Galliford Try plc said today that its AMP5 water sector revenues are building up with the publication of its annual results for the year ended 30 June 2011.

Financial highlights include a 5% increase in Group revenue to £1,284 million (2010: £1,222 million) and profits before tax up 34%. Revenues grew sharply in housebuilding as the firm delivered the second year of its expansion plan, new sites came on stream and the number of completions increased.  Housebuilding revenue was up 23% to £388.5 million (2010: £316 million).

In the Group’s Construction division, construction margin remains robust  at 2.4% (2010: 2.4%), with a strong year end construction cash balance of £217 million  (2010: £207 million). Revenue remained little changed during the year at £936.9 million (2010: £936.5 million). Construction profit from operations was down at £22.2 million from £22.8 million in 2010.

The Group has a £1.7 billion current construction order book underpinned by major long term projects with 90% of current year's planned revenue already secured.  (2010: £1.8 billion; 88%)

In construction, the firm said that although the market had held up for longer than expected, the effect of public sector spending constraints is impacting the construction industry's future pipeline of work and continuing to drive further intense competitiveness.

Construction activities year end order book of £1.75 billion includes the recently awarded £790 million Forth Road Crossing, where the Galliford Try is part of a four party consortium.

The company said that the UK construction market had remained challenging throughout the financial year and that the Government's 2010 comprehensive spending review has had a significant effect on reducing the pipeline of future public sector work, particularly in England and Wales.

More opportunities in water sector

With a significant amount of work already let under long term frameworks in the infrastructure sector, specifically in the water industry, Galliford Try highlighted more visibility to future opportunities in the sector and its success in supplementing its five year AMP5 work with additional projects.

Out of a total £1.75 billion year end order book, 42% is in the regulated sector, 40% in the public and 18% in the private sector. 50% of Galliford Try’s order book is in frameworks and 63% has been secured on a basis other than through pure price competition. The firm said that since the year end the order book had reduced marginally to £1.7 billion, in line with a policy of focusing on work that will support profit and cash objectives, not on maintaining past revenue levels.

AMP5 revenues are building up

Infrastructure revenues fell from £397.4M in 2010 to £376.5M in 2011, with a corresponding drop in profits from £10.7M to £9.9M. The order book remains largely uncharged at £921M in 2011 compared with £922M in 2010. operating profit margin fell slightly from 2.7% to 2.6%.

According to Galliford Try, the Group has secured the largest proportion of any contractor of the five year AMP5 water programmes in 2010, on which it works for seven water utilities. Coupled with additional frameworks from the Environment Agency, the firm said this provides it with both visibility of future work and a base that qualifies it for securing projects let outside the frameworks.

Examples of work secured by Galliford Try water joint ventures includes the £200 million Liverpool waste water scheme as part of its process alliance framework with United Utilities in the year, and £90 million of additional waste water treatment works for Thames Water.  Revenues in water started to build up during the second year of the AMP programmes, with £597 million of water and flood alleviation work in the order book at the year end.

New business in energy from waste

Galliford Try said it has built on its expertise in water treatment processes to develop a business in energy from waste schemes and during the year completed a £22 million project for Biffa Waste in Cannock.  The Group has secured a £33 million project for Northumbrian water to construct an energy from waste scheme at Howden in Northumberland.  Following completion of the Rothes flood alleviation scheme in Scotland, Galliford Try were awarded a further £50 million scheme at Elgin for Moray council.  The firm also handed over the first Olympic Park venue to be completed, the white water canoe centre at Broxborne.

 15% carbon reduction target by 2013

During the period Galliford Try completed its third annual submission to the carbon disclosure project and its emissions intensity measure, per £100,000 revenue, reduced from 3.74 to 3.63 during the year.  The Group has now established a new group carbon task force with a strategy to reduce carbon emissions per unit of revenue by 15% by the end of 2013.

Commenting on the results, Greg Fitzgerald, Chief Executive, said:

"We exceeded our profit expectations during the year as growth in housebuilding accelerated in the second half, testimony to our strategic focus on southern England.  We also maintained a higher than anticipated margin in construction.

As a result we enter the final year of our three year transformational expansion plan for housebuilding in a strong position to deliver on the objectives we set for 2012 and to drive further growth thereafter."

In 2009 Galliford Try laid out a plan to double the size of its housebuilding business over three years based on a strategic focus on southern England.

In March this year a Competition Appeal Tribunal judgement reduced the quantum of the fine imposed by the Office of Fair Trading in 2009 for cover pricing during the period from 2001 to 2004 from £8.3 million to £1.4 million. In May 2011 the Group successfully completed the refinancing of its bank facilities, agreeing a four year £325 million revolving credit facility with HSBC Bank plc, Barclays Bank plc and The Royal Bank of Scotland plc.