Costain Group (LSE:COST) — 2025 Half Year Results Q&A

0:02 Good morning, ladies and gentlemen, and welcome to the COSTIN GROUP PLC half year results investor q and a session. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish your responses where appropriate to do so on the investor meet company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the team from COSTIN GROUP PLC. Matt, good morning, sir. Good morning. Thank you very much, and good morning, everyone. Thank you for joining us this morning. I'm joined today by Alex Bourne, CEO, and Helen Willis, CFO.

0:54 Alex is gonna make a few introductory comments, and then we're gonna get straight into the questions and answers. I know there's some that have already been submitted, so thank you for those. And as was just said, if you have more as as we go through the session, please add them in. We'd be delighted to answer them. So with that, I will hand over to Alex. Thank you, Matt, and good morning, everyone, and thank you for taking the time to join our half year results investor meet call. And we'd welcome any questions you'd like to ask us. So I'm Alex Warren. I've been chief executive of COSTIN now for six years, and I'm just gonna give you a very brief overview of our results and and our reflections.

1:41 And then Helen and I will both Helen, our chief financial officer, and I will take the questions. If you haven't had a chance to watch yesterday's results presentation that we both gave, you can view a recording of that presentation via a link on our website. I'd encourage you to look at that if if you're interested. When I look at the highlights of the results presentation and then the results that we announced yesterday, look, I I'm incredibly proud of all of the hard work and dedication of the COSTANG team and what they're putting in to executing our ambitious strategy. This has resulted in an increase in operating profit margin and operating profit again and the forward work in the first half of the year. All of that underpins both our confidence in delivering expectations for the full year this year and then growth in a step up, significant step up in growth in revenues and operating profits in full year 2027.

2:48 So it has been another positive financial performance in the first half of the year. Revenue was $525,000,000 and that reflected the continued growth in natural resources, which was also offset by a reduction in transport. That was due to the expected completion of a number of road contracts ahead of the new contracts that we've already been awarded starting next year and a rephase schedule for HS two in the short term, moving that work back a couple of years. I think what's really important is the quality of the contract portfolio that we have and our strong contract execution because you can see that coming around. But despite that revenue small decrease, we've got a 3% increase in adjusted operating profit, which is great news, and an increase in that we've got an operating margin of 3.2% in the first half of the year, which is a big step up from last year's 2.5%.

3:52 So you can see the profitability of the business growing. And we remain on track to deliver our targeted 4.5% margin run rate during the second half of this year as we build to grow that adjusted operating profit margin in line with the targets that we've set out before. Our net cash position remains very strong. And at the end of the first half, the net cash was a 144,900,000, which reflected the timing of some of the payments that we were gonna get in. But we've reconfirmed that we remain on track for our year end net cash to be around about 170,000,000, which is in line with the previous expectations that we that we set out. Now as a result of our focus on critical growing markets, we've continued to win a lot of new work and add a number of new customers.

4:46 And we've expanded our forward work position to £5,600,000,000, up from 5,400,000,000 at the year end, which was a significant increase on the previous half year. That 5,600,000,000 is now much more than four times our full year revenues for last year. And we'll see and if you take that, you took a step back, the bidding activity levels remain incredibly high, and we expect to be making a number of further new contract announcements in the second half of the year. So the forward growth of the businesses is becoming secure. And if I look at the marketplace, infrastructure investment is increasing significantly, and we see real momentum in the work progressing as is evidenced by the further awards that we've made this year and the high level of bidding activity.

5:43 We were obviously encouraged by the commitments made by the new government in its ten year infrastructure strategy to increase investment in transport, defense, and nuclear energy and energy, along with the significant increase in committed regulatory investment in water, which is at a record high, energy, again, at a record high, and the aviation sectors. All of this underpins our clarity and confidence in the significant growth aheads, and you could not wish to be in better markets. Now through the growth in operating profits and margins, continued strengthening of our balance sheet and the progression in our dividend alongside our share buyback program, we are creating substantial value for our shareholders and investors.

6:31 And given the very positive market outlook and our business resilience, we're increasingly confident of delivering on expert expectations for further progress this year, next year, and that step change in 2027 and beyond. Now the step change in growth in 2027 renew revenues and operating profits and margins and net cash are driven by three things. Firstly, and it underpins the margins we've made this year. The quality of the contracts that we are now writing up to signing up to and being awarded, And the strength of our contract execution is just giving a real confidence in how we can deliver solid margins and solid contract profit.

7:17 The second thing is obviously the increased volume of forward work, and you can see that coming through in the increase that's been made and the confidence that we have that there'll be further announcements coming in the second half. And then it's also the confidence in further work being secured because we are bidding with there's a high level of bidding. There's a lot of committed investment by our customers, so we see that. So those are the three things that really underpin the confidence in the growth that we're talking about for for '27. So finally, look, when I step back and I reflected on our results, for me, the business is in the strongest position it's been for years. And that's because, firstly, we've again successfully delivered growth in both operating profits and margins as well as further strengthening the balance sheet, and we're on track to meet expectations for this year.

8:14 We also continue to win that further good quality work and have a growing forward work position of 5,600,000,000. And as I've said, that's over four times last year's revenue, which by any comparator is at the high end. And that positions us for the step change, as I've said, in revenue and profit growth in '27. And our market outlook is extremely positive with significant growth across all of our markets, and that work is now flowing through. So as I said, for me, the business is in the strongest position it's been for years. So thank you. Thanks, Matt. Thank you very much, Alex. So we will now turn to the question and answer session. We'll begin with the pre submitted questions, but I can see we've had some additional ones come in this morning as Alex has been speaking. So thank you for those, and we will we will answer those. But starting with the the first question that was pre submitted for you, Alex, is on topic of Thameswater that is obviously in the news a lot at the moment.

9:20 I'm really wanting to get your views around, given the issues that Thameswater is confronting, how are we feeling about working with them and and the future with them? Yeah. Look. Great great question. And you can't turn the TV on or read the newspaper now with there being a commentary about the state of The UK's water industry at the moment and and what needs to happen. And as a result of that, we've got record investment going into water in this next five year £104,000,000,000 worth of investment in the next five years. And we know that in the five years after that, there's gonna be even more investment. So huge investment being made to fix the challenging situation we've got at the moment. And positively, COSTTAIN holds strong positions with seven of the largest water companies, and we've got contracts with them, some for the next ten years and some for the next five. And that gives the company significant growth opportunity.

10:21 And Thames Water is a customer we've worked with for a long time, and we we don't do a lot at the moment, but they're talking to us. There are strong opportunities, whoever is the owner of Thames Water, to turn around and and and deliver the critical infrastructure that is needed both for London, the 10 and the Thames Valley. As a business, we've got a really strong pipeline of water opportunity on top of the other. And what I would say, there was another thing in there about COSTIN GROUP had some of the past issues we had with councils and planning authorities. The good thing is that government is helping to address the whole consents and planning issues that the country has, which is fantastic news, and that all of the new contracts that we sign up to ensure that we address those issues before we commit to a price and a program. So I would see Thames Water as a big opportunity because whoever the owner significant investment has to be made, and I'll see that the type of contracts that we're signing up to really protect us from those challenges.

11:32 Great. Thank you, Alex. Next question is also is also for yourself, I think. It's a a great question actually about what the culture is like at COSTIN. Yeah. Look. Great question. And I suppose I'm a little bit biased because I've been with COSTIN for thirty five years. So, clearly, I love the company and the people that work for the company. But let me just talk about the values. I was gonna talk about the values and core behaviors and some of the underpinnings. So talking about culture, the values of people who work for COSTIN. Our values are integrity. So we will always do the right thing, and we will act with absolute integrity at all times.

12:17 Safety and well-being, we won't do anything that isn't safe for our team to do it, and we really care about the well-being of those people that work for us. We are a business that's environmentally and socially responsible. We want to have a positive impact on society and the environment, and we are incredibly customer focused. And that is a real priority for us and and and and makes us a valued partner for our customers. So those are the values, integrity, safety and well-being, environmentally and socially responsible, and customer focused. Going alongside those, there are four core behaviors that we ask people at COSTEAM to work to. They are curiosity, collaboration, courageous, and caring.

13:06 And those are, for me, about driving that growth mindset as a business, that curiosity of how we go about doing things. Collaboration of business is all about teamwork. Courageous is being brave to come up with that new idea, challenge the ideas, look at doing things differently, make sure that we're open and honest about the financial performance and where we are and and what goes on. And that caring is caring for the environment, caring for our customer, caring for each other. It's just making sure. So I hope that brings to life the sort of culture, a place where we embrace teamwork, we have a growth mindset, and we solve some of the biggest challenges together. Now that's from someone who's been here for ages.

13:53 Helen, would you like to give your impression? Thank you. Yes. So I wholly endorse all of that, but I say as someone who's been here nearly five years and coming into the industry fresh, coming to COSTIN, I think what's really struck me is the culture we've created here is truly inclusive in in all ways. As a female coming into what has been a a male dominated industry, that's that's that's a really important factor. But it's not just about that gender diversity. It's it's truly diversity in in in all respects. And and and I have felt it to be a very respectful culture, and we've worked very, very hard at you picked up the point, Alex, creating a transparent environment where people feel safe to share ideas, safe to bring problems or or opportunities, and and we're more definitely stronger for it. So I think it's a very special culture at COSTON.

14:53 Thank you very much, both of you. Sticking with you now, Helen, I think for the next question. We have a question about AI and how how we're using it to drive efficiencies and what sort of benefits, I guess, we might expect to see from AI. Great. A hot topic. So we we are driving digital transformation in in COSTIN. We've been implementing new systems over the last year or so and and have a program of change that we're very excited about and think it is is going to differentiate us in the market. And AI, of course, is is is coming up very regularly as you might expect. It's obviously a incredibly fast pace of change in terms of what AI technology is is out there and and what it promises to do.

15:43 I think we are, taking a cautious approach to it. The the the the primary, consideration for us as a company is making sure that we maintain our cybersecurity. So making sure we use tools that are cyber secure, that are keeping our data secure and our customers' data secure as well. So that is that's sort of a consideration number one. But we were are very alive to the fact that it it can do new and different things for us. It can help us to understand our business better. And so we are certainly, any new systems that go in, we're making sure they have AI functionality. And we are thinking about how we how we use that, how we release that into the into the business, and and therefore, how we start to extract value from it. So I think a really exciting area. But for us, we're on a digital journey that will be about new systems including AI capability.

16:38 So exciting times. Thank you, Helen. So the next question is returning to a, I guess, a more topical story again. So the Lower Thames Crossing is is obviously now got got the go ahead, and there's a question about whether we have any agreed or proposed involvement in the in that large project. Alex? Yeah. Look. Let me so we're not directly involved in the Lower Thames Crossing contract. But, however, we are involved in many other programs across the industry and across across our sectors. So you'll have seen us as one of the players in the Thames Tideway scheme over the last six to seven years, and that is transforming the health of the River Thames and London and supporting the growth of London. So we've been involved with that, and we're involved in a huge number.

17:35 Actually, on the front page of our results presentation, you'll see the Bure Reservoir, which is a fundamental piece of infrastructure that is gonna safeguard clean water supply to the Southeast Of England working with Southern Water. So water, critical infrastructure we're involved with. If I look at rail, clearly, HS2, major strategic program that we've been involved with. Road, we're involved with quite a number of schemes in London to safeguard the integrity of transport coming into and around and inside London, as well as the M 60 up in up in Manchester, critical piece of road infrastructure. Energy, we're involved in the BP net zero landmark project, the first major carbon capture and storage scheme that will unlock a green energy future for The UK. Wow.

18:31 Who wouldn't wanna be involved in that? Defense programs like the twenty year plan to redevelop Devonport, really important program. And then we announced earlier this year the award of a contract for Yorenco where COSTIN is gonna be leading a program that is all about creating the fuel that will unlock that nuclear energy future. So, no, unfortunately, not involved in Lower Thames Crossing, but we are involved in a lot of other very exciting landmark schemes. Great. Thank you very much, Alex. Yes. Certainly sounds like lots of opportunities. And the next question follows on from that in some respects. It's it's around the potential for capacity constraints that we may face given this large volume of forward work and opportunity out there? Do you see any capacity issues from either a personnel point of view or a financial point of view? Yeah. Look. Absolutely.

19:29 If you look at the growth and investment and the fact that, you know, a lot of our workforce will be retiring over the next ten years, you know, there's there's a really big focus on driving the skills and expertise and capacity to be able to deliver this infrastructure. So as a business, we're recruiting a record number of graduates, apprentices, and running development programs in our business to upscale our people, which is fantastic and continuing to recruit people and grow, which is great. I think one of the real thing when when we look at how are we gonna get the capacity, how are we gonna attract the capacity and develop the capacity, I'll come back to something I talked about in our presentation yesterday, costing benefits from three c's.

20:17 And those three c's are the first one is consistency, and it's all about the consistency of relationships and approach. So with our customers, we have long term relationships and our long term approach. We really get to know each other, and we do the same with our supply chain. So that just makes people feel confident in working with the with each other, very open, very clear, very transparent. And that's a fundamental attraction for people wanting to work with COSTIN and wanting and wanting to work for COSTIN. And then there's continuity of work volume. So because of the type of work we win, which is five year programs of work, we are able to give people confidence that they can pay their mortgage and continue to buy things for their family for the next five years. That attracts people that wanna work for us as well as the exciting projects that we deliver, but the fact that you've got that continuity attracts those people.

21:18 And then for our supply chain and for us with our clients, the fact that we have collaborative contracts. So these are not adversarial. They are about sitting down, codeveloping the solution, codeveloping managing the risks, and then getting on to execution. That is something that we can attract people for, and we can attract our supply chain. So where we're placed and the type of contracts that we win and secure and deliver really gives us the opportunity to reach in and address that capacity challenge that we have. Fantastic. Thank you, Alex. So the next question, I will turn over to Helen. We've had quite a a long question on on dividends, essentially asking you to to set out your views for for dividend policy of the company over the next few years. What should investors expect from COSTIN and and dividend?

22:17 Thanks, Matt. So I think it's a sort of wider topic of capital allocation, And we we do set that out in in the r and s. The the place that we have prioritized over the last few years is is investing in the company. We truly believe in the growth opportunities of the company. And we've been investing in our transformation. We've been investing in bringing the right skills into to really drive those opportunities and drive that growth, and you can really see that coming through in the forward workbook as as Alex was was describing earlier. And we've been investing a a capital expenditure in in our digital transformation as I was was just referencing earlier, bringing in new systems. So that may that continues to be a focus for us. We believe there's a lot more that we can do.

23:08 We are driving the margin up. That means we might need other skills to come in to continue to drive that upwards, and we think we're we're ambitious for for more growth. So we will continue to prioritize those investments. That said, our balance sheet is really strong. We do have we do have more than enough cash, and so we have resumed payments of dividends, which we resumed in 2023. And you will have seen those increasing steadily into '24 and and then the interim that we've just just announced at half year. We do have a three times policy stated, and we anticipate moving towards that. And of course, we have then done share buybacks with what we consider to be extra cash returning to shareholders.

23:58 So I suppose that's the sort of order of priority. There is just one thing to remind on that I spoke about last time. We do have the dividend parity clause with the Defied Pension Scheme, which says that contributions into the scheme should match payments to shareholders. And that that is in is in place in the overall agreement with the pension trustees, But we have introduced the annual check that we carried out last March and this March, and that gave us annual pauses to cash contributions and dividend parity. So that is something that is sort of in the background and gives us cause to be slightly cautious on on the steps we take and guidance that we give in this area. So we are making progress on that, and we'd hope to be a bit more clear on that when we get to the full year. So thank you.

24:52 Great. Very clear. Thank you, Helen. So the final pre submitted question, I'll hand to Alex shortly. And then I can see we've had a number of questions come in during the call on the on the first half results released from yesterday, which is fantastic. Thank you. So we'll turn to those shortly. Keep them coming. Whilst you do that, I'll ask Alex the final of the presubmitted questions, which is around whether we're looking at any options to to bid for work outside of The UK market over the next five years or so. Yeah. Look. So good question. We certainly look at the potential, and it's something we're very open to. However, what I would say is I come back to my three c's that I've just talked about. I think what is a critical factors for success is where you can have that consistency of customer relationship. You know? I'm not a fan of, and I will not support one off one off relationships with customers because I don't believe either party strives to or can have the best outcome.

26:02 So that continuity sorry, the consistency of relationship is something that we would look for if we were going to embark upon an opportunity overseas. We'd also want to be able to see continuity of a work program. So this would want to be something that isn't just one contract, could be a number of contracts or a program of contracts and would have some longevity around it. And then we'd also want it to be a collaborative form of contract. So we certainly, as a business, we've been very clear. We will not sign up to any single stage fixed price lump sum contracts. That is not something we would tolerate. We want to work under collaborative contracts. So, you know, that that would be the rule book. And, I would say we are not short of opportunity in The UK. There is huge opportunity for us right across. There is record investment in road, rail, aviation, water, energy, defense, and nuclear energy. Huge investment. And we know that there's other things like ports that, you know, once the offshore wind market really gets going, is also gonna be increasing investment. So we are in a target rich environment, and we're very focused on those three c's and how that unlocks really valuable opportunities for us. So thank you, Matt.

27:26 Thank you, Alex. Okay. So we will turn now to questions relating more to the results released from yesterday. There's a number of questions really trying to unpick, I think, the the revenue decline that we saw in the first half. Wanting to understand a little bit more around the drivers behind that, how much of that was expected because, obviously, the the market took on bridge with with with it yesterday. So, Helen, perhaps you could talk about, you know, the revenue decline that we saw in the first half. And and then there's a number of questions around how we should then think about revenue going forward into the second half and through into '26 and '27.

28:13 Was it just short term timing issues? And do we have the work coming through in these future years to to underpin that revenue forecast that we see out there? Thanks, Mark. Quite a lot in there. I'll try and work through. If I miss anything out, please just give me a nudge. So first, if I tackle, first of all, the movements in the first half, really, transportation, as as you can see from the presentation, expected decline in roads revenue as we are completing a number of projects there. And we've talked a lot about what will come next. I think those those roads were those road jobs were signed some years ago, almost ten years ago, and were carried out through quite challenging times, inflationary periods, and COVID, and have been consequently not not at the margin we would like going forward.

29:11 But we are active and and bidding other road rather other road jobs. We talked about the m 60, for example, in the presentation yesterday. And those terms and conditions are are much more in the the space that we would like going forward. So we see opportunity coming through there. And I think come '26 and beyond, we'll start to see that that reversing, for roads. HS two, we talked about the short term, rephasing of work out of '25 into, sort of '26 and '27. That work is still ours. We're performing really well on that contract, and it really is a factor of how the overall program is is being sequenced. And so we we are quite confident that that will be work that we will come back to.

29:59 So thinking about the full year, clearly, takes our revenue down a little bit. But if you have looked at our consensus, and that's on the website, our consensus operating profit was at 46.6, and we were quite clear yesterday that we are maintaining that. We believe that that's absolutely achievable. So lesser revenue, higher operating profit, and that is gonna continue to increase our operating margin. So the target is four and a half percent during during FY '25. So think about that as the h two margin. And if you do the sums on all of that, what that means is the full year will be four point x in all likelihood. So we're doing very well on on margin. That's a real indicator of the the quality of the business and that that improvement that we've been driving over the last few years.

30:55 So then how should we think about the revenue going into '26 and '27? So as Alex has been describing, we have won an awful lot of work. We have visibility of where that work will be and when it will land. We're still driving more opportunities that that will land and will impact on '26 and '27 and beyond. So there's there's more to come. We we're quite sure. Again, if you if you look at CONSENSYS on our website, you'll see there is anticipated growth in revenue and profit for '26. And we've talked about a step change in 2027 where revenue really starts to to have a significant uptick. And obviously, that falls through into into profit.

31:41 So we we believe we've created the right platform for growth. We've invested in the right areas. We have a cost base that supports that growth. So we're that that revenue and profit growth is going to come through, and the margin will continue to tick up as we grow. We'll get some operating leverage. The portfolio will continue to improve as we drive all of these changes through. So we're excited about what's gonna come in '26 and '27 and and thereafter. Great. Thanks. Alex, do wanna add anything? I think Helen's covered everything. I think there's just been some question about at what point did we know about so we knew about the roads coming off, and I think we'd we'd put that in in in the guidance. So we knew those those were going to complete. Clearly, we were we were expecting the m 60 to start earlier, but we've only got the spending review that's come through confirming that that is now gonna go ahead now. But and then on HS2, I think that is the one that was new news to us. So when we started the year, we had an agreed budget with the client, and we've been working to that agreed budget.

32:55 But come sort of mid June, they started to talk to us about the need to rephase our work. And the reason they want to rephase our work is that there are priorities elsewhere on the program that need to be accelerated, whereas we're not in that situation because we're doing rather well. And so we've been working with the client, and it's only recently now that we've understood the sort of impact of that, and and that's why we've announced it today. But clear for us is the full year expectations for profit are gonna be met because of the resilience and strength of the business that we've got the ability to be able to manage our situation. And, obviously, we always have contingency and and and things for things, and and therefore, we're as a rail run business, we can still deliver the profit that we want. So I think you should see it as a sign of a business that's really strong, well capitalized, very responsible in how it recognizes revenue, and therefore, is a stronger partner going forward.

34:00 Great. Thank you. Thank you very much both. The next I'll I'll take two questions maybe and for for Helen here that are that are related. One is around our payment terms to subcontractors and, you know, how how we how we view those. Are all our subcontractors happy and content with the the way we work with them? And then the second one on the customer side, actually referring back to the Thames Water example, how do we mitigate against credit risk? What is the what is the sort of process and controls we have in place to protect ourselves there? Thanks, Matt. So on payment terms, we you'll see on slide 12 of our presentation, we give a stat of how we pay our subcontractors.

34:59 So we paid 97% of invoices within sixty days, and that is that is right up there in the industry. Paying paying our subcontractors promptly is a really important factor for us. We want the best quality supply chain working with us and recognizing that some of those are, small enterprises. Cash flow is is, of course, absolutely critical for them. So we are absolutely at pains to pay them promptly, not to squeeze them on terms to make sure they remain healthy at such that they deliver for us. We also do other things for our subcontractors. So we we run supply chain academies. We support them in in in in all sorts of areas where they may not have their own internal resources.

35:49 And we work with them as very much part of our team. So that's that's a really, really important point for us. So thank you for raising that question. And customers, you know, our customers are old fashioned term, blue chip customers. You know, we know them as Alex said. Who we select as customers is really important for us as long term relationships. So we we know them, we understand them, we know them well of old. For us, risk of risk of payment against amounts outstanding to us is is very low. We do not have a DSO issue. We are paid for promptly by our customers. The the question for us as a long term contractor is what amount sit in work in progress?

36:36 And are we able to promptly move those into being certified amounts and therefore invoice and therefore paid? And and that is about having a really well run organization that works works well in in collaborating with the customers and making sure we are doing work that is agreed, and then it it it flows through the processes. So it's not something that is a concern for us. It's about us managing our projects, activities on the ground really well, and then and then that process flows through. Great. Thank you, Helen. Got two other questions here that are related to to the the large share price drop that came yesterday. And given that, one question, why aren't we buying back shares again?

37:26 And the second one, following the share price drop, are we concerned about a cheap bid coming in? Helen, do you wanna take the buyback? Yeah. I think, you know, for us, we want to drive that share price up. We absolutely do. We're we're here to create shareholder value. But I think that is a a a an unfortunate blip yesterday, but one we view as an overreaction in in the market. Do we believe the value of our business has fundamentally changed overnight? Absolutely. We do not. We're very, very positive about the future as you've heard from us today. The consideration of a buyback, I think, is something that we we would do over time and and not as a reaction to a short term share price movement.

38:16 And, yeah, I talked about our capital allocation priorities. We need to maintain our cash to really invest in the business and and these other other sort of priorities I I mentioned earlier. So that's not in our thinking, and we're very much hoping that that share price will stabilize and come back up to to to counterbalance that overreaction yesterday. Alex, do want to to build? Yeah. Just going I mean, I I agree a 100%. I I think coming back to would we be a a target. Look. We're a public company. Therefore, at any point, someone could approach the business. Are we disappointed with the reaction yesterday? Yeah. I mean, we're we're we're quite surprised.

39:03 Maybe we shouldn't be, but we're quite surprised on the basis that if you look at the quality of the contracts we've got and the financial performance and the profit and margins that we're making and the strength of the balance sheet, the business is in really good health. If you look at the guidance we've given for the end of the year, we're saying we're gonna do what we said we were gonna do. And if you just look at the volume of work that we've won which supports the growth, it it it's incredible. And at the moment, this business is undervalued in our view. It is undervalued if you look at any of the analysts' notes as well. So, you know, and nice article in the Times this morning turned around again. This is an opportunity to buy and something to you know? So so look, you know, it's it's one of those things. We're running a really good business.

39:55 We feel very confident in the direction. We feel very strong where we're going, and that's what we'll keep focused on and keep driving. Thank you, Alex. Another question here. A broader question really around the competitive landscape. Has that changed in the last six, twelve months of barriers to entry increasing? And how are we differentiating ourselves versus the competition? Yeah. Shall I take that one? Yeah. Well, it is still competitive. I'm not gonna say it's not a competitive industry. It is. But I think as you can see from the work that we've been winning, we are successfully competing well. And what differentiates us, again, is the strength of relationship, our technical expertise, the way we do business.

40:48 And what's really important to every single customer is that we come up with a better solution than anyone else can can come up with. And that's about our skills and expertise as as a business to drive value for the customer. Helen was talking earlier around the opportunity that AI presents, but there's a huge opportunity in the way that we go about designing infrastructure and then delivering it. And we pride ourselves on being able to come up with a solution that gives the customer a lot of efficiency and a lot of value and shortens the program. And that's what we compete on. And and and as you can see in the work we're winning, the quality of it, we're a very attractive proposition for many customers, and new customers wanna work with us, which is fantastic. So it's still competitive, and we are one of the, you know, one of the top competitors out there. Great.

41:45 Thank you. I think there's time for one one final question, and it's really around the we we referenced a number of times the the step up in performance in FY twenty seven. And I guess question for you, Alex. Can you just remind us of what is the what are the factors that give you that confidence? Yeah. And I've touched on this in in my opening, but I'll I'll I'll look forward to making the point again. If I step back and I look at it, it's about the quality of the contracts that we've got. So Helen talked about that we had we had road contracts that were signed in in 2016 that aren't as profitable as as the margin targets that that we expect now.

42:31 The really good news is that we're the the forward work and the secured work we've got is contracts that we've written we've signed up to. The quality of those contracts in terms of margin is in line with our targets. But the most important piece is risk profile of those contracts. And I've talked about collaborative contracts. These are contracts that we get to work with the customer, co develop the solution, co come up with a plan to mitigate risk, and then it's about us executing. So and you can see the quality of those contracts coming through in the margin. So that's the underpin. The quality of the contract, strength of execution, big tick. The second thing is you can see the increased volume of forward work. You know, over four times our revenue by an an industry norm is three times revenue. So you can see there's gonna be that uptick, and we and we've won work, which is fantastic. So that's underpinning that. And, you know, AMPAPE will be really up and running. We'll be three years into AMPAPE. We'll be at a high run rate. The defense programs will continue to to to be going. We'll have new road projects that are at the margins we want coming through. We'll have the systems contracts that are at higher margin on HS two coming through.

43:56 We'll have more new new you know, energy new nuclear. We've got, you know, the we've got that stuff that hasn't really started yet, and that will be be rolling. So that work that we've already secured is gonna be in a really good place. And then, you know, we've got high confidence because we're we're turning on and saying there's gonna be announcements in the second half that we're gonna secure even more work in the pipeline of opportunities that we see. So we're gonna be topping that up with even more. So those are the reasons why I'm really excited, as you can tell. I'm very confident that that step change in growth will happen in '27. Great. Thank you. Looking at the time and the questions, I think we have now got through all of your questions. Thank you very much for for the interest you've taken this morning and and all the the questions.

44:47 And thanks to Alex and Helen for the very clear answers given there. I will just hand back to Alex for some concluding remarks, and then we will sign off. Alex? Yeah. Look. Again, thank you very much for taking the time to join this call. For those of you that are already investors, thank you very much for investing in COSTIN. We greatly appreciate it. For those of you that are thinking about it, it's a great place to invest and has a bright future. I'll come back to what I said at the start. This business is in the strongest position it's been for years, and it's in the strongest position because we're delivering on our promises, and we're running a really good business. We're also continuing to win high quality volumes of work and have a an amazing forward work position that's the envy of many, and that is gonna deliver the step change, as I've said.

45:40 And you couldn't wish to be in a better market in terms of outlook, and the critical national need for new infrastructure is gonna drive, you know, economic growth, resilience, and the decarbonization of The UK. So we're in a great place. These are exciting times for us. So thanks very much. Perfect, guys. If I may just jump back in there, and thank you once again for updating investors this morning. Could I please ask investors not to close this session? She'll now be automatically redirected for the opportunity to provide your feedback in order the management team can only better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of COSTIN GROUP PLC, we would like to thank you for attending today's presentation.

46:27 That now concludes today's session. So good morning to you all.