The agricultural year of 2014 has been described as an 'unmitigated disaster' for Valencian growers.
A laser labeling technology is coming to the U.S. produce industry, and potentially anywhere that JBT Corporation has customers.
Spanish pomegranate growers will team up with the Elche soccer team to promote their fruit at home and abroad.
The president of the Regulatory Board, Cirilo Arnandis, said Monday that the kaki harvest this season is expected to reach approximately 80,000 tonnes, with "high quality and good calibres." This is 8,000 tonnes more than last season.
Arnandis highlighted how the success of kakis is the result of hard work and effort in the entire sector, as well as support from the regional and national administrations. "We have managed to turn kakis into a flagship product," he stressed.
The campaign will primarily focus on consumers, aiming for them to recognise the fruit with the PDO Ribera del Xuquer "as a kaki that guarantees flavour, quality and food safety," and that only PDO-certified fruit can be marketed under the Persimon label.
In addition to promotions at domestic level, Arnandis said that such campaigns will also be carried out, with help from ICEX, in Germany, the UK and Canada. There will also be a EU-funded campaign in France. Total investments in promotion for this season exceeded one million Euro.
Moreover, the president of the Regulatory Board stated that while hailstorms have affected the production in some places of the region, this will be of "equal or slightly higher quality than last year, although taking into account that not all demand could be covered last season. "This campaign there will be a decline in demand as a result of the closure of the Russian market, although there is enough demand from other markets to absorb all supply," he explained.
Zespri Iberica, subsidiary of New Zealand's multinational engaged in the production and marketing of kiwifruit, has announced plans to introduce a new gold variety into the Spanish market in the next two or three years, the result of a project that is already very advanced.
The marketing manager of the company, Enrique Guío, announced the structure and Zespri's objectives in the present and in the future. Today, the company sells three varieties of kiwi worldwide: Green (70%), Gold (26%) and organic (4%), but they only distribute the first two varieties in Spain.
"We want our product to arrive in the best possible quality to the customer, and we developed a strict control process called Zespri system," said the Firm's manager.
The pomegranate season of the Valencia variety, which started in mid-August, is almost finished and the markets are awaiting the arrival of the Mollar from Elche on 30 September, which is the flagship of the Spanish campaign.
"So far, the Valencia pomegranate season has been characterised by a reduction of about 25% in production volumes; a similar percentage to what we expect for the Mollar variety," says José María Martínez, head of the cooperative Cambayas, one of the largest pomegranate producers and marketers, based in Elche, Alicante.
This decline, mainly due to problems in the settling of the flowers due to the lack of rain during the spring and summer in the eastern region, "has so far not had an impact on the average prices, which have been under pressure due to the Russian veto," said the executive.
Therefore, as regards the Mollar campaign, which will start in a few days, the similar drop in production could compensate for the volumes of this variety that will not be shipped to the Russian market," explains Martínez. Taking into account both direct and indirect exports, Russia accounted for around 30% of the exports; more than 13,000 tonnes.
"This also indicates that, although pomegranates are currently a popular fruit, the market supply is growing faster than demand, not only in Spain, but also in the rest of the world; a trend which it seems will continue for now," he affirms.
The acreage devoted to Mollar pomegranates in Elche and the surrounding municipalities is of approximately 3,000 hectares and this year a harvest of about 35,000 tonnes is expected.
Some of the major destinations right now, besides the domestic market, are the UK, France, Germany and the Netherlands, as well as the Persian Gulf and Asia.
Turkey and Israel will benefit from the Russian ban, as it will allow them to increase their shipments to this destination. "Turkey and Israel will get a larger market share and, even if the veto was to be lifted in the future, it would be difficult to recover that share," he points out.
The crop accounts for over 80% of the agricultural production in many municipalities in the south of the province of Alicante and generates more than 3,000 direct jobs and a thousand indirect jobs.
Recent hailstorms have put a €52.5 million dent in eastern Spanish citrus, grape and persimmon farms.
During the first six months of 2014, the European Union (EU) has purchased a total of 650.02 million kilos of fresh and refrigerated peppers, paying around 13.87% lower prices than in the same period last year, according to data from the statistical service Euroestacom (Icex-Eurostat).
Within the period at hand, the volumes purchased have dropped by 4.89% compared to the same period in 2013.
The EU countries paid a total of 971.47 million Euro; a 17.84% drop compared to the previous year.
Spain is the leading pepper trade in the EU market, with a total of 302.03 million kilos; 46.46% of the total, followed by the Netherlands with 156.93 and Morocco with 52.44 million kilos. Regarding the Spanish exports, Almeria is the largest exporter with 71.05% of the domestic total, followed by Murcia (12.65%) and Alicante, which carried out 6.71% of all Spanish pepper exports to the EU. The province of Almeria's exports accounted for 171.74% more than the total sold by the Netherlands.
The fourth largest pepper supplier to the EU is Israel (41.97), followed by Germany (22.87), France (14.77), Turkey (14.59), Belgium (8.60) Greece (6.65) and Slovenia, which closes the Top 10 with 6.02 million kilos.
Cooperative Unica will now be the largest on-the-vine tomato grower in Spain through the incorporation of a new member.
The table grape campaign in Vinalopó, Alicante, is currently in full swing with the early white seeded variety Victoria and the white seedless Superior, but with lower volumes compared to last year's bumper crop.
"This week we will start working with the red seeded Red Globe variety and soon we will have Italy, a white seeded variety," explains Eduardo Costa, sales manager of the young company IMG. "From September, we will have Crimson white seedless grapes and red seedless Autumn Royal." It is a campaign with fewer kilos, but with better quality and larger calibres.
"The quality of these table grapes is truly satisfactory this year. Furthermore, as a result of the dry weather and the arrival of high temperatures, the ripening has accelerated and the fruit reaches high Brix levels, with a yellowing of the skin that indicates that the fruit is at its best for consumption," he affirms.
The Valencian company is currently also distributing peaches, nectarines, apricots and flat peaches, which, despite their higher quality this year, have failed to increase in price due to oversupply.
"Since the start of IMG's operations in March we have been very pleased with the progress and how sales are going, as well as with the addition of new clients who have placed their trust in us," concludes Eduardo Costa.
IMG International Med Growers S.l.
At the moment, the melon campaign is primarily focused in Murcia, although Almeria will remain on the market for around 15 more days, as many growers there planted later due to their fear to the New Delhi virus.
"The results of the campaign are not positive so far in terms of quality, demand and prices," points out Javier Uceda, manager of Somevisa.
The domestic market has always been the most important and remains so for the Piel de Sapo melon, but Javier says that exports are gaining relevance given the increased demand outside the Spanish borders.
"Over the past few years, we have gained a stable position in Portugal, where large calibres of between 3 and 5 kilos are demanded. In the rest of the continent, including Scandinavia and Eastern Europe, we are shipping melons of between 1.2 and 1.8 kg. It is very expensive to find small calibre melons, since almost all the varieties available are intended for the production of large calibres. And, when the melon is small in size, it is usually due to problems during the production process and the quality is not the same," he explains.
Frutas Somevisa is celebrating its 25th anniversary. The Villaconejos-based company is devoted to the marketing of melons from all producing areas in Spain, mainly the Piel de Sapo variety. "We have warehouses for handling near the plantations in all production areas because we believe that in this way we reduce the time from harvest to the delivery to our customers, maintaining an ongoing relationship with growers," states Javier.
As soon as Murcia's season ends, the firm will continue with melons from Castile-La Mancha and Villaconejos, which will be the last of a campaign finishing in late September.
Last year, Extremadura suffered production losses of up to 60 % due to heavy hailstorms and other weather adversities. "It was a year in which growers only obtained good prices as a result of the low volumes of fruit in the warehouses," recalls Manuel Alonso, of Naturcrex.
"This year, the weather has been very favourable and has allowed us to start seven to ten days earlier, with a satisfactory quality for all types of stonefruit and production volumes at slightly higher levels than those of a normal campaign," he points out.
Based in Valdivia, in the Spanish region of Extremadura, and with headquarters in Calasparra, Seville and Huelva, Naturcrex produces all kinds of stonefruit from April to late September, with plums being its speciality. Plums actually represent more than 55 % of all stonefruit crops in Extremadura.
"The first Early Queen plums are harvested in late May. Later, we continue mainly with the CrisonGlo, Fortune and Freedom, closing the season in September with the Plum Late variety, which we store until February if the product meets the right conditions," he explains.
Under the brands CREX, Pangú and Luxus, Naturcrex markets its products primarily through supermarket chains in both the domestic market and the export market, reaching all of Europe as well as faraway destinations like Brazil, Canada, South Africa and Saudi Arabia.
Spain's red berry sector revenue fell significantly in the 2012-13 season despite a greater surface area of crops.
Average tomato prices have increased for first time since mid-April, reaching close to 0.26 €/kg. Sales volumes are down by about 30% compared to the previous week, with the smooth, ribbed and on the vine varieties dropping the most in volume and experiencing the greater price increases.
The low prices received by growers since late April due to the market's saturation has led to an early end of the campaign for many plantations. The month of May has left a very unfavourable balance for tomato growers, with sales volumes down by 20-30% compared to the same month of the 2012/13 campaign, and the average monthly price of the product approaching 0.22 €/kg, compared to the 0.42 €/kg obtained during the month of May last season.
During week 22, Morocco exported a total of 2,305 tonnes of tomatoes to the EU at an average price of 33,40 €/100kg. Exports fell by 32% in volume and 19% in value compared to the previous period.
31 May marked the end of Morocco's quota period for the export of tomatoes to the EU. The volume exported amounted to 95% of the available quota for the 2013/14 campaign, with a total of 66 days with a price below the minimum established in the EU-Morocco Trade Agreement.
With a 10 day advance at the start of the campaign, the Spanish region of Aragon expects to harvest 570,000 tonnes of fruit this year, as announced by the head of fruit and vegetables of the Union of Growers and Farmers of Aragon (UAGA), Vicente López.
Aragon has over 38,000 hectares of stone and pome fruit plantations, of which 34,000 are in full production. 54% of those hectares are devoted to the cultivation of peaches and nectarines, 20% to cherries, 5% to apricots, 3% to plums, 10% to pears and 9% to apples.
According to UAGA, Aragon's total fruit production last year was of about 570,000 tonnes and this year's is expected to match it, as despite the variability of the weather conditions in 2014, the good spring temperatures have allowed for a good fruit development.
The peach and nectarine production is expected to be the same as last year, of about 370,000 tonnes. The cherry harvest will be greater than in 2013, with about 30,000 tonnes, and apricots should also register similar figures to last season, with some 11,000 tonnes. No variations expected either for the plum harvest, with a production of 7,000 tonnes, while apples will fall by 20% and pears are expected to remain at similar levels as in 2013.
According to UAGA, the value of Aragon's final agricultural production in 2013 amounted to 3,793.21 million Euro; 10.24% more than in 2012. Last year, the fruit sector reached a value of 341 million Euro; 1% more than in 2012.
Aragon's fruit industry ranks second in terms of food product exports, with transactions valued at a total of 114,659 million Euro.
In this sense, UAGA expressed its concern on behalf of the sector regarding the instability in the relations between Russia and the European Union, given that approximately 25% of the region's peach and nectarine production is exported to Russia.
This was stated by the president of the Citrus Growers Association of Huelva, Lorenzo Reyes, who explained that the situation is not final. "Much of it will be harvested gradually, depending on how the market evolves." However, Reyes describes the current campaign as "terrible, because prices have remained at rock bottom prices." In fact, orange prices at origin have oscillated between 0.16 and 0.17 Euro / kilo, and in recent weeks they have dropped even lower, down to between 0.11 and 0.12 Euro / kilo; well below the production costs, which according to growers, stand at around 0.18-0.20 Euro / kilo." The average profitable price to be able to face the next season is of about 0.30 Euro / kilo.
"These prices will cause many growers to have serious funding problems next season," lamented Lorenzo Reyes. And this despite having achieved a good production in the province, with 295,000 tonnes; 2.5% more than last year, but consumption levels have remained very low, which has led to a sharp drop in prices.
The quality of the production this campaign has suffered because calibres have been slightly smaller and the fruit's external appearance has been affected by issues such as the 'clareta', ie white spots caused by the weather conditions, which does not have an impact on the fruit's taste. Both factors have contributed to lower prices. However, there has also been fruit "of optimum quality that has not reached the market value of other years," said Reyes.
The positive note has been that the mandarin campaign "has gone well," affirmed Reyes. Most citrus growers have managed to diversify their production, and as such those who grow oranges also cultivate mandarins. The fact that the results in recent seasons have been better for mandarins than for oranges is leading producers to expand the acreage of the former. Right now, from the 16,600 hectares of citrus plantations in the province of Huelva, 56% correspond to oranges and 44% to mandarins, with a clear trend of the latter to continue expanding. In fact, the province of Huelva is the leading mandarin producer in Andalusia.
The melon forecasts for Charentais from Morocco, Spain and France were presented at last week's Medfel, Perpignan (France). Production of Charentais melons in Morocco covers 1560-1800 ha, of which 950-1,050 ha is in the Marrakech area. The melon season begins at the end of February and lasts until April in Dakhla (260-300ha), followed by the start of greenhouse production in Agadir (350-450ha) and Marrakech at the end of March. Greenhouse harvest in Marrakech is slightly delayed this year. Field crops are harvested from the 20th April for the yellow Charentais and the 25th April for the green, reaching it's peak between the 5-15th May. There has been a slight drop in acreage in Dakhla this year and a continual decrease in Agadir. Acreage remains stable in Marrakech and Kenitra despite a decrease in small producers. The season is good this year with no weather problems.
Harvest in Spain begins between April-May in Almeria, in 'competition' with the Moroccan green Charentais, followed by May-July in Murcia-Malaga. Yellow Charentais surface has increased in the Murcia-Malaga area and acreage reaches 2,500-2,600 ha (of which 500-600 ha are used for green Charentais). Weather has been favourable and overall, crops are healthy. Acreage remains stable in Almeria (especially that of greenhouse green Charentais) totalling 300-350 ha. Volume increases between the 15-20th May through until the end of June with some continuing into July. Crops are healthy with calibre varying depending on the plot.
French melons are slightly early this year. Melons from heated greenhouses were on the market at the start of May, followed by tunnels at the end of the month. Charentais melon acreage in France totals 14,060 ha, of which 5,400 ha is in the South-East where the main production is u nder covers and tunnels (3,400 ha), followed by 1,350 ha in outdoor crops and 650 ha sheltered. Favourable weather conditions mean that crops are healthy, about a week early at the moment, but to be confirmed depending on the weather over the second half of May. Acreage has dropped slightly in the South-West to 3,500 ha (100 ha in large shelters, 1,500 ha under covers and tunnels, 1,900 ha outdoors) and to 4,900 ha in the Centre-West (30 ha in large shelters, 2,100 ha under covers and tunnels, 2,770 ha outdoors) but crops are healthy and volume could make up for the surface decrease. The South-West and Centre-West have experienced good conditions, are slightly early but this could change depending on the weather over May and June.
CSO-Centro Servizi Ortofrutticoli in Ferrara updated 2013 data concerning Italian foreign trade. Exports reached 3.6 million tons (-8% with respect to 2012) for a total of €3.8 billion (+4%).
In the same year, Spanish produce exports increased by 11% in terms of volumes, reaching 11.8 million tons and €11.7 billion (+7%).
Italian fresh fruit exports dropped by 10%, however, the average annual price reached €1.01/kg (the highest of the past few years), so the total value was more or less that of 2012 (€2.5 million).
It seems that everything that Italy lost was gained by Spain, as its exports increased by 4.5% in terms of volume (7.1 million tons) and 11% in terms of value (€6.35 billion).
The main destination for Italian fresh fruit is Germany, however quantities have dropped from 42% in 2002 to 28% to 2012. France (10%), Spain (7%) and Poland (6%) follow. Exports to Russia and Switzerland (3%) remained stable and there was a slight increase in North Africa (Libya 3% and Algeria 2%).
Table grapes were the most exported fruit, with a 4% increase with respect to 2012, while there was a decrease in exports of pears (-40% due to the productive deficit), kiwis (-3%) and strawberries (-14%). Plums (+28%) and apricots (+34%) did well.
If we consider Spain in particular, Italy exported mainly apples (+11%), kiwis (+5%) and table grapes (+15%) whereas there was a 23% drop in peach/nectarine exports.
The balance is positive, though it is slightly lower than in 2012. Exports reached 1.1 million tons and €1.3 billion.
Citrus fruit exports reflect fresh fruit exports: volumes (235,000 tons) dropped by 9% but prices reached €0.77/kg (the highest price of the last few years) so the value reached over €180 billion (+11%).
Despite this, Italy imported more than it exported, from Spain in particular. Over 60% of the produce bought by Italy in 2012-13 comes from Spain.
Italian vegetable exports dropped by 1% reaching 930,000 tons. In this case too though, the average price was rather high at €1.23% (+11%).
Spain increased its vegetable exports by 10%, reaching 4.6 million tons for a total value of €4.33 billion (+11%).
While Italian fresh fruit imports come mainly from countries in the Southern hemisphere (counterseasonal and exotic fruit and bananas), Italy imports its vegetables mainly from France (34% of the total) and Spain (18%) followed by Germany (17%) and the Netherlands (11-12%).
From Spain, Italy imported mainly salad (+29%) and garlic (+23%), whereas the imports of peppers and tomatoes dropped by 7%.
In general, the situation is rather mixed: in terms of volume, the situation looks worse than in 2012, as Italy imported over 299,000 tons of vegetables more than it exported, however, the balance is positive in terms of value with exports totalling €372 billion more than imports.
Heavy rains earlier this year have negatively impacted the quality of Spanish strawberries, leading to overall poor results for the campaign.


text:
Edited Transcript of BBY.L earnings conference call or presentation 14-Aug-19 8:00am GMT
Thomson Reuters StreetEvents September 17, 2019
Half Year 2019 Balfour Beatty PLC Earnings Presentation
London Sep 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Balfour Beatty PLC earnings conference call or presentation Wednesday, August 14, 2019 at 8:00:00am GMT
TEXT version of Transcript
Corporate Participants
* Leo M. Quinn
Balfour Beatty plc - Group Chief Executive & Executive Director
* Philip J. Harrison
Balfour Beatty plc - CFO & Executive Director
Conference Call Participants
* Andrew Nussey
Peel Hunt LLP, Research Division - Analyst
* Gregor Kuglitsch
UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst
* Howard David Seymour
Numis Securities Limited, Research Division - Director of Equity Analysis
* Marcin Karol Wojtal
BofA Merrill Lynch, Research Division - Analyst
* Saravana Bala
Jefferies LLC, Research Division - Equity Associate
* Stephen Joseph Rawlinson
Edison Investment Research Limited - Analyst
Leo M. Quinn, Balfour Beatty plc - Group Chief Executive & Executive Director [1]
I'm Leo Quinn, Balfour Beatty's Chief Executive. There is a live webcast, so we'll -- that's for everybody on the webcast.
First slide I'd like to put up is actually our Balfour Beatty 110 years. In January of this year, the company has been around for 110 years which I think is a phenomenal achievement and you'll love that graphic, I'm sure, the way we build it with cranes and trucks. First and foremost, it plays very nicely into the fact that our Build to Last program has always been designed to actually put in place a platform for the next 100 years of success, and that's building on the 110.
Today, we've announced what I think is a strong set of results, and there's a continuation of the progress we've made over the last 5 years. Encouraging to see that our profits are up some 29% and beneath that our construction services in the U.K. has actually improved by some 41%, so it's nice to see that.
If you remember back in 2015, I think, we had 79 distressed projects. So it's good to see those work through the system. The real highlight is actually the cash. And I think last time we presented our cash for various reasons wasn't as strong as we would like it to be, but our average net cash during the period is GBP 290 million, which is a huge step up from where it was last year and our closing was GBP 425 million. That's cash in the bank as opposed to overdraft.
And our financial strength is underpinned by a GBP 1.2 billion investment portfolio, which has the benefits of a strong yield, but it also has the benefits as the assets mature we choose to sell them off. We've got a strong performance in the second half of the year. The first half was a little lighter than the prior year.
In terms of our growth in orders, we've used the word manage because we don't want to get ourselves back into this position we were in and where the industry was in terms of forced growth, where you have to grow your top line in order to keep feeding the cash flow to keep funding the losses. So it's really important for us that we are highly selective in terms of the risks that we're taking, and this is the first time we've really allowed the order book to grow on the back of what we think are very good solid projects.
And then finally, our confidence in the future is underpinned by a 31% increase in the dividend, and this is the third year in a row where we've had a 30% increase, behind that is some of the leading indicators. And what's important about this next slide is not so much the Lean, Expert, Trusted and Safe, but this is a 5-year trend of continuous improvement. And it really doesn't matter what you measure, but provided you're measuring something and holding yourself to account. If it keeps improving, something good is going to be happening underneath that.
In terms of Lean, we're looking at cash in, cost out. But more importantly, how we're investing in the infrastructure to support the next 100 years as a company, which will allow us to drive the productivity. And as you see in the next slide, our overheads continue to reduce in absolute terms, not only as a percent. I'm encouraged, if you look at -- we have GBP 400 million improved cash flow ahead of where we were back in 2014, and each year that line keeps rising and it flattens out around the 0 point. So that's a very encouraging trend.
We're an industry that's based on the capability of its people, and it's up to us to create a great place to work in order to keep our employees with Balfour Beatty. And you can see for the fourth year in a row, our employee engagement index has actually risen and the number of participants in that survey is the highest level it's been in the company in the last 5 years. So I think everything is going well here. This is important to attract people in and also to retain people within the company.
Our trusted is about doing what we say we will do, and this is more a case of our customer satisfaction and we measure that and that's remained at 97% for the period.
This is an incredible progression, and I think safety is a sort of a leading indicator of how the business is going to perform. And 5 years ago to think we could actually halve it, which is an improvement, by the way, less accidents, is quite unimaginable, but we are there. We were recently recognized with the construction use safety award and the quote was, "We're not only leading the industry, we're setting the standard for the industry." And I think that's a great accolade to all of the work that the senior managers do top to bottom in this company to make sure that we send people home safely every night. So great track record in terms of 5 years of improvement and hopefully another 5 years.
If we actually move on to some of the hard numbers behind those particular trends, if I look at the average net cash for the half year period forward, back in 2015, we were overdrawn to the tune of GBP 16 million. Today, we have net cash of GBP 290 million. For our earnings-based businesses at the end of the first half of '15, we lost GBP 180 million. Today, we're generating GBP 63 million.
By the way, the amount that we generate, in my view, is absolutely derisory. But the point is, if you look at the trend and if you project that forward, you can almost become optimistic and encouraged. If I look at operating expense, 2015, our overhead was GBP 212 million. On the same volume, we're GBP 137 million. That's a GBP 75 million improvement in the first half. And I think we're talking about GBP 185 million improvement in the year, which is an improvement of about GBP 10 million over last year.
And then in terms of attrition, which is -- this is a real cost to the business, it's particularly our business where you've got records, history and the likes of that. You to have gone from 15% down to 11%, we still have a target of 10%. Again, that's really encouraging place to be. And from a brand and an industry point of view, I do feel we have sort of the place that people actually want to come to work today. So it's great to have a brand that's been restored to its former strength and the place that people do actually want to come to.
So on the back of that, what I'll do is I'll hand over to Phil, who will now treat you to some facts.
Philip J. Harrison, Balfour Beatty plc - CFO & Executive Director [2]
Thanks, Leo. Good morning, everyone. Let's look at the headline numbers. I'm particularly pleased with the profit from operations up 9% on relatively flat revenues as we continue to focus on operational delivery. At a pretax level, profits increased by 14%. Another highlight is the order book, which increased again under the group's managed growth strategy, which we'll cover later. We also saw year-on-year improvements on average net cash with our first half performance of GBP 290 million, up more than GBP 100 million on prior year. Given this performance, the Board has declared an interim dividend of 2.1p, a 31% increase on prior year.
Now let's look at the results in detail. Turning to underlying profit from operations. In the earnings-based businesses, profits increased by 29% to GBP 63 million, which contributed to the overall 9% increase in the group's underlying profit at GBP 72 million.
Looking at the constituent parts, construction services improved by 41% to GBP 45 million and support services by 6% to GBP 18 million. Following significant disposals in 2018, infrastructure investment profits from operations decreased GBP 8 million to GBP 25 million.
Order book. We saw an increase of 5% from year-end 2018, an increase in both absolute terms and the constant exchange rates. The construction order book increased by 4% due to increased orders in the U.S. In the first half, we booked significant buildings projects across our U.S. regions at the Wharf project in Washington, D.C.; Block 216 in Portland, Oregon; Jacksonville International Airport in Florida; and a significant commercial office in Plano, Texas.
The U.K. order book remained stable at GBP 3 billion. As a reminder, it does not include our share of HS2, the GBP 2.5 billion civil work or the GBP 1 billion Old Oak Common station in London. Work is progressing to deliver detailed plans and costs for the civil works for lots N1 and N2 under an early works contract, work we now expect to complete by the end of the year. Importantly, our financial forecast for this year and next do not rely on HS2 going ahead.
In Support Services, the order book increased 7% to GBP 3 billion, following growth in the transportation sector, namely the award of the Central Track Alliance by Network Rail, where we have booked GBP 250 million of the expected GBP 1.2 billion of work under the 10-year framework agreement. And we also saw the re-award of the London Underground infrastructure contract for a further 4 years.
Now let's look in more detail at each segment, starting with construction. In the U.K., revenue increased 7%. The first time revenue has increased under Build to Last. Profit from operation showed an improvement to GBP 17 million, with an associated margin of 1.7%. We expect that for the full year, U.K. construction will be within the 2% to 3% industry-standard margin target range.
In the U.S., revenue increased 10%, 3% at constant exchange rates. The PFO margin was consistent with last year at 1.1%. We anticipate margin improvement in the second half of the year as new work booked in 2018 progresses.
At Gammon, revenue was lower in the period as the timing of revenue from project starts compared to last year is more heavily weighted to the second half. Importantly, margin performance improved to 2.4%.
Now turning to Support Services. As you can see on the slide, Support Services' revenue decreased by 7%, as expected by the -- following the conclusion of the Area 10 highways maintenance contract and lower volumes in the power transmission business. Importantly, profit from operations and PFO margin for the period increased to GBP 18 million and 3.6%, respectively. We continue to expect the full year PFO will be broadly in line with prior year.
Breaking down the constituent parts into a bit more detail. In power, new business wins in substations and power lines for National Grid will feed through into higher volumes next year. The gas and water business is moving towards the end of its current regulatory cycles. In water, the group has started to engage on M7 planning cycle, including negotiating the renewal of current contracts. In transportation, the underlying highways market is good with multiple local authority contracts coming to market. Whilst the rail, our partnership contract with London Underground, as I said, was renewed at the start of 2019. And in March, we got the 10-year Central Track Alliance Contract to design and deliver track renewals and associated infrastructure works across the London Northwest, London Northeast and East Midland routes.
Moving to infrastructure investments. The business continued its strategy of optimizing value through the disposal of operational assets while also continuing to invest in new opportunities. Following significant disposals in 2018, underlying profit from operations decreased to GBP 25 million, with both predisposal operating profit and profit from disposals lower than the prior year.
It is worth remembering that the investment portfolio is integral to the group, a constantly regenerating asset base that interlinks with our Construction and Support Services businesses. As examples in the U.K., investments in construction are working on a major student accommodation project at the University of Sussex. And in the U.S., our Civils and Building businesses are working with investments on the LA Airport Automated People Mover. The group continues to see opportunities to invest in high-quality projects with good returns.
In the U.S., the focus is on student accommodation, multifamily housing and public/private partnerships. In the U.K., the focus is on student accommodation and public authority-led regeneration schemes. We continue to look to time asset sales to realize optimum value to shareholders with more disposals expected in the second half.
Turning to the Directors' Valuation. Looking at the moving parts, we invested GBP 11 million in new and existing projects, whilst cash yield from distributions amounted to GBP 32 million as the portfolio continues to generate cash flow to the group net of investment. The sale proceeds were GBP 26 million from the sale of Borden Data Centre in Canada and 3 multifamily housing assets in the U.S. The unwind of discount was circa GBP 45 million with the period end valuation again rounding to GBP 1.2 billion, this equates to 169p per share.
If I go to the next slide, this slide shows all the investment disposals that the group has made since 2015. Each bubble represents one disposal. The size of the bubble represent the sale proceeds received. The color of the bubble represents whether the asset was sold either at or above Directors' Valuation. Blue is above DV or dark blues above DV. On the left-hand side of the graphic, we have the end-to-end multiple for each project at the point of disposal. This is calculated as the sale proceeds plus distributions received over time divided by the original equity investment. The graph demonstrates that the group continues to make strong returns from its investments. Over the period, we've realized GBP 650 million from the portfolio with the majority of the disposals above DV. Returns have averaged over 3x the initial equity outlay, and we continue to target a minimum 2x return on new equity.
Now if we move to cash flow. I'll start by highlighting the good average net cash performance for the group at GBP 290 million for the first 6 months. This is substantially higher than last year. And for the full year 2019, we have now increased to a range between GBP 280 million to GBP 300 million.
Now moving to the waterfall. The total cash movements in the period resulted in GBP 88 million increase to the group's net cash, positioned to GBP 425 million. The increase came primarily from the GBP 94 million operating cash flow with working capital broadly neutral. It is worth pointing out with the adoption of IFRS 16, the operating lease cash flows are no longer categorized in operating cash flow. But in financing activities, these amounted to GBP 24 million in the period, other flows were as expected.
Negative working capital as a percentage of revenue remained stable at 10.7% versus full year at 10.3%. You can find additional information on working capital splits as well as IFRS 16 in the appendix.
My final comments before I hand you back to Leo, a good first half performance in terms of profit and cash. We continue to be selective in the work we bid for, and we continue to focus on operational delivery. Therefore, the Board expects the group to deliver a full year performance in line with expectations.
So that concludes my remarks. I'll now hand you back to Leo.
Right. Thanks, Phil. Back to Build to Last. We're creating a platform in which to build the future of the business here. But at the same time and underneath that, we've also created what I regard as a geographically and operationally a diversified company.
Today, over 50% of our returns come from outside of the United Kingdom. And although we're a British-listed company, it sometimes overlook just how much comes from Hong Kong and primarily the United States. In the case of investments, you've seen over the last 4 to 5 years, where those ratios have actually switched, we used to be about 44% in the U.S. and 56% in the U.K. We've now switched that round.
The operationally diversed portfolio we have is the different business models we operate within the various territories. But if I spend a few minutes in terms of the U.S., although we're looking at bookings here, in revenue terms, the U.S. building business is about 80% of our turnover and that operates on the basis of construction management. So we receive a low fee in that area in the order of 4% to 5%, but we actually take a much lower risk because the risk is passed down to our supply chain. The remainder, which is about GBP 700 million to GBP 800 million, is in our Civils business, which in some ways is slightly neanderthal in terms of how it contracts. And it hasn't matured to the point that where the U.K. business and market is, and I'll explain that in a few minutes to you. But there's an awful lot of hard bidding goes on in this area, where it's a fixed guaranteed maximum price, which can carry superior returns but also can come with superior challenges. And you'll have noticed from the industry that some of the competition have had some big challenges recently.
In terms of Gammon, I'll touch on this in a bit more detail, but this for us is a full-service model, again, primarily guaranteed maximum price. But our focus on Gammon is really around the dividend, I'll explain that.
If I look at the U.K. in terms of U.K. construction and U.K. services, again, very different models in terms of our U.K. services is primarily focused on long-term engagement with customers 10-year contracts, which actually demand of you to be more productive at the end of the cycle rather than the beginning. And there is lower cost invested in securing this work because it runs over 10 years, but they can be equally challenging over time. And U.K. construction is a myriad of construction or contracting models, which I'll touch on in a later slide as well.
In the case of our investment portfolio, which is really the jewel in our crown and will continue to be, not only in terms of its size, but the security of the income that comes from it and the flexibility affords us if we want to sell down assets at the peak, as Phil has described. This works best when we have a model that the -- we design, build, finance and operate, where we're a full-service provider. And there are a number of models, which I'll touch on in next few slides, which portray that. It's not foolproof, it can actually go wrong. But today, as we use this asset to our advantage, we seem to be building better with long-term returns in this business than we had in the past across the whole portfolio i.e. delivering profit to construction and delivering finance profits to the infrastructure business.
If I move to the U.S., I talked about geographically diverse. You're aware of our Southern Smile in terms all the way from Seattle round through California, Texas and up into the north the Mid-Atlantic and the Carolinas, and that's referred to as a Southern Smile. And as the population gets older, it migrates to the warmer parts of the country. So we've seen population growth, which brings with accommodation, housing, infrastructure and the likes of that, which actually caters to what we do. We're also diverse in terms of our customer base and who we cater to. And they are very different markets and there's value in that diversity because not everything rises and falls at the same time.
If I look up in the northern area, we're primarily focused on the tech sector companies like Amazon and data centers, Microsoft and their campus and things like that. As I move down into California, our primary building focus is largely around schools. If I go down to Florida here, we're actually engaged in the likes of Disney, Universal, hotels, leisure and the likes of that. And if I look at the final areas of our building business in terms of Texas, the Mid-Atlantic and the Carolinas, it's primarily offices and residential accommodation, mostly construction or concrete build frame -- or concrete frame buildings and the likes.
And as I then look towards the other side of our portfolio, which is actually the more hard-bid area. In the area of Texas, we're one of the primary deliverers of roads. We've had a very successful Horseshoe delivery. We've got a very successful project with The Southern Gateway, and we recently were the winner of a GBP 1.7 billion I-635 highway project. That's an area where we work closely with a client. We've had a 20-year relationship, and it is a very successful business for us.
Our other big Civils infrastructure activities are in California, where we're in to rail and water treatment plants. And in the Carolinas, where it's the same all the way down from Washington down into the north of Florida here. So those are our 2 particularly strong business models. It turns over about GBP 3.5 billion annually. In terms of our investment portfolio in the U.S., it's about GBP 650 million, and that's primarily our military housing asset and other unique locations.
If I look at the prospects for this market, I refer you here to the right. There's no shortage of opportunity in the U.S. at the moment, and there's an awful lot of growth. Our challenge is being particularly careful and selective in what we go for. And because a lot of the models -- business models are around hard bidding in that area, we need to sort of start to change some of these because the risk tied up in some of these major infrastructures are so large, they can't really be absorbed by a single company. That doesn't mean you put together a joint venture and absorb that risk over multiple companies, it means you either play on the basis of a cost reimbursable or you decide not to play.
If you look at this chart as well, you'll see there's 55 stars, which actually represent all of our military housing assets across the United States. We look after 43,000 residential homes for the military on a 50-year concession. It's serviced by 1,200 employees, who are committed to providing the highest possible service, and many of them actually have a service background. So they are intimately connected with that industry.
You'll be aware from the press recently that we've had reports around allegations in 2 of our bases, Tinker and Mountain Homes of issues around the processing of work scheduling orders in terms of repairs. We've looked into this. We take the matter very, very seriously, and what we want to ensure is that we have an independent review. So we've -- in order to ensure the independence, we've appointed external counsel, and there is an investigation underway. Given what we know today, we see no reason to change either our financial forecasts or our Director's Valuation in respect to that asset. And if there are any further questions on that, we'll take them during the Q&A.
If I move to the U.K., it's hard to think that a country of the size of the U.K. is geographically diverse, but I can assure you it is, and we do operate all the way Scotland down to the London area in the south. The point I'd like to talk about here in terms of the U.K. business models is that if I look here up to the top right, where we're looking at things like Scape, Regional Investment Programme, which is highways England and the new Central Track Alliance, these are invariably long-term partnership arrangements. Scapes 4 years, but the Regional Programme and the CTA is actually a 10-year program. What they hold in common is the fact is that most of the work is actually constructed under what is an ECI, which is an early contractor engagement. And what that means in simple terms is that the customer pays for us to put together the scope, the cost and the schedule of the job. And once we understand the risk and the client understands the risk, we then decide whether or not we proceed with that work. This is transformational, when especially I'm going to touch on large projects. This is transformational in terms of where the U.K. sits today compared to Civils work in the United States. And I think that you'll see in the future the Civils in the United States will start to evolve to a much more collaborative model. This long-term engagement does give security of work and although it underpins a good reliable workforce.
If I look at the areas over here, some of our major infrastructures work with the M4, for example, Hinkley, and I'll even include HS2 in that discussion is that these are major infrastructure projects. They carry with them very, very high risk if you get them wrong. But the good thing that's happened in the U.K. as a result of whether it's Interserve or Carillion or this is that. The way we engage with our clients today is completely different to the way we used to engage. So what we're doing is we are actually working, collaborating with the likes of Hinkley, HS2 and M4 to engage with them early, whereby we put together the cost, the schedule and the scope, and then we work through what is practical and what's feasible.
And what we're now starting to see is models emerge, which effectively is like a cost-incentivized fee, where our fee and overhead is guaranteed on the contract and then there's a pain gain formula, which is in the tight band. It says if you overperform, you'll get a small marginal improvement. If you underperform, you will actually get a small marginal loss, and that band is important because what it means is you never drive a contractor into loss when they can't manage. If, however, you don't perform, you'll simply recover your overhead and you won't make any profit from it, but you don't end up with the disaster scenarios occurred.
So this market is changing and evolving. And again, this is, I think, a real important indicator as to where we'll see other markets around the world change in the future as well. If I also look at the future prospects here, the fact of the matter is, is that there is a very ripe infrastructure market sitting out there at the moment. As you know, we were selected on N1, N2, which is a Birmingham area for High Speed 2. We were also selected for Old Oak Common, which is currently in dispute. There's been a protest against the bidding process and HS2 is taking that to court in early September to have that presided over and decision made. At the moment, everything is on hold in respect to that.
Our position in that contract is purely as a construction manager, where we get a fee for our service. If I look at this pipeline ahead here, all of the work that we're looking at this moment in time is invariably some form of collaborative bidding as opposed to just simple hard bid and things have actually changed. Some contracts have come out in the last year, and there have actually been no tenders for it. And so the government and the associations had to go back and change how it's going to procure in the marketplace, which just shows how the market is evolving.
Phil talked about our investment business and the Sussex University. Where we make our best returns is when we actually act in concert with our investments, financing and our construction building, and we make a wall-to-wall return on the basis of that. And we've got a couple of big projects, the concession on the M25, which runs for 30 years, which is running well; and the Sussex University, we've recently completed the first 1,000 rooms in their upgrade program. So an important market to us and one that actually, I think, has been derisked all the time that we work within it.
If I look at Hong Kong, we're a joint venture with Jardine Matheson 50-50. It's about GBP 1 billion worth of turnover from us. And the most important takeaway actually from this business is that Hong Kong for us is an annual dividend. This company has its own balance sheet. It bonds on the back of its own balance sheet. It takes risk on its own balance sheet. It is a strong balance sheet, but its primary purpose for us is the dividend that it yields at each year.
It's a full-service construction company. In terms of that, we do ground engineering. We mix cement. We deliver it all the way through to the mechanical and electrical it goes on. We have a variety of infrastructure projects ranging from the M&A on the tunnel to the Viaduct that we just recently completed. We're engaged in some of the major building infrastructures in the center of Hong Kong in terms of the Lyric Theatre. Interesting enough, it sits over a railway line. How you have a concert with a railway underneath it. It's another mystery to me. And then the M Building museum. And then we're even in the area of water parks and the likes of that. So this is a full-service business. The business model over here is still hard bid, it's -- which means that you really have to know that market and you have to be ingrained in it. However, what we're now seeing is signs that that's moving towards a more collaborative model in terms of the first NEC contracts and the first early engagement types of contracts.
So I think the challenging market, but I think the future looks bright here. The amount of work that's coming down the pipeline is phenomenal over in Hong Kong, particularly around the fact they've got a 10-year hospital plan, they've got a 10-year residential housing plan, they've also got supporting infrastructure plan. So this is a very buoyant market. And although there's a short-term chaos that's going on in Hong Kong, it's not something that long term I would spend a lot of time worrying about.
So really, in summary, I think Balfour Beatty this time in all of our chosen geographies have a strong position in the infrastructure market, and we're going to see that grow over the next 10 years. My number one challenge and priority is how do we recruit and retain the people in Balfour Beatty in order to deliver that work. And as you know, we're strongly engaged in bringing on apprentices and graduates into the industry, but we're equally engaged in ensuring that those people who got 40 years of experience don't retire at 60. So to help them along the way, we've canceled all retirement at 60 for our employees. And the fact of the matter is, is that I'm sure they'll be engaged and wanting to stay a lot longer in light of the future challenges and work that's coming.
We've spent a lot of time in bidding -- in embedding what I would describe as a risk management culture, whether that would be in our GTIC process, whether it be on our projects on the page. But for us, it's really, really important that we understand the risk. We won't always get it right, but the fact of the matter is, we're involved, we're engaged and we're making the decisions as to what we will and what we won't do at a very high level, and that involvement is critical to our future success and our future improving margins.
And the Build to Last, we've put in a platform, which is capable of growing the business and scaling it. It helps us in terms of how we manage our financials, how we drive productivity through the company and also how we scale it. I believe we've got a truly scalable model if we ever wanted to use it. And I'll give you an example. Under the Central Track Alliance, we've just recently TUPE'd over 500 employees and contractors from various companies around the United Kingdom into our system. And to date, it's gone flawlessly. That's a major task because it's not only about moving someone's employment file, it's about giving them a new car, a new van, a computer, a telephone and everything needs to be up and running and working. And when we took over sort of 165 employees from Carillion a couple of years ago, that went seamlessly for us, and I'm sure this will go seamlessly as well, all that leads to driving more productivity and costs down.
And then finally, the strength of our balance sheet, and in particular the strength of our investment portfolio, I think, leads us ideally to the point that in the future we can see strong cash distributions from the company. And as I've said before, our first priority is always going to be next year, we've got 110 million preference shares with a 10% coupon on them. We've got a GBP 25 million private placement. So that's our first priority to get those paid down, and those are the singly most value-accretive things that we can do within the company.
So on the basis of that, I think we'll hand over for Q&A, and we can take any questions that you care to offer.
Andrew Nussey, Peel Hunt LLP, Research Division - Analyst [1]
Andrew Nussey from Peel Hunt. Couple questions, if I may. First of all, on the infrastructure business, you said there's lots of opportunities out there for investment. I'm just wondering what the market is like for asset sales at the moment in order you get to maximize the value for the group? And then secondly, in the U.S., if we work an assumption of more collaborative working, should we expect a greater shift to Civils over the Building business over the next probably 2 to 3, maybe 5 years?
I'll do the second one first, if I can. I think it all depends on the risk. There's absolutely no shortage of opportunity in the last, what, 48 hours, we've looked at high-speed rail in California. We looked to Expressway, which is the high-speed rail to Las Vegas, et cetera, and it all comes down to on the basis to which they want to actually contract. And of course, from a client's point of view, what they want is a fixed price guaranteed lump sum. Well, you know not on this planet, it just cannot happen. You can't take those risks on board. So I think it's very much a question of -- I could see the Civils business growing to a certain extent, you have to remember, we've only got a limited capacity and limited number of people. But at the end of the day, it's going to have to be on terms that means that we're not carrying the risk of delivering their high-speed railway to a certain schedule and that it's worked collaboratively overcoming the challenges that you come. If you compare that with the way HS2 has been handled, it's working on a very tight budget. And what they've realized is that they're better to work on a cost-adjusted incentivized fee with the contractor and not try and pass down bonding costs and liquidated damages, et cetera, because ultimately the risk stays with them whatever happens. So we've got to get the U.S. and the U.S. client base to the same point of view. If I let Phil touch on the asset sales.
I think our -- as you've seen and demonstrated over the last 5 years, we've been very good at extracting value as we go into the market. The investment team has done a great job there. Values are still strong. The secondary market is strong. There is a -- if you like, a lack of assets into the secondary market. So there is a, I think, a pent-up demand there. So we'll continue to time and extract the best value from those assets. We don't see that at this point changing.
Howard David Seymour, Numis Securities Limited, Research Division - Director of Equity Analysis [4]
Howard Seymour from Numis. Two, if I may on unrelated areas. Firstly, could I just ask on the military housing. Thank you for the slide, very useful. You alluded to the fact that you don't see any sort of impact on DV, 2 questions there. One, is there an actual schedule timetable going on in terms of what's going on in terms of the allegations that we can understand? And secondly, in what circumstances could you see a change in the DV on the basis of the allegations? And I don't know if you can put any quantification on that as well? And then, I'll come to second question.
Right. First and foremost, putting it in context, we are talking about 2 military bases out of 55 and allegations made by 2 ex employees and second big case one work order. So the challenge is, is that -- I'm going to be very careful with my words, the challenge is that you want to make sure that we review it independently, which then means you'll then -- despite working with the Air Force, you'll then forced to go down through a process, and it's never easy to communicate and get all i's dotted and t's crossed. So yes, it will take time. I can't tell you how long that will be, but I know it is as equally challenging, embarrassing for the customer as it is for us. And so it's in all our interest to try and move this forward as expeditiously as possible. In terms of circumstances, I can't think of any, but Phil might have a thought on that?
I mean, what we reiterate we have no knowledge today that would make us change the DV. I don't really want to speculate on future occurrences. We'll deal with that when they arise.
Okay. Okay. And secondly just on payment terms in terms of the U.K., which again has been quite a sort of contentious area for us, I suppose. You can see that the payments have come down, just real thoughts in terms of where the government is on this at the moment? They seem to be a little bit less draconian perhaps than they were, but do you perceive that you'll continue to see that the payment days drop over a period of time from Balfour's and the industry point of view?
We've been on a process over the last 18 months pre anything that's happened this year to improve our processes in terms of actually collecting cash and paying our suppliers on time. The industry is very complex when it comes to invoicing, making payments just because of the difficulties that go on day-to-day on sites and changes that occur. But over the last 18 months, we've improved all our metrics significantly. We have an action plan that has been approved by the Prompt Payment Code, which we're working through that we will consistently, I think, deliver improvements as we go forward, which is our commitment. I say our first commitment is actually always to our supply chain because we live and breathe what we do and how we deliver by our supply chain partners. So it's essential to us to make sure that they are paid and also perform. The government itself has brought out new guidance. It made the guidance earlier in the year that said that you would not receive or you would be reviewed if you're below 95% payment to suppliers within 60 days. In the last 3 weeks, they've reduced that to 75%. I think that's in recognition that the processes and the improvements that need to be made across the industry is going to take more time, but we're committed to improving. And as you can see, our results this time around again is an improvement.
Yes. I think our branch is built that one way is -- first of all, we're totally committed to paying to terms. But beyond that, we're totally supportive of our supply chain. It's not a question of whether we follow the K, The fact is, it's in our interest and getting the job done on time that we're philosophically supportive of paying our suppliers on time. So I see it's ingrained as part of our culture.
Gregor Kuglitsch, UBS Investment Bank, Research Division - Executive Director, Head of European Building & Construction Research and Equity Research Analyst [10]
Greg Kuglitsch from UBS. I've got, I think, 4, some should be easy, some maybe not, but just on the military housing, can we have 2 questions there. So the first one is the 2 bases, how much are they of the DV so we can get a sense of kind of what the risk is? And just to be 100% clear, are these contracts all structured separately on SPV basis with nonrecourse to the group, just we can understand what they may be thinking about contagion risk of some sort?
And then the second question is on the incentive fees. So can you just give us a sense how much either the whole portfolio as a percentage the incentive fees represent as part of the value because obviously that's a bid, I think, that's been kind of under discussion?
And finally, obviously, we're not privy to the contracts, but are there any clauses in the contract where you can get fined for, I guess, this kind of misconduct? Sorry, this was kind of 3 questions, actually only supposed to be 1.
So second question is just you're mentioning on the U.K. construction business that the sort of contract terms are changing of lower risk and more collaboration, how much of your book or your business is actually on those new terms? Because I guess there's still -- not everything is like that, but I would want to know how much is actually in that sort of lower risk phase where your loss potential is lower?
And then the third and final question perhaps is, could you just give us an update what the resolution is with the Scottish Department of Transport on Aberdeen bypass on any potential settlement of the final contract?
Leo M. Quinn, Balfour Beatty plc - Group Chief Executive & Executive Director [11]
If we could have done a separate presentation for you, couldn't we. Phil, let's take the military housing one because that's easy one to get that out of the way for you. And then what we'll do is I'll tear off the construction one and the Transport Scotland and the Aberdeen Peripheral bypass.
Philip J. Harrison, Balfour Beatty plc - CFO & Executive Director [12]
So on military housing, I think you asked, are they -- are these bases in separate SPVs? We -- the 2 -- the Air Force bases are in separate SPVs. The Tinker is in a project that -- wrapper that we call AMC West. So we have 21 project companies in our portfolio that add up to the 55 bases. There is -- they are nonrecourse debt. They are not cross defaults. So I think that's important to recognize. On incentive fees, we make a statement in the -- and I'm just trying to -- I think it's 13% is the figure that we have told you in the statement and that's all Air Force bases, the 21. And you can roughly extrapolate that to the DV.
And then just -- sorry, before we move on to sort of 2 entities, the SPVs, AMC West and, I guess, I don't know Mountain Home, how much is that of the entire -- is it 2% out of 20%, so 10% roughly of the DV.
No. It's...
I think rather than to answer it now...
We'll just take it offline and give you the answer to it.
Unidentified Company Representative, [17]
(inaudible) percentages of the military housing portion of the DV, not the whole DV, so all these percentages may relate to the element...
Absolutely, yes, yes.
Yes, they don't relate to our GBP 1.2 billion. If you don't put it into GBP 1.2 billion contract, it's immaterial.
Yes. Your questions were around U.K. Constructions, how much of the portfolio falls into that more collaborative side? So it's obviously very difficult to measure it because you've obviously got historical contracts, which you're trading through and you do have a complete myriad. But I'd have to say the portfolio is dominated by what I think is the collaborative type of engagement. If I think of Highways England and I think of their revenue, if I take a Scape partnership in that, if I take our service contracts, I'd say the portion is large. And with the likes of HS2 as and when it comes into the portfolio, it will be even larger. And I think that's actually also in self-preservation because I think the client base is realizing it has to work collaboratively on these projects, otherwise it will have no one to do them in the future. And there's been a lot of failures on the back of the old model.
In terms of the resolution of Transport Scotland, we continue in a good-faith dialogue with Transport Scotland. There is an impending deadline, which in December proceedings have to be filed with the court so that we don't sort of exhaust the statute or the limitation of the statute on the claim. So it will be coming to the head by the end of the year either in court or some sort of resolution.
Marcin Karol Wojtal, BofA Merrill Lynch, Research Division - Analyst [21]
It's Marcin Wojtal from Bank of America. So first question is on your dividend, which was increased 31%. So can you explain how did you get to this number? Does it track your profits from operations? And can you maybe help us a little bit to try to forecast your final dividends for the year on that basis?
Number two, just going back to contract structures in the U.S., you've got a couple of large Civils projects in Los Angeles and also in Texas. So are those fixed priced contracts? Or there are some elements of profit sharing or cost-plus perhaps?
And maybe lastly on working capital, which was quite solid, I think, in H1, but what do you expect for the second half? Because I think, as you show in your results release, there was some progress on the receivables, but at the same time a buildup of payables. So I'm just wondering if this is sustainable what we saw in H1?
So obviously, I have no idea how Phil determines the dividend. So it would be good to hear an answer to that question myself. So if you could do the dividend and working capital, I'll do the Texas contracts?
Well, you want me to decide. Well, the Board determines the dividend. The dividend, we look at a number of -- or the Board considers a number of things. Clearly, dividend cover, the progress of the business. The 31% is actually a little bit around the math because we prior year did 33% increase. If you actually look at the split, our split is typically 1/3, 2/3. If you extrapolate the -- what we've done now, you'll work out that if the Board does declare in the same ratio as last year, it would be a 33% increase full year, if the Board determines that full year, but that's up to the Board at full year to do.
So we'll leave the Board to determine that, will we?
And the working capital?
Working capital, I think, we're looking at being relatively neutral through the full year. I can say is being plus or minus full year GBP 20 million or GBP 30 million, but clearly we're not anticipating anything of the size of last year. And as you know that was predicated on some very specific things, around outflows in Aberdeen. The U.S. revenue declines that we experienced last year and some of the payment progress that we made. So we're not anticipating those things to repeat in the second half this year.
Okay. And the answer to the question -- I'm sorry, I just deviated from the last question, it was about the nature of the contracts in the U.S. So in the case of LAWA, which is the LAX People Mover, that's a design, build, finance and operate. So that's taking the full portfolio risk. There's also a maintenance contract on the back of that. We're not part of that long-term maintenance contract on that job. I was visiting the job -- or I visited the job, should I say, 2 weeks ago. And at the moment, it's on program or a little bit behind on the schedule for breaking ground but things look to be well within the range of where we've struck the forecast.
In the case of the University of North Carolina where we're doing a 1,000 room student accommodation, that is a design, build, finance and operate. That was actually -- I was there 4 months ago and that actually is proceeding very well. Interesting enough, that is our top-performing construction team in the United States. And I'm very, very confident that, that will come in on time and schedule. So everything I saw gave me confidence, and we're already on that campus doing other work. This is a run on from that work.
In the case of the I-635, which is the interstate in Dallas, that is a hard-bid job. It is in joint venture. The Texas is our most successful highways construction operation. We delivered the Horseshoe Bend project, which was GBP 500 million at a double-digit margin, very capable team. The same team is actually delivering the Southern Gateway, which is on program at the moment, and this is actually what 25 miles up the road from those 2 projects. So it's -- it will be a bid around a high degree of confidence because of our previous experience in the area, but also working with the client. But make no mistake, it's GBP 1.7 billion is a big road project, lot of dependencies. There is risk in it. It has questioned our ability to manage the risk, but I would have a high degree of confidence in this team in that geography.
Stephen Joseph Rawlinson, Edison Investment Research Limited - Analyst [29]
It's Stephen Rawlinson. Can I ask 4 questions, sorry for that, 4 unrelated questions. The record 7, by the way, set by Mark Stockdale. So I'm still short on that one. Just first one, on the GBP 150 million you've got to find next year on the perhaps -- and some other chunk of change you got to find, how would that manifest itself in the P&L coming through next year and 2021 because obviously the interest cost was about GBP 15 million, I think, on that particular item last year. So how could we expect that to drop through? And would you repay it in cash or might it be repaid in shares in which we think of that as well?
Secondly, with regard to risk, you mentioned risk in the U.K. context in relation to construction. Could you just talk about a little bit in relation to services because, obviously, we've got things like the outsources playbook and so on. And in the text of the statement this morning, you talked about managed 5% growth by maintaining disciplined bidding practices. This is sort of the implication being that actually perhaps you could have grown a little bit faster on the order book if you haven't maintained them or perhaps also it might be that the government is coming back with tender documents that improve the original terms, given the fact that nobody bid in the first place?
Thirdly, you talked a bit about growth. Well, how should we be thinking about that because you talk about the platform for growth? And finally, forgive me on this one also, the pension. The discount rate has gone down to 2.2% from 2.8%, which has increased the net liability and you were seeing GBP 16 million outflow in the first half in cash. How should we be thinking in future about the cash flow item related to pension fund deficit funding?
Well, given the first one is financial, I better take that.
Yes. You'll do that one.
Yes, I'll do that one, but the press will be paid down out of cash. I think, from memory, they carry GBP 11 million coupon a year.
Or GBP 12 million, yes.
GBP 12 million. And that effectively will go back to earnings and cash flow. We will just go into the parts, and then we'll decide how that gets distributed or used either in the future to buy down shares or pay a bigger dividend and whatever. But it's -- after 20 years of the prefs, it would be nice to see them going at a 10% coupon.
Nor does one of our Board members who is a holder of them. On the pension, I should probably take that, but that's an easy one so I'll give that to Phil.
I don't remember the pension one...
Pension was the 2 -- the reduction in interest rates -- for the fact is our pensions hedged for a reduction interest rates. So it doesn't penalizes...
Yes. I mean, that's the -- it's not the actuarial valuation. It's just the IFRS calculation. So we just adopt the normal discount rates that are prevalent in the market. I think the more important point is that we're in the triennial revaluation year, so we're working to through that this year, and we hope to conclude that at the end of the year. That's our current goal...
And so your cash flow, going forward, what we should be thinking in regards to that given, what, GBP 15 million, I think, of unusual -- of abnormal payments in the first half?
Yes. And you should -- it will be roughly the same in the second half. So we're not changing any of our assumptions around cash that we've given to you previously.
Okay. And the service one is really interesting question because like everything it's -- it looks perfect on the outside, like a sausage, but you're never quite sure what's the contents are. So we're trying to unravel some of the contents and make sense for you. The portfolio is made up of rail service and maintenance, local road maintenance, gas and water with gas and water being very different and also power. Within that, the road maintenance business with many local authorities has been well established for over 10 years plus and is actually well understood, well managed and we're fairly comfortable about the forward projections in that area. We haven't seen a lot of growth in that business because some of the suicidal bidding that's gone on in the last few years, but what we've done is we've maintained our portfolio. And as we get more productive over time, we get better returns.
In terms of our rail service business, obviously that's a strong business for us, where we consider to be a very good supplier. And we've just added the Central Track Alliance to that, which is GBP 1 billion over the next 10 years. And we've recently won the Welsh rail contract there as well. So I think we see strong growth happening there. The nature of the contract -- I can't actually remember what terms it's signed up on, but I'm fairly confident that the terms would be very acceptable because they would align with where we are contracting today.
In the area of gas, gas is a challenging contract because it's coming to the end of its period, and there's always goals for increased productivity. So that remains a challenging area. On the other hand where water is the end of its end period and we're rebidding that, but water remains a good business on fair terms. There's always odd nuances around the recognition of profit and the likes of that, but we -- you could write sort of a bible on that.
And then the final area is power. Power is a business, which has the highest barriers to entry. That is invariably struck on a contract-by-contract basis. It's an oligopoly. It's primarily SEC and national grid, and we fully understand those terms and know how to work with them. We see revenue growing very rapidly in that area over the next 2 to 3 years because of the Hinkley electrification and power transmission lines. This year, power is actually probably as low as revenue level. Its cost base has been adjusted to match that revenue level. So as we see the sales growing in the future, we're rather optimistic about improving returns in that area. Sorry about the vagueness of the reply, but it is actually really complex number businesses tied up in there.
And then in terms of growth, I think there's no doubt we could take on more business and grow, but I think that would be reckless. So what we've done is that where we can't live with the terms is we've worked with the clients. We've never rejected. We've worked with the clients to get them onto a platform basis, where we can go ahead. And sometimes within our frameworks, some of the terms that were asked for neanderthal which we will never sign up to. But we find that as we work with the customer, we can get to a point where it is workable and there isn't the risk transfer that was previously sought. So we're a great believer in managing to a successful outcome on terms which are acceptable. But generally, I see terms in the U.K. moving to much more sensible than they were in the past.
Okay. So we'll do this and one more, because I know people have got schedules, and it's just after 10. So please carry on.
Saravana Bala, Jefferies LLC, Research Division - Equity Associate [44]
Saravana from Jefferies here. Just 3 questions for me, please. First one is on the supply chain. So given the importance and close relationship you have with the supply chain and the upcoming VAT changes possibly adding some pressure on the cash flow, I was wondering if you see any consequential impact on Balfour Beatty besides the invoicing, which you flagged in the press release?
Second is on Gammon. I appreciate that selective bidding is very much the priority but with bidding trends seemingly improving, could we see some further growth coming in -- higher growth coming through in the coming years?
And finally, sorry to go back on the military housing, but have you identified any scenarios whereby the maintenance concessions could be revoked without compensation?
Okay. I'll have to get you to talk about the VAT implications, but the -- on the new arrangements, logistically and process-wise, it's a nightmare for the industry. For those of you who don't know, the responsibility of collecting VAT is moving from the government, collecting it from the subcontractor and the supply chain to the main contractor. I think that's right way of describing it, isn't it? And the change in processing systems is huge. It's an extremely challenging task, and I'm not sure everybody will be ready on the prescribed date associated with that. In terms of the VAT and cash flow implications?
It's too early to say what will be the impact. We've got a team. We've got the systems in place. We're well ahead of doing what we need to do. We'll just have to work with our supply chain and deal with the issues that arise.
In terms of your question on Gammon, I could answer that generally in terms of the U.K., U.S.A. and Gammon. Our issue isn't around opportunities to do work. It's -- the issue is around the risk involved with work and the margin associated with that. So I don't see in the current market, globally, we're entering into what I think is an era of we're supplier constrained. Even if we won all the work, we don't have the ability to man up and deliver it. So we're not short of opportunity. What we're short of is, the right terms; and then for the limited workforce we have, how we engage it for the best of the best advantage and that applies to Gammon as well as in the U.S. and the U.K.
In terms of military housing, I probably have to go back to my statement. There's nothing that we know of, whereby service could be taken away or would be taken away. You got to remember, these are allegations. Nothing has actually been proven at this moment in time, and we're investigating it. And our statement says that we know no reason to change either our financial forecast or our Directors' Valuation for the business. I probably don't see any sense of why I have asking -- or answering the question.
Any last questions? Otherwise, you're all free to go. Thank you for your time and patience and look forward to a successful day.
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redpajama_set_name: RedPajamaCommonCrawl


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Expect to increase your turnover 20% by May 2018? Imaginators does, as boss Matt Tydeman outlined earlier this year, citing recent investment of around £400,000 in a 5m wide Durst Rho 512R as the key reason for the anticipated hike at the £2m turnover company. Capable of running speeds of up to 350m2/hour, the machine has certainly provided a massive productivity jump for the Essex-based company, but as we all know, speed isn't everything - Tydeman also has a canny business development strategy in place that he hopes will bring profit, as well as sales, growth. The bottom line is to ensure clients recognise Imaginators "not as a print company, but as a production company".
Focus was shifting, and when they opted for a 5m wide NUR Blueboard and needed more space, the strategic decision was taken to buy the current building "and to differentiate Swan Graphics as a pre-press arm and form Imaginators as the print arm – and to close Swan Colour Press," explains Matt Tydeman.
Agencies currently account for around 20% of Imaginators' turnover – direct end companies account for 30% and design companies practically all the rest. Trade work is less than 5%.
"We have a really knowledgeable team that can talk the language of our customers and apply it," enthuses Tydeman, referencing jobs won through the company's wider understanding of customer needs, sector specialisms, and a willingness to do more than 'just print'. "So, we are a model maker, for instance," he says, pointing out that they produced glittered models of hands for table centres at one event.
The company may not have a dedicated design team, nor a dedicated R+D team/budget, but it does have a dedicated R+D area used to show clients what is possible. "Increasingly we're brought into a project very early, especially on the live events side, and get involved in developing solutions. Take acoustic mesh for example. Our studio manager met with the client to talk about how we could cover the enormous speaker stacks with graphics for a music festival. It means not only working with a substrates manufacturer to get what we needed, but liaising with sound, lighting people etc to get whole stage set looking and working right.


A good friend sent me a Birthday card that said: "You've been on God's mind since before you were born. Today is just one more of such days ahead" Yes, Psalm 139:17-18 says: "How precious are Your thoughts to me, O God! They are innumerable! I can't even count them; they outnumber the grains of sand!" Imagine…God's thoughts towards me, and you, are more than all the grains of sand in the world! That is an incredible thought!
Before I, or you, were even born, God saw us and fashioned us in the womb. He, the Creator of Life, designed each of us and fashioned our days before we even came to be on this earth ! Read it in Psalm 139:15-16 !
Yes, you and I are marvelous creations. We were created by God, for God. It's not about us. It's all about Him, in us. That is what makes me–me, and you–you, and I am so glad to be reminded of that on this day of my birth!
What is the treasure that we have? I believe it is the "one pearl of great price" as spoken of in Matthew 13:46.


The legacy of Ernest Bloch strides the twin worlds of cultivated Jewish art or concert music and that of the modern extension of the Western classical tradition in general. A singular and in many ways sui generis force in the course of Western music of the first half of the 20th century, Bloch is usually viewed—notwithstanding his important works that predate his American immigration—as an American composer. (Grove's Dictionary of Music and Musicians, for example, appropriately cites him as "an American composer and teacher of Swiss origin.") He is also remembered for his profound influence as a teacher, especially with regard to composition.
Bloch was born in Geneva, where he began his musical life playing the violin as a pupil of Louis Rey [Louis Étienne-Reyer] and Albert Goss. Still at a young age, he also studied composition and solfège with Émile Jacques-Dalcroze. He furthered his violin studies in Brussels with the acclaimed Rumanian violinist Eugène Ysaÿe while studying composition with François Rasse.
Between 1899 and 1903 Bloch lived and worked in Germany—first in Frankfurt am Main and then in Munich. He studied for a while with Iwan Knorr and for a brief period with Ludwig Thuille. During those years in Germany he began his lifelong confrontation with issues of spirituality and religion, in a general sense and, in particular, in terms of his Judaic heritage and his search for ethnic-national identity vis-à-vis artistic purpose. His biographers have pointed to that period as one in which these spiritual and ethnic-national (or "racial," in the jargon of that time) concerns became central to his worldview.
After spending a year in Paris, Bloch returned to Geneva in 1904, married, and, for purely practical reasons, entered his father's business firm. He continued, however, to develop his musical gifts and to compose as well as conduct. In 1910 his opera (or lyric drama) Macbeth, which he had composed between 1904 and 1909, received its premiere in Paris, and he soon established a reputation as a conductor as well. He also lectured on aesthetics for a few years at the Geneva Conservatory.
It was during that time frame, in the years leading up to and roughly during the early years of the First World War, that Bloch wrote his first important Jewish-related works, which were part of what came to be known collectively as his "Jewish cycle." These included his Trois poèmes juifs (1913); Israel, for five solo voices and orchestra (the Israel Symphony); and Schelomo—Hebrew Rhapsody, for violoncello and orchestra (1915–16), which is considered standard cello concerto repertory and is, by most estimations, probably his best-known and most commonly recognized work. His opera Jézabel, the sketches for which were begun in 1911 (and on which he continued to work in America) was never completed.
Bloch came to the United States in 1916 initially to be the conductor of Maud Allan's dance troupe, although the tour was aborted after he arrived. He remained to take a teaching position at the recently founded David Mannes School of Music (now the Mannes College of Music) in New York, where he taught theory and composition. Over the next several years he witnessed premieres of some of his works, including those of the so-called Jewish cycle. And throughout the 1920s, although his music was by no means confined to overt Jewish expression (at least not consciously), he continued to solidify a perception of himself as a "Jewish composer" whose art was inspired by and infused with a contemporaneous idea of a Hebrew spirit of Jewish antiquity. From this period came such Jewishly related works as his Baal Shem Suite (1923), for violin and piano (later orchestrated); From Jewish Life (1924), for cello and piano; Méditation hébraïque (1924), for cello and piano; Avoda [Abodah] (1929), for violin and piano; and Psalm settings. In 1919 his Suite for Viola and Piano was awarded the Elizabeth Sprague Coolidge Prize and soon attracted considerable attention.
In 1920 Bloch became the first director of the Cleveland Institute of Music. Over the next five years there he taught composition, conducted the institute's orchestra, presented and presided over master classes, and instituted extension courses and classes. In 1925 he became the director of the San Francisco Conservatory of Music, during which time his epic rhapsody in three parts, America, won first prize in a competition sponsored by Musical America. Meanwhile, through his association with Cantor Reuben Rinder of Temple Emanu-El, San Francisco's prestigious Reform synagogue, Bloch received a commission from the congregation (underwritten by Gerald Warburg) to compose a complete Sabbath morning service for baritone cantor, chorus, and full symphony orchestra. Avodath Hakodesh: Sacred Service, completed in Europe (1930–1933) during his temporary return there—what turned out to be most of the decade—was to become one of his most celebrated and enduring works, not only from Jewish and liturgical perspectives, but also as a universal and transcendent artistic statement. In its use of a Jewish worship service and the liturgy as the basis for a sophisticated, full-length, almost oratorio-like work that could speak to non-Jewish and Jewish audiences alike—and would find equally appropriate expression in concert performance and in the context of classical Reform worship—Avodath Hakodesh was a watershed undertaking, a major contribution both to Jewish liturgical expression and to the genre of sacred music per se.
Apart from Avodath Hakodesh, Bloch returned only twice during the 1930s to specifically designated Jewish expression. His Voice in the Wilderness, for orchestra with violoncello obligato, and his Visions and Prophecies for piano were both composed in 1936. And in 1951 he wrote Suite hébraïque for viola and piano, three of the five movements of which he subsequently orchestrated—for which he also created a violin version.
In 1940 Bloch assumed a professorship at the University of California at Berkeley, where he taught summer courses until his retirement, in 1952. But for the most part he lived and worked in Agate Beach, Oregon. He cannot be said to have established any particular compositional school; nor did he aspire to any avant-garde or radical departures. Yet he carved out an emblematic personal style, relying on a variety of proven techniques and approaches and exploiting these with intense individuality. A number of his chamber works have a decidedly neoclassical stamp; other pieces, including his so-called epic works, might be viewed under a neo-Romantic lens; and still other compositions reveal the imprint of expressionism. But regardless of style or technique, and even though he was not averse to some experimentation with atonality and twelve-tone thematic constructions, he always insisted on the central role of melody in his creative process. For him, as he proclaimed many times, music was a spiritual experience.
Bloch, I suppose, is the first truly Jewish composer the modern world has known. Bloch writes Jewish music; and an order of imagination, a range of perception, personal and racial, here come into play that have been submerged by centuries of European culture. It is not only that Bloch presents us with images and experiences hitherto strange to Western music; what especially attracts some of us to his work is the new freedom of his language—really a reversion to a freedom possessed by music centuries ago but long since lost.
or to base my works on melodies more or less authentic. I am not an archaeologist. I hold it of first importance to write good, genuine music, my music. It is the Jewish soul that interests me, the complex glowing agitated soul that I feel vibrating throughout the Bible; the freshness and naïveté of the Patriarchs; the violence that is evident in the prophetic books, the Jew's savage love of justice; the despair of the Preacher in Jerusalem; the sorrow and immensity of the Book of Job, the sensuality of the Song of Songs. All this is in us; all this is in me, and it is the better part of me. It is all that I endeavor to hear in myself and to transcribe in my music: the venerable emotion of the race that slumbers way down in our souls.
In my work termed "Jewish"—my Psalms, Schelomo, Israel, Trois poemes juifs, Voice in the Wilderness—I have not approached the problem from without by employing melodies more or less authentic (frequently borrowed from or under the influence of other nations) or "Oriental" formulae, rhythms, or intervals more or less sacred!
NO! I have but listened to an inner voice, deep, secret, insistent, ardent—an instinct much more than cold and dry reason, a voice which seemed to come from far beyond myself, far beyond my parents … a voice which surged up in me upon reading certain passages in the Bible, Job, Ecclesiastes, the Psalms, The Prophets….
This entire Jewish heritage moved me deeply; it was reborn in my music. To what extent it is Jewish or to what extent it is just Ernest Bloch, of that I know nothing. The future alone will decide.
For a long time now it has been both fashionable and fatuous to write of Bloch mainly as something of a schizoid musical personality that could be strictly divided between the "Jewish Bloch" and the "universal Bloch." This is a vast simplification. In truth the Bloch that matters—and that will remain—is to be found in works that are explicitly Jewish and those abstract works in which the Jewish musical elements are not so easily recognizable, but are redefined, reordered, and brought to what are, for them, new formations.
…As much as he might have tried, Bloch could never totally lose his Jewish musical accent…. He undoubtedly wrote best, with individuality and pungency, when he drew from the true vein of his creative source, his Jewish heritage and its emotive experiences—whatever his contradictions, evasions, resentments, and estrangements. And it could very well be that his most cogent works derive their force and impress from the stress induced by his Jewishness and his ambivalent relationship to it.
…However retrogressive and démodé his example may appear in contemporary progressive music circles, it is in Jewish music, and particularly American Jewish music, that Bloch is still a major figure and is likely to remain so: to esteem, to praise, to emulate—but also to parody, to run at full tilt, to deflate, to topple, and to supercede. But ignore him at your risk. He is among the best Jewish music has ever had.
The depth of Bloch's impact on American music can also be seen in the roster of his students. Among them were such eventually important and successful composers as Roger Sessions, Quincy Porter, Bernard Rogers, George Antheil, and Randall Thompson. His articles on music and music education include "Musical Education" (1927); "Man and Music" (1933); "Securing the Best Results from Piano Study" (1923); "The Pitfalls of Memorizing" (1923); and "Ernest Bloch Surveys the Problems of Music Education" (1921).


Plans by the airport company Fraport AG provide for substantial investment in the airport's infrastructure in order to cope with the future growth in traffic and also to maintain competitiveness. These include the construction of a A380 hangar. The first phase of construction was completed in 2008. A new 2,800 m long runway is to be built in the northwest of the airport, which will be taken into operation in time for the winter flight schedule in 2011. Terminal 3 is expected to be opened in 2018. Reason for the plans is the expected growth in traffic per year from currently 490,000 to about 700,000 in 2010.
There are also plans to expand the Cargocity area by 27 hectares. At the same time, a new district will be created by 2016 - Gateway Gardens. Besides offices, conference and exhibition centres, the area will also inlcude catering, retail and leisure facilities. These will be close to the ICE railway station and have their own S-Bahn. The largest industrial park is being planned in the Mönchhof Gelände, and this will also have a direct transport link to the airport as well as space for the airline companies.


text:
From Idris Elba to Mel Gibson, Look Back at People's Sexiest Men Alive
From Ben Affleck to Denzel Washington, it's quite an impressive list of Hollywood hunks
By Zach Johnson Nov 06, 2018 12:40 PMTags
SexyMagazinesMel GibsonIdris ElbaCelebrities
Robert Viglasky, © BBC
Idris Elba is the "Sexiest Man Alive," according to People.
The 46-year-old Luther actor is the 33rd Hollywood hunk to receive the title—and the first black man to do so in 22 years, after Denzel Washington booked the magazine's 1996 cover. Other stars who made the list in this year's issue (on newsstands Friday) include Chadwick Boseman, Noah Centineo, Bradley Cooper, Henry Golding, Prince Harry, John Krasinski, Shawn Mendes, Hasan Minhaj, Chris Pine and Thomas Rhett. So, what did Elba think when he learned he'd be replacing last year's honoree, Blake Shelton? "I was like, 'Come on, no way. Really?' Looked in the mirror, I checked myself out. I was like, 'Yeah, you are kind of sexy today.' To be honest, it was just a nice feeling," he says. "It was a nice surprise—an ego boost for sure."
Elba joins an elite list of men who have been recognized in the pages of People.
At 29 years old, Mel Gibson was the first actor to receive the honor in 1985. He was succeeded by Mark Harmon (1986), Harry Hamlin (1987), John F. Kennedy, Jr. (1988), Sean Connery (1989), Tom Cruise (1990), Patrick Swayze (1992) and—although it seems strange now—Nick Nolte (1992). Power couple Richard Gere and Cindy Crawford were named the "Sexiest Couple Alive" in 1993—the only time a woman was honored—before he returned solo in 1999.
As Elba gets used to his new designation, take a look back at previous honorees:
People didn't select anyone to cover its 1994 issue; twenty-one years later, the magazine selected Keanu Reeves as its pick, with runners-up including Jim Carrey and Hugh Grant.