Andrew Nussey

Andrew Nussey from Peel Hunt asked if the rephasing of the HS2 project would hinder future revenue growth in U.K. Construction and inquired about the scope and findings of the monitor in the U.S. military housing business.

Answer

CFO Phil Harrison explained that the HS2 rephasing is not expected to be an issue for 2023 or 2024 forecasts and could increase revenues later. He described the U.S. monitor's role as a wide-ranging review of compliance, ethics, and culture, which the company welcomes. CEO Leo Quinn added this aligns with a group-wide focus on transparency.

Andrew Thomas Nussey from Peel Hunt questioned the order book impact from the HS2 win, the expected trend for the order book across different segments, and how much of the announced cost savings would be reinvested versus flowing through to profit.

Answer

CFO Philip J. Harrison clarified that the bulk of the HS2 order value will not be booked until late 2018 or early 2019. Group Chief Executive Leo M. Quinn projected growth for the Rail business and a flat-to-steady outlook for the Regional business. Regarding costs, Quinn estimated the majority of H1 savings and about half of H2 savings would flow through to profit.

Andrew Nussey of Peel Hunt asked about the expected margin differences between the transportation and utilities businesses within support services, and the differing performance trends between regional and major projects in UK construction.

Answer

CFO Phil Harrison clarified that within support services, transportation margins on highways are higher, while gas and water are at the lower end, blending to the target range. CEO Leo Quinn explained that in UK construction, the M&E business is returning to profitability, regional construction is focused on profitability over size, and major projects are expected to perform at industry-standard margins over the cycle due to their scale and fewer number.