Galliford Try Holdings (LSE:GFRD) — Full Year Results

0:00 Good morning, and welcome to the GALLIFORD TRY HOLDINGS PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The 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 publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Bill Hocking, CEO. Good morning, sir. Thank you very much. Morning, everybody. Welcome. I'm Bill Hocking, chief exec. I'm here with Chris Morning, everybody. CFO. So most of the people or quite a few of the people, I think, on the call are familiar with the story. So what I intend to do today is whistle through some of the slides just to make sure that we are on the same track and then go to questions fairly quickly.

0:50 So let's jump to this slide here. And I think it's important for those people who aren't familiar with the story that this is the philosophy of how we run the business and we think this is obviously we are biased but we think this is the way that a contracting business should be run with a very big emphasis of course on risk management. So we start in the middle with a core of about 4,300 very good people and around those people starting on the left hand side we start off with robust processes, robust risk management and incentives that link to all of that of course and this high degree of selectivity around what we do and what we don't do leads to a very high quality order book with everything in that order book being the type of work that we can do day in and day out in the right parts of the country with the right clients, right supply chain, the right people, and so on. And that that means that we perform on the right hand side consistently and predict ably, and you can see that in our numbers. And Chris will go through some of the charts in a minute, which demonstrate that amply.

1:47 And then that that strengthens our already strong balance sheet and so the wheel turns. So that's the simple philosophy of how we run the business, and that hasn't changed one iota since we kicked off in 2020. So if you just touch on what we do for a living, know, we we basically construct the social and economic infrastructure that this country needs to continue to be or maybe to be more productive and more efficient and to get growth into the economy. So all of these of these things we touch on. Environment for us is water and wastewater, and we work for every single water company in The UK. We'll come back to that in a bit more detail later. We work in roads and energy infrastructure, defense, custodial, education, all the things you see that won't go through them. But the bottom line is that the the social and economic infrastructure of The UK is old and tired. There are some nice shiny bits, I always say, but apart from that, a lot of TLC needed to keep our infrastructure or to get our infrastructure back to a position where it supports the economic growth of the country.

2:51 This is how we structure just broadly speaking. We are GALLIFORD TRY in England and Wales and Morrison Construction up in Scotland. And I won't go through all of those. You can see them for yourselves there, but obviously, we work in the building arena in all the sectors you see down the left hand side. We've got special services businesses that operate both in the building environment, which is the second column in, the the where you see open asset intelligence and so on. And then we also have on the right on to the right hand side quickly, the specialist businesses in water, which are pretty high-tech businesses that manufacture equipment for the water and wastewater sector. Going back to the middle infrastructure, roads, bridges, energy and so on, and then back to water on the right hand side. Asset creation is about design and build of water and wastewater treatment works.

3:38 We do design services and then we're increasing our presence in capital maintenance and asset maintenance. And I mentioned the water tech businesses down the right hand side there. So we work for all of the major companies, all of the bigger public sector procurement agencies and so on. And then in a nutshell, this is our strategy. So when we set off, we were you know, we started life on on on this in disguise in 2021. We set off with a strategy to be 1,600,000,000 three percent by 2026. We got there early, and we set out our new strategy to 2030, which is to be bigger than £2,200,000,000 at more than 4% or 4% or more in 2030. And we're making very good progress towards that as you see on the numbers in in the sort of in just to the right hand side there.

4:28 And in a nutshell, our strategy is to grow revenue and margin, of course, in our big three core businesses. So building at about a billion pounds, highways at about $33.50, water $5.50,600, something like that, to grow those businesses, ahead of inflation, but but not dramatically, I suppose, growing revenue and margin, in line with our strategy. And I would say we start to hit a program with that. But that is the big sort of critical mass of the business, the core of the business always will be, and and so, you know, that is the the big foundation of GALLIFORD TRY, I suppose. Then we come along with those specialist businesses I mentioned both in the building part of the of the our business and in water, and we grow those specialist higher margin businesses faster. So these businesses all, we've been incubating them over the years, some are more advanced than others, but they're all profitable now, they all should be making mid to high single figure margins, and there's a great deal of opportunity to grow these businesses. So the strategy the simple strategy is we grow those businesses faster. There's enormous opportunity to do that. And because they're all higher margin businesses, the mix changes over time, and hence it helps us from the three and a half and maybe a bit more in the big businesses and that pushes up to the 4% as you go through the strategy period.

5:41 And then in the middle there, we enter the affordable homes market. So this market is probably eighteen months, maybe even two years behind where we thought it would be. We're reentering from a standing start and on the back of planning issues and fire safety issues and funding issues and so on, which are well rehearsed, this market is way behind. But we saw a few weeks ago the £10,000,000,000 that the government has now allocated to support affordable housing and simplicity that allocation of funds fills the viability gap between the cost of building an affordable homes block, and the rental, yields and so on and, the the viability gap in the middle. So, simplistically, that's what that funding does. So that was good to see that that start to flow through, and I do feel that, with more impetus here from the from the new leadership in the government that this is starting to move. That said, you know, if you push the button today, there will not be much action on the ground for some some year, best part of a year probably. So don't hold your breath, but there is, you know, there is life here and affordable homes is is gonna be a a big market yet.

6:46 And then, of course, we leverage our geographical footprint. We've got offices and and frameworks and clients across the whole of The UK, and we leverage that particularly with those smaller specialist businesses to give them access to our our office, our office network, our frameworks, our clients, as I said, and they and that gives them a enormous opportunity for growth. Hence, on the right hand side, we carry on delivering as Chris will take you through in a minute. So I think on that note, we're good to hear, Chris. Yeah. Thanks. Good morning, everybody. I'll take you through well, I'll just I'll just pause on that slide. So, that building there that you can see is recently handed over to the client a couple of months ago. It is Cardiff's new tallest building. It's, We call it the rise in Cardiff. We built it through modular construction and using a lot of digital tools, so we built it digitally three or four times before we actually put it on the ground. What I think is fascinating about the modular construction and the technology we brought here is that site, the plot there is it's a triangle. It's maybe, I don't seventy, eighty meters by seventy, eighty meters squashed between the main train line from London to Cardiff and some of the city's major routes. So no lay down areas. It's a very tight area, but actually using technology, bringing in the panels one by one with the windows in them, and sort of building a floor a week. We managed to stick to put up a 31 storey tower right in the middle of that, with minimal disruption.

8:05 But it's a good looking building, you know, bringing that tele technology to bear really does, make unviable sites viable. In terms of the numbers, I you know, the first thing I would say is it's very pleasing to see green arrows broadly across the board there. So revenue up 3% to 1,930,000,000. We'd expected it to be flat this year. That was our guidance, so we're pleased to come a little ahead of where we said, driven predominantly by highways having a very strong year and actually a very smooth transition in water between AMP7 and AMP8, but I'll come back to that in a minute. Our divisional adjusted margin, as Bill said, is ahead. We'd originally forecasted to be at 3% in 2026. That was our previous targets. We actually got three and a half percent in 2026, having hit the target a year early. So strong margin progression across both of our core divisions, which took profit up some 24% to £55,900,000, a really strong profit growth.

8:58 That obviously drives adjusted basic earnings up per share up by the same amount and our dividend up to 23.5. So on top of the six and a half p interim dividend, we declared a 17 p dividend for the full year. So dividend up in line. I'll come back to our dividend policy later, but, you know, we have a 1.8 times cover, so that's entirely in line with that. Average cash followed profits as it has done, and I'll come back to cash shortly, followed profits, average cash, and and we think average cash is more important than spot cash. You have to do it every month for obvious reasons, and so it's really good to see that, number moving up as well. Order book, looking very healthy. We'll take you through a bit more detail on that, but up 5% ish to £4,300,000,000 with really high visibility circa 90%. And that's 90% back on June 30, not 90% today, so it's a bit higher than 90% today. So 90% of twenty seven's revenue and 62% of the subsequent year's revenue, FY '28. So that looks really good. And then we're pleased to announce some more capital allocation. I'll take you through our capital allocation shortly, but we announced a share buyback of £15,000,000 based on that strong cash performance.

10:06 If I pick some of the highlights of the p and l out, I won't pick too many, but really what's driven this, as Bill said, we have that we have that round or that circle. The high quality order book means that we've got orders that we know how to build, projects that we know how to build, and strong commercial discipline about the rates, and the pricing of those deals, and quality project execution. So bringing that technology to bear has allowed us to deliver our projects at higher than expected margins, which has has driven the margin up. Those higher margin businesses, Bill said, they're growing nicely. They're up to sort of mid to high single digit percentage of revenue at high high margins or higher margins, so that's driving up. And then that disciplined management of cash balances. So cash interest up to just over £6,000,000, up 44%.

10:51 So strong increase in cash management and interest rates on that cash that we hold. Pleased to say no exceptional items for for the last two years. We're very pleased with that. Alongside the cash, I think it says that the quality of our earnings is very, very high. I talked about dividend share buybacks. So let's go on into the division. So there's the building division. Building division, as Bill said, nearly £1,000,000,000 of revenue, so strong performance there. A little bit down on on the previous year. That's just a few things just sliding to the right. It's not that the work is lost. It's just sometimes when you change prime minister and you have those sort of things, you know, so the decision makers can sit on their hand a little bit. So we've just seen some revenue slide into, '28 sorry, '27. We're not worried about that.

11:40 As you can see, the order book is up, some 8%. So you can see the revenue is still there. It's just drifted to the right. That being said, margin performance was very, very strong, in the business. The margin up to 3.5%, that's up some 57 basis points, driving adjusted operating profit up by 17%. So revenues might be flat, but profits have gone strongly forward, and the outlook for next year is very strong with some 93% of the revenue for our expectations already secured and nearly two thirds for the following year. Same story really in terms of the drivers, you know, improved margins, high quality delivery, an increased contribution from our FM business, all of those things driving this, these margins forward. So really, really in good shape, strong profit growth, and a strong order book looking forward. So buildings had a great year. Now infrastructure division, similar story, but strong revenue growth here, up some 7.7% driven predominantly by the highways business, which you can imagine with the long dry summer that we've all had and enjoyed, or maybe not enjoyed if it was too hot, but generally enjoyed.

12:47 We managed to move our roads projects forward completing three major road projects with lifetime revenues of some 7 of some £400,000,000 at and above our expected margin. So really strong performance from highways. In some ways, an exceptional year. We wouldn't typically expect to have delivered that much in the year. And so as these teams move on to new projects in f y twenty seven, they'll go to the design phases. The design phases of our projects are typically good margin, but lower revenue. So so that's sort of the story of highways in '26 and '27. Water, as I said, smoothly transitioned from AMP seven to AMP eight. We're very pleased how that's gone, and we can see the work now coming in in AMP eight for f y, '27. So what we sort of got a story there is highways will be resetting in f y twenty seven, AMP eight will start to flow through, not just for our big core design and build parts of the, environment division, but also the specialists so that as they move from design to manufacturing construction, those smaller specialist businesses are seeing the orders coming in. So overall, outlook for infrastructure for '27 is good.

13:53 Flatter revenues, with those two sort of subdivisions offsetting, but margins going forward, particularly as the new AMP8 margins are are stronger than AMP7. So in terms of order book, relatively flat at 1.7, just reflecting where we are as as we've as we move forward. Just turning to the balance sheet for a second. Bill talked about the strength of our balance sheet. The balance sheet remains, actually a very simple balance sheet as you can see on the right hand side. I won't take you through the detail, but it's not a complicated thing. Very limited complexity in it. The things we're very pleased about is net net assets moving up, cash moving up, as I said, that's about 216,000,000. And, you know, we've got strong other assets on there, the PPP assets. These are a series of assets we've held since the PFI days.

14:40 They are cash back. They deliver about 10% interest in the year, so strong cash back profits. And these assets are very liquid and very marketable. I'm gonna come back to capital allocation. You should remember these we hold these assets, and and maybe PFI will come back as Bill will talk about, But we have other opportunities through m and a and organic investments where if we can find something that is more accretive to to our returns, then we can sell these assets and and recycle that cash into something better. And what I would say about the balance sheet is we have no no debt, no bank debt. We've got an RCF for agility reasons. That RCF has been undrawn since we since we put it in place, so that's really good. No pension liabilities. So all in all, a very, very clean, very tidy balance sheet. And lastly, by no means leastly, in the red at the bottom, we put you know, we're very proud to pay our suppliers promptly, and in time, we've averaged days to pay at twenty seven days, comfortably in line with their payment practices. So really simple story on the balance sheet.

15:36 If I look now for a second at cash, what I can say to you about cash is and we and we deliberately put two charts in here. So you can see them on the left hand side, you can see the f y 26, so the the prior year cash bridge, and then we've aggregated the free bridges, for the last three years on the right hand side. And if you just before we look at the numbers, you just stare at them, you can see the similarity in shape. The gray areas are the sort of, cash inflows that we generate, and then the red boxes are how we use that, so the generation and use of that cash. In the year f y twenty six, we bought in £56,000,000 of cash from profits, so that's slightly ahead of the profits. Working capital inflow was naught £900,000. Now what I can say about those, you know, we we should take from that is that we turn our working capital through broadly every month, and so we turn those profits to cash very, very quickly. If I just cast your eyes to the right hand side, you can see that the working capital movement over three years, and that must be some £55,500,000,000 of revenue we've put through, the total working capital movement in the last three years has been £5,000,000. So you can see the consistency of how we turn our trading activities into cash. And then you can see we bring in bank interest on those cash balances, £6,400,000 in the year, £13,600,000.

16:48 So the simple story of '26 really is that we brought in about £60,000,000 through those activities, and we deployed £40,000,000 of those through £8,100,000 for the acquisition of Mean Valley. There's still a million pounds of deferred consideration out there, but £8,100,000 in the year. Just over £1,000,000 of organic investments, that's predominantly in opening a new fabrication facility in Keefley, making pipe specials, but we'll talk a bit more about that, and about £500,000 on upgrading our commercial reporting systems to handle the growth as we go forward. But we deployed £10,000,000 through a share buyback in the period and £20,300,000 through that 1.8 times dividend cover. So simple stories, bought in 60,000,000, we deployed 40, that left net cash up £20,000,000, in the year. And over the same period, you can see of the three year period, we bought in a 153,000,000, and we deployed a 102,000,000 through capital allocation.

17:47 We announced a share buyback, as I said, in the period. That £15,000,000 effectively reflects the increase in net cash at year end. What I would say, just for a technical point, is that, because of deferred historical tax losses, we haven't paid any cash tax. Our p and l tax is at the standard rate, but we haven't paid any cash tax. Those diff deferred historical tax losses have now been used up. Of course, they have when you're generating £50,000,000 of profit a year. You tend to use them up pretty quickly. So going forward, there will be a cash tax, line on this bridge, as we see going forward. Take you forward then to the capital allocation slide. First thing to say is this hasn't changed for those of you who've seen this before. On the bottom half, you can see that we have investing for growth as our primary objective. That's where we prefer to spend it. We think the returns are better.

18:34 But where we have, cash to return, we will. So we have the dividend at 1.8 times cover and, any excess cash we will return. And as we thought about this, and and we've been talking about it as a management team, you know, we believe that our ability to generate revenues with those high visibilities we talked about about in the order book, we can turn that revenue into profit, into cash consistently and successfully now. As we cast our eyes forward to 2030, you know, our view is that there could be some $1,520.25, £30,000,000 a year as we grow with free cash flow after dividends. And as a management team, we've been talking about how we how we use that cash to generate further EPS accretion. And so we are leaning in a little bit in our messaging this this reporting season into m and a and into share buybacks if we can't do m and a.

19:26 And we think there is an opportunity here to generate EPS accretion over and above those organic targets that Bill talked about. So Bill talked about revenues in excess of 2,200,000,000 and profits sorry, margin at 4%. Actually, if we use that cash to generate sorry, that profit to generate cash, we can generate incremental EPS returns. And how are gonna do that? Well, we've done m and a over the last five or six years. We've done five deals. We now four in water and one in, Neen Valley Fire that we talked about. We've done that successfully. I'm pleased to say that Neen Valley is ahead of its business case and integration plan, so that's going really well. And I think that's the point. You know, we've done m and a. We we know we've got the capability, the expertise to do it. We have got really exciting markets that we can grow. And as Bill said, our ability to grow these businesses faster than they grow on their own is really significant.

20:19 Why? Because we have frameworks and customer relationships across The UK. And two, because we have offices across The UK, so the marginal cost of us growing these businesses is less than the than the marginal cost would be were they on their own. So two real key differentiators, and, of course, we have the balance sheet as well to back that growth. So we think that m and a is a really good place for us to play. But in the way that Bill talked about, we're selective about how we pick contracts. We're gonna be really selective about how we do deals. And on the right hand side, you see those criteria. They will be adjacent. They will be bolt ons. They will not be big transformational deals. That's not what we're into. So, you know, probably one or two deals a year, 10 to £20,000,000, that's the sweet spot spot we think for us. Financial criteria, these will all be higher margin with, you know, high margin businesses.

21:11 We have set IRR targets, returns targets that we look for. If the deals don't meet those targets, we will not do them. That's the simple thing to say. So really disciplined about it. And then you can see the sectors that we're really interested in. So capital maintenance and water technologies, we're already in those markets. We understand the risks of those markets, but we can see forward to AMP nine and Bill talking about it. We think capital maintenance in AMP nine, so the next asset management plan in water, is gonna have a lot more capital maintenance because the assets we've built over the last few years are gonna need more maintenance. So capital maintenance is an exciting place to play. And then water technologies, we have three three of all companies that build these high-tech bits of kit today. There are plenty more places where we where we think we can buy businesses in and around the clean and wastewater sites that we build. On the building side, we see fire protection, passive and active fire.

22:04 So Neen Valley is a business that we bought. I talked about they do passive, fire, so that's fire door replacement, typically. We can expand this business across our build our our education, our defense, and our hospitals, our health portfolio to help them replace fire doors there, but also we put about 3,000 new fire doors in the year across our building business. Business, so we can really expand that. And then active fire is suppression and fire detection. We already have some presence in that space, and so we see we can grow it. Asset security, again, it's sort of fences and and high-tech security, and then hard FM, that is maintaining the fabric of the business of buildings. And that's a bit like capital maintenance in water. Those are the places we want to play. As I say, we're leaning into that message, and we hope we can use that the the cash we generate to generate incremental margins. And so what that really says is six periods of growth, strong track record behind us, strong order book looking forward, plenty of road in front of us. And as I say, when we deploy the capital that we're going to generate, we can generate returns over and above these black bars. The black bars on the right hand side are the are the organic targets that we've got in front of us, but we think there's plenty of road to travel in front of us as we generate incremental EPS.

23:18 That's all from me. I will hand over to Bill to talk a bit more through the strategy. Okay. Thank you. So I'm just gonna whistle through these. I've got a question, I think. So how do we get from now three and a half to four when we started this? Of course, it was 3%, but and I've gone through this at a high level. But simply, see, there's there's, four stepping stones that you see there. The first one, obviously, as we grow, our overheads get a bit more efficient and and can leverage them a bit more so that it adds goods to the mill. The better contracting environment, I'll come back to you in a minute, but that's all about a more mature procurement attitude for all of our clients now which makes the whole sort of environment more conducive. Then there's all sorts of operational improvements. Chris talked about the modular high rise buildings and things like that that we build. But there's all sorts of high-tech sort of visualization tools, three d design, AI, all these things are coming into play to help us be sort of incrementally more efficient, you know, as as we progress.

24:19 So this the pace of change actually in in the technology is fascinating and things that we couldn't dream about ten years ago, we now do as as as a norm, know, designing things in virtual reality, walking through them, making sure that the that buildings are debugged so that when we go and build them in reality, as Chris said, we we we we better at building the right first time, on time, and things like that. So we spend less money and time, obviously, in rework, and that all adds grist to the mill and then the drift as we grow the higher margin businesses up upwards in in margin. So that's that in a nutshell. I spoke about the size of the markets. I'm not gonna go through this slide in any detail, but you can see there, there's two assets to this, the the regulated spend in environment and energy, which is our we pay that through our bills, and then the the the public sector spend in education, defense, and so on, which is central government. And that's all part of the ring fence £725,000,000,000 that was announced last year. It's all CapEx.

25:16 It all has a business case. It all underpins economic growth. And so we're very confident that money will continue to be spent in our sectors. Looking forward, you can see there 95% of our order books in public and regulated, 95% in the private sector. We come into a new year with typically more than 90% of that works work in hand. And more importantly to me, you can see they're looking forward to next year, 62% and the year after 44%. Those numbers will be higher now, I'd have a guess that we probably got two thirds of full year twenty eight's work already in the bag and heading for half of twenty nine's work already in the hand in in in hand. And that allows us this good long line of sight. It means we can get all our ducks in a row with regard to our supply chain, our people, our materials, all those sorts of things, and plan a long way ahead and and and make sure our designs are up to scratch and things like that. Again, that all makes us deliver more predictably, more consistently.

26:11 So it's really important to us. On to the next slide then, you can see in the bottom left that we negotiate in one form or another 99% of everything that we do. So so the red is predominantly infrastructure, and that is on the target cost cost reimbursable basis. So we get allocated work. We get paid to design it. We we agree a target cost, will include contingencies for risk and inflation and things like that, and then we get paid actual cost plus our fee against the target of the pain gain formula. In the black, that's typically in the building arena where on this is all through frameworks by the way, where, again, we get allocated a project. We get paid upfront to finish the design. Our supply chain are are on board at the time. We finish the design. We agree what the price will be again, agreed to opportunities and inflation and so on. But in that market, we then agree a lump sum fixed price at that point. If the scope changes, of course, the price will change. But the point is that we arrive at that price through negotiation.

27:14 And then the gray, which is ever increasing actually a few years ago, that gray would have been a much smaller proportion. That's where our clients just say, can you come and please do something for us? We'll negotiate the price. And that's in the both the public sector, provided that you're performing. In in some of the public sector frameworks, if you're number one or two in their frameworks, they have the opportunity direct award projects, and that's what that is in the grand and and also some in the private sector where private sector clients that we've worked for many years will just ask us to come and negotiate something and and build it for them. So that means that the vast majority of work is negotiated, which of course then means that it gives you the opportunity to perform more predictably, I suppose. Moving on, we talked a little bit earlier and I won't get through this again. I just want to talk a bit about AI again because AI will certainly help us be a bit more productive but I don't think it's going be transformational in the in the early stages anyway in construction. So it helps us be a bit more efficient.

28:15 It helps us, for example, at the front end where where we are producing proposals for frameworks and so on, where if you have a I always choose an easy example. Let's use safety as an example. If we have a question, how do we manage safety? We answer that question all the time. There'll be different nuances, of course. But then this now what we can do is rather than somebody trolling through the last 10 submissions and say picking up the best bits and adding on whatever's new and so on, which we do at the moment, you can plug the last 10 highest scoring submissions, for example, into the AI, and it'll produce a draft response to the question in about ten seconds flat, which would have taken, somebody a couple of days, probably highlighting bits and cutting and pasting and things like that. And then, of course, we apply we reckon that'll be about 70% of the answer. Then we apply human oversight to make sure that it's that it's it's good.

29:06 So AI will make us a little bit more efficient but I don't think it's going to transform anything in the short term anyway in construction. The next slide really is two things. It's why we target frameworks and I've mentioned the longevity of the line of sight, the fact that we now have clients who've worked for donkey's years. But the real point of this slide, everyone, is to show that what's in our framework position now absolutely underpins our strategy. So a few years ago, our frameworks were all the green. Our scale is different there, of course. So what's in the green there are the big frameworks in building and infrastructure and water and so on, and those are the big design and construct frameworks. The quantum is the same as it was in the past. In addition to that now, in the blue, we have a whole lot of frameworks which underpin the specialist business growth, that's all in the blue, and the orange on the bottom are the frameworks which underpin our growth into the affordable home sector. And remember everyone, by affordable housing, we mean our definition of affordable housing is mid to high rise blocks of flats in big conurbations. We're not talking about houses per se. I just want to make that clear.

30:12 So that slide just shows that that our presence in these frameworks underpins the strategy and the same in water. So this slide here you can see that we work for all of the water companies on the right hand side and we have done for a long long time, heading for twenty years now on average and some a lot longer than that by the way. On the left hand side, before we, before we, you know, in in back end of nineteen, early twenty, we we were looking at the state of the assets in the of Walton Wastewater assets in The UK, and and we're, very clear that it could only be a matter of time before the the spend on these assets to maintain what is a critical life support had to go up in some style and hence our growth into water. It's mainly through acquisition there. And you can see there that through acquisition and and, of course, organic growth, we've grown our presence in what we used to do in design and build in the red on the left hand side there very significantly.

31:04 But over and above that, everything in the grey, we didn't do at all in the past, which is the capital maintenance in the light grey and the water tech in dark grey, the manufacture of high-tech bits of kit. So you can see there again a very clear sort of visual representation that our presence in the water industry now and particularly going into the grey, the size of the red and the growth or the addition of the grey absolutely underpins our strategy. I won't go through that but essentially what we're saying here is as we grow into water we'll be able to touch more and more parts of water and wastewater giving our clients more and more of an end to end capability. And we've already got a good presence in that, but we intend to carry on to grow. And finally, my favorite slide, you know, the graph on the right just demonstrates to me that we have the right strategy, we have the right philosophy, we are very focused on risk management, we are very focused on sensible growth and always doing what we say we are going to do. So our intention of course is to carry on growing that trajectory as you see there over the future, and we believe that our great people, great order book, our great balance sheet, and the sheer size of the market out there and everything that needs doing for our social and economic infrastructure absolutely underpins the future of this business, and that gives us the confidence to carry on our strategy through 2030 and, of course, beyond.

32:29 So that's the end of the quick presentation. Let's go to some of the questions which are here. So I've got a presubmitted question. Do the board see sustainable profits and dividends over the next three to five years? I think we've answered that question. You know, strong order book, strong visibility, and, and the ability to accrete EPS over and above the, over above the organic targets gives us a lot of confidence looking forward. So we we have the 1.8 times dividend cover. We would expect to continue that. Within that, I would I should just add, you know, the 1.8 times cover is really two times cover on our trading profits, and then we give back the interest on the PPP assets. So, should we decide to divest on the PPP assets, then, we might we might readdress that. But, you know, we'll tell you when that comes, but not right now.

33:17 Okay. Question from Harry, on sort of does the order book or does 92% of revenues with repeat business help us or sort of hinder us on pricing and margin benefits rather than just greater revenue visibility and lower bidding risk? I think the answer is, I would say, a couple of things there, Harry. One, having repeat clients and frameworks is our strategy. It sort of helps absorption, so using overheads, using people if you, you know, you constantly got them deployed. So that is very helpful from a margin point of view. We do move our hurdle rates forward, so AMP eight has improved margin than AMP seven. And then thirdly, I'd say, you know, knowing these clients really, really well allows us to get into projects earlier. So sort of early contractor involvement phases, PCSA phases, That allows us to design things that aren't sort of preset in the client's head in a way that they're simpler to build, easier to build, cheaper to build, and require less defects and less problems. So all of those three three things for me come together to allow us so that 90% repeat clients is a really good thing. And, yeah, absolutely does help us drive modules forwards.

34:23 Bill, a question there for you on sort of historical problems with modular building. Have we solved those problems? Yeah. I mean, basically, these are solid lumps of concrete. You know? The fact is that they are precast in a factory off-site. The windows and balconies and so on are are put in, and that allows us to just put them up like a big, like a big Lego set really on-site. And as Chris said earlier on, what that does is it means there's no scaffolding around the outside. There's there's basically, there's a very, structured they they come in the truck. They lift it up in the place. Bang. Truck goes. Next truck arrives. So it's it's a it's a very logistical way of doing things. It does mean that you have to have a far slicker front end because these are there's enormous detail in the design of these things, and then, obviously, there's the production and the exploiting and what we do is we'll have if you think back to the photograph of that building, we'll have at least half of that building manufactured and on the ground before we start going up.

35:25 That means that there's more of a cash pull, so the cash profile of these jobs is different, but what it does mean is when you do start to go up, put up the outside walls, you put in the bathroom pods, you put on the precast lab, and up you go again. So as Chris said, we do one floor a week. Every fifth floor then we waterproof it, which means you can start fitting out the lower floors as you carry on going up above. And that's a very significant difference in terms of efficiency between a traditional way of building something, which is far more difficult to achieve that. So, it is a it is a, efficient way of doing things. It is no concrete at the end of the day, so I I don't foresee any of the issues that that that we had some of some of the older systems and, rack concrete and things like that. No. I don't I don't use any sleep over that.

36:14 Thanks, Bill. Two questions from Alastair. I'll take the first one. You take the second one. So first one is what is happening to the basic construction margin, and is the specialist mix contribution more vulnerable to cyclical factors? So as Bill said, we saw that structure of getting the big core businesses to three and a half, and then getting the specialist to grow as we incubate them, and higher margin will will take us up to the four. I think we would say we're we're we're ahead on the base on the core businesses getting towards the three and a half percent. They're going they're going along very nicely. But actually, what we like about these specialist businesses, we don't really use the word vertical, but they're sort of vertically integrated. So the high-tech bits of kit, I think, control panels from Lintock, we use those on the on the water sites. And so what we do in these businesses, we will sell to ourselves, we will sell to our competitors, and we will sell to third party clients. And we like that. So in slightly leaner times, we can lean in and give our people more our, you know, our our specialist businesses more work, and and so we can adjust that mix as to how we point work around. So, actually, I think them being part of this group reduces the risk of cyclicality rather than than enhances it. So we feel we feel very good about about that.

37:23 And then the second question was about data center construction, Bill. Think I think I'd go more I'd go further. We are not a cyclical business. Yep. We are we are flat. There's no cycles in there's no sort of cycles of, like, in house building now in our business. Data centers, no. I haven't considered it, and I have no intention of considering it. So there's a nice short response to you there, Alastair. As I think data centers are a bit of a bubble. There's one there on smart buildings above which we've noticed. So so there's one there on smart buildings, but from John, yes, the buildings we put out typically, and and I'd say it's pretty much the norm now, I'd say, John, in new buildings that that they are designed to be efficient to maintain, that there's a lot of standardization, that there's you know, you scan the barcodes and look at you. For example, if if this was an iPad, just you you pull it up and it'll tell you what's behind the ceiling so you can pick out things. It's it's very high-tech and very impressive. So, yes, the short answer is we we design our buildings to be efficient to maintain.

38:22 Absolutely. That's it. Is it? I think we've answered all the questions we've got. So if anyone's got any more, you've probably got a few seconds to ask it. That's great. Thank you for answering those questions you care from investors. And, of course, the company can review all questions submitted today and will publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important for the company, Bill, could I please just ask you for a few closing comments? Yeah. Thank you. Look, in in closing, I'll just repeat what I said before really. We've got a great bunch of people, a great balance sheet, a great order book, and and the the market out there is phenomenal. So I'm a bit of an anarch, of course, in my game, but everywhere I drive, the roads need a lot of attention. I'm sure all of you see that as well. There are things that you might not see like the water treatment, the wastewater treatment works and you can see how much work is out there just to maintain those assets.

39:18 Custodial, obviously, there's a shortage of prisoner places. People are being let out of prison early, very unpopular, so that custodial market is going to carry on in some style for a long time yet. Defense, huge amount of spend going there for obvious reasons, both in on the government side and in the defense primes and the private contractors and and manufacturer side. Of course, education carries on as usual. So the bottom line, everyone, is we're in really good shape. You know, what we do is we provide the social and economic infrastructure that this country needs to be more productive and to, I suppose, provide the services that we take for granted. You know, all of us take absolutely for granted that we turn the tap on and the water comes out. What lies beneath that is an enormous amount of effort in engineering, of course.

40:07 So I'm very confident that we're in great shape and our markets are in great shape to sustain our strategy going forward long way into the future. Thank you. That's great. Thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good morning to you all. Thank