Galliford eyes growth beyond £1bn barrier

More housebuilding capability next on the agenda after record £34m profit boost.

Galliford Try's transformation into a £1bn-turnover-a-year player has left it hungry for more - and the priority is to snap up more housebuilding capability.

Latest annual results (12 months to 30 June) show a record pre-tax profit of £34m (£27m), though the latest figure included an exceptional £2m gain through a sale-and-leaseback deal.

Turnover rose to £850m (£720m). There was a five-month contribution from Chartdale Homes, bought for £67m, and a three-month contribution from Morrison Construction, acquired from AWG at a cost of £42m.

Galliford chief executive Greg Fitzgerald said: "The acquisitions delivered their projected profits, integration is on track and their prospects for the future are encouraging."

Having seen what expansion can deliver, Galliford wants more. The housebuilding operations cover the south of England and the eastern counties - leaving a large swathe of new territory to expand into.

Galliford has three operating divisions: construction, PPP investments and housebuilding.

The operational profit in construction jumped by 45% to £13m, as turnover climbed to £630m. The forward orderbook stands at £2.3bn, with 90% of this having been bid non-competitively.

The construction margin of 2.1% is a record. When Andy Sturgess arrived as managing director of construction, the division was making a loss. During his time in charge he has progressively improved the margin.

Construction's building business now has a presence in the Scottish market, thanks to the Morrison acquisition, particularly north of the central belt. Morrison's former English and Welsh operations have been integrated into Galliford's existing teams.

The building business's future workload stands at £1.1bn. This includes two new education academies awarded since the year-end.

The infrastructure element of the construction division concentrates on water, highways and rail. It is now looking to develop a greater capability in remediation and renewable energy.

The housebuilding division completed more than 1,000 homes, with the average selling price rising slightly from £208,000 last year, to £212,000. Sales are running a fifth higher than at the same time last year. Operating profit was a record high, at £32m, representing a 14.3% margin.

[Contract Journal, 13 September 2006, p 2]