Are we good? Good morning, everybody, and welcome to the interim results presentation for Keller for 2024. Welcome to our new presentation facility as well. It's a new fresh for us. Talking of which, in terms of housekeeping, pardon me, first of all, you would have noticed I came in with some walking sticks, so I'll be sitting and presenting from here today, but David will be making use of some exercise and actually moving the lectern. In terms of mobile phones, I'd appreciate it if you could all switch them to silent as we go through. There's no programmed fire alarms, so if the alarm does go off, I'll ask you to make your way through the fire escape through the doors there. Then there's an exit to the left, and there's a muster point directly outside. Okay. In terms of our agenda, it follows our normal agenda today.
I will be topping and tailing it with a summary and an outlook at the end. David, as usual, will carry the heavy load of actually explaining in detail in the middle of the presentation, which I'm sure you'll find there's some very rich detail in there as he works his way through it. Moving on to the summary, this is lifted directly off the RNS, as you'd expect. There's some really good positive features in there on pretty much every single variable that you look at. Now, I'm not going to go through each of those individually. I mean, you can see all of those, and David will explain the moving parts in a little while. But what I do want to do is to impart to you what I think are the three key messages of the presentation today.
The first one is the fact that in the first half of 2024, we've had an absolutely outstanding performance from the company. If you look at it in terms of operating profit, margin, free cash flow, earnings per share, all of these have moved significantly ahead. So much so that in one half year, we've achieved a performance that, frankly, we used to achieve in a full year. And that is really, really pleasing to see. And there's numerous elements behind that, and as I say, David will explain that in a little while. The second thing, and this is really important to us, the second thing is it evidences very clearly that the improvement that we did in 2023 in terms of operating and financial performance, that step up, is sustainable, and that we can do it as an encore, and it's here to stay.
And that is an important thing to prove to ourselves, and in terms of us moving forward, is the new starting point as far as our corporate performance is concerned. And then finally, the third item, given the momentum of the first half, given the strength of the order book, which I will talk to a little bit later on, we reviewed the forecast of the full year as a Board, and there's some further investigation we did. But in the end, it was actually quite straightforward to actually come back and do a material upgrade for the full year performance in 2024. And that, I think, is driven by those two things: the momentum so far, as we go into the second quarter, the second half, and also the strength of the order book.
With that, I'm going to hand over to David, who will take you through the detail.
Thank you, Mike. And good morning, everybody. So in the financial results section, the key highs to watch out for are the outstanding underlying operating profit growth, and I'll share the year-on-year movement. Following from that, the very strong free cash flow generation compared to last year and the resulting reducing leverage rate. And finally, the look-ahead modeling considerations for the rest of 2024. Okay, let's start with the P&L. This is the full P&L showing underlying operating profit of GBP 113.2 million, non-underlying of GBP 7.3 million, with a resulting statutory operating profit of GBP 105.9 million. A very impressive increase of 87% versus H1 2023. This builds on the performance we recorded in the second half of last year. Let's look at underlying first. So looking at revenue, we have solid revenue growth of 4.6% on a constant currency basis.
Volume was up in North America by 4.2%, driven by growth in foundations, offset by Suncoast as a result of the residential downturn, and RECON due to lower levels of activity on LNG projects. Europe and Middle East increased revenue by 6% despite the market conditions in Europe and a drop-off of revenue from The Line project in H1 2023. APAC increased revenue by 3.4% despite the reduction in Australia infrastructure projects, following a stellar period in 2023. India and ASEAN continue to show steady growth. It is very pleasing to report an underlying operating profit increase of 75.5% on a constant currency basis, and our margin rate increasing 300 basis points to 7.6%. I'll bridge that operating profit performance in the next slide. Net finance costs have decreased by GBP 2.9 million, driven by lower average borrowing levels due to strong levels of cash generation.
Taxation at GBP 26.7 million is at an effective rate of 26% that has increased since last year due to the higher mix of profits coming from the U.S. The underlying earnings per share has increased 85% to 103.3p, driven by the improved underlying profitability with lower finance costs contributing to the higher growth level compared to underlying operating profit. The Board has increased the interim dividend of 16.6p, rebased following the 20% increase in the 2023 full year dividend, and a proportionate with an anticipated full year dividend increase of 5%. We'll now move on to the operating profit bridge slide. So moving from left to right, starting with 2023 H1, underlying operating profit of GBP 67 million. There's an FX impact of GBP 2.5 million due to sterling strength against the dollar.
So coming to the North American division first, which is up GBP 42.7 million versus the half year last year, much stronger than expected. Foundations volume relates to growth in comparison with the first half of last year, driven by busy markets in the South, Central, and Northeast business units in particular. The foundation's margin block of GBP 32.9 million is made up of a few elements. Firstly, a storming Q1, given the busyness of the markets and with little or no impact from the usual bad weather we would expect. Secondly, the continuing impact of sustained improvement in underlying contract performance as a result of improved project execution and focus on commercial discipline that we saw coming through, particularly in the second half of 2023, as the old order book was chewed through following the actions we took in 2022.
And finally, a buoyant market in South Central business units where schedule and program are more important to clients, which results in robust pricing and tighter, more effective utilization of resources. RECON is down following the postponement of an LNG project on the Gulf Coast as a result of an amendment of regulatory requirements in respect of energy projects. Conspicuous by its absence is a block related to Suncoast. The negative residential volume reduction did occur, but was offset by resilient pricing management by the local team. Now turning to Europe and Middle East, where it was GBP 8.7 million down. The European businesses performed well, increasing profitability driven by a large infrastructure project in Germany. The market conditions in Europe do, however, continue to be tough. Middle East, including Neom, is negatively impacted by a prior year comparative benefiting from the work on the Line at Neom.
The Trojena project at Neom commenced at the start of the year and has encountered ground condition difficulties, resulting in a loss reported in the period. We are in discussions with the client to remedy the contractual position. The APAC division was up GBP 15.2 million, predominantly driven by the turnaround in Austral, with monthly profitability against losses in 2023. The rest of APAC has performed well, with the expected drop-off in profitability in Australia being offset by continued growth in India and, to a lesser extent, ASEAN. Moving to the next slide, I will cover off non-underlying items. Again, the income statement, but this time focusing on the middle column, non-underlying items. We continue to tighten our definition of non-underlying across the business.
The analysis box shows the items that make up GBP 7.3 million, down from GBP 10.4 million in the half 2023, which we have split between cash and non-cash. We continue to invest in the ERP program and the restructuring costs related to the Group Finance Transformation Program that was launched in H1, with the setup of two finance shared service centers, one in Kuala Lumpur and the other in Warsaw, servicing the APAC and EME divisions, respectively. The plan, in respect of North America, will be developed in the second half. The loss on disposal relates to the sale of the South Africa business to local management. Non-cash predominantly relates to acquired intangible amortization, and the GBP 0.8 million contingent consideration credit relates to the GKM acquisition, where deferred consideration is no longer payable. I'll now move on to talk about cash.
This page shows the summary net debt flow from underlying operating profit down to net debt. The levels of free cash flow generation that we achieved in the second half of 2023 have continued in the first half of 2024. We have generated free cash flow of GBP 88.6 million against an outflow of GBP 9.1 million in H1 2023 and GBP 100 million for the full year 2023. Working capital outflow was minimal as the growth of payables and receivables aligned, and net CapEx levels are reduced given the spend on Neom assets in H1 and higher levels of disposal proceeds in H1 2024, some of which related to properties in the U.S. Other callouts: cash tax is lower than half year 2023 because there was a higher payment in H1 last year as the 2022 liabilities payment slipped into 2023.
The GBP 4.9 million outflow on disposal relates to the sale of the South Africa business. In the bottom box on the right, we highlight the reconciliation of net debt on an IAS 17 covenant basis to GBP 100.7 million. Leverage on a lender covenant basis is 0.3 times, already outside our target range of 0.5-1.5 halfway through the year. More on net debt later. Next slide is a summary balance sheet. This slide shows a summary balance sheet with comparatives for December and June 2023. For reference, we set out the movements in the boxes, which are pretty standard with no particular callouts, so we'll move on. The next slide shows more detail on the net debt profile during the year. The cash generation from operations has driven the reduction in net debt.
Looking at the trend, you can see the reducing profile of the second half of 2023 has continued into 2024. The increase in June 2024 is driven by the payment of the final year dividend. The group's multi-currency syndicated revolving credit facility was refinanced in the period, increasing the facility from GBP 375 million -GBP 400 million, with no change in the related covenants. The revolving credit facility was undrawn, and along with cash at period end, gives us a headroom of GBP 650 million, a very robust position as we look to the future. There is covenant detail on the slides, and we are well within our key metrics. Our leverage rate is now at 0.3 times, and we will gravitate towards zero towards the end of this year and into Q1 next year. We will continue to assess the optimal capital allocation options in the second half.
The next slide shows some look-ahead modeling considerations for the second half. On North America foundations, continued sustained improvement with the market buoyancy tapering off, resulting in more normalized margins. Suncoast pricing will normalize, so the associated margin levels of H1 will not repeat. On Europe and Middle East, the market will continue to be tough in H2 in Europe. Austral, we expect a full year of profits. On phasing, H1 has been exceptional with a very strong Q1. We do expect normalized margins in H2, such as we have a H1 weighting exacerbated by an FX headwind. On cash and net debt, we will continue to gravitate towards zero net debt on an IAS 17 basis, with capital allocation options to be considered. That's it for me. Thank you for your attention, and I'll now pass you back to Mike, who will take you through the business performance update.
Thank you, David. Okay. I'm going to start the business update with safety and well-being. And as always, John Raine and his team, and indeed the whole of operations, continue to make really good progress on this particular agenda. You can see there that the AFR, the accident frequency rate, is somewhat stable, and the TRIR, the recordables, is slightly down. We've actually, and this has been encouraged by the Board, we're actually beginning to move from lagging indicators to leading indicators. And the idea for this is to add additional impetus to try and get ahead of incidents and events before they occur. And that's something which we're increasingly putting emphasis on. And you'll see that perhaps in some of our future presentations.
But it is, again, another, if you like, an encore, another impetus to try and actually make further progress in what is a tremendously difficult agenda item. You'll see there are some of the key actions which we've taken. We've got the safety week coming up in September. The theme this year, again, trying to be preemptive, the Global Safety Week, is to distance yourself from danger. And that is to actually take yourself away from the danger zone and out of the line of fire before you actually start any work. And by doing so, de facto you will prevent accidents. And that's something which we're focusing on. It's not always going to be possible, but it's something in terms of mindset, it's something which we're going to be encouraging and focusing on for a week, trying to reinforce that message with people.
Some of the other items down there, second bullet point is really about mental health. Mental health in construction is a key factor for us all. It is an area which young males in particular are particularly vulnerable. It's a very macho industry. It's an industry where people bottle things up. And we've got to try and unpeel that a little bit and actually make people open up and actually, again, get ahead of some of the issues there. And the final one I'll pick out is telematics, particularly automotive in North America. And this is common to all sorts of different industries. Auto accidents in North America are always a big issue. We have now installed telematics in all of the Keller-owned vehicles in North America. And we're using the Just Culture within safety to reinforce good behaviors with people, call them out, and get them to improve.
We've just started that program. It's quite pleasing because people are responding. You're effectively holding a mirror up to them and saying, "Look, do you realize you're not putting your seatbelt on? You're not speeding. You're taking corners too quickly. You're braking too fast." As soon as you start monitoring, the majority of the people that work for us are responding and responding reasonably well. I don't doubt that we will have some challenges as we get to Christmas with people who don't respond. But so be it. That's what we have to do. Next slide, please. Second item in terms of our sustainability agenda is our carbon performance. This is, again, one of those items which you just have to tenaciously pursue.
I'm very pleased to say that Scope 2, which is the one we started with, we are confident that we'll get below 50% of our baseline of 2019. That puts us well on track for achieving Net Zero by our target of 2030. And I think my expectation is we'll get there before then. But it is getting increasingly difficult when you start addressing properties and facilities which we don't own that we have to actually influence our landlords, which in some countries is easy, in some countries it's more difficult. In Scope 2 and Scope 3, these are much, much bigger parts of our carbon footprint and are tremendously difficult to address. But nonetheless, the team are coming up with some pretty innovative and pretty sound, I think, ideas as to how we can move forward.
Scope 1, in particular, they're doing some very good things in equipment and some practical things that you can make a difference on. But it is a much longer timeframe which we're dealing with. And certainly in terms of things like CapEx and the way we reinvest, it's right up there in terms of the things which we are looking at. I think these two, we've just talked about two elements of our sustainability agenda. Our sustainability agenda is much broader than that and is maturing rapidly.
One of the things which I'm pleased to announce today is that we've appointed to the ExCom our first Chief Sustainability Officer, who's actually in the room, Kerry Porritt with us today, who's a very long-standing member of the ExCom team and actually ideally placed to pull all of these activities and these strands together, make sure that we leverage the experience across the group, make sure we share best practice. And frankly, we drive best practice as well. And that for me and indeed for the team is a very exciting appointment and something which I think is going to be worthwhile. And I hope we'll see more of. And as we go forward, we'll share more with you. Moving on. Another exciting thing. I've got loads of exciting slides today. The order book. This is actually, when you quietly sit and look at it, is tremendously pleasing.
You've got a number of COVID times, 2020, that we started around GBP 1 billion. We thought that was quite good back then. Since then, it's slowly, year-on-year, increased. There's been a few ups and downs in terms of key items. Overall, we stand here in 2024 with a record of GBP 1.6 billion. Significant increase from 2020. There isn't anything particularly big in the GBP 1.6 billion. It's geographically well-balanced. In terms of timeframe, it's pretty well-balanced. In terms of quality, it's pretty good. It's better than it was in the billion-pound market. In all of those quotients, since you move forward, things have improved over time. From my perspective, that just evidences the way the business is moving forward and has been progressively getting more and more into a growth mode.
It's that, frankly, that gave us the confidence as we go into the second half to actually make the upgrade announcement, which we've done. Moving on to North America, clearly an absolutely brilliant improvement year-on-year. David has already taken you through a lot of the detail. But I'll just reiterate a couple of items here. Clearly, the market in North America has been fairly buoyant. And that has offered us both volume and also, to a certain extent, pricing opportunities where program has been more important than price. And this team has actually been quite careful and controlled and managed about exploiting those sorts of opportunities, which I think is good because it shows the organization is maturing. There's also been improved operational execution.
And we've been that operational on the field and the use of GPTs and some of our operational expertise, that has been pleasing to see. But also, and this is more pleasing to me, people being more tenacious contractually, more aware contractually, chasing change orders more, because that means that we are getting value for the work which we are completing. And there's more work to be done there to make sure it's fully embedded. And that will always be something which we're always pursuing. It's a bit like every sort of self-improvement project. And then finally, higher levels of utilization. This plays absolutely square into our strategy. The areas where we have local markets, where we have higher levels of market share, we get higher levels of utilization of both our equipment and our people and our yards. That's where we make more margin.
So actually acting smart, concentrating, that's where we'll make a difference. Napoleon once said, "God is on the side of the biggest battalions." That translates to our strategy too. If we're local, we will always win if we want to. Suncoast, puts and takes there, down on volume, but again, maturity in the way they've addressed the pricing regime, which is pleasing to see. And then Recon. Recon down slightly, but frankly, that I think is a timing thing because of the LNG prospects and the market there being delayed into 2025. But it will come back. I'm confident of that. And when it does, we'll be there to take the opportunities. And overall, strong order book. Moving on to Europe and Middle East. This is almost a game of two halves.
Europe, in contrast to North America, has been a very, very tough market because the interest rate's been so high. Residential has been tight. Because residential has been tight, everybody's been looking for market share in other sectors. And that has led to margin compression and people fighting over the same piece of market share pie. And that's been pretty much general across most of Europe. Despite that, I think the team overall has done well. In particular, Central Europe. In the German market, some people have really suffered. We've done quite well. And some of the other markets, we've done reasonably well. We've had some very good projects. We've had some challenging projects. But overall, the progress in Europe has been reasonably pleasing. And there's more to come there. It'll take longer to access, but there is definitely more to come.
You can see that as you go round. In the Middle East region, including Neom, I think that really, again, there's several moving parts in there. And David talked earlier on, the biggest move year-on-year is the unfavorable prior year comparator from The Line element of Neom. Again, we've got some good projects within there. And we've got some challenging projects. We referred earlier on to Trojena. We've also had some very good projects in the Emirates, where we've had some very good steady state vibro compaction and dynamic compaction jobs, which for us is good work. It's technically pretty straightforward, and we are good at it. We're very productive at it. We can beat the competition. So again, there's a bit of a mix. And overall, the order book, it's nice to see that it's steadily moving slightly onwards. And then finally, Asia-Pacific.
Asia-Pacific, if I was to work from east to west, Keller Australia has actually had a good year. Not as good as it did last year. But last year, in the first quarter, we had a couple of really big, intense infrastructure projects in the back of COVID. So they've had a good year, but it's not quite as good as it was last year. And they're actually getting a reasonable steady state of medium-sized infrastructure and other orders coming through, which is, again, it's good to see that business in a steady state mode now. Austral. Austral is the big move year-on-year. And the move from loss-making last year to a steady profit state this year is particularly pleasing. The turnaround in that business and the work that the team has done is paying off.
And we're now in a state where they are quoting within their capabilities and living within their limits. And it's also pleasing to see that there's no loss-makers in that business. They're actually managing that business quite well and smartly. They're not taking on too much. They're sticking to what they're good at. And then India and ASEAN, just quietly moving forward. India is a great market for us. It's purely organic over the last 20-odd years. And it's just steadily moving onwards year-on-year, generating cash. It's a very, very good business for us. Moving on to group strategy. This slide you'll all be familiar with. It's basically this strategy we established in 2019 and has been guiding our decisions and our stewardship decisions since that time. And increasingly, you can see it coming through in terms of the benefit evidenced in the results.
If you look at the progress we've had in 2024, there's clearly some further refinement of the portfolio. We disposed of the South African business to a management buyout. That was actually quite a, I would say, difficult transaction. It took a little while to get to the end of it. There's several moving parts in it. And there were several parties interested originally. But I think we've done right by both the local management. And also, we exited it with more value than I thought we were going to get at the outset. So I was quite pleased by that. We will continue to refine the portfolios and go forward. There are still businesses on the fringe where if you step back, you think, "Well, are we going to get market leadership positions in these markets?
Is there a reason why we should be staying here for a particular reason?" And if there's not, then frankly, we will look for ways to exit those businesses for the maximum value and with the least risk. And that's what we will continue to do. In terms of performance, you can see the benefits of this coming through, particularly in the North American results, but also elsewhere, be it on the operational side of things, exercising best practice, be it on the technical side. I've seen things coming through with the GPTs. You can see more and more of that evidence as you go through the management results. And frankly, as you look at the strategic priorities for the rest of the year, it's going to be more of the same. We're going to continue to focus on refining the portfolio.
And given where we are in terms of our balance sheet, that was likely also to be more and more in terms of potential additions rather than just disposals. But I'd reiterate, as I've said before, that we're looking for things which will accelerate and de-risk our strategic execution. We're not in a rush. To that extent, we're not going to get bounced into doing something that is precipitous simply because we've got the resources available to do so. We will maintain that discipline, which I think is absolutely important. M&A is the same way as it is in project execution. Talking of project execution, we'll continue that focus on performance. Finally, summary and outlook. I'm going to basically finish with the same three messages that I started with. We've had an outstanding first-half performance.
Profit, margin, free cash flow, EPS, leverage, all of these things are going in the right direction. Purposefully so. It's not by accident. These things have been done by design. We've had a little bit of help here and there, but the vast majority of it is by the team doing what they do well. The second item is to reinforce the fact that this is sustainable. This half-year results evidence is the fact that the step up in 2023 is here to stay. Sure, there will be ebbs and flows in terms of markets. But in terms of our ability to execute and our ability to actually manage this business, we are moving forward.
And then finally, the strength of our momentum and the strength of the order book, which I talked about earlier on, and the quality of that order book, the breadth of that order book has given us the confidence to materially increase the full year 2024 expectations. And with that, I will draw the presentation to a close and open up for questions. Thanks very much.
Aynsley Lammin from Investec. Just two from me, please. You spoke about the kind of looking at optimal capital allocation in the second half. Just wondered if you could give us a bit more color around kind of thoughts and priorities, dividends, share buybacks, M&A. And just in that context, I guess, if the U.S. has now seen the big margin uplift, is it more about kind of revenue and growth going forward?
Are there any obvious gaps within the North America market regionally or technically that you'd see as being obvious? And then secondly, just on the trade and outlook in the U.S., particularly, obviously, election coming up, some kind of recent patchy macro data, just interested in your thoughts. When would you first see any signs of change in the market? What you're currently seeing? Any color there would be great for us. Thanks.
Do you want to talk about capital allocation? Then I'll talk about M&A and the economics.
Yeah. I think, as I said in the presentation, we are gravitating towards zero in terms of our net debt on an IAS 17 basis. I think we're keeping our options open, really, in terms of what we will do with that. I mean, our priority is financing the business properly in terms of CapEx, dividend, and then M&A.
And we haven't done much M&A over the last couple of years. And we're always on the lookout for the right types of opportunities. And I think beyond that, I think it's a conversation which we do need to have. We haven't felt the need to have it, to be honest, with the Board to date. But as the cash generation has been what it has been over the last 12 months, really, I do think it is a conversation which we'll have towards the back end of this year. And whether that turns out to be share buybacks or special dividends, I think, are, frankly, just going to net cash, which isn't a bad option. It isn't a bad option either.
In terms of M&A and filling in spaces, there are some good opportunities for us.
If you take Europe or North America and pick those because that's where the majority of run rate business is, we are present in some key areas, but we don't provide all of the services in every location. So there are opportunities where we can infill. From an M&A perspective, it's actually, from a risk perspective, among the lowest risk M&A you can do because we're already present in the location. We know the clients. We know the economics. We know the labor force. It's just that we haven't got or we've got a smaller subset of that particular technique, which we use somewhere else in the group. So we understand the technique. It's just not in that location. So from that point of view, that sort of activity in terms of M&A is attractive.
We have had, in the first half, a number of things we've looked at, specifically North America, which have fitted that mold and had the potential to give us increased market share. But frankly, the expectations of pricing have been too high. What I don't want to do and what we will not do is get sucked into something which, from a form point of view, looks good. But in terms of substance, buying at the top of the market, you have to be very careful. Which brings us on to North America and the economics. I mean, the last 48 hours has been fairly volatile, if you can put it as bluntly as that. I don't think what's going to happen. We've got a full order book. We've got momentum going into the second half. I think our result for 2024, I'm pretty confident about.
We might see a few projects slip into 2025, but there's enough for us to be getting at that 2024 I feel pretty comfortable at. I'd also say that at the moment, the level of tendering, the level of activity at the front end of the business is also pretty robust. It's reasonably good. Now, clearly, as we go through the autumn, we'll have to take stock as to whether the last two days have been a bit of a blip or there's something more substantive there. As we do, we will evaluate what that means for 2025 and beyond. I would say, though, it does highlight the strength of the business, though, because our geographical diversity, at the moment, North America is doing well. Europe's been doing not so well.
There'll be ebbs and flows there because, as I said earlier on, there's more that we can extract out of our European business, which plays to our strength in terms of our diversity.
Hi, Rob Chantry at Berenberg. Thanks for the presentation. Three questions, all on North America. I suppose, firstly, could you just give a sense of what is supernormal pricing at the moment, given the buoyancy of the market? So putting it in the context of historical price increases, how big a delta have you seen that reflects that buoyancy? Secondly, in terms of market share in North America, are you gaining it? I know it's very local market. Or is it a riding tide, lifting all boats? Have you got any anecdotal or numerical evidence on that?
And then thirdly, just in terms of U.S. industry structure, I think you're probably 10%-12% market share in North America overall. I mean, how much consolidation do you see among the long-tailed businesses? Are there other active consolidators that you see more and more, or is the relative structure quite consistent? Thanks.
I can do the first one.
Okay. So I thought I was emceeing.
I think the supernormal pricing is very difficult to actually pinpoint just how much of the margin improvement is down to the fact that we can robustly price because in those particular regions, the client is more interested in schedule and timing rather than the cost, or whether we are just driving a better performance in terms of we're not allowing bad bids to come in.
We have tried to look at that, but I think it ends up being a bit of a thumbs-up. But without a doubt, there is an element in there where we are seeing some margins. If you go in the fullness of time, either the competitors will catch up with us or the clients will turn in terms of cost. So we do expect that to actually start to come off in the second half of this year. It was very hard to actually put a hard number on it in terms of how many margin points it actually makes a difference with.
That's tremendously difficult from the point of view of no two projects are exactly the same. So you can't actually say cost of a widget versus cost of a widget because it's just completely different.
In terms of market share, this is, I think, tremendously variable depending on where you are in North America. In certain parts of North America, we do already have significant market share. That's been earned over the years. That's simply because we've performed well. Clients have appreciated that. When there's been an encore, they've turned to us and preferred to anybody else. That could be logistics. It could be servicing. It could be because it's technically difficult. Good, for instance, for that, for instance, is we've just done the deepest ever CFA pile in Miami. Now, if you've got particularly deep excavations and that's the technique that you want to use, then given that you're on the seafront, you're going to look for people who've done it before.
That means that there's only two of us can do it, and we happen to be the best at it. So if that's important to you, that's what they will do. There's other circumstances where that's less relevant. So it all depends on where you're at. I think the more interesting thing is that, from my perspective, is that, and this comes back to execution and strategy, more and more, our business unit leaders are realizing, "Hang on a minute. I've got X%. That means somebody else has got 100 less X. How much of that do I want?" And there are some big markets out there which, frankly, we should have a bigger share of. And that, to me, is really interesting because the fact that management are beginning to think that way, and don't get me wrong, we're not buying it for the sake of just volume.
They've got to be quality, and they get that too. But increasingly, that's what we're going to be getting after. In terms of industry and consolidation, North America, most of our competition, like us, are doing reasonably well. And that's because the market as a whole is doing reasonably well. And because of that, there's very few people who are under stress, and there's no big impetus to consolidate in that regard. I think, in contrast, Europe, I think there might be an increasing emphasis on consolidation. Some of our competition are in stress and de-stressed. And I've said before, the U.K. market is ripe for consolidation, and frankly, so are several of the other European markets. So I think it's where the market is actually under compression where you'll see more of that. But we'll wait and see. Thank you.
Thank you. Good morning. Joe Brent from Panmure Liberum.
Three questions, if I may. Firstly, on the U.S. margin, what do you think now is a sustainable level? Maybe a range if you have one. Secondly, can you give us some indication of what do you think the performance in Europe will do 2024 versus 2023 from an EBIT point of view? And thirdly, can you give us some sort of comfort on the range of outcomes on Trojena and kind of what the second half might look like at Trojena?
You can deal with the first one. We're not going to answer the second one. And I'll answer the third one.
Okay. So in terms of sustainable margins, I think we still are not stepping away, I think, from what we've shared in the past in terms of the sustainable margins on North America.
We would hope, actually, that from taking out all the short-term timing and the abnormal margins we're getting, that we would be able to secure a margin between 7% and 8% through the cycle in respect of North America.
Okay. In terms of Trojena, Trojena is quite an interesting one. I mean, in some respects, it's a classic contract for us. We're given a particular characteristic of work to quote against, which we did. Started work, and the workplace which we turned up to and the conditions and the environment which we turned up to weren't exactly as we described on the box to begin with.
But like most of these contracts, the vast majority of them, they have a Nike clause in there that basically says, "You will take reasonable instruction from the clients and carry on and carry on working as much and as best as you possibly can," which is what we have done. And program time for them is very important. So from that point of view, the endeavor to actually keep works going has been important. And it's fair to say, as David said, the geotechnical circumstance which we turned up to has been different. So we've been working with them on a different solution which has different elements of contribution from us and indeed other subcontractors.
Being that we are prudent in our accounting, anything which is extra contractual, even if we've completed the works, unless the client has fully signed off a VO, we have not taken any revenue from it. Hence the fact that job-to-date, there's a loss. I have no doubt that we will get some of those VOs claimed and certified. Probably not all of them. The client is in a world of pain here as well. But nonetheless, we will make progress. Indeed, the last few days, our PM there has been working with their PMC from Bechtel to rescope and reschedule the works in such a way that it is deliverable in a way which is technically appropriate and has reconfigured our works. We're effectively in the process of renegotiating what we're doing, which is important.
From our point of view, I don't think it will get any worse than it is right now. In fact, there should be potentially upside if we do it well.
So if you were in our shoes, reasonable to assume sort of break-even in the second half from Trojena?
Yes. Yes. And indeed, from an accounting perspective, if it wasn't, we would have had to take a bigger loss provision.
Yeah. Thank you.
Thank you very much. Keller, is there questions on the? No. No?
Excellent. Well, thank you very much for making it today. I know today is a very, very busy results day. And I know that several of you got to run off to other people's results. It's been a real pleasure to host you. And thank you very much indeed.