Okay. Good morning, everyone, and thank you for joining our half year results presentations, both here in person, and I'd also like to extend a welcome to those joining us by webcast and audio. I'm Andrew Davies, Chief Executive of Kier Group, and I'm joined today by Simon Kesterton, our Chief Financial Officer. This morning, I will talk you through the highlights of the last six months to 31st of December 2022, and then hand you over to Simon, who will talk you through the group's financial performance. This will be followed by an operational review, an update on ESG, and we will finish off with our outlook. There'll be a opportunity for questions and answers at the end. If we move on through the disclaimer, and we look at the half year 2023 highlights on Slide 4.
We delivered a strong set of results in the first six months. We had a positive momentum in the business; infrastructure services revenue grew by 5% and construction grew by 4%. We do, however, continue to see inflationary pressures in the business, and certain projects are having to be reappraised and therefore delayed due to cost pressures, in particular in our construction business. We did, however, achieve an adjusted operating profit of GBP 57 million, a period-over-period increase of 6%. We delivered an industry leading adjusted operating margin of 3.7%, continuing to outperform our medium-term target of circa 3.5%. I'm very proud of my entire Kier team in delivering another set of strong results, and Simon will talk through the financial performance in more detail later.
Our focus continues to be firmly on delivering the medium-term plan through growth in our core markets, supported by U.K. government spending commitments. Therefore, to deliver a 3.7% adjusted operating profit margin in the first 18 months of our 3–5-year plan increases my confidence in the business to continue delivering for our shareholders. The group's net debt position at 31 of December was GBP 131 million. The net debt position reflects our usual seasonal working capital cycle, as well as the full repayment of our CEPS facility. Therefore, GBP 131 million was a great achievement against this context. Average month-end net debt for the year was GBP 243 million compared to GBP 191 million in the prior year.
We're seeing the underlying positive cash flow come through, which has allowed us to reduce our debt and our debt-like items. Our order book sets us up well for the medium-term plan and demonstrates that we continue to benefit from U.K. government spending. The order book has increased by 26% year-on-year from GBP 8 billion to GBP 10.1 billion, reflecting contract wins across our business and providing multiyear revenue visibility. The underlying momentum in the business is strong. We've secured 96% of FY 2023 revenue, which provides a high degree of certainty against a backdrop of wide economic and political market uncertainty. Significant effort has been made to improve the quality of our order book. As a reminder, over the last three years, we've exited low and loss-making contracts.
We've spent a lot of time de-risking our portfolio, we're focused on winning work within U.K. government and regulated authorities with negotiated terms and appropriate risk profiles. Our order book is supported by long-term framework positions; frameworks are our route to market. We've maintained and grown our central and local framework positions. However, we exclude long-term framework positions from our order book, therefore these represent additional pipeline of opportunity. We're committed to our sustainability framework and ESG targets, which we'll talk about later in this presentation. Our existing order book and strong at GBP 10.1 billion has continued to grow in the period which provides us with confidence and healthy visibility for the full year FY 2023 and into FY 2024. With that, I'm pleased to be able to hand over to Simon.
Thank you, Andrew. Morning, everyone. Turning to Slide 6, this sets out a high-level income statement. Revenue in the first half, as Andrew mentioned, is similar to the prior year and reflects volume growth in both infrastructure services and construction, which offset the anticipated reduction in property transactions. I'll walk through this on the next slide. We delivered adjusted operating profit of GBP 57 million in the first half of the year despite inflationary pressure. The group is 20 basis points ahead of its medium-term plan margin target of 3.5%. The business made a statutory profit before tax of GBP 25 million. This is post adjusting items and amortization. Statutory profit has doubled compared to half year 2022. This demonstrates period-over-period improvement and how the business continues to progress towards its medium-term value creation plan.
We achieved adjusted earnings per share of 8.5 pence. This represents a 9% growth when compared to the 7.8 pence in the first half of last year. Net debt consistent with last year was GBP 131 million and reflects the usual seasonal working capital outflow. We achieved the GBP 131 million despite the repayment of our supply chain finance facility, CEPS, in July 2022. Average month-end net debt was GBP 243 million. This was adverse to the prior period, but in line with our expectations, given the repayment of our CEPS facility and other debt-like items. Turning to Slide 7, starting on the left-hand side, we start with revenue of GBP 1.5 billion. Infrastructure services revenue increased by 5%, primarily due to the ramp up of capital works on High Speed Two.
Construction revenue increased by 4% as our order book starts converting to revenue. Our new prison in East Yorks, Yorkshire, Her Majesty's Prison Full Sutton, continues to ramp up production. It is worth mentioning we've achieved this growth despite having seen customer budget approvals being delayed, project reappraisals and value engineering to bring projects back in line to budgets with public sector spending having been impacted by cost inflation. Property revenue fell by GBP 66 million as we saw the expected reduction in property transactions reflecting current market conditions. We took advantage of favorable market conditions at the end of our last financial year, knowing it would subdue property transactions for the next couple of years. Moving now to the adjusted operating profit bridge. We start with the previous year's first half adjusted operating profit of GBP 54 million.
Volume mix and price changes have resulted in an increase of GBP 4 million. The reduction in property transactions resulted in property profits being GBP 6 million lower than the previous period. Cost inflation over the period amounted to just under GBP 5 million. We continue to see inflationary pressure given the macroeconomic environment but also continue to mitigate the majority of this. Over 60% of our order book is made up of target cost or cost reimbursable contracts. If we do choose to give price certainty to our customers, it will be done after key risks and opportunities are understood. Our average order size in construction is only GBP 14 million, resulting in a regular repricing of contracts. Lastly, we have management actions of GBP 9 million. Management actions primarily related to ongoing cost-saving initiatives in the first six months of the year.
The result is an increase in adjusted operating profit to GBP 57 million. Adjusting items amounted to GBP 20 million in the period and are much lower than the GBP 30 million incurred in the first half of last year. We've seen restructuring costs materially reduce as expected. As a reminder, half of these items are non-cash, being amortization related to historical acquisitions of GBP 9.8 million. Restructuring costs. These, as I've said, have reduced significantly from nearly GBP 12 million to less than GBP 4 million. The costs in the period relate to the downsizing of the international business in line with its market opportunities. The comparative costs largely relate to the regional restructuring and cost reduction in our construction business completed in FY 2022. Some of these costs were paid during the first six months of this financial year.
Other items of GBP 5.5 million include GBP 4 million of fire cladding costs. Given the nature of the construction projects, we typically engage in and following regulation change, we estimate our exposure to this could be a worst case between GBP 10 million-GBP 20 million. Moving on to free cash flow. Operating cash flow conversion was in line with expectations given the seasonality in the business. Adjusted EBITDA in the period grew from GBP 77 million to GBP 91 million. We have GBP 79 million of working capital investment, a significant reduction when compared to the half year 2022 outflow of GBP 133 million. Working capital is seasonal in the business, with summer being a higher period of activity compared to the winter months.
Working capital improved compared to the prior year, predominantly due to the volume growth in the business. The prior year comparative was also impacted by VAT payments on account of GBP 10 million. During the second half of the year, the group is anticipating a reversal of the H1 working capital outflow and a return to net cash. As previously mentioned, we repaid the final GBP 50 million of CEPS in July 2022, meaning our total operating cash generation, together with proceeds from the equity raise and the sale of Kier Living, has allowed us to reduce CEPS by GBP 201 million since the 31st of December, 2018, and GBP 79 million since the equity raise, which demonstrates the underlying cash being generated. CapEx in the first six months amounted to GBP 27 million.
However, GBP 22 million of that relates to payments made and the leases now capitalized under IFRS 16. The majority of the increase relates to additional plant and equipment to support the ramp up of HS2. Net interest and tax increased by GBP 8 million in the first half due to interest payments of GBP 5 million, with a mark to market benefit of GBP 2 million from the hedge we took out in February 2022, tax of GBP 3 million and leases of GBP 2 million. We maintain supply payments of 34 days on average, consistent with the prior period. If we step back and look at our free cash flow in the first half, excluding the impact of CEPS at GBP 38 million, this outflow was a significant improvement on what would have been an outflow of GBP 100 million in the last year.
We can therefore see the underlying cash generation with our adjusted EBITDA converting to free cash flow. Turning over to Page 11, we have the net debt bridge. We start on the left-hand side with closing cash of GBP 3 million at the end of June 2022. We see free cash outflow of GBP 88 million that I've just talked about. We had adjusting items of GBP 23 million. This includes the payment of items accrued for in FY 2022 and pension payments of GBP 7 million. We have the purchase of Kier Group shares. This is in respect of the group's employee benefit trust, which acquires Kier shares from the market for use in settling the long-term incentive plan share schemes when they vest. The net cost of this was GBP 12 million. The other GBP 4 million predominantly relates to net joint venture investments.
This results in a net debt position of GBP 131 million, the same as the prior year. Moving to financing and liquidity. On the right-hand side, we show the current debt structure of the business following the refinancing in 2021. As a reminder, the majority of our facilities were extended as part of last year's refinancing and are due to mature in January 2025. During the first six months of the year, in addition to caps, we repaid $54 million in total on our revolving credit facility and U.S. private placement notes, both of which matured in December 2022. We repaid these from our operating cash flow, and we continue to maintain considerable headroom on our facilities. Slide 13 sets out our order book position.
Our order book is high quality and has significantly increased by 26% to GBP 10.1 billion compared to 31 December 2021. We've secured 96% of our FY 2023 revenue, as Andrew mentioned, and we continue to win work in our chosen markets. Significant effort has been made to improve the quality of the order book. We're focused on winning work with U.K. Government and regulated authorities. We continue to focus on managing risk and reward when bidding, negotiating, and delivering work. As mentioned earlier, 60% of our order book is under target cost or cost reimbursable contracts. Our infrastructure business has nearly 100% of its contracts agreed as target cost or cost reimbursable, and it's important to balancing our risk and reward profile.
Within our construction business, we utilize staged lump sum contracts to fix that risk with our clients where appropriate and provide certainty. We also use two-stage contracts to negotiate favorable terms and manage risk. Our average order size is only GBP 14 million. Having that relatively small average order size results in us regularly repricing contracts. The order book continues to be underpinned by significant long-term framework agreements. Our long-term framework positions are excluded from the order book. These represent further opportunities for the group. Moving to capital allocation. We're focused on optimizing shareholder returns. Accordingly, as we generate cash from operations, we expect to deploy that in a number of ways. CapEx is expected to be minimal, but we plan to invest further in our property business in order to generate consistent returns over time. We'll continue to do this in a disciplined and controlled manner. Further deleveraging.
As you're aware, we're targeting a sustainable net cash position in the medium term. We're targeting a dividend cover of around three times earnings through the cycle. Once we have sight of our medium-term sustainable net cash position, we appreciate that restating the dividend will be key to ensuring our shareholders share in the benefits of the group's growth. With regard to mergers and acquisitions, the group will continue to consider value-accretive acquisitions in core markets where there's a potential to accelerate the medium-term plan. Now I'll hand back to Andrew for the operational review.
Many thanks, Simon. Now turning to Slide 16, I'll give some color on the operational updates over the last six months, starting with our infrastructure services business. As a reminder, this includes our highways, our infrastructure projects, and our utilities businesses. We've seen revenue growth with an increase of 5%, this is largely driven by the ramp up, as Simon said, of HS2 capital works in our infrastructure projects business. We're part of the Eiffage Kier Ferrovial BAM, or EKFB, joint venture, Kier is delivering the longest section of earthworks, 80 km from the Chilterns to just south of Warwick. We have the lead on that project management within the HS2, EKFB/HS2, we're the project integrator within the joint venture. Within the business, our adjusting operating profit increased 3% to GBP 34 million.
Our adjusted operating margin remains strong for infrastructure services at 4%. We've seen some of the volume benefits from HS2 being partially offset, however, by increased contract mobilization costs in our utilities business. Our utilities business has seen higher activity in the telecom sector with the U.K. Government's commitment to rolling out 5G connectivity across the country. We're heavily involved in the installation and maintenance activity on this with our telecoms team as part of the broadband rollout. As the telecoms business has ramped up, there have been an adverse impact on margins in the first half of the year. As a result, we're currently reviewing our costs in that business. The performance in our utilities business continues to improve. We've had positive momentum in the order book with an increase of almost 30% to GBP 5.8 billion, as Simon said.
Our utilities business, which delivers long-term contracts providing construction and maintenance services to water, energy, and the telecom sector, as I said, was reappointed on a 3-year extension to the Network Services Alliance framework by both South West Water and Bournemouth Water, which we estimate will be worth GBP 55 million per annum to us. This framework work follows an existing contract which was agreed in April 2000 under the AMP7 cycle. With 97% of our revenue secured for FY23, and with our recent wins, this underpins our revenue in the infrastructure services business for FY23 and beyond. We move to our construction business. Our construction business comprises the regional build business, where we construct schools, hospitals, prisons, and defense projects for the U.K. Government. It also includes our strategic projects business and Kier Places, our housing maintenance and facilities management businesses.
Construction volumes grew 4% to GBP 709 million, which reflects the ramp-up of work in East Yorkshire to construct a new prison, HMP Full Sutton, for the Ministry of Justice, U.K.'s first net zero carbon prison. This category C, low security prison is expected to house 1,500 prisoners and will run on electricity only. It's been designed to include solar panels, heat pumps, and efficient lighting. The prison is being constructed using modern methods of construction, providing both cost and program efficiency benefits. Social value is also a key element of the project, with Kier committing to 50 sustainable employment opportunities for prison leavers, 50 apprenticeships, and upskilling 1,000 workers within its supply chain. Kier Places also saw volume growth across facilities management and housing maintenance.
The facilities management work is predominantly for the Ministry of Justice and Home Office, demonstrating the synergies of these two businesses. The adjusted operating profit grew 25% to GBP 33 million, with margins increasing 70 basis points to 4.6% as the benefit from volume growth and previously realigned cost base start to drop through to the operating profit line. Simon said the order book momentum has continued in our construction business, with an order book increasing 23% to GBP 4.3 billion. We were recently appointed to the GBP 10 billion offsite construction solutions framework. Kier, with our joint venture partners, McAvoy and Metek, were appointed to all six lots, and it replaces the existing modular building framework and will run for the next four years. Kier has also been reappointed to the North West Construction Hub high-value construction framework.
The new version of the framework will continue to support local authorities procuring for the construction and maintenance of public sector buildings in the area. We secured places on both lots 1 for projects valued at circa GBP 8 million-GBP 25 million and lot 2, covering projects GBP 25 million and above. Kier has worked within the framework since its inception in 2009, collaborating with many of the Northwest region's public sector organizations through two-stage arrangements, meaning early contractor involvement to deliver projects including schools, colleges, leisure and sporting facilities, and theaters. The Kier Places team has been awarded preferred bidder status by RHP Group on a GBP 75 million 10-year contract to deliver repairs, voids, and planned works across its housing portfolio of around 10,000 affordable homes in the boroughs of Richmond, Hounslow, Kingston and Hillingdon.
As part of RHP Group's large-scale improvement plan, Kier Places skilled teams will aim to carry out works to upgrade homes, including installing new kitchens and bathrooms, as well as making properties more energy efficient. Our construction business has 95% of its revenue secured for FY 2023. I'm very proud to say the construction team has won new, high-quality and profitable work in our markets, reflecting the bidding discipline and risk management embedded in the business. As these orders convert to spades in the ground, we expect the associated revenue generation and working capital flow opportunities to follow on. Finally, to our property business. Our property business invests and develops primarily mixed-use commercial and residential schemes and sites across the U.K.
The business is well established in the urban regeneration and property development sector, and we largely operate through joint ventures to manage risk and opportunities. As expected, operating profit fell due to reductions in property transactions driven by current market conditions. As we anticipated a slowdown in market conditions, we were able to increase our completions and transactions at the back end of FY 2022 to maximize the returns for our shareholders. We'll continue to take advantage of market opportunities where possible in terms of land acquisition, timing of build and selling, and doing so within our disciplined approach to the use of capital. Simon said the capital employed in our property business reflects Kier's equity, debt investment, capital appreciation and reinvestment of profits. The capital employed increased to GBP 158 million from GBP 122 million invested at 30 June 2022.
A return on capital employed for the first half of the year was 7%. As a reminder, we're targeting to increase our capital employed, as I said, to GBP 170 million over the medium term. We believe this to be consistent rate of capital investment at a level expected to help smooth the returns profile of the business. We believe it takes some time to selectively invest in sites, season the capital and then transact. Over the medium term, we expect to deliver a more consistent performance from our property business. Similar to the rest of Kier, the property business has performed well in work winning, and the highlights include our Andover development in partnership with Test Valley Borough Council, which was fully let, and our Solum joint venture with Network Rail sold its final residential block at its Twickenham Gateway development.
Moving on to ESG and sustainability. This is the slide which I hope is familiar to most of you, but we thought we'd remind you of the key focus areas for Kier. Our purpose is to sustainably deliver infrastructure which is vital to the U.K. As a strategic supplier to the government, ESG is fundamental to our ability to win work and secure positions on those long-term frameworks. For example, U.K. government contracts above GBP 5 million require net zero carbon and social value commitments. Previously, we launched our new sustainability framework, building for a Sustainable World, which covers sustainability from both an environmental and a social perspective. We genuinely believe that to be a responsible business and to play a leading role in our industry, we must address both the impact of climate change and leave a lasting legacy in the communities in which we operate.
We turn to environmental on Slide 21. This slide details one of the initiatives to reduce our carbon footprint. Following engagement with our supply chain partner, we've introduced the use of battery storage units alongside generators on our sites. As our sites can often be in areas without access to mains power supply and given the significant carbon emissions generated by fossil fuels, we believe the use of battery storage units will represent both a reduction in our carbon emissions, but also a great cost-saving opportunity. So far, we've introduced the storage units on just under 20 of our 400 live sites. Moving to social side, Kier is, and always has been, committed to investing in training programs to upskill our employees with a view to addressing the current industry skills shortage.
Kier is a people-based business, and our performance depends upon the ability to attract and retain a dedicated workforce. During the period, we had over 500 apprentices participating in programs representing 6% of our workforce. We have a total of 7.5% of our workforce currently in formal training programs. I'm proud to say that in January this year, we committed to creating 10 internships for talented Black students as part of the 10,000 Black Interns scheme. We're committed to making Kier a diverse and inclusive workplace, and we're targeting to increase the number of internships as we go forward. If I move on to the summary and the outlook. The performance of the group over the last six months reflects our significantly enhanced resilience and strengthened financial position. We've continued to outperform our medium-term targets.
Our order book has increased significantly against prior year to GBP 10.1 billion, reflecting a large number of contracts wins across our businesses. This provides us with good multi-year revenue visibility. These awards reflect the bidding discipline and risk management now embedded across the business. Current trading remains in line with the board's expectation despite inflationary pressures and the political and economic uncertainties. Looking ahead, we expect to generate positive operating cash flow for the full year and deliver a net cash position at year-end. Our FY 2023 outlook remains unchanged. The group is well positioned to continue benefiting from U.K. government infrastructure spending commitments and focused on delivery of a sustainable net cash position and a sustainable dividend in line with our medium-term value creation plan. With that, ladies and gentlemen, I'd like to open up the meeting for any questions. Andrew.
Good morning. Andrew Nussey from Peel Hunt. A couple of questions, please. First of all, in terms of inflation impact, there's obviously some comment in the market that inflation pressures are beginning to ease. Are you still facing some delays within construction arising from inflation, or is it beginning to get a little bit better? Secondly, in terms of the management actions, the benefit of GBP 9.1 million, how much was sort of an annualized impact from past actions as opposed to what was undertaken in the period and what might be led moving forward?
Should I take the first and Simon, you want to take the management action? On the construction delays, yes, we are still seeing construction delays. I think they're easing, and I think you see the order, well, the order book growth is good, but the revenue's increasing in construction, as we said, 4%, 5%, et cetera. I think that reflects now the easing of it. It also reflects the latency working through from prior delays last year in construction. Those contracts are now, having been reappraised, coming to get spades in the ground, as so to speak. We are seeing an easing of it, but it does still exist and inflation does remain still an issue in the business.
I think it'd be fair to say it is easing, and the evidence for that, I'd say, is the construction revenue growth. Do you want to take the management actions?
Yeah. The cost side, the management actions was about roll forward was about GBP 5, incremental GBP 1, and then GBP 3 was actually mitigating inflation. Not a cost saving itself. It was mitigating those inflation.
Thank you.
Johnny.
Thanks. Johnny Cooper at HSBC. Could I ask firstly on the construction margin, and you pulled out that it was helped by the impact of management actions and higher volumes. It'd be helpful to also understand the margin dynamics within the different businesses within construction and what the difference is between Kier Places and Regional Build, and what the impact of that was?
Yeah, it's a good question. Places is a slightly higher margin. Our construction business lower margin. At the moment, the mix is swung towards our Places business as to where we'd expect it to grow because the construction business is still recovering. As the construction business grows, I'd expect that margin to become slightly diluted.
In terms of the debt maturities in 2025, what's your expectations at the moment for how you refinance that?
Yeah, I mean, obviously at the moment, the markets aren't great for refinancing debt. You know, at the moment we've got plenty of time, so we'll just keep an eye on them. When a window opens up, we'll try and take advantage of it.
Just going back to the construction point, you'll see when we did say we took management action last year in construction, we sort of trailed that we were going to do it because we anticipated slightly lower volumes last year because the inflationary pressures delaying things, and you sort of see the benefits of that coming through. It is a volume sensitive business, but that's why we're very acutely aware that you do have to make sure your cost base is right for your volumes. The comment I made in utilities is the same sort of comment. We do proactively take management action to make sure we have the right cost base for the right business volume.
Thanks. Just one more from me. You mentioned delivering a good performance despite political uncertainties. What are your expectations at this stage for the impact on your end markets if there is a Labor government coming into place next year?
I mean, obviously like everybody else, we have, to a degree, been impacted by the changes in government. You know, various ministers change, et cetera, et cetera. That naturally puts a slight pause in processes. That's possibly a contributor to the delays, but I do think, you know, inflation has been the main sort of issue there. I mean, our view of the current government is that they've stated they want to stick by the original manifesto, which they got elected in 2018, 2019. That was a commitment to recapitalizing infrastructure in the U.K. All the signs are we are seeing that commitment being continued.
I think for the present, you know, government remains very strongly committed, and I think the chancellor recently, you know, in response to an article, committed that HS2 would continue to go to Euston. Very strong support and commitment is what we see from the existing government, which is great. I think for a future government, I think all parties, as a bipartisan approach to investment in housing, investment in schools and education, investment in transportation, hospitals and healthcare. You know, naturally, we need to see what their policies are when they roll them out as part of any election campaign. I think, you know, there seems to be a very strong bipartisan approach that do need to recapitalize infrastructure in the U.K.
Morning.
Morning.
Adrian from Panmure. two from me. Given the macro-outlook on property, what kind of property transactions and investments are you likely to direct the capital towards? Perhaps if you deal with that one, then I'll ask the second question after.
Do you want me to take that?
Yeah.
We'll continue to, you know, continue to look at the opportunities we have looked. I mean, the one thing we do look to with properties, we look to those areas of strong synergies with our operating businesses. I mentioned, you know, the success of the Twickenham scheme, Twickenham Gateway, which is a residential scheme built in conjunction with Solum, our Network Rail partner, above Twickenham station. You know, it allowed them to redevelop the station they wanted to do and then finance it through the skill set which we brought to allow them to develop the residential. We continue to look at those opportunities within existing JV agreements. We continue to look at logistics, but as we said, we did sell a fair few of those last year.
We took advantage of the market conditions and opportunities. That was the right thing to do to transact a little earlier to take advantage of that. It's a broad spectrum. It's a good portfolio we look at. We do look at areas where we've got strong synergies with either customers in the operating businesses, you know, like Network Rail or like the various councils we operate with. It's across the usual spectrum.
One for, probably for Simon. Could you give us some sort of color in terms of what the sort of non-underlying items are gonna be for the second half and perhaps for next year as well?
Yeah, I mean, in terms of, I mentioned the fire and cladding. I mean, I think that's the one that could potentially drop through, and we see there GBP 10 million-GBP 20 million potentially, with 4 in the first half, go. Those are the items more likely going forward. Andrew mentioned a sort of cost-based review on utilities. There could be a little bit from that, but I don't see that material. From a cash point of view, of course, we're still cash flowing that Cheshire West and Chester amount, which cash flows out until 2025.
Thanks.
Morning, both. Alex O'Hanlon from Liberum. Just one question from me, if I may. On the construction order book, you mentioned that you use two-stage bidding as a process to manage the risk of cost inflation. Could you give us an idea of what proportion of work is bid on that basis?
Phew. A %, I mean, we do target two-stage. Most of the frameworks, you know, by the very definition are two-stage negotiations, so you will get into them. Sorry, you can go next. Look, you know, certainly, you know, that's our preferred route to market, is working with the customer, get early engagement, work with the customer, work through the inflationary pressures. You may have to value engineer it. That's, of course, the slight delays, as we've always consistently said. You always get to an end result with a proper and, you know, correct allocation of risk between the client and the contractor if you do two-stage negotiation. Not saying we do always the two-stage negotiation.
If we're building, something with a client off a framework with a known cost base, with certain elements de-risked, maybe land risk excluded or asbestos risk excluded, we will do a lump sum, D&B contract. You know, you know the risk in that. If it's an unknown unknown or a new client or a new type of, we will almost certainly go through a two-stage negotiation as our preferred route to market, but not exclusively. At the end of that, when you get into contract, as Simon said, once you get cost certainty and risk certainty around the projects, very often to give the client budget certainty, you will then fix it out at a point in time, in the, in the contract. That suits both parties, and that allows then margin to grow potentially within the contract.
Perfect. Thank you.
Any more questions? Okay. With that, I will wind up the proceedings. Thank you very much, everyone, and have a good day.
Thanks.