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Stuart Togwell: Good morning, everyone. And for those here in person, thank you for joining our Half Year 2026 Results. I'd also like to extend a warm welcome to those joining by webcast and audio. So I'm Stuart Togwell, Chief Executive of Kier Group. And before we begin, I want to take a moment to say our thoughts are with our 9 colleagues and their families based in the Middle East. We are thinking of them at this difficult time and hope they remain safe and well. So turning to our half year results. I would like to start by saying I'm immensely proud and honored and energized to be leading Kier as its Chief Exec and speaking to you today to update you on our half year results and the strategic and operational progress we are making. I'm also delighted to be joined by Tom, our Chief Financial Officer since the 1st of January. Okay. This morning, I'll walk you through our highlights and touch on the strategic progress we've been making. I will then hand you over to Tom to talk through the group and divisional financial performance. I will then come back and take the first opportunity as Kier's new Chief Exec, to offer some color and context around these results and share my perspectives on our operational highlights and where we're leading as a group. We will then finish with a group summary and outlook before opening the floor for any questions you may have. Starting then with the highlights from the last 6 months. The period saw the group deliver a strong first half with good growth in both revenue and profits. The future prospects of the group also remains strong with our order book increasing by 5% in the period to a record GBP 11.6 billion, reflecting contract wins across our business and providing multiyear revenue visibility. Through our order book, we secured 94% of our full year '26 revenue and 78% of full year '27 revenue. And we have seen the momentum continue into the second half with a number of appointments to frameworks in our key sectors. Our Property division remains on track to deliver ROCE target of 15% by '28. We are continuing to convert profit into cash with a net cash position significantly improved to GBP 103 million. Most importantly, we have now delivered an average net cash position of GBP 17 million for the first time in 13 years. Our shareholders have and will continue to benefit from this strong performance. Due to our robust cash generation and in line with our capital allocation framework, we have announced a proposed increase in interim dividend up to 2.6p per share. In addition, I am pleased that we're able today to announce the launch of a new share buyback program, increased to GBP 25 million. This follows the successful completion of our first share buyback program worth GBP 20 million. We have also made a number of operational changes in relation to our new structure and leadership capability. If I may, I'd like to now take a moment to expand on this and reflect on the change we've made in line with the first few months since I became Chief Exec. Over the period, we've taken a number of steps to optimize our structure and leadership capability to maximize the market opportunities that exist for Kier, particularly in response to the government's 10 year infrastructure strategy announced in June 2025. We have strengthened our Executive Committee and be joined by Tom as Chief Financial Officer; Martin as the Group Managing Director for Construction, alongside the creation of new roles for Louisa as Chief Operating Officer; and James as Group Commercial Director. They give us industry-leading functional strength. We also brought together our 2 complementary divisions within infrastructure to form a combined infrastructure powerhouse, to create a more integrated delivery platform to meet our customer needs. The group has also introduced its Naturally Digital program to empower our people and improve productivity through access to the right digital tools and platforms. We are seeing strong operational delivery and opportunities within Kier's divisions, which I'll touch on later. And we're advancing our Kier 360 approach, which leverages the group's capabilities across the whole fund, design, build and maintain project life cycle and enables the most appropriate solutions to be achieved, tailored to meeting customer needs while meeting the environmental, social and digital requirements of national and local frameworks. These positive steps we are taking ensure we are poised for future sustainable growth. With that, I will hand you over to Tom to give our financial highlights for the period up to 31st December. Tom, over to you.
Thomas Hinton: Thank you, Stuart. And I should firstly say that I'm delighted to be presenting to you for my first time as Kier's CFO. It's my pleasure to take you through our performance for the first half of FY '26. Let's begin with the financial highlights for the period. Revenue in the period, as you've heard, grew 2.6% and reflects good growth in activity levels, primarily in infrastructure services business, which I'll cover in more detail shortly. We delivered adjusted operating profit of GBP 71 million, up 6.6%, representing a margin of 3.5% and a modest improvement of 10 basis points from that achieved in HY '25. Allowing for our usual second half weighting of earnings, this margin is consistent with our target range of 4% to 4.5% on a full year basis. You'll see that the period end net cash position is materially better than the prior period at GBP 103 million compared to GBP 58 million at December 2024. This is despite increasing shareholder returns via our GBP 20 million share buyback and the increase in dividends paid. As we targeted, the group achieved average net cash over the period of GBP 16.8 million, a significant advance from the prior period average net debt of GBP 37.6 million. This cash and profit performance is all underpinned by our order book and framework positions, which provide us with the visibility over future revenue. Our order book currently stands at a record level of GBP 11.6 billion, having grown by 5% from June 2025. It represents 94% coverage of this year's revenue and substantial coverage of next year's forecast revenue, currently standing at 78%. The order book continues to be underpinned by long-term framework agreements, positions totaling GBP 150 billion. And within this, we have GBP 35 billion pipeline of work visible for this year and the next. You can see from the graph at the bottom of the slide, how our order book, combined with our framework positions provides revenue visibility covering a period of at least 5 years. Stuart will look at our pipeline, order book and long-term opportunities in more detail later. Now focusing on our revenue for the period. We delivered group revenue of GBP 2.029 billion, representing a 2.6% growth versus the comparable period last year. The main element of this growth comes from Infrastructure Services, which was up 4.9% to GBP 1.083 billion. This growth came primarily from the design and delivery of road capital projects, growth in rail work, including HS2 and a ramp-up of water activity under AMP8. Our Construction segment delivered GBP 920 million of revenue in the period, down slightly by 1.3% due to the recent transition to modular construction. Although as the off-site construction comes on-site, we will see these revenues bounce back in the second half of the year to full year growth. Property transactions grew modestly, although again, we expect a busier H2, which is a familiar seasonal feature of this business. In the same fashion, I'll now take you through the adjusted operating profit in the period. The revenue growth that we saw in Infrastructure Services translated into the profit growth of GBP 2.1 million to GBP 48.2 million. We maintained our strong 4.5% margin in this business. The Construction business also maintained its operating margin at 3.9%. The small increase in property volumes resulted in the operating profit growing GBP 1.2 million, and we also saw lower corporate costs in the period. Overall, we delivered adjusted operating profit growth of 6.6% to GBP 71 million. There are some specific costs excluded from our adjusted operating profit figure, which I'd like to take you through. Excluding noncash amortization interest, the adjusted items amounted to GBP 10.7 million in the period and are now solely related to fire and cladding compliance costs. This is an increase on the same period in the prior year, and we expect this to result in a charge of around GBP 30 million for FY '26. We then expect this level of expenditure to continue into FY '27 as we remediate any remaining cladding and internal fire remediation works under the Building Safety Act. These specific remediations are treated as adjusted items and are provisioned gross when the liability is recognized and can be reliably quantified. Further, we recognize insurance or third-party recoveries once they are confirmed, therefore, creating a net provision in adjusting items. We expect the adjusting items to reduce post FY '27 and for these claims to be resolved by the end of FY '28. The interest costs here are recognized under IFRS 16 relating to the exit of leased office space. Turning now to free cash flow. Starting with adjusted EBITDA, which in HY '26 was GBP 101 million. Working capital outflow in the half was GBP 107 million, in line with HY '25, slightly lower in fact. As you'll know, we expect to see our usual working capital inflow in the second half with the higher activity levels of the spring and summer months, combining with government spending and budgeting cycles. CapEx in the period amounted to GBP 24 million, with the majority of this relating to lease payments capitalized under IFRS 16. Net interest and tax paid were just slightly above the prior period, with the group continuing to utilize its significant long-term deferred tax asset. You may remember that the tax asset of GBP 130 million relates to past losses, allowing us to offset half of our tax charge in any given year, which we anticipate to take around 7 years to fully utilize. Altogether, this results in a free cash outflow of GBP 42 million, slightly improved on that of the prior year period in what, as we have said, is a seasonally disadvantaged half of the year. Then taking this free cash flow to the net cash flow, net cash movement in the period. We started the period on the left at the end of June 2025 with GBP 104 million of cash. This free cash outflow of GBP 42 million then reduces our cash balance. The cash impact of the previously mentioned adjusting items equate to GBP 4 million as our insurance recoveries offset a lot of the cash fire and cladding costs in the period. We contributed GBP 3 million in the period to our smaller pension schemes, which remain in deficit, with the schemes we inherited through acquisition around 10 years ago. The net cash bridge neatly shows a significant return to shareholders as well. GBP 23 million of dividends paid in the period and GBP 14 million of share buyback. We also purchased GBP 15 million of shares for the group's employee benefit trust for share-based employee incentives. This resulted in a net cash position of GBP 103 million, lower than at June 2025 due to the seasonal working capital outflow, but importantly, a significant increase over the last 12 months compared to GBP 58 million of cash at December '24. The second half of the financial year has started well from a cash perspective, and we expect this uplift in cash position to roll into the full year net cash. So staying with cash, we consider the average net cash position to be a critical measure. It's been a key target for the business for several years, and I'm delighted to report that we achieved a milestone in this most recent period. We've always defined average net cash as the average month end position. The average net cash is therefore the average over the month ends in the half year. You can see here how over the last 4.5 years, we have steadily reduced average net debt and debt-like items by GBP 600 million, so that we now have GBP 70 million of net cash. It represents a significant mark for the group and provides an excellent foundation for our growth plans. Looking now at our financing arrangements. This slide sets out the structures we have in place to provide flexibility and optionality as we pursue our growth strategy. Last October, we completed out the refinancing of our revolving credit facility with a new 3 year GBP 190 facility. This represented a GBP 40 million increase on the size of the previous facility, including an option to extend for 2 more years as we strengthen further our debt maturity profile. In October, our credit ratings are reviewed with S&P upgrading us to BB+ and Fitch upgraded our outlook from stable to positive, maintaining us BB+. This affords us the optionality as we review the financing requirements for the group. Now to my final slide, I thought I'd remind everyone of our capital allocation framework and its clear priorities. Overall, we are focused on optimizing shareholder returns while maintaining a disciplined approach to capital allocation and an ever-strengthening balance sheet. In short, our capital requirements are minimal. We target dividend cover of around 3x earnings through the cycle. We plan to invest further in our property business to generate consistent returns over time, deploying up to GBP 225 million of capital and targeting a consistent long-term ROCE of 15%. With regards to acquisitions, we will continue to consider value-accretive acquisitions in our core markets. And then lastly, having completed our first share buyback program of GBP 20 million in December, I'm pleased that we're now able to launch a new GBP 25 million buyback program. This, alongside the interim dividend demonstrates that our shareholders will continue to benefit from Kier's significant financial improvement as well as the renewed strength of the group's balance sheet. And now I'll hand back to Stuart for the market update.
Stuart Togwell: Okay. Thanks, Tom. What I'm going to do now is give you some insights into how the business is doing and provide the confidence in terms of us do long-term generation of cash to give Tom loads of options in terms of what he's going to do with the money. So many thanks, Tom. Turning now to our operational update. It would be a good opportunity to reintroduce our divisions, particularly in light of the structural changes we have made and to give a sense of their size and scale and how that gives us confidence of our ability to continue to meet our medium-term targets. I will share an update on the breakdown of our order book and the considerable pipeline of opportunities beyond that. And I really want to highlight is our capabilities and to remind you of those. And the way we leverage them together across the group positions us strongly to benefit from the opportunities in front of us. We really do have a resilient order book, a healthy pipeline and a set of complementary strengths that continues to support delivery in our chosen sectors. So let's start with the Infrastructure Services. Infrastructure Services has an order book of GBP 7.1 billion, which is up 6% and provides 92% of secured work for full year '26. The business continues to win work across its chosen sectors. The most recent examples include National Highways Legacy Concrete Framework that's over GBP 900 million, where we're 1 of 3. Project to upgrade Thames Water treatment works at Maple Lodge, that's GBP 280 million. In nuclear, we've also been awarded a 2 year extension on the Hinkley Point C. We've made progress in aviation with an appointment to the British Airways Better Buildings framework. And if you look at the new graphs we provided on the right, which go to explain the gap between the GBP 150 billion framework position and the GBP 11.6 billion order book, you can see the scale of further opportunity. By the way, pipeline includes further material work even within preferred bidder stage and known tender opportunities. I've only included those that cover the next 2 years in terms of work opportunity winning. There is a clearer material pipeline emerging, particularly across water, defense and rail, which gives us real confidence as we move into the later stages of our HS2 delivery. Importantly, our 750 strong in-house design team gives us a fully integrated design-led delivery model. It means we can engage early with customers and shape solutions around what they genuinely need. In addition, our infrastructure division is driving innovation, whether it's around how we manage environmental risks through sustainable drainage techniques or through digital innovations such as our QuikSTATS, which delivers high accuracy digital data at scale, lowering strike risk, delivering measurable efficiency gains across major programs. Given the scale of the pipeline ahead and Kier's geographical footprint, we have robust strategic workforce plans in place to support us to pivot resources as required. Some of these capabilities are genuine differentiators for Kier and strengthen both the value we bring to customers and the quality of work we convert into the order book. But it doesn't stop there. So moving to our Construction business. We have an order book of GBP 4.5 billion, which is up 5% and 96% is secured for full year '26. Construction's approach to building long-term relationships and its track record means we have good visibility of repeat business on key infrastructure frameworks and also within the private sector commercial sector. Recent wins include a place on the GBP 37 billion new hospital program 2.0 Alliance framework, a place on the DfE's new GBP 15 billion CF25 framework for schools, universities further in technical colleges to deliver high-value projects over GBP 12 million in the North and South of the country. Now this is on top of the work we are delivering for the existing Department of Education or CF21 framework, including 8 schools within preconstruction agreements awarded in quarter 2 alone, and they are not yet reflected in our order book. Other notable wins include the construction of the flagship Government Property Agency Hub in Darlington worth GBP 85 million. You can see that there is a strong pipeline visibility ahead with opportunities to convert frameworks to projects in health, education and defense and of course, in the London private sector commercial market. Also part of construction is Kier Places. Now this represents 15% of the '26 revenue. It's an annuity type business providing long-term FM, housing maintenance and specialist critical school works under GBP 10 million, often from existing frameworks and often from direct award. Kier Places also plays a central role in our 360 approach. A recent example is a way their operational footprint and proven delivery of the Heathrow Quieter Neighbourhood scheme directly strengthened our proposition and help secure the BA Better Buildings win in infrastructure. This demonstrates how our integrated model drives differentiated value for our customers. Our construction capability is anchored in our national coverage and regional delivery model and the strength of our long-term supply chain partnerships with delivery projects from GBP 1 million to GBP 683 million, the strength of our dedicated clients and markets team and the access to call-off contracts under 2 stage or direct award. The construction offering is further strengthened by our in-house mechanical and electrical capability, which is supporting projects of circa 40% of the '26 revenue across all regions of the U.K. Using in-house capability allows us to self-deliver complex projects, reducing risk and removing reliance on Tier 1 external subcontractors. It also enables better engagement with customers, coordinated solutions, ensuring a smoother transition from construction to operation and our input to long-term building performance through our digital twinning capability. Finally, our product capability is critical to outcomes-led solutions and ensuring satisfaction and repeat business from our customers. I would draw your attention to our Deyes High School in Liverpool. It's a great example of how we do this. By taking an outcomes-led approach and working in partnership with the customer, Kier has delivered 7 extra minutes of learning time per lesson. And we did this through the design of the school. It's also delivered energy-efficient performance well above target and has driven high levels of customer satisfaction. There is a video that is available on our website and it is well worth watching. Property. Lastly, let's look at our Property business. Invest and develops commercial and residential sites, largely operating through public and private sector joint venture partnerships to deliver urban regeneration projects across the U.K. As you can see from the slide, property has a gross development value of GBP 3 billion. There has been considerable progress made across the portfolio as developments move through their cycles. For example, 60% of sites now have planning permission. 6 sites are in construction and 4 schemes that we are actively marketing for sale. There is considerable capability within the Property division, which drives future opportunity and create synergies with the other business divisions. Kier Property has trusted public sector relationships built on delivering outcomes-led development and regeneration. It also has a deep understanding to what is needed in terms of responding to changing market needs in business and retail that leads to the efficient recycling of funds. An example is the growing need for net zero and energy-efficient office space, for example, our development 19 Cornwall Street in Birmingham. Looking ahead, these long-standing relationships with public and private joint venture partners will leverage funding that can be turned into delivery. Kier Property is also critical to our 360 approach. The historical PFI and urban regeneration expertise will support Kier to influence the early-stage vision and structure long-term investment models set out in the 10 year infrastructure strategy that is moving toward blended finance and PPP type models, particularly in areas like community health care and environmental resilience and from which Kier could create predictable, durable revenue streams. The momentum we currently have and the future opportunities that exist supports our confidence in delivering our target of 15% ROCE by full year '28. I thought it'd be worth just touching on some of the things that I've spoken about in the past. So I would like to just give a more of an explanation around our 360 approach. It's really cool. Simply put, it captures the breadth, depth and scale of Kier and enables us to leverage the group's capabilities across the whole fund, design, build and maintain project life cycle. It enables the most appropriate solutions to meet customer needs while meeting the environmental, social, digital requirements of national and local frameworks. This drives tangible customer benefits because due to the breadth of our national footprint, we can deploy capability consistently wherever it's needed. We combine that breadth with real depth because we can fund, design, build and maintain. We solve customer needs end-to-end. We can offer customers choice of solution, what we call Choice Factory. That focuses on the flexibility needed to deliver true value for money and high-quality outcome-led solutions. One example is MMC. Now Kier doesn't own a manufacturing facility. That means we don't need to keep it full. Instead, we have a broad supply chain, and we can curate a choice of factory-based solutions. This has allowed us to select the optimum system for each project, improving value for money, managing risk and delivering with greater certainty. Harnessing digital is also fundamental for improving customer experience. Digital processes and data-led approaches drive productivity, improving accuracy, program certainty and building performance, e.g. digital twin. And crucially, our work delivers more than just assets. We support customers to generate social and economical benefits such as creating jobs, training, supporting SMEs and creating greater equality. This all reinforces our position as a trusted industry partner, strengthens repeat business and enhances margin certainty. I would also like to expand on the environmental and social benefits as environmental and social performance, they're not an add-on, they're integral to long-term value creation. They are both a key requirement for government contractors and a direct driver of employee engagement. The Kier recent highlights include achieving the first Carbon Disclosure Project A rating for climate disclosure, placing us in the top 4% of companies globally. First in sector in the FTSE Women Leader's review for women in senior leadership positions, strengthen our safety performance through Kier Cares, our new health and safety well-being strategy and through adopting predictive digital tools to help us prevent incidents even before they happen. Average supplier payments down to 32 days, and we achieved 95% of payments within 60 days. We have 532 people engaged in apprenticeship programs, and we were included in the top 100 Apprenticeship Employers list. We are also signatories of the government's Youth Guarantee. For those who are financing within the room, I thank you for your patience of going through that slide. Moving on to drive shareholder value. That all points to how we now continue to drive shareholder value. Before I come to our summary, I thought just to remind everyone of our medium-term financial targets, which are set out here. And actually, there's no reason to change these, they're still applicable today. So we target revenue growth above that of GDP, an adjusted operating margin of between 4% and 4.5% cash flow around circa 90% conversion of operating profit and an average net cash position, a sustainable dividend policy of circa 3x earnings cover through the cycle. And then finally, in summary, the group delivered a strong first half, along with the significant achievement of average net cash for the first time in 13 years and revenue, profit and cash all continue to grow. Our order book stands at a record GBP 11.6 billion, and we have further excellent visibility of future performance. Significant increase in shareholder returns, we're able to announce the launch of a new larger GBP 25 million buyback program and a 30% increase in our interim dividend payment to shareholders. Finally, in terms of outlook, building on our half year '26 performance, we have seen this momentum continue into the second half, and we are trading in line with Board expectations. Full year expectations remain unchanged. We are building and leveraging capabilities through 360 approach, which underpins a 4% to 4.5% margin target range. We are confident in our ability to pivot at scale and pile sustainable growth through delivering social and economical infrastructure that is vital to the U.K. So with that, I'd like to open up the meeting to questions-and-answers. Questions from the room first, please, and then we'll take questions from the call. Thank you.
Robert Chantry: Rob Chantry at Berenberg. Just 3 questions. I suppose, firstly, for both of you. Could you just share your views on the optimal balance sheet structure medium-term for Kier, I guess, in the context of the potential bond refinancing this year, the recent cash generation, the move to an average net cash, just how you see that evolving on a 3- to 5-year view? Secondly, just touch on building safety costs. I think it's fair to say that's a step-up versus where the guys thought it was a year ago. I think you're now talking GBP 30 million this year, GBP 30 million next year, a bit of a balance in '28. Can you talk a bit about what's driven that change and happy it goes no higher thereafter? And I suppose, thirdly, really interesting going through the different structural dynamics of your market share. Could you just kind of highlight to us, I guess, where you think you're a genuine market leader in these markets and where you think there is a gap to the top and how you might think about if that's a gap you want to fill with potential M&A or more investment?
Stuart Togwell: Do you want to take the first 2?
Thomas Hinton: Yes, a couple of questions there. Can everyone hear me okay? So let's start with the balance sheet one. I guess, firstly, let's reflect on where we are. So we're at this average net cash positive position, which I think everyone is very pleased with. It's been an enormous journey to get there. And then if you reflect on our cash flow, here we have strong cash flow, and we expect that to build over time. We've obviously come out there and said, we'd like to continue with the share buyback. So we've continued the share buyback. So the implication there is that if you look at our cash flow, we are kind of returning the dividend. We're doing the share buyback. That does mean we have spare cash. So that does mean it will build. So we expect the cash to build over time, and that's what we'd like it to do. So we would like to continue to build -- we'd like to continue to strengthen our balance sheet in the medium-term. So what I can't say is here's the cash number we're going to aim towards. We haven't got that. What I can say is that we want to keep it positive, and we would like to continue to strengthen the balance sheet. That's our plan. And then the point on the bond, I think you kind of reflected on the bond quickly. So we've got a bond. It's at 9%. Kind of I alluded to it in the slides that there is optionality around that bond, and we will look to potentially go to market on that at the kind of end of the first quarter. So like in the next few weeks, let's see what happens. But ideally, we'd like to come to the market with the bond later on. So that's the bond side, the balance sheet. So fire and cladding. So you saw there in the half year that we've got GBP 10 million adjusting item for fire and cladding. And I also said that we expect that to be around GBP 30 million for the full year. So your question then was, well, how you got comfortable with this? So what we've done is look through every project that's got any exposure on fire and cladding. And each one is bespoke. Everyone is unique, each one is discrete, and it all has different insurance recoverability against it as well. So -- and we have to wait to see if the liability is going to crystallize. So we're going through each one to try and work out, is there a liability? Is it going to crystallize? And then those numbers that I've kind of alluded to are an estimate on how that liability could crystallize over time and an estimate on how we could get recoveries on insurance against them. So that's a kind of net estimate against that. And the challenge, of course, is that you can't take it all today because you don't know the liability is going to crystallize and you don't know the scale of it. So that's the best we can do is estimate what that adjusting item is going to be this year and next year.
Stuart Togwell: If I pick up in terms of the market and the sectors, it's a great question. Thank you. If you think about it in terms of Kier stalwarts, that still remains around education, highways and at the moment, MoJ work that's passing through. We are seeing through the slides I put up there, the growth opportunity through the pipeline in defense, the water contracts are starting to come through and working with the water companies in terms of their cycle of funding coming through. Certainly, a huge opportunity in health, particularly off the placement in terms of the new Alliance framework, but there's also other health spend that's going on with the trust that haven't been privileged enough to be one of the 11 hospitals. And we're seeing entry into the nuclear sector, which is a slow burn. It takes time, but we are there and positioned well. In terms of areas in terms of future, rail is an area that I'd like to do more in. There's certainly going to be some spend. Certainly, when the money starts being diverted onto HS2, we're looking about where that's going to go. The London -- the views out here, the London private sector is starting to wake up. And we have a dedicated team in London that is delivering very well at the moment, and I see further opportunity there. And finally, the Places business. I made a point today, I've actually explained a bit more around that business particularly being annuity and the opportunity we have through FM, housing maintenance and also the specialized work we do around small works. As I said, that's often work that's coming through existing frameworks or direct award. It's critical work to the client and often it leads to either repeat business within places or across the group. Longer-term, I've often said around, I felt the opportunity was going to be there for PPP and urban regeneration. And what we're doing about it? Well, we're starting to have conversations. We had a conversation yesterday with NISTA and cabinet office and other CEOs around how the construction industry can feed into the models going forward to make sure that we learn the lessons, the good and bad of previous PFI. But I also look to, at the moment, I've got a Property business that has expertise from the previous PFIs. We certainly have the ability to draw on funding and with the relationships with the public sector. And we have a Places business that is already currently working on 22 contracts under PFI arrangements. So we have all the bases covered.
Jonathan William Coubrough: Jonny Coubrough from Deutsche Numis. Can I ask perhaps on the change in mix within Infrastructure Services and it looks like water is clearly expected to be a big growth area also defense. How do you view the contract terms in those markets and also potential margins relative to transportation? The second question would just be on central costs and why they fell in the period. And then third question on Kier 360. Do you think there are opportunities to broaden that out across your markets in terms of increasing your activities at the front end of projects and improving margins there?
Stuart Togwell: So if I take 1 and 3 and leave you on 2. Yes, I leave you 2. So the margin risk in terms of these new areas, we've used the word pivot quite a lot. So what we look for is work that is procured on a similar basis through framework that it plays into our strength of having the U.K. coverage, plays in our strength in terms of that we have the local presence that we can bring the environmental and social benefits. Generally, in terms of the frameworks, the risks are going to be proportionate to what we do elsewhere. And it really plays into then us bringing -- being able to bring in the other capabilities we have across the group. So I see those very much in terms of being just same as just a different sector. And that's the strength of the model that we have going forward is that we have the visibility where spend is going to be. We start thinking about those sectors way before they come to market in terms of frameworks. It gives us time to think about the capabilities that we need to understand the customer needs. And we also have a model now that we can really look at our workforce in terms of how we move it around to suit these new streams of work. If I touch on the last point in terms of Kier 360, the answer is actually both. If you think about it in terms of the infrastructure business, our 750 strong designers predominantly are based on the highways business in terms of transportation. Now by combining those 2 organizations together, I've opened up that ability to move it quicker into serving things like water and defense going forward. Now if I look in terms of the construction capability around M&E design, again, I'm looking at 40% of the construction business. But there's no reason why I can't start looking in terms of how do we help that, particularly around the water sector to drive better efficiencies and confidence around that. So both internally and externally. The feedback we had from our one government day when we're talking about the departments about ability to bring, say, environmental understanding into any scheme because most schemes at the moment will have some form of water problem in terms of how they deal with the current water or how they make sure it goes away. Or they're going to have issues in terms of how do they get power in and make sure the energy supply is there sufficient for them. They might be looking for funding solutions because they haven't quite got the funding. And they might need be talking about, well, how do we maintain these buildings in the future? Are you Kier interested in doing the future maintaining? If you're not, can you make sure that the base specification reflects your knowledge of operating these buildings elsewhere? And if you want to put it all together, go and have a look at the Deyes High School. So an outcomes-led design. And you can only do that by bringing all these skills together, look at it in terms of how the building works in terms of energy efficiency, how you actually transfer children more effectively around and teachers around the school classrooms. And that's delivered, as I said before, 7 minutes improvement per lesson. That's [ Kier 360 ] in work.
Thomas Hinton: Okay. On the corporation costs, I mean they're relatively flat year-on-year. I think there's a slight improvement. I think the only change is kind of -- I think it comes down to things such as what's the level of bonus accrual you put into the corporate costs, Jonny. I don't think it's much -- there's not much more than that. There hasn't been a deliberate cost drive in the corporate center to date. So it's not different from that. It's more kind of smaller assumptions driving it.
Andrew Nussey: Andrew Nussey from Peel Hunt. A couple of questions. Useful disclosure around sort of the pipeline. I did observe that you've got defense sitting in both sectors. How do you sort of draw the line? And does that create some inefficiencies having it sort of sitting in both buckets? And secondly, in construction, modular construction is becoming a feature of the industry and there was an implication of being the revenue sort of slightly lumpy. Is that going to be an ongoing feature as one would imagine your projects get bigger and more modular? And is there any impact on the cash flow from that shift?
Stuart Togwell: Okay. I'm happy to say both, and you can then correct me in terms of the second one. Good spot on the defense. The distinction is one is nuclear defense and one is anything else that isn't nuclear defense. Nuclear defense has a particular requirement in terms of your capability, obviously. And it tends to be more large infrastructure complex schemes like Hinkley. So that's why we keep that within that side of the organization. We do, though, share knowledge between the 2 and the relationships and make sure that if there is any joint learning or joint sharing of design or joint sharing of M&E that we do the crossover. But that's the reason we do that. In terms of the MMC, I think you have to remember in terms of the big impact there is in terms of the Glasgow, in terms of the size of it, in terms of timing. I personally don't see it as being -- having a lumpy impact on us. And our approach to MMC really has been embedded in the organization from what we've learned around MoJ in terms of the mill site. And we will continue working through it. Anything else you want to add?
Thomas Hinton: No, I think as you said, it does suppress the revenue a little bit on one side versus the other. But what it does do is large construction, you can actually achieve bringing that cash in slightly earlier, if anything. So if anything, it's positive from a cash perspective. So you've got kind of large construction activities, then that can be advantageous for cash actually.
Adrian Kearsey: Adrian Kearsey, Panmure Liberum. Three questions, if I may. In terms of water, which kinds of projects have you got in the pipeline and which looking beyond the current AMP do you see sort of coming through? Kier Places 15% currently in terms of revenue of the division, where do you think that can go? And what kind of -- do you think you need to expand your capability within Kier Places in order to grow that? Or is it more about just winning more -- just more of the same kind of work? And then the last one, frameworks, your position within frameworks is not equal across all of the participants within the framework. Which particular frameworks do you think you'll win a greater share?
Stuart Togwell: Okay. Again, I'll do my best. Yes, I thought you'd say that. Water, I like the [ time ] there in terms of pipeline. So capital works, we went to the water treatment works. Some of us went to the water treatment works. We're seeing more of that, which is what Maple Lodge is. So more around the capital works. In terms of places, no, we have the capability. It's more of the same. I held back in terms of housing maintenance because that became quite awkward in terms of price per property programs that were in the last 5 or 7 years. But definitely, there is going to be a need to upgrade in terms of housing maintenance properties across the country. And the FM, generally at the moment, we're staying within public sector. I'd like to see if that opens up more opportunities around, particularly around the PPP work going forward. Frameworks, are we equal? There are some that we are more equal than others. That is correct. But generally, the approach with any framework that we go on that we've discussed this morning, we try to have a position in 1 of 3. So if we can get a position in terms of 1 and 3, you have the real opportunity to influence in terms of the customer. You start being able to bring forward your views around outcomes-led design, and it often allows you to work very closely in terms of the alliancing work about what's going forward. Generally, if you look in terms of longevity in the past, education and highways are a stalwart of what we've done. Alongside that, I took a trip down to Bridgewater to look at the environmental work we were doing. We do somewhere between GBP 50 million and GBP 100 million a year on that. Smaller organizations will be talking about it because it will be a larger proportion of their works. But some of the work we do that in terms of our understanding in terms of the environment and how we work with local communities to make sure that we manage water, wildlife, et cetera, is a real strength that we have. And I can see us leveraging that expertise across the other divisions.
Maximillian Hayes: Max Hayes from Cavendish. So first, looking at the in-house design consultancy, just looking at the potential to sell these services externally. And then also the improvements in net cash and average net cash balance, has that supported access to any certain frameworks and help develop the pipeline?
Stuart Togwell: Okay. In terms of cash, no. But what it has done is reduce the number of questions we've had about net debt with some of the people in the room. But I do see it as a positive sign in terms of where we are. Generally, the turnaround has been accepted. We've closed that off in terms of the frameworks. What this does do, though, is draw people into, okay, Kier, PPP, okay? You get into a position in terms of having surplus cash at some point in the future. We will have conversations with you in terms of how should we be thinking about Kier in those conversations. So, positive. In terms of design, at the moment, we have so much internal. It's a benefit to us. We like to keep it internal. The other benefit we have in terms of the internal model is that when we go to customers, if you like, our outcome is revenue for the other divisions. It's not time on the clock. It brings a different focus in terms of what our design capability do. So I wouldn't want them to move away from that focus and all the work they do for us, moving into an external place where quite often it's time on the clock. So for now, internal. Okay. I think this is the last question.
Alastair Stewart: Alastair Stewart from Progressive. A couple of questions. First, following on from Andrew. Defense, very small in terms of the current order book as a percentage, but very big in terms of both pipelines. Have you been getting a sense that, that pipeline is getting more urgent from your clients? And specifically, have you had any incoming calls in the last few months and more particularly -- more particular in the last few days that could move that forward. So that's question one. And question two, GBP 197 million capital employed in property. Given the move to average net cash and the comments on PPP, do you see that GBP 225 million ceiling moving up in the mid-term?
Stuart Togwell: Do you want to take that one?
Thomas Hinton: Yes, I'll do the last one first. So let's start with the -- you can talk to the defense kind of point, your phone is booming this morning or not. On the property, I said GBP 197 million at the moment. And we were quite clear, we want to get to a 15% ROCE. So we kind of need to prove that. We need to prove it to this room. We need to prove it to ourselves. We need to show that this business can get up to that kind of sustainable return level. And we're confident we can get there, but we need to kind of prove that. I think once we prove that, then you can look to invest further. And to what Stuart said earlier, that doesn't necessarily mean that it's the current kind of design model. It could be slightly pivoted model into other investment areas. It could be a PPP. It could be a specific focus on urban redevelopment. But that's what we're thinking about it. It's about how do we use our cash, let's get the returns, let's prove the returns of the business, and then let's move from there.
Stuart Togwell: There's a subtlety that I'm looking for is to make sure it generates revenue across the divisions. So we can actually see it more as in terms of being integrated solution we have. Just going back to defense, I've got to start by saying it's most important that we -- at this time, we think about our people, the 9 employees we have -- employees that we have over in the Middle East. And also, we have -- many of our staff have friends and family of that region. In terms of the urgency, it's been urgent for a while in terms of the need they have, whether it's in terms of providing the nuclear safe havens for submarines or warships, along with improving the living accommodation for -- under the SLA or in making sure that we've got proper safe havens for storage in terms across the country. So there has been an urgency for probably the last couple of years. But what I would say is that Kier saw this as an area of undoubtedly, there was going to be some spend that was going into it, that they were going to start changing their way in terms of the way they approach more to an alliance in way and procuring work through frameworks. So it's a reason why we -- and we needed something to continue the work that we created in terms of the MoJ and defense became a natural place to start moving our resources probably a couple of years ago to be ready for this growth.
Alastair Stewart: Specifically, is that urgency getting more urgent?
Stuart Togwell: No. Okay. I think we are done. So thank you very much for coming. Thanks for your time. And I'd love to share a coffee with you next door if you've got time. Thank you very much.