In conversation with Thomas Warner, Andrew Duxbury, the chief financial officer of Galliford Try Holdings PLC (LSE:GFRD), a leading construction group in the United Kingdom, elaborated on the company's impressive full-year results, strategic acquisitions, and future growth plans. The chat provided a comprehensive view of Galliford Try's robust performance, marked by a rise in revenue, operating profit, and dividends.
Thomas Warner (TW): Could you provide an overview of Galliford Try's core operations?
Andrew Duxbury: Galliford Try is a leading UK construction group that operates nationally. We focus on constructing critical economic and social infrastructure. This includes a wide range of projects such as schools, prisons, roads, and water infrastructure. Our sectors are not cyclical, which means they offer real, sustainable growth opportunities going forward.
TW: Your full-year results have been strong. Could you delve into the specifics?
Duxbury: Certainly. We've had another strong performance this year, marked by increasing revenue, operating profit, and dividends. Specifically, our profit before tax increased by 23% to £23.4 million. We've also announced an improved dividend cover policy of 1.8 times cover, reflecting the improved operational performance of the business as well as the value of our financial assets. We're also paying a special dividend of 12 pence per share in October.
TW: Could you talk about your acquisitions and their impact?
Duxbury: We've successfully integrated two acquisitions this year—MCS and Ham Baker Group. These acquisitions have given us additional capabilities, particularly in the water sector. They have been instrumental in strengthening our portfolio and positioning us as a key player in this critical infrastructure segment.
TW: What is your strategy for capital allocation?
Duxbury: Our absolute priority is to maintain a strong balance sheet. This is crucial as it supports our operations and is beneficial for our clients and supply chain. This strong balance sheet also allows us to invest in the business, our people, and digital assets. We've been undertaking a £15 million share buyback, which will increase earnings per share by about 7.5% going forward. Over the last year, we've returned approximately £38 million to shareholders, demonstrating our commitment to delivering shareholder value.
TW: You seem quite optimistic about the future. What's the source of this confidence?
Duxbury: Our confidence stems from a strong order book worth £3.7 billion, which includes 92% of the revenue for the new financial year up to June 2024. The non-cyclical nature of our work provides us with a level of security that extends through the next general election and beyond. This gives us a solid foundation to grow the business in a disciplined and controlled manner.
TW: There have been headlines about water infrastructure and crumbling schools. What are your plans in these sectors?
Duxbury: We've been very proactive in these sectors. We've made three acquisitions in the water sector over the last 18 months and now work with almost all of the major water companies in the UK. We have framework positions that extend out to 2030, and we expect spending in this sector to increase significantly between 2025 and 2030. In education, we're working closely with the Department for Education on new school buildings, and we expect this programme to continue.
TW: Finally, could you encapsulate the investment case for Galliford Try?
Duxbury: In summary, we are a high-quality business operating in robust, non-cyclical markets. We have a proven track record of delivering reliable, consistent, and profitable growth. We have clear profit targets up to 2026, supported by embedded Environmental, Social, and Governance (ESG) metrics. We're in excellent shape and are highly confident about our future outlook.
