Galliford Try H2 2025 Earnings Report

Galliford Try EPS Results

• Actual EPS: GBX 34.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Galliford Try Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Galliford Try Announcement Details

• Quarter: H2 2025
• Date: 9/17/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, September 17, 2025
• Conference Call Time: 4:30AM ET

Galliford Try (LON:GFRD) is one of the UK's leading construction groups, working to improve the UK’s built environment, delivering positive, lasting change for the communities we work in on behalf of our clients. Our business operates mainly under the Galliford Try and Morrison Construction brands, focusing on areas where we have core and proven strengths, namely in Building, Highways and Environment. We see long-term growth and appropriate margins in these markets. Our company is founded on our values of excellence, passion, integrity and collaboration, and our vision is to be a people-orientated, progressive business, driven by our values to deliver lasting change for our stakeholders and the communities we work in.

Galliford Try H2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Galliford Try reported 6% revenue growth to £1.9 billion and adjusted PBT up 28.6% to £45 million, achieving a 3% operating margin one year ahead of target.
• Positive Sentiment: Strong cash conversion with average month-end cash up 15% to £179 million, prompt supplier payments in 26 days, and a £10 million share buyback announced.
• Positive Sentiment: A record order book of £4.1 billion (93% repeat clients, 92% secured for 2025, and 75% for 2027) underpins confidence in future revenue visibility.
• Positive Sentiment: High-margin specialist businesses and AMP8 framework transition support ongoing margin expansion towards the 4% by 2030 strategy goal.
• Neutral Sentiment: A technical IFRS 15 accounting change reclassified £11.7 million of prior-year framework losses as an exceptional item, with no impact on adjusted PBT or dividends.

Presentation

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Hello everybody, and welcome to Galliford Try's full-year results for the period ending June 2025. I'm Bill Hocking, Chief Executive, and I'm here with Kris Hampson, Chief Financial Officer. Here's our agenda for today. The photo you see here is of Guildford Crescent, our first PRS or build-to-rent scheme down in Cardiff, and we'll come back to this as a case study a bit further on in the presentation. We've had another really good year, with revenue up 6% at £1.9 billion. I'm very pleased to report that we've achieved a divisional operating margin of 3%, one year earlier than our strategy envisaged, and with adjusted PBT up 28.6% to £45 million.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

A really good performance, ahead of expectations, which produces earnings per share of £34.4 and a total dividend for the year of £19, which is made up of the half-year dividend of £5.50 and a final dividend of £13.50. Cash performance was excellent, with an average month-end cash of £179 million, up 15% on the same period last year, and whilst paying our supply chain in 26 days on average. On the back of this performance, we're announcing a further share buyback of £10 million. Our strong order book stands at £4.1 billion, up £300 million on the same period last year, with 93% repeat clients and 92% work already secured for the current year. These figures are a reflection of the 4,300 excellent people in Galliford Try, our culture, robust risk management, and performance on the ground.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

The continuing momentum that we see in the business and in our chosen sectors gives us confidence in the outlook for the business. You can see from our results that we're making good progress towards our 2030 targets of at least £2.2 billion of revenue and 4% operating margin, and really pleased with our 3% operating margin one year ahead of programme. Those are the highlights, and over to Kris for more detail on the numbers.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Thank you, Bill, and good morning everybody. It is amazing how quickly my first year at Galliford Try has passed, and I'm delighted to be able to take you through a second set of annual results. In the image on this slide, you can see maintenance work being carried out on a control panel by a colleague from our AVRS business. The fostering of our high-margin specialist businesses is a key objective in achieving our strategic goals, and Bill will talk you through the four key building blocks to our 2030 targets later. Let me first take you through the numbers for 2025 in more detail. We are pleased to deliver another strong set of results, with the group growing revenues by 6.3% to more than £1.875 billion, with good growth across both our core divisions of building and infrastructure.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

The revenue performance in the second half continued the theme of the first half, with a very strong run-off of AMP7 continuing, and with progress on our highways projects being boosted by the dry winter and spring. Alongside the 27% revenue growth in 2024, this means we've grown by more than a third in two years, with a CAGR of 14% since 2021. This accelerated growth is ahead of our trajectory to our 2030 targets, with an anticipated slight flattening in 2026 as we transition from AMP7 to AMP8. This transition will allow us to access the higher volumes that can be seen in our record infrastructure order book, with more to come as AMP8 scales up. 2026 expectations remain ahead of our strategic targets, and 2027 and 2028 are looking really good, as Bill will explain later.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Adjusted operating profit rose fast in revenue, up circa £10 million to £40.6 million, and representing an increase of more than a third. This was driven by our disciplined execution of our robust risk management model and on-time delivery of high-quality construction projects. Net interest received was £4.4 million, down £1.8 million, reflecting the non-repeat of corporation tax interest of £0.8 million in the prior year, and RCF implementation costs of £0.5 million in 2025. Underlying interest was down slightly, therefore, reflecting lower PPP interest, higher IFRS 16 interest costs on our growing business, partially offset by interest on higher cash balances. Adjusted profit before tax, therefore, increased by 28.6% to £45 million, more than doubling in the last two years, and a CAGR of some 50% since 2021.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

This year's adjusted effective tax rate of 23.9% benefited from deferred tax asset increases, and we expect the rate to revert towards U.K. standardized corporation tax rates in future years. The growth in profits drives adjusted basic earnings per share up by circa 16% to £0.344 per share, more than doubling 2022 adjusted EPS. Alongside these very strong results, we are pleased to announce a final dividend for the year of £0.135 per share, bringing the full-year dividend to £0.19 per share, up 22.6% on the previous year, and in line with our full-year dividend policy of 1.8 times cover. Based on our strong performance, we're also pleased to announce a share buyback of up to £10 million, reflecting this year's strong performance, our record order book, and confidence in our trajectory and cash generation to 2030.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Moving on now to the segmental analysis, we can see strong revenue generation in our core divisions of building and infrastructure, and further profit growth across all the divisions. We are particularly encouraged by the 42 basis point margin improvement in divisional adjusted operating margin to 3%, delivering our previously announced 3% margin target one year early. The improved margin, continuing the trend of the last few years, alongside the transition to higher margin AMP8 in the current year, gives us confidence in delivering further margin and profit growth in 2026, as we make further progress towards our 2030 4% margin target. Moving on to the investment business, Bill will shortly outline the positive progress we are making here. As we've said before, this business is lumpy by nature, and the prior year included the financial close of our first private rented sector scheme at Guildford Crescent in Cardiff.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Through careful management, the investment business net losses were reduced to £0.4 million, and Group OVAC head costs are up in line with revenue, largely reflecting inflationary impacts and long-term incentive costs. We are reporting a non-cash prior year adjustment following a technical change to the group's application of IFRS 15 contract combination accounting on a handful of acquired water frameworks, with the resulting associated reclassification of material losses on one of these frameworks of circa £11.7 million as an exception cost in the prior year.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Under the application of our existing audited IFRS 15 combination policy, the group had previously combined some contracts within these specific water framework agreements, which has subsequently been deemed to be incorrect, and as a result, the group, as we stated, reported statutory profit before tax and associated tax on working capital items in the 2024 financial statements, reducing revenue and increasing cost of sales by £11.7 million in aggregate. Following the change in IFRS 15 application, management have reviewed and are now reporting material historical project losses as an exceptional item under one framework agreement that had previously been combined within the framework as we would otherwise have done. This specific framework, which was acquired with the NMCN Water Division acquisition in 2021, with highly unsustainable terms and conditions, was positively renegotiated in 2023, and subsequent projects are now trading profitably.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Importantly, no restatement has been made to the previously reported adjusted PBT in 2024 or earlier periods, and no exceptional losses have been reported in 2025, reflecting the improved performance on these frameworks. The NMCN frameworks and associated subsidiaries were acquired for £1 million in October 2021 out of administration. Since the acquisition of NMCN, revenues of more than £750 million have been delivered, and given its strong market positioning and long-term water contract relationships, the group is forecasting further revenues of more than £1.5 billion on the acquired NMCN businesses through the strategy period to 2030. Margins are in line with target trajectory, and the business is performing ahead of the pre-acquisition investment case. We've added two new slides this year to give you more of an insight into our core divisions of building and infrastructure, and to demonstrate the progress they are making over time.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Building increased revenues to circa £965 million, with consistent demand in the education, custodial, and defense sectors. The record order book, diversified across our chosen sectors, is prudently measured at £2.4 billion. The order book is up more than 7% on a year ago, and the division is well placed for 2026, with 92% of work secured. The pipeline of new works can be seen in the defense project at RAF Digby, and we've also had significant wins in custodial at HMP Moreland and HMP Wakefield. Profit performance has been very strong, with margins rising 36 basis points to 2.9% for the full year, resulting in adjusted operating profit up 17%, or circa £4 million to more than £28 million. An excellent performance with more to come.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Moving on to our infrastructure division, which comprises our highways business and our environment business, including our higher margin specialist and capital maintenance businesses, revenue grew by circa 11% to more than £902 million. A robust performance from our highways business, as can be seen in the images of our projects in Carlisle and on the A47, and an excellent run-off result from AMP7, were the drivers of the growth. The record forward-looking order book is up more than 9% to nearly £1.7 billion, reflecting both the early strength of the AMP8 frameworks and progress in our specialist services businesses. The transition to AMP8 is in progress, with good new design work coming through, which will convert into construction work in the coming years.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

In highways, we've had good contract wins such as the Banwell Bypass in North Somerset, and we have expanded our entry into the energy sector with our place on the civil engineering lot of the National Grid £59 billion high-voltage framework. Overall, the division delivered very strong profits, with margins up 50 basis points to just over 3%, driven by improved operational delivery and operational leverage. The division delivered adjusted operating profits of £27.4 million, up £7.3 million, or circa 36% versus 2024, another great result. Moving on to the balance sheet, the strong trading profits and continued discipline in balance sheet management have driven uplifts in both net assets and cash. Year-end cash rises from £227 million to £237 million.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

More importantly, average month-end cash rises to more than £178 million, from £155 million in the prior year, up nearly 15%, demonstrating our continued robust focus on cash delivery each and every month. In the second half, HMRC advanced our quarterly VAT payments, reverting to a historic pre-COVID pattern. The change meant circa £17 million of VAT payments previously scheduled for 2026 were made in 2025, as you will see on the upcoming cash ridge. This change has no impact on the overall amount of VAT cash flows. Making payments in earlier months causes a technical reduction in the average cash metric of circa £8 million in 2025, already included in the average shown for the year, and will cause a further £18 million reduction in the average cash KPI in 2026.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

The rebased 2025 average cash metric would therefore have been circa £161 million if the pattern change had occurred before the start of the financial year 2025. This technical KPI impact, as further explained in the appendices, has no impact on the proven cash-generating ability of the group. Our public-private partnership portfolio valuations have reduced as a result of the higher interest environment on our discount rates and expected loan repayments. There remains a strong secondary market for such assets, and the annuity income of £3.6 million continues to provide a stable, lower-risk cash income within our trading profits. Under our current strategy, our intention is to hold onto these assets for the foreseeable future, as they provide a recognized differentiator in the strength of our balance sheet.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Further, the low-risk PPP interest is given back to shareholders in full each year and supports our dividend policy of profits giving 1.8 times dividend cover. We continue to have no drawn bank debt and no pension liabilities, and our strong trading and cash management means our balance sheet has been strengthened even further. This chart explains the movement in year-end cash and cash equivalents, which have risen sequentially by circa £10 million to £237 million. Operating profits have converted like-for-like into cash from operating activities, and tight cash management has driven a small £2 million outflow in working capital, alongside the aforementioned VAT phasing impact. On 14 August 2024, we received the cash for the prior year corporation tax refund accrual of £10.4 million and returned that cash to our shareholders through the completed £10 million share buyback.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

We returned £17.5 million to our shareholders through our progressive dividend policy. Pleasingly, we have therefore returned a total of £27.5 million of cash to shareholders in the financial period. The net of tax interest and other items delivered a net inflow of £1.7 million. Finally, our high-quality supply base is of key importance to us, and we continue to pay our suppliers promptly, with an average days to pay of 26 days, flat to the prior year, and we are pleased to be one of the first bronze members of the new fair payment code. As we progress through the 2026 financial year, our focus on balance sheet strength and allocating our capital most efficiently remain unchanged. We have long been clear that the strength of our balance sheet provides a competitive advantage, which helps to deliver our sustainable growth plans.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

It is valuable to our clients who see the importance of financial stability, and it ensures that we are the partner of choice for our supply chain, and it is evermore a differentiator in recruiting the best colleagues. Our balance sheet also allows us to invest in future growth by investing in our people, in innovative digital assets, and when appropriate, bolt-on acquisitions in higher margin adjacent markets. We have completed four acquisitions since 2021, delivering annualized revenues of £124 million at acquisition, and we also continue to make operational investments, such as the water operations center and manufacturing facility in Paisley, that supports our higher margin specialist services strategy. Where acquisition opportunities do arise within our pipeline, we will assess these opportunities in line with our clear strategic priorities and agreed capital allocation thresholds.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

We have previously stated that our targets do not rely on acquisitions and are deliverable organically. Our strong balance sheet also gives us confidence that we can continue to pay a growing and sustainable dividend covered by EPS at 1.8 times, in line with the policy implemented in 2023. Where we have excess cash and it makes the right financial sense, we will return it through special dividends or share buybacks, as we've done in the recent past and as we are announcing today. Over the last five years, we will have returned £108 million to shareholders in the form of standard and special dividends and through our free share buyback programs, and this equates to roughly one quarter of our current market capitalization in the last five years.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Our rigor in capital allocation decisions is only matched by our disciplined risk management and contract selection framework, and we recognize both of these are crucial to our wider stakeholder communities. In summary, 2025 has been another year of wide-ranging progress for the group, a year where we grew revenue and margins to deliver our 2026 margin target one year early, delivered strong cash conversion, and reported a record order book for the future. As Bill stated earlier, it is the fifth consecutive year of revenue and profit growth, delivering both strong growth CAGRs since 2021 and TSR of circa 350% over the same period. Moving into 2026, we expect to make continued progress, and we are confident in delivering another year of margin expansion and increased profitability, in line with the required trajectory to get to our 2030 targets.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

We continue to believe there is a simple and compelling story of sustainable returns generation through to 2030, based on the disciplined delivery of our proven model in our attractive chosen sectors. Bill will now take you through the operational side of this strategy in more detail. Bill, back to you.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Thanks, Kris. Here's a photo of our Woodham Academy project in County Durham for the Department for Education, another successful project in our education portfolio. This slide shows the philosophy of how we run our business. We start with the core of the company, our 4,300 excellent people. We have a culture of discipline and risk awareness, supported by good processes and aligned incentive mechanisms. Being selective about the work we take on leads to a high-quality order book, which we can deliver reliably and which underpins our margin targets. Most of our order book is in long-term frameworks with repeat clients, and we get good visibility of the forward order book and can align our people and our supply chain accordingly. This leads to a good operating performance, which further strengthens our already strong balance sheet.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

On the right-hand side of the slide, we have disciplined risk management processes at the pre-construction stage, and once in contract, we have robust commercial and project controls and a regular system of cross-business peer reviews and project health checks. We're targeting revenues of at least £2.2 billion and an operating margin of 4% in 2030. As I said earlier, we're very pleased that our target of 3% operating margin in 2026, as a waypoint en route to that 4%, has been achieved a year early. The precis of our strategy is shown on the top of the slide. We continue to grow revenue and margin in our three big operating businesses of building, highways, and environment, and the outlook very strongly supports this. We grow our specialist higher margin businesses in adjacent markets, both organically and through further bolt-on acquisitions, and are making good progress.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

In the year, we've set up our third fabrication facility in Yorkshire, following the Paisley facility which we opened last year. This new facility will also have the capability of producing pipe specials, which are in high demand across the water industry and is a good example of further organic growth in the business. We re-enter the affordable housing market and are continuing to secure places on the main frameworks in this sector. Please remember that our definition of this market is mid-rise blocks of flats for registered providers and local councils. Finally, we leverage our geographical framework and client footprint across the whole of the UK, selling more GT services to existing customers and sectors. The higher margin specialist businesses augment the margins in our core business to produce the 4% in 2030 target, continuing our trajectory of growing shareholder returns over the long term.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

This slide is to explain in more detail how we will progress on 3% to 4% adjusted operating margin. There are four main drivers of our margin progression, as you see here. Firstly, growing the business and getting the efficiencies and overhead leverage that comes with that. Secondly, a better contracting environment with more equitable, sustainable contracting terms and conditions. Thirdly, the operational efficiencies we get through better use of digital tools, offsite manufacturing, and the associated improved quality and reduced cost of rework which comes with that. Finally, higher margin work through our specialist businesses and affordable housing. I'll go through each one of these in a bit more detail.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

There continues to be robust long-term demand across all of our sectors, driven by aging social and economic infrastructure, which needs to be repaired, improved, and replaced to cater for a growing population, the effects of climate change, and to underpin and enhance the UK's productivity. We have leading positions in the sectors and frameworks that are responding to these challenges and see a solid pipeline of opportunity well into the future with Galliford Try part of the solution. All of our sectors are underpinned by the government's growth priorities and capital spending allocations. Our excellent position in frameworks gives us long-term access to these markets. You can see on this slide the enormous programs of work across the public and regulated sectors in which we work. The key thing here is that all of the public sector spend supports the government's growth agenda and is funded from CapEx budgets.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

We welcome the visibility that the government's 10-year infrastructure plan brings, and we're very confident of the market going forward. I get out and about in our sites whenever I can, and every time I look at the existing infrastructure across all of these sectors, I'm struck by the enormous market to maintain, refurbish, and replace these assets. We have an excellent order book at £4.1 billion, up £300 million on the same period last year. We came into the current financial year with 92% work secured and 93% repeat clients. Kris took you through the building and infrastructure order books in more detail earlier on, so the important thing for me to point out on this slide is the 75% of work already secured for full year 2027.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

This is the best position we've ever had looking forward and demonstrates the points I've made on the amount of opportunity out there in the market. Full year 2027 and 2028 already look very strong and supportive of our 2030 strategy. These are the frameworks we have at the moment, and you can see the excellent forward visibility of work that we get through our framework positions across all of the sectors. We expect a high renewal success ratio as frameworks end and are reprocured, which is represented in the lighter color to the right. We target frameworks for this excellent long-term visibility and the ability to have long-term collaborative relationships with our clients, in which we can continuously improve our offering, our service to our clients in a sensible risk environment.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

I've repeatedly said that investors should be encouraged by the fundamental improvement in industry procurement methods by public, regulating, and private clients. The construction playbook in particular has driven a more mature, sustainable contracting environment with an emphasis on quality over price and an equitable allocation of risk. The combination of this more mature attitude to client procurement, allied to strong risk management, helps us to drive margins in the right direction. You can see on the left that 99% of our order book comes through some form of negotiated route, be it two-stage, target cost, cost reimbursable, or direct negotiated work. This slide shows the benefits of early contract involvement in a project.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

The top of the slide shows the old-style model of contracting, in which the contract had very little or no input into the design, and after some sort of pre-qualification exercise, the bid would land on your desk and you'd have a really short period to tender the work before winning or losing it. The bottom of the slide shows what is now the norm with most clients. We get appointed and involved at a very much earlier stage in the process, where we can bring our expertise to bear on the project's scope and to design the project to be efficient and safe to build and maintain, which significantly de-risks the whole process for all parties. As I've already mentioned, the left-hand boxes remain the mainstay of margin growth.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

There are a host of operational and process efficiencies which work together to further enhance our margins: modern methods of construction, offsite manufacturing, and digital tools that allow us to construct a project in virtual reality and identify improvements, which then improves the quality, safety, and efficiency of the physical build. On the right-hand side, our work mix will change over time, with a higher proportion of high margin work, and the continued growth of the business will make the overhead more efficient. Here's a video of our Guildford Crescent PRS scheme in Cardiff to demonstrate to you how these things come together to produce really good quality, safe, profitable contracts.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Our teams make it look easy, but we shouldn't underestimate the enormous attention to detail and meticulous design, planning, and expediting that underpins this whole approach to building, which is just as applicable to other sectors such as single living accommodation for the military and prisons.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

At our Guildford Crescent PRS scheme, more than 5,000 components have been manufactured offsite and then assembled in situ to create the tallest building in Cardiff. These modern methods of construction provide time savings, maximize build accuracy, and minimize the impact of adverse weather to produce a smoother, more efficient process. Components are transported to site in the correct sequence on a just-in-time basis. 3D models enable the team to visualize the process before we even reach site, removing unnecessary works and de-risking the build process to make it safer for everyone involved.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Having created the initial podium, MMC elements are added, including concrete planks for floor structures, external wall panels, and bathroom pods, with all electrical and plumbing modules included, allowing the building to rise quickly. This method of construction allows us to develop high-density buildings without extensive scaffolds, improving safety and making a tight site like Guildford Crescent more viable. With the external structures complete, the creation internally of the individual apartments and their fit-out is assisted by the use of digital tools to monitor, check, and report on the progress of each individual room. All activities are logged digitally via a QR code system and linked software, with tradespeople marking off actions as they are delivered.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

This means that quality and productivity can be monitored in real time, keeping them at the forefront of the construction process, as well as speeding up build times and collecting information that can be used to maintain the building correctly in the future. Digitalization and MMC are key tools of the present, but also very much part of the future, as we refine and develop each element that we utilize on each project that is completed. With MMC embedded in our operations, we will continue to deliver the key time, cost, quality, and safety efficiencies that will improve our margins and the facilities we deliver for our clients.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

We have a pipeline of PRS projects following on from Guildford Crescent, and as you can see here, we are a preferred bidder on four further schemes: two in Milton Keynes, one in Nottingham, and one in Leicester, with a total gross development value of £360 million. We are through to planning commission on the Grafton Gate scheme, with the other three projects due to follow, and a further pipeline of eight prospective schemes. We've been working with all the UK's major water companies for an average of 18 years and have an unparalleled overview of the water industry in the UK through our 55 current frameworks. The photo you see bottom left is Shield Hall, which is a large wastewater treatment works just outside Glasgow. I was there a few weeks ago, and you can see in the photo two back-to-back LinTod panels that we designed, built, and installed.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

These panels are huge, something like 20 meters long, and this is a really good example of how we're replacing aged controlled infrastructure with new controlled infrastructure, a requirement which is replicated across the country. Here you can see that, as with the main design and build part of the business, we've built a really firm foundation of long-term frameworks to support our growth aspirations in higher margin work in capital maintenance, water technologies, FM, security of national critical infrastructure, and affordable homes. This strong framework base will stand us in good stead as we grow the higher margin specialist businesses.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

I hope that gives you better granularity as to how we move from 3% to 4% operating margin through a combination of volume and leverage, a better, more mature contracting environment, operational improvements through digital offsite manufacture, and so on, and then growth in revenue of higher margin specialist work and affordable homes. In summary, then, we've had another really good year and are pleased to have achieved our 3% operating margin a year ahead of program. We're in very good shape with a strong balance sheet, growing high-quality order book, no debt, and no pension fund liabilities. The outlook for the future is good, with strong government and regulated demand in our chosen sectors, which gives us a high degree of confidence in the outlook through to 2030, and the confidence, of course, to announce our third share buyback as we continue to grow value for Galliford Try shareholders.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

We have momentum in the business, and my thanks goes to our 4,300 excellent people and our supply chain partners for their contribution to the strong set of results. That concludes the presentation, and I'll hand back to the operator to take any questions. Thank you.

[Operator]

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We'll pause for a brief moment. Thank you. We'll now take our first question from Andrew Duxbury of Peel Hunt. Your line is open. Please go ahead.

[Andrew Duxbury, Company Representative at Galliford Try Holdings PLC]

Hi, yes, good morning, Bill and Kris. A couple of questions, if I may. First of all, on the highways side, Bill, can you just remind us of the mix of business between local authority and national highways? Allied to that, obviously with RIS3 coming up next year, just any insight that you think or you might be receiving in terms of what that might look like for Galliford Try Holdings plc. Secondly, on modern methods of construction, obviously you referenced or the video referenced lower cost. Is that lower absolute build cost or lower whole life cost? Equally, from a Galliford Try perspective, obviously supportive of improved margin, but can the overall value still be developed on these modern methods of construction type programs? Please.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Okay, thanks, Andrew. Over the last few years, we've been changing the nature of the highways order book that protects broadly 50/50 national highways and local authority highways, which of course are spread all over the country. In addition to that, we're seeing a few other markets like energy, for example, coming in and housing, where you need access roads into new nuclear power plants, for example, or new wind farms or new housing developments. We are diversifying the type of clients and the type of work we do within the highway sector. On RIS3 itself, we see the nature of the work changing in RIS3 to smaller schemes, pinch points, junction improvements, things like that, resurfacing of concrete roads, things like that, which is really straight right up our street. The type of work in RIS3 will be very well aligned to what we do here in Galliford Try.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Actually, our order book in highways is, I'd say, full for the next two, two and a half years as we speak. On modern methods of construction, in terms of whole life or build cost efficiencies, it's both, I think, Andrew. As you saw in the video there, we spend a lot of time designing a building that's easy to build, straightforward to build, and therefore be more profitable to build, and of course to maintain, because you know we'll build a thing in two years or so, but it's going to be there for many, many years thereafter. The long-term maintenance costs are really important, and we design those efficiencies into our buildings so our clients get the benefit of that through the whole life of the job.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

The short answer is the sort of approach to building that makes profitability and quality in the build stage and long-term efficiency in maintenance.

[Andrew Duxbury, Company Representative at Galliford Try Holdings PLC]

Got it. Great, thank you.

[Operator]

Thank you. We'll now take our next question from Joe Brandt of Benmier Liberum. Please go ahead, your line is open.

[Joe Brandt, Analyst at Panmure Liberum]

Good morning.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Morning, Jack.

[Joe Brandt, Analyst at Panmure Liberum]

Two questions, if I may. Firstly, can you update us on your thinking on your guardrails in respect of capital allocation? Secondly, as part of your capital allocation, you mentioned acquisitions. Could you give us an update on what that pipeline looks like?

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Yeah, thanks, Joe. I'll probably take a really overall order, actually. As we said in the presentation, we do have a pipeline. We are building that and are slightly more front-footed on that. As you'll see in the appendix, as we said before, we've got clear strategic threshold and financial thresholds. We screen things before they go on the list to make sure they're absolutely in the spaces and the type of deals we want to do. Of course, you have to do the DD, and the vendors have to be ready to sell. It takes a little bit of time for that to come through. As we go through the DD, we'll work out whether we like it or not, whether we want to return. We've got a clear overview of our pipeline indeed.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

On the guardrails, we've long said as we grow the business, without growing the average job size, as it goes, as we grow the business, we think that we will lower the guardrails. The guardrails are based on revenue, and revenue therefore implicit answers are the amount of cash goes up. We don't see risk increasing, and therefore we think we'll lower those next 12 months.

[Joe Brandt, Analyst at Panmure Liberum]

Thank you, yeah.

[Operator]

We'll now take our next question from Edward Prest of Berenberg. Please go ahead.

[Edward Prest, Equity Research Analyst at Berenberg]

Hello, morning. Thank you both for the presentation this morning. I've got three, I think, please. Firstly, in relation to margins, you're expecting to hit your 4% target for 2030. How do you expect this curve to pan out? Do you expect a reasonably linear progression through to 2030, or are there sort of lumps in the way? I'm thinking potentially margin uptick with AMP8 or as adjacent services come through. Just be interested to see how you see that panning out. Secondly, on order books, obviously you're at the moment well diversified between sector and contract. That's a clear strength in terms of allocating, in terms of exposure to anything in particular. With the pipeline, as you see it coming through and the opportunities available, is it going to be, is it reasonable that this stays very well diversified?

[Edward Prest, Equity Research Analyst at Berenberg]

I'm sort of wondering if water risks becoming a too large share. Thirdly, on affordable housing, we obviously very recently have a new housing minister, and it's possibly too early to say, but has there been any change in tone from government since he took office? Thank you.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Okay, and Kris takes the first one, if we're safe and clear.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Yeah, morning, Ed. Thanks for the question on margins. Bill's laid out the building blocks in this section on the presentation this morning. If I take you back to the capital markets day that we did sort of 18 months ago, we said that it would be slightly tail-ended, so there would be a little bit of a faster rise at the end. That was driven by the fostering of our special services, high margin businesses, and as we build those to scale, then the mixed impact of those on the overall number. As we've also said, we're a little bit ahead of target, hitting the 3% margin one year early. That by definition sort of flattens the curve a little bit, so we continue to make progress.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

We said we'd expect margin expansion in 2026, so we think we'll continue to make margin improvements year on year, but it still remains a little bit of a faster rise towards the end, especially as businesses come through.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Okay, thanks, Kris. On the order book, Ed, and the share of water, what we've seen over the last few years is infrastructure growing faster in the building part of the business. Building is a parameter for you, I think 52% of revenue this year, infrastructure 48%. It'll probably carry on evening up over the next year, 18 months, I suppose, and a bit further into the future, infrastructure will probably mildly overtake building. We do see that moving slightly as we go forward, but we'll make sure that we maintain a very diversified portfolio. We're not going to become overly reliant on any one sector, and whilst water is a huge market and will grow, we will operate within the sensible bounds. We won't bite off more than we can chew.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

We will manage the order book to make sure we maintain that very healthy diversity that stood us in good stead over the last few years. On affordable housing, I think there is a subtle change of tone, Ed, although it's pretty recent. There are well-publicized issues with regards to delays through planning, delays through the building safety regulator. The funding became clearer early in the year, which was good, and I think that the logjam, I suppose, that we see currently, specifically through the building safety regulator, is showing signs of starting to improve. I was on a call just last week with the new head of the building safety regulator, and I was really impressed, very pragmatic, sensible, down-to-earth person who's got some very clear ideas of how he can get things moving.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

I do expect things to improve, and let's hope that we're correct in that, but I sense that there's improvement coming in, yeah.

[Edward Prest, Equity Research Analyst at Berenberg]

Brilliant, thank you.

[Operator]

Thank you, and we'll now take our next question from Max Hayes of Cavendish. Please go ahead.

[Max Hayes, Equity Research Analyst at Cavendish]

Hi guys, congrats on the results. Just two from me. Just seeing more chapters, I guess, from government on public-private partnerships. Do you see any more scope for opportunities here in your PPP portfolio? The second is, you've just seen with a lot of your peers recently, temporary working capital outflows in recent results, but you haven't seemed to add this, just wondering how you've managed that. Thank you.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Max, there is a little bit of talk about PPP coming back. It is still sort of working up in Scotland under the NPD model, the non-corporation model, but there is a bit of talk coming on what I'd call lower tech type of buildings. We're talking here about portfolios perhaps of schools or portfolios of care centers and doctor surgeries and things like that. Of course, we've been very successful in those markets before, and we still retain our team at the front end, our PFI team. We're currently involved in the more PLS front end at the moment, but are well versed in PPP. I'd say early days, but there are a few signs that PPP might come back onto the agenda. In the water industry, it's called direct procurement, DPC, direct procurement, something like that, but it's the same thing. It's PPP in the water industry.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

We've not gone there yet because the current schemes are not really up our street. They're sort of enormous schemes, huge water transfer pipelines and things like that. In water, there is more talk of the water companies possibly using some form of private financing to advance specific areas of their portfolios. We will set both in terms of our track record, our team at the front end, and our balance sheet to have a look at this if it becomes reality.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

On the working capital question, I'd just sort of draw three things out of some of the points Bill made earlier. Whilst our order book is diversified, it also is in sectors that we know how to do and that we have long been doing. We build projects that we know how to do, which reduces risk, and we build those projects well. Ultimately, there's no real argument for our clients not to pay us. Giving the clients no reason not to pay you is the most important thing. It is that more mature procurement environment that Bill talked about. They recognize that stable, viable, sustainable businesses are the most important thing. It is in the also known best answer for them to pay us as well. That's an important thing. We make sure we build those relationships. In water, we talk about 18 years of relationship on average.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

We have long-term relationships and we do the price. Finally, Bill referenced the incentivization point. Our colleagues are incentivized on cash every month of the year. There isn't a mad dash of line. They have to deliver cash every single month, and that's what they do. The combination of those things, those three things in our model, is why we think we continue to deliver strong working capital performances.

[Max Hayes, Equity Research Analyst at Cavendish]

Great, all clear. Thank you.

[Operator]

We'll now take our next question from Greg Poulton of Singer Capital Markets. Please go ahead.

[Greg Poulton, Senior Equity Research Analyst at Singer Capital Markets]

Morning guys.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Hi Greg.

[Greg Poulton, Senior Equity Research Analyst at Singer Capital Markets]

Two from me, please. Could you just talk a bit on partnership housing? Could you talk a bit about the pricing environment, and then specifically on affordable housing? Some reports that the central government funding is still taking a while to slow down to local authorities. Could you just talk about whether you're seeing that and how you're seeing affordable housing contracts progress in that environment?

[Bill Hocking, CEO at Galliford Try Holdings PLC]

You know, we set out, as you know, Greg, we were excluded from this market following the sale of the Hospital and Business of History for a few years. As part of our strategy, which we launched in 2024, it was to re-enter this market. What we've been doing in the intervening period is getting onto quite a few frameworks that support growth in affordable housing. We've made really good progress towards that and continue to win places on further frameworks. We've started to build some schemes, which we're building at the moment. You're right. In our evolution, we've not been necessarily adversely affected to date, albeit that the market is slower than or the progression, I suppose, overall is slower because of the points you make. Central government funding and some of the points I made earlier on about planning commission and the building safety regulator and so on.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

I do understand as well that central government funding is finding its way to the right places now. The other thing that we didn't really talk about, Greg, is that lots of the residential, the rich providers and councils and so on have been spending a lot of this funding on upgrading their buildings in terms of existing buildings, this is in terms of fire and in terms of quality and mold and things like that, dealing with those sorts of things. I think that that has started to tail off now and their attention is now moving back to new build. As I said earlier on, it has been a bit slow. There's lots of things being in the way, but I do sense that we have a bit of a turning point and hopefully in the next six months or so we'll start to see some action.

[Greg Poulton, Senior Equity Research Analyst at Singer Capital Markets]

Great, thank you.

[Operator]

We have no further questions in queue. I'll now hand over to Daniel for webcast questions.

[Operator]

Thanks, Laura. We do have a couple from the webcast. The first one coming from Stephen Rawlinson. Are there any large-scale contracts in the order book or current workload?

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Thank you, Daniel, and thank you, Stephen. I think I just sort of touched on it a little bit in my answer to Joe's question earlier about the guardrails. You can see it on the building side that we put in the deck that the average job size in building is between £19 million and £20 million. It's been around there for a while. It's creeping up with inflation as those costs go up slightly over time. We've seen quite a lot of stability in that, particularly in the building sector. There are no particularly big jobs there. In environment, the jobs could be a lot smaller, probably in the low to mid-single digit millions in terms of the average jobs in water. There are a few water plants that are bigger. In roads, we have some highways where we'd have the bigger projects.

[Kris Hampson, CFO at Galliford Try Holdings PLC]

Our biggest project is in the Parallel. We've probably got three or four that are over £100 million, not very many. There are only one or two and they're naturally a little bit bigger. There's no real dependence on any one job. I think I've written this too.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Yeah, I'd make the point that all of those big jobs are on a total cost plus reversal basis. The risk profile on this is very different.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Thank you. Our next question is from Chris Smith. How is Galliford Try addressing the skills shortages within the industry and its impact on current and future project delivery, looking ahead to 2026 to 2030?

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Okay, thanks, Colin. I mean, we've been talking about this as an industry all of my career, I think. There are two things that are really important in this for me. That is to retain the existing 4,300 good people in Galliford Try and then to bring new people into Galliford Try obviously to sustain our growth trajectory. On the retain side of things, we do a huge amount of work on training and career development, making sure that Galliford Try is a nice, welcoming place to work where people can advance their careers. We survey the staff every year and are really pleased this year that 87% of our people are strong advocates of the company and would recommend us as a good place to work. We're having good success in attracting good people to Galliford Try and we intend to become a destination employer.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Our churn rate, our voluntary churn rate, is 10.6%, which is good. That's where we are. I think that our reputation, results like this, our balance sheet, are all things that attract good people to Galliford Try. Through the supply chain, of course, we encourage our suppliers to recruit apprentices and more people themselves by giving them continuity. I spoke about that a little bit in the presentation. Continuity of work and opportunity to have long-term work with us, profitable work, safe work. That does attract a good supply chain and allows them to invest, which is obviously really important to us as well. Further to that, and more broadly, we support the industry training schemes like CITB and are members of the 5% Club, which means that we undertake to employ at least 5% people in some sort of training scheme.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

We actually more than double that at the moment, it's 10.1% at the moment. We do a huge amount of work here and it's really good to get some nice feedback. If you go into, which I don't, but I get a bit of feedback occasionally from things like Glassdoor and Indeed websites that people use, we get good feedback as a company, which is nice to see. In external rating agencies, we were rated number one for apprentices and for graduates last year. Really pleased with that. Overall, the shortages I would say are constant with what I've always seen, but we have to carry on working really hard to make sure that we can have sufficient good people to sustain our growth.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Thanks, Bill. As there are no further questions on the webcast, I'll hand back to you for closing remarks.

[Bill Hocking, CEO at Galliford Try Holdings PLC]

Okay, thanks, Daniel. All right, thank you everybody. Really pleased with our results and thank you all for joining the call. We'll see some of you on the roadshow. Thank you very much. Bye-bye.

Participants

Executives

• Kris Hampson, CFO
• Company Representative
• Andrew Duxbury, Company Representative
• Bill Hocking, CEO

Analysts

• Max Hayes, Equity Research Analyst at Cavendish
• Video Narrator
• Edward Prest, Equity Research Analyst at Berenberg
• Joe Brandt, Analyst at Panmure Liberum
• Greg Poulton, Senior Equity Research Analyst at Singer Capital Markets