Galliford Try's 16% profit rise show margins on the mend

Galliford Try’s construction margin is on the mend – it is already back to 1.5% and is on course for 2% by the end of 2006, said Andy Sturgess, managing director of the group’s construction division, this morning (Thursday).

Sturgess spoke as Galliford announced its annual results (for the year to 30 June 2005). Turnover was 5% higher at £720m while pre-tax profit was 16% ahead at £26m.

The housebuilding division continues to deliver the bulk of the group’s profits, but Sturgess has now put Galliford’s construction business back on an even keel.

“We’re happy with the business model of having both housebuilding and construction in the group,” said Sturgess. “Construction had a strong cash-flow and housebuilding achieved record profits.”

Galliford has been spending in order to establish a third major business stream – PPP investments. During the year, Galliford achieved financial close on four PPPs with a total construction value of £120m and it working towards financial close on the Northampton Schools PPP valued at £150m.

“At the moment we’re taking a cost on PPP, which is the price of bidding, but this is in line with our budget,” said Sturgess. “We want to achieve a position in PPP. We believe it will give better construction returns. Galliford’s PPP Investments business will be profitable in three years.”