Business model and strategy

Galliford Try operates across the UK as a standalone construction group, carrying out work primarily as Galliford Try and Morrison Construction.

Half year results highlights

Our business is organised into three areas: Building, Infrastructure and Specialist Services, which includes Investments, FM and our dry lining and piling businesses.

Building operates across the UK, designing, constructing and refurbishing assets across markets where we have proven expertise and significant opportunities, particularly the education, health, defence, justice and commercial sectors. Our Facilities Management business works with Building, with an emphasis on the education and health sectors. Our capabilities include delivering high-quality, full life-cycle solutions to our clients, including green retrofit.

Infrastructure division comprises our Environment and Infrastructure businesses, which carry out vital civil engineering projects across the UK. Environment covers the water and sewage sectors, where we are one of the largest players and carry out capital delivery and maintenance, and asset optimisation. Our work in Infrastructure has contributed substantially to the national infrastructure network, from major project delivery of large-scale schemes to delivering road surfacing works and maintenance as a leading player.

Investments has historically specialised in managing construction through to operations for major building projects via public private partnerships. These skill sets are now being used to progress co-development opportunities, with a focus on the PRS (Private Rented Sector). Our expertise in leading bid consortia and arranging finance to devise and secure the right solution on an individual basis makes us attractive to clients.

Our network of regional offices is a key advantage, offering clients the benefit of national strength with local delivery and we are focused on sectors where we have proven strengths, operating predominantly in the public and regulated sectors.

Prior to 2020, Galliford Try was a FTSE 250 construction, housebuilding and regeneration group. The business disposed of its housebuilding divisions Linden Homes and Galliford Try Partnerships on 3 January 2020 becoming a well-capitalised, standalone construction-focused group. In 2021, Galliford Try announced its Sustainable Growth Strategy and acquired the water business of nmcn, including Lintott, following administration of the company. As part of the £1 million acquisition, circa 900 employees joined Galliford Try. In July 2022, we acquired MCS Control Systems.

Our robust financial position combined with market leading positions in our chosen sectors means that we are strongly positioned for our Sustainable Growth Strategy, which aligns our financial objectives with our sustainability aspirations to deliver sustainable profitable growth. Bill Hocking Chief Executive , Galliford Try

Sustainable Growth strategy

Our strategy is to deliver high-quality buildings and infrastructure in a socially responsible way and provide a sustainable return for our shareholders.

Our strategy targets sustainable growth across revenue and margin. Our focus is on margin growth, with revenue targeted where markets support growth.

Growth will be achieved by:

  • Increasing volumes in our existing markets within Highways, Environment and Building by growing in our existing geographies.

    Why?

    We understand these markets and their risk profiles and are already working in these sectors, predominantly in frameworks. We have the potential to grow within these areas by bringing all of our business units up to critical mass.
  • The second main growth area is in complementary and adjacent markets and has three main strands: i) Private Rented Sector (PRS). ii) Green retrofit. iii) Capital maintenance and asset optimisation within the existing Environment sector.

    Why?

    These are all higher-margin activities and will contribute considerably to our margin growth targets. The nature of the work is complementary to our existing capabilities, we are present in these markets across the UK, and they have risk profiles within our appetite.

Sustainability, driven by digitalisation, decarbonisation and social value, is at the core of our strategy, responding to stakeholder needs and increasing the long-term operational and financial resilience of our organisation.

Given the successful performance against our current strategy the Group intends to update its strategy to 2030 at a Capital Markets Event on 23 May 2024.

 

Sustainability pillar

Objective

KPI

FY22

FY23

Ambition

 

Health and safety

Prioritising health, safety and wellbeing and ensuring no harm to anyone linked with our operations.

Accident Frequency Rate

0.06

0.09

No harm.

Lost Time Frequency Rate

0.26

0.20

No harm.

Our people

Creating an inclusive environment and progressive culture that enables all individuals to reach their potential.

Early careers as a % of total employees

6.1%

6.3%

Year-on-year increase.

Women as a % of total employees

21.2%

21.6%

Year-on-year increase.

Employee advocacy

85%

86%

>80%

 

Environment and climate change

Adopting sustainable resourcing and consumption practices and taking measures to mitigate carbon production and climate change to protect our environment and biodiversity.

Scope 1 and 2 carbon emissions (CO2e tonnes)

10,795

11,822

Net zero by 2030.

Scope 3 carbon emissions (CO2e tonnes)

487,220

477,062

Net zero by 2045.

Waste intensity (tn/£100k revenue)

21.0

21.8

Year-on-year reduction.

Communities

Making a positive impact in communities where we operate by delivering greater social value and improving lives.

% of completed

projects

delivering >25%

SLEV as a % of

contract value

50%

94%%

60%

Considerate Constructors Scheme performance

41.8

(industry ave 39.0)

43.4

(industry ave 39.0)

>39 and above industry average.

 

Clients

Delivering lower carbon, superior buildings and infrastructure with a better social footprint for clients in our chosen markets through a focus on innovation, digitalisation and quality.

% of repeat business in our order book

94%

87%

>80%

% of full year planned revenue secured at the start of the financial year

90%

92%

>85%

Supply chain

Aligning our supply chain with our culture and creating collaborative relationships that deliver best practice, innovation and sustainable outcomes for clients, communities and the environment.

% of business unit core trades spend with Aligned subcontractors

60%

58%

70%–80%

Prompt payment – % of invoices paid within 60 days

98%

98%

>95%

Sustainable financial returns

 

2026 target

Finance

Earn a sustainable return on the value we deliver.

Focus on bottom line margin growth

Divisional operating margin 2.4%

Divisional operating margin 2.4%

Divisional operating margin growth to 3.0%

Disciplined contract selection and sustainable revenue growth

Revenue

£1,1237.2m

Revenue

£1,394m

Revenue growth towards £1.6bn

Maintain strong balance sheet

Average month end cash £174m

Average month end cash £135m

Operating cash generation

Sustainable dividends

Dividend cover of 2.0x

Dividend cover of 1.8x

Dividend cover of 1.8x

Our strengths

  • Our business is well-capitalised and cash positive.
  • We have strong client relationships based on collaborative working.
  • Our management team is highly-experienced. 
  • We have a disciplined approach to project selection.
  • We are focused on sectors where we have core and proven strengths.
  • We have an excellent position on frameworks and in public and regulated sectors.
  • We are committed to creating long-term value for our stakeholders.
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