Kier Group plc

Thank you very much for joining us for our half year 2025 results presentation. For those of you here in person, I'd also like to extend a warm welcome to those of you joining us by the webcast and the audio as well. I'm Andrew Davies. I'm the Chief Executive of Keir Group and I'm joined today by Simon Kesterton, our Chief Financial Officer. And this morning, I'll walk you through the highlights for the six months to the 31st of December 2024. And then I'll hand you over to Simon to talk you through the group's financial performance. And 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 of the presentation. So there's the disclaimer and there's the title slide. So moving to the highlights of the year on slide four, this slide here. The last six months, I've seen the group deliver a solid set of results demonstrating further operational and financial progress. We've delivered revenue growth, which resulted in an operating profit of £67 million, representing a margin of 3.4%, which is consistent with the prior period. We continue to convert these profits into cash with a net cash position of £58 million at December and significant reduction in average month-end net debt now down to £38 million. Future prospects of the Group also remain strong, with the Group's order book increasing by 2% in the period to a record £11 billion, reflecting contract wins across our business and providing multi-year revenue visibility. And around 98% of our FY25 revenue is now secured in the order book. Our order book is supported by long-term framework positions, And given the significant progress that the group has made in recent years, and given our continuing confidence in the business, an interim dividend of two pence per share has been declared, a 20% increase on prior period dividend of 1.67 pence. This equates to an earnings cover of circa 3.5 times, and we anticipate improving over the following periods as we move to a three times earning cover. We're also very pleased to announce in January the launch of an initial £20 million share buyback programme. We also increased investment in property as we seek to deliver increased shareholder returns. And overall, we're in great shape. Our strategy has progressed well, supported by great people, excellent long-term order book and strengthened balance sheet as we continue to deliver against our long-term sustainable growth plan. This slide provides a reminder of our long-term sustainable growth plan. It provides visibility over the direction of the group We're targeting to grow revenue above GDP growth driven by the attractive markets combined with our market leading positions. Our portfolio of businesses are targeted to generate an adjusted operating margin of 3.5% or above. Cash conversion of 90% and an average net cash position which allows us to invest surplus cash into those areas which will deliver increased shareholder returns. And this includes a targeted sustainable dividend policy of circa three times cover throughout the cycle. So with that, I'll hand over to Simon, who will take you through the detailed financial results.

Thank you, Andrew. Good morning, everyone. Now moving on to our half-year financial performance. Revenue in the period, as Andrew mentioned, is higher than half year 24 and reflects volume growth in both our infrastructure services and construction segments, which I'll cover more in detail in the next slide. We delivered an adjusting operating profit of £67 million, up 3% in the period despite continued, albeit lower, inflationary pressure. The group achieved an adjusted operating profit margin of 3.4%, which is consistent with that delivered in the same period of the prior year. And as usual, we expect the current year's profitability to be second half weighted. Net cash is materially better than the prior period at 58 million pounds, compared to 17 million pounds for half year 2024, despite working capital outflows returning to more normal levels and increased capital being deployed to our property business. As expected, the group materially delevered. This has resulted in the average month-end net debt reducing by circa 100 million pounds to 38 million pounds from 136.5 million pounds, despite dividend payments and the capital being deployed into our property business. Turning to slide eight, I'll walk you through the group's revenue growth. Starting on the left-hand side, we start with half-year, 24 revenue of 1.9 billion pounds. Infrastructure services revenue increased by 9%, primarily due to continued volumes across HS2, nuclear and water. Construction revenue increased by 2% as we deliver out our strong order book. Overall group revenue increased by 5%. Moving now to the adjusted operating profit bridge, we start with the previous period's adjusted operating profit of £64.7 million. Volume mix and price changes have resulted in an increase of £3.5 million. This is offset by lower property transactions, which we expect will be second half weighted this year. Management actions of £5.2 million during the half year continue to more than offset continued, albeit lower, inflation. The improvement reflects the impact of our performance excellence projects. During the half, the largest contributors to this were supplier onboarding and site setup optimizations. Over 60% of our order book is made up of target costs or cost reimbursable contracts. And if we do choose to give price certainty to our customers, it is only done after key risks and opportunities are understood. The result is an increase in adjusted operating profit up 3% to 66.6 million pounds. Adjusted items excluding non-cash amortisation and interest amounted to £9.6 million in the period, in line with the same period last year. The main item remains related to fire and cladding costs, which is £7.5 million in the period. Given the nature of construction projects we typically engage in and following regulation change, we estimate our net exposure of this could be in the region of a further £20 million. The property costs relate to the sale of a mothballed legacy office in Manchester and the interest relates to IFRS 16 where leased office space has been exited. Slide 11 sets out our order book position. Our order book is high quality and has further increased by 2% to a record £11 billion compared to June 2024. We have secured nearly all of our FY25 revenue, circa 98%, and we continue to win work in our chosen markets. Significant effort has been made to improve the quality of the order book. We're focused on winning work with UK government and regulated industries. We continue to focus on managing risk and reward when bidding, negotiating and delivering work. 60% of our order book is under target cost or cost reimbursable contracts. Our infrastructure business has nearly all of its contracts agreed as target cost or cost reimbursable. Within our construction business, the majority of the contracts are fixed, but our policy is to fix these after following a two-stage process to identify, mitigate, retire or exclude the risks involved. Our average order size is only £21 million and this relatively small average order size 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 and total £158 billion by advertised value. The combination of our strong order book and our framework positions provides good revenue visibility. Moving on to free cash flow, the adjusted EBIT during the period grew 9% to £101 million in half year 25. We then have £91 million of working capital outflow. Last half year saw a 22.5% increase in revenue, which reduced the usual working capital outflows, which occur with lower activity in the first half of any year. In order to provide a normalised comparator, we've included HY23 alongside the half year 2024. You can see the half one working capital outflow this year is similar to half year 2023 levels as revenue growth has stabilised. We expect to see our usual working capital inflow with higher activity in the summer months during the second half. We've increased the capital employed within our property division in the period, including investment in property work in progress of £19 million, significantly higher than the £2 million in the comparative period. CapEx in the period amounted to £27 million, however 23 of this relates to payments made under leases, now capitalised under IFRS 16. Net interest and tax reduced by one million in the period due to interest payments due to new bondholders starting in August 2024 offset by lower corporation tax payments as the group utilises its significant deferred tax asset. The group has a deferred tax asset of £141 million which relates to losses made by the group in previous years and allows us to offset half of our tax charge in any given year. We anticipate it will take around eight years to fully utilise this asset. Turning over to page 13, we have the net cash bridge. We start on the left hand side with closing cash of £167 million at the end of June 2024. We then see the free cash outflow of £50 million that I've just talked about. We had adjusting items of £15 million, half of this, £7 million, related to items accrued for in previous periods. £17 million relates to deploying capital to the joint ventures within the property segment. This will help drive future returns as the current market is affording some great opportunities. We also paid £4 million to our smaller pension schemes, which remain in deficit. We then have the purchase of Kier Group shares. This is in respect of the Group's Employee Benefit Trust, which acquires Kier shares from the market for use in settling long-term incentive plan share schemes when they vest. The net cost of this was £7 million. FY24 saw the group declare our first final dividend in many years, and the payment of this dividend was £15 million in the period. This results in a net cash position of £58 million, a material increase on the HY24 result of £17 million cash. Moving to slide 14, this slide is a reminder of the significant progress made by the group up to the point where we've effectively eliminated our month-end average net debt and strengthened the balance sheet. If we look at the last 36 months, we've reduced our average month-end net debt and debt-like items by £250 million, a significant improvement resulting in just £38 million of reported average month-end net debt during the first half of this year. During the period we've seen the operating cash generation used to materially deliver. The 38 million average achieved across the half is 99 million lower than the comparative. This slide sets out our long-term capital structure that we have in place to support our strategy whilst retaining flexibility and optionality to deliver future growth. In February 2024, we secured long-term financing of the group through the issuing of 250 million of five-year senior notes. I believe we were the first debut issuer in that market for two years, and we now have access to a reliable long-term debt capital market. We also took the opportunity to extend our revolving credit facility to 2027. These actions strengthened our debt maturity profile and diversified our funding sources. In January 2025, we fully repaid all the outstanding USPP notes and £111 million of the RCF matured, both in line with their agreements. This leaves our facilities, as you see on the page, comprising of a £250 million bond and £150 million involving credit facility, which mature in 2029 and 2027 respectively. We are focused on optimizing shareholder returns and maintaining a disciplined approach to capital allocation. Accordingly, as we generate cash from operations, we expect to deploy that in a number of ways whilst maintaining our strong balance sheet. We're targeting a dividend cover of around three times earnings through the cycle, as Andrew mentioned earlier. We plan to invest further in our property business in order to generate consistent returns over time. We anticipate deploying up to £225 million of capital in that business. Our disciplined approach to the projects we undertake and partners we choose mean that we are targeting the segment to deliver consistent long-term return on capital employed of 15%. With regard to mergers and acquisitions, the Group will continue to consider value-accretive acquisitions in core markets. Our consistent material reductions in average month-end net debt has given the Headroom to consider other ways to deliver returns to our shareholders, including the consideration of share buybacks when appropriate. In January, we announced an initial £20 million share buyback programme, further increasing returns to our shareholders. This framework complements the evolved long-term sustainable growth plan, ensuring our commitments to our evolved targets whilst maintaining a strong balance sheet with a sustainable month-end net cash position. And now I'll hand back to Andrew for the operational review.

Many thanks, Simon. So if we go on to infrastructure services to start with, turning to slide 19. So infrastructure services segment saw revenue growth of 9%, largely driven by additional high-speed to capital works activity, as well as volume growth in the water and nuclear sectors, as previously announced contracts wins convert into revenue. Adjusted operating profit increased 4.8% to £46.1 million. Adjusted operating margin remained strong for infrastructure services at 4.5% as we continue to see our revenue mix weighted towards higher margin design work in the first half of the year. It should be noted that the segment remains affected by delays to the start of works in Control Period 7 in the rail market and the Road Investment Strategy 3, or RIS 3, in the highways market has yet to be agreed. The portfolio effect of our infrastructure services segment means we're able to effectively manage these risks and returns. The order book continues to consist of high quality and profitable work in our market, reflecting the bidding discipline and risk management embedded in the business. Our natural resources, nuclear networks or NRNN business within our infrastructure services segment has continued to grow its position in the water market as the operating companies start the next investment cycle of AMP8. And Kier has been appointed by Yorkshire Water to their 850 million AMP8, which is 2025 to 2030, complex non-infrastructure works framework to support their investment in water processing and waste networks. has also been appointed to an early contractor involvement or an ECI by Seven Trent to design and build a replacement sewage treatment plant in Worcester worth £20 million. Overall, I'm pleased to say that 97% of our FY25 revenue is secured, which combined with our recent wins underpins our future revenue in infrastructure services. Turning to the next slide, which looks specifically at our position in the UK's water sector. The AMP8 investment cycle is due to start in April 2025, with the regulators and water companies having broadly agreed to deliver a significant larger investment determination worth £104 billion, which is double that of AMP7. As the market is due to double, we expect Kier's volumes to grow in line with that market. The AMP8 programme is driven by ageing asset base, which needs replacing or refurbishing, increasingly stringent environmental regulations, and the focus on extending the life of existing facilities through maintenance. The water companies are turning to Tier 1 contractors for long-term support, particularly those with specialist mechanical and engineering skills, such as KIA, to help them deliver these upgrade and maintenance programme, given the large increase in the CAPEX requirements. And this slide sets out our UK footprint in water. We're one of the largest tier one contractors supporting regulated water companies with their asset optimization. As at 31st of December, we're on 15 frameworks with nine companies with an advertised value of 15 billion pounds. Moving to our construction business. The business comprises regional builds where we construct schools, hospitals, prisons and defence projects for the UK government, as well as delivers projects for the private commercial sector. It includes our care places business and care places includes our workplace solutions business, formerly known as facilities management and residential solutions business, formerly known as the housing maintenance business. Construction revenue increased 2% to £932 million in the period. The adjusted operating profit grew by 10% to £36.5 million. And the prior period margin was impacted by increased overheads to support additional site starts in our regional build business. And accordingly, in the first half of FY25, we saw the benefit of those costs which we put in last year. Within construction, our key places business saw volume growth across workplace solutions and residential solutions. As a reminder, workplace solutions is predominantly facilities management work for the Ministry of Justice and Home Office. On the other hand, residential solutions delivers housing repairs and maintenance services for local authorities. We continue to grow our capabilities and customers in this area with a focus on decarbonising social housing through retrofit opportunities. The construction order book grew by 7.5% to £4.3 billion as we continue to win work in our chosen markets. Construction business has successfully won a number of recent awards. This included being appointed by the Scottish Government on a £684 million contract to deliver HMP Glasgow, a major new prison project that will provide a much-needed replacement for Scotland's largest prison, HMP Barlinnie. Justice remains a key sector for the business as we utilise our extensive experience to provide high specification, safe and secure facilities that are focused on reducing reoffending. We've also been appointed under PCSA to deliver a new improved army infrastructure at Rock Barracks, MOD Woodbridge, Suffolk to be delivered as part of the MOD's Defence Estate Optimisation Portfolio, which is a six year alliance to create 16,000 bed spaces for the armed forces in single living accommodation. Our care places business has been awarded a place on the £814 million facilities management framework by Pagabo to provide a range of services to various public sector organisations, including education, healthcare and local authorities. And our construction business has 99 or circa 99% revenue secured for FY25. Moving next to our property business. Our property business invests and develops primarily mixed-use commercial and residential schemes and sites across the UK. The business is well established in the urban regeneration and property development sectors, and we largely operate through joint ventures to manage risk and opportunities. The performance of the property business reflects its recapitalisation as we prepare for future growth. Transactions, as Simon said, are expected to be second-half weighted. We're focused on the disciplined expansion of the property business through select investments and strategic joint ventures, while the market provides buying opportunities. At period end, Kier's capital employed in the property segment was £194 million, and this reflects the group's cash investment in property. Given the group's increased operating cash flows, we can see a number of attractive buying opportunities, leading us to further increasing capital deployed to £225 million. We're targeting the property division to deliver a consistent return on capital employed of 15% and we also recycle the capital from our property transactions and therefore these provide a source of future capital for the group. So we believe our property business will generate returns for shareholders in the next few years, especially given the timing of the deployment within the cycle and expected market recovery. Property division has synergies with our wider business model and the cash generated from our construction and infrastructure services division being deployed to generate higher returns in our property business, thereby smoothing the returns profile for the group. We believe it takes time to selectively invest in the sites, season the capital, and then to transact. And over the long term, the property business will deliver a more consistent return as a result. Moving on to sustainability. As a key strategic supplier to the UK government, ESG is fundamental to our ability to win work and secure positions on long-term frameworks. UK government contracts above £5 million require net zero carbon and social value commitments. Our sustainability framework is focused on three core pillars – people, places and the planet. Firstly, looking at our environmental progress. We're on track to deliver our scope one, two and three carbon reduction targets. We're committed to helping our supply chain reduce their carbon footprint. An example being that we're working with the supply chain sustainability school to support the use of low carbon HVO. We're seeing increased demand from customers for KIA to deliver environmentally conscious projects. And this is reflected in our green economy mark accreditation. Kier is a people-based business and our performance depends upon our ability to attract and retain a dedicated workforce. The group has 12% of our workforce in the formal learning programmes as we help the industry skills gap through developing people, ensuring we better reflect the communities we work within and we serve. And this has been recently acknowledged by Kier becoming a platinum member of the 5% Club. And we're also pleased to be included in the 2024's top 100 apprenticeship employers list. As part of our drive to recruit diverse talent, during the period Kier has offered 28 prison leavers or those released employment either within our business or within our supply chain partners in the first half of the year. And Kier also remains committed to offering employment opportunities to those who've served in the armed forces and has offered 57 veterans positions in the period. And turning to suppliers, our supply chain partners are clearly highly valued by us. They help us deliver solutions that both benefit our clients and reflect the communities that we're working in. Reflecting the fact that circa 55% of our subcontractor spending is with small and medium sized enterprises. Moving on to the summary and outlook on page 24. We've delivered a strong set of results for the first six months of the year, as we continue to demonstrate further operational and financial progress, which is reflected in our improved average month-end net debt. It's very pleasing to be able to share the proceeds of this progress with our shareholders through increased dividends, and we further increase shareholder returns through the launch of our first share buyback programme at the start of 2025. Our order book remains strong at £11 billion and provides us with good multi-year revenue visibility. The quality of the contracts in this order book reflects the bidding discipline and risk management now embedded within the business. The second half of the financial year started well and we're trading in line with expectations. Group is confident in sustaining the strong cash generation achieved over the last few years and is well positioned to continue benefiting from UK government infrastructure spending commitments. And Kier operates in markets which are vital to the UK. We remain committed to delivering our long-term sustainable growth plan, which will benefit all of our stakeholders. And before we move to questions, just a reminder to everyone that we are holding our Capital Markets Day on 3rd of June 2025. It will be a great opportunity to meet our operational leadership team from each of our core businesses. And we'll confirm details in due course and look forward to seeing as many of you there as possible. And with that, I would like to open up the meeting to questions and answers. We'll take the questions from the room first, please, and then we'll move on to those online. And I've been asked to sit down to take the questions. Okay. If you mind, Andrew, do you want to start on the right?

Good morning. Andrew Nussie from Peel Hunt. A couple of questions, if I may. First of all, in the infrastructure segment, the transition from AMP 7 into AMP 8, what level of visibility do you have at the moment in terms of those AMP 8 volumes beginning to ramp up? And is there a risk of maybe a bump over that transition? and secondly in again in infrastructure with CP7 delays and highways regulatory period delays can you give any sort of high level thoughts on what you think might happen there in terms of when activity will come in and what RIS3 may or may not look and I've got a further one on property but maybe do those two questions

Hopefully you can hear. My microphone is still working, OK? OK, good, good. Look, on AMP7 to AMP8, it's about mobilisation. As I said, we've got positions on frameworks, I think I said, up to sort of £15 billion with nine counterparties. It really is about mobilisation now, and we're seeing that the utility companies or the water companies are moving to accelerate through to April their mobilisation plans. Some are further ahead than others. You naturally expect that. So the programmes where we have pre-existing relationships with those clients, for example, 7Trent, we've seen a dramatic build-up in volumes coming from 7Trent. Those who are new to us, so for example, Southern Water, Wessex, United Utilities, we're now building up that portfolio of work which they're allocating to us. So it's a slight mixed bag, but we're very happy where we are in terms of mobilisation. We're bang on plan and we feel confident that we will see those volume increases coming through over the next sort of 12, 18 months in water. CP7 and RIS3, it's more delays than anything as the Department of Transport works out its spending profiles. We're not overly concerned about it. We still have strong positions on RIS3 with national highways. We're a major supplier, top three supplier, international highways. As we said, the mix in highways at the moment is slightly geared towards design, but we do have large volumes coming through on the A417 Missing Link programme and we are in the design phase of the A66 in the north as well. So there are slight delays in the visibility of that coming through as they define their procurement strategy in national highways for the next iteration of capital projects as well as the maintenance projects, but we're not unduly concerned. CP7 is a relatively small part of our portfolio, very important part of our portfolio, came with the acquisition of Buckingham Group. And we've got plenty of work going through at the moment. We do anticipate that that will come through once they define the programmes.

On property, which is normally Simon's bag. Just sort of line of sight, you expect more completions in the second half. what degree of visibility do you have those in terms of what might be negotiating at the moment and secondly targeting the 200 or the limit of 225 million of capital employed when do you think you might get there and equally let's say returns on capital start to progress towards a 15% level would you consider increasing the level of capital employed beyond the 225 million

Yeah, so thanks, Andrew. I mean, the property second half, I think we've got great visibility. So we're not at all concerned about the second half performance of the property business. And with regard to the 225, yeah, I mean, I think as we get there, we've said really in our capital allocation, but we're not going to put large amounts of cash on the balance sheet. We're going to use that cash to either enhance earnings going forward, and 15% ROKI isn't a bad option, but also return value to shareholders as well. So it's just a trade-off really, you know, what represents the best opportunity to increase earnings or return value to shareholders. Okay, thank you.

Adrian, then we'll work our way across.

Morning. Adrian Kiersey, Pamela Liberum. Just two questions from me. Firstly, could you give some colour in terms of what are you seeing in terms of cost inflation and the supply chain? And are there many variances across the different parts of the business? And then going back to property, would you be able to give us a feel for the types of project structure that you're putting into property, the kind of joint ventures, the kind of partners that you've got? and how that is affecting how much money you're putting into each project.

The cost inflation, I think the response we typically give is 60% of our portfolio is on a cost-reimbursable basis. And I think as Simon mentioned, the other 40% is pretty much all secured through two-stage negotiated contracts and the average size of those contracts, they predominantly sit in construction. is relatively small notwithstanding you know I mentioned a 680 million pound prison project in Scotland but again that's through a two-stage negotiation so you've allocated risks you've allocated cost risk etc etc you understand the project so we're not seeing inflation unduly affect us as ever the thing that inflation tends to affect is the budgets and therefore that may put a slight delay into projects and that was happening two years ago at the height of the Ukraine inflationary issues which are coming through we did see some delays coming through which then slowed up the growth in our construction business which then eventually came through very strongly last year but we're not seeing it unduly impact our projects at the moment Adrian and you know we feel we can manage you know within the the structure of how we contract anyway we can manage that well within those contracts

you want to take the property yeah so on property and i mean we've really got a quite focused um strategy we're looking at mixed use residential sustainable offices and industrial and small logistics and we want to keep it kind of an even balance across those projects across those sectors sorry with our projects two things we look at really is the size of the equity check and really the liquidity in the portfolio so it's important to us to maintain a relatively liquid portfolio and it's also important to us to not have too much of a focus on any one projects and not get overexposed so you are on average our equity check is only about four million pounds to any one individual project yeah so you can imagine we do have quite a lot of projects going through there And if you look at 30 to 34 in the appendix, that does give us an overview. And in the relationships in there, you can see Network Rail, Lloyds Bank, Investec. You can see there Birmingham City Council, Watford is in there as well, of course. So we've got a broad range of relationships and partners that we work with often in JV.

Adrian, do you want to pass the microphone to the right?

Thanks. Johnny Kubra from Deutschland-U.S. Could I ask firstly on construction? Is HMP Glasgow, is that included in the £11 billion order book at the end of the half? And then could you give us an update on other projects within the portfolio in terms of

timing on other major projects coming through such as mill psyche ending and if you've got any smaller projects in there well mill psych is completed and it's been handed over it's achieved PC so that one's completed in the order book I mean we mentioned a few coming through single living accommodations they're coming through we've got a few health projects which we're not able to announce yet which we've been down selected into a two-stage negotiation and we're bidding quite you know as part of the national hospitals program which has now been reconfigured by the government you know to prioritize those rack hospitals and those hospitals which are advanced stage planning so we're heavily participating in those so the pipeline in construction is pretty strong actually at the moment as well as the traditional schools, you know, and other local authority activity that comes through. And London, the commercial work is reasonably strong in London in our chosen sectors, which is obviously dealing with blue chip, you know, clients with strong pipelines. So, you know, we're quite confident in construction of the pipeline is very strong.

So just to follow up, have we seen the working capital impact of Mill Psyche end in the first half? And then did you see the benefit of Glasgow in the second half.

Yeah, effectively, yeah. But of course, the overall working capital number is just on absolute volumes in terms of what you'll see. But of course, mill site for sure, that working capital unwind has happened. And then as we ramp up activity in Glasgow, that working capital inflow will come in.

Thanks. And then just you called out HS2 growing activity in the first half. Could you give us an update on where you are with HS2? And is that at peak run right now?

Yeah, it's roundabout the peak runway. We're on the critical path in the centre for the test regime. We're working very hard with HS2 to ensure we can sort of get a programme that actually works for them, works for us as well in that sense. HS2 wish to go through a reset programme where they want to get a degree more certainty into the residual elements of that. That's perfectly natural in this sort of phase of a programme. It's what we do in all of our other projects and we've been very clear with HS2 that we'd be very committed as a joint venture to try to help them achieve a degree more certainty into their future cost base. So, you know, relationships are robust, but pretty good.

Hi, Rob Chantree from Berenberg. Thanks for the presentation. Just two questions for me. I suppose firstly, just on the property division, you mentioned the three main areas, and I guess at scale, they're roughly 70 to 80 million in each of mixed-use, sustainable offices and industrial, etc. Can you help us understand the financial profile between each of them? Is there a big difference in how you make money in terms of equity share or development management fee etc and then secondly have you seen any change in the competitive environment in those specific end markets at that scale over the past two or three years have you seen more people coming in or do you see it relatively consistent in that area thanks

Yeah, so thanks, Rob. In terms of the exposure, you're absolutely right. So if we're keeping it balanced, 70 to 80 million in each sector. And then it's really, I mean, unfortunately, it's project by project. So you can see a complete mixed bag depending on who the client is, who the JV partner is, and who the other partners are as to what the structure and how we make money split between fees and, of course, returns due to getting planning permission, building out, and then, of course, letting... letting spaces.

If you just, I mean, the pictures you see on page 30, I mean, in Watford, they'll be sold on an individual basis, and we have a retail capability that actually delivers against that, and you'll take margin as in when you sell those properties. If you sell land into a joint venture with a house builder, you'll take certain profit out at the point of sale of the land into it, and the residual profit you'll take out when you sell each individual house. So that's the profit profile there, in that sort of sense. If you take Bracknell on the right, that's a single... facility, you know, logistics facility, and obviously you're going to sell it or rent it to a single user. Offices are somewhere in between, depending on the type of office. So it depends on the size of the project.

There's one in the back there. Hi there, Max Hayes from Cavendish. So you discussed higher margin phases in infrastructure. Just wondering, do you expect this trend to continue and where do you think this could get to?

Well, the higher margin comes from the design phase. We are a design and a D&B design and build contractor when it comes to roads. So we're heavily involved in the design of the A66. So that's where you get the increased margin. So, yeah, as and when RIS 3 gets published and they get more into the design phase of future projects, we would anticipate that the margin there is slightly higher. And in the operational phrase, we're slightly lower, but volumes are bigger. So the margin as an absolute stays roughly you know the same but it depends on the cycle so with RIS3 we do see some more maintenance orientated capex capabilities coming through like Loon Gorge where we've been down selected to replace seven viaducts on the M6 north of Preston it's a maintenance project it's replacing existing capability requires a lot of design input and that's what we will they'll be bidding to do in those phases and that's where we think risk-free will be probably moving towards in terms of orientation it's more maintenance orientated capex thank you very much any more from the room okay so should we offer any questions online or on the audio are there any

Thank you. To ask a question, please press star followed by one on your telephone keypad now. We currently have no questions, so I'll hand back to Andrew and Simon for closing remarks.

OK, look, thank you very much for all your questions today and for coming along. And we'll catch up soon. So thank you very much.