Galliford Try Holdings plc (GFRD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Galliford Try Holdings PLC Full Year Results for the 30th of June 2021 Investor Presentation. [Operator Instructions] I'd also like to remind you that this presentation is being recorded. [Operator Instructions] And I'd now like to hand over to Andrew Duxbury, CFO from Galliford Try. Good afternoon.

Good afternoon, Mark. Thanks very much, indeed. Welcome, everybody. So it's a pleasure to be back. We like had a session with you at the end of our half year results back in March. And so, looking forward to talking to you about our full year results through to the end of June 2021 and also our strategy for the next 5 years. As Mark says, my name is Andrew Duxbury, CFO, at Galliford Try. Actually, the picture you can see, just to give you an indication, on the screen now, that's the roof of the Exchange building in Centenary Square in Birmingham, formerly known as the Municipal Bank. That is a refurbishment we've done from a building that has been effectively derelict for 15 years or so. And just in the background on the left-hand side, Symphony Hall Birmingham. And again, we've just put a new entrance hall and performance area onto the front of Symphony Hall. So I'd encourage any of you who are from the Birmingham area, if you go to Centenary Square, you'll see some really good examples of our work. So as I say, this is our full year results presentation for the year ended 30th of June 2021. And the highlights are: It's been a really, really good year. So thanks to our excellent people, particularly, but also our processes, our supply chain, our clients. We're really pleased with the progress that we've made during the year. And we set really strong foundations for growth going forwards from here. So the performance in the year was excellent. It was ahead of target. And again, it set really strong foundations. And just to give you some of the highlights, if you look on the right-hand side of this slide, revenue of GBP 1.1 billion is 3% higher than the equivalent period in 2020. Our profit before tax is higher than the market expectations at GBP 11.4 million. And really importantly, we hit a divisional operating margin of 2% a year earlier than our target. So really, really strong financial performance throughout the year. Our earnings per share of GBP 0.095 has allowed us then to declare a dividend of GBP 0.047, which is 2x covered by earnings. And again, that is on a more generous end of our dividend at policy range, which is 2 to 2.5x cover. And the reason we're able to do that is a combination of the excellent performance and the strong outlook, both of which I'll come on to a little bit later. And as the final bullet point says, that we're very confident in delivering our updated sustainable growth strategy. So the excellent outlook, combined with the strong platform for growth that we've established through the last year has allowed us to publish an updated growth strategy out through to 2026. And again, I'll come on to that in much more detail in a moment. As well as the trading performance, our balance sheet continues to be very strong indeed. And this has been resilient through the last year, our average cash balance -- average month-end cash through the year to June 2021 was GBP 164 million, and our lowest cash point during the year was around GBP 100 million. As well as that strong cash, we've also got PPP asset portfolio of GBP 49 million and the asset portfolio generates me an interest income of GBP 4 million in the year just ended. So a really good return on that PPP asset portfolio. And that strong balance sheet is a real differentiator for us in terms of winning work and there's examples of us having been approached to negotiate for work because of the strength of our balance sheet. It's also a real differentiator for us in dealing with and getting the best supply chain. And I should say, during the year, we've managed to improve again our payment performance to our supply chain such that for the last 6 months, we paid 95% of invoices within 60 days. So we've made huge strides to make sure we treat our supply chain properly and fairly. Also worth noting on the balance sheet, that we have no debt. We've got no pension liabilities to fund. So that balance sheet is a balance sheet which can be used for the benefit of growth of the company and for the benefit of shareholder returns. So we're very pleased under the continual strength and resilience of our balance sheet through the last year. One of the things that the balance sheet has allowed us to do is to revisit our dividend policy. And in March, we published an updated policy, which was a dividend cover of 2 to 2.5x. And just to put that into some context, what we look to do with our balance sheet is, first and foremost, to support the growth of the business, both the investment in our people, in digital infrastructure, and also to look for strategic opportunities where we can to accelerate the growth of the business. But secondly, we look to maintain that strong balance sheet through the cycle. So there's examples of construction companies in the past who have not maintained strong balance sheets. And when the market is turned, they face difficulties. So we find that a strong balance sheet is a real differentiator in terms of winning work and gives us that resilience in the medium term. And what that then also allows us to do is to pay that sustainable dividend to shareholders because we can use that balance sheet strength, combined with a strong outlook to support a sustainable dividend. So in terms of the dividend that we declared, I've already mentioned a GBP 0.047 full year dividend twice covered by earnings, which is at the more generous end of that dividend cover policy. And it's worth noting that through the year, through to June 2021, we took no advantage of government COVID support schemes. We took some furlough money in July and August that we've subsequently repaid. So there's no government support in that from COVID. We've got that strong balance sheet, as I say, supported by cash and PPP assets. And we've got no pension liabilities to fund. So all of that has given the Board the confidence to declare the dividend of GBP 0.047. So in summary, the year to June 2021, a really good year, setting the foundations, really good return to profitability. Margins improved ahead of schedule and that continuing strong balance sheet. And what that's allowed us to do is to then start to look forward into the next phase of our strategic development. So our previous 5-year strategy was all about that -- sort of developing those foundations and getting the company on to a sure footing, and that's been done successfully. We're not going to lose any of that discipline that we've instilled and embedded through the business. But what we are now doing is looking forward for the next stage of our strategy, the next 5-year stage. And this is all about disciplined growth. So sustainable growth, sustainable in a socially responsible way and sustainable financially. So we're not interested in growth, which is not able to be sustained year-on-year. It's all about disciplined growth. You can see in the center of the slide there, our strategy is all about delivering high-quality buildings and infrastructure, delivering those in a socially responsible way and providing a sustainable return for our shareholders. And what we've done is we've developed 4 pillars for our strategy. And this is all about weaving and embedding all of our ESG and sustainability metrics into our core strategy. So first and foremost, we've been developing a people-orientated progressive culture. So this is about focusing on health, safety and wellbeing, making sure that all of our people can operate safety and our ambition there is zero harm across all of our sites. Currently, accident frequency rate is 0.07, and we're striving to reduce that further as we go forward. It's also about developing our people. We want to retain and attract the best people who can grow and develop their careers with Galliford Try. The bottom left quadrant there is about protecting the environment, creating greater social value. So this is all about responsible consumption practices. This is about our carbon commitments, which I'll come on to later on. And this is all about the social value we add back to our community. So for example, through employing local labor and the local supply chain. The top right-hand side is about delivering excellence. So this is about working with our clients, deliver excellence and also working with our supply chain to develop our supply chain. And there, we use a program called Advantage Through Alignment, which is about giving our supply chain access to our training programs, access to our pipelines so that they can invest in their own businesses. And what we're looking for is our supply chain to come and make a fair return, make a decent profit on our sites, so they want to work with Galliford Try and that we can attract the best supply chain. And in doing all of that, what we'll do is create and deliver sustainable returns for our shareholders. This is all about long-term sustainable value creation. What I'll do is I'll come back in a little bit more detail in a moment around the particular targets and how we want to -- so I'll talk about how we're going to grow the business and what that means in terms of our targets to 2026. But firstly, just to -- how to think about the market because the market is currently there to support and sustain growth in the medium term. It's really important that we grow the business with the market as opposed to trying to grow the business when the market is not conducive. So what we're seeing across all of our sectors is there's a real drive at the moment for investment in the U.K. social and economic infrastructure. And by social infrastructure, I talk about things like schools and hospitals as well as the economic infrastructure of things like roads. And these are exactly aligned to the key markets that we work in. 90% of our work is with the government and regulated sectors, so heavily invested in the government spend, which is coming, which is all about their investment in improving the U.K. economic and social infrastructure. You'll have heard a lot around the leveling up agenda, and we're starting to see this come through on the ground in terms of actual work in, if you like, money being committed by government. And we're particularly seeing this in the Midlands and the North, again, particularly, for example, through the health and education sectors. And our business is structured. We've got national coverage across 9 regional building businesses. So we're well placed to access that leveling up work in the Midlands and the North of England. Of course, the urgency of the climate crisis is something which is driving spend at the moment, and this is something which we are working very closely on. Something like 80% of emissions from the U.K.-built environment will come from existing buildings. So there's a real opportunity for us to increasingly retrofit and green up the existing build environments in the U.K. as well as building new buildings and new infrastructure as efficiently as possible. So climate change is a huge driver for our work at the moment, and we'll touch on that in a moment. And finally, the government is really focused on productivity. So post Brexit and post COVID is about increasing and improving the U.K. productivity. And similarly, not only on the buildings that we construct and the infrastructure that we construct conducive to helping improve the U.K. productivity, we're also heavily investing in our own digital infrastructure, our own digital strategy, investing in modern methods of construction, which is all about improving our own efficiency, our own quality and our own productivity. So the markets are there to support the growth that we're looking to achieve in the next 5 years. And just to bring that into some real sharper focus, you can see here some of our key markets that we operate in: education, defense, custodial, which is Ministry of Justice, health care, highways and environment, which particularly for us, is the water and the water sectors. So these are all sectors. These are our core sectors. And if you reflect on those market drivers I spoke about earlier, these are all sectors which will benefit from our increasing government spend. So we're very satisfied that our chosen markets, the markets that we've got core expertise in and have got a real tailwind to support growth over the next few years. So growth of markets is great and growth of markets -- and growth of our business is great, and that's what we're looking to achieve. But it comes with a real caveat. We're only going to chase growth, where we can do that in a risk managed and disciplined way. So if you were on the call that we had in March after our half year results, you'll know we spoke a lot about risk management and about discipline. And we're absolutely maintaining that framework and that foundation, and that's the context in which we look at the opportunity to grow the business. So we are much more interested in growing the bottom line, quality of earnings and margin than we are at the top line. So we're not going to chase revenue, which doesn't meet our margin aspiration targets. We talked about this slide when we spoke in March. This is all about the embedded risk management framework that we have in the business. So when we go through contract selection, all contracts above GBP 25 million come to the Executive Board for approval, but particularly any contract which has a risk factor on our heat map, so that might be the geography of the project, the technical requirements, the nature of the client, the terms and conditions, the resources we've got available to deliver the project, any one of these kind of metrics which has a red flag, that contract will also come to the Executive Board for review irrespective of value. And this is all about ensuring that we take on the right work because the best way for us to grow our margin is to make sure we take the right work on in the first place. And again, I'll come back to the order book in a moment. And as you can imagine, we also have significant controls around in-process projects, whether that be finally reporting, whether that be what we call commercial health checks, which is peer-to-peer reviews of a project to make sure that we've identified risks and that we've dealt with risks on projects as they arise. And just to give you a little bit more detail, one feature of our order book is that 87% of our order book at the moment is -- has been awarded through frameworks. A framework is a way that we can procure work in a way which manages our risks and lowers our risk because it's about repeat clients, it's about repeat terms and conditions, and it's about an arrangement where -- which is mutually beneficial really for clients and for contractor because it's all about working together in a partnership. That poses a much lower risk way of contracting because it means we're contracting with people who we know and understand and who culturally are aligned to what we're trying to do at Galliford Try. So a lot of people asked me why we talk about this 87% of our order book in frameworks, and this slide really just sets out why frameworks are a lower risk way of contracting for us. So our strategy is all about sustainable growth. And that's about growing the business but in a risk management sustainable way. So I just want to spend a moment explaining how we expect to grow the business going forwards. The first thing that we'll do is to grow the existing core of our business. So we had GBP 1.1 billion of revenue in the year just finished, in the markets I've just talked about: Education, health, justice, defense. And we can see all of those markets have the opportunity for us to grow and to grow that business over the next few years. And that's a combination of the markets -- have opportunity, and some of our business units also have the opportunity to increase that capacity as well. Some of our business units are not quite running at full capacity just yet. So the market is there to support disciplined growth. But then what we're also going to look to do is to move gradually into what we call adjacent markets. So this is a markets that we are familiar with, that we understand, but that we're not quite doing as much work at the moment. So just to give you 2 or 3 examples of the kind of adjacent markets that we'll move into. So the first is PRS or the private rented sector. So this is a market that we operate in at the moment in terms of constructing PRS apartments for clients. What we're looking to do is to move slightly earlier and do some more of the codevelopment work, which brings us a higher margin, is margin accretive, and it's work that we're very familiar with. We're already familiar with the design of PRS blocks, with working PRS blocks through the planning system. So actually leveraging our balance sheet and doing a little bit more earlier investment in PRS will allow us to move into a market that we're very familiar with, but just to grow our margins incrementally beyond that which we already do. Another example of an adjacent market would be what we call the green retrofit market. So we already have a facilities maintenance business, which maintains the buildings that we have constructed. So it's hard maintenance. It's building maintenance, work that we do. And there's a huge market at the moment for greening existing buildings. And so because we already do facility management in buildings that we've built, so a relatively small change to start doing that work in buildings that we didn't build as well and to start to do that green retrofit. And that might be changing the light fittings to LED lights, it might be changing the ventilation systems, it might be changing from gas boilers to air sourced heat pumps and so on. So it's the kind of work that we already do on existing -- on buildings that we're building, but just moving that into the new -- into a newer market. And we see this is an opportunity which will really grow the next few years as all companies and all property owners have to reduce the carbon footprint of their existing built estates. And the third area I just want to pick up on is our water business. So we already have a substantial water business, which operates. We've got 5 or 6-year frameworks with Southern Water, Thames Water, Northumbrian Water, Yorkshire Water and Scottish Water. And what we're looking to do is to just grow our capabilities into, as well as the asset maintenance into the asset optimization. So this is about -- we've installed valves and pumps on a site. Actually, it's about maintaining those valves and pumps. It's about optimizing the asset so we can use our digital expertise to really monitor the assets and how they're performing. And then we can do the maintenance at the same time. So again, it's a market that we know well, but that we can just expand our capabilities and therefore, grow our revenue. So we see a route to deliver revenue growth from GBP 1.1 billion towards GBP 1.6 billion by 2026, so roughly 50% growth in the top line by the existing markets and these adjacent markets that we are familiar with. And what this will result in is what we can see on the slide, which are our 2026 targets. We consider these to be ambitious but achievable targets. So -- The most important one is to grow the margin, to grow the division operating margin to 3%. And as I've just explained, we expect our revenue to grow towards GBP 1.6 billion over the same period. But we will absolutely prioritize margin growth over revenue growth. We expect to continue to be operating cash generative and to pay a sustainable dividend within the range of 2 to 2.5x. So to say those top 2 targets we consider to be ambitious but achievable. But alongside the financial targets, we've also restated just broader sustainability ambitions. So across 6 pillars of our sustainability framework, which are all mapped to the UN's Sustainable Development Goals on the right-hand side there. What we've done is we've set out ambitions across all of these because we strongly believe that if we can achieve these sustainability commitments, we will be far more likely to also achieve a sustainable financial performance that we know our investors are looking for. So I'll just pick up a couple of these areas just to highlight to you. So at the top of there, health and safety. That has to be our #1 priority as any responsible construction company -- it should be. So our accident frequency rate in the year to June 2021 was 0.08, which is very good. It's going to be trending at 0.07. And of course, we're targeting no harm. So we're -- that will be a journey that will take a period of time, but of course, we strive no harm on any of our sites. Dropping down to people. You can see our investment there in early careers. We are a member of the 5% Club, which means we are committed to having 5% of our employees in early career, so that's apprentices, trainees and graduates. At the end of June, we had 7.2% of our employees in such schemes. As of today, 7.9%. And that investment in early careers also allows us to invest in a more diverse workforce, and a workforce for the future, and develop our own talent as we go forward. So that's a really important part of our strategy. In the middle of the page there, in terms of climate change, we committed in June to our zero carbon targets of Net Zero by 2030 for Scope 1, Scope 2 and operational Scope 3. So that is effectively the carbon that we control ourselves. So our office energy, our car fleet, our site diesel and so on. And we're already making huge strides there. 37% of our car fleet is already electric, and that's growing very, very quickly. And in fact, we now have a policy that we no longer will lease or buy other than electric or plug-in hybrid vehicles going forward. So big strides that we're making to take out carbon from our fleet. Most of our site -- most of our offices are already using renewable energy sources as well. So making big strides on our own carbon reduction. And we've committed to zero carbon across all of our activities by 2045. And just towards the bottom there, in fact the very bottom one, just one that I'm very proud of, which is our Prompt Payment performance. I've already mentioned that we're now paying more than 95% of our invoices within 60 days in the most recent 6 months. Across the previous 12 months, it was 93%. And that's all about treating our supply chain properly and fairly. So these are sustainability commitments, we think, again, they are ambitious but achievable. And just to give you an example of why we've threaded sustainability and financial strategy together. Because these things are, in our view, completely intertwined. If we want the best people and we want the best clients, then we've got to have -- and that's how we'll get the best financial results. So this is an example of the kind of thing we're doing on our projects. So this is obviously just a sort of pictograph. But what we've done is we built a school a couple of years ago, and we've gone back and completely redesigned that school to be net zero carbon in use. So in other words, from handing over to the client, that's now will be redesigned as a net zero carbon in use building. And that has made huge savings. It's probably halved the CO2 across the life of that building. So a slightly higher capital cost and a much lower cost in use. And I'm not an engineer, but there's -- some of the things that we do are very straightforward. So replacing gas boilers with air source or grass or heat pumps, very straightforward, putting PV panels on the roof or above the car lot, very straightforward. But we've also done things like changing the ventilation flows in the building to make sure that we're using the most efficient and effective ventilation flow. So really clever redesign. And this is all about us helping our clients to understand what's possible and moving our clients' buildings to net zero carbon. If you like, it's a push-pull thing. So we can encourage the clients and show them the absolute possible and the clients need to also want to move down this journey with us, but this is something that we're seeing is increasingly important for our clients. So pulling all of this together, we sit here today with a really, really strong order book and an order book which supports our sustainable growth targets. Our order book is GBP 3.3 billion, 91% of it in the public and regulated sectors. And most importantly, 90% of our work for the new financial year through to June 2022 is already in hand, and more than 60% of our work for the year to June 2023 is already in hand in that order book. And the reason that's important is that gives us great selectivity. Nobody in the business is out chasing work to deliver this year to hit a number because actually, we've already got that level of work secured that we need. Everybody in the business is incentivized around profit and cash and not growing the business with turnover. So the order book is fantastic quality. The order book underpins our margin aspirations as we go forward. And I'm really proud of the level and quality of order book that we sat with at the end of June 2021. So to summarize, and then I will take questions. The year to June 2021 was a great performance ahead of expectations and ahead of our own trajectory for growth. The business has got great foundations to grow going forward. We've got a great outlook, the sectors that we operate in are strong and growing, and we're operating in the sectors which have got real opportunity to deliver sustainable, profitable growth for us going forward. And that's given us the opportunity to set out the ambitious but achievable targets through to 2026. So with that, I'm very happy to take any questions.

[Operator Instructions] Andrew, I wonder if you'd be so kind to open the Q&A tab. You'll see investors have submitted a number of questions. There was one, I think, that was pre-submitted as well that I've just thrown into the mix for you as well. If you'd be so kind to read out the questions and give a response where it's appropriate to do so, and I'll pick up from you at the end.

Okay. I will. So let me start with the pre-submitted question. So please, can you explain how the PFI portfolio works in a bit more detail? And in particular, comment on cash flow valuation and returns each year. And secondly, the resource statements mentioned an GBP 11.8 million loss, is at an error? Well, let me deal with slide error. Let me deal with the second part. First of all, the GBP 11.8 million is not just PPP. That was a combination of our PPP division, which made an operating loss of GBP 1.8 million and our central costs, which were GBP 10 million in the year. So our PPP portfolio is largely PFI and NPD in Scotland assets. There's a portfolio of probably 12 or more assets in there, which we've valued at a blended discount rate of 7%. That is a discount rate which I think is appropriate, but on the conservative side. There is a real active secondary market for these assets. So we could sell these assets in the market if we so choose, but we see good value in holding them, and those assets returned GBP 3.9 million of interest in the year just finished. So if you like, about a 9% return on the fair value that we've got on the balance sheet. So a very good return. The PPP division itself operates -- it supports our co-development work in PRS and some other big work, and so the operating loss it made is a function of the cost of managing the portfolio and doing some of that big work. And it does go up and down a little bit each year depending on when we get big success fees in. So it's always a little bit lumpy in terms of the income. But that's where the PPP as -- that interesting income, I should say, there's a question on cash flows. That interest income is cash interest income each year. So that's a genuine interest which goes into my EPS and, obviously, into my dividend calculation. The next question, very topical, is from Ben. It says, how are you managing costs, especially in relation to the much publicized inflation rises in materials and payroll? And will cost inflation impact our thin operating margins? And how will we manage this? So this is a very topical question. It's one that we get a lot at the moment. And I can say at the moment, the materials inflation and the variability has had no significant impact on our operations. No significant impact on our margins at all. So we're not immune, obviously, to inflation, but the way that we operate this is really twofold. So firstly, is by working very closely with our supply chain. And secondly, it's about how we tender for projects. So all of our work when we tender it, we tender on current prices, and we allow an allowance for inflation. So if it's a 12-month job or a 24-month job, we'll allow inflation accordingly. And to the extent there are significant elements of the job. So for example, say a large part of the project with steel or steel framed buildings. Then on the day that we signed the contract with the client, we'll also look to sign the contract with our steel frame provider to lock in the price of the steel and also guarantee our availability slot. So we manage inflation that way. And obviously, as we price each new job, then we take in current pricing and current inflation into account. In terms of availability, again, we've not had any significant impacts of the availability challenges. But what we have been doing is procuring early. So whereas previously, we may have looked at a 3-month lead time, we may be now looking at a 6-month or a 9-month lead time. So as an example, I was on a site in Liverpool a couple of weeks ago. The site has got quite a big space in the car park and they were preordering materials earlier than they would probably have done a year ago. They had space to store those on-site that we can make sure that we've got the material on site, but we don't affect the program. So that's how we manage this. So at the moment, as I say, we are managing it very carefully, but it is manageable because of the way we structure our contracts and the way that we procure materials. Actually, a similar question about supply chain issues, which I think is the same question. The next question, great results. So that's very kind, thank you. Given the strength of the balance sheet, how big a part does M&A play in our strategy moving forwards? So we set out the strategy of the growth to GBP 1.6 billion and 3% operating margin. We can see a route to do that organically. We think we can do that without M&A. But equally, we think there is opportunity for some bolt-on M&A to accelerate that growth, to accelerate and expand our capabilities. So M&A is something which is, in our mind, something that we may well do as part of our growing to that strategic objectives. But what we'll do is look at M&A, which as I say, is helping our capabilities, helping develop into adjacent markets while helping accelerate those growth plans. So if you like, it's M&A, which is supportive of the strategy, which I've outlined as opposed to M&A kind of as a separate strategy in its own right. But we do think there are opportunities to do some bolt-on M&A. Do you think that the economics of air source heat pumps stack up for buildings of the future? So -- We're increasingly seeing -- this is a question for Mike. So we're increasingly seeing the use of air source and ground source heat pumps, let's say, on schools. We're doing a refurbishment in Bishopsgate at the moment, which is moving to air source heat pumps. So I think it does stack up. I think it stacks up probably easier for commercial properties or schools where you have an owner who's going to be owning that for the duration of -- or long period of the asset's life, so they can look at the combination of -- from capital cost and in-year cost of running the building. I think it probably works easier in those than it would do in -- and we don't do private housing. But for example, in private housing, where perhaps there is more need to have the kind of more equilibrium of the initial cost base. So I think we are seeing it increasingly, something which is helping our clients both into the new build, and let's say in terms of green retrofit. So -- and I think, increasingly, clients are understanding this, look at the whole life cost as opposed to just capital cost. That's an increasingly important part of what they're doing. So next question, what is the company's strategy towards potential new acquisitions to grow in key markets? And do we have sufficient capital to support growth through new acquisitions without additional fundraising? So this is very similar to the previous question. So our strategy is to look at M&A where it is appropriate, where it supports that growth strategy, say, whether it's the capabilities or the market expertise, it may be geography, which supports the growth strategy. Clearly, the funding of that would depend on the particular circumstances, quite hard to generalize, but there are some bolt-on acquisitions that I think we could certainly do without additional fundraising. But obviously, the precise nature of that would depend on the individual opportunity that we're looking at. The next question. You mentioned adjacent markets, PRS, green retrofit, water. How big a market opportunity do you see here? And how do you look to replace the competition? And which one provides the greatest opportunity? Okay. So that's -- so a few parts to that question. Simon, if I may just kind of unpick the different pieces. So I think, what we've seen sort of growing towards that GBP 1.6 billion by 2026, probably sort of half of that growth will be just by doing more of what we already do. And certainly, that part of the growth will be in the earlier part of the 5-year period. And then sort of half of the growth is probably by moving into these adjacent markets, and we'll be, by necessity, a little bit more back-end loaded just because of the types. So for example, in water, we operate in these 5-year cycles in England. We see more opportunities probably towards the back end of the AMP 7, moving into the AMP 7 cycle. In PRS, there is quite a long gestation period. So in PRS, we do have some schemes and we've got 2 schemes already at a preferred bidder, one by Cardiff, for example, going through the planning process. So this is a market which we are -- we've already done the groundwork in. We've appointed advisers to help us find more sites because actually, what we need is a slightly bigger pipeline. So as these things work through the planning process, we've got a constant stream coming through into the construction phase. And of course, all of these we're going to construct with forward-funded position. So it's with a client in place. So again, I think the PRS will grow towards the back end of the period. But that is a real big market opportunity. So PRS is probably a bit like student accommodation, which again is a market we operate in, a bit like student accommodation was probably 5 or 10 years ago. I think I'm right to say that the single biggest PRS landlord in the U.K. hit something like 1% of the market share. So it's a hugely fragmented market. At the moment, rentals is largely driven by people with 1 or 2 properties as opposed to big professional landlords. And so we see this market really growing. So I don't think it's so much about replacing the competition as this is a market which -- where we see the market opportunity will grow. We're already well placed because we already built PRS schemes. We're doing a 665 unit scheme in Leeds at the moment. And so this is about just moving into -- moving further into the value chain of that process. So I think, for sure, PRS is a market -- a big market opportunity. It's not so much about replacing competition. It's about growing into this growing market. And I think green retrofit is very similar. So we already do, as I say, that green -- or green work in our FM portfolio and our facilities management portfolio, we already have a business which does dry lining. And actually, so it's a sort of short hop to expand that capability, but this is a market which we see growing. And so as opposed to having to take market share, we think this is a market which will grow significantly in the next few years because unless you were to take down and rebuild -- most of the U.K. built environment will stay in place. And so for the U.K. to reduce the carbon footprint of its built environment, it needs to go in and take out single glazing and put in triple glazing. It needs to say, change the ventilation, change the heating mechanism change the lights, fittings and so on and so forth. So this is all about a growing market that we are very well placed to serve. So I think what we see is great opportunity, but it's not as kind of zero sum game , this is an opportunity where the markets are there to support that growth. So moving on to -- next question is from Mark. Please can you update us on the disputed contract claims, been going on for a while. Any closer to a resolution? So what Mark is referring to is -- and we've been quite open in our full year results statements. It's -- and as Mark alluded to, probably for the last 2 or 3 reporting cycles. We have 3 contracts, all with a single client, which are going through the arbitration process at the moment. These are contracts where we are no longer on site, so we're not incurring money other than obviously a bit of legal fees. So these are contracts where we expect to make a recovery. The arbitration process is slow. We've probably been going through the process for, I'm guessing, sort of 18 months already. There's probably another 18 months or so for that process to run. Of course, there's no need for that process necessarily to run all the way through to the end, but that's the kind of time table, which is in place if we were to run through to the end of the arbitration process. That -- the recovery of those -- of that claim is not included in our forecast for the strategy period to 2026, not because we're not confident of our position, but because it wouldn't be prudent for me in terms of quantum or timing to know how much to include in our strategy plan. So Mark, that claim is ongoing. It's progressing, as I'm afraid the arbitration process is not a fast process, which is why that will continue for a number of months yet.

Andrew, I might just jump in, seeing as so far, every question that's coming from investors, you've very kindly given a response to. And thank you to all those investors that have submitted questions. It may be an opportune time given that there are no questions outstanding at the moment that perhaps I could hand back to you. I know investor feedback is important, we should certainly be redirecting investors to provide you feedback very shortly. But before doing so, I wonder if you could have a few closing comments.

Yes. See, well, Mark, really appreciate you giving me the opportunity, and thank you to everybody who's asked a question. So hopefully, I answered those as fully as possible. Just really to reprise where we are. We've -- great foundation set from the previous strategy and from the year to June 2021 was one which was an excellent operational performance, delivered financial results ahead of target, which is always very helpful. As I sit here today, we've got a great order book and a really great pipeline of work. Our markets are really supportive. So there's a real great outlook for the markets that we operate in and some of these markets are growing as we spent time talking about. And so we're very confident with this strategy we've put in place through to 2026. We think this is appropriate both in terms of being socially responsible and in terms of giving great sustainable financial returns to our shareholders. So we sit here very happy with where we're sat and really pleased with the outlook. So really, Mark, that's the summary of the position. So thank you for -- thank you again for taking the time to listen to it this afternoon.

Andrew, thank you, and thank you for updating investors this afternoon. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the management team. On behalf of the team at Galliford Try Holdings, we'd like to thank you very much for attending today's presentation. That now concludes today's session. Thank you for your time, and good afternoon to you all.