Kier Group plc

Good morning, everyone, and thank you for joining our full year results presentation, both here in person, and also I'd like to extend a warm welcome for those joining on the webcast and the audio. I'm Andrew Davies, I'm the Chief Executive of Care Group, and I'm joined today by Simon Kesterton, who's our Chief Financial Officer. So this morning, I will walk you through the highlights from the last 12 months to the 30th of June 2023, and then hand you over to Simon, who will talk you through the group's financial performance. This will be followed by an operational review, an update on ESG, and we'll finish off with our outlook. And then there'll be an opportunity for questions and answers at the end. So if we work through the disclaimer and the title. So the FY23 highlights on here, slide four. We've delivered a strong set of results in the year. We had a positive momentum in the business. Infrastructure services revenue grew by 3% and construction grew by 15%, with significant volume growth in the final quarter of the financial year. We continue to see inflationary pressures, which we're successfully mitigating. We achieved revenue growth overall of 5%. We've achieved an adjusted operating profit of £132 million, a year-on-year increase of 9%, and we delivered an industry-leading adjusted operating margin of 3.9%, continuing to outperform our medium-term target of circa 3.5%. Our focus was and continues to be firmly on delivering the medium-term plan through growth in our core markets supported by UK government spending commitments. And the strong operational and financial performance in the year increases my confidence in our ability to consistently deliver for all of our shareholders. So the group's net cash position at 30th of June was £64 million, significantly improved on a year ago and above where we expected it to be, especially as the net cash position was delivered despite having repaid our supply chain finance facility called KEPs of £50 million. We delivered strong cash generation, allowing the reduction of our debt and debt-like items. Average month-end net debt for the year was £232 million, compared with £216 million in the prior year. And given our confidence in the cash generation of the business and our belief this momentum will be sustained, I'm pleased to say we intend to commence dividends to shareholders in financial year FY24. We plan to start with a dividend which can be progressed over time and is covered three times by earnings. We intend to declare the first dividend alongside our interim results. Our order book sets us up well for the medium term plan and demonstrates that we continue to benefit from UK government spending. The order book has been maintained at £10.1 billion, reflecting contract wins across our business and providing multi-year revenue visibility. The underlying momentum in the business is strong. We've secured 85% of our FY24 anticipated revenue, which provides a high degree of certainty against a backdrop of wider economic and political market uncertainty. A significant effort has been made to improve the quality of our order book. As a reminder, over the last three years, we've exited low and lost making contracts. We've spent a lot of time de-risking the portfolio. We're focused on winning work with UK government and regulated authorities in negotiated terms and appropriate risk profiles. Our order book is supported by long-term framework positions and frameworks, as I've said before, are our route to market. We've maintained and grown our central and local framework positions. However, we exclude long-term framework positions from our order book and therefore these represent an additional pipeline of opportunity. The medium term plan also noted we would consider value accretive acquisitions if the opportunity presented itself. And earlier this month, we completed the acquisition of substantially all of the rail assets of Buckingham Group and their HS2 contracts, supplying Kier's HS2 joint venture EKFB for consideration of up to £9.6 million. And this acquisition provides an excellent cultural fit for our organisation and importantly accelerates Kier's rail strategy. We also agreed our pension scheme triennial valuation, resulting in decreased deficit payments. And lastly, we refreshed our sustainability framework and introduced and reinforced our commitment to ESG targets. And I'll talk more about that later on in the presentation. So I'll just talk about the medium-term value creation plan. So the group announced and committed to a medium term value creation plan in FY23 and our focus has been very much to deliver against the targets we set. Medium term plan focused on an increased revenue, increasing margin and increasing operating cash generation, thus enabling debt reduction and providing a stronger balance sheet with a commitment to reintroducing the dividends at an appropriate time. And this slide sets out how we're doing against each target. You see, we're tracking well against the revenue target of 4 to 4.5 billion pounds. We delivered 3.4 billion pounds in the year with a growth of 5% over the prior year. We've exceeded both the margin target of 3.5% and the cash flow conversion of 90%. We achieved an adjusted operating profit margin of 3.9% and cash flow conversion of 130% in the year. We said we would target a sustainable net cash position with the capacity to invest. We're performing better than initially expected on average month-end net debt with a FY23 average balance of £232 million. And the group's strong underlying operational and financial performance and repayment of debt and debt-like items gives us confidence over further progress in the short term. And we also set out a sustainable dividend policy of three times earnings cover through the cycle. And as I said, we intend to return to the dividend list in the current financial year. So at this point, I will hand over to Simon to take us through the financial highlights. Simon.

Thank you, Andrew. Morning, everyone. Turning to slide seven, this slide sets out a high-level income statement. Revenue in the year, as Andrew mentioned, is higher than the prior year and reflects volume growth in both infrastructure services and construction, which more than offset the anticipated reduction in property transactions. I'll walk through this on the next slide. We delivered adjusting operating profit of £132 million in the year despite continued inflationary pressure. The group achieved an adjusted operating margin of 3.9%, 40 basis points ahead of our medium-term plan margin target. Statutory profit before and after tax has more than doubled compared to the full year 2022 and demonstrates a continued improvement and how the business continues to progress towards its medium-term value creation plan. We achieved adjusted EPS of 19.2 pence. This represents a 14% growth when compared to 16.8 pence last year. Net cash is significantly better than the prior year at 64 million compared to 2.9 million due to strong cash flow conversion, which is enhanced by volume growth translated into working capital inflows. Reductions in adjusting items and pension scheme payments. This is also, as Andrew mentioned, following the 50 million full repayment of our supply chain facility kept back in July 2022 and was above our initial expectations. Average month-end debt was £232 million. This is adverse to the prior period, but better than our initial expectations, despite the repayment of KEPs and other debt-like items of £62 million. Turning to slide 8, starting on the left-hand side, we start with revenue of £3.3 billion. Infrastructure services revenue increased by 3%, primarily due to the continued ramp-up of capital works on HS2. Construction revenue increased by 15% as the strong order book we entered the year with converted to revenue. The growth was second-hard-weighted and gives us comfort over anticipated 2024 revenue growth. property revenue fell by 109 million, as we saw the expected reduction in property transactions. This partly reflects current market conditions, but is primarily driven by us taking advantage of favourable market conditions at the end of our last financial year, knowing it would subdue property transactions for the next couple of years. Moving now to the adjusted operating profit bridge, we start with the previous year's adjusted operating profit of 121 million pounds. Volume, mix and price changes have resulted in an increase of £9 million. The reduction in property transactions resulted in property profits being £5 million lower than the previous period. We've achieved management actions of £14 million during the year. These relate to ongoing performance excellence initiatives undertaken as we more than mitigate cost inflation of £7 million. We continue to see inflationary pressure given the macroeconomic environment but also continue to manage and mitigate this. Over 60% of our order book is made up of target cost or cost reimbursable contracts and if we do choose to give price certainty to our customers it will generally be done after key risks and opportunities are understood. Also our average order size in construction is only 16 million pounds resulting in regular repricing of our contracts. The result is an increase in operating profit to £132 million. Adjusting items excluding non-cash amortisation and interest amounted to £31 million in the year and are much lower than the £56 million incurred last year. We have seen restructuring costs materially reduced as expected. Going forward, we do not expect any further restructuring or related costs. As a reminder, the amortisation of 19 million relates to historical acquisitions and the interest relates to IFRS 16 where leased office space has been exited. Other items of 18 million include 13 million of fire cladding costs. Given the nature of construction projects we typically engage in, following regulation change, we estimate our exposure to this could be at worst case a further 10 to 20 million pounds. We also incurred 5 million on insurance-related matters. This is made up of a non-cash provision of 8 million against the insurance receivable, partly offset by 3 million of insurance proceeds related to a claim for a fire at one of our facilities. Moving on to free cash flow, this year saw considerable improvement in operating cash flow conversion as construction revenue growth, particularly in the final quarter of the year, drove a working capital inflow. This was considerably improved on last year. Adjusted EBITDA in the period grew from £165 million to £196 million. We then have an £80 million of working capital improvement, a significant improvement when compared to the FY22 inflow of only £4 million. As previously mentioned, we repaid the final $50 million of caps in July 2022, meaning our total operating cash generation, together with proceeds from the equity raise at the sale of Kia Living, has allowed us to reduce caps by $201 million since 31 December 2018 and $79 million since the equity raise, which demonstrates the strong operating cash flows of the business over recent years. Repayment of this and other debt-like items amounted to an average of £62 million compared to the prior year. CapEx in the year amounted to £51 million, however 46 of this relates to payments made under leases now capitalised under IFRS 16. The majority of this increase relates to additional plant and equipment to support the ramp-up of HS2. Net interest and tax increased by £6 million in the year, primarily due to increased interest rates. We maintain supplier payments of 34 days on average, consistent with the half year. This results in the group improving its operating cash conversion from 90% to 130%, well above our medium term plan target of 90%, demonstrating that the plan is delivering meaningful improvement in the cash position of the group. Turning over to slide 12, we have the net cash bridge. We start on the left-hand side with closing cash of £3 million at the end of June 2022. We then see free cash inflow of £132 million that I've just talked about. We had adjusting items of £27 million. This includes the payment of items accrued for in the previous financial year and pension payments of £13 million. made up of £10 million of pension deficit repayments and £3 million of expenses. This payment will reduce in the future years due to the recent valuation and agreed reduced deficit repayment plan. We then have the purchase of Keir Group shares. This is in respect of the Group's Employee Benefit Trust, which acquires Keir shares from the market for use in settling the long-term incentive plan share schemes when they vest. The net cost of this was £12 million. The other £19 million relates to deploying capital to the property segment. This will help drive future returns as the current market is affording us some great opportunities. This results in a net cash position of £64 million at the end of the year. Moving to slide 13, the slide highlights the progress made towards our medium term plan and the route to achieving a sustainable net cash position. In FY21, our average month-end net debt was £432, and when you added on the debt-like items of supply chain finance, KEPs, the KEPs programme, and HMRC COVID-19 debt, the total was £582 million. In FY22, the £582 million of debt and debt-like items were significantly reduced to £286 million. driven by the proceeds from the capital raise, the sale of Kia Living, as well as from free cash flow generation. The net debt element of that figure was £216 million. In FY23, we expected the average net debt to increase, driven by the final repayment of those debt-like items, with the £232 million achieved better than our initial expectations after paying down the £62 million of debt-like items. In FY24, we expect the reported average net debt to decrease materially, with free cash flow generation continuing to be almost entirely devoted to debt reduction. During the year, in addition to KEPs, we repaid £44 million in total on our US private placement notes, and the year saw us fully repay all the short-side notes. The RCF also reduced by £40 million. These were repaid from cash flow generation, from operating cash flow, and we continue to maintain considerable headroom under our facilities. Slide 14 sets out our order book position. Our order book is high quality and has further increased by 3% to $10.1 billion compared to June 2022. We have secured 85% of our FY24 revenue in line with that of the start of FY23 as we continue to win work in our chosen markets. Significant effort has been made to improve the quality of the order book. We are focused on winning work with UK government and regulated authorities. We continue to focus on managing risk and reward when bidding, negotiating and delivering work. As mentioned earlier, 60% of our order book is under target cost or cost reimbursable contracts. Our infrastructure business has nearly 100% of its contracts agreed as target cost or cost reimbursable and is important to balancing our risk and reward profile. Within construction, the majority of our contracts are fixed, but 95% of these are fixed following a two-stage process to identify and mitigate the risks involved. Our average order size, as mentioned earlier, is only circa £16 million, and this is relatively small average order size, which results in us regularly repricing contracts. The order book continues to be underpinned by significant long-term framework agreements. Our long-term framework positions are excluded from the order book. These represent further opportunities for the group. Moving to capital allocation. We're focused on optimising shareholder returns. Accordingly, as we generate cash from operations, we expect to deploy that in a number of ways. CapEx is expected to continue to be minimal. We plan to invest further in our property business in order to generate consistent returns over time. We'll continue to do this in a disciplined and controlled manner. Further deleveraging. As you're aware, we're targeting a sustainable net cash position in the medium term. We're targeting a dividend cover of around three times earnings through the cycle. With regard to mergers and acquisitions, the group will continue to consider value accretive acquisitions in core markets where there is potential to accelerate the medium term plan. Slide 16 shows the current accounting position of the group's pension schemes. The combined schemes under an accounting basis are currently in a surplus of £105 million. More importantly, the recently agreed tri-annual actuarial valuations were concluded with the trustees at the end of this financial year. This position reflects the payments made to the pension schemes and the improved covenant provided by Keir's improved financial position. We do have some smaller schemes still in deficit and therefore we do still have to make some deficit repayments. These repayments for the next few years will decrease from £10 million in FY23, £9 million in FY24, £8 million in FY25, £5 million in FY26, £4 million in FY27 and finishing with £1 million in FY28. We've also agreed that once each of the pension schemes are in surplus, they will cover their own administration expenses. We paid £3 million in the current year, and therefore this represents a material drop in cash payments over the next few years. Slide 17. As Andrew mentioned, it's our intention to reinstate a dividend. As we've just discussed, the group's strong operational performance has resulted in a spot net cash position, and this combined with the order book affords us line of sight to an average net cash position. The dividend is anticipated to be paid as a one-third interim dividend as part of the half-year results, and two-thirds final dividend with the full-year results. Our dividend policy is three times cover, and we intend to progress to this over time. It's very pleasing that the results of everyone's hard work at the company can now be shared with our shareholders who've been extremely supportive over recent years. And now I'll hand back to Andrew for the operational review.

So thank you, Simon, for that. And turning now to... Slide 19, where we'll talk about infrastructure services. I'll give some colour on some of the operational updates over the year, starting with the, as I said, infrastructure services business. As a reminder, in May this year, we announced a realignment of the segment to support our growth ambitions. So from 1st of July 2023, Kier's three current business streams of highways, utilities and infrastructure projects became two to align to our clients and markets. The business streams have been renamed, and the first business stream is called Transportation. This provides design, engineering, delivery and maintenance to support the movement of people, goods and equipment by land, sea and air. It includes our existing highways business, as well as Kier's rail, airports, infrastructure and port sectors. Our EKFB joint venture on HS2 programme will sit under this business stream. And the rail acquisition is currently being integrated into this business. The second business stream is called Natural Resources, Nuclear and Networks. This includes our existing utilities business and the infrastructure business relating to capital work supporting water, energy and networks. As UK infrastructure asset owners continue to invest in their businesses, we believe Kier's realigned business will be well placed to support our clients in those key markets. And for instance, recently the UK water companies announced their intention to invest £10 billion to modernise water and sewage systems. So this realignment simplifies our business structure and is another step towards executing the medium-term value creation plan. Importantly, there's been no change to the external business unit reporting, which will remain under the overarching headings of infrastructure services, construction and property. In the year, our infrastructure services segment saw a revenue growth of 3%. As Simon has said, this was largely driven by the ramp-up of HS2 Capital Works. And as a reminder, as part of the Eiffage, Kier, Ferroville and BAM, or EKFB, joint venture, Kier is delivering the longest section of civil works, 80 kilometres from the Chilterns to just south of Warwick. And we have the lead on project management and programme integration in the joint venture. Our adjusted operating profit increased 14% to £80 million and adjusted operating margin remained strong for infrastructure services at 4.7%. The operating profit benefited from the HS2 volume increase but was partially offset by utilities. And the utilities business experienced a slower rollout of the 5G connectivity in the telecom sector and the market conditions resulted in reduced activity and therefore led to an adverse impact on margin. Turning to the order book, we have a positive momentum on the order book with an increase of 3.6% to £5.8 billion. The transportation business was appointed by National Highways to carry out an essential maintenance programme on eight viaducts at Loon Gorge spanning the M6 in Lancashire. Our Natural Resources, Nuclear and Networks Division was reappointed on a three-year extension to the Network Service Alliance Framework by both Southwest Water and Bournemouth Water, which we estimate will be worth £55 million per annum to us. The framework follows an existing contract which was agreed in April 2020 under the AMP7 cycle. And with 76% of our revenue secured for FY24, and with our recent wins, this underpins our revenue in the infrastructure services business for FY24 and beyond. I'll just talk about the rail asset acquisition here on this slide. On the 4th of September, 2023, after the year end, our year end, we acquired substantially all of the rail assets of Buckingham Group, as well as their HS2 contracts, supplying Kia's HS2 joint venture, EKFB, for considerations, I said earlier, of £9.6 million. So this acquisition provides Kia with new rail clients and increases our capability across the UK. The acquisition also brings a very welcome 180 employees with expertise in the rail sector, further enhancing Kia's talent pool. The rail assets consisted of design, build and project integration contracts for a range of customers, including Network Rail, and the acquisition very much accelerates Kia's broader rail strategy. Given Kier's risk management processes, historic contractual liabilities prior to the completion date were not acquired as the rail assets were purchased out of administration. And the acquisition was also defensive and it provided operational stability to Kier's HS2 joint venture, EKFB. We're currently integrating the business and I'm delighted to welcome all of those 180 new employees as well as the new clients and suppliers to the Kier Group. Let's move on to construction. Our construction business comprises the regional build where we construct schools, hospitals, prisons and defence projects for the UK government. It also includes our strategic projects business and care places, our housing maintenance and facilities management business. Construction volumes grow 15% to over £1.7 billion, which reflects the ramp-up of work in East Yorkshire to construct a new prison, HMP Millsike, for the Ministry of Justice, the UK's first net-zero carbon prison. Keir Places saw volume growth across facilities management and housing maintenance, and the facilities management work is predominantly for the Ministry of Justice and Home Office, demonstrating the synergies of these two businesses. The adjusted operating profit grew 14% to £70 million, with margins of 4.2%, achieved as the benefit from the volume growth and previously realigned cost base started to drop through to the operating profit level. The order book momentum has been maintained in our construction business, with an order book increasing 2% to £4.3 billion. We were recently appointed to the £5.1 billion Strategic Alliance contract in relation to the Defence Estate Optimisation, or DOP, by the Ministry of Defence. And Keir's award consists of one major project and one regional package. And the major project is the delivery of a training centre at IVF Cranwell in Lincolnshire, and the regional package is for the South of England Army bases. Within DIOP, this strategic alliance programme will drive collaboration across core themes, including social, environmental sustainability and digitalisation. And the alliancing approach will embrace and enable modern methods of construction and design for manufacturing assembly, building on the approach we've taken with the Ministry of Justice, again, most tellingly at HMP Wellingborough and also at Milpsych. Kier was also appointed to the £4.5 billion Southern Construction Framework, Construction Solutions Framework. The new framework was launched in May and will last four years, providing procurement routes for public sector buildings, including educational, healthcare and leisure facilities. We've been appointed to all five lots, which includes new £1 to £5 million lots for the South West region. As part of the tender process, contractors had to demonstrate carbon benchmarking assessments for all bills and emphasise their carbon retrofit capabilities. Kiers historically completed over 60 projects through the framework worth over £530 million. This has included public buildings in the South East, London and the South West, including St Sidwell's Point, the UK's first passive house leisure centre in Exeter. Completed in April 2022, the state-of-the-art leisure centre was modelled to withstand predicted changes in climate conditions up to 2080. The Southern Construction Framework has operated under evolving identity since 2006 and was the first regional framework for construction in local government. In Kier Places, we were appointed by L&Q for its major works investment programme to deliver housing maintenance across its estate. Kier is one of 10 contractors selected to deliver the programme, expected to be worth up to £300 million per annum. and which will include a range of services, including estate and environmental improvements, planned mechanical and engineering works, and internal decorations for L&Q residents. And the works will span East London, including Waltham, Tower Hamlets, Stratford Newham, Redbridge, Barking and Dagenham. Our construction business has 95% revenue secured for FY24. And I'm proud to say the construction team has won new, high-quality and profitable work in our markets, reflecting the bidding discipline and risk management embedded in that business. As these orders convert to spades in the ground, we expect the associated revenue generation and working capital flow opportunities to follow on in the business. We move to property management. our property business. It invests and develops primarily mixed-use commercial and residential schemes and sites across the UK. Business is well established in the urban regeneration and property development sector, and we largely operate through joint ventures to manage both risk and opportunities. As we expected, operating profit fell due to a reduction in property transactions driven by current market conditions. And again, as we anticipated a slowdown in the market conditions, we were able to increase our completions and transact at the back end of FY22 to maximise returns for our shareholders. Continue to take advantage of those market opportunities, however, and where possible, in terms of land acquisition, timing of build and selling, and doing so within our disciplined approach to the use of capital, which Simon referred to. At the year end, Keir's capital employed in the property segment was £175 million, including third-party debt and fair value gains. If you exclude these items, it would have been £150 million. In order to make the reported capital employed measure meaningful, we've amended the definition to exclude these items going forward, and we believe this better reflects the group's cash investment in the property segment. In addition, due to the group's increased operating cash flows, benefit of building out projects such as 19 Cornwall Street in Birmingham, and market conditions, we are reviewing the upper end of capital employed in our property segment. We previously said we were looking to invest up to £170 million. The current market conditions could present attractive buying opportunities. As a reminder, we're aiming to achieve a level of capital employed that helps smooth out the returns profiles of the business. We believe it takes time to selectively invest in sites, to season that capital in those sites, and then after to transact. And over the medium term, we expect to deliver a more consistent performance from our property business, property segment benefiting from that increased deployed capital. And similar to the rest of Kier, the property segment has performed well in securing new work. Highlights include entering a joint venture partnership with Countryside to deliver housing developments in South Wokingham, the commencement of redevelopment works, as I said, on 19 Cornwall Street in Birmingham to transform the building into an office operating at a net zero carbon level, and we've achieved planning consent for a wind farm to be developed on the former Greenburn mine site as well. I'm picking up that theme if I move now to sustainability on slide 24. Our ESG update. Three years ago, we launched our first sustainability framework. This year, we've reinforced our commitment by issuing a refreshed framework. To better align our activity to major customers such as the UK government, this evolved version of the framework focuses on three key pillars of people, places and the planet. As a reminder, our purpose as a company is to deliver infrastructure which is vital to the UK. And as a strategic supplier to the UK government, ESG is fundamental to our ability to both win work and secure positions on long-term frameworks. So, for example, UK government contracts above £5 million require net zero carbon and social value commitments. In order to help achieve these goals, we're targeting our work to firstly build a workforce which has the relevant skills and capabilities to deliver these goals, ensuring where possible that everyone receives equitable treatment and our people reflect the communities in which we serve. And secondly, we want to leave a positive legacy to those communities through the projects we deliver and the people we employ on them. Alongside this, we have at our disposal tools to further tackle inequality. And thirdly, as the stewardship of the planet is vital to all of us, we're planning to reduce our carbon usage and support our customers with their infrastructure requirements as they manage climate-related change events. At CITES, we're aiming to protect biodiversity and look to efficient use of resources on our projects. we turn to environmental. As a reminder, we've set a pathway to become a net zero carbon for business operations in relation to scope one and two by 2039, and including value chain, i.e. scope three by 2045. I'm pleased to say that in the financial year, we achieved a 19% reduction in carbon intensity against the prior year. For Scope 1 and 2, we're rolling out initiatives to ensure our fleet comprises ultra-low emissions and electric vehicles. We've also been working on ensuring our sites and facilities use energy-efficient technology, and we're looking at opportunities we have to self-deliver electricity across our state. Scope 3 predominantly relates to the emissions from the materials we buy and the supply chain partners we rely on to deliver our projects. This is our second year of reporting our Scope 3 emissions and we're working collaboratively with our supply chain partners to target our most carbon-intensive materials and activities such as steel, concrete and diesel consumption. We've also enhanced our sustainable design capability to reduce whole life carbon, including embodied and operational emissions. In respect to waste, we've committed to eliminating avoidable waste by 2035. We achieved a 33% reduction in the year and 92% of our construction material and packaging waste was diverted from landfill in FY23. And finally, for water, we've committed to reducing our water usage. We delivered an 8% reduction in the cost of water as a percentage of operational spend during the last financial year. I'm moving on to social commitments. So safety is our licence to operate. The group's 12-month rolling accident incident rate, or AIR, was 88%. in FY23, and that's a fall of 23% compared with FY22, as the actions taken last year deliver improvements this year. Kier is very much a people-based business. Our performance depends on the ability to attract and retain a dedicated workforce. During the year, we had 646 apprentices participating in programs representing 6% of our workforce, a graduate intake comprising 43% of women. We also continue to focus on making Kier a diverse and inclusive place to work to ensure we better reflect the communities we work within and serve. And as people at the heart of Kier, we like to ensure we pay them a competitive wage as well as offering them support through the cost of living crisis. Since April 2021, Kier has been an accredited real living wage employer. As a result of the cost of living crisis, we accelerated our planned increase in wages and extended the real living wage to our contingent workforce. We also provided welfare and support to our people, including inflation support and payments, enhanced sick pay, financial support and mortgage advice to those most affected by the cost of living crisis. And we're continuing to monitor the situation. We'll consider taking further steps as appropriate. Tunix suppliers, our supply chain partners, are highly valued by us and are part of our team. They deliver solutions to benefit our clients. In FY23, 69% of our subcontractor spend was with the small and medium-sized enterprises. In addition, we continue to ensure our suppliers are paid on time. We adhere to the prompt payment code and suppliers are paid on 34 days during the year. And finally, if I move to the summary and the outlook. So before I do that, I wanted to highlight the journey the group has been on since I joined in April 2019. Kia has undergone a transformation, rationalisation and a recapitalisation. After a strategic view in 2019, we went through a cost reduction programme, introduced a new management team, rationalised the portfolio and exited loss-making contracts. Following the operational turnaround, we recapitalised the group by disposing of our house-building business, Kier Living, which was non-core, and alongside that, we launched an equity raise. We used the proceeds from the sale and equity raise to significantly deleverage the group. At the same time, we extended the majority of our debt facilities to January 2025. As part of the equity raise, we announced and committed to a medium term value creation plan in June 2021, which involved leveraging Kier's capabilities to drive disciplined growth and cash generation. And since then, our focus has been to deliver against that medium term plan targets. The group has made considerable operational and financial progress over the last two years since the plan was launched. And this is a testament to the hard work and commitment of our people who have enhanced our resilience and strengthened our balance sheet. I'd like to thank the entire Kier team for all of their efforts over that period. And with that, I'd like to move on to the summary and the outlook. Our order book has remained strong at £10.1 billion and provides us with good multi-year revenue visibility. The contracts within our order book reflect the bidding discipline and risk management now embedded within the business. This year also saw the group significantly improve our year-on-net cash position. And looking ahead, the new financial year started well and we are trading in line with our expectations. is well positioned to continue benefiting from UK government infrastructure spending commitments, and we have confidence in the continuation of further strong cash generation evidence this year. And this, combined with our focus on delivery, gives the group a clear line of sight to materially deleverage. As a result, the group intends to resume dividend payments to shareholders, with the first dividend to be declared alongside our interim results. With that, ladies and gentlemen, I would like to open up the meeting to questions and answers, and perhaps we could start with any questions in the room first. Andrew.