Nexus Infrastructure plc (NEXS) Earnings Call Transcript & Summary

Good morning, and welcome to the Nexus Infrastructure plc Half Year Results Investor Presentation. [Operator Instructions]. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Charles Sweeney. Good morning to you.

Good morning, and thank you, Alex. Good morning to everybody. Thanks for your interest in Nexus and for attending this presentation. So Dawn and I will be presenting the Infrastructure interim results for the period to the 31st of March, which we published on Thursday, 15th of May. We have in front of us there the contents of our presentation. So we will do a brief introduction to the company, talk about our strategy and progress to date. Dawn will then pick up on the key financials. I'll look to markets, I'll talk about progress in the order book, and then we'll have a summary and close, and we'll have time for Q&A. So Nexus Infrastructure, civil engineering business established more than 48 years ago, operating in the Southeast. We of course, far north is Peterborough to the south down as far as the South Coast. We've got 2 operating subsidiaries. One is Tamdown in the housebuilding sector and second is Coleman, operating in water, rail and some other sectors listed there. So look a little bit further into Tamdown. So it is focused on the housebuilding sector. It's a very strong brand, civil engineering of anything to do with the infrastructure through to the foundations of the housing with large housing developments. It's been recognized and has its experience, capabilities in complex long-term multiphase developments. Again, we'll be talking about that in further detail in this presentation. We're also going to present the fact that the housing market looks to be in a recovery process now, and Tamdown is very well placed to benefit from that going forward. So Coleman, we acquired Coleman in the beginning of this half year and is part of our strategy to diversify into those other sectors that I mentioned previously. It's been in business for more than 20 years. It operates along in the South Coast from Kent all the way through to Hampshire. Principal focus is the water sector, but does have other activities, particularly rail. So our strategy and progress. So we laid these out 18 months back, and we've been talking about these in these various presentations over the last periods. So very pleased to see that our focus on key customers has actually seen the order book grow in this first half. So GBP 72 million at this time last year, it's GBP 81 million now. And if we actually just look beyond the end of March into April, we picked up an extra GBP 16 million, very pleased to get that too. And I can say that so far in May, we picked up a further GBP 9 million very close to our geographies, very close to our customers and make sure that we can be with them as they start to grow. Expanding our market was related to mainly diversify, not to be solely reliant on just one sector and that part of strategy over 12 months prior to the conclusion of the acquisition, which as I say, was in October of '24. So we now get our exposure to the water sector. I'll be talking a little bit more about that in the latter part of this presentation. Things have gone very well in the integration of Coleman into the business. Very pleased with the progress to date and very excited of that. And then on the matter of keeping things tight, focusing on financial delivery, making sure that we are on top of things, that's been producing results this last 12 to 18 months as well. So we do see that the revenue has grown. That's great. But the gross profit margins on a like-for-like basis, just on Tamdown, it was 13.5% previously. It's now gone up to 13.6%, which is good, but we're expecting that to improve further. But it's also the case that because we brought Coleman into the business now that has increased in profit margins overall. So for the group, our gross margin is 14.9% in this past half year. Cash, and Dawn will go into that in more detail just shortly. But cash even after having done the acquisition and the cost of the acquisition because of the other things that we've been doing, we've been able to maintain that cash position. In fact, actually increased it slightly up to GBP 9.6 million. So I think we're very well placed to proceed from here with our strategy. And I now hand over to Dawn.

So overall, we're pleased with how the first 6 months of the financial year have gone with all key metrics positive and improving from this point last year. Revenue from the housebuilding sector was delivered by Tamdown and has increased by 8% to GBP 27.8 million in the first half of the year. In the 5 months since we've acquired Coleman, they delivered GBP 2.8 million in revenue as they complete projects under the previous AMP8 program. Gross profit increased by 31% to GBP 4.6 million, including GBP 800,000 from Coleman, who delivered a margin of 28%. The gross margin in Tamdown continues to improve following the operational and financial steps taken to manage delivery and costs. The operating loss before exceptionals was reduced by GBP 200,000 through the increased revenue, the increased gross profit and the work done to reduce the overhead costs in Nexus. The housebuilding sector has been slower to recover than we anticipated. And we're pleased that Tamdown has recently secured several projects to increase the order book to GBP 80.8 million at the half year. And as Charles has already mentioned, has secured further work in April and May taking the order book to the mid GBP 90 million. We've got a well-maintained cash position even after the acquisition and the exceptional costs in Coleman. This will be important over the coming months as both Tamdown with its increased order book and Coleman as it starts the new AMP8 program will need working capital. As already mentioned, the group performance for the 6 months shows an improvement on 2024 with revenue or gross profit improving and the loss reduced. The steps taken to manage costs over the last couple of years continue to produce positive results despite the challenging market backdrop of the housing sector. We've been able to integrate Coleman into the Nexus financial reporting system. We reviewed their IT structure and people systems, making savings and improvements through use of the group resources. The strength of the group's balance sheet continues, supported by the cash of GBP 9.6 million. This gives us the capacity to deliver the order book and support both subsidiaries as they grow. We continue to invest in owning plant. This is more cost-effective operations, while balancing it with hiring in plants so that we can manage the fluctuations in revenue and order book that we need to deliver. Actions taken on trade receivables are delivering positive results with aged debt and retentions reducing. As well as reducing debt, we're taking steps to control retention balance as new contracts start, considering retention caps, whether it's across the client or across the job to secure a maximum amount that they can take or by reducing the amount of retention that's actually held per contract. The Board has also declared an interim dividend of 1p per share, which will be paid to shareholders on the 27th of June, continuing the dividend policy that we have had in place over the last few years. Charles will now start to talk about the market and give you some information on the market.

Okay. Thank you, Dawn. So first of all, let's turn to the matter of the housebuilding sector. So on this chart is just to emphasize the point that the long term undersupply of housing is still there. Those of you that are close enough to the housebuilding sector will know that the government set the target originally as 300,000 new dwellings per annum and then increased that to 370,000. I mean there's some doubts in the sector overall as to whether the 370,000 will be reached. And I noted that in March, the OBR evaluated situation. The OBR's evaluation was to say not going to make the 370,000 per annum, but 300-plus thousand. So I think 305,000 per annum should be reached by the end of the parliament. So -- that is still a significant gap against what we are currently as a sector, being producing. So the initiatives are there from the government. Planning and infrastructure bill is going through parliament at the moment, but things that are already being done, the NPPF changes, the National Planning Policy Framework changes at December '24. Those changes are starting to have an impact. So government is really trying to do its best on the supply side to make things easier. So we are starting to see the benefit of that coming through. Just also turn to something else, which is the matter of in the short term, in this last couple of years, we've seen that there's been a gap between the light colored blue line is the actual number of houses completed in England. This is ONS data released quarterly. The dark colored line is the actual numbers of starts. And so we'd even say that even if the market were not to ramp up as it is needing to do to that 300-plus thousand a year, there's been a gap. And sooner or later, that's going to have to close again because otherwise, you could say that the main housing developers are just eating into their stock, if you like. So we would expect housing starts to pick up anyway in the near term. In the Q&A -- or should I do it now? I'll do it now. As I did notice that Glenigan data, I'm just going to look to the Glenigan data issued this morning, indicating quite a significant upturn in housing starts in the last couple of months. That's one source of data. I also noticed that Forterra, the brick manufacturer, their Q1 revenue, they're basically saying that there's been a significant increase in demand from their side. 22% increase in revenue in the first quarter of this calendar year versus last year. And I also finally on this note that the planning portal information, which I saw mid last week, was indicating a 44% increase in the amount of planning applications. So a degree of caution required in this, probably a high degree of caution because we all don't -- of course we've seen false dawns before. But there still seems to be subject to macroeconomics and nothing else crazy happening. The delays that we've had as a result of, let's say, the Chancellor's announcement last autumn and then subsequently, the whole business with United States and tariffs and so on. This long-term demand is finally looking like we're seeing there's going to be a pickup in the housing sector and dawns given some details there before about the -- what our experience has been, our order book growing to a position that we've not had for some time. So optimism can be there, but I think we just need to be careful before we get too carried away, too excited about it. Here, if I look at the housebuilding sector. This is from Savills research. This is 8 plc homebuilders, the average sales rate, which again, we can see how that is from a very low point, admittedly a very low point, has been ticking up. And again, for those of you that are close to the sector, you'll be seeing that the sales from the announcement coming from the major developers or TW were the ones that were out most recently, I think, a week back, and they were indicating that the experience in the weeks since January is 0.76 sales per unit -- sorry, sales per outlet per week at 0.76 in the first weeks of the year. So looking positive, but we just need to be cautious in how this will develop in the coming 6 months. We've got a few case studies, which I will talk to briefly in each, but I think it sort of comes to what we've been talking about the experience of Tamdown and how it's respected for taking on large complex developments and particularly those that can be over multiphases stretching 10 years plus in their lifetime. So this one -- this was awarded October. It's quite large. It's GBP 16 million. It's for Bloor in Basildon. In this instance, part of the selection process was working together with Bloor and coming up with what would be a strategy for the earthworks. I mean when some of these sites are -- they're not flat -- the buildings that they were, they're not flat when we turned up. So we have to come up with a strategy of how we can flatten out the land without needing to export off the site or import into the site too many lorry loads. And these can be substantial sometimes lorry loads of soil being moved from one location to another. So in this instance, we came up with a strategy, which is good for the environment because we have the lorries tumbling up and down, but also has reduced cost and certainly will reduce the time to implement. So that was part of this. Also, I'll make reference, we'll use trenchless technology to minimize disruption in the roads in the surrounding area where we do have to undertake some development of the road infrastructure. And I then turn to another example, I like this picture just because it gives an impression of the scale and also the -- what we start with, if you like. This is a typical start when we're clearing out the earthworks and just starting into the infrastructure of the roads for the site. In this case, again, a large job, GBP 17 million Bellway Homes driven. It's been awarded with a program of 5 years, and it can always be the case that the likes of Bellway should they see sales pick up that they can accelerate that. They can ask us to bring in the work a little bit sooner than that. But it's got a 5-year program GBP 17 million. Again, same sort of statistics of the previous slides, more than 200 units will be installed, 2,000 meters of infrastructure roads. In this case, we'll have a sports pavilion, sports pitches and so on will be part of the development. It's a 12-hectare site. And we've come up with a plan, in particular, to reroute the access into a local gold club just to make sure that we've eliminated the interface between the public and the construction traffic. Again, I think that was valued as part of our tender for this work. And then there's a third and last case study for this presentation on Tamdown. Again, a large job, GBP 11 million. But why to mention this, in particular, was 2 years back doing this presentation, Dawn and myself doing this presentation, we're making reference to Phase 2. So we've carried out Phase 1. Phase 2 had just been awarded then. I think that was at GBP 10 million in March '23 award. So this is Phase 3. So it's just an example of what I mentioned about multiphase developments. Phase 3, in this case, 185 residential units and 1,200 meters of road, et cetera, et cetera, et cetera. So again, the construction strategy in this instance is -- has been developed to ensure we're trying to minimize the impact of disruption to the existing residents in the earlier phases. And hopefully, that's given a good snapshot of case studies. So the summary of the market for the housebuilding sector, let's say, you can read the bullet points here. But the summary is that near-term, we are seeing steady growth. I just want to emphasize that steady growth. It's really encouraging to see it. We've had the pickup in both the volume of our revenues, but also the order book has grown significantly and is looking very healthy. And we would like that, of course, to continue. We still see government support will be there. And it might be that the government at some point may take some sort of steps on the demand side. We'll have to see. But there remains a significant upside potential for the sector overall. So I'm just going to talk in a similar way about the water sector. So now that we have ourselves with Coleman, we're active in the water sector. So just a few things about water sector, again, for those that don't know too much about it. So the programs that are awarded are put together and are awarded on 5 -- tend to be 5-year tenures. So in the case of the next 5 years, which just started from April, the total expenditure agreed by Ofwat is GBP 104 billion for the country. So that's a significant -- it's almost double, it's not double, but it's almost double previously. So with regards to the capital investment, specifically in developing water for the benefits of the environment and so on and so forth, it's a 4x increase in what was previously being expensed. So that's a particular interest, of course, to construction companies. And it's part of the 25-year strategy. We will be, unfortunately, as a water bill payers, we will have to do something about the infrastructure that we have. And that's not going to be fixed just in 5 years. So I'll go a little bit more detail into Southern Water and why? Because Coleman does work for other water companies, but predominantly is Southern Water. So in the case of Southern Water, of that GBP 104 billion, that which was agreed for them was GBP 8.5 billion total expenditure, and that is GBP 4.2 billion more than the previous 5 years. So this is why you can see that from a construction company point of view, it's particularly exciting about the water sector because there is going to be a significant upturn in the amount of work that is going to need to be done in the coming 5 years and beyond. So Southern Water is currently challenging, the GBP 8.5 billion. They're actually saying we think we need more than that, but that will be a debate between Ofwat and Competition Markets Authority and Southern Water. They're not alone. I think there are 4 or 5 other water companies that have done that. They've gone through the challenge process. But as it is, the program is going ahead. The supply chain, Coleman attended a supply chain engagement session in March, at which Southern Water and its strategic delivery partners presented the work that was to be undertaken. And as I say, it is significant dotted right across the South in the territory for Southern Water. So very encouraged by that. And so I've got a few examples of Coleman's work that they've done and some information on what they're doing at the moment. So this is an example of a typical large project that Coleman would undertake. It's a revamp, if you like, and an upgrade of an existing treatment facility in Lingfield in Surrey. The value was GBP 3.6 million approximately. It's completed just in '24. So there's a whole bunch of things we could talk about this, but I was just looking at the -- in the top left of that picture, you can see the tank, the concrete tank that we installed 31 meters in diameter, I mean this is not insignificant civil engineering work. This is a substantial work. So they're always having to deal with the fact that working in -- it's an existing area as in there are pipes and cables and all sorts of things that they have the expertise to be able to do this work in a safe manner, which is one of the reasons why Coleman is highly valued by the customers. And just as of interest as if it wouldn't have enough problems, this is actually located in a flood plane. So part of the construction strategy was actually to address how should there be problems with flooding, how that will be dealt with. So that was a really successful project. This one, again, I really like this photo. So it's Bewl Water, which is I think it's the largest reservoir in the Southeast. So Bewl Water, and you can see the guys just in the picture there, little compared to the size of the dam wall, et cetera, it just gives you the scale, understanding of the scale. But anyway, this project is to install -- and I see the pipes in the background. They are large 1.7 meter diameter pipes and the infrastructure that goes with it, and they will be used to siphon out the water when repairs to the dam will be required in the future. So okay, lots of reasons why we could get excited about this. But certainly, in terms of the criticality, it was important for this work to get completed before Christmas. Because they wanted -- wanted to be able to fill the reservoir back up again, I guess, in anticipation of a dry spring, which is what we've had. So that was achieved. This project is continuing on in terms of the completing the works, the final works to the outside of this. But the first step was getting done by the end of '24, as I say, so they could refill the reservoir, and that was done very successfully. Client very pleased with Coleman's performance on that. And then this -- here is just an example of work which has started quite recently. This would still be the tail end of the AMP7 program. Coleman was busy on this Phase 1 activities about GBP 0.5 million, which was completed mid last year. Then we started into Phase 2 in the early part of this year. So that's underway at the moment. Again, it will be many similarities to the first pictures I was showing you in this case, that the tank is almost 25-meter diameter. But it's same sort of thing, lots of pumps, pipe work working in and around existing often very old and fragile equipment. So Coleman's expertise is, as I say, particularly valued in their ability to deliver this type of work. So what I'm going to do -- yes, let me go water sector summary. So I won't go through the bullets as I said before. We're transitioning to AMP8 now. So AMP7 is tailing off. AMP8 work is currently going through the design planning process. We attended the engagement seminar in March and really encouraged by the type of projects, size of projects and how those projects will be scheduled out. So it's a huge increase in spend. And for the water sector overall, this is an investment which will go on for some years and decades to come. So in terms of our wrap-up then, summary from where we're at is that with the 3 strategic objectives, we've taken positive steps with all 3 and really pleased with that. The half year so far, we've had increases in revenue and the order book. That momentum should see us well through the second half, and we'll also make sure we've got a good foundation for FY '26 and beyond as that order book is looking really quite strong. We have diversified in accordance with our plan to other sectors, as mentioned with Coleman, and that's gone very well. Gross margin has improved again. And that's just as Tamdown, we've had further increases, but also through the addition of Coleman. We do see a recovery in the housebuilding sector, and it's positive. We've been slightly cautious just to make sure that momentum continues. But so far, indications, early indications from a number of different places are looking like we -- subject to anything crazy going on, on the macroeconomics internationally. But just looking at the housing sector, it looks like we've got a process of improved conditions. Water sector AMP8 is almost double the spend certainly is with Southern Water, and we're really, really happy with that. As Dawn mentioned, we've got a robust balance sheet, and that's in place so that we're going to be able to take advantage of these growth opportunities and to deliver our strategy. So overall, I think we're very well placed for future growth. That brings us to the end of the main presentation. So I'll hand back to Alex now. I think she will see if there are any questions.

[Operator Instructions]. Charles, Dawn, we have received a number of pre-submitted questions, and I wanted to start off the Q&A session with these. First two questions are on profit with the first one being with orders and margins up, why no profits to report?

Sorry, what was the second part of that?

So the second part was with all -- the first -- sorry, let me just read out the entire question. With orders and margins up, why no profit to report?

I think one of the parts of the order book increase was that it came a little bit later than we originally planned. And also, as I mentioned, a slight delay. I think in this -- 6 months back, we were talking about how we'd observed in January, how we had observed, there has been a significant increase in our inquiries in October. It's a substantial increase. I think we had -- in Tamdown, we had GBP 100 million of inquiries in October. And when the market is busy from the time we receive a tender to when we might actually get that work on site, might be 3 months, it can actually be shorter than that. But 3 months is when the market is really busy. We have experienced that 4 to 6 months would be a period between tender activity through to work actually starting. The way it's turned out, I'm going to say because of the uncertainties that came through maybe from March, April time, unfortunately, that perhaps delayed a couple of things. So what I'm getting at is the order book is in. Revenues, we have now every opportunity for revenues to increase further in the second half, and we will see that Tamdown will be in profit in the second half. So just a little bit of a delay to that order book build to allow us to get the revenues really flowing.

And the next question we've got is, will you report profit or loss for Coleman separately? When should Coleman report a profit?

Yes, we will show Coleman financials separately. We will talk about them, and we will show them within the note section of the accounts when they're published. And in the first 5 months, Coleman did deliver a profit of GBP 100,000.

The next few questions are on Tamdown and Coleman. To what degree do Tamdown and Coleman rely on immigrant labor and will your costs increase as immigration declines?

Yes. I've seen this in just general trade press and so on. I mean our own experience was from a Tamdown point of view. When we were doing the high-rise concrete frame projects in Central London, I used to notice that, that is a far more prevalent case that you'd see quite a lot of people from the Continental Europe, I would say, would be working on site. As we currently set up on the activities we're currently doing, it's less of an issue than perhaps would have been in the past. But -- so as we see things at the moment, it's not causing us a problem. If the market, I'm talking about both housing sector and more generally, were to ramp up and overheat, then of course, I think we will find a problem with that and costs will increase. But where I'm going with this is I don't see it as a particular issue just at the moment. The market seems able to respond and to take care of this. But for the longer term, if there was a significant upturn in activities, it's possible that we would see some pressure on rates.

Next question is, has Tamdown lost any major customers?

I think what is the case is that the business has had its core major housing developers for many years, many, many, many years. It is the case that from time to time, the interest in some of the particular clients over others increases just because of their activity and perhaps their approach in the market. So we might back off the way from certain entities for a period of time. But if that is the case or if it has been the case, then that kind of businesses come back together again somewhere down the track. So nothing unusual for us, I would say.

The next question is on acquisition. What type of acquisition are you looking at?

We would look at further acquisitions at the right time. I suppose that's the first thing to say. The second thing would be it would be only in the case if it would fit with our strategy that we've been presenting today. We want to be always involved with the right types of business, culture, very important to us and attitude. Sector is a prime interest, of course. We only want to be involved in sectors that are not based on discretionary spend, if you like. So there's a degree of transparency and I was about to say certainty, nothing is certain, but a greater degree of certainty as to how -- what needs to get done within the time frame, is not as affected by general economics as other sectors. So -- so it's part of our plan, and we're enthusiastic and we're intending to grow. So we'll see where the opportunities come and whether that fits with our timing.

Moving on to the next question. Does the company have an LTIP scheme. And I believe you mentioned this in the presentation, but if you had anything to add there?

No, the company doesn't have an LTIP scheme currently in place. We did have a scheme that was settled when TriConnex and eSmart was sold back in '23. And Remuneration Committee is now looking at the options of what that may look like going forward. So it's something we would like to -- we're investigating reintroduction of.

Next question. Communications between financial reports is almost nonexistent, and there isn't enough liquidity in Nexus shares. Could you announce new contract wins as they arise?

Yes. What I do see is we try to be more active on LinkedIn. While that may not be -- I don't know if that's an appropriate thing to say whether we should be doing it in terms of formal releases of information. I guess we'll have to look into that. You do find information on LinkedIn, but I think we'll use that as a takeaway because that's fair. Subject to client confidentiality, if they're happy with that, I guess we could set something up more formal. So we'll take that away. I'd encourage people to in the meantime, check out LinkedIn. Maybe I'll also personally put things on to LinkedIn, but that's perhaps not the only way to do that. So that's a takeaway and see what we can do to improve that.

Next question we've got is what impact will the recent lowering of interest rates have on the company?

I'm sure Dawn will say something about what we do with our money and -- but that would be one thing. But the main thing by far of course, is the impact on the housing sector. So there have been various comments in general about the expectation of being two or possibly three further base rate reductions in the coming year. Yes, so that's the biggest impact by far, the demand side for the housing sector and the connection between every time the rate comes down another 0.25% and then another 0.25%, the impact on mortgages, the expectations of that happening, better mortgage deals and what that can be doing to house for demand on the housebuilding side. So as I mentioned, I think, in the presentation, I don't even know. I'm speculating, but at some point, it might be that the government will do something further on demand side that it may be tempted to start to get involved again in something akin to improving first-time buyer and possibly on stamp duty, but I'm purely speculating. But straight answer to the question is the biggest impact on us by far would be increase in the housing sector through reductions in the base rate.

We've got an investor here asking, what are retentions and how does the company reduce them?

So retentions are monies that are held back by the developer when they pay us so that they have -- they are building a pot of money for any remedies or items of work that needs to be carried out towards the end of the contract. That's held until partly practical completion will release some of it and then it can be up to 2 years before the balance has been released. We work with the developer to get them any remedial works done as soon as possible to release the retention. But we're also looking at what we can do to keep those retention balances down. So I mentioned during the presentation about retention caps, so that the client is holding maybe a maximum amount of money across all the projects we work on for them so that, that retention amount that they're holding doesn't get to too high level.

Next question we've got is in the water sector, how many years will investment be needed? And will there be an AMP9?

Yes. So I think I touched on that before, is the -- it's a 25-year horizon for sure. If you look in the -- all the strategic planning, it's all talking about 2050. The -- unfortunately, the investment goes -- requirement on investment from a bill payer point of view, will continue way into the 2050s and beyond, driven by several different factors. One is, of course, is climate change. I think last week, there were a couple of news articles going on about drought, it's driest spring. BBC had presentations on it about how we're going to deal with this. And it comes around every couple of years recently, the impact of potential drought and house pipelines and so on and so forth. So environmental impact on the drought side, but also when it does rain, I think as we experienced last year, it's flooding all over the place. So it has two sides, this drought side and this flooding side. Then there's a quality side of it. We need to reduce the amount of sewage being put into the rivers and into the sea. So that's part of the statutory regulations I talked about before, the reduction of that. And then there's aging infrastructure, and much of it needs to get replaced if nothing else, just because it's falling apart. And then there's technology, changes in technology required -- I mean just even as we know about the -- I don't know, on the IT side from what I saw about supercomputers in the press just recently. But the whole matter of AI and the demands on cooling and so on and so forth. And then finally, there's population growth and the population growth in different parts of the country. Every time there's a new -- every time there's those housing estates, I've just been talking about someone doing another 200 units. Each time there's one of those, the infrastructure requirements pick up. So water investment for all those reasons will be significant, and it will go on and it's at least got horizon in the strategy planning documents through to 2050. And then I think the other thing was is there an AMP9, yes, there will be AMP9. I think there's a possibility that at some point, there may be a change in how the whole process is set up with Ofwat and so on and so forth. I see that being reviewed. But yes, some of the program activity for AMP8 actually just already includes into the following year and not a couple of years, at least into what is referred to AMP9. So yes, there will be an AMP9.

Another question on Coleman. How are things going with Coleman?

Well, from a point of view of just started with on the culture side, it's been really good. It's been really enjoyable. And we couldn't have wished for better. I think you'll find that both ways. We are very conscious of the need to provide support and assistance and offer benefits and reductions wherever possible, but without fiddling with things. The business is a very successful business, so what we're trying to do is to bring our support and encouragement. But we're not interfering with the business operations, the customer interface, all that sort of side of it. I think it's very important for a successful acquisition to have that in mind. And I think we've got that in spades so far. So there's more to be done. I'm going to actually also point to Dawn because she can talk about some of the things that we have brought to Coleman. But our intention is, is to continue that we just started in the first 6 months. And even on the -- say, just the personal relationships and so on has gone very well. So I'm very pleased with it so far. But Dawn, I'll turn it to you.

Yes. I think we've made some really good progress with integrating them into our financial systems. We've been able to provide them with a better pension scheme. We've been able to provide them with access to some of our systems that they've not had before. And they're also talking to Tamdown about items, which is the best way to get vans or how to get equipment. So there's a bit of sharing starting to go on between the subsidiaries as well, which is really positive.

Moving on to a few live questions. If water-related projects are won, will they only be implanted by Coleman? Or is there a cross-selling potential for Tamdown as well?

There's an expertise and a differentiation between operating the housebuilding sector and in the water sector. So in terms of frontline delivery, it will be done by Coleman, the qualifications, the tickets and et cetera, that's required is specific to the water sector. So that's not the intention. But as we're just talking about is there is -- as further steps down the track, there will be potential for us to get benefits from the economies of scale. We should be able to purchase like aggregates and concrete and et cetera, so things which are common to the 2 sectors. We'll be investigating how that might bring benefit to the subsidiaries. So that's for the next stage. But we're certainly not going to have water undertaken by Tamdown and that...

Next question has got 2 parts. With early signs of recovery in the housebuilding sector, how does Nexus plan to capitalize on this market rebound? Are there any geographic or customer segments you see as particularly promising?

Well, I think if we were based outside of the Southeast, we might have been saying we need to get a piece of that in the Southeast. I think the Southeast in terms of this market size, and its growth potential is more than enough for our plan with Tamdown. Can we do more? And of course, we go back around the strategic planning cycle is just beginning just now. So we would look at potential areas of likely to be geographic growth rather than any sector specific changes within side of housing. So we currently operate I should say, as far up as Peterborough right down to the South Coast. But we're predominantly, if I put it on a clock face, it's almost from the Essex base of Tamdown. You might say that it stretches across to like 11:00. And so taking that over to like the M1 and maybe a little bit further stretching towards the M14 and one [ subarea ]. And then to the south, that may be goes around to like 5:00. So it's Kent. We do activities in Kent, but have not pushed further around into Surrey or beyond. So there are always those steps to take. But I'd say, again, is the housing sector just as it is being in the Southeast and for the potential growth that's in front of us is surely more than enough to meet our strategy and our plan for growth.

And the next question, perhaps for you, Dawn. On the 30th of September 2024, overdue receivables sat at approximately GBP 7.8 million. Has this come down at all over the last 6 months?

Yes, we've seen a reduction in overdue receivables, partly, I think, due to the introduction of a commercial director into Tamdown, which has added a further degree of expertise in there and also helped to free the MD up to concentrate on different areas such as work going in. And I think you see that in the level of cash that we have that we've been able to maintain even after the acquisition and the cost of the acquisition have come through.

Next question. CapEx rose significantly in the first half. Do you expect similar levels in the second half and beyond?

I don't expect similar levels in the second half. The first half was very much part of our reinvestment program. Once machines get to around the 4-year-old mark, they tend to start to cost a lot more money to keep running, and we like to recycle and upgrade them and bring the new machines in. We will be monitoring the number of machines that we own over the next few months as we expect that to tick up just because it's more cost effective to run our own machines, than it is to hire, but we do like to keep that flexibility on the higher numbers so that we can increase or decrease depending on the workload.

Perhaps some final questions here. What sectors are you targeting next for diversification?

Again, I would say that with the water sector, we have quite an opportunity in itself will be huge. So our intention wouldn't be to stray too far away from what we've started with until we have that in place and I'm comfortable with the growth and the performance in that. So with Coleman, we have also the rail sector. Coleman's already busy with the rail sector. They have activities in that. I would comment that rail sector, the CP7, which started from March last year, it's been slow in coming through with the work. But at the moment, Coleman provides safety critical personnel into activities in the southern region for network rail. So that's a diversification, and we'd like to see that to grow. But there'll be other sectors that we would consider as our plan, but not just, yes, I think we'll continue to push with water, rail and we'll keep an eye on some other areas for the future thereafter.

And the final question we've got here is, how far into the future does the order book stretch? And to what degree is it a guide to the next 12 months revenue?

So I think you saw some of the cases there say that the order book for particular projects, you can see already that some of them have 5 years as a schedule. Of course, the profile within that varies quite considerably. There's a bunch of activity clearly at the start of any housing development when Tamdown is putting in -- is doing the main earthworks and then putting in the principal infrastructure, et cetera. Then the housing plots themselves start to go in. And so Tamdown is involved in putting the foundations in for the individual plots. Then for that particular area, Tamdown is pulling away from the activities. The other trades come in and do the rest of the completion of the house, but then they come back again to complete the landscaping and externals and it's referred to, up tail end of the work. So there's a profile to consider. So to come to the base of the question. With regards to the future, let's say, into FY '26, I mean we would like to build the order book. And I think the order book even as it stands with the way that it will be burned in this coming half year, we'll still have a substantial order book for the period thereafter. As to how much of that will burn within the 12 months next year, it varies across contracts. And I think what we'll do is we'll provide further updates in the coming months as to how we see that developing and provide further amount of detail on that subject. But good order book and it's got a 5-year profile for some of the jobs. For some of the others, it shorter, it's in 3 years or 2.5 years. So we'll provide further details later in the coming months.

That's great Charles, Dawn. That concludes the Q&A session. So thank you for addressing those questions from investors today. And of course, the company can review all questions submitted today, and we will publish those responses on the Investor Meet Company platform. But before redirecting investors to provide you with their feedback, which is particularly important to the company. Charles, could I please ask you for a few closing comments?

Well, just I'd say thanks to everybody that has attended and has listened to us present our H1. Our concluding points would have been in the final slides. I mean, volume is up. The order book is significantly up. We've continued improving the gross margin. We've maintained our cash position. In fact, we've improved it slightly beyond and that's even taking into account the acquisition and the cost of the acquisition. We've got confidence in the market. It looks like it's pointing in the right direction in both housing and will come when AMP8 gets rolling in the latter part of this year, a significant spend upturn in expenditure there. And as Dawn has presented the robust partner and balance sheet will enable us to take advantage of the growth going forward. So we're optimistic, but we're trying to keep things as measured because we'll see how the housing sector comes through in the coming months if it continues the growth that we've seen recently. So thank you, everybody, for attending.

Fantastic Charles, Dawn. Thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Nexus Infrastructure plc, we'd like to thank you for attending today's presentation, and good morning.