tax rate, adjusted basic earnings per share increased by 23.1% to 42.4p per share. This means that adjusted EPS CAGR has grown by 33% since 2021. We remain confident in delivering higher earnings going forward. I will talk later about how we intend to use the cash we generate to drive accretive EPS accretion going forward. Moving now to our Building division. The team have delivered another disciplined performance with commercial focus and high-quality operational delivery, driving margins to new highs.

Speaker #2: And as Bill said, even after that higher tax rate, adjusted basic earnings per share increased by 23.1% to 42.4 pence per share. And this means that adjusted EPS CAGR has grown by 33% since 2021.

Speaker #2: We remain confident in delivering higher earnings going forward, and I will talk later about how we intend to use the cash we generate to drive EPS accretion going forward.

Speaker #2: Moving now to our building division. The team has delivered another disciplined performance, with commercial focus and high-quality operational delivery driving margins to new highs.

Speaker #2: These strong profit results, and an order book up more than 8%, have been delivered against a backdrop of some delayed decision-making, meaning some revenue has moved into 2027.

Kris Hampson: These strong profit results and an order book up more than 8% have been delivered against a backdrop of some delayed decision-making, meaning some revenue has moved into 2027. This leaves Building revenues slightly down at GBP 951 million for the year. More importantly, adjusted operating profits increased by 17.8% to GBP 33.1 million, with adjusted margins up by 57 basis points. This reflects the quality of our contract selection and bidding discipline, our risk-managed order book, and the quality of work we have delivered across 94 completed projects in the year, including The Rise at Cardiff, with total project revenues of over GBP 700 million. As you know, we are selective in the revenue we take on, and delivering continuing and sustainable increases in profit and cash for our shareholders is the story here.

Speaker #2: This leaves left building revenues slightly down at £951 million for the year. But more importantly, adjusted operating profits increased by 17.8% to £33.1 million, with adjusted margins up by 57 basis points.

Speaker #2: This reflects the quality of our contract selection and bidding discipline. Our risk-managed order book, and the quality of work we've delivered across 94 completed projects in the year, including The Rise at Cardiff, with total project revenues of over £700 million.

Speaker #2: As you know, we are selective in the revenue we take on, and delivering continuing and sustainable increases in profit and cash for our shareholders is the story here.

Speaker #2: And the order book does tell the forward story, up nicely to £2.7 billion, driven by strong demand across defence and custodial. High levels of work are secured for the upcoming financial year, with 93% of revenue secured for 2027, and 60% for the following year already.

Kris Hampson: The order book does tell the forward story, up nicely to GBP 2.7 billion, driven by strong demand against defense and custodial. High levels of work are secured for the upcoming financial year, with 93% of revenue secured for 2027 and 60% for the following year already. As Bill has said, we are supportive of the new Prime Minister's intention to free up planning regulation and to deliver on the government's new affordable homes commitments. All in all, another strong year for the Building division, with all sectors in good shape and an order book that sets us up well for 2027 and beyond. It is a similar story in our Infrastructure division, where FY2026 was a very strong year. The division comprises our Highways and Environment businesses, and this includes our higher margin specialist and capital maintenance businesses.

Speaker #2: As Bill said, we are supportive of the new Prime Minister's intention to free up planning regulation and to deliver on the government's new affordable homes commitments.

Speaker #2: So, all in all, another strong year for the building division, with all sectors in good shape, and an order book that sets us up well for 2027 and beyond.

Speaker #2: And it is a similar story in our Infrastructure division, where FY26 was a very strong year. The division comprises our Highways and Environment businesses, and this includes our higher margin Specialist and Capital Maintenance businesses.

Speaker #2: Revenues increased to £971.6 million, up around 7.7%, reflecting a smooth transition to AMP8 and an exceptional year in highways. If we talk about highways for a second, they delivered three major projects open for traffic in the year.

Kris Hampson: Revenues increased to GBP 971.6 million, up some 7.7%, reflecting a smooth transition to AMP8 and an exceptional year in Highways. If we talk about Highways for a second, they delivered three major projects open for traffic in the year. The Melton Mowbray distributor road, which you will all now know as the Pork Pie Way, is opened. The 8-kilometer Carlisle Southern Link Road and the A47 at Blofield in Norfolk. These three projects completed some 12 miles of road, 15 major structures, and finalized project revenues of in excess of GBP 400 million at attractive gross margins. As I said, the transition from AMP7 to AMP8 was relatively smooth in the year, with Environment growing revenues slightly where we had expected them to be flat.

Speaker #2: The Melton Mowbray distributor road, which you'll all now know as Pork Pie Way, is opened. The 8-kilometre Carlisle Southern Link Road, and the A47 at Blofield in Norfolk.

Speaker #2: These three projects completed some 12 miles of road, 15 major structures, and finalised project revenues in excess of £400 million, at attractive gross margins.

Speaker #2: As I said, the transition from AMP 7 to AMP 8 was relatively smooth in the year, with Environment growing revenues slightly, where we had expected them to be flat.

Speaker #2: Looking forward to fiscal year 2027, AMP 8 project revenues are building now for both the main contracting businesses and the smaller specialist water and capital maintenance businesses, as early design work turns into construction and manufacturing work.

Kris Hampson: Looking forward to FY27, AMP8 project revenues are building now for both the main contracting businesses and for the smaller specialist water and capital maintenance businesses as early design work turns into construction and manufacturing work. Within the overall division, the mix of revenue will swing back to environment in FY27 as those highways teams move on to the earlier stages, the earlier lower revenue stages of their new projects. This will have a flattening impact on the aggregated infrastructure revenues into FY27. In FY26, margins increased by 49 basis points, again to 3.5%. This was driven by the quality first time delivery, improved commercial terms on our new frameworks, accelerated delivery in a long, hot, and dry summer, which we all enjoyed, and the tidy closeouts on those major roads projects. Consequently, adjusted operating profit for the division increased by 25.2% to GBP 34.3 million.

Speaker #2: Within the overall division, the mix of revenue will swing back to Environment in FY27, as those Highways teams move on to the earlier, lower-revenue stages of their new projects.

Speaker #2: And this will have a flattening impact on the aggregated infrastructure revenues in FY27. In FY26, margins increased by 49 basis points, again to 3.5%.

Speaker #2: And this was driven by the quality first-time delivery, improved commercial terms on our new frameworks, accelerated delivery in a long, hot, and dry summer—which we all enjoyed—and the tidy closeouts on those major roads projects.

Speaker #2: Consequently, adjusted operating profit for the division increased by 25.2% to £34.3 million. So, I think for me, the key thing to take from both of those two slides for Building and Infrastructure is that both businesses are now delivering 3.5%, up from 3% a year ago.

Kris Hampson: I think for me, the key thing to take from those two slides for building an infrastructure is that both businesses are now delivering 3.5%, up from 3% a year ago. The forward order book for infrastructure is held at GBP 1.7 billion, weighting towards environment at GBP 1.17 billion with secured revenues for next year or the current financial year, 87% and nearly two-thirds of FY28. The ongoing commercial and operational discipline we have shown and the new improved framework terms on our AMP8 frameworks gives us confidence in margin progression going forward. If I turn now to our balance sheet, a slide you have all seen before. Strong trading and continued discipline and balance sheet management have maintained a very robust cash position and increasing net assets. Year-end cash was GBP 259 million, up 9.0%.

Speaker #2: The forward order book for Infrastructure is held at £1.7 billion, weighting towards Environment at £1.17 billion, with secured revenues for next year, or the current financial year, at 87%, and nearly two-thirds of FY28.

Speaker #2: And the ongoing commercial and operational discipline we have shown, and the new, improved framework terms on our AMP8 frameworks, give us confidence in margin progression going forward.

Speaker #2: If I turn now to our balance sheet—a slide you've all seen before—strong trading and continued discipline in balance sheet management have maintained a very robust cash position and increasing net assets.

Speaker #2: Year-end cash was £205.3 million, up 9.0%. The number I would really point you to is the average month-end cash, at £216.2 million, up 21% on the prior year, broadly tracking profits.

Kris Hampson: The number I would really point you to is the average month-end cash at GBP 216.2 million, up 21% on the prior year, broadly tracking profits. The group continues to have no bank debt, no pension liabilities. Our GBP 25 million RCF remains undrawn, and we are pleased to have taken the first options to extend this by a year to 2029. The PPPE assets valued at GBP 37.2 million generated annuity income of GBP 3.7 million in the year. This is a portfolio of assets which generates strong cash back returns, and there is a liquid market for such assets. We keep this portfolio under review, and should we find a use for this capital with a higher return for shareholders, we could look to divest individual assets as necessary. Lastly, and no means leastly on this slide, we are proud to and committed to paying our suppliers on time.

Speaker #2: And the group continues to have no bank debt, no pension liabilities. Our £25 million RCF remains undrawn, and we're pleased to have taken the first options to extend this by a year to 2029.

Speaker #2: The PPP assets, valued at £37.2 million, generated annuity income of £3.7 million in the year. This is a portfolio of assets which generates strong cash-back returns, and there is a liquid market for such assets.

Kris Hampson: This is a portfolio of assets which generates strong cash back returns, and there is a liquid market for such assets. We keep this portfolio under review, and should we find a use for this capital with a higher return for shareholders, we could look to divest individual assets as necessary. Lastly, and no means leastly on this slide, we are proud to and committed to paying our suppliers on time.

Speaker #2: We keep this portfolio under review, and should we find a use for this capital with a higher return for shareholders, we could look to divest individual assets as necessary.

Speaker #2: And lastly, and no means leastly on this slide, we are proud to and committed to paying our suppliers on time. With average days to pay at 27 days, and 97% of invoices paid within 60 days, we are comfortably in line with their payment requirements.

Kris Hampson: With average days to pay at 27 days and 97% of invoices paid within 60 days, we are comfortably in line with fair payment requirements. In summary, we maintain a straightforward, resilient, and strong balance sheet, and this remains a key differentiator for our people, our clients, our suppliers, and investors. If I turn now to the cash flow, the spot of the balance sheet. You can see on the left our FY26 cash bridge explaining the movements in our net cash over the last 12 months. Cash from operating activities was GBP 56.1 million, including IFRS 16 lease repayments. That was ahead of our adjusted operating profit at GBP 49.5 million. Working capital was essentially neutral across the year at GBP 0.9 million of inflow. What this means is that the seasonal outflow that we reported in March reversed in full as it did in the prior year.

Speaker #2: And so, in summary, we maintain a straightforward, resilient, and strong balance sheet, and this remains a key differentiator for our people, our clients, our suppliers, and investors.

Speaker #2: If I turn now to the cash flow that supported the balance sheet, you can see on the left our FY26 cash bridge, explaining the movements in our net cash over the last 12 months.

Kris Hampson: You can see on the left our FY26 cash bridge explaining the movements in our net cash over the last 12 months. Cash from operating activities was GBP 56.1 million, including IFRS 16 lease repayments. That was ahead of our adjusted operating profit at GBP 49.5 million. Working capital was essentially neutral across the year at GBP 0.9 million of inflow. What this means is that the seasonal outflow that we reported in March reversed in full as it did in the prior year.

Speaker #2: Cash from operating activities was £56.1 million, including our first 16 lease reprints, and that was ahead of our adjusted operating profit at £49.5 million.

Speaker #2: Working capital was essentially neutral across the year at £0.9 million of inflow. What this means is that the seasonal outflow that we reported in March reversed to inflow, as it did in the prior year.

Speaker #2: Net positive interest income of £6.4 million, up from £4.4 million a year ago, on higher cash balances. And put it together with the trading cash flows and the other of minus £2.5 million, that gave us circa £60 million of net inflows.

Kris Hampson: Net positive interest income of GBP 6.4 million, up from GBP 4.4 million a year ago on higher cash balances. Putting together the trading cash flows and the other of -GBP 2.5 million, that gave us circa GBP 60 million of net inflows. Against these inflows, we have invested GBP 8.1 million against the Nene Valley Fire acquisition that we announced at the H1. Alongside this, we have made shareholder returns of some GBP 30.3 million, being GBP 20.3 million of cash dividends in the year and the GBP 10 million share buyback completed in April. Alongside this, we have made some smaller organic investments in our Keighley fabrication facility and in upgrading our commercial reporting suite of systems. These total GBP 1.1 million. All in all, the total capital allocation in the year equaled GBP 39.5 million, all generated from trading cash flows and representing some 70% of the adjusted PBT for the year.

Speaker #2: Against these inflows, we have invested 8.1 million pounds against the mean value for our acquisition that we announced at the half year. And alongside this, we have made shareholder returns of some 30.3 million pounds, being 20.3 million pounds of cash dividends in the year, and the 10 million pound share buyback completed in April.

Speaker #2: Alongside this, we've made some smaller organic investments in our chiefly fabrication facility, and in upgrading our commercial reporting suite of systems. These total £1.1 million.

Kris Hampson: Alongside this, we have made some smaller organic investments in our Keighley fabrication facility and in upgrading our commercial reporting suite of systems. These total GBP 1.1 million. All in all, the total capital allocation in the year equaled GBP 39.5 million, all generated from trading cash flows and representing some 70% of the adjusted PBT for the year.

Speaker #2: All in all, the total capital allocation in the year equaled £39.5 million, all generated from trading cash flows, and representing some 70% of the adjusted PBT for the year.

Speaker #2: In the year, there was no corporation tax outflow, largely due to the use of historic tax losses. But, as previously guided, we will return to paying corporation tax from 2027, as these losses have now largely been used up due to recent successive years of profitability.

Kris Hampson: In the year, there was no corporation tax outflow, largely due to the use of historic tax losses. As previously guided, we will return to paying corporation tax from 2027 as these losses have now largely been used up due to recent successive years of profitability. We felt on the right-hand side it was worth showing the aggregated cash flows of the last three years to demonstrate the consistency and similarity with which our model generates and uses cash. For me, the first key point here is the tight control of working capital. As you can see on the slide, over the three-year period, working capital has been a net inflow of circa GBP 5 million. We feel this clearly demonstrates the high quality of our profits. We turn working capital into cash broadly every month, and we have done so for more than three years now.

Speaker #2: And we felt, on the right-hand side, it was worth showing the aggregated cash flows of the last three years to demonstrate the consistency and similarity with which our model generates and uses cash.

Speaker #2: For me, the first key point here is the tight control of working capital. As you can see on the slide, over the three-year period, working capital has been a net inflow of circa £5 million.

Kris Hampson: For me, the first key point here is the tight control of working capital. As you can see on the slide, over the three-year period, working capital has been a net inflow of circa GBP 5 million. We feel this clearly demonstrates the high quality of our profits. We turn working capital into cash broadly every month, and we have done so for more than three years now.

Speaker #2: We feel this clearly demonstrates the high quality of our profits. We turn working capital into cash on a broad basis every month, and we have done so for more than three years now.

Speaker #2: Secondly, beyond the prompt conversion to cash, the two bridges clearly demonstrate the broad range of our accretive, creative capital allocation policy in play year on year, with more than £120 million of capital allocated over the last three years.

Kris Hampson: Secondly, beyond the prompt conversion to cash, the two bridges clearly demonstrate the broad range of our accretive capital allocation policy in play year on year, with more than GBP 120 million of capital allocated over the last three years. As we look forward to 2030, we are focused on maintaining this track record and then ensuring we allocate capital that we generate as optimally as possible. If we have a look at our capital allocation policy, the first thing to say on this slide is our capital allocation priorities remain unchanged, and you can see progress against each of these on the bottom half of this slide, as I just discussed on the cash bridge.

Speaker #2: And as we look forward to 2030, we're focused on maintaining this track record and ensuring we allocate the capital that we generate as optimally as possible.

Speaker #2: If we have a look at our capital allocation policy, the first thing to say on this slide is that our capital allocation priorities remain unchanged.

Speaker #2: And you can see progress against each of these on the bottom half of this slide, as I just discussed on the cash bridge. And as we look to 2030, with a strong pipeline of work, high visibility of revenues, and our track record of converting revenues to profits to cash, we believe we can continue to deliver sequential cash performances that will give us plenty of capital allocation optionality.

Kris Hampson: As we look to 2030 with a strong pipeline of work, high visibility of revenues, and our track record of converting revenues to profits to cash, we believe we can continue to deliver sequential cash performances that will give us plenty of capital allocation optionality. Let me talk you through our thinking here. We will continue to grow our sustainable dividend at 1.8x adjusted EPS cover. That is a market leading cover in our sector. The 1.8x cover represents circa 2x cover on our normal operations and improves to 1.8x when we also return the annual interest earned on our PPP assets. Even after these dividends over the next four years, there will still be plenty of free cash flows to invest.

Speaker #2: Let me talk you through our thinking here. We will continue to grow our sustainable dividend at 1.8 times adjusted EPS cover. That’s a market-leading cover in our sector.

Kris Hampson: That is a market leading cover in our sector. The 1.8x cover represents circa 2x cover on our normal operations and improves to 1.8x when we also return the annual interest earned on our PPP assets. Even after these dividends over the next four years, there will still be plenty of free cash flows to invest.

Speaker #2: The 1.8 times cover represents approximately 2 times cover on our normal operations, and improves to 1.8x when we also return the annual interest earned on our PPP assets.

Speaker #2: Even after these dividends, over the next four years, there will still be plenty of free cash flow to invest. We can do that organically for revenue growth, with examples in the last couple of years being our Paisley and Chieveley fabrication facilities, and acquisitively in bolt-on M&A in higher-margin adjacent sectors, like our Neen Valley acquisition in February.

Kris Hampson: We can do that organically for revenue growth with examples in the last couple of years being our Paisley and Keighley fabrication facilities, and acquisitively in bolt-on M&A in higher margin adjacent sectors like our Nene Valley acquisition in February. We all know that M&A can be lumpy, and there may be periods where there are fewer deals to complete or organic investments to make. In these periods, the mix of capital allocation activities may lean towards further incremental returns, typically through share buybacks. Either way, further EPS improvements are obtainable above and beyond our sustainable growth targets. It is also worth being clear that our decisions on returns of capital will be made whilst retaining adequate financial capacity for the transactions coming through our active M&A pipelines. We are pleased to have announced the GBP 15 million share buyback today, but it has been made very much in line with these concepts.

Speaker #2: We all know that M&A can be lumpy, and there may be periods when there are fewer deals to complete, or fewer organic investments to make.

Speaker #2: In these periods, the mix of capital allocation activities may lean towards further incremental returns, typically through share buybacks. Either way, further EPS improvements are obtainable above and beyond our sustainable growth targets.

Kris Hampson: Either way, further EPS improvements are obtainable above and beyond our sustainable growth targets. It is also worth being clear that our decisions on returns of capital will be made whilst retaining adequate financial capacity for the transactions coming through our active M&A pipelines. We are pleased to have announced the GBP 15 million share buyback today, but it has been made very much in line with these concepts.

Speaker #2: It's also worth being clear that our decisions on returns of capital will be made while retaining adequate financial capacity for the transactions coming through our active M&A pipeline.

Speaker #2: We are pleased to have announced the 15 million share buyback today, and it's been made very much in line with these concepts. And so, 2026 was a strong year for capital allocation, with nearly £40 million deployed. We are continuing to build our M&A pipelines and organic pipelines for the future.

Kris Hampson: 2026 was a strong year for capital allocation, with nearly GBP 40 million deployed. We are continuing to build our M&A pipelines and organic pipelines for the future. Moving on to M&A opportunities, I would like to explain a little bit more about how we are building those pipelines and what we are thinking, and our views on M&A can be expressed in three simple points. Firstly, we have the track record, capability, and experience to deploy capital successfully in M&A. We actively learn from previous deals, and we implement the learnings in our new deals. As an example of this, we are pleased to say that our recent acquisition of Nene Valley Fire is ahead of business case, and the integration is going well with cross-selling underway and geographical expansion underway, including the hiring of our first technicians in the northwest of England. Secondly, acquisitions will be bolt-on and adjacent.

Speaker #2: Moving on to M&A opportunities. I'd like to explain a little bit more about how we're building these pipelines and what we're thinking, and our views on M&A can be expressed in three simple points.

Speaker #2: Firstly, we have the track record, capability, and experience to deploy capital successfully in M&A. We actively learn from previous deals, and we implement the learnings in our new deals.

Kris Hampson: We actively learn from previous deals, and we implement the learnings in our new deals. As an example of this, we are pleased to say that our recent acquisition of Nene Valley Fire is ahead of business case, and the integration is going well with cross-selling underway and geographical expansion underway, including the hiring of our first technicians in the northwest of England. Secondly, acquisitions will be bolt-on and adjacent.

Speaker #2: As an example of this, we are pleased to say that our recent acquisition of Neen Valley Far is ahead of business case, and the integration is going well, with cross-selling underway and geographical expansion underway, including the hiring of our first technicians in the northwest of England.

Speaker #2: Secondly, acquisitions will be bolt-on and adjacent. We will only buy specialist businesses in specific, sustainable markets where we already operate and where we understand the risk.

Kris Hampson: We will only buy specialist businesses in specific sustainable markets where we already operate and where we understand the risk. We are focusing our efforts on a limited number of target areas. You can see on the slide, in environment, it is capital maintenance and water technologies, and for specialist services, it is fire protection, asset security, and Hard FM. These are structural but fragmented growth markets where our differentiation is that we have the client list to drive faster revenue growth and margin increases. Our team in Nene Valley Fire are really starting to benefit from this already. Thirdly and finally, we will be very disciplined about the process. Our active pipeline is regularly screening the sectors I have mentioned. However, deals will only be considered where they meet both our strategic, financial, and operational hurdles. You have seen them before, and you can see them again to the right of the slide.

Speaker #2: We're focusing our efforts on a limited number of target areas. You can see on the slide, in environment, it's capital maintenance and water technologies. For specialist services, it's fire protection, asset security, and hard FM.

Speaker #2: These are structural but fragmented growth markets, where our differentiation is that we have the client list to drive faster revenue growth and margin increases.

Speaker #2: Our team in Neen Valley Far are really starting to benefit from this already. Thirdly, and finally, we'll be very disciplined about the process. Our active pipeline is regularly screening the sectors I've mentioned; however, deals will only be considered where they meet both our strategic, financial, and operational hurdles—you've seen them before, and you can see them again to the right of the slide.

Kris Hampson: Our team in Nene Valley Fire are really starting to benefit from this already. Thirdly and finally, we will be very disciplined about the process. Our active pipeline is regularly screening the sectors I have mentioned. However, deals will only be considered where they meet both our strategic, financial, and operational hurdles. You have seen them before, and you can see them again to the right of the slide.

Speaker #2: So, simply put, our rigor and discipline in capital allocation decisions is matched by our rigor and discipline in contract selection, and we recognize that for both of these, discipline remains crucial to all of our stakeholder communities.

Kris Hampson: Simply put, our rigor and discipline in capital allocation decisions is matched by our rigor and discipline in contract selection, and we recognize for both of these, discipline remains crucial to all of our stakeholder communities. That being said, we are excited by the scale of opportunity in these spaces and how they strengthen the investment case of the group. Turning to my final slide before I hand back to Bill. We look forward to 2027 with some anticipation. We expect similar levels of revenue growth and continued margin progression towards our targets. As the journey develops towards the black bars to 2030, we continue to believe in a simple and compelling story of sustainable and increasing returns generation based on that disciplined delivery of our proven model in our attractive chosen sectors. There is plenty of capital allocation optionality to be had on top.

Speaker #2: That being said, we are excited by the scale of opportunity in these spaces and how they strengthen the investment case of the group. Turning to my final slide before I hand back to Bill, we look forward to 2027 with some anticipation. We expect similar levels of revenue growth and continued margin progression towards our targets.

Kris Hampson: We look forward to 2027 with some anticipation. We expect similar levels of revenue growth and continued margin progression towards our targets. As the journey develops towards the black bars to 2030, we continue to believe in a simple and compelling story of sustainable and increasing returns generation based on that disciplined delivery of our proven model in our attractive chosen sectors. There is plenty of capital allocation optionality to be had on top.

Speaker #2: And as the journey develops towards the black bars to 2030, we continue to believe in a simple and compelling story of sustainable and increasing returns generation.

Speaker #2: Based on that disciplined delivery of our proven model in our attractive chosen sectors, there's plenty of capital allocation optionality to be had on top.

Speaker #2: So, we've taken another successful stride along our journey. Our ambition remains bright, and there's plenty of exciting road ahead of us.

Kris Hampson: So we have taken another successful stride along our journey. Our ambition remains bright, and there is plenty of exciting road to travel in front of us. Bill will now take you through the operational side of the strategy delivery in more detail. Thank you.

Speaker #2: Bill will now take you through the operational side of the strategy delivery in more detail. Thank you.

Speaker #1: Okay, everyone. So, a bit like Chris, you're going to see quite a few—some of the slides you're going to see now, you've seen before.

Bill Hocking: Okay, everyone. So a bit like Kris, some of the slides you are going to see now you have seen before, and I am really pleased with this because what it shows our strategy is robust and is unchanged, and our delivery is really consistent. So let us just reprise the strategy in a nutshell. This is a one-page representation of the strategy. We start on the top left there, growing revenue in our core businesses. So that is building highways in the design and build part of water. This is the big engine room of Galliford Try. This is where the vast majority of the revenues come through, and the ambition there is to grow those businesses in advance of inflation and get them to 3.5% and beyond. That was our original plan back in 2014 we set out on this strategy. We are making good progress here, as you have seen today.

Speaker #1: And I'm really pleased with this, because what it shows is our strategy is robust and unchanged, and our delivery is really consistent. So let's just reprise the strategy in a nutshell.

Speaker #1: So this is a one-page representation of the strategy, and we started on the top left there: growing revenue in our core businesses. So that's building highways, and the design and build part of water.

Bill Hocking: So that is building highways in the design and build part of water. This is the big engine room of Galliford Try. This is where the vast majority of the revenues come through, and the ambition there is to grow those businesses in advance of inflation and get them to 3.5% and beyond. That was our original plan back in 2014 we set out on this strategy. We are making good progress here, as you have seen today.

Speaker #1: This is the big engine room of Galliford Try. This is where the vast majority of the revenues come through, and the ambition there was to grow those businesses ahead of inflation and get them to 3.5% and beyond.

Speaker #1: That was our original plan back in 2004, when we set out on the strategy. And we're making good progress here, as you've seen today.

Speaker #1: Next, our objective is to grow our specialist businesses in higher-margin, adjacent markets. Chris has touched on some of those. These businesses are doing well.

Bill Hocking: Next one there is to grow our specialist businesses in the higher margin adjacent markets. Kris has touched on some of those. These businesses are doing well. These are the water tech businesses, so manufacture of high-tech bits of kit in the water and wastewater industry, and then Hard FM, fire security, things like that in the building part of the business. These are all high margin businesses, and as we grow them, and they are doing well, then the mix starts to change, and that is what helps to drive us from the 3.5 up towards the 4. We reenter the affordable homes market. Now we all know that this part of the market is probably 18 months, perhaps even a bit more behind where we all thought it might be. But what we do see here is a bit more impetus now.

Speaker #1: These are the water tech businesses—so, manufacture of high-tech bits of kit in the water and wastewater industry—and then hard FM, fire security, things like that, in the building part of the business.

Speaker #1: These are all higher-margin businesses, and as we grow them—and they are doing well—then the mix starts to change, and that's what helps to drive us from the 3.5 up towards the 4.

Bill Hocking: These are all high margin businesses, and as we grow them, and they are doing well, then the mix starts to change, and that is what helps to drive us from the 3.5 up towards the 4. We reenter the affordable homes market. Now we all know that this part of the market is probably 18 months, perhaps even a bit more behind where we all thought it might be. But what we do see here is a bit more impetus now.

Speaker #1: We re-enter the affordable homes market. Now, we all know that this part of the market is probably 18 months, perhaps even a bit more, behind where we all thought it might be.

Speaker #1: But what we do see here is a bit more impetus now. We've all seen the £10 billion funding that's been allocated in the last couple of weeks.

Bill Hocking: We have all seen the GBP 10 billion funding that has been allocated the last couple of weeks. Prior to that, there were some planning issues, there were some fire safety issues, viability issues, which are improving, I think would be the right thing to say. So I do think that the GBP 10 billion now allocated will provide a stimulus to the affordable housing market overall, and I expect to see a bit more action there the next 6 to 9 months, I suppose. Then Kris mentioned the further bolt-on acquisitions, the possibility of those, and actually the acquired companies. If you take a company like Nene Valley Fire, and you give that business access to our client base, our geographical base, our offices all over the country, that is a really, really good foundation for significant growth.

Speaker #1: Prior to that, there were some planning issues, some fire safety issues, and viability issues, which are improving, I think would be the right thing to say.

Speaker #1: So, I do think that the £10 billion now allocated will provide a stimulus to the affordable housing market overall, and I expect to see a bit more action there over the next six to nine months, I suppose.

Speaker #1: And then Chris mentioned the further Bolton acquisitions—the possibility of those—and actually the acquired companies. If you take a company like Neen Valley Fire, and you give that business access to our client base, our geographical base, our offices all over the country, that's a really, really good foundation for significant growth.

Bill Hocking: Then Kris mentioned the further bolt-on acquisitions, the possibility of those, and actually the acquired companies. If you take a company like Nene Valley Fire, and you give that business access to our client base, our geographical base, our offices all over the country, that is a really, really good foundation for significant growth. That is the simple philosophy of how we take higher margin bolt-on acquisitions, give them access to our client base, our geography, our offices, and really grow them in some style.

Speaker #1: And that's the simple philosophy of how we take higher-margin, bolt-on acquisitions, give them access to our client base, our geography, our offices, and really grow them in some style.

Bill Hocking: That is the simple philosophy of how we take higher margin bolt-on acquisitions, give them access to our client base, our geography, our offices, and really grow them in some style. When we do all of that, we continue to grow our earnings, our capital allocation optionality, our returns to our shareholders. So that is it in a nutshell, everyone, unchanged now for some time. Then we talk in a bit more detail about how we carry on moving up towards the 4% margin. So, pleased to say that last time I was standing up, it was 3.2%, and before it was 3%. So the left-hand side is improving and starting at 3.5%, which is nice. The target is still 4%. We are making good progress, as you can see. These stepping stones, we call them, have not changed one iota.

Speaker #1: And when we do all of that, we continue to grow our earnings, our capital allocation optionality, and our returns to our shareholders. So that's it in a nutshell, everyone.

Bill Hocking: When we do all of that, we continue to grow our earnings, our capital allocation optionality, our returns to our shareholders. So that is it in a nutshell, everyone, unchanged now for some time. Then we talk in a bit more detail about how we carry on moving up towards the 4% margin. So, pleased to say that last time I was standing up, it was 3.2%, and before it was 3%. So the left-hand side is improving and starting at 3.5%, which is nice.

Speaker #1: Unchanged now for some time. And then we're talking in a bit more detail about how we carry on moving up towards the 4% margin. So, please say that last time I was standing up, it was 3.2%, and before that, it was 3%.

Speaker #1: So the left-hand side is improving and starting at 3.5%, which is nice. And then the target is still 4%. And we're making good progress, as you can see.

Bill Hocking: The target is still 4%. We are making good progress, as you can see. These stepping stones, we call them, have not changed one iota. I am going to go through these in a bit more detail in a minute. Before I go to that, another slide you have all seen before. I just wanted to remind you of the philosophy of how we run the business, because I think as we grow, maintaining the discipline of why we have done so well is really, really important.

Speaker #1: But these stepping stones, as we call them, haven't changed one iota. And I'm going to go through these in a bit more detail in a minute.

Bill Hocking: I am going to go through these in a bit more detail in a minute. Before I go to that, another slide you have all seen before. I just wanted to remind you of the philosophy of how we run the business, because I think as we grow, maintaining the discipline of why we have done so well is really, really important. So the simple philosophy is we start with a core of brilliant people. We have got 4,300 plus very good people in Galliford Try. Around those people, we put a strong discipline of culture, of process, of risk management, and being very selective about what we do and what we do not do, and having the courage to walk away from projects where we do not think they are the right projects for us.

Speaker #1: But before I go through that, another slide you've all seen before—I just wanted to remind you of the philosophy of how we run the business, because I think, as we grow, maintaining the discipline of why we've done so well is really, really important.

Speaker #1: So the simple philosophy is, we start with a core of brilliant people. We've got 4,300-plus very good people in Galliford Try, and around those people, we put strong discipline of culture, of process, of risk management, and being very selective about what we do and what we don't do, and having the courage to walk away from projects where we don't think they're the right projects for us.

Bill Hocking: So the simple philosophy is we start with a core of brilliant people. We have got 4,300 plus very good people in Galliford Try. Around those people, we put a strong discipline of culture, of process, of risk management, and being very selective about what we do and what we do not do, and having the courage to walk away from projects where we do not think they are the right projects for us.

Speaker #1: What that means is that everything in our £4.3 billion pipeline is work that we can execute day in, day out, with the right people in the right areas, with the right supply chain, with the right clients, and so on and so forth. This means that we perform consistently, as is reflected through our performance and our numbers, and we continue to strengthen our already strong balance sheet.

Bill Hocking: What that means is that everything in our GBP 4.3 billion pipeline is work that we can execute day in, day out with the right people in the right areas, with the right supply chain, with the right clients, and so on and so on, which means that we perform consistently, as is reflected through our performance and our numbers, and we continue to strengthen our already strong balance sheet. So the wheel turns. That is the simple philosophy of how we run the business, and that will absolutely remain. Going back to people, I just want to put a bit more color around people because we spend an awful lot of time and effort making sure that we can retain those 4,300 good people and attract more good people to Galliford Try to sustain our growth. So here are just some of the things that we do.

Speaker #1: And so the wheel turns. And that's the simple philosophy of how we run the business, and it is that at which we'll absolutely remain. Going back to people, I just want to put a bit more color around people, because we spend an awful lot of time and effort making sure that we can retain those 4,300 good people and attract more good people to Galliford Try to sustain our growth.

Bill Hocking: That is the simple philosophy of how we run the business, and that will absolutely remain. Going back to people, I just want to put a bit more color around people because we spend an awful lot of time and effort making sure that we can retain those 4,300 good people and attract more good people to Galliford Try to sustain our growth. So here are just some of the things that we do.

Speaker #1: So here are just some of the things that we do. I won't go through all of them. Eighty-five percent employee advocacy score. So every year we do an employee engagement survey, and we're really pleased that 85% of our employees think Galliford Try is a great place to work and would recommend it to their peers and their friends as a great place to work, which is a really strong score and well above the industry average adjacent ad.

Bill Hocking: I will not go through all of them. 85% employee advocacy score. So every year, we do an employee engagement survey, and we are really pleased that 85% of our employees think Galliford Try is a great place to work and would recommend that to their peers and their friends as a great place to work, which is a really strong score and well above the industry average, I hasten to add. 45 career moves is interesting. So that is just in a year. Overall, through our Explore programme, we have moved 154 people around. This is simplicity. If somebody wants to move geographically or to a different business sector within Galliford Try, they can do that. If somebody's partner gets transferred to Scotland and they want to go to move, then they can go and transfer to Scotland with Galliford Try. They do not need to leave.

Speaker #1: Forty-five career moves is interesting. So that's just in the year. Overall, through our Explore program, we've moved 154 people around. And this is, simplistically, if somebody wants to move geographically or into a different business sector within Galliford Try, they can do that.

Bill Hocking: So that is just in a year. Overall, through our Explore programme, we have moved 154 people around. This is simplicity. If somebody wants to move geographically or to a different business sector within Galliford Try, they can do that. If somebody's partner gets transferred to Scotland and they want to go to move, then they can go and transfer to Scotland with Galliford Try. They do not need to leave.

Speaker #1: If somebody's partner gets transferred to Scotland and they want to move, then they can go and transfer to Scotland with Galliford Try.

Speaker #1: They don't need to leave. So, it's about retaining good people and making sure that—and we operate pretty much everywhere throughout the UK. So, this is a really good program.

Bill Hocking: It is about retaining good people and making sure that. We operate pretty much everywhere through the UK. This is a really good program. It helps us to retain our good people. We promoted broadly 10% of our people in the year, which is fantastic. People see career opportunity with Galliford Try, and people do get, in the industry, I would say, not just with Galliford Try, a lot of responsibility pretty young in the construction industry. People do get a lot of job satisfaction, as I said right at the start, through the construction industry, and we really push that in Galliford Try. 10% of our people are in some on early careers as defined. In some sort of training, graduates, apprentices, degree apprentices, trainees, people like that, and that is a very high percentage.

Speaker #1: So that helps us to retain our good people. We promoted broadly 10% of our people in the year, which is fantastic. So people see career opportunity with Galliford Try, and people do get, in the industry—I'd say not just with Galliford Try—a lot of responsibility pretty young in the construction industry.

Speaker #1: So, people do get a lot of job satisfaction, as I said right at the start, through the construction industry, and we really push that in Galliford Try.

Bill Hocking: People do get a lot of job satisfaction, as I said right at the start, through the construction industry, and we really push that in Galliford Try. 10% of our people are in some on early careers as defined. In some sort of training, graduates, apprentices, degree apprentices, trainees, people like that, and that is a very high percentage.

Speaker #1: Ten percent of our people are in some early careers, as they're defined—so in some sort of training: graduates, apprentices, degree apprentices, trainees, people like that.

Speaker #1: And that's a very high percentage. So the emphasis there is on growing our own—growing people from within—and it's really good to see.

Bill Hocking: The emphasis there is on growing our own, growing people from within, and it is really good to see. Those people, going to the last one, number one, those people vote, what is it, unprompted by us, Nabeeda. They vote through The Job Crowd. They vote us number one in our sector for apprentices and for graduates, which is really nice to see. A lot of emphasis on people, everyone. Going back to the stepping stones, the first one is about volume and growth and so on. You have seen this slide before. We have not changed the numbers.

Speaker #1: And those people going to the last one, number one, those people vote, what's it? Unprompted by us, Babita. They vote through this job crowd.

Speaker #1: They vote us number one in our sector for apprentices and for graduates, which is really nice to see. So, a lot of emphasis on our people—everyone.

Speaker #1: So, going back to the stepping stones, the first one is about volume and growth and so on. You've seen the slide before. We haven't changed the numbers, but this is just to demonstrate there's a mountain of work out there in social and economic infrastructure.

Bill Hocking: This is just to demonstrate there is a mountain of work out there in social and economic infrastructure, both in the public sector, so taxpayer-funded work, you can see up on the screen, but also bill payer-funded, so in the regulated industries, water and energy and so on, where we pay the bills. There is a mountain of work out there. There is not a lot of optionality in here. A lot of this work just has to be done. In this last summer, we have seen drought and hose pipe bans and train derailments because the lines are warping and so on. In five minutes' time, there will be flooding and all sorts of things.

Speaker #1: Both in the public sector—so taxpayer-funded work, as you can see up on the screen—but also billpayer-funded, so in the regulated industries, such as water and energy, where we pay the bills.

Speaker #1: There is a mountain of work out there, and there's not a lot of optionality in here. A lot of this work just has to be done.

Speaker #1: We've seen, in this last summer, drought and hosepipe bans, and train derailments because the lines are warping, and so on. And in five minutes' time, there'll be flooding and all sorts of things.

Speaker #1: So the bottom line is our infrastructure has to be more resilient, and there's very little optionality about having to do a lot of this stuff.

Bill Hocking: The bottom line is our infrastructure has to be more resilient, and there is very little optionality about having to do a lot of this stuff, which is, of course, all encompassed in the GBP 725 billion of CapEx funding that was announced last year and ring-fenced. Just a nod to the volume of work out there, everyone. That leads, of course, to our order book, which is in really good shape. 95% of the order book, as you see there, is in the public sector and 5% in the private sector. It waxes and wanes a bit, but it is something like that normally. We always go into a new year with 90-odd percent of our work in hand, which is really good from a number of perspectives.

Speaker #1: Which is, of course, all encompassed in the £725 billion of CapEx funding that was announced last year, and ring-fenced. So just a nod to the volume of work out there, everyone.

Speaker #1: So, that leads, of course, to our order book, which is in really good shape. 95% of the order book, as you see there, is in the public sector and 5% is in the private sector.

Speaker #1: It waxes and wanes a bit, but it's something like that normally. We always go into a new year with ninety-odd percent of our work in hand, which is really good from a number of perspectives.

Speaker #1: We can obviously get all our ducks in a row in terms of people, supply chain, materials, and so on, but also in terms of risk management. When you've got a very full order book, there's no need to go off and do things that you shouldn't do.

Bill Hocking: We can obviously get all our ducks in a row in terms of people and supply chain and materials and so on. But also in terms of risk management, when you have got a very full order book, there is no need to go off and do things that you shouldn't do. That nods to both of them. But more importantly to me on this chart is full year 2028 and full year 2029, because we already can see, these numbers are a few months old now, so they will be a bit different now, a bit higher. We can already see, best part of two-thirds of full year 2028's work already in the bag and heading towards half of full year 2029's work already in the bag.

Bill Hocking: We can obviously get all our ducks in a row in terms of people and supply chain and materials and so on. But also in terms of risk management, when you have got a very full order book, there is no need to go off and do things that you shouldn't do. That nods to both of them. But more importantly to me on this chart is full-year 2028 and full-year 2029, because we already can see, these numbers are a few months old now, so they will be a bit different now, a bit higher. We can already see, best part of two-thirds of full-year 2028's work already in the bag and heading towards half of full-year 2029's work already in the bag.

Speaker #1: So that nods to both of them. But more importantly to me on this chart is fully at 28 and fully at 29, because we can already see these numbers are a few months old now.

Speaker #1: So they'll be a bit different now, a bit higher. We can already see the best part of two-thirds of full-year '28's work already in the bag, and heading towards half of full-year '29's work already in the bag.

Speaker #1: So that's really, really good in terms of this long line of sight for the business, keeping this bar wave of work ahead of us at all times.

Bill Hocking: That is really, really good in terms of this long line of sight for the business, keeping this bow wave of work ahead of us at all times. I have said to some of you before, we already have clients in the water industry talking to us about AMP9, 10, and 11. That is 2030 to 2045. And looking forward to getting a quality supply chain in place now to sustain the enormous growth that we forecast going into AMP9. We think AMP9 is going to be considerably bigger than AMP8 already. So a very good position with regards to the order book, everyone.

Speaker #1: I've said to some of you before, we already have clients in the water industry talking to us about AMP7, AMP8, and AMP9. There's 2020, 2030 to 2045.

Speaker #1: And looking forward to getting a quality supply chain in place now to sustain the enormous growth that we forecast going into AMS 9. We think AMS 9 is going to be considerably bigger than AMS 8 already.

Speaker #1: So, a very good position with regards to the order book, everyone. I'm not going to go through all of these, but just to point out that the jobs that we win—and these are changing every single day—but when you run your eye through the list, you see defense, you see education, you see affordable homes, energy, water, specialists.

Bill Hocking: I am not going to go through all of these, but just to point out that the jobs that we win, and these are changing every single day, but when you run your eye through the list, you see defense, you see education, you see affordable homes, energy, water, specialists. It is across the board is the point I am making here. Then we go into a better contracting environment. We have spoken about this quite a bit, about clients are procuring in a far more mature manner for long-term value and long-term collaboration, and efficiency, I hasten to add. And this leads to what you see up here, that 99% of everything we do is negotiated in one form or another. So once you are on the frameworks, and you do need to be on the frameworks first, of course, most of the work is negotiated.

Speaker #1: It's across the board, is the point I'm making here. And then, we're going into a better contracting environment. We've spoken about this quite a bit—about how clients are procuring in a far more mature manner, focused on long-term value and long-term collaboration.

Bill Hocking: We have spoken about this quite a bit, about clients are procuring in a far more mature manner for long-term value and long-term collaboration, and efficiency, I hasten to add. And this leads to what you see up here, that 99% of everything we do is negotiated in one form or another. So once you are on the frameworks, and you do need to be on the frameworks first, of course, most of the work is negotiated.

Speaker #1: And efficiencies are hastened to add. And this leads to what you see up here, that 99% of everything we do is negotiated in one form or another.

Speaker #1: So once we're on the frameworks—and you do need to be on the frameworks first, of course—most of the work is negotiated. So the red is target cost, cost-reimbursable work, mainly in the water and highways business, infrastructure.

Bill Hocking: The red is target cost reimbursable work, mainly in the water and highways business infrastructure. The black is two-stage work where you are appointed in the early stage and you negotiate a final price. You do end up at a lump sum fixed price through negotiation, and that price includes inflation and risk and all those sorts of things. Then, in the light gray where clients just ask us to come and negotiate something and get on and do it. So that is a really good place to be, everyone. Secondly then, we have talked in the past about quality-price split, and typically it is 80/20, 70/30 in favor of quality. And what the government are saying now in terms of government projects or public sector projects is that the social value element of the quality mechanism will rise to up to 20%. It was 10% previously.

Speaker #1: The black is two-stage work, where you're appointed in the early stage and you negotiate a final price. You do end up at a lump sum fixed price through negotiation, and that price includes inflation, risk, and all those sorts of things.

Speaker #1: And then, in the light gray way, clients just ask us to come and negotiate something and get on and do it. So that's a really good place to be, everyone.

Bill Hocking: So that is a really good place to be, everyone. Secondly then, we have talked in the past about quality-price split, and typically it is 80/20, 70/30 in favor of quality. And what the government are saying now in terms of government projects or public sector projects is that the social value element of the quality mechanism will rise to up to 20%. It was 10% previously.

Speaker #1: Secondly then, we've talked in the past about quality/price split, and typically it's 80/20 or 70/30 in favour of quality. What the government are saying now, in terms of government projects and public sector projects, is that the social value element of the quality mechanism will rise to up to 20%.

Speaker #1: It was 10% previously, so that's fine by us, because we put a huge amount of effort into social value. There's a slide here, and again, I'm not going to go through all of these stats.

Bill Hocking: That is fine by us because we put a huge amount of effort into social value. There is a slide here, and again, I am not going to go through all of these stats, but social and economic value in the locality of where you are working is simply around employing people locally, training people locally, employing local companies to do work, things like that. There is a formula which the government mandates that we measure. We measure here 39 of our projects with a value of more than 500 that competed in the year, achieved that GBP 527 million worth of social and economic value in the locality. You can see there the sort of things that we measure. I will not go through some more, but jobs, training, access for young people to come and have a look at construction, things like that.

Speaker #1: But social and economic value in the locality where you're working is simply around employing people locally, training people locally, employing local companies to do work, things like that.

Speaker #1: And there's a formula which the government mandates that we measure. So, we measured here 39 of our projects, each with a value of more than £500,000, that completed in the year, and they achieved £527 million worth of social and economic value in the locality.

Bill Hocking: We measure here 39 of our projects with a value of more than 500 that competed in the year, achieved that GBP 527 million worth of social and economic value in the locality. You can see there the sort of things that we measure. I will not go through some more, but jobs, training, access for young people to come and have a look at construction, things like that.

Speaker #1: And you can see there the sort of things that we measure. I won't go through them all, but jobs, training, access for young people to come and have a look at construction—things like that.

Speaker #1: And you know something? It's the right thing to do. People love doing it. Our people love doing this. And it helps us to win work.

Bill Hocking: You know something, it is the right thing to do. People love doing it. Our people love doing this, and it helps us to win work. Operational improvements. I will not go through all of this, but we said in the past that the sort of technology that we use in terms of 3D modeling and 5D modeling, the fact that we can build things in 3D and in virtual reality, you can walk through buildings and hospitals and prisons and whatever it is. You can debug them, you can tweak them. You build them half a dozen times in virtual reality, so when you go and build them in reality, you get it right first time. Therefore, our rework costs are lower, we are more predictable in terms of program, et cetera. Lots of small accretive, sort of incremental improvements which you can see reflected through our numbers.

Speaker #1: Okay. Operational improvements. I won't go through all of this, but we said in the past that the sort of technology that we use in terms of 3D modelling and 5D modelling, the fact that we can build things in 3D and in virtual reality—you can walk through buildings and hospitals and prisons and whatever—you can debug them, you can tweak them, you build them half a dozen times in virtual reality.

Bill Hocking: You can debug them, you can tweak them. You build them half a dozen times in virtual reality, so when you go and build them in reality, you get it right first time. Therefore, our rework costs are lower, we are more predictable in terms of program, et cetera. Lots of small accretive, sort of incremental improvements which you can see reflected through our numbers.

Speaker #1: So, when you go and build them in reality, you get it right the first time. Therefore, our rework costs are lower. We are more predictable in terms of program, et cetera, et cetera.

Speaker #1: Lots of small, creative, sort of incremental improvements, which you can see reflected through our numbers. And the only probably newer one, and more germane at the moment, is bottom left there—AI.

Bill Hocking: The only probably newer one and more germane at the moment is bottom left there is AI. We are starting to use AI in a very considered and circumspect way, I hasten to add. We are using it at the front end to help us sort of condense documents and scan documents and things like that. We are using in things like safety, whereas before you might have to go through a process and understand what you need to do to do a certain task. Now you can push the button or talk to it, and it will say, "These are the things you need to do without having to go and trawl through the processes." It is still in its infancy with us.

Speaker #1: So, we are starting to use AI in a very considered and circumspect way, I hasten to add. We're using it at the front end to help us sort of condense documents and scan documents and things like that.

Speaker #1: We're using it in things like safety, whereas before you might have had to go through a process and understand what you need to do to complete a certain task.

Speaker #1: Now you can push the button or talk to it, and it'll say, "These are the things you need to do," without having to go and trawl through the processes.

Speaker #1: So, it is still in its infancy with us. My personal view is it will help us to be a bit more efficient, a bit more productive.

Bill Hocking: My personal view is it will help us to be a bit more efficient, a bit more productive, but we are pretty circumspect about how we are implementing it, and we are testing it very thoroughly with human beings before we trust it too much. That is operational improvements. Then we move on to the last one, which is really about higher margin work. You might wonder why I put the frameworks up there, but the real story I want from this slide is we target frameworks for all the things we have talked about in the past, the long line of sight, long client relationships, ability to innovate and to be more effective for our clients, to drive costs down without driving margins down, I hasten to add. A few years ago, this slide was entirely green.

Speaker #1: But we are pretty circumspect about how we are implementing it. And we are testing it very thoroughly with human beings before we trust it too much.

Speaker #1: So that's operational improvements. And then we move on to the last one, which is really about higher-margin work. So you might wonder why I put the frameworks up there.

Bill Hocking: You might wonder why I put the frameworks up there, but the real story I want from this slide is we target frameworks for all the things we have talked about in the past, the long line of sight, long client relationships, ability to innovate and to be more effective for our clients, to drive costs down without driving margins down, I hasten to add. A few years ago, this slide was entirely green.

Speaker #1: But the real story I want from this slide is we target frameworks for all the things we've talked about in the past – the long line of sight, long client relationships, ability to innovate, and to be more effective for our clients, to drive costs down.

Speaker #1: Without driving margins down, I hasten to add. A few years ago, this slide was entirely green. Now, when you look at our strategy, which is about grow the big businesses, that's the green, grow the specialist businesses, that's the blue, and grow into affordable housing, that's the orange.

Bill Hocking: Now, when you look at our strategy, which is about grow the big businesses, that's the green, grow the specialist businesses, that's the blue, and grow into affordable housing, that's the orange. The scale is different, obviously, to fit them all in. What we've done is we've maintained the quantum of the green, and over the last couple of years, we've got a really good presence in the specialist business frameworks and in the affordable housing frameworks. You can't just get on a framework. You have to wait for them to mature. You have to wait for them to be renewed. It's a never-ending process, really. The real story I wanted to get you across in this slide is that the framework presence now reflects absolutely the strategy. That's the simple message out of this slide. It's much the same in water.

Speaker #1: And the scale is different, obviously, to fit them all in. But what we've done is we've maintained the quantum of the green, and over the last couple of years, we've got a really, really good presence in the specialist business frameworks and in the affordable housing frameworks.

Speaker #1: So you can't just get on a framework. You have to wait for them to mature; you have to wait for them to be renewed.

Bill Hocking: You can't just get on a framework. You have to wait for them to mature. You have to wait for them to be renewed. It's a never-ending process, really. The real story I wanted to get you across in this slide is that the framework presence now reflects absolutely the strategy. That's the simple message out of this slide. It's much the same in water.

Speaker #1: So it's a never-ending process, really. But the real story I wanted to get across to you in this slide is that the framework presence now absolutely reflects the strategy.

Speaker #1: That's the simple message out of this slide, and it's much the same in water. On a more granular basis, you can see there that in 2021, we had eight design-and-build frameworks in water.

Bill Hocking: On a more granular basis, you can see there that in 2021, we had 8 design and build frameworks in water. Then through all the acquisitions that we've made over the years, we now work for every single of the major water companies in the UK for an average of 19 years. You can see there on the left-hand side how we've improved our presence in water. Not only in the big design and build frameworks, but more importantly, in terms of the higher margin part of the strategy, the gray bits there, capital maintenance and water technologies, where we've gone from nothing to a very good presence in both of those higher margin areas, which really are going to help us drive through AMP8 and more into AMP9. So a good story there in terms of the framework presence underpinning the strategy.

Speaker #1: And then, through all the acquisitions that we've made over the years, we now work for every single one of the major water companies in the UK, for an average of 19 years.

Speaker #1: But you can see there on the left-hand side how we've improved our presence in water. So, not only in the big design and build frameworks, but more importantly, in terms of the higher-margin part of the strategy—the grey bits there—capital maintenance and water technologies.

Bill Hocking: Not only in the big design and build frameworks, but more importantly, in terms of the higher margin part of the strategy, the gray bits there, capital maintenance and water technologies, where we've gone from nothing to a very good presence in both of those higher margin areas, which really are going to help us drive through AMP8 and more into AMP9. So a good story there in terms of the framework presence underpinning the strategy.

Speaker #1: Where we've gone from nothing to a very good presence in both of those higher-margin areas, which really are going to help us drive through eight and more into AMP9.

Speaker #1: So, a good story there in terms of the framework presence underpinning the strategy. And then this is just a little infographic to show you.

Bill Hocking: Then this is just a little infographic to show you. On the top it is wastewater. Sorry, there's water. On the bottom is wastewater. That would never happen in reality, by the way. As an infographic, it's just to show you where we operate in water and wastewater. The dark gray bits or black, whatever color that is where we currently have full capability in water, and the red is where we interface, and we have some capability in water. The real message I wanted to get across here is as we continue to develop our water business, as we continue to probably buy a few more bolt-on acquisitions in the sector, we expect to get more and more end-to-end capability, which will be really good for our clients, for us to provide good services and efficient service to our clients.

Speaker #1: On the top, it is wastewater. Sorry, it is water; in the bottom is wastewater. That would never happen in reality, by the way.

Speaker #1: But as an infographic, it's just to show you where we operate in water and wastewater. So the dark grey bits, or black—whatever colour that is—are where we currently have full capacity in water.

Speaker #1: And the red is where we interface, and we have some capability in water. But the real message I wanted to get across here is, as we continue to develop our water business, and as we continue to probably buy a few more bolt-on acquisitions in the sector, we expect to get more and more end-to-end capability. This will be really good for our clients, allowing us to provide good and efficient services to them.

Bill Hocking: The real message I wanted to get across here is as we continue to develop our water business, as we continue to probably buy a few more bolt-on acquisitions in the sector, we expect to get more and more end-to-end capability, which will be really good for our clients, for us to provide good services and efficient service to our clients.

Speaker #1: So finally, everybody, in summary, we've had a really good year. Very proud of another good year. Thanks again to all of our people for all the hard work they put in to get to these numbers.

Bill Hocking: Finally, everybody, in summary, we've had a really good year. Very proud of another good year. Thanks again to all of our people for all the hard work they put in to get to these numbers. We're making really good progress with our 2030 targets. We've got a great bunch of people, a great order book. The market is really supportive, and we've got a strong balance sheet which supports further returns to our shareholders, of course, and capital allocation optionality. That's it. Thank you very much. We'll go to questions.

Speaker #1: We're making really good progress towards our 2030 targets. We've got a great bunch of people and a great order book. The market is really, really supportive.

Speaker #1: And we've got a strong balance sheet, which supports further returns to our shareholders, of course, and capital allocation optionality. So that's it. Thank you very much.

Speaker #1: We'll go to questions.

Speaker #2: Thanks. Morning. Greg Thornton from Sayne, a couple of markets. Just a few for me, please. On M&A, obviously the messaging seems to have stepped up a bit.

Greg Fulton: Thanks. Morning, Greg Fulton from Sana Capital Markets. Steve, for me, please. On M&A, obviously the messaging seems to have stepped up a bit there. Could you just talk about if there are any specific sector focus where you primarily focused on acquiring? I know it is the adjacent sectors, but that is quite a wide net. Where are you sort of seeing the most opportunities coming?

Greg Poulton: Thanks. Morning, Greg Fulton from Sana Capital Markets. Steve, for me, please. On M&A, obviously the messaging seems to have stepped up a bit there. Could you just talk about if there are any specific sector focus where you primarily focused on acquiring? I know it is the adjacent sectors, but that is quite a wide net. Where are you sort of seeing the most opportunities coming?

Speaker #2: There. Could you just talk about whether there are any specific sector focuses where you’re primarily acquiring? I know it’s the adjacent sectors, but that’s quite a wide net.

Speaker #2: Where are you seeing the most opportunities coming from?

Speaker #1: The answer is, it's sort of as Bill showed on that infographic—it'll be the vertical slide. So, Handbag will build distributor arms.

Kris Hampson: The answer is, as Bill showed on that infographic, it will be the vertical slide. So Hanbakel, the distributor arms, you can see those going around. We will be picking individual bits of capability across clean water and wastewater. So it will be products and manufacturing, I think will be the particular targets with sector then. We will look at capital maintenance businesses as well there. In terms of sort of the building ones, more fire businesses. As I say, these markets are very fragmented. So we are looking to grow organically across the UK, but if a fire door business came up in Scotland, we might consider that in Edinburgh or Glasgow, for example. Active fire, we are trying to build out a sort of full fire service offering. So in the same way in water, we are trying to get to full service offering across water.

Speaker #1: You can see those going around. We'll be picking individual bits of wastewater, so it'll be products and manufacturing, I think, will be the particular targets we sector.

Speaker #1: Then we'll look at capital maintenance businesses as well there. In terms of the building ones, more fire businesses—as I say, these markets are very fragmented.

Kris Hampson: In terms of sort of the building ones, more fire businesses. As I say, these markets are very fragmented. So we are looking to grow organically across the UK, but if a fire door business came up in Scotland, we might consider that in Edinburgh or Glasgow, for example. Active fire, we are trying to build out a sort of full fire service offering. So in the same way in water, we are trying to get to full service offering across water. We will try and build out our capability and maybe suppression, maybe active fire as well. Hard FM will sort of be more of the same. So those sort of sectors as you would expect.

Speaker #1: So, we're looking to grow organically across the UK, but if a business—a fire door business—came up in Scotland, we might consider that in Edinburgh or Glasgow, for example.

Speaker #1: Active fire, we were trying to build out a sort of full fire service offering. So, in the same way, in water we're trying to get to a full-service offering across water.

Speaker #1: We'll try and build our capability in maybe suppression, maybe active fire as well. Hard FM will be more of the same, so those sectors are expected.

Kris Hampson: We will try and build out our capability and maybe suppression, maybe active fire as well. Hard FM will sort of be more of the same. So those sort of sectors as you would expect.

Speaker #2: And then just on water, obviously there's been a lot of design work coming through this year. Could you talk about the expected ramp-up in construction work as FY27 progresses?

Greg Fulton: Then just on water, obviously there has been a lot of design work coming through this year. Could you talk about the expected ramp-up in construction work as FY27 progresses?

Greg Poulton: Then just on water, obviously there has been a lot of design work coming through this year. Could you talk about the expected ramp-up in construction work as FY27 progresses?

Speaker #1: Yeah, that is happening. I mean, it's a natural progression, isn't it, Greg, as you go through? So we're seeing that now. And we're also seeing an uptick in orders through the water tech businesses.

Bill Hocking: Yeah, that is happening. I mean, it is a natural progression, isn't it, Greg, as you go through. We are seeing that now, and we are also seeing an uptick in orders through the water tech businesses, which also goes through a little bit of a modulation as you go through the AMP transition process. We are seeing that ramp up as well. It is all panning out as expected, I think, into AMP8. I think more importantly, you look at AMP9, and you see even more work coming through AMP9. The nature of it might be slightly different. We expect the capital maintenance aspect of AMP9 to be significantly bigger than AMP8, and that is natural, I suppose. The assets are getting older. They need more TLC to keep them going until they can be renewed.

Speaker #1: Which also goes through a little bit of a modulation as you go through the amp transition process. So we're seeing that ramp-up as well.

Bill Hocking: We are seeing that ramp up as well. It is all panning out as expected, I think, into AMP8. I think more importantly, you look at AMP9, and you see even more work coming through AMP9. The nature of it might be slightly different. We expect the capital maintenance aspect of AMP9 to be significantly bigger than AMP8, and that is natural, I suppose. The assets are getting older. They need more TLC to keep them going until they can be renewed.

Speaker #1: So it's all panning out as expected, I think, into AMP8. I think more importantly, you look at AMP9, and you see even more work coming through AMP9.

Speaker #1: The nature of it might be slightly different. We expect the capital maintenance aspect of AMP9 to be significantly bigger than AMP8, and that's natural, I suppose.

Speaker #1: The assets are getting older. They need more TLC to keep them going until they can be renewed.

Speaker #2: I think you put some numbers on it.

Kris Hampson: I mean, if there are some numbers on it, the original eight frameworks you saw on that slide were probably GBP 100, GBP 120 million worth of revenue. We brought about another GBP 120 million of revenues through the acquisitions, the full water acquisition. Call that 250, and we have disclosed, we think sort of through the peak of AMP8, we will be doing GBP 600 million-ish. So that is the sort of scale of growth that we have delivered through those acquisitions. Andrew.

Speaker #1: Our original eight frameworks you saw on that slide were probably £100 million to £120 million worth of revenue. We bought about another £120 million of revenue through the acquisitions of four water acquisitions.

Speaker #1: So, call that 250. And we've disclosed, we think, sort of through the peak of AMP8, where we're doing £600 million-ish. So that's the sort of scale of growth that we've delivered through those acquisitions.

Speaker #2: Thanks. Andrew?

Speaker #1: Andrew?

Bill Hocking: Andrew.

Bill Hocking: Andrew. Can you say your name and where you are from?

Speaker #2: Can you say your name and where you're from?

Kris Hampson: Can you say your name and where you are from?

Andrew Nussey: Yeah.

Andrew Nussey: Yeah. Good morning, Andrew Nussey from Peel Hunt. Two questions, if I may. First of all, on water, and you are engaging with clients with a view to AMP9, 10, and 11, as you said. They are keen to build their supply chains. How are you able to build your supply chains to ensure that you are in a position to deliver over that longer-term horizon? Secondly, in terms of the margin bridge, how much more of an influence do you think the better contracting environment is going to be in your overall goals?

Speaker #3: Yeah. Good morning, Andrew. Nasty from Peel Hunt. Two questions, if I may. First of all, on water, and you're engaging with clients with a view to AMP 9, 10, and 11, as you sort of said.

Andrew Nussey: Good morning, Andrew Nussey from Peel Hunt. Two questions, if I may. First of all, on water, and you are engaging with clients with a view to AMP9, 10, and 11, as you said. They are keen to build their supply chains. How are you able to build your supply chains to ensure that you are in a position to deliver over that longer-term horizon? Secondly, in terms of the margin bridge, how much more of an influence do you think the better contracting environment is going to be in your overall goals?

Speaker #3: They're keen to build their supply chains. How are you able to build your supply chains to ensure that you're in a position to deliver over that longer-term horizon?

Speaker #3: And secondly, in terms of the margin bridge, how much more of an influence do you think the better contracting environment is going to be on your overall goals?

Speaker #1: Okay. We've got a sort of supply chain. So, what we’re doing is, firstly, we continue to be an attractive employer. So, you saw the steps up there.

Bill Hocking: Okay. With regard to supply chain, what we are doing is firstly, we continue to be an attractive employer. So you saw the stats up there. The supply chain like our strong balance sheet. They like our framework presence. They like the fact that it is basement 27 days. So we are a good employer, and we are attractive to the supply chain. That is really important that we maintain that. What we are doing is we are setting in place more and more back-to-back agreements, Andrew. We already have a number of back-to-back agreements through plant hire and things like that. What we are doing now, and it is more regional because the type of companies often that we want in a back-to-back range are more regional suppliers.

Speaker #1: The supply chain like our strong balance sheet. They like our framework presence. They like the fact that Chris Paysman—27 days—so we are a good employer.

Speaker #1: And we are attractive to the supply chain. That's really important that we maintain that. What we are doing is we're setting in place more and more back-to-back agreements, Andrew.

Speaker #1: So we already have a number of back-to-back agreements through plant hire and things like that. What we're doing now—and it's more regional because the type of companies, often those we want in a back-to-back arrangement, are more regional suppliers.

Speaker #1: So if you took somewhere a bit further away, let's just say Wessex Water for this example, we'll be talking to some of the some of our suppliers in Wessex Water are about a back-to-back framework through amp eight and possibly to amp nine.

Bill Hocking: If you took somewhere a bit further away, let us just say Wessex Water for this example, we will be talking to some of our suppliers in Wessex Water about a back-to-back framework through AMP8 and possibly into AMP9 so that we can secure that supplier, and that supplier can invest as well in people and plant and whatever it is they need to do. So we are trying to get more and more back-to-back agreements into place with that regard.

Speaker #1: So that we can secure that supplier, and that supplier can invest as well—in people, plant, and whatever it is they need to do.

Speaker #1: So, we are trying to get more and more back-to-back agreements into place in that regard.

Speaker #2: Just to follow up on that point, does that change at all if there is more of a shift in AMP9 to capital maintenance activity?

Andrew Nussey: Just to follow up on that point. Does that change at all if there is more of a shift in AMP9 to capital maintenance activity?

Speaker #1: It might, but I think the underlying capital maintenance will be in addition to, not instead of, I think, Andrew. So it’ll just be a great idea.

Bill Hocking: It might, but I think the underlying, the capital maintenance will be in addition to, not instead of, I think, Andrew. So it will just be accretive, yeah.

Speaker #2: Okay. Thanks.

Andrew Nussey: Okay.

Speaker #1: And I've forgotten your second one, because I haven't written it down.

Bill Hocking: I have forgotten the second one because I have jotted down.

Andrew Nussey: The better contracting environment as a sort of margin driver over the sort of medium term, because it feels like we are already in a good contracting environment.

Speaker #2: The better contracting environment as a sort of margin driver over the medium term, because it feels like we're already in a good contracting environment.

Speaker #1: We are. I mean, as I said, we saw sort of a modulation between the amps for the specialist manufacturing businesses. That's picking up nicely now.

Bill Hocking: We are. As I said, we saw there was sort of a modulation between the AMPs for the specialist manufacturing businesses. That is picking up nicely now, but the strategy is working out well, and we see significant revenue growth in those spaces over the next few years, and therefore, the mix will start to move. We think that it is going to evolve pretty much as we forecast.

Speaker #1: But the strategy is working out well, and we see significant revenue growth in those specialists over the next few years. Therefore, the mix will start to move.

Speaker #1: So we think that it's going to evolve pretty much as forecasted.

Speaker #2: Okay. Thank you.

Andrew Nussey: Okay. Thank you.

Speaker #1: Joe.

Bill Hocking: Joe.

Speaker #3: Good morning. Joy Brent from Pam Hill. Three questions, if I may. Firstly, Andy Burnham—what are your first thoughts? Have you seen some delays in government procurement as there's been that inevitable reshuffle of ministers?

Joe Brent: Good morning. Joe Brent from Panmure Gordon. Three questions, if I may. Firstly, Andy Burnham, what are your first thoughts? Have you seen some delays in government procurement as there has been that inevitable reshuffle of ministers? He seems to have good energy. Are you feeling that in your businesses? Secondly, could you tell us a little bit more about the trajectory in roads, highways? Clearly a very strong FY26, and clearly, going forward, environments can be stronger. But interested just maybe get some rough numbers around what is happening in highways. Thirdly, on capital allocation, I guess you have got a pretty good sense of your organic investment. If you bundle M&A and buybacks together, both in FY26 and over the last three years, you have tended to spend GBP 10 to GBP 20 million on buybacks and M&A. Is that the sort of number you would expect going forward?

Speaker #3: Yeah, you seem to have good energy. Are you feeling that in your businesses? Secondly, could you tell us a little bit more about the trajectory in roads and highways?

Speaker #3: Clearly a very strong FY26, and clearly, going forward, the environment can be stronger. But I'm interested just maybe to get some rough numbers around what's happening in highways.

Speaker #3: And thirdly, on capital allocation, I guess you've got a pretty good sense of your organic investment. If you bundle M&A and buybacks together, both in FY26 and over the last three years, you've tended to spend £10 to £20 million on buybacks and M&A.

Joe Brent: Thirdly, on capital allocation, I guess you have got a pretty good sense of your organic investment. If you bundle M&A and buybacks together, both in FY26 and over the last three years, you have tended to spend GBP 10 to GBP 20 million on buybacks and M&A. Is that the sort of number you would expect going forward? And obviously, we are not going to model that, but we should be thinking about it in terms of accretion over and above the growth you expect.

Speaker #3: Is that the sort of number you'd expect going forward? And obviously, we're not going to model that, but we should be thinking about it in terms of accretion over and above the growth you're expecting.

Joe Brent: And obviously, we are not going to model that, but we should be thinking about it in terms of accretion over and above the growth you expect.

Speaker #1: So, I'll take the first two, and you can take the last one. So, Mr. Burnham—well, he seems to be very quiet, doesn't he?

Bill Hocking: Well, I will take the first two, and you can take the last one. Mr. Burnham, well, he seems very quiet, doesn't he? But I think the important thing for us is we have seen action on the affordable homes, as I said a minute ago, which is welcome, not before time too, I would say, but nevertheless welcome. Let us see what happens on 28 October, of course. But what we see a little bit, Joe, every time there is some sort of political activity, like a new leader, is we see a little bit of public services sitting on their hands a little bit, waiting to see which way the wind is going to blow. We do sometimes see some minor delays creeping in as projects slipping a bit to the right, but nothing of any substance, really, and they all come back later.

Speaker #1: But I think the important thing for us is we've seen action on affordable homes, as I said a minute ago, which is welcome.

Speaker #1: Not before time, too, I would say. But nevertheless, welcome. Let's see what happens on the 28th of October, of course. But what we see a little bit, Joe, every time there's some sort of political activity, like a new leader, we see a little bit of public service just sitting on their hands a little bit, waiting to see which way the wind is going to blow.

Bill Hocking: But what we see a little bit, Joe, every time there is some sort of political activity, like a new leader, is we see a little bit of public services sitting on their hands a little bit, waiting to see which way the wind is going to blow. We do sometimes see some minor delays creeping in as projects slipping a bit to the right, but nothing of any substance, really, and they all come back later.

Speaker #1: So, we do sometimes see some minor delays creeping in, with projects slipping a bit to the right, but nothing of any substance, really. And they all come back later.

Speaker #1: So that's what we see so far. Overall, I do think things feel a little bit more positive. But I do think we need to get past the 20th of October before we know what's going to happen.

Bill Hocking: That is what we see so far. Overall, I do think things feel a little bit more positive. But I do think we need to get past 20 October before we know what is going to happen. It is pretty obvious. Roads trajectory, it just shows how in some parts of the business, we are still wed to the weather. The roads, if you remember, the first two months of this year, didn't stop raining, did it, for two months. Luckily, you don't do much earth moving in those periods anyway in roads. But since then, to the dismay of the water companies, it hasn't rained enough, which means that we have had a cracking year in roads because you can actually make hay. Nothing is holding you up. It is because normally weather holds you up on the roads.

Speaker #1: It's pretty obvious. Road trajectory—it just shows how, in some parts of the business, we are still wed to the weather. So the roads, if you remember, the first two months of this year, it didn't stop raining, did it, for two months.

Speaker #1: Luckily, you don't do much earth moving in those periods anyway in roads. But since then, to the dismay of the water companies, it hasn't rained enough.

Bill Hocking: Luckily, you don't do much earth moving in those periods anyway in roads. But since then, to the dismay of the water companies, it hasn't rained enough, which means that we have had a cracking year in roads because you can actually make hay. Nothing is holding you up. It is because normally weather holds you up on the roads. I am being a little bit blasé, but that is a factor behind the roads as well as, of course, great performance by our people.

Speaker #1: Which means that we've had a cracking year in roads, because you can actually make hay—nothing's holding you up. It's normally weather that holds you up on the roads.

Speaker #1: So, I'm being a little bit blasé, but that's a factor behind the roads, as well as, of course, great performance by our people.

Bill Hocking: I am being a little bit blasé, but that is a factor behind the roads as well as, of course, great performance by our people. We have a little bit of a, because those jobs are finished a little bit ahead of time, there is a little bit of a hiatus until the next ones kick off. We have a really good backlog in roads. Remember that it is probably less than half of our backlog in roads now is National Highways, and the rest is in local authority roads. So we have a really good order backlog. It is a bit like the AMP transition, really. It is in the design phase, and it will kick off on the ground shortly and get moving. We expect that to recover quite quickly.

Speaker #1: So we have a little bit of a hiatus because those jobs are finished a little bit ahead of time. There's a little bit of a gap until the next ones kick off.

Bill Hocking: We have a little bit of a, because those jobs are finished a little bit ahead of time, there is a little bit of a hiatus until the next ones kick off. We have a really good backlog in roads. Remember that it is probably less than half of our backlog in roads now is National Highways, and the rest is in local authority roads. So we have a really good order backlog. It is a bit like the AMP transition, really. It is in the design phase, and it will kick off on the ground shortly and get moving. We expect that to recover quite quickly.

Speaker #1: We've got a really good backlog in roads. And remember that it's probably less than half of our backlog in roads now is national highways, and the rest is in local authorities' roads.

Speaker #1: So we've got a really good order backlog. That's a bit like the AMP transition, really. It's in the design phase, and we'll kick off on the ground shortly and get moving.

Speaker #1: So, we expect that to recover quite quickly.

Speaker #3: Yeah, on capital allocation, I think you're bang on the money. I mean, the thing that's different, sort of in terms of free cash flow—if I use that phrase that we all know—between sort of '26 and '27 and beyond, is the corporation tax point.

Kris Hampson: Yeah. On capital allocation, I think you are bang on the money. I think the difference in terms of free cash flow, if I use that phrase that we all know, between 2026 and 2027 and beyond is the corporation tax point. We have used up those historical deferred tax losses. So we will have to pay that going forward, but we are happy to do that. Let us be clear on that. So yeah, about GBP 20 million, that sort of range. As you see, we are at the top of our tramlines that we talk about as well. So there is room to maneuver in the tramlines. If something a little bit more exciting turned up, there is room for that as well.

Speaker #3: We've used up those historical deferred tax losses, so we'll have to pay that going forward. But we're happy to do that—let's be clear on that.

Speaker #3: So yeah, about £20 million, that sort of range. As you see, we're at the top of our sort of tramlines that we talk about as well.

Speaker #3: So, there is room to maneuver within the tramlines if something a little bit more exciting turns up—there’s room for that as well.

Speaker #1: Thank you. Go to Max.

Bill Hocking: Thank you. Max. Go to Max line.

Joe Brent: Thank you.

Bill Hocking: Max. Go to Max line.

Speaker #2: Hi guys. Max Hayes from Cavanish. Just two questions, if I may. So the first one's just sort of we went through digital. Just want to be a bit more color on sort of the areas that are now well established and sort of what other areas that you think sort of can drive that further margin accretion towards the 2030 targets.

Max Hayes: Hi, guys. Max Hayes from Cavendish. Just two questions, if I may. The first one is just, you went through digital. Just wondering a bit more color on the areas that are now well established and what other areas that you think can drive that further margin accretion towards the 2030 targets. Then the second one is just on affordable homes. You have made good progress getting onto frameworks. So is it now about just executing on those frameworks, or is there a lot more to go after? Thanks.

Speaker #2: And then the second one's just on affordable homes. So, you've made good progress getting onto frameworks. So is it now about just executing on those frameworks, or is there a lot more to go after?

Speaker #2: Thanks.

Speaker #1: So digital, I mean, this never ends, Max, does it? If you go back a few years, we would take a 2D drawing of a building, and we'd build a 3D model. It was quite expensive and time-consuming and, to be perfectly honest with you, not all that useful.

Bill Hocking: Digital, I mean, this never ends, Max, does it? If you go back a few years, we would take a 2D drawing of a building, and we would build a 3D model, and it was quite expensive and time-consuming and not all that useful, to be perfectly honest with you. Now, everything is designed in BIM, building information modeling. It is all designed in 3D. It is all automatically, you can go and play with it virtually. You can get your supply chain to come in and input into the model. It is a really interactive, really powerful tool. Things that we dreamt about a decade ago are a reality now, and that will just carry on progressing. I think that, I have said before that the language of construction over the next few decades will change from construction to assembly and modularization and things, words like that.

Speaker #1: Now, everything is designed in building information modeling. It's all designed in 3D. It's all sort of automatically you can go and play with it virtually.

Speaker #1: You can get your supply chain to come in and input into the model. It's a really interactive, really powerful tool. So, things that we dreamt about a decade ago are a reality now.

Bill Hocking: You can get your supply chain to come in and input into the model. It is a really interactive, really powerful tool. Things that we dreamt about a decade ago are a reality now, and that will just carry on progressing. I think that, I have said before that the language of construction over the next few decades will change from construction to assembly and modularization and things, words like that.

Speaker #1: And that'll just carry on progressing. So, I think that I've said before that the language of construction, over the next few decades, will change from "construction" to "assembly" and "modularization"—words like that.

Speaker #1: And I do think that will be more of a trend. But you'll never—you can't build a road, for example, in a modular way.

Bill Hocking: I do think that will be more of a trend. But it will never, you cannot build a road, for example, in a modular way. You might do the bridges or something like that possibly, but there are some things in construction that will always have to be done the old-fashioned way, if I can use that term. But the technology is moving so fast, it is fantastic. I think that technology will continue to have an input into what we do. Now we fly drones, rather we used to send people to measure things up and do surveys of sites, and now you just fly the drone over, does a point cloud survey to a millimeter accuracy. I mean, that is fantastic, the tech. It is absolutely brilliant. I think that will continue to evolve. How? I do not know.

Speaker #1: You might do the bridges or something like that—you possibly could. But there are some things in construction that will always have to be done in sort of the old-fashioned way, if I can use that term.

Speaker #1: But the technology is moving so fast, it's fantastic. So I think that technology will continue to have an input into what we do. Now, we fly drones—whereas we used to send people to measure things up and do surveys of sites—and now you just fly the drone over, it does a point cloud survey to millimeter accuracy.

Bill Hocking: I think that technology will continue to have an input into what we do. Now we fly drones, rather we used to send people to measure things up and do surveys of sites, and now you just fly the drone over, does a point cloud survey to a millimeter accuracy. I mean, that is fantastic, the tech. It is absolutely brilliant. I think that will continue to evolve. How? I do not know.

Speaker #1: I mean, that's fantastic as a tech. It's absolutely brilliant. So, I think that will continue to evolve—how, I don't know. But it will continue to help us to be more productive.

Bill Hocking: But it will continue to help us to be more productive. Then affordable housing, I just think that the impetus is there. We have got our first one on the ground in Chester. We are talking to some of these registered providers about some more as we speak. I think the sort of flood, I would not say, that is probably too strong a word. The floodgate, I would say. But there will be more of these things starting to come through now. The interesting thing is that some of that allocation was to councils, which is the first time that has happened, I think, since the Second World War or something.

Speaker #1: And then affordable housing, I just think that the impetus is there. So, we've got our first one on the ground in Chester. We're talking to some of these registered providers about some more as we speak.

Speaker #1: And I think the sort of flood—I wouldn't say, that's probably too strong a word, the floodgate, sort of. But there will be more of these things starting to come through now.

Speaker #1: The interesting thing is that some of that allocation was to councils, which is the first time that's happened, I think, since the Second World War or something.

Bill Hocking: The interesting thing is that some of that allocation was to councils, which is the first time that has happened, I think, since the Second World War or something. It will be interesting to see what those. It is not a huge amount of the GBP 10 billion, by the way, but it will be quite interesting to see what the councils do, because they are probably not quite used to or prepared for how to go about spending that money intelligently.

Speaker #1: So, it will be interesting to see what those—it's not a huge amount of the £10 billion, by the way—but it will be quite interesting to see what the councils do, because they probably are not quite used to or prepared for how to go about spending that money intelligently.

Bill Hocking: It will be interesting to see what those. It is not a huge amount of the GBP 10 billion, by the way, but it will be quite interesting to see what the councils do, because they are probably not quite used to or prepared for how to go about spending that money intelligently.

Speaker #2: Great. Thank you.

Max Hayes: Great. Thank you.

Speaker #4: Alex DeStewart, Progressive Equity Research. A couple of questions. One on your progression to 4%. If you look at the order book—look at incoming orders, as opposed to the backlog—are you close to, or even at, 4%, and is it just a case of the backlog moving out over the next couple of years?

Alastair Stewart: Alastair Stewart, Progressive Equity Research. A couple of questions. One on your progression to 4%. If you look at the order book, look at incoming orders as opposed to the backlog, are you close to or even at 4%, and it is a case of the backlog moving out over the next couple of years? In other words, are you going to get there earlier than in 2030? Is the blunt question. Secondly, can you give an idea of the quantum of the delayed orders in building and maybe put a bit of color on, I have forgotten the quote there, the macro uncertainty among the public authorities?

Speaker #4: In other words, are you going to get there earlier than 2030? That’s the blunt question. And secondly, can you give an idea of the quantum of the delayed orders in Building, and maybe put a bit of color on that?

Speaker #4: I've forgotten the quote there—macro uncertainty—among the public authorities.

Speaker #1: So if I take the second one first, Alice—I sort of answered that earlier, Ron. That's just civil servants sitting on their hands a bit while they're waiting to see which way's up.

Bill Hocking: If I take the second one first, Alastair. I sort of answered that earlier on. That is just civil servants sitting on their hands a bit while they are waiting to see which way is up. It is in the roundings. There is nothing to worry about. I do not lose any sleep over that at all.

Speaker #1: It's in the roundings. There's nothing to worry about. I don't use any steep over that at all. Yes, it is. Yeah, going back to the first one.

Alastair Stewart: It is not

Bill Hocking: Yes, it is. Going back to the first one. Look, I think we have established a bit of a reputation for setting targets that we expect to be able to achieve, and if we achieve them early, so much the better. We are making good progress towards the 4%, and maybe this time next year we will be making even closer progress. When we get there, we will tell you what comes next.

Speaker #1: Look, I think we've established a bit of a reputation for setting targets that we expect to be able to achieve. And if we achieve them early, so much the better.

Speaker #1: So, we are making good progress towards the 4%. And maybe this time next year, we'll be making even closer progress. So when we get there, we'll tell you what comes next.

Alastair Stewart: Is it beyond the bounds of possibility that for a third year, you can make a 50 basis point jump?

Speaker #4: Beyond the possibility that, for a third year, you can make a 50 basis point jump.

Speaker #1: Well, we'll see. But we're in good shape. We're in very good shape. As I said before, we've got a crackin' balance sheet. We've got a crackin' order book.

Bill Hocking: Well, we will see. We are in good shape. We are in very good shape. As I said before, we have got a cracking balance sheet. We have got a cracking order. We have got a cracking bunch of people and a big market out there. So, we are in good shape, Alastair. The fact that we can use some of that firepower to invest organically or make further bolt-on acquisitions, and you get further EPS accretion through that as well, of course. So no, we are in good shape. If we get there early, then that will be great. Steve, Colin Smith.

Speaker #1: We're attracting a bunch of people in a big market out there, so we're in good shape, Alice. And the fact that we can use some of that firepower to invest organically or make further bolt-on acquisitions and get further EPS accretion through that as well, of course.

Speaker #1: So no, we're in good shape. And if we get there early, then that'll be great. Steve, call it.

Speaker #2: Colin Smith from Capital Access Group. Three of me. You sort of highlighted about £300 billion's worth, I think, of infrastructure potential spend over the next 10 years.

Colin Smith: Colin Smith from Capital Access Group. I will have three, if I may. You sort of highlighted about GBP 300 billion worth, I think, of infrastructure potential spend over the next 10 years. Could you just talk a little bit about what you think the actual constraints to the growth rates that you are currently delivering are, and whether you could do better than that on a more structural basis? First question. Second one, with the growth of the higher margin add-ons and their continued development within the Galliford Try structure, do you think the risk structure or the risk profile of the business has changed from where it was in any material way, and if so, how?

Speaker #2: Could you just talk a little bit about what you think the actual constraints to the growth rates that you're currently delivering are, and whether you could do better than that on a more structural basis?

Speaker #2: First question. Second one, with the growth of the higher-margin add-ons and their continued development within the Galliford Try structure, do you think the risk structure or the risk profile of the business has changed from where it was in any material way?

Speaker #2: And if so, how? And then the final question is just to sort of understand what you think, or how we should think about, the kind of maximum amount of cash the business would like to hold, just to try and get a feel for where you think you might be holding excess cash that might come back by way of special dividends, as we've just seen in the announcement today.

Colin Smith: The final question is just to understand what you think the maximum amount of cash the business would like to hold, just to try and get a feel for where you think you might be holding excess cash that might come back by way of special dividends, as we have just seen in the announcement today. Thank you.

Speaker #2: Thank you.

Speaker #1: Thanks, Colin. So constraints interesting. So it is an enormous number, Colin. But to be fair, it's always been an enormous number. And in the industry, we've when we've had big one-offs like the Olympics, for example, or Hinkley Point Sea or HS2, there's angst about the size of supply chain and et cetera, et cetera.

Bill Hocking: Yes, Colin. Consensus interest, it is an enormous number, Colin. To be fair, it has always been an enormous number. In the industry, when you have had big one-offs like the Olympics, for example, or HS2, there is angst about the size of supply chain, et cetera. Without sounding blasé, supply and demand seems to come into play and work. From our perspective, though, it is about risk. Could we double the size of the business? Possibly. Would we want to double the size of the business? Probably not. It is all about making sure that, in my view, that you never bite off more than you can chew, that you grow the business in a civilized manner with the right people and the right supply chain, the right foundations, to make sure that you can grow and continue to succeed. Because growing a construction business is easy.

Speaker #1: And without sounding blasé, supply and demand seems to come into play and work. So from our perspective, though, it's about risk. Could we double the size of the business?

Speaker #1: Possibly, but would we want to double the size of the business? Probably not. So it's all about making sure that, in my view, you never bite off more than you can chew—that you grow the business in a civilized manner, with the right people, the right supply chain, and the right foundations to make sure that you can grow and continue to succeed.

Bill Hocking: Would we want to double the size of the business? Probably not. It is all about making sure that, in my view, that you never bite off more than you can chew, that you grow the business in a civilized manner with the right people and the right supply chain, the right foundations, to make sure that you can grow and continue to succeed. Because growing a construction business is easy.

Speaker #1: Because growing a construction business is easy. Growing it profitably is less easy. So for us, yes, the market's big, but we will remain very disciplined as we grow into that in accordance with our strategy.

Bill Hocking: Growing it profitably is less easy. For us, yes, the market is big, but we will remain very disciplined as we grow into that in accordance with our strategy. Risk profile on the high margin businesses, it is just different, I think, Colin. Some of these businesses are manufacturing businesses where they were factories that manufacture pretty high-tech bits of kit, so they have orders coming in and so on. What we see, for us, that is a slightly different mindset, I suppose, from a contractor's mindset, if we can put it like that. So we have a different set of people that come from manufacturing backgrounds and business development backgrounds to make sure that we are not putting a contractor's mindset over a manufacturing business, if I can put it like that. So the risk there is about utilization, really, of these bits of kit.

Speaker #1: Risk profile, the high-margin businesses. It's just different, I think, Colin. So some of these businesses are manufacturing businesses, where they've got factories that manufacture pretty high-tech bits of kit.

Speaker #1: So they have orders coming in and so on. What we see—for us, there's a slightly different mindset, I suppose, from a contractor's mindset, if I can put it like that.

Bill Hocking: What we see, for us, that is a slightly different mindset, I suppose, from a contractor's mindset, if we can put it like that. So we have a different set of people that come from manufacturing backgrounds and business development backgrounds to make sure that we are not putting a contractor's mindset over a manufacturing business, if I can put it like that. So the risk there is about utilization, really, of these bits of kit.

Speaker #1: So, we have a different set of people that come from manufacturing backgrounds and business development backgrounds to make sure that we aren't putting a contractor's mindset over a manufacturing business. So the risk there is about utilization, really, of these bits of kit.

Speaker #1: And I think we're pretty well sized at the moment. In saying that, we're just about to double the size of Neen Valley's premises. We're just about to double the size of Lintott's premises in Coventry.

Bill Hocking: I think we are pretty well sized at the moment. In saying that, we are just about to double the size of Nene Valley's premises. We are just about to double the size of Lintott's premises in Coventry. We have opened two new fabrication facilities, and we are probably eyeing another one down the M4 corridor sometime soon. So we are making sure that where we see demand, and it is long-term demand, we can cater for it. Remember, when you look at our specialist businesses, we buy bits of kit from those specialist businesses so we can provide them with a foundation that is really solid, and then we sell bits of kit to our competitors, and we sell bits of kit to our clients. So the risk profile is a bit different because it is manufacturing, not construction.

Speaker #1: We've opened two new fabrication facilities, and we are probably eyeing another one down the M4 corridor sometime soon. So we are making sure that when we see demand, and it's long-term demand, we can cater for it.

Bill Hocking: So we are making sure that where we see demand, and it is long-term demand, we can cater for it. Remember, when you look at our specialist businesses, we buy bits of kit from those specialist businesses so we can provide them with a foundation that is really solid, and then we sell bits of kit to our competitors, and we sell bits of kit to our clients. So the risk profile is a bit different because it is manufacturing, not construction.

Speaker #1: And remember, when we look at our specialist businesses, we buy bits of kit from those specialist businesses, so we can provide them with a foundation that's really solid.

Speaker #1: And then we sell bits of kit to our competitors, and we sell bits of kit to our clients. So, the risk profile is a bit different because it's manufacturing, not construction.

Speaker #1: But we come at it with the same sort of mindset—a conservative mindset—in that we want those businesses to be running at a high degree of productivity all the time.

Bill Hocking: We come at it with the same sort of mindset, a conservative mindset, that we want those businesses to be running at a high degree of productivity all the time. We don't want a big factory that is half empty. We'd rather have a smaller one that's just always busy, if that answers the question.

Speaker #1: We don't want a big factory that's half empty. We'd rather have a smaller one that's always busy, if that answers the question.

Speaker #3: If I take the third question—I mean, I think the two questions are very much interlinked. The order books, as Bill says, are shorter in those businesses.

Kris Hampson: Well, I think if I take the third question, I think the two questions are very much interlinked. The order books, as Bill says, are shorter in those businesses, but because they're adjacent, we can feed work to them. So perhaps if there was a fallow period, we will. We debate how much of that self-feeding work we should do. Actually, we want to self-feed some of it. We want to sell, as we do to our competitors, we want to sell to third parties as well. So where the mix of that sits in the business. But if one of those dips, then maybe we can. So we can self-control how we manage that risk. I think overall, the thing that I really like about what we've done over the last few years is we've grown volumetrically. Our biggest projects are not particularly growing.

Speaker #3: But because they're adjacent, we can feed work to them. So perhaps, if there was a slightly fallow period, we will— and we debate how much of that self-feeding work we should do.

Speaker #3: Actually, we want to self-feed some of it. We want to sell, as we do, to our competitors. We want to sell to third parties as well.

Kris Hampson: We want to sell, as we do to our competitors, we want to sell to third parties as well. So where the mix of that sits in the business. But if one of those dips, then maybe we can. So we can self-control how we manage that risk. I think overall, the thing that I really like about what we've done over the last few years is we've grown volumetrically. Our biggest projects are not particularly growing.

Speaker #3: So where the mix of that sits in the business. But if one of those dips, then maybe we can so we can self-control how we manage that risk.

Speaker #3: I think, overall, the thing that I really like about what we've done over the last few years is we've grown volumetrically. Our biggest projects are not particularly growing.

Speaker #3: Yes, there's some inflation through them, but we've grown volumetrically. So, every job becomes a smaller percentage of the whole. That helps with the de-risking that we've talked about.

Kris Hampson: Yes, there's some inflation through them, but we've grown volumetrically. So every job becomes a smaller percentage of the whole. That helps the de-risking that we've talked about, and therefore, we also feel we don't need to keep growing cash. So we have the tramlines, as you know. They used to be eight to 12. We've been nudging them. We don't formally write these on targets, but we're nudging those down towards seven to 11. We've been communicating that for the last 12 months. Even at the current cash number, at the year-end, we were probably toppy on that. But that's why we're leaning a little bit more into M&A and into returns in this presentation today. That's the key point. We can deploy the cash, and we've got enough in the firepower.

Speaker #3: And therefore, we also feel we don’t need to keep growing cash. And so we have the tramlines, as you know. It used to be 8 to 12.

Speaker #3: We've been nudging them, we want those down towards 7 to 11. We've been communicating that for the last 12 months. Even at the current cash number at year-end, we were probably top 8 on that.

Kris Hampson: We don't formally write these on targets, but we're nudging those down towards seven to 11. We've been communicating that for the last 12 months. Even at the current cash number, at the year-end, we were probably toppy on that. But that's why we're leaning a little bit more into M&A and into returns in this presentation today. That's the key point. We can deploy the cash, and we've got enough in the firepower.

Speaker #3: But that's why we're leaning a little bit more into M&A and into returns in this presentation today. And that's the key point: we can deploy the cash, and we've got enough in the firepower.

Kris Hampson: As I said, we will make cash return, shareholder return decisions based on what's in our active pipeline and we expect to come through. So it may not always be obvious to you why we have or haven't made a return, I guess, but that'll be because we're very conscious about the cash that we see we need in the future to really access those incremental EPS opportunities that we see in front of us. Stephen, you might go next, Stephen.

Speaker #3: And as I said, we will make cash-returning and shareholder return decisions based on what's in our active pipeline, and we expect that to come through.

Speaker #3: So, it may not always be obvious to you why we have or haven't made a return, I guess, but that'll be because we're very conscious about the cash that we see we need in the future to really access those incremental EPS opportunities that we see in front of us.

Speaker #1: Stephen, microphone. Stephen.

Stephen Rawlinson: Hi. Stephen Rawlinson from Applied Value. I am just intrigued with what is going on in the investment business. Can I just ask four questions about that? Firstly, the loss in investments, GBP 1.8 million higher this year than last, GBP 2.2 million. Just to help us out a little bit as to why that increased so much. Secondly, you have got preferred bidder on five PRS projects. Can you just talk about the capital that might be needed over the next few years from you as your part of the ventures there, and how we should be thinking about that? Thirdly, will you actually build them yourselves? Is that the intention within the preferred bidder? Because obviously, this is an area where historically margins have been well above the average for building. If you are going to get successful on this, then obviously that will help with the margin accretion you have described.

Speaker #2: Hi, Stephen Orlinson from Applied Value. I'm just intrigued with what's going on in the investment business. So, can I just ask four questions about that?

Speaker #2: Firstly, the loss in investments is £1.8 million higher this year than last, at £2.2 million. Just to help us out a little bit as to why that increased so much.

Speaker #2: Secondly, you've got preferred bidder on five PRS projects. Could you just talk about the capital that might be needed over the next few years from you as you're part of the ventures there, and how we should be thinking about that?

Stephen Rawlinson: Can you just talk about the capital that might be needed over the next few years from you as your part of the ventures there, and how we should be thinking about that? Thirdly, will you actually build them yourselves? Is that the intention within the preferred bidder? Because obviously, this is an area where historically margins have been well above the average for building. If you are going to get successful on this, then obviously that will help with the margin accretion you have described.

Speaker #2: Thirdly, will you actually build them yourselves? Is that the intention within the preferred bidder? Because, obviously, this is an area where, historically, margins have been well above the average for buildings.

Speaker #2: So, if you are going to be successful on this, then obviously that will help with the margin accretion you've described. And the fourth one is probably a little bit blue sky.

Stephen Rawlinson: The fourth one is probably a little bit blue sky, but are you expecting to add these to the portfolio or are you expecting to sell them? What is the thought process at the moment from the board's point of view?

Speaker #2: But are you expecting to add these to the portfolio, or are you expecting to sell them? What's the thought process at the moment from the board's point of view?

Speaker #1: Okay. Do you want to take the first two? I'll take the second two, then.

Bill Hocking: Okay. Do you want to take the first two and I will take the second two then?

Speaker #3: Yes, I think the simple way to say it is actually the market's pretty much slowed down. These things are quite difficult to get away viably at the moment, with bond rates being as high as they are.

Kris Hampson: Yes. I think the simple way to say it is actually the market has pretty much slowed down. These things are quite difficult to get away viably at the moment with bond rates being as high as they are. In reality, what you have got is a little less revenue going through because the projects are going through the building or building planning or fire safety. There is a little bit of stuff slowing down there, and the reality is we are trying to keep that team together because we do see the money coming through for affordable housing. We are keeping the team together. The reality is, and we are doing some development work on the five projects, so you are still incurring some money. We do not put that on the balance sheet. We will take it as we have it, because if they do not come on, they do not come.

Speaker #3: So in reality, what you've got is a little less revenue going through because the projects are going through the building or building planning or fast safety.

Speaker #3: So, there's a little bit of stuff slowing down there. And the reality is, we're trying to keep that team together, because we do see the money coming through for affordable housing.

Kris Hampson: There is a little bit of stuff slowing down there, and the reality is we are trying to keep that team together because we do see the money coming through for affordable housing. We are keeping the team together. The reality is, and we are doing some development work on the five projects, so you are still incurring some money. We do not put that on the balance sheet. We will take it as we have it, because if they do not come on, they do not come.

Speaker #3: So we're keeping the team together. So the reality is—and we're doing some development work on the five projects—that you are still incurring some money.

Speaker #3: And we don't put that on the balance sheet. We'll take it as we have it, because if they don't come on, they don't come.

Speaker #3: So, it's a prudent view of the number. That's how we would say it. But should those five deals come through, there'll be plenty of opportunity in the future.

Kris Hampson: It is a prudent view of the number. That is how we would say it. But should those five deals come through, there will be plenty of opportunity in the future. The cash, the capital we put into in our model is actually very limited. It is sweat capital mostly. We might take an option on the land that might be GBP 50,000 or GBP 100,000. It is not big bucks, maybe GBP 400,000 of sweat capital that you will see in that GBP 2.2 million effectively. That is what we do. So they are not significant. Then Bill will talk about through the ongoing thing, but actually the build is typically funded by the party that will eventually run the building. So the capital need is actually very low.

Speaker #3: The cash, the capital we put into our model, is actually very limited. It's mostly sweat capital. We might take an option on the land.

Speaker #3: That might be £50 or £100,000. It's not big bucks. Maybe £400,000 of sweat capital. You'll see in that £2.2 million, effectively. That's what we do.

Speaker #3: So they're not significant. And then Bill will talk about the ongoing thing. But actually, the build is typically funded by the party that will eventually run the building.

Speaker #3: So, the capital needed is actually very low.

Speaker #1: Yeah. So what do you do? Actually, Steve, we'll do the plan permissions and all the stuff, get all the statutory permissions that we need.

Bill Hocking: Yeah. So what we do actually, Steve, is we will do the planning permissions and all the stuff, get all the statutory permissions we need. When that is done, we will sell it forward to a number of people who buy these sorts of assets, and then we will build it for them. So we get a profit on the upfront sale of the development, and then we go and build it, and as you rightly say, make better profits. When you put those two together, we make broadly double our standard construction margins. So we built the photo you saw there, The Rise, we built that. That is exactly the model we used there. We bought an option on the land, we designed it, we sold it forward, we built it, and we handed it over on time, and it has been a really successful project. So that is the model.

Speaker #1: When that's done, we'll sell it forward to a number of people who buy these sorts of assets, and then we'll build it for them.

Speaker #1: So we get profit on the upfront sale of the development, and then we go and build it, and as you said, make better profits.

Speaker #1: When you put those two together, we make broadly double our standard construction margins. So, we built the footage you saw there—the Rise. We built that.

Bill Hocking: When you put those two together, we make broadly double our standard construction margins. So we built the photo you saw there, The Rise, we built that. That is exactly the model we used there. We bought an option on the land, we designed it, we sold it forward, we built it, and we handed it over on time, and it has been a really successful project. So that is the model.

Speaker #1: That's exactly the model we used there. We bought an option on the land, we designed it, we sold it forward, we built it, and we handed it over on time.

Speaker #1: And it's been a really successful project, so that's the model. The ones—so the PRS team are basically the old PFI, PPP team, because the same front-end skills are needed to do these things.

Bill Hocking: The PRS team are basically the old PFI, PPP team, because the same front-end skills are needed to do these things, and it is the same front-end skills needed for affordable. So that is a really good team to have in place, and they do a great job. Just going back to the investments. It is quite lumpy. If you sell or do a deal the day before, the day after is going to. So it is in the round, it is here.

Speaker #1: And it's the same front-end skills needed for affordable, so that's a really good team to have in place. And they do a great job.

Speaker #1: Just going back to the investments, it is quite lumpy. If you sell or do a deal the day before or the day after, it's going to—so it's in the roundings, yeah.

Speaker #2: Thank you.

[Analyst]: Thank you.

Stephen Rawlinson: Thank you.

Speaker #1: Good. Any more questions? Anything on the wires there as well?

Bill Hocking: Good. Any more questions? Anything on the wires there, Squire?

Kris Hampson: There was nothing a minute ago. Let me just check one more time. No, no questions on the wires.

Speaker #3: There was nothing a minute ago. Just check one more time.

Speaker #1: No, no questions on the wires.

Speaker #3: Excellent. Well, thank you all very much for coming. It's nice to see you all in the flesh for the first time in a long time.

Bill Hocking: Well, thank you all very much for coming. Nice to see you all in the flesh for the first time in a long time, and we'll sure speak outside. Thank you very much.

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