Last updated 21 September 2022
Galliford Try Plc
Galliford Try is one of the UK’s leading main contractors. In December 2019, the group agreed a deal to sell its private and partnership homes businesses to Bovis Homes, leaving Galliford Try as a standalone contracting business with annual turnover of more than £1.1 billion and a workforce of more than 3,000 people.
Financials
In the 12 months to June 20202 group revenue firmed to £1,237.2 million (2021: £1,124.8 million) and Galliford Try made an underlying operating profit of £15.8 million but including exceptional items the profit was just £2.0 (2021: £8.0). At a pre-tax level, profits from continuing operations were £6.3 million (2021: £10.4 million).
To view the financials for Galliford Try Holdings Plc, visit Companies House and use Company ID 12216008.
Operations
Galliford Try’s construction operations comprise building and infrastructure divisions and works across Britain in the public and private sectors. In May 2017, Galliford Try acquired Drew Smith, a contractor and mixed-used developer based in the south of England.
Building
The building operation works for clients ranging from government departments such as the Ministry of Defence to local and county councils and blue-chip private clients such as Vodafone and Thales, and on long-term agreements such as LHV’s £500 million New Build Housing Construction Framework (Project ID: 21016341) and the extended £2 billion Procure North West (Project ID: 18052831).
In the 12 months to June 2022, building revenue was static at £789.1 million (2021: £789.2 million) but the operating profit before amortisation rose to £18.9 million (2021: £15.9 million).
Infrastructure
The infrastructure business works on highways, utilities and environment projects, including water and flood alleviation projects and on long term agreements such as the £90 million Nottingham Highways Framework (Project ID: 17271989) and Yorkshire Water’s £1 billion AMP7 spending programme (Project ID: 17135261).
In 2022, infrastructure revenue rebounded to hit £441.9 million (2021: £329.2 million) and operating profit before amortisation reached £10.8 million (2021: £6.0 million).
PPP Investments
Galliford Try’s strategy for Public Private Partnership work is two-fold: aimed at both creating investment opportunities and also securing long-term construction and maintenance workload for the group itself. The group is also pursuing expansion into wind farms. Turnover in the 12 months to June 2022 rose to £6.2 million (2021: £6.4 million) and operating losses fell to £0.9 million (2021: £1.8 million loss).
Glenigan Data
In the 12 months to Q2 2022, orders at Galliford Try totalled £808.8 million (2021: £648.9 million) and the company was ranked in 15th place in Glenigan’s ranking of the construction industry’s top 50 contractors (2021: 18th).
In regional terms, Galliford Try, which does not operate in Northern Ireland, is ranked amongst the top 10 contractors by orders in three of the 11 British regions at Q2 2022.
The largest regional exposure is in the Scotland, where the group was ranked second with orders of £319.7 million. In the South east, Galliford Try was ranked eighth with orders totalling £131.4 million and ninth in the East Midlands with a £76.7 million order book
Conclusion: Building ahead
Revenue have been virtually flat over last three years and the order book has only moved marginally upwards to £3.4 billion (2021: £3.3billion) as the group emerges from the sale of its housing business being for £1.1 billion to Bovis. This saw the standalone construction business fall out of Glenigan’s rankings of the industry’s top 10 contractors by orders as revenue reduced due to both this sale and the impact of the Covid-19 pandemic.
The focus appears to be building work, where the operating margin increased to a respectable 2.4% in 2022 (2021: 2.0%). The group’s figures show that the building order book rose to £2,047 million (2021: £1,920 million) with 31% of this work in education, 23% in defence and custodial, 18% in facilities management and 11% in health. Infrastructure revenue grew at a faster rate but the order book less so, reaching £1,396 million (2021: £1,348 million) comprises of £622 million of highways work and £774 million in the environment sector.
Glenigan’s data shows building orders won over the last 12 months surging by 54% but civil engineering orders dropped by 50%. Going forward, the focus appears to be on building work, which comprised 87% of the order book by value in the 12 months to Q2 2022 according to Glenigan’s data with the balance derived from civil engineering (2021: 72% building/28% civil engineering).
In this period, Galliford Try won £263.9 million-worth of highways-related work (2021: £135.1 million) and was ranked seventh in Glenigan’s ranking of the UK’s top 20 contractors in this sector (2021: 15th). However, unlike the other ranking, this total does include a share of work on framework agreements such as the latest iteration of the £1 billion Midlands Highways Alliance (Project ID: 21078193,
Galliford Try had discontinued bidding for major lump-sum civil engineering contracts in 2016 to reduce the risk profile but a hit of £45.0 million in 2018 on the Aberdeen Western Peripheral Route project in which Carillion had been a partner, forced the group into share diluting rights issue to raise £150 million.
Galliford Try has continued to take on large value roads jobs such as the £300 million A47 Blofield to North Burlingham scheme (Project ID: 16133900) but with fewer of these types of projects the average contract award for highways work has dropped to £19.3 million (2021: £48.6 million). With a reduction in large value civil engineering awards, particularly roads projects, which has helped reduce the overall risk profile and the value of the average contract award has halved over the last two years to £7.9 million (2021: £9.5 million).
Work from the AMP7 water investment programme is however growing with for clients such as Thames Water, where the group is working on its £4 billion investment programme (Project ID: 19219218). However, a consequence of the changes in strategy has been a reduction in regional exposure with the slimmed down group amongst the Top 10 contractors in only three regions at Q2 2021, compared to seven in 2019.
The group has a heavy reliance on the public sector, which provided 91% of the order book and just 9% is in the private sector. Given the likelihood of a recession in the UK, this is no bad thing.
Galliford Try has no net debt and cash balances firmed to £218.9 million (2021: £216.2 million) and has, so far been successful in withstanding cost pressures to grow margins. The group is now in a stronger position to tackle the challenges as the construction industry tackles the challenges of the post Brexit and virus economy.
Winning Work With Galliford Try Plc
Galliford Try has a group-wide procurement strategy with lead buyers appointed for various commodities based on the individual strengths of the buyers and their expertise. The group prioritises the development of long-term relationships with both established and new product suppliers and service providers. Supply chains are created at group and regional level. Subsidiaries tend to strike national supply agreements for base materials, whilst negotiating supply chains for specialist sub-contractors on a regional basis.
Galliford Try has initiated a preference for purchasing responsibly and ethically sourced products and materials and is ensuring all timber meets Forest Stewardship Council or Programme for the Endorsement of Forest Certification standards. Galliford Try is also working with its Preferred Group suppliers (PGSs) to develop an enhanced sustainable product and services offering. The group benchmarks all PGSs against its sustainability matrix to identify PGSs consistent with group values and where there is a need to work together to improve performance. The group is also part of the Supply Chain Sustainability School and details can be found here.
A group procurement forum is held quarterly along with three divisional procurement forums, which are attended by senior procurement managers. The group’s supply chain management policy aims to: add value, reduce cost, enhance quality and deliver superior and environmentally sympathetic solutions. Details on Galliford Try’s supply chain can be found here.
Key Galliford Try procurement contacts include:
Head of procurement – Peter McGee, tel: 01895-855000