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

Good morning, ladies and gentlemen, and welcome to the Galliford Try Holdings Plc Full Year Results Investor Presentation. [Operator Instructions] 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 we'll publish our responses where it's appropriate to do so. And before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Galliford Try Holdings, Bill. Good morning, sir.

Thank you, Jake. Good morning, everybody. Thank you for joining. I'm Bill Hocking, Chief Exec, and I'm here with Kris Hampson, our new CFO, we will hear from Kris in a minute. So I'll start off with the highlights, and then Kris will take us through tenders in a bit more detail, then I'll give a bit of an update on the strategy. So yes, you have the highlights for the year. We've had a really, really good year, everyone. Revenue, GBP 1.8 billion, which is up 27% on the previous year. There are some reasons for that revenue growth, which I'll come back to in a minute. As a result of that, we've raised our operating margins to 2.5% on route to our original target of 3% in 2026 and our new target of 4% in 2030. But just for everyone's clarity, we are still aiming at 3% to '26 as a way mark along the way to 4% in '30. So a really good performance on PBT level, GBP 32.7 million, up 40% in the previous year and a really good dividend of 15.5p for the whole year, up 48% in the previous year. So lots of happy shareholders out there. Kris will talk about cash and so on, and I've used GBP 10 million share buyback, which we announced last week. The order book is in a really good state of GBP 3.8 billion, up GBP 100 million in the previous period last year. And again, I'll go into that in a bit more detail later on in the presentation. Just going back to that GBP 1.8 billion revenue number. We had good underlying revenue growth in the euro, and that was augmented by two things. Firstly, if you cast your mind back to back into 2022, the mini budget and sort of [indiscernible] followed that and inflation spike that followed that. Through that period, we were very, very disciplined in not taking on work until we knew that we had protection against inflation or would properly price it and things like that. So we held off and that produced a bit of a [indiscernible] awards in that period. And so part of the growth over and above the good underlying growth last year was that work coming through, because it also fell into place early '23 now, and it's washing through now. So that was one reason. Another reason was a really good year in AMP7 in water. So we'll go to water in a bit more detail later in the presentation. But obviously, as you've all seen, there's an awful lot going on water at the moment. So a really, really good start to our 2030 strategy, really strong year, and over to Kris for a bit more detail on the numbers. Thanks, Kris.

Thank you, Bill, and it's really nice to be here. Had a great welcome from everyone to the company. So let me take you into the numbers and to little bit more detail. We'll start with the segmental analysis. So as Bill said, really strong year of revenue growth, up 27% to GBP 1.73 billion. So really a strong growth. Building grew by 17.7% and infrastructure by 38.8% for those reasons that Bill just pointed out, strong underlying growth and those two tailwinds helping us along. Investments grew strongly. We completed the financial close, our first per scheme in Cardiff. So that was very helpful on the investment revenue as well. Moving to profits. You can see that we grew profits in line. Each of the divisions growing two big divisions, building infrastructure, growing their profits in line with their revenues. Investments moved backwards slightly from plus 4.4% to minus 1%. There was a onetime GBP 3.6 million JV disposal in the prior year. Our investments portfolio and interest has an annuity income of about GBP 3.8 million. It is worth pointing that, that falls into the interest line, so below operating profit. But if you add that back in, the investments makes profit overall. Central overheads slightly up in line with revenue. So in terms of margins, I think we're pointing out a really strong performance from building, moving its performance forward 23 basis points. Infrastructure held it flat. It made good gains last year, held them this year. There were a couple of projects that were delayed, which held the margin back from improving. But overall, the group margins moved forward by 13 basis points, which is a good step forward. So from my point of view, it's a relatively new starter. It's worth saying that we grew revenues by 27% profits followed and margin accretion. The margin accretion comes from two points good operational cost control and also from our robust risk framework and contract selection model. With Bill and the team have been very tight on that. I'm sure you've heard about it before, but just fundamentally, we choose where to play and where not to play, where we understand the risks and where we can manage and mitigate those risks and price for all those risks. And if you do that, then it comes down to execution risk, and the team have executed brilliantly, as you can see to drive revenues and margins forward. Worth just touching on the left-hand side, exceptional costs in the period of GBP 2.6 million, those exceptional costs we reported at the half year relating to the implementation of our digital strategy, the ERP system that we've implemented. That is now complete. There were no further exceptional costs in H2, and we expect no further exceptional costs relating to that investment going forward. Pleased to say we've reported our numbers on the ERP system. So that's always a good measure of success and we're now moving forward into the optimization phase of that, where we try and [ sweat ] that asset for what it's worth. I would just point out. Not on the slide, but tax rate, 14.6%. We have some onetime deferred tax asset gains in the year. We expect the tax rate to normalize going forward. And we also had -- we treated an exceptional GBP 9.6 million corporation tax refund relating to 2019. We had a confirmation of that alongside associated interest of GBP 0.8 million confirmation of that in June. So we booked that as an exceptional credit in June. The cash was received during the month of August. So just to be clear, we booked the gain in the period as exceptional, but the cash was received in the '24, '25 financial year. Now if I move on to the next slide, you will see effectively two bridges on the right. I will just pick the bones out of that. The top one is the profit chart, you can see last year, we had the JV gain, as I mentioned earlier. So if you take that, the ongoing profit in 2023, it was about GBP 18 million. We grew GBP 9 million from the volume flow through at the prior year margins. The operational leverage delivered another GBP 2.2 million. So effectively an extra -- just slightly more than 10% extra profit in the year. And then we completed the acquisition of ABRs in quarter 4 of 2023. That was profit and margin accretive in the period, and that drove the operating margin up to GBP 29.6 million. If you move to the chart below, what's really pleasing to see is that we turn that profit of GBP 29.6 million into cash from operating activities of GBP 33 million. So more than pound-for-pound cash conversion to operating profit. So again, just to repeat that point, we've grown revenues. We've grown profits, we've grown margins and we've turned that into cash in the period. As a result of tight cash management, our month and cash -- average month end cash flow has risen from GBP 135 million to GBP 155 million, that's roughly 15%. And that tight cash management can be seen in the working capital movement of plus GBP 7 million. That comes from two points really that tight monthly focus on this, which is absolutely critical. And secondly, as you grow, you get some payments on account and that helps drive working capital forward, there's GBP 7 million there at GBP 3 million net of interest and tax, stronger cash balances in this strong high interest environment allows us to generate interest returns. So that net GBP 3 million which, in our view, effectively funded the GBP 2.6 million for the digital ERP implementation in the period. So those two nets are. Then we returned GBP 29 million. So we've generated GBP 30 million of profit, GBP 33 million of operating cash, and we returned GBP 29 million. The GBP 29 million is broadly made up of the normal dividends of a growing dividend in the period, on the growing profits. You'll remember, we announced a policy last year of 1.8x cover. So that's the dividend in there. So we paid that dividend. We also paid a GBP 12 million special dividend on the sixth of October 2023, in relation to a claim we've successfully received. And then during the period, we completed the 2022 share buyback of GBP 15 million, about GBP 5 million in the period. So that adds up to GBP 29 million. To the right, we spent a couple of million pounds on share purchases for employee benefit trusts and so on. And then there's a net of the GBP 4 million cash consideration of AVRs, offset GBP 2 million for the disposal of Rock and [indiscernible] that moved the overall year-end cash from GBP 220 million to GBP 227 million. Worth pointing out just a couple of points. Also, we have no bank debt at all. So clear of any bank debt, and we have no pension liabilities. So in reality, we show a net cash balance on the balance sheet, and we're in a great position. We have a PPP portfolio. I mentioned the investment annuity income earlier. That's -- we have an asset of GBP 41.8 million. It's a very liquid asset if we needed to dispose of it, we could, but it generates roughly 10%. So it's very strong for us, and that's where we keep it. However, we do return all of that GBP 3.8 million to shareholders each year. So our dividend is broadly made up of the annuity income from the PPP portfolio, plus about half of our operating profits. I think just the other point worth making really in a year where we've implemented an ERP system, which is always very, very big project. We have managed to continue to pay our suppliers on time, 96% of invoices paid within 60 days and 26 average days to pay. The strong balance sheet we have is really, really crucial. It's crucial to our customers. I'm sure Bill will talk about or we'll have a question at some point on ISG and so on, but it's very critical to our customers that they know they have a supplier who can -- they can deliver the project on time, it's also very critical to our supply chain. Suppliers want to work for customers who will pay them. And I think we can demonstrate repetitively that we do pay them, and we pay them on time and in full. So a really strong cash message, a really strong balance sheet. We've got the ERP system in place now that is working, and that's a really big foundation block for us to go forward towards our 2030 targets of GBP 2.2 million of revenue and 4% divisional operating margin. In terms of capital allocation, I guess, really two or three points very quick points to -- one, as a new CFO, I'm going to confirm that we are not changing our capital allocation policy as we go forward to 2030. So no big change there. You'll be pleased to know. And I think as you look across the three boxes below, we have that sustainable dividend policy at 1.8x cover, which is very strong in the industry. And we also allocate in other ways. We invest in businesses. We bought four businesses over the last few years, generating north of GBP 120 million of revenue per year. Those are in our specialists services businesses, the higher-margin businesses that we're moving towards, and Bill will tell you more about that. And then where we have excess cash, and just a reminder, our definition of excess cash, we expect to have average month and cash in the tram lines of least 12% of annual revenues, at 9% at year-end. But where we have excess cash, we will return that. And worth pointing out that we have just announced a second share buyback of GBP 10 million maximum, that GBP 10 million broadly equates to the corporation tax refund that I referenced earlier. And so in the last 3 years, we will have done two share buybacks and on special dividend that I also mentioned earlier. So you have a clear picture of our capital allocation model, and we prefer to invest it for growth where we can, but where we can't and where we have excess cash, we will return it to Iris share buyback or a special dividend. So a very clear message on capital allocation. And we're saying we're going to be as robust about our capital allocation as we are about our contract selection model. So I think those will be the key points I'd make. And I think, Bill, at that point, it back to you to talk about how the strategy and how the engine works.

Great. Thank you, Kris. Okay, everyone. So on the left-hand side here is the philosophy of how we run the business. So we start in the middle there with 4,200 really good people. And on the left -- [indiscernible] from the left, we embed a culture and very strong processes around risk awareness. So how to go selectivity, and what we do and what we don't do, as Kris said earlier on, clients who work for the ones who don't work all that sort of thing. Over time, it becomes a culture, as I've said, and actually, just to reinforce that the incentive mechanism Galliford try do not include revenue. So our incentives are about profit, they're about cash, about ESG measures. There's not a single revenue incentive in Galliford Try, because it can drive the wrong behaviors. So that process, that culture then leads to a very high-quality order book with sensible clients, central terms conditions in the right geography with the right people with the right supply chain, et cetera, et cetera. And what that means is that we deliver our projects consistently and predictably, and we make the profits that we expect to make generate cash we expect to generate. That strengthens our already strong balance sheet and so the real terms. And if you go back to the sort of link between selectivity and our balance sheet, when you've got a very strong balance sheet and a very good order book, you don't need to go scrambling around, taking on work that you're going to regret later. And that's a really, really important thing to bear in mind for any construction company. Having the discipline not to take on work you're going to regret later, and we're very, very good at that. Then of course, on the right-hand side, I've talked about the top bit, but then we have very robust commercial control reporting through the tenancy of our projects. The strategy through 2030 is simplicity is made up of of three main strands on the left there: The first one is to grow our big revenue generators, building infrastructure and environment. So building is schools and defense establishments and health establishments, prisons, things like that. And infrastructure is mainly highways at the moment, an environment is mainly water, water and wastewater, which, of course, is very topical at the moment. I'm sure we'll comment that later. So the simple plan is to grow revenue and margin in the three core businesses through to 2030. And then simultaneous with that, grow our specialist businesses in higher-margin adjacent markets. So we have 8 specialist businesses now. We have 4 in the water industry that we've acquired over the last couple of years. And all of those are either in capital maintenance and asset optimization in the water industry or in manufacture of 3 high tech [indiscernible] for the water industry. The more building-oriented ones are in [ FM]. They're in security, high-tech aspects of security and in fire-related issues like fire doors and facade remedial and things like that. And so these businesses are fairly small at the moment. We've been sort of incubating them over the last few years. They're going to grow up to critical mass over the period and at the sort of -- to further out towards the back of the strategy period, these businesses will be coming of age and producing those higher margins to augment the margins in the big revenue-generating businesses. In that look like is to reenter the affordable homes market. So when we sold our housebuilding operations back in 2020, there was a restrictive covenant on affordable homes. That covenant came to an end last year and so we're going back into this market because it's a very big and it's a very attractive market. Our definition of affordable homes, just to be perfectly clear, is that it's sort of mid-rise blocks or flat for consoles and for residential providers and so on. It's not houses per se. So that's really important to understand that. So this isn't a quick fix, obviously. We need to reestablish ourselves at the construction side of it we have in Spain. But we've got a news team now that's reestablishing our relationships with our prospective clients. getting on to your frameworks. We won four good frameworks positions on four good frameworks now, and we have to start to bid and win on those frameworks which means the revenues through the stream will also be fairly back-end loaded. It's if you want a job today, then it's designed for 6 months or so and then build it is going to take a further 18 months, 2 years. So it is a few years before we start to see revenues start to come through the Affordable Homes stream. Then when you put all that together, we cover the whole country. We have offices for [indiscernible] and all points in between. So we can leverage that geography, that enormous framework presence through all our public sector, regulated center and private sector clients, and we can sell and cross-sell more Galliford Try services to those clients. And all that, of course, then continues to generate those shareholder returns. The same strategy in a bit more detail just about what we really concentrate on. So if I start on the top left there, we spend a huge amount of time on people making sure that we retain our 4,200 good people, and we attract more good people to the company to sustain our growth. We've taken about 150 young people every year, Kris and I actually went to the welcoming ceremony the other day. And it's a really, really good day out, about half graduates and half trainees and apprentices. And as I said, to general who listen it's my favorite of the year, the energy and enthusiasm in that dream is tangible and it really -- for me anyway, I'm not looking to patronize anybody who restores your faith in young people that we've got some absolutely brilliant young people coming through. And of course, we do that every year and these people are coming through the business and doing really well. Huge focus on health and safety, as you'd expect from any responsible construction company. and our AFR accident frequency rate is down at 0.04, which is less than half of last year and certainly in the top few in the construction industry. But nevertheless, we'll never be happy until that is zero, and we work very, very hard to make that zero. On the right-hand side there, everything we do, we try to do in a responsible manner. So we've got our carbon targets, Scope 1 and 2 through to 2030. So that's area in 2030. To be fair, that's the easier of the targets. The big ones, of course, are embedded carbon, mainly in steel and concrete and things like that. And our target was a net zero is 2045. So we spend a lot of time on that. And actually, when you go back to what's good for your business in terms of ESG. Actually, when you look at driving carbon out of projects, you're driving cost out to driving program out, you're driving quantities of materials out. So it's a good driver of efficiency as well. And then, of course, in the communities in which we operate, we employ local people as best we can. We procure goods and services through the local companies as best we can. And that's really important to us and to our clients. On the bottom right-hand side there, we look to improve the quality of what we deliver through using modern massive construction, more digital tools so we can design a building in virtual reality and build a [indiscernible] in virtual reality before we go into it in anger. And that means that we do it right first time. We spend less time and money on rework and things like that, and the quality is better. We do more construction in factories now, of course, and bolt them together on sites, which also adds to that. We've got a good supply chain. We treat our supply chain well. As Kris said, we pay them on the button. And we've got an additional called advance through alignment where they can get access to our training to our pipeline, all those sorts of things. So we try to help our supply chain. And of course, having a really good supply chain is important because a high view of what we do is delivered through the supply chain. And as Kris said, a strong balance sheet is very, very important to our clients and to our supply chain, of course, to our people, as we go through this. So that's it. And when we get all that together, of course, we continue that nice trend of growing revenues and profits through the business. So here, just a few of the drivers of revenue growth. Obviously, apart from the slide, all we've got to do is drive around the country looking around, and you can see the extent of the issue. So a huge amount of the infrastructure in this country is old, and it's struggling to maintain its use under the pressure of growing population, a lot of change in climate change, the intensity of rainfall and all these things making some of -- or what we built in the past really no longer fit for purpose. And the good thing for us is that everything -- all the sectors we in address this issue. So those are the drivers of revenue growth as well as, of course, for us, expansion into Jason Marks, which I'd spend a minute ago. Drives the margin growth. The most important two there on the left-hand side, I've discussed those really, I suppose, clients, I think one thing that the market still misses in the construction industry or the listed construction industry anyway, is that clients have changed their attitude to procurement significantly over the last sort of 4 or 5 years now. The construction playbook really started to change this in some -- and it was produced in 2020. We and all of our competitors would have been a consultant, of course. And the playbook basically just moves the owners on procurement from the big public sector clients from price to quality essentially. So we will allow work place predominantly on quality now. And by quality, we mean the quality of our people, the quality of our balance sheet, the quality of reputation, our specific proposals, our carbon credentials our safety credentials, all of those things come into the quality aspect and then commercial will be an element of price, element again of supply chain, payment terms, balance sheet, et cetera, et cetera. And when you marry that attitude to the attitude of all the Tier 1s in my view now, where all of them are being far more selective about what we do and not doing silly things. That means that the whole industry is moving in the right direction. And that's exactly what we want. So those two left-hand boxes, I think, are the main driver. And then that's augmented by the things I spoke a little bit about offsite construction, modernistic construction, digital tools, things like that. That will help us to drive margin growth. Then on the right-hand side there, we've got our higher-margin businesses being margin accretive at the back end of the strategy period. And as the business grows, of course, our overhead leverage gets better. So here, the slide that just shows how we work. On the right-hand side there, you see a typical example. This is a real example, actually, of our clients scoring criteria. So that's the some thing that they look at, in terms of quality. And we regularly now win work from the most expensive price because we're the best on quality. And so it is working. On the left-hand side there, you can see that 99% of everything we do, is procured through some sort of negotiated position. So in the white, the 43%, that's all in building, public sector building. And what happens there is when you're on a framework, there's even some sort of quality driven many competition between typically two of the companies in the framework. So it's not a commercial competition or in some point, it's just a direct award. It's just we [indiscernible] to negotiate pricing on. So in that environment, you -- there is no competition, you build up the design, you build up the price for the scheme, which includes, of course, allowances for risk and inflation and market and all those things. But -- and then that -- in that sector, it becomes a lump sum fixed price at that point, and we're very happy with that. In the gray, it's just pure negotiating when clients pen us up and just say, can we build the source, please. We negotiate the price we do. And then in the red, that's all in the water industry in the highways industry, those are target cost reimbursement projects. So again, in water, once you're into a framework, you typically have a geographical patch and you do all of the work in that patch. There is no competition. The client pays us to design the schemes. We build up to target price. It's slightly different, because it is a target price. Again, it includes inflation and risk and all those things. And then when you go to build that scheme or water waste for a treatment plant, you get paid your actual cost plus your fee against the target. And if you bring the project in below the target, you share the gains and if you bring the targeting above the project and above the target that you share the pain. So it's a very good set of terms and conditions in terms of making sure that people work together to mitigate issues that might arise and keep the -- keeps the project below the target price. And even if you go above the target price, it dilutes your margins as opposed to producing a loss-making project. So it's a very good way of working. And that's all of our work in water and in infrastructure is done on that basis. So the order book of GBP 2.8 billion, GBP 100 million up from last year. And you can see where it is on the left-hand side there. Typically, 90-10 for our figures in terms of public and e-related versus private. And the private sector clients we work for are all clients revert for a long time and have sensible terms, conditions and things like that, and that's why we work with them. And you see there, we came into this year at certain end of June numbers with 92% secured, and 70% already secured for the following year. And I see there are some questions which I'll come back to on that. So a really good position in the order book and everything in there, high-quality work that we can execute with a high degree of confidence every day of the week. So here is just a sort of visual representation of some of the frameworks we have. We've got every firm we want to be on, we are on pretty much. And then you can see there that, that gives us great visibility for donkeys out into the future. And often, of course, these frameworks are renewed as they go, that's the light green color, and we have a high success rate in winning positions on new firms as we go through. If you take the second one down environment there as you [indiscernible] the S21 is the Scottish equivalent. And on that side, you just see two bars going out to 2030. Well, that probably goes out to 2035, in the first phase. But when you look behind those, this is what we've actually got in water. So we work for every single of the major water companies. We've got 54 live frameworks. Some of them will be AMP7, which will vote off over the next few years while [indiscernible] ramps up, of course. 21 of them in the big line of build frameworks. But going back to those specialist business I spoke about, and some of our acquisitions, we're establishing a really good footprint in the capital maintenance, asset optimization side which is in the white there and in the water technologies, the high-tech take we sell into the water industry in the gray. So we're making good progress in establishing our presence in these adjacent markets, higher-margin adjacent markets that we want to expand into. And that's what the picture sits behind lots of those other green bars you see there as well. Just a comment on ESG here. So I'll just pick a few of our ESG measures. But the main point, everyone is that, our ESG measures are so through the fabric of the business. We do them whether we had to report them or not, it makes a difference. All of our measures help us be a better business, help us be a green and a more efficient born-inclusive employer, all of those sorts of things. And then, of course, good people want to work for good inclusive green responsible companies. So I'll pick out a few of these. 92% of our cars, we've got about 2,000 company cars now. And a few years ago, we decided that we just -- we'd only buy or lease a pure electrical plug-in hybrids from that time. And so as the leases, of course, are renewed all the cars come out of the fleet are very low carbon and I think average carbon per kilometer is done something like 15 grams, which is very, very good. So that's just a good example of how you can take a fairly straightforward decision really and drive carbon out of the business. Accident frequency rate, I spoke about safety. So that 0.04 is very good compared to the industry. But as I said, we will not be happy until that 0 and we work very hard to make that 0. We do a staff survey every year and very pleased that 87% of our employees are strong evidence of the business, which is really important. And I talked about all those young people. Last year, we were #1 for graduates and #2 for appendices of this year. We're #1 for apprentices the #2 graduates. So that's fine. I'll take either of those. So those are just a snapshot. In the appendix to our main presentation, there's a much cooler a list of all the ESG measures that we measure ourselves against. So in summary, everyone, before we move on to questions, we're in very, very good shape. We had a cracking year last year. We've had a really good start to this year. Typically, as you come into a year with a political change or a new government, we'll see a bit of a hiatus. This year, to be fair, we've seen absolutely nothing that was helped by a fairly short process in the first place, of course, but often a new government will come in and then just put their foot in the board for a while and decide where to spend the money. We've seen none of that so far. It's certainly in terms of justice, in terms of education and defense, it's just been business usual, just [indiscernible]. So that's been really good to see. And another thing where we've had a really good start this year is, we are on so a bit of a transition through the amps in water, and we've not really seen that yet. There hasn't been a time yet to go, but so far so good. So really good position everyone, a great bunch of people, great order book, great balance sheet and a very, very good outlook. So thank you. That concludes the summary.

Perfect. Bill, Kris, if I may just jump back in there. [Operator Instructions]. I'd just like to remind you that a recording of this presentation Along with the [indiscernible] slides and the published Q&A can all be accessed via invested dashboard. Bill, Kris, as you can see there, we have received a number of questions throughout your presentation this morning. I thank you to all of those on the call for taking the time to submit their questions. But [indiscernible] point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great.

Great. Thanks, Jake. Kris, do you want to take the first one?

Yes. First question from Gary. Thank you very much Gary. The question was what drove the decision to implement the buyback at this stage and how to balance this with other potential uses of capital such as organic growth, or M&A opportunities. So I think there's a couple of -- three points I'd make on that one. What I talked to her about the tram lines that we have, the 8% to 12% of annualized revenue. So that's how we see our definition of the amount of cash we should have. At year-end, we were 9%. So average month-end cash of GBP 155 million is just about 9% of our revenue of GBP 1.7 billion. So we were comfortable within our tram lines. If you sort of take that position and you consider how strong our cash conversion was during the period, we took the profits are of about GBP 30 million and turn it into operating cash flow of about GBP 30 million as well. So we have strong pressure see the cash refund for the corporation tax. Our view was well, that feels one time in nature. It feels like something that we should have returned to shareholders some period of time ago. We were comfortably in our trend lines bearing in mind that of GBP 1.8 million of revenue is a much bigger number than 9% of our previous revenue, GBP 1.4 billion. So we are comfortable in that. And our view is in reality, if we continue with our strong robust risk framework and strong operational framework, we will generate the sort of same GBP 10 million in about 5 or 6 months. So by the half year, we would have generated that cash anyway. So our view was it felt like excess cash. As we have in the past, we've done special dividends and share buybacks -- our view was this time the share buyback made more sense. It builds more strength in the balance sheet, more firepower on the balance sheet, should we ever wish to do. A bigger M&A, and we needed to issue share capital over the last 2 share buybacks, we bought back 10% of the share capital, 7% last time. On the share price, it was sort of circa 170, 3% this time on share price -- so our view is value is in great shape. This felt one time. We were comfortable within our trend lines, and we feel like we're going to continue to generate cash. We're working on acquisitions. You will see we've done four. So we have a good track record of that. And all acquisitions will be considered in the light of our strategic hurdles, and Bill has talked about where the targets are going and hitting the higher margins. So we're not going to chase revenue. We're not going to chase volume. We don't need to do that. So it needs to pass the strategic [ hurdle ] and then, of course, it needs to pass the capital allocation hurdle. Does it make accretive returns to us. If it doesn't, we shouldn't spend our money there. So we've got a very clear view of capital allocation, a very clear view of when and where we'll do acquisitions. So if you consider all those elements, the share buyback made the most sense at this point in time, and that's why we put it out.

Thanks, Kris. I'll just add as well there that it's quite a strange market out there, at the moment. Our acquisitions, as Kris said, are likely to be bolt-ons. And there's a bit of a rush for the door for the end of October going on at the moment. So we're not going to be pushed in terms of a time limitation on due diligence. So I think we'll just let the dust settle and go back in the common sense returns. So Rob, question, Rob, you reference a 92% of full year '25 revenue unsecured. Yes. Could you provide some more [indiscernible] the sectors and the visibility beyond '25 and how are you managing any potential risks to these contracts? Can I go back to that slide. So Rob, you can see the sectors there. So the biggest sector by some environment, which is water at GBP 905 million, and then highways at GBP 640 million. And then most of the building ones are fairly close, I suppose, education, 634 defense, 437 custodial [indiscernible] 29. The interesting one there and in commercial, 18. You'll see the FM order book at GBP 324 million. That's a sort of long, slow burn order book, all their projects are sort of 10 years in duration. So that's quite a slow burn order book. The visibility beyond '25, if I go into the framework slide there, we've got great visibility beyond '25 through the framework. So we might not know exactly which school we're going to be building starting -- well, in '25, we call will now by the way, but in '26, '27, but we will know based on the geographical presence we have around the country and where the schools are, we will know that we'd likely be building a few schools here and there. I mean, typically, we're building something like 35 schools somewhere in the country in some stage of the evolution at any time, for example. So we get really good visibility through, a long way into the future and actually water visibility years into the future. And then your comment about managing risk on these contracts. Bear in mind that whilst these frameworks as to 5 years, we price every project on its own merits at the time. So if you price something now, we're looking at inflation now. We're looking at risk now. And if we're pricing something in 2026 or 2027, we'll be doing the same thing. So everything we do is priced on current pricing. And so all we ever looking at really to the 10 of our projects for inflation, for example, is a differentiation between -- or the difference between what we thought would happen to inflation, what's actually happening, which is we're normally pretty [ apt in that ]. So I hope that answers that one. Then David. Yes. As you shift from AMP7 a larger unpaid water plan, what measures are being taken to ensure a smooth transition, capitalizing the opportunities in this fashion? Well, I tell you, in my entire career, we've been trying to get the regulator and the water companies to stop the sort of hiatus between amps. And to be fair, we've made steady progress over the AMPs. And so far, a minute ago, so far this year is the newest I've ever seen. Now it's in some way to go, of course, but there's such an enormous backlog of work that the regulators are allowing the companies to sort of merge certain sort earlier and things like that. So it is important for us to keep those sort of resources to grams as stable as we can. With regard to opportunities, well, the AMP is doubling pretty much from 57% to 88% is the latest number. I think it will go up a bit. But the amount of work out there is enormous. The important thing for us is that we're not going to buy more than we can chew. We'll work within the constraints of good people and good suppliers and so on. biting a or you can choose is normally entering it later on. So there's a big opportunity out there, but we will be sensible. We will go strongly in water, but we won't double that's for sure. I hope that answers that question. Then one from Nicolas, the FM business is positioned as a complementary offering within the building segment. Are the plan to scale this further expand the FM business into new regions or sectors? Yes, the FMS is a good business. It's mainly looking after the -- the fabric that we do hard only. We don't do soft [indiscernible] cleaning or cooking or stuff like that. It is Complementary. We can -- so the first thing is what we mainly do now is look of the assets we built in the past. How do we scale it up? Well, there's a few things we can do -- we can offer everything we build, we can offer FM services to our clients, and we do. In many cases, there if you got [indiscernible] they already have frameworks were so it's quite hard to get it. We do some, but there's an opportunity to grow as the frameworks come up for renewal. We offer commercial clients opportunities for sort of soft landing. So in other words, we do the construction for the whatever it takes 2 years, and then we'll look after building for 2 or 3 years after that to just get into steady state. And sometimes, that leads to a longer-term contract and sometimes not. But the biggest opportunity, I think, in FM, the hard part of their FM, of course, is the fact that there's lots of PFI portfolios that are coming to maturity recently and over the next few years. That's the sort of typical 25-year period if you get back to the PFI days, they're all coming to conclusion. So there are packages of work that have been managed by concession companies that are going to come back on to the market in the next few years. And we understand that market because we've [indiscernible] of course, and so we feel well placed to get some more FM work as that evolves, as those packages get handed back. So I hope it answers your question, Nicolas. Peter. Can you expand more on your risk management strategy for contract selection? Can you go back to the slide. We have what we call a heat map. I need to keep this relatively high level, too. And the heat map at its highest level says who is a client -- have the sensible terms and conditions, can they pay -- do we have the people? Do we have the supply chain? Is it in the right geography? You might think geographies are something to say in the U.K., but -- for example, I've got nothing against the middle of Wales also, but we don't have any presence in the middle of Wales. So if someone went and said to us, can you go and build something in the middle of Wales, we'd probably say no, we're not the best place people. There'll be better placed contractors for us. We don't have a supply chain, we don't have people there. So, geography does come into the occasion. So at the high level, we have this heat now. And if any one of those triggers goes with regardless of the size of the project, then it will come up to the exact for a discussion about should we or shouldn't we be doing this job. Everything above GBP 25 million comes to exact for a discussion. Even if it's got no red flags. And sometimes it's quite a short discussion. If it's a very standard school in a very standard geography, and we've done -- we do them all the time, then it's going to be a fairly short discussion. And occasionally, something comes through, Peter, where on the face of it, the probably doesn't look very good. So I wouldn't mention the client, but one came through a few years back now, which was glowing red and we couldn't really understand why the management team brought it to us. And it will such a cracking job, but the terms and conditions are unacceptable. And what we did in that case, we went back to the client. And we said, look, it's a nice job in principle, that your terms and conditions are unacceptable. If you change these things, and be more sensible about it, then they'll bid it. And to their credit, they did they change, they heard us. They changed their terms conditions, and we bid it, in that particular instance, we came second actually didn't win the job. But the point is that the risk management process works. So we do those sorts of things at a very high level, that's what we look at, Peter. And then your second question was about adapted labor market challenges. Well, we've always been a real working wage or a real living wage employer, London living wage employer. And so yes, the sort of ripple effect of the minimum wage will rope up a bit. But going back to what I said earlier is that we price everything on current numbers means that there's a very narrow slip of impact there, and it's not going to be significant at all to us. In terms of the changes to the broader labor market in terms of sick pay from day 1 and all those things, we pretty much do most of that already. And I don't anticipate a huge impact. 99.9% of people are sensible and the tiny minority, we'll try to take advantage of it, and you just got to brush that off and move on where [indiscernible]. So I don't think there's going to be much of an impact on our business there. So those are all the questions I can see, Jake.

Absolutely, Bill, because I may just jump back and thank you very much indeed for being said generator time then addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll, of course, make these available to you immediately after the presentation has ended, and just for you to review, to then add any additional responses where it's appropriate to do so. And we'll publish all those responses out on the platform. But Bill, perhaps before really just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments. Just to wrap up with, that would be great.

Yes. Thanks, Jake. I think in summary, we're in really good shape. As I said before, a great bunch of people, very strong order book, a very strong balance sheet and the outlook is phenomenal actually. We've got great positions in water, in roads, in defense and education in Justice. Those are the big markets health, et cetera. And our ability to augment those construction margins through the higher-margin specialist businesses is going to be exciting but over the next few years to continue to grow the big ones and grow the margins but grow this best faster and go to the middle and improve our margins through that boot as well as, of course, getting back into the affordable housing market. So we're very well set. And I think stability in government, regardless of political views will be good for the company. And just as an aside, by the way, labor governments historically have always been better for the construction industry than conservative governments. And I think if the chance does get a bit more headroom in terms of capital spending to invest that will do our industry good as well. So overall, I'm very positive about the future. There's lots of noise out there. But as far as our businesses to concern I think for the broader construction industry, the outlook is very positive over the next decade and more. Thank you very much for joining. Really appreciate it. Take care.

Perfect. That's great. Bill, Kris, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order of the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure be greatly valued by the company. On behalf of the management team of Galliford Try Holdings plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.