Kier Group plc (KIE) Earnings Call Transcript & Summary

Okay. Good morning, everyone, and thank you for joining us here today, and thank you for so many of you joining us in person. It's good to see you all after such a long period in time. Also, a very warm welcome to those of you who are joining the webcast and are on the call. We'll cover logistics of how we do Q&A a little bit later. So I'm Andrew Davies. I'm the Chief Executive of Kier Group, and I'm joined today by Simon Kesterton to my right, who's our Chief Financial Officer. So if we just bounce through the disclaimer, and we move on to the results summary. So we'll walk you through the highlights of the results for the 12 months to the 30th of June 2021. I'll then hand you over to Simon to talk you through the Group's financial performance. This will be followed by an operational update and a walk through our sustainability framework, which I'll give you. And then at the end of it, there will be an opportunity for Q&A for those in the room and for those who are online or on the webcast as well. And that will be at the end of the presentation. So for those of you who are in the room, if you turn around, there is a microphone centrally positioned. If you could please use that to ask your questions. And that will enable all the people on the line and on the webcast to hear them. If you don't, that's sort of okay, but I'll have to repeat the question to make sure they get them as well. Those of you who are on the line, if you could just bear with us while we go through the questions from the people in the room first, and then we'll address the ones that come in from those of you who are not able to be here today. So I hope that is clear. So to the FY '21 highlights. We delivered materially improved results, demonstrating the completion of the operational and financial strategic actions, which we announced in June 2019, which were to simplify the group to improve cash generation and to strengthen the balance sheet. The simplification has been completed through the exit of noncore businesses and the adoption of an appropriate cost base. Performance Excellence has been embedded in the group, which we believe will drive continuous improvement. And the successful capital raise and the sale of Kier Living raised approximately GBP 350 million of gross proceeds for the group. This, together with our debt facilities extension, provides us with the financial and operational flexibility to pursue our strategic objectives within our chosen markets and capitalize on our position as a strategic partner to our customers. During the year, we also launched our sustainability framework called Building for a Sustainable World, which we'll talk about later in the presentation. And our results reflect the hard work undertaken by all of our employees throughout the year. We reported revenue of GBP 3.3 billion. Our adjusted operating profit grew by GBP 59 million to GBP 100 million, which is up 140%. And our margin increased to 3%, which is up 180 basis points. Adjusted EPS was 25p and more than double that of the prior year, after the restatement for the new shares. And we achieved free cash flow of GBP 93 million, and we ended the year in a net cash position, and I'm extremely proud of the whole team who enabled this to happen. We continue to win new contracts across our businesses, Highways, Utilities, Infrastructure, Construction and Property. And our focus is on risk and reward profile from entry to execution of projects. We have a quality order book of GBP 7.7 billion. We continue to benefit from U.K. government spending policies. Let me now focused on delivering our medium-term value creation plan. And over the next few slides, I'll take you through some of the key underpins in our Infrastructure Services and Construction and Property sectors. So we deal with Infrastructure first, U.K. government spending commitments. If we look at those spending commitments, a number of radical reforms are announced last year to stimulate the economy. Overall, there was a commitment to GBP 600 billion over the next 5 years as part of the National Infrastructure Strategy. Initiatives within this include GBP 27 billion of investment in roads under the RIS2 program, GBP 32 billion committed by private and public sectors on 5G infrastructure by 2027 and between GBP 37 billion and GBP 53 billion on HS2 phases 2a and 2b. In addition, the government is targeting to achieve net zero carbon by 2050 through greener buildings and public transport. And this week, the transforming infrastructure performance road map was launched along with the national infrastructure and construction pipeline. Central to the road map is the built environment model, which is very focused on aligning with the UN sustainable development goals, and we are well positioned to win our fair share of work across all of these areas. If we move on to Construction, again, looking at U.K. government spending commitments. If we look at the equivalent in construction spending commitments in this sector, where the -- we are the U.K.'s leading regional builder and the government has announced to accelerate its spending into all of our core sectors. Within education, GBP 1 billion has been committed for new -- 50 new schools and a 10-year school rebuilding program. A further GBP 1.5 billion has been announced for the further education capital fund to upgrade and refurbish college of states. And within health, there's GBP 1.5 billion for hospital maintenance and building for the new hospitals program, which is set out to be delivered by 2025. And in justice, GBP 4 billion has been committed over 4 years. And in defense, an GBP 8 billion capital expenditure program has been announced over 10 years. We've secured places on long-term frameworks to which most of these -- most of the increased spend will be deployed. And in addition, we are driving disciplined growth in our commercial business in London, in particular. We're very selective with the opportunities we pursue, and we're focused on blue-chip clients with long-term relationships. And if we look at our attractive market positions in the growing markets and Infrastructure first and our positioning within them. Our core business propositions fit into Infrastructure Services and Construction segments, and we've got an attractive market position across the sector. Again, as I said, within Highways, we've established relationships with strategic clients on long-term frameworks lasting generally between 6 and 10 years. Our expertise sits with our integrated role as well as design, construction and maintenance of strategic and local road networks. In utilities, we're a top 3 contractor in the water and energy sectors. We install and maintain connections in water, energy, telco and rail, and the majority of our contracts are delivered under cost reimbursable contracts. We're a fiber network partner to all 3 key digital infrastructure providers. And within Infrastructure, we managed a number of high-value construction and civil engineering projects across energy, nuclear and rail sectors. An example includes HS2, where we're a delivery partner in the largest section of the project. And if we look at the same equivalent positions in Construction and Property. In Construction, we're a national builder weighted towards social infrastructure in key sectors, including education, health, justice and defense. We're a strategic supplier to the Department of Education, the Department of Health and Social Care and the Ministry of Justice. 78% of our projects are for repeat customers. Our Property business is focused on mixed-use commercial and residential development. It typically operates through joint ventures with both the public and private sector. We've been measured in the past couple of years with the capital allocated to the business, and we've now increased liquidity in the Property portfolio. We're looking to grow the Property business in a disciplined manner with increased capital investment. Our Property business enjoys synergies with the wider group in terms of margin enhancement, use of the cash generated from the contracting businesses and in respect of activities with local authorities, the regulated sector and on the regeneration side. An example is a case in point is the photo you see on the right-hand side here. This is the Durham County Council, where we're working with the local authority as a developer to develop and deliver their new HQ, which is then being built by our Construction business. If we look at our group strategic framework. This illustrates our group's strategy. And you can see that our purpose, our vision and our strategy, the top 3 boxes, have not changed since we issued our 2019 strategic review. The Group's strategy continues to be focused on U.K. government, regulated industries and blue-chip customers, operating in the business-to-business market and contracting through long-term frameworks. There's been no change to that since 2019. Our core businesses are well placed to benefit from the announced and committed U.K. government spending plans to invest in infrastructure, decarbonization in the post COVID-19 recovery. But having completed all the previous strategic actions, the fourth box down here in the picture, we've introduced new strategic actions of disciplined growth, consistent delivery and strong cash generation. All of this is underpinned by our key differentiators and enablers, along finally with our values of being collaborative, focused and trusted. And this forms the basis of our communication, both internally and externally of our corporate strategy. So against that strategy, we move now to the summary of the medium-term targets. This slide illustrates those and provides clear visibility of our direction. We're looking to grow the business to between GBP 4 billion to GBP 4.5 billion with adjusted operating margin of circa 3.5%, generating cash conversion of circa 90%. We want to sustain a net cash position and deliver sustainable dividends throughout the cycle. So at that point, I will now hand over to Simon, who can take us through the detailed financial results. Simon.

Thanks a lot, Andrew. Good morning, everyone. Nice to see so many people here in person. Turning to Slide 12. This shows a high-level income statement for our continuing operations, excluding Living business. Revenue slightly decreased by 4% to GBP 3.3 billion as we completed the simplification of the group, which included exiting noncore, low-margin loss-making businesses and successfully completed our motorway upgrade projects as well as the market conditions caused by COVID-19. This was partially offset by growth in our core business, and I'll walk you through the moving parts on a later slide. Adjusted operating profit of GBP 100 million reflects the significant improvements in the group and the improved quality of earnings. The group closed the year with a positive cash position with the receipts from the equity raise and the sale of Living in the final months. This was a strong performance by the group compared to where we were last year. As I just mentioned, growth in our core business was offset by 2 key items. Starting on the left-hand side of our revenue bridge, we see our FY '20 revenue of just below GBP 3.5 billion. Construction revenue was 4% below the prior year as we simplified the business and exited noncore businesses. This simplification reduced revenue by GBP 145 million. Adjusting for that shows that growth in our core Construction and Places businesses of circa GBP 80 million. Infrastructure was 6% lower than the prior year. Here, the successful completion of motorway upgrade projects reduced revenue by GBP 200 million, and this was partially offset by growth in our Highways maintenance businesses and by the start of construction phase of HS2. Finally, we had a GBP 3 million increase in Property and Corporate with additional revenue in the second half as liquidity in the market started to improve post COVID-19. Moving to the adjusted operating profit bridge on Slide 14. We start on the left-hand side with the prior year's adjusted operating profit of GBP 41 million. We then look at the impact of volume and mix, which is a positive GBP 6.4 million despite the lower revenues. As usual, there is a small impact of inflation. During 2021, this was GBP 2.2 million. And going forward, we expect to see some temporary upward pressure on this. On the next bar, we have the incremental impact from our management actions of GBP 35.3 million (sic) [ GBP 34.3 million ], followed by our wages and salaries impact of GBP 15 million. This includes the conclusion of temporary remuneration reductions and holiday pay accrual movements as a result of COVID-19. In addition, direct costs related to COVID-19 last year have not reoccurred. Overall, this resulted in an adjusted operating profit of GBP 100 million and a 3% margin. Moving on to Slide 15. This slide looks into more detail at the adjusted items. As you can see, these are considerably lower than last year, a trend we expect to continue as our restructuring program is substantially complete. The restructuring charge of GBP 31.6 million includes cost of circa GBP 10 million for the equity raise. The other large item is GBP 21 million of amortization relating to acquisitions in prior periods. This is a noncash item. Other costs of just under GBP 4 million relate to compliance costs of new fire regulations. The cash cost was as expected, higher than P&L cost due to the payment of items accrued during last year. Now we move on to free cash flow. Our actions throughout the year are reflected in the considerable improvement in free cash flow generated by the group, starting with adjusted EBITDA of GBP 150 million. We then have a working capital inflow of GBP 63.5 million as the impact of COVID reduces. It should be noted that we benefited from a GBP 50 million timing difference from a change to the domestic reverse charge VAT rules. We maintained supplier payment days of 34 days, and we continue to bear down on KEPS, which has further reduced by GBP 46 million to GBP 79 million, offsetting most of the benefit from the VAT rules change. CapEx was GBP 47 million, of which GBP 40 million relates to payments made under leases now capitalized under IFRS 16. The interest and tax line is mainly made up of interest payments in the year of GBP 25 million. We have paid GBP 61 million of HMRC deferred taxes with the final GBP 19 million now due during the current financial year, and that leaves free cash flow for 2021 at GBP 93 million, a significant improvement in cash flow from the prior year. Turning to Page 17. We have our net debt to net cash bridge. We start on the left-hand side with the FY '20 closing net debt of GBP 310 million. We then see GBP 93 million of free cash flow that I've just talked through and then adjusting items of GBP 53 million. Under the revised pension deficit repayment plan, we paid GBP 27 million in the financial year. Going forward, this reduces to GBP 9 million per annum. The sale of Kier Living generated a GBP 89 million net cash inflow after paying fees and an additional GBP 10 million to the pension scheme. The successful capital raise completed in June generated net funds of GBP 214 million after costs. This leaves the net cash position of GBP 3 million, achieving the goal that Andrew set out in June 2019 in the strategic plan. Moving to Slide 18. We talked about the net cash position of GBP 3 million earlier. The average net debt position of GBP 432 million remained fairly constant with the prior year due to the timing of the receipts from the capital raise and the sale of Living, these arrived in the final months of our financial year. This slide also highlights the current debt structure and its maturity following the application of the RCF and USPP Note extensions to June -- January 2025. This provides us with additional flexibility to fund the group's strategic objectives. Finally, turning to Slide 19, our order book. Our order book was GBP 7.7 billion, slightly down on the last year due to the cycle of awards in our Infrastructure business and COVID-19-related procurement delays. We have already secured 83% of FY '22 revenue as we continue to win high-quality work in our chosen markets. Significant work has been done to improve the quality of the order book. We have exited low and loss-making contracts, and our focus is predominantly on winning work with government-regulated industries and blue-chip customers. The makeup of our order book remains similar to the half year with over 50% of the book under target cost or cost reimbursable contracts. Our average order value is around GBP 12 million. The order book gives us good visibility over the organic growth in context of our medium-term targets. And I'll now hand back to Andrew for the operational update.

So thank you, Simon. I'll just give you a little bit of color now, if I may, on some of the operational updates over the last financial year. Starting here with the Infrastructure Services. Revenue, as Simon said, of GBP 1.4 billion in infrastructure services reflects the successful completion and handover of the M20, the M23 and parts of the M6 motorway upgrade projects. Adjusted operating margin improved by 250 basis points to 4.6%, demonstrating our focus on higher-margin capital works. We've also been awarded a number of projects, including being appointed to deliver highways and utility works on Phase 2a of HS2 North of Birmingham. In our Highways business, we won a GBP 200 million Transport for London maintenance and management contract over an 8-year period. In our Utilities business, we have been appointed a partner of Openreach, BT Openreach to construct new broadband infrastructure in the West and South of England as well as in Scotland. And looking forward, 87% of our revenue is now secured for FY '22 in the Infrastructure Services sector. If we move to Construction, the revenue reflects the pace of contract awards and the deliberate focus on margin through the exit of low or loss-making noncore businesses. The adjusted operating margin improved 80 basis points to 3.2%, reflecting the better quality of work underpinned by our culture of Performance Excellence. We continue to win high-quality work with places on frameworks with up to an GBP 11.5 billion. And recent awards in this sector include our appointment to Lot 2 of the Scape framework, with expected -- with an expected GBP 2 billion pipeline over the next 4 years and also our appointment to the MoJ's GBP 1 billion New Prisons Program. We're one of 4 contractors appointed to design and deliver 4 New Prisons. Our Construction segment also includes Kier Places, which was formerly known as Specialist Services. Kier Places includes our housing maintenance and government-focused facilities management businesses. It seemed logical to us that we pursue a strategy to manage built assets through life with our housing association, local authority and U.K. government clients. And looking forward in this sector, 80% of our revenue is secured for FY '22. If we move on to Property. In 2019 -- in the 2019 strategic review, we identified the need to introduce measured discipline to capital allocations, and therefore, we reduced the capital allocated to the Property business. Its revenue in the year reflects these capital constraints, and the capital employed is now GBP 135 million. And we expect this to normalize over time towards the top end of GBP 140 million to GBP 170 million allocation range as new capital and recycle capital is employed in the business. If we now move on to our sustainability framework. We define sustainability really in the terms of ESG, which you'll all be familiar with. And in July 2020, we launched a new sustainability framework called Building for a Sustainable World. At Kier, we reframe sustainability from being an environmental specialism to being a strategic and business critical mindset. We believe this balances the need for environmental resilience, community resilience and profitability in day-to-day decision-making. And the framework is governed through a sustainability leadership forum, established at group level and within each of our core businesses. If you take the first element of it, the environmental element. On the left-hand side, you'll see we outlined our approach to environmental sustainability based on the 5 pillars. And on the right-hand side, we detail our progress made during the last financial year. We are ambitious with our targets and have committed to achieving net zero by 2045, together with interim targets such as net zero across all of our operations by 2039. We're launching carbon, waste, water and biodiversity KPIs for FY '22. And looking at FY '21 progress for carbon, we achieved a 27% reduction against the prior year. For waste, we achieved a 22% reduction in the year, and the addition, 87% of our material and packaging waste was diverted from landfill. And for water, we're in a transition year. We've used the FY '21 to set a baseline for reporting against progress in future periods. On the social side of ESG, we recognize that our work and our actions directly impact the communities we serve, and this in turn generates wider social value. On this slide, we set out our 5 social pillars on the left-hand side and our progress against them on the right-hand side. We generated GBP 233 million of social value through supporting initiatives across the group. And although in the next -- on safety, our year-on-year accident rate has increased, which is disappointing. We continue to have a strong safety record within the industry. We continue to reduce the time taken to pay our suppliers with a further reduction of 4 days to 34 days in FY '21. And we remain committed to the next generation. We have 649 individuals, which is 6% of our workforce in apprentice schemes. 25% of our graduate intake is female, and we're demonstrating our commitment through the launch of our diversity and inclusion road map. And we've also introduced the Real Living Wage across the group. And finally, if we look at governance. Good governance is and will remain a core component of the group's approach to operations. The group operating framework is embedded across the organization and covers all aspects of our projects underpinned by our robust risk management framework. All businesses have to report twice yearly that they comply with this through the operational assurance statement. And to our investment proposition. Over the last 2 years, we completely reshaped the business to a value-accretive, earnings-led business model, which is aligned to the U.K.'s investment priorities. We have attractive market positions focused on the U.K. infrastructure and construction markets. This is underpinned by our strong order book with long-term contracts and framework agreements underpinning those contracts. And lastly, our management team is experienced with a proven track record of operational and financial delivery, which has been demonstrated, I trust, over the last 2 years with the turnaround of Kier. So to summarize and provide an outlook. I'd like to summarize by saying that this year has seen materially improved results following the successful completion of our 2019 strategic actions. The balance sheet has been strengthened and now underpins our medium-term plan to grow the business. If I move on to the outlook, we continue to trade in line with expectations despite inflationary pressures and increased national insurance payments. And therefore, our current year outlook remains unchanged. And we're confident of making further progress, and we're on track to deliver our medium-term value creation plan. And finally, Capital Markets Event before we move to questions, I'd like to know, we are planning to hold a Capital Markets Event in 2022 to give you the opportunity to meet with both myself and Simon again as well as our operational leadership team, and we'll provide details in due course, and obviously look forward to seeing you there. With that, I am very happy to open it up to questions. As I said, if you could deal with the questions in the room first. And if you wouldn't mind using the microphone, which is centrally positioned, that means that everybody who's online can actually hear as well. And then we'll come to the questions for those of you who are online. Okay.

All right. Andrew and Simon, congratulations firstly on the successful completion of the 2019 strategic actions. Three questions from me. The first one would be on the medium-term targets. And clearly, the focus on margin appears to have delivered good progress on the margin this year. But perhaps revenue needs to show a bit more progress to get up to the GBP 4 billion level. So just keen to hear your thoughts on what the drivers, which areas you'd expect that to come from and what level of order book you might need to sustain that? The second question, probably for Simon would be on the GBP 3 million cladding charge taken in FY '21. Just keen to hear if you've got any other exposure there? And then the third one, again, probably for Simon would be on the GBP 50 million benefit from the change in VAT rules. How sustainable would you expect that to be? And would you expect kind of a bit of an impact there from suppliers asking for change in terms?

Okay. Should I take the first one first. On the revenue side, I think we did set out, we believe, the market backdrop in both Construction and Infrastructure Services, i.e., across all of our operations is very strong. And I think that's backed up this week with the infrastructure strategy rollouts and the TIP rollouts as well from the IPA. So I think government is moving quite strongly now to deliver this GBP 600 billion strategy, which is set out over the next 5 or 10 years. Our positions in those markets, I think, as you've seen, is robust and strong. We are very strong players across all the pieces, and we participate in all the relevant sectors. So we feel confident that we have a relevant offering into those sort of strong market positions. So the specific point you made is that when can we see, therefore, the order book perhaps tick up and the revenue tick up towards those medium-term objectives. I think we are seeing very strong signs that bidding activity is very, very good. I think, though, government is no different from anybody else. It has been percept by COVID-19 issues. That has caused slight delays. I think there is a little bit of inflationary pressure in the system as well, a little bit of labor shortages in the system as well, which is making people just sort of reconsider and reevaluate some of the feasibility studies, which they're doing. So that is causing delay, but I think it's a timing issue. We remain very confident that given the broad strategic thrust, which government is reconfirming this week, our strong position in those markets that this timing will be overcome, and we will see that come through. And then the order book and the revenues will tick up certainly into the end of '22, '23. Simon, do you want to take?

So Jonny, cladding exposure, I think, was your first one. So no, we don't have any material cladding exposures, a few expenses going through. There's a few buildings, but not very much that there's any risk whatsoever on. So if there was, we would have accrued for that. And then the second question was the GBP 50 million DRC benefit. I don't see any pressure there from suppliers wanting to change terms. However, as soon as the revenues start to see they're getting regular payments of VAT, they perhaps might want some payments on account. So that would probably be the pressure there.

Just on the cladding, we've obviously done a systemic review of all of our exposures or likely exposures or potential exposures, each one is very, very different. But as a company, we haven't really been exposed neither as a developer or a contractor to that sector of the market as a matter of strategy historically. So we're not exposed to the same extent others do. But as Simon says, as and when there is an issue, we will address it and we will account for it appropriately. And that's how we deal with it. Yes, whoever is nearest. Yes, queue up.

Just trying to be polite. Three questions, if I may. Firstly, could you talk a little bit about capital allocation and when dividend might get paid again and whether M&A comes back into your thinking as well? And secondly, on the interest charge, I think the interest -- could you give us an indication of what the interest charge is as a percentage of the average debt? So I think that number, certainly, in my model is quite high. It's around 14%. Could you explain why the interest is high relative to the average debt? And finally, some other people in the market have been talking about challenging utility markets and have actually chosen to exit some of the utility markets. Could you just give us your view of which ones you see attractive and how you navigate that?

Okay. I'll take all of those, I think. So the capital allocation, I mean, clearly, at the moment, it's -- the priority is deleveraging. However, of course, with our free cash flow conversion target of 90% and plenty of liquidity, we do anticipate that we're going to allocate a bit more capital to our Property business and invest in that and see it get to the return on capital employed target of 15%. Dividends, we need to have clear line of sight to our medium-term targets including a sustainable cash position going forward. So if you think our medium-term targets of 3 to 5 years, we should have sight of those within the next 2 to 3 years. So that would be what you need before we start paying dividends. And then interest higher than debt. I mean I think that's been there all the time. And of course, your average net debt, some of the cash that's in there won't be in your treasury systems or in project bank accounts that are actually part of your cash position, but don't get offset against your overdraft. So your debt number has got some permanent debt in it. And that permanent debt, of course, the USPP, the Schuldschein, it's quite expensive. And then your RCF is probably a little bit drawn whereas if you just took the average debt number, you might assume it isn't drawn at all.

The third question was about utility markets.

So I'll just -- the utility market is a mature market, but it's really sort of 2 markets, if we -- the way we look at it. Firstly, we've got the traditional utility market in sort of energy and water, which is a very cyclical market based around their own sort of regulatory cycles. And if you're not in those cycles, then by definition to a degree, you're exiting that business, that may be why people are exiting because they haven't got on those cycles. And those cycles are sort of 2 years in, I think, at the moment, for the energy in the water sector. We've got our full share of it. It's a very strong business for us. We like it. I would say it's probably a lower growth business but it's attractive. And the other thing about that business, what it does, it provides an entry point in a set of customer relationships, which we do utilize in our Infrastructure business, then taking on sort of larger projects like water treatment works as well with the same set of customers. So we're very attracted to that business. The other side of the Utilities business is telco, which obviously, at the moment because of the 5G rollout and the figures I quoted earlier in terms of the investment, which is mostly coming from the private sector, is a very, very strong growth market for us, and we're with all the main providers in that 5G rollout. And it's a little bit of a race there for those players, and we're very strongly aligned with them and seeing strong growth in that market. So for us, it's attractive for a variety of reasons. But yes, it is a mature market. And yes, it does follow a regulatory cycle. And for some, it's less attractive for those reasons. But we're attracted to it.

Yes. Two -- Andrew Nussey from Peel Hunt. Two remaining questions from me. I think, first of all, when we look at Infrastructure and particularly, the margin, I'm sort of curious to know what your thoughts are over the medium term and what levers or what you're going to task that division to do in terms of mix? You obviously highlighted the reduction in the capital works in high whatever, lower-margin capital works, but more about driving services, driving that higher margin activity. What are you saying to the Infrastructure division that they should go out and do and deliver? And secondly, on the property side. Obviously, you highlighted the intention to increase the level of capital employed there. Do you see a mix changing maybe towards regeneration-led projects as opposed to shorter term commercial activity, which might carry a slightly higher near-term risk?

Okay. So I'll take those, Simon. So on the Infrastructure on the margin side, I mean, the sheer scale of some of these projects and the way these contracts are set up in terms of the cost reimbursable nature means a lot of the costs of running these projects sit within JVs or within the projects themselves. So it's a fairly light overhead, which they need, which means that whilst it's a lower gross margin, it means you get an attractive net margin as well, and we're seeing that sort of come through. In terms of your mix, we are very attractive to both sites. And sort of a similar story, as I said, on Utilities. If you're participating on the services side, you get the long term up to 12 years, even longer than that with some local authority Highways work and Utilities work. You get the long-term nature. They tend to be cost reimbursable. We have a skill set, which is highly relevant to our clients. We understand the domain. We understand the assets. So it's very, very attractive. And you can see the margins that are coming out of it. It also is an entry point when they do capital works. So some of the smaller projects are within the maintenance contracts themselves, minor works type contracts. But it's an entry point into your clients if they want to do major work. So for Highways or National Highways, I should say now, we both do CapEx and OpEx work for them. And the relationships are sitting on both on -- relationships are sitting on both sides as well. So it's not an either or for us. It's very much both. And one is an entry point in terms of relationship for the other. And we bring our Infrastructure business, which is a capability-based business doing large-scale projects through to the clients and offer their services to the National Highways team or to Utilities companies, et cetera. So it's not an either or for us, it's both, definitively a both for us, and we're pursuing that strategy. On Property, as I said, the property business is very attractive to us because it's got a lot of synergies. So notwithstanding, the strategic review in 2019 said we did have to ration capital in a much more disciplined way across the group. We feel we've achieved that point now, and these results hopefully demonstrate that. So therefore, we feel able to put more capital back in. Property was always very strongly synergistic with the rest of the group. It does a lot of work in JVs, and a lot of that is with clients on our core businesses side. So we're in the Solum joint venture with Network Rail. We work with a lot of local authorities. We bring to the party a lot of highways experience to those mixed-use regeneration scheme. So regeneration for us, utilizing sort of quasi governmental land assets in a joint venture is absolutely core business and provides a lot of synergies. And there's a lot of financial synergies as well, utilizing the capital that comes out of the contracting businesses in a very disciplined way, and it enhances margin. So very strong. As I said, the great picture of the Durham County Council, we are the developer and we're also the constructor. But we don't mandate that. It has to be best of class. The Construction team have to know that they're winning it on merit. There's no gifts going on here or anything like that. But it is -- the point is it is very synergistic with the group from a financial and an operational point of view, and we do want to increase the capital allocated in it for those regen schemes. Are there any more questions, anybody in the room? So I suggest, therefore, that we go to ask if there are any questions of people who are online?

We have no questions registered via the phone lines.

And on that basis then, I think we once again draw stumps. So thank you very much for coming those of you who are here in person, great to see you, and thank you for those of you who joined us online. And have a good day. Thank you.