Hello everybody, and welcome to Galliford Try's half year results for the period ending 31st of December, 2025. I'm Bill Hocking, Chief Executive, and I'm here with Kris Hampson, CFO. The photo you see here is typical of the work we do in existing wastewater treatment works around the country, and I'll come back to this key growth area later on in the presentation. Here's the agenda for today. I'll run through the highlights, Kris will do the financials, and then I'll outline progress against our 2030 strategy. We're in really good shape with great people, a strong order book, and some of the most supportive market conditions that I've seen in my career. There's a huge amount of work to do on social and economic infrastructure across the U.K., and Galliford Try is well placed to support these investments and to benefit from them.
We've had a strong first half with good trading across all divisions, resulting in another period of profit and margin growth. Revenue is up GBP 12 million, or 1.3% at GBP 935 million. Our adjusted divisional operating margin continues to improve. We achieved 3.2% at the half year, a full half percent up on the same period last year and 20 basis points up on the FY 2025 result. Adjusted PBT in the half is up 20% to GBP 24.7 million, which produces earnings per share of GBP 0.186 and an interim dividend of GBP 0.065 , up 18% on the same period last year. Cash performance remains excellent with average month end cash of GBP 190 million, up 6.3% on June 2025.
Our strong order book stands at GBP 4.1 billion, up GBP 200 million on the same period last year with 98% of work secured for the current financial year and 80% of FY 2027's revenue already secured. In line with our strategy to grow our higher margin specialist businesses, we are also pleased to announce that we have acquired Nene Valley Fire & Acoustics Ltd, an established growing fire protection business that will join our Asset Intelligence and Oak Fire Protection businesses. I'll cover this later. Our results demonstrate continued momentum across the group and overall we are well on track to deliver against our 2030 targets. Those are the highlights and over to Kris for more detail on the numbers.
Thank you, Bill, and good morning everyone. I'm very pleased to be presenting our half year results to you, and as Bill said, to report continued momentum with another really encouraging set of numbers reflecting broad-based growth across our business. Before I get into the financials, here is a photo of the Carlisle Southern Link Road, our biggest project at over GBP 190 million, connecting the M6 to the A595 with 5 mi of new road, including two river bridges and five road bridges. We are pleased with the progress the project is making as it approaches completion this year. Turning now to the summary financial slide. We have delivered another strong and consistent set of results for the first half of our 2026 financial year, reflecting how disciplined execution of our strategy is driving incremental year-on-year improvements.
At the full year results in September, we guided to an expected flattening of revenue in FY 2026 as we transition from AMP7 to AMP8 alongside further margin expansion as we execute our commercial quality and specialist services strategies. We have delivered just that in our eleventh half year period of growth against our core financial metrics. Revenue for the half year increased by 1.3% to GBP 934.9 million, compared with GBP 923.2 million in the prior period, reflecting broad-based growth across both our Building and Infrastructure divisions. Adjusted operating profit at GBP 21.6 million with no exceptional items increased by 22%, materially ahead of revenue growth and net interest increased to GBP 3.1 million up 10.7%, reflecting improved cash interest management on higher average cash balances.
This has resulted in adjusted profit before tax increasing by 20.5% to GBP 24.7 million, demonstrating the continued strength of our operating model. As previously guided, the adjusted effective tax rate for the half year was 25.1% in line with statutory corporation tax rates. This compares with 22.9% at the previous half year. Including the higher tax rate, adjusted basic earnings per share increased by 18.5% to GBP 0.186 per share. This flows into increased shareholder returns with the interim dividend at GBP 0.065 per share, up 18.2% on the prior period. Since the year end, we have paid the final dividend of GBP 0.135 per share and progressed well through the third share buyback announced in September 2025.
Circa GBP 9 million of the GBP 10 million has been transacted. We expect to complete this buyback by the end of the current financial year. Moving on now to the segmental analysis. You can see the broad-based progress across our business. This strong performance across our core divisions translated into further margin progression in both Building and Infrastructure, driven primarily by quality delivery of projects from our risk-managed order book and improved commercial terms in our new frameworks. The incremental 54 basis point margin improvements results in divisional adjusted operating margin rising to 3.2%, compared with 2.7% at H1 2025 and 3.0% at full year 2025.
The Investments business reported an adjusted operating loss of GBP 1.1 million, reflecting the lumpy nature of this activity and current market dynamics. The Investments team also manages the PPP portfolio, which generates the valuable annuity interest income reported below operating profit. Central costs increased modestly to GBP 7.4 million, broadly in line with revenue growth. The year-over-year 54 basis point margin improvement in the divisional adjusted operating margin is particularly encouraging, as we've been trading sustainably for one year now at this higher margin point. This helped in delivering our previous 3.0% margin target one year early at the full year in September and gives further confidence in our operating model as we continue to progress towards our 4% margin target for 2030. Turning to our Building division.
Building revenues increased to GBP 476.5 million, up 2.0%, driven by continued strong demand across our chosen sectors, particularly defense, custodial, education, and in our specialist FM business. Adjusted operating profits increased by 19.2% to GBP 14.9 million, with adjusted margins increasing by 45 basis points to 3.1%, reflecting strong framework performance and continued focus on quality first-time delivery of projects selected through our risk-managed order book. The order book remains high quality and at GBP 2.4 billion is up 5.4% on the prior year, driven by defense and custodial. With high levels of work secured for the upcoming financial year, the order book is providing strong visibility into future periods.
We were particularly pleased to win, amongst others, a place on a major affordable housing framework by The Hyde Group across its East, South, and London regions. Recent orders in the education sector that Bill will talk about are particularly encouraging. The Building division continues to deliver excellent schemes such as the Health Innovation Hub in Govan, Scotland, shown here. The hub is an 87,000 sq ft state-of-the-art flexible laboratory facility for university spin-off businesses to incubate and grow. All in all, another strong period for the Building division with great momentum heading into the second half. It is a similar story in our Infrastructure division. The division comprises our highways and environment businesses, including our higher margin specialist water and capital maintenance businesses.
Revenues increased slightly to GBP 454.2 million, up 0.6%, reflecting the expected transition to AMP8 and a robust performance in highways with the dry summer and autumn aiding progress on our major highways projects. The Southeast Aylesbury Link Road that you can see on this slide is one of these major projects, as is the Carlisle Link Road we saw earlier. Adjusted operating profit for the division increased by 23.6% to GBP 15.2 million. Margins increased by a significant 62 basis points to a record 3.3%, driven by quality first-time delivery, good progress on early AMP8 design work, improved commercial terms on our new frameworks, and significant progress on our major roads projects, as I discussed earlier.
The forward order book ticked up to GBP 1.7 billion, reflecting early strength in AMP8 frameworks and the continued full order book in Infrastructure for the next couple of years. With 87% secured for FY 2027, the division is well set for the AMP8 growth period and the extension of our highways business into the civil engineering elements of both the National Grid HVDC framework and Sizewell C access roads. Focusing now on our balance sheet. Strong trading and continued discipline in balance sheet management have maintained a robust cash position. Period in cash at 31 December 2025 was GBP 211.7 million, up slightly on the prior half year.
Through this consistent focus on cash management, average month-end cash of GBP 189.9 million increased by 6.3% from the GBP 178.7 million at year-end and up 7.7% from the GBP 176.4 million at H1 2025. The group continues to have no bank debt, no pension liabilities, and the group's revolving credit facility established last year remains undrawn. PPP assets valued at GBP 38.5 million generated annuity income of GBP 1.8 million, flat versus the prior period, with redemptions broadly offset by improved discounted future cash flow opportunities. Moving on to the next slide, where we present our cash bridge, explaining the movements in net cash over the six-month period.
Firstly, it is worth noting the very similar shape of the chart to the previous year as evidence of the consistency of our performance. As you can see from the bridge, cash from operating activities of GBP 24 million, including IFRS 16 leases, ahead of operating profits at GBP 21.6 million. A working capital outflow of nearly GBP 30 million, slightly better than the GBP 33 million in the prior period. This seasonal movement is again the main driver of the lower period and net cash as it was in H1 2025.
Shareholder returns in the period through both the share buyback and the prior year final dividend totaled GBP 20.6 million, up from circa GBP 15 million a year ago. Net positive interest income of GBP 3.1 million, up from GBP 1.8 million a year ago, reflected improved cash interest management on higher average cash balances, partially offset by GBP 2.5 million of other cash flows. The consistency of cash conversion remains a strength and a reflection of the risk focus of the group. We continue to pay our supply chain proactively, and the average of 29 days to pay our supply chain is comfortably in line with Fair Payment Code requirements. We continue to retain and prioritize a strong balance sheet.
We have long been clear that the strength of our balance sheet provides competitive advantage, which helps to deliver our sustainable growth plans. It is valuable to our clients who see the importance of financial stability. It ensures that we are a partner of choice for our supply chain, and it is a differentiator in recruiting the best colleagues. Our balance sheet also allows us to invest in future growth by investing in people, in innovative digital assets, and when appropriate, bolt-on acquisitions in higher margin adjacent markets. Where investment opportunities do arise within our pipeline, we assess these opportunities in line with our clear strategic priorities and agreed capital allocation thresholds. We are actively making organic investments, such as the two new manufacturing facilities in Paisley, Scotland and Keighley, West Yorkshire.
We are pleased to announce a new acquisition today, further strengthening our position in the passive fire sector. The circa GBP 10 million Nene Valley Fire deal will be adjusted operating margin accretive from the first year. This deal is expected to provide the catalyst for further growth in this growing and attractive regulation-led sector. Bill will talk you through all of these investments shortly. Our strong balance sheet also gives us confidence that we can continue to pay a growing and sustainable dividend covered by EPS at 1.8 x in line with the policy implemented in 2023. Where we have excess cash after investments and it makes the right financial sense, we will return it through special dividends or share buybacks, as we've done 3 x in the past five years.
Over the last five years, we will have returned GBP 79.2 million to shareholders in the form of standard and special dividends and GBP 35 million through our three share buyback programs. The total returns of GBP 114 million over the period equate to roughly 20% of our current market capitalization. It is worth repeating that our rigor in capital allocation decisions is only matched by our disciplined risk management and contract selection framework. We recognize both of these are crucial to our wider stakeholder communities. In summary, the first half of FY 2026 has been another period of broad-based progress for the group. A half where we saw another incremental improvement on margins against the expected relatively flat revenue, delivered strong cash conversion, reported a stronger order book for the future, and completed the Nene Valley Fire acquisition.
We look forward to the second half of the year, weighted similarly to last year, with increased confidence. We expect to make further progress in delivering another year of margin expansion and increased profitability in line with the required trajectory to get to our 2030 targets. We continue to believe there is a simple and compelling story of sustainable and increasing returns generation through to 2030 based on the disciplined delivery of our proven model in our attractive chosen sectors. Bill will now take you through the operational side of strategy delivery in more detail.
Thanks, Kris. Here's a photo of Catherine Infant School in Leicester for the Department for Education. This is a fairly typical smaller school in our portfolio of projects for the DfE. We are typically building 20-25 schools at any one time, from the smaller primary schools to the larger academies and senior schools. We recently won an excellent position on the new DfE Estates Framework renewal for large schemes across the whole of England and for smaller schemes in the Midlands and the South. This framework is bigger than the previous framework, both in geography, covering the whole of England, and duration, which is six years compared to the previous four-year framework. A very good long-term foundation in the education sector for the business. We have already been allocated two schools worth a combined GBP 94 million under the framework.
We're targeting revenues of at least GBP 2.2 billion and an operating margin of 4% in 2030. As you can see from our results, we're making good progress towards these targets. The pricing of our strategy is shown on the top of the slide. We continue to grow revenue and margin in our three big operating businesses of Building, highways and environment, the outlook very strongly supports this. We grow our specialist higher margin businesses in adjacent markets, both organically and through further bolt-on acquisitions, are making good progress here. We reentered the affordable homes market and are continuing to secure places on the main frameworks in the sector with the Hyde Framework, which we won in October. Please remember that our definition of this market is mid to high-rise blocks of flats for registered providers and local councils.
Finally, we leverage our geographical framework and client footprint across the whole of the U.K., selling more GT services to existing customers and sectors. The higher margin specialist businesses augment the margins in our core businesses to produce the 4% blended margin in 2030, continuing our trajectory of growing shareholder returns over the long term. Here's the margin improvement bridge, which shows how we will progress divisional adjusted operating margin from 3% at the full year 2025 to 4% in 2030. There are four main drivers of our margin progression, as you see here. Firstly, growing the business and getting the efficiencies and overhead leverage that comes with that. Secondly, a better contracting environment, predominantly in long-term frameworks, with more equitable, sustainable contracting terms and conditions, and where we negotiate the vast majority of our work.
Thirdly, the operational efficiencies we gain through better use of digital tools and off-site manufacture, and the associated improved quality and reduced cost of rework and delays, as we showed you at the full year. Finally, higher margin work through our specialist businesses and affordable homes. The increase in operating margin in the half year from 2.7%-3.2% reflects progress across all those stepping stones. In particular, though, I'd like to expand a little on the last item, specialist businesses and affordable homes. As Kris said, our capital allocation model enables us to reinvest in the business, both organically and through acquisition. Earlier this year, we opened our fourth fabrications facility in Yorkshire, following the opening of our Water Tech manufacturing facility in Paisley last year.
This new facility has a capability to produce highly engineered pipe specials, which are in demand across the water industry, and is a good example of further organic investment in the business. The photo you see here is a typical example of the type of engineering we can produce. Here's a short video to provide an overview of some of our specialist Water Tech businesses.
In 2021, as part of the development of our sustainable growth strategy, we foresaw the challenge lying ahead in the U.K. water sector: poor asset condition, water scarcity, flooding, and sewage overflows. With our capabilities, this presented an opportunity to expand Galliford Try's presence in the water industry. The game-changing acquisition of nmcn elevated our position overnight.
nmcn was an excellent acquisition, bringing 900 additional skilled people into our business who are now a fully embedded and integrated part of our team. We gained access to further water and wastewater frameworks and extended our geographical coverage, giving us national capacity and capability. We are now one of the biggest players in the U.K. water sector, working with all 13 major water and wastewater companies.
Our sustainable growth strategy sets out the target to grow the core part of the business where we design, build, and commission water and wastewater treatment facilities. In addition, with increasing pace, we are scaling up our higher margin capital maintenance and asset optimization businesses, supplying high-tech equipment and services into the industry.
Our Water Technologies business is at the center of this strategy, with both organic growth and acquisitions putting us in an excellent position.
Lintott introduced new and significant expertise in control panels and chemical dosing systems to our business, products and systems that play a key role in water treatment, distribution, and wastewater management through its factory in Norwich.
The success of the Lintott integration encouraged us to develop our strategy and pursue further bolt-on acquisitions. MCS Control Systems here in Coventry, where we are now, was part of that. Now we have both teams and their mix of products and services under one brand operating from four bases across the U.K. This is a perfect example of how bolt-on acquisitions can complement and enhance existing operations. These further bolt-on acquisitions, including the work we're doing here in Coventry, has allowed us to develop our product mix, our service offering for our clients, and give us real national coverage across the whole of the U.K.
Further diversification in manufacturing came with the purchase of Ham Baker Engineering in Staffordshire, whose products are critical to cleaning, controlling, and managing water treatment processes. Another evolution took place with the addition of AVRS, bringing the design, supply, and commission of complex MEICA systems for water plants, power stations, and factories to our portfolio. Meanwhile, access metalwork specialist GT Fabrications has grown from its base in Huthwaite to open a new facility in Paisley, shared with its Lintott colleagues. Most recently, further organic growth with the investment of a new factory set up in Keighley, West Yorkshire.
This model of combining organic growth with specialist acquisitions has given us an enviable position in the market with an excellent offering across the U.K., providing core design and build solutions with adjacent higher margin bolt-on products and services. This is a highly sought after offering that allows us to work closely with our clients to shape the future of the sector through the construction, renewal, and enhancement of vital infrastructure across AMP7 and beyond. I'm very excited about the future for Galliford Try in the water sector. We've got a fantastic foundation, we've got great U.K. coverage, and we've got access to all of the clients across the water and wastewater sector.
We're very excited not only about what we can offer, but the investment that's in the sector that's going to allow us to drive our business forward and achieve the higher margin blend that we've got in our 2030 sustainable growth strategy. I thought it worth dwelling on our cover photo a little further to help bring to life the work we do in water. This is a wastewater treatment works for Thames Water, and is typical of the work we do in the water industry to add more capacity and install new process treatments to existing water and wastewater treatment works. A hybrid of refurbishment, capital maintenance, and new process capacity to provide improved reliability and operational resilience. The photo boxes illustrate the transformation of this site.
In box 1, you can see a new primary filter under construction, and this adds process capacity to the plant. Box 2 shows previously refurbished filters where we have replaced the distributor arms and the filter media. Box 3 shows installation of new monitoring equipment to support enhanced operational control. Box 4 shows preparations for a new chemical dosing system. To demonstrate the contribution from our specialist businesses, Galliford Try Fabrications delivered the steelwork and access platforms. Ham Baker undertook the refurbishment of the distributor arms and rotating equipment. Lintott installed the new chemical dosing plant and control system, and Asset Intelligence provided the site security systems. Overall, we retain an excellent position in the water industry, working for all the major water companies in 57 current long-term frameworks, which provide visibility of workload through to 2030 and well beyond.
The split of these frameworks supports our strategy with an increasing number of capital maintenance and Water Technologies positions through 2030 and beyond. The affordable homes market is probably about 18 months behind where we expected it to be, driven by a few external factors such as planning, funding, the Building Safety Act, and so on. That said, the market is starting to show signs of progress. We've continued to expand our team and the number of framework positions we have and hope to announce our first affordable housing project imminently. As referred to earlier, this morning we are pleased to announce the acquisition of Nene Valley Fire for GBP 10 million, a well-established owner-managed business which adds critical mass to our existing passive and active fire protection businesses and will be first-year margin accretive.
This business installs fire doors and passive fire protection for a range of public and private clients. We believe we can grow the combined businesses significantly, both in their existing markets and by providing access to Galliford Try's clients and framework positions. Nene Valley Fire represents our fifth acquisition since the demerger, in line with our stated position to use our balance sheet to acquire specialist high-margin businesses in adjacent markets where they meet our strategic and financial criteria and accelerate our progress towards our 2030 targets. We have an active pipeline of potential acquisitions, all in specialist higher margin adjacent markets. We have an excellent order book at GBP 4.1 billion, up GBP 200 million on the same period last year. Kris took you through the Building and Infrastructure order books in more detail earlier on.
The important thing for me to point out in this slide is that this year's work is almost fully secured and 80% of revenues already secured for FY 2027. This continuous power wave of work ahead of us gives us a long line of sight which supports our attitude to risk and allows us to have everything in place to ensure safe and efficient delivery of our projects. These are some of the frameworks we have at the moment, and you can see the excellent forward visibility of the work that we get through our framework positions across all of our sectors. We expect a high renewal success ratio as frameworks end and are re-procured, which is represented in the lighter colors to the right.
We target frameworks for this excellent long-term visibility and collaborative relationships with our clients and our supply chain in which we can continuously improve our offering and our service in a sensible risk environment. Investors should be encouraged by the fundamental improvement in industry procurement methods by public, regulated, and private clients. The Construction Playbook has driven a more mature, sustainable contracting environment with an emphasis on quality over price and an equitable allocation of risk. The combination of this mature attitude to client procurement, allied to strong risk management and efficient site performance, helps us to drive margins in the right direction. You can see on the left that 99% of our order book comes through some form of negotiated route, be it two-stage, target cost reimbursable, or directly negotiated work.
In summary, we've had a very good half year and our continued performance is a reflection of our culture, robust risk management and strong performance on the ground. I thank all of our 4,400 excellent people and our supply chain for their efforts. We're in good shape with an excellent balance sheet, high quality order book, no debt and no pension fund liabilities. The outlook for the future is good, with strong long-term government and regulated utility demand in our chosen sectors, which gives us a high degree of confidence in the outlook through to 2030. That concludes the presentation, and I'll hand back to the operator to take any questions. Thank you.
Thank you very much, sir. Ladies and gentlemen, if you'd like to ask any audio questions, please press star one on your telephone keypad. Please also ensure mute function is not activated in order to stimulate your equipment. Star one for questions. Pause for just a moment to give you a chance to signal. Our first question today is coming from Andrew Nussey, calling from Peel Hunt. Please go ahead, Andrew. Your line is open.
Hi. Yeah. Morning, everyone. A couple of questions from me. First of all, when we look at the Infrastructure division, obviously modest revenue growth in the period as you had expected, given that sort of transition into paid. A question in terms of when you look at the order book and pipeline, should we expect a more meaningful step up in revenue growth? Secondly, in terms of Infrastructure margin, I think you alluded to on the call there, Kris, that there was some mixed benefits within there. Again, just sort of the confidence to continue to progress margins towards your 2030 target. Then sort of second area around affordable housing Bill. You mentioned that you're hopeful of securing your first sort of contract.
I just wonder if once sort of the first is in, we should probably expect more meaningful draw down from the various frameworks that you have secured over the last sort of six to 12 months. Thank you.
Thanks, Andrew. Chris, you're next.
Yeah. Thank you, Andrew. In terms of the order book, in our Infrastructure division, yeah, it ticked up by about GBP 100 million in the periods last year. We feel good about that is the early AMP8 design work coming through. I'd say in the last six weeks we seem to have started to see some more orders coming through, we feel optimistic about that division as AMP8 dials up across all the water companies and wastewater companies that we work for. Yeah, we would expect to see that continue to grow towards our targets as we go forward. In terms of the margins, I think generally across the business we have seen the big design and build businesses making good progress.
They're probably slightly ahead of where we thought they'd be, hence the overall margin target is ahead. We can see that is sustainable going forward. We expect to see as the revenues grow, we will gain leverage on that. As the smaller specialist businesses incubate and grow to critical mass, we'll see progress there as well in line with our strategy. All in all, we feel confident about the Infrastructure division.
Thanks, Kris. Morning, Andrew. Yeah, on affordable housing, I think, you know, the whole affordable housing market in my view is probably 18 months behind where we thought it might be by now on the back of all the issues that are well rehearsed, planning and funding and fire safety and things like that. I do sense momentum coming into the game now. As we've said, we expect to sign our first affordable housing contract imminently. I'd expect, you know, a few more quite shortly thereafter, Andrew. I do sense movement in the market more generally. You know, we had an aspiration of getting to about GBP 250 million per annum by 2030 from a standing start in our Capital Markets Day in May 2024.
We still think that that is a sensible target to be heading for.
Do you see some opportunities in affordable to bring in some of the Investments capability that you have within the group?
We do, yes. The old PFI team obviously have very good experience in the front end of projects. They'll be leading the front end of our PRS sector projects, and that's very similar skills when you look at the sort of mixed tenure opportunities and partnerships type arrangements in affordable housing. Yes is the short question, Andrew, albeit we've always said that, you know, our entry is based on a contracting entry to sort of get us away, and then we'll look at broadening out a little down the line.
Got it. Great. Thank you very much.
Thank you.
Thank you for your question, sir. We'll now move to Edward Prest from Berenberg. Please go ahead. Your line is open, sir.
Thanks for the question. Morning, Bill. Morning, Chris.
Morning.
I've got a couple please. Firstly in relation to the fire doors and fire stopping market, what is the competitive environment like? I know a couple of years ago you said it was very fragmented, is that still the case? Do you expect to come up against any meaningful competition? Secondly, in relation to affordable housing again, when it does get going and when you start the site, how does the revenue profile and cash profile to shape up? Is there gonna be a significant land draw down at the start? Is the contract structured to be kind of a smoother revenue over the course of project?
Okay. Well, sort of for the fire market, it is a very fragmented market, Ed, and that's where we see opportunity because through this acquisition we get more critical mass into our own fire operations. Through that then we can look at both geographic expansion, and giving Nene Valley Fire access to our frameworks and our client base, which is a, you know, significant one. We think there's an opportunity to grow the business significantly and perhaps a little bit further consolidation through further bolt-ons, further into the future. It's a huge market, and obviously, as I say, we can provide significant growth opportunities internally within Galliford Try and through just giving access to our various frameworks.
On affordable housing revenues, as I say, we're going in from a contracting start originally, it's not going to consume cash. As we go further on into the program and we start to look at getting further involved and perhaps putting a bit of our balance sheet to work, then that will start to involve it. If you take our PRS activities as an example, it's predominantly sweat equity and in some options on land. We are talking about huge numbers here.
Okay, cool. Thank you.
Thank you. That's your question, sir. Ladies and gentlemen, as a reminder, if you have any questions, please press star one at this time. Back with Greg Poulton of Singer Capital Markets. Go ahead.
Hi. Morning, Bill. Morning, Kris. How are you doing?
Very well.
Thanks for taking the question. Just following up on the water side of things. Could you talk about the pace of water build up that you've seen so far this calendar year and how you expect that to ramp up in H2 please? Secondly, following up on Andrew's question about affordable housing. Just in terms of visibility of funding, when is that likely to ramp up? Some of the providers have indicated that, you know, from September there should be, you know, decency on funding. Do you get good visibility ahead of that? You know, just some more color on that would be good please.
Yeah. I'd say that the transition from AMP7 to AMP8 in water has been as we anticipated and fairly standard, dare I say, insofar as it normally slows down a touch, certainly in the first half, then starts to accelerate away. That's what we see now. We've seen a slower start or a slower start as we anticipated, and what we see now is momentum starting to gather. Strong into the second half and very strong in 2027 and 2028. A fairly typical cycle I think, Greg, in water. In affordable housing-
Yeah.
- you know, what we see at the moment in the frameworks we are on is that there's a lot of interest and a lot of activity in the sort of pre-construction side. What it looks to me is that some of the funding clarity is starting to come through. As I say, we hope to announce one imminently and a few more shortly after with a bit of luck. Thereafter, it looks to me like the frameworks are gearing up, you know, to really get going later on in the year. That sort of supports what you're saying about funding visibility later on in the year, Greg.
Yeah.
And-
There's one more. Oh, sorry, go on.
Just while you do, Greg, just we've got a similar question from Alistair just about the pace of water, so I'll just answer Alistair's question while we're on this subject. Alistair asked a question about sort of the quantum of uplift in revenue we'd expect for this year in water. We've given guidance that we're at the top of our revenue expectations. Top of revenue expectations was about 2.5% before we announced today. We think there'll be another 1%, 1.5% on top of that, so taking us somewhere sort of 3.5%, 4%-ish in total. We think that will broadly be split equally between Building and our Infrastructure division. Within that you can read the same answer. Greg, back to you.
Okay, thanks. Just last one from me. Just in terms of the Building Safety Act, I see a lot of London building sites in particular were stalled on that or heavily delayed. Are you seeing any signs of life of those moving forward?
We've only got one project that just recently went into the pipeline, Greg, you know, as you'd expect, our submission is absolutely fully compliant and we expect it to sail through. Let's see. I do think that Andy Ward and his team are doing a good job at clearing the pipeline and differentiating between, you know, sort of projects that are going through with full compliance and projects that aren't quite. The ones that are fully compliant, we expect to sail through.
Okay, thanks.
Thank you, Richard. Next question will be coming from Joe Brent, client from Panmure Liberum. Please go ahead. The floor is open.
Yeah. Good morning, everyone. A lot of them have been covered, but maybe three questions from me. Firstly, you provide that very good margin step chart. I'd be interested in your view as to which chunks of those steps are most exciting in terms of getting to your 4% divisional margin. Secondly, you know, you talk quite a lot about affordable housing and the ambition of GBP 250 million in 2030. I'm interested in your sense of the trajectory of that. Is that gonna sort of flatline or is it gonna be back-end loaded? Finally, in the sort of Investments business, we haven't talked about that at all. Can you give us any changes you're seeing at the government level which may create further opportunities for investment?
Morning, Joe. On the steppingstone question, I suppose they're all important. I would say that, what we said at the Capital Markets Day is that we expect the big businesses to grow in both volume and operating margin through the strategy period. We had the big businesses growing to about 3.5%, if you remember. At the back end, we had the higher margin work coming through, so the specialist businesses and affordable housing, and that change in the blend and the mix produces, takes us from 3.5%- 4%. What I would say is that we are ahead of program with the big businesses.
I think we're moving towards that 3.5% faster than we anticipated back in 2024, which is of course a very good thing. That's the, that's probably the first two steppingstones, I suppose, Joe. We continue to make incremental improvements in how we do things and using technology and offsite manufacture and all the, those good things we've spoken about in the past, and that makes us more efficient. That means we spend less money on rework, less time on rework, and that all is grist to the mill in terms of our margins. The fourth steppingstone, the higher margin specialist work is really about, you know, the acquisition we've announced today.
It's what we've said all along the way, of course, is that we don't need acquisitions to achieve our strategic targets. Where we can find businesses that we can acquire to accelerate our progress, then we will do. Anything that we acquire in the future will also be by its nature specialist and higher margin. We're not gonna go and buy any volumes. I think that's really important. All the steppingstones are important. I think the last one though is where there's a lot of attention at the moment in terms of affordable homes and the specialist businesses obviously. On affordable homes, the trajectory, well, I wish I knew, Joe. I think, you know, it's been slower than we thought for the first 18 months.
It looks like it's getting a lot of the momentum now. We'll see how it pans out. We still think that our GBP 250 million by 2030 is a sensible target to be going at, notwithstanding the fact that we'd be behind program. Of course, as in any strategy, we'll be a little bit behind on some things, a little bit ahead on other things. Overall, I think we're in very, very good shape. Finally, Investments. The government are talking about using some form of PPP for healthcare centers and the like in England. That's encouraging. It's a market that we were in quite strongly back in the day of PPP and PFI.
We've still got our teams that to do that sort of work, and it's the type of work that's right up our street, actually. Similarly with schools. They're not talking about schools at the moment, but, you know, looking a bit further into the future, perhaps, if healthcare centers come back and they're successful, there's no reason why they shouldn't be, by the way, then maybe it'll be broadened out a touch. The Investments team is being put to good use in PRS, more so perhaps in the next couple of years in affordable housing, and certainly they're in the wings if PPP comes back.
Fantastic. Thank you.
Thanks, Joe.
Thank you very much for your questions, Joe. As we have no further questions from the audio, we'll turn it over out to Julian to take any questions submitted by webcast.
Yeah. Thanks, George. A number of them have actually been picked up already. We do have a follow-up from Alastair at Progressive. On the subject of defense, similar question to that which he asked Kier yesterday: Have you noticed any increased urgency among your clients in response to the recent, very recent events?
I'd say that the urgency, has been there for a little while now. I don't think the events from the weekend have changed anything for us. You know, we've picked up a lot of work in Defense through the DEO program and through some additional works. We announced on Monday, I think it was, the RAF Lakenheath project, which is actually for the U.S. Air Force. And there's a lot of work going on in Defense, obviously, through the DEO program and through various other frameworks. I'd say it's as we anticipated. There's nothing particularly changed since the weekend, no.
That concludes the webcast questions. Just turn it back to you, Bill, to wrap up.
Okay. Thanks, Julian. Okay, everybody, well, thank you very much for joining us. Just to sum up, I suppose, we've got great people in the business. We've got a cracking order book. We've got a very strong balance sheet, and the market conditions are very supportive of all our, all of our aspirations. On the back of all of that, of course, as we said this morning, we expect our full-year results to reflect that outlook. Thank you very much for joining, and have a good day. Thank you.