Galliford Try's growth by acquisition takes turnover to £1.4bn

Galliford Try’s annual turnover has blasted through the £1bn barrier, a massive surge of speed having taken it from £850m last time round to a new figure of £1.4bn.

Greg Fitzgerald, chief executive, said: “We have delivered profit growth across all our businesses, with the acquisitions made in the prior year and Linden Homes, bought in March 2007, performing ahead of expectations.”

Pre-tax profit in the 12 months to 30 June 2007 was £60m (figure in the previous year: ££35m).

Galliford now has a chunky housebuilding operation. The £340m turnover in this expanded division produced an operating profit of £49m.

Galliford’s construction turnover ran to £1.1bn in total. It has splits this part of its activities into two separate divisions: building is the larger of the two, with a turnover of £660m, while infrastructure chips in with a figure of £400m.

Operating profit from Galliford’s building operations ran to £12m while infrastructure’s £10m figure was enhanced by it having the better profit margin of the two.

Andy Sturgess, managing director of Galliford building, said: “The blend is a margin of 2.2%. We want to stay in that 2%-2.5% margin band. We’ve seen other contractors go to 3% and even 5% but then like Icarus they fall from the sky.

“Anyway, our figure puts us in the upper quartile. And on top of the margin aspect, we’ve enjoyed a period of good cash generation because we’ve had no bad jobs and the market is good. Also, we’ve had some milestone payments on our PFI work which have helped, though that flow will run out at some future stage.”

Galliford’s fourth division, PFI investments, was in loss, at £1.1m. “That’s because the figure represents our PFI bid costs,” said Sturgess.

“We’re at one in three on Birmingham Schools for the Future PFI and we’re preferred bidder on the St Andrew’s hospital in Scotland, with a £26m build value. We’re also bidding several more - they are in the schools and local authority sectors.”

The group’s latest profit figure includes a net exceptional gain of £7m as a result of several disparate happenings.

There was an exceptional gain of £3.9m resulting from property rationalisation, including a profit from a sale-and-leaseback deal for group premises.

The defined benefit pension scheme was closed to future service accrual during the year, resulting in an exceptional curtailment credit of £5.2m.

The group made a one-off payment into the scheme following the closure, making a total of £13m contributed to reducing the scheme’s deficit in the year. Galliford has agreed to make further deficit reduction payments of £7m annually.

As a result of these attentions, the deficit at the end of June was trimmed back to £18m. The group said: “There are no arrangements remaining within the group under which employees are accruing pension on a defined benefit basis”.

Partially offsetting these gains was a £1.9m cost, the result of a reorganisation of the group’s housebuilding structure in the south east of England, the move being triggered by the acquisition of Linden Homes.