GALLIFORD Try, the building firm which owns Morrison Construction in Scotland, has smashed through a profit target it pledged to reach three years ago.
Despite battling “difficult markets” in construction, the firm said a stellar performance by its Linden Homes housebuilding division, which mainly builds in the south-east of England, meant profits leapt by 80 per cent to £63.1 million in the year to 30 June.
This is well above the benchmark of £60m it set in 2009 when it asked shareholders to stump up £125m to fund an expansion. Group revenues also grew 17 per cent to £1.5 billion.
The group rewarded its shareholders with an 88 per cent hike in its total dividend to 30p per share. Its shares rose 18p or 2.7 per cent to 690p and are now more than a third higher than when the rights issue was announced.
Performance at the firm’s construction division was not as cheering, however, with operating profits down 15 per cent to £18.9m.
But Ken Gillespie, construction group managing director, said the division was performing better than he expected, and was boosted by its work on a number of Scottish Government-led projects, including those led by procurement agency Scottish Futures Trust. Scottish projects include the Forth Replacement Crossing, the £300m ten-year framework for the Scottish South East Hub, and the £57m Orkney Schools framework. The firm also works with Scottish Water.
Gillespie said: “Construction feels that we have a stronger market in Scotland than we have elsewhere in the UK.”
He said staff numbers north of the border increased 20 per cent to over 1,000 staff, and he reckoned there were more than double that employed by its suppliers.
“The Scottish Government identified very early in this recessionary period the benefits of infrastructure investment to the economy. Unlike central government, they got on and did it. We are seeing a pipeline of projects coming to market which will support economic recovery in Scotland,” said Gillespie.
“Central government said ‘cut, cut, cut, cancel public sector pipelines’. They have returned to them as they realised that is not a very good strategy for economic recovery.
“The Scottish Government’s procurement agency, the Scottish Futures Trust, are adopting a far more sophisticated approach to public sector procurement.
“What I mean by that is it is intelligent. It is about driving efficiency out of that relationship between the private and public sector, as opposed to arms-length tendering on lowest cost day one without understanding the implications.”
Galliford’s housebuilding division completed 3,039 homes in the year, meaning it beat its target of doubling in size. In 2009, the company made a strategic shift to build larger family homes in the south-east of England, using the funds raised from investors to buy land which had collapsed in value due to the onset of the recession.
Mark Hughes, an analyst at Panmure Gordon, said the performance of the housebuilding arm was “extremely strong”, while its construction arm had also outperformed the wider industry.