Hello, and thank you for taking the time to listen to this recording, which accompanies our full-year results for 2023, which were released on Thursday, 11 April 2024. I'm Lucas Critchley, Chief Executive Officer, and I'm joined by Andrew Smith, Chief Finance Officer, to take you through the slide deck. I'll start with a summary of the highlights from what was a fantastic year for the group in 2023, before passing to Andrew to run through the finance section of the deck. I'll then spend a bit of time talking through some of the strategic and operational achievements in the group in 2023, and conclude with an outlook for 2024. I won't steal Andrew's thunder on the financial highlights, but I will just briefly draw your attention to the operating margin.
Those of you that have followed our story will know it's been a major focus within the group over recent years to return the margin to our targeted 5%. While we've still got some work to do, the progress between 2022 and 2023 has been excellent. This focus on margin improvement is not one that we'll lose, and we'll continue to work hard to achieve the 5% target. I know that this is an item that Andrew's keen to give a bit more detail on through his presentation. It's important to us to retain a selective approach to bidding, with opportunities coming from a highly qualified pipeline, and we were delighted to secure our two key targets in 2023.
This was augmented by further success in the decarbonisation space, with us securing nine Social Housing Decarbonisation Fund grants on behalf of our clients, generating about GBP 120 million of works. Our net-zero offer to our clients is a part of the group that's really gained momentum over recent years. The way in which we, as a group, communicate with our workforce and continually strive to improve the employee experience is something that we take very seriously. In 2023, we saw further improvement in retention rates and excellent feedback through our Best Companies survey.
The financial part of the deck starts with the income statement. This slide's all about the percentages. Each line reflects a year of strong progress. All the key numbers - revenue, profits, margins, EPS, and dividend - are all modestly ahead of expectations, which is really pleasing. The revenue number I'll pick up on the next slide. We're reporting solid growth in the top line, but as always, the devil's in the detail. Operating margin, for me, is the star number in the entire deck. It's great to see the margin starting to get back towards our long-term target of 5%. Again, I'll pick that up on that later in the deck. I have two key messages to flag on this slide. Firstly, on EPS, and it's a slightly technical point, but it's an important one.
We bought back around 11% of our stock during the course of 2023, but the buybacks were heavily second-half weighted, meaning the impact on EPS in year was actually rather underwhelming. You can see that from the average share count only moving from 113.5 million to 110.2. The more important number for me is the 101.4 million, which is the closing share count. With the third buyback now, which is well advanced, that number's already reduced to closer to 98 million shares where we sit today. What this means is, if nothing else changes, a 10% increase in EPS in FY 2024, which is a really nice tailwind. Secondly, I wanted to make a comment on dividend. We often speak of the group's progressive dividend policy, and I think the group's got a track record on dividend which we can be proud of.
The results reported today show an EPS increase by 27%, and the dividend, perhaps unusually, falling behind with a 24% increase. The slight shortfall should not be seen as a lack of confidence. If the board has been slightly conservative, it's very much driven by a desire to continue a strong upward trajectory on future dividends. With dividend cover of 2.4 x, I think the board's retained a lot of flexibility when it comes to distributions in 2024 and beyond. Moving on to looking at revenue, and this slide provides additional granularity, which I hope will be helpful for people if they're trying to get under the skin of our numbers. In terms of the key messages, and perhaps if I start with maintenance, at the half-year, we were very clear in our messaging. We recognized that revenues had gone backwards in this area over a number of years.
Some of the reduction has been intentional, but some of the reduction was disappointing and not all work that we wanted to lose. In August, we made some fairly optimistic comments. We felt that the group was well placed to reverse the downward trend, and we expected to see a return to organic growth. Looking at the maintenance portion of the bridge, I think it goes some way to support that message. 1% growth in year is, I would recognise, nothing to get too excited about, and I'd also recognise that without indexation, the maintenance number would actually have reduced. However, the 2022 attrition is really old news now and still impacting on the graph. And the organic growth relates.
2023 is really positive, both in terms of the traditional work that we've secured, but also the work that's come from SHDF and decarbonization, which Lucas will pick up on later. If I move on to management, it's worthy of note that management now makes up 50% of the group's revenue number, which is incredible performance given it was a new startup only 10 years ago. I think our long-term expectation probably isn't 50/50. I think management revenues are currently elevated for reasons that are well known. In time, I would expect management to be smaller than maintenance. In terms of FY 2023, it's outstanding performance from that division. In terms of the key messages on management, understandably, much of the focus is always on asylum.
We talked about normalisation of activities on asylum throughout FY 2022, and then again throughout FY 2023, and in both years, the figures actually went up. This is shown in the bridge, where you can actually see the additional revenue delivered by asylum in FY 2023 versus the prior year. The messaging for FY 2024 is very similar. We think revenues will reduce. The precise timing and phasing is not certain. The most pleasing number for me in the bridge is actually one of the smaller numbers and one that Lucas touched on earlier.
The green GBP 7 million is additional work secured from both the MOD and the MOJ, which is a key strategic highlight for us. Much of this new work was secured late in FY 2023, so the full-year impact in FY 2024 is significantly more than the GBP 7 million showing in the bridge. Over the page and moving on to operating margin.
I flagged earlier that I saw the operating margin as the best single figure in today's release. We've consistently used the IFRS 16 measure when it comes to reporting operating margins. It's how we bid contracts, it's how we think about the business, and it's how we manage the business. We've consistently said over the last two to three years that we were confident that we would get back to a 5% operating margin. Notwithstanding our confidence, I think we've always been rather unwilling to commit to a timescale. The bullets down the right-hand side of the slide highlight some of the actions we took to drive the improved margins, and all those, I think, are consistent with things that we've said to you previously. We certainly feel that some of the headwinds have lessened. There's still macroeconomic challenges, but things have certainly eased.
The inflationary and supply chain challenges that we saw 12 months, 24 months ago are much improved, and we've made some good progress in terms of resolving some of the commercial challenges linked to the normalization of asylum. We've still got some way to go in that area, but we've made really good progress. Delivering a 4.7% operating margin for FY 2023 is very positive, and that, for me, is now our starting point for FY 2024. We aren't far away from reaching the 5% target, and I'm certainly not going to overpromise today and then risk falling short, but I would certainly look at the 4.7% as the new floor, and I'd certainly be happy for market analysts to start forecasting using that number. Hopefully, we'll make good progress against the target in the coming year. Over the page onto cash. Cash performance has once again been really strong.
EBITDA to operating cash conversion, which is our headline measure, is well above 100% for the fourth consecutive year. I think this reflects both the quality of the earnings, but also, I think, a relatively conservative approach to accounting. Our management-led activities have operated with negative working capital for a number of years, so one should have an eye on contract liabilities disclosure. That position is likely to unwind over time. It's not new. I've highlighted payments on account ever since the pandemic, and I believe that number will reduce over time. In fact, the unwind has actually been slower than I anticipated. As previously reported, we allocated capital to property acquisitions on asylum with a GBP 22 million outflow in the period. That's around 250 properties. Ideally, we'll look to sell and lease back those properties, then recycle the monies to acquire more properties over the course of 2024.
If we don't sell those assets, we have a balance sheet that's got the strength to support that investment over a longer term. Overall, to have invested GBP 22 million in asylum properties and to have distributed almost GBP 50 million to shareholders through both buybacks and dividend, and still to have reported an increase in our net cash in the year is absolutely terrific performance. The final financial slide is a simple balance sheet slide. It's included in the pack for completeness. I think the key messages can be found in the prelim statement, so I don't think they need repeating by me. I'll hand back to Lucas.
Thank you, Andrew. We've benefited from absolute clarity of strategy over recent years, and that's a strategy that is well understood across the group. At the heart of that is a commitment to deliver brilliant service to our clients. We're in a fortunate position of having considerable longevity in our client relationships, and that brings with it the responsibility that we take incredibly seriously, both in terms of delivering the core service well, but also by developing solutions to support clients with their long-term challenges. Investment in our workforce has always been hugely important to the group, and the efforts over recent years around both pay and packages have been wide-ranging.
We've consistently applied healthy increases, often early and often directed primarily to lower earners in recognition of the cost of living crisis, and we've enhanced terms and conditions in several areas, including the introduction of sick pay for frontline workers. While the intense labor pressures of 2022 have dissipated to some degree, our approach served us well through that period, and that's an area that will continue to be a focus for the group going forward. It was pleasing to again see exceptionally high response rates and great feedback through our annual employee survey, and this feedback has become so valuable at both a branch and a group level to feed into long-term people plans in an attempt to continue to improve the employee experience. 2023 was an excellent year of bidding and new business.
We've historically talked of a one-in-three win rate, but as I've mentioned, our approach to bidding has become ever more focused and selective, and we do believe that a more reflective measure going forward will be a one-in-two win rate. This has been achieved over the course of the last 18 months or so, and certainly through 2023. We were delighted to secure long-term maintenance contracts with the London Borough of Croydon and with A2Dominion, and our continued momentum in both the development of our offer and our win success in the decarbonization space has been particularly pleasing. Our three large central government relationships are extremely important to the group and, as Andrew mentioned, contributed close to half of the group's revenue in 2023, so for all three of these relationships to expand in some way through the course of 2023 was really satisfying.
I will, in particular, draw your attention to the extension of the scope of our relationship with the MOD and the services that we've provided successfully to that department for nearly a decade now. We were asked in the latter part of 2023 to extend this relationship by both increasing the volume of settled accommodation and also setting up some shorter-term sites to provide additional accommodation. That mobilisation is ongoing, and we look forward to continuing to deliver a high quality of service through that relationship and also to the full-year revenue and profit benefit of this work in 2024. We've talked at length about the ongoing procurement with our existing client, North Lanarkshire Council, over recent months and even further back than that, and we remain really well placed in that process.
As a reminder, that contract would see our revenues broadly double from the existing GBP 60 million per annum. The culture of the group and a heavy focus on diligent operational delivery is critically important to us, and we continue to invest in our sector-leading systems to not only enhance their core capabilities but also to develop new and innovative tech solutions. In addition, our focus on health and safety is absolute, and we were delighted to be awarded our seventh RoSPA Order of Distinction in 2023 and our 21st successive RoSPA Gold Award. We continue to work hard to deliver against our objective of being the most trusted private sector provider to local and central government, and the extension of the scope of our work with all three of our important central government clients was particularly heartening in that regard.
The sectors in which we operate are facing a number of significant challenges currently, and these are challenges that, as a long-term partner to local and central government, we continue to strive to help them meet. Many public sector bodies are looking to work with trusted partners for the long term to solve structural issues in both the cost base and service delivery to customers, and we see clients placing increasing reliance on Mears' problem-solving capabilities. As such, we continue to evolve and broaden our core competencies to ensure that we're best placed to solve those challenges and ultimately strengthen our market position. We're certainly benefiting from the increased focus on the energy efficiency of homes.
Despite the challenges of increasing costs in recent years, we ended 2023 with a far greater level of certainty and clarity about the cost of energy, the cost of labor, and the cost of materials. We're fortunate that our services are deemed essential and are often funded from ring-fence budgets, so to some degree, we're protected from the financial struggles of an increasing number of local authorities. We've made progress in the adoption of data analytics and AI in both our everyday and developing services, and I expect this to play an important role over the coming years and gather further momentum through the course of 2024. Finally, without wanting to overstate our position, our market leadership and the strength of the brand do give us some opportunity to influence or at least contribute to the debates in our sectors about how services are to be delivered.
The developments in the social housing sector are quite interesting and quite exciting currently. There's a recognition that many of the challenges that social landlords, both local authorities and housing associations, are faced with come back to finding efficient ways of managing their assets and services, and that this, in turn, will result in improved satisfaction within their customer base. There's clearly significant crossover in a number of these challenges, and we've started to see some clients drift towards a single provider solution to provide holistic, long-term whole-house approaches to managing capital investment works, the decarbonization of their stock, the risk and impact of damp and mould, a more robust approach to Big Six compliance, limiting the risk of disrepair claims under Right to Repair legislation, and the impact that all of this has on customers, including protecting them from fuel poverty.
The Mears' offer in response to this is strong, and we'll work hard through 2024 to ensure that it becomes ever more compelling. Specifically, our turnkey offer around decarbonization of our clients' housing stock continues to go from strength to strength. It really is an end-to-end solution that we provide by analyzing a client's housing stock through our IRT DREam platform that we acquired in 2022 that has now been entirely integrated with our own systems, making recommendations about the client's approach to decarbonizing their homes, considering customer impact as well as the asset, and identifying funding streams. We then write funding applications on behalf of our clients, and by delivering the works for them, ensure compliance through the PAS processes to make sure that the funding is both drawn down and, importantly, protected.
While we're delighted with our offer in this space and it continues to be very well received by our clients, we've always sounded a note of caution around the future funding and potential cannibalisation of existing services. While that remains the case to some extent, we do now have greater visibility of funding of works through SHDF late into this decade, and we're looking at how we can dovetail funding streams for our long-term partners by knitting together SHDF and other funding streams as well. It looks likely that we'll see a general election in the autumn, which may lead to a change of political control. Mears has worked under governments of various colours over the last three decades, and we're very comfortable with this.
The structural challenges that the sectors in which we operate in face ultimately will not change irrespective of who leads government, and we'll continue to build relationships and work hard to provide quality services to central government. We're fortunate, as I say, that our services are essential and largely funded by ring-fence budgets. Actually, navigating political change is business as usual for Mears across the U.K., and we'll continue to deal with change in a responsive and agile manner. 2023 was another excellent year of delivery against our ESG plans. ESG, in its various guises, has always been fundamental to the group, and our ESG strategy is intertwined with every part of the group and, in particular, with the way in which we deliver services.
Our pathway to net-zero strategy is now well understood by our people and well embedded within the group, and 2023 was a great year for us in terms of developing a better understanding of our fleet and how we electrify it between now and 2030, and we have a really clear plan in that regard. When you consider that fleet emissions make up 91% of our Scope 1 and Scope 2 emissions, that represents a significant step forward.
We generated GBP 20,000 of economic and social value per employee, as quantified by the Social Value Portal in 2023, which is a fantastic output, but it's the difference we make in every one of the communities in which we operate, both in terms of local employment, apprenticeships, supporting local supply chains, and investment of our people's time in strategic community projects that is what really matters to the group in this space. The nature of our work means the need for robust information security is critical, and 2023 represented a really good year for us with further Cyber Essentials and, indeed, ISO 27001 accreditations. Andrew talked earlier about both the board's desire to ensure a progressive ordinary dividend that moves towards the bottom end of the 2x-2.5x cover over time and also the positive long-term impact of the share buyback programmes.
We do remain keen to maintain a net cash position, but the board will keep all options under review in terms of surplus cash and shareholder returns. An important part of this is our continuing review of acquisition opportunities, and Andrew and I have a degree of flexibility considering the cash position as outlined earlier and our future projections that should we identify an opportunity that we believe can deliver long-term value to the group and to shareholders, we have the ability to progress that. So 2023 really was an excellent year for the group, and that momentum has continued into the early part of 2024. We do continue to expect the elevated revenues in the management-led activities to reduce through the course of 2024, though timing does remain uncertain. We look forward to continuing to develop our relationships with the Home Office, the MOD, and the MOJ.
In maintenance, we're very comfortable with both our current order book and our qualified pipeline of opportunity over the coming years, and are optimistic that high levels of retention and a one-in-two strike rate on new business are both achievable. We're delighted with the 4.7% operating margin in 2023, and we'll look to continue our journey towards a 5% margin in 2024. We're delighted with our cash position, and we'll continue to communicate our approach to capital allocation clearly through the course of this year and beyond, as we have done over recent years. Finally, the senior team are acutely aware that the successes of 2023 are all underpinned by high-quality operational delivery and customer service from our exceptional teams, and we won't lose sight of this through 2024 and beyond.
Thank you for taking the time to listen to this recording, and Andrew and I look forward to updating again at the half-year.