Galliford Try H2 2026 Earnings Report

Galliford Try EPS Results

• Actual EPS: GBX 41.70
• 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 2026
• Date: 9/17/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, September 17, 2026
• 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 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong FY2026 performance: Revenue rose 3% to £1.93 billion, adjusted PBT increased 24% to £55.9 million, margins improved to 3.5%, and adjusted EPS grew 23.1% to 42.4p.
• Positive Sentiment: Galliford Try reported a robust balance sheet with £259 million of year-end cash, £216.2 million of average month-end cash, no bank debt or pension liabilities, and continued 100% cash conversion. The board also announced a new £15 million share buyback and a 23.5p dividend.
• Positive Sentiment: The order book remains strong and provides substantial revenue visibility, with £2.7 billion in Building and £1.7 billion in Infrastructure; 93% of Building revenue and 87% of Infrastructure revenue for FY2027 are secured.
• Positive Sentiment: Management expects similar revenue growth and further margin progression in FY2027, supported by public infrastructure spending, AMP8 water work, specialist higher-margin businesses, affordable housing opportunities, and disciplined bolt-on M&A.
• Negative Sentiment: Infrastructure revenue growth is expected to flatten in FY2027 as highways projects move into lower-revenue early stages and the AMP8 transition progresses. In addition, historic tax losses are largely exhausted, so the company expects to resume corporation tax payments from FY2027.

Presentation

[Bill Hocking, CEO at Galliford Try]

Morning, all. Nice to see you. Welcome to Galliford Try's full year 2026 results. I suppose just having a think about the video reel that you saw a bit up there and was running outside. It really, even now, still inspires me to watch the sort of stuff that we do all around the country every day and the contribution we make to the social and economic country, the productivity of this country, I think it's fantastic. One of the great things about construction is you can see the fruits of your labor generally for the rest of your life, and it's a great tangible thing that brings good people into the business and gives us a lot of the job satisfaction.

[Bill Hocking, CEO at Galliford Try]

Okay. Here's the agenda for today. Standard agenda. I'll do the highlights. I'll steal some of Kris' thunder at the front end. Then he'll take you through the numbers in a bit more detail. I'll do a quick update on the strategy, then we'll go to questions.

[Bill Hocking, CEO at Galliford Try]

The first thing is everybody, really pleased that we've delivered six now consecutive years of improvement in all of our key metrics. I suppose the key message from this slide is that we're absolutely confident in that trajectory continuing into the future. All the ingredients are there for us to continue to grow that order book. We've got a long line of sight into the future. We're well aligned with the Government's priorities of where they need to spend their money and where we need to improve the infrastructure of this country. That gives us huge opportunities going forward to produce the goods as we have done for the last six years and to have more capital allocation optionality in that time.

[Bill Hocking, CEO at Galliford Try]

So in a nutshell, we are very well on track for our 2030 targets that you see down the bottom there. Okay, so here's the headlines. Very pleased. You've seen this already, I presume, on the RNS, but revenue up at GBP 1.93 billion, up 3%. If you remember this time last year, we said revenue would be slightly flatter than the growth we'd seen the previous years, and that's how it panned out. But still 3%, we're happy with that. More importantly, of course, because we are a bottom-line-driven company, not a top-line-driven company, much happier that the 3% is now, 3.2%, sorry, at the half-year is now 3.5% at the full year and up from 3% in the previous full year. So that's a really good performance and well on track, as I said earlier on, towards our 2030 targets.

[Bill Hocking, CEO at Galliford Try]

That produces adjusted PBT of GBP 55.9 million, up 24%, and a really good full-year dividend of 23.5p, which is up again. Similar sort of number, actually. We should have tweaked it to have 23.5% and 23.5% really. But anyway, up a very similar number, 23%, 24% up on the same period last year. Cash has performed really well. GBP 216 million of average month-end cash, up 21%. Cracking order book, and I'll come back to the order book in a bit more detail as to what's in it, but a really good, high-quality order book, and of course, the new GBP 15 million share back that we announced this morning. So all in all, everyone, we're in very good shape, very pleased with our progress, and I'll hand over to Kris to give you more detail on the numbers.

[Kris Hampson, CFO at Galliford Try]

Thank you, Bill, and good morning, everyone. I am going to leave the tweaking numbers comment in the past, I think. Look, I am really pleased to stand up here today and present our full-year results, and as Bill said, to report a sixth consecutive year of growth. It is a hugely positive set of numbers, I am sure you will agree, demonstrating continued execution of our strategy and resulting in better-than-expected revenue growth, strong profit and margin improvements, and continued 100% cash conversion. But before I get into the financials, let me talk about The Rise here, a project completed and handed over to the client in July. This tower adopted offsite construction fabrication, modular integration, and digital tools to enhance build quality and efficiency. This is Cardiff's new tallest building.

[Kris Hampson, CFO at Galliford Try]

And what I have really liked about it is fitted into a really tight site between the mainline train from London and between major roads in the city. A really tight site. But it really demonstrates how our capabilities and innovations can make previously unviable land available for great construction. Turning to the financials and getting into a bit more detail through the P&L to try and help you understand the story of the year. As I referred to earlier, we have delivered revenue growth ahead of expectations at 3%, up to more than GBP 1.93 billion. With the AMP8 transition smoothly navigated and an exceptional outperformance from our highways team giving us our sixth period of total top line growth. Exactly as we predicted, both of our core divisions of building and infrastructure turned the revenues into higher profits through strong margin progression.

[Kris Hampson, CFO at Galliford Try]

At 3.5%, the divisional adjusted operating margin was up by 53 basis points, predominantly driven by commercial discipline and improved commercial terms in those newer frameworks, quality delivery projects from our risk-managed order book, and a growing contribution from our specialist services businesses. The key point for me here is that the diversification of our chosen markets means we are in more control of our overall revenue and profit outcomes. Let me pick some highlights from the slide. Adjusted operating profit at GBP 49.5 million increased by 21.9%, materially ahead of revenue growth. And there were no exceptional items in the year for the second consecutive year. The 53 basis point improvement in divisional adjusted operating margin is particularly encouraging for us and gives us further confidence in our operating model as we move towards our 4% margin target for 2030.

[Kris Hampson, CFO at Galliford Try]

Net interest income have increased to GBP 6.4 million, up 45%, reflecting improved cash management on higher average cash balances. As previously guided, the adjusted effective tax rate for the year was 25.0%, broadly in line with statutory corporation tax rates. And as Bill said, even after that higher tax rate, adjusted basics earnings per share increased by 23.1% to GBP 0.424 per share. And this means that adjusted EPS CAGR has grown by 33% since 2021. We remain confident in delivering higher earnings going forward, and I will talk later about how we intend to use the cash we generate to drive accretive EPS accretion going forward. Moving now to our Building division. The team have delivered another disciplined performance with commercial focus and high-quality operational delivery, driving margins to new highs.

[Kris Hampson, CFO at Galliford Try]

These strong profit results and an order book up more than 8% have been delivered against a backdrop of some delayed decision-making, meaning some revenue has moved into 2027. This leaves Building revenues slightly down at GBP 951 million for the year. More importantly, adjusted operating profits increased by 17.8% to GBP 33.1 million, with adjusted margins up by 57 basis points. This reflects the quality of our contract selection and bidding discipline, our risk-managed order book, and the quality of work we've delivered across 94 completed projects in the year, including The Rise at Cardiff, with total project revenues of over GBP 700 million. As you know, we are selective in the revenue we take on, and delivering continuing and sustainable increases in profit and cash for our shareholders is the story here.

[Kris Hampson, CFO at Galliford Try]

The order book does tell the forward story, up nicely to GBP 2.7 billion, driven by strong demand against defense and custodial. High levels of work are secured for the upcoming financial year, with 93% of revenue secured for 2027 and 60% for the following year already. As Bill said, we are supportive of the new Prime Minister's intention to free up planning regulation and to deliver on the government's new affordable homes commitments. All in all, another strong year for the Building division, with all sectors in good shape and an order book that sets us up well for 2027 and beyond. It is a similar story in our Infrastructure division, where FY 2026 was a very strong year. The division comprises our highways and environment businesses, and this includes our higher margin specialist and capital maintenance businesses.

[Kris Hampson, CFO at Galliford Try]

Revenues increased to GBP 971.6 million, up some 7.7%, reflecting a smooth transition to AMP8 and an exceptional year in highways. If we talk about highways for a second, they delivered three major projects opened for traffic in the year. The Melton Mowbray distributor road, which you'll all now know as the Pork Pie Way, is opened, the 8-km Carlisle Southern Link Road, and the A47 at Blofield in Norfolk. These three projects completed some 12 mi of road, 15 major structures, and finalized project revenues of in excess of GBP 400 million at attractive gross margins. As I said, the transition from AMP7 to AMP8 was relatively smooth in the year, with environment growing revenues slightly where we had expected them to be flat.

[Kris Hampson, CFO at Galliford Try]

Looking forward to FY 2027, AMP8 project revenues are building now for both the main contracting businesses and for the smaller specialist water and capital maintenance businesses, as early design work turns into construction and manufacturing work. Within the overall division, the mix of revenue will swing back to environments in FY 2027 as those highways teams move on to the earlier stages, the earlier lower revenue stages of their new projects, and this will have a flattening impact on the aggregated infrastructure revenues in FY 2027.

[Kris Hampson, CFO at Galliford Try]

In FY 2026, margins increased by 49 basis points, again to 3.5%, and this was driven by the quality first-time delivery, improved commercial terms on our new frameworks, accelerated delivery in a long, hot and dry summer, which we all enjoyed, and the tidy closeouts on those major roads projects. Consequently, adjusted operating profit for the division increased by 25.2% to GBP 34.3 million.

[Kris Hampson, CFO at Galliford Try]

I think for me, the key thing to take from those two slides for Building and Infrastructure is that both businesses are now delivering 3.5%, up from 3% a year ago. The forward order book for infrastructure is held at GBP 1.7 billion, weighting towards environment at GBP 1.17 billion, with secured revenues for next year or the current financial year, 87% and nearly 2/3 of FY 2028. The ongoing commercial and operational discipline we have shown, and the new improved terms on our AMP8 frameworks gives us confidence in margin progression going forward. If I turn now to our balance sheet, a slide you have all seen before. Strong trading and continued discipline in balance sheet management have maintained a very robust cash position and increasing net assets. Year-end cash was GBP 259 million, up 9.0%.

[Kris Hampson, CFO at Galliford Try]

The number I would really point you to is the average month-end cash at GBP 216.2 million, up 21% on the prior year, broadly tracking profits. The group continues to have no bank debt, no pension liabilities. Our GBP 25 million RCF remains undrawn, and we are pleased to have taken the first options to extend this by a year to 2029. The PPP assets valued at GBP 37.2 million generated annuity income of GBP 3.7 million in the year.

[Kris Hampson, CFO at Galliford Try]

This is a portfolio of assets which generates strong cash back returns, and there is a liquid market for such assets. We keep this portfolio under review, and should we find a use for this capital with a higher return for shareholders, we could look to divest individual assets as necessary. Lastly, but by no means leastly on this slide, we are proud to and committed to paying our suppliers on time.

[Kris Hampson, CFO at Galliford Try]

With average days to pay at 27 days and 97% of invoices paid within 60 days, we are comfortably in line with fair payment requirements. In summary, we maintain a straightforward, resilient, and strong balance sheet, and this remains a key differentiator for our people, our clients, our suppliers, and investors. If I turn now to the cash flow that supported the balance sheet, you can see on the left our FY 2026 cash bridge explaining the movements in our net cash over the last 12 months. Cash from operating activities was GBP 56.1 million, including IFRS 16 lease repayments, and that was ahead of our adjusted operating profit of GBP 49.5 million. Working capital was essentially neutral across the year at GBP 0.9 million of inflow. What this means is that the seasonal outflow that we reported in March reversed in full as it did in the prior year.

[Kris Hampson, CFO at Galliford Try]

Net positive interest income of GBP 6.4 million, up from GBP 4.4 million a year ago on higher cash balances. Putting together the trading cash flows and the other of GBP -2.5 million, that gave us circa GBP 60 million of net inflows. Against these inflows, we have invested GBP 8.1 million against the Nene Valley Fire acquisition that we announced at the half-year. Alongside this, we have made shareholder returns of some GBP 30.3 million, being GBP 20.3 million of cash dividends in the year and the GBP 10 million share buyback completed in April.

[Kris Hampson, CFO at Galliford Try]

Alongside this, we have made some smaller organic investments in our Keighley fabrication facility and in upgrading our commercial reporting suite of systems. These total GBP 1.1 million. All in all, the total capital allocation in the year equaled GBP 39.5 million, all generated from trading cash flows and representing some 70% of the adjusted PBT for the year.

[Kris Hampson, CFO at Galliford Try]

In the year, there was no corporation tax outflow, largely due to the use of historic tax losses. As previously guided, we will return to paying corporation tax from 2027, as these losses have now largely been used up due to recent successive years of profitability. We felt on the right-hand side it was worth showing the aggregated cash flows of the last three years to demonstrate the consistency and similarity with which our model generates and uses cash. For me, the first key point here is the tight control of working capital. As you can see on the slide, over the three-year period, working capital has been a net inflow of circa GBP 5 million. We feel this clearly demonstrates the high quality of our profits. We turn working capital into cash broadly every month, and we have done so for more than three years now.

[Kris Hampson, CFO at Galliford Try]

Secondly, beyond the prompt conversion to cash, the two bridges clearly demonstrate the broad range of our accretive capital allocation policy in play year on year, with more than GBP 120 million of capital allocated over the last three years. As we look forward to 2030, we are focused on maintaining this track record and then ensuring we allocate capital that we generate as optimally as possible. If we have a look at our capital allocation policy, the first thing to say on this slide is our capital allocation priorities remain unchanged. You can see progress against each of these on the bottom half of this slide, as I just discussed on the cash bridge.

[Kris Hampson, CFO at Galliford Try]

As we look to 2030 with a strong pipeline of work, high visibility of revenues, and our track record of converting revenues to profits to cash, we believe we can continue to deliver sequential cash performances that will give us plenty of capital allocation optionality. Let me talk you through our thinking here. We will continue to grow our sustainable dividend at 1.8x adjusted EPS cover. That is a market-leading cover in our sector. The 1.8x cover represents circa 2x cover on our normal operations and improves to 1.8x when we also return the annual interest earned on our PPP assets. Even after these dividends over the next four years, there will still be plenty of free cash flows to invest.

[Kris Hampson, CFO at Galliford Try]

We can do that organically for revenue growth, with examples in the last couple of years being our Paisley and Keighley fabrication facilities, and acquisitively in bolt-on M&A in higher margin adjacent sectors like our Nene Valley acquisition in February. We all know that M&A can be lumpy and there may be periods where there are fewer deals to complete or organic investments to make. In these periods, the mix of capital allocation activities may lean towards further incremental returns, typically through share buybacks.

[Kris Hampson, CFO at Galliford Try]

Either way, further EPS improvements are obtainable above and beyond our sustainable growth targets. It is also worth being clear that our decisions on returns of capital will be made whilst retaining adequate financial capacity for the transactions coming through our active M&A pipelines. We are pleased to have announced the 15 million share buyback today, but it has been made very much in line with these concepts.

[Kris Hampson, CFO at Galliford Try]

2026 was a strong year for capital allocation with nearly GBP 40 million deployed. We are continuing to build our M&A pipelines and organic pipelines for the future. Moving on to M&A opportunities, I would like to explain a little bit more about how we are building those pipelines and what we are thinking. Our views on M&A can be expressed in three simple points. Firstly, we have the track record, capability, and experience to deploy capital successfully in M&A. We actively learn from previous deals, and we implement the learnings in our new deals. As an example of this, we are pleased to say that our recent acquisition of Nene Valley Fire is ahead of business case and the integration is going well with cross-selling underway and geographical expansion underway, including the hiring of our first technicians in the northwest of England.

[Kris Hampson, CFO at Galliford Try]

Secondly, acquisitions will be bolt-on and adjacent. We will only buy specialist businesses in specific sustainable markets where we already operate and where we understand the risk. We are focusing our efforts on a limited number of target areas. You can see on the slide, in environment, it is capital maintenance and water technologies, and for specialist services, it is fire protection, asset security, and hard FM. These are structural but fragmented growth markets where our differentiation is that we have the client list to drive faster revenue growth and margin increases. Our team in Nene Valley Fire are really starting to benefit from this already.

[Kris Hampson, CFO at Galliford Try]

Thirdly, and finally, we will be very disciplined about the process. Our active pipeline is regularly screening the sectors I have mentioned. However, deals will only be considered where they meet both our strategic, financial, and operational hurdles. You have seen them before, and you can see them again to the right of the slide.

[Kris Hampson, CFO at Galliford Try]

Simply put, our rigor and discipline in capital allocation decisions is matched by our rigor and discipline in contract selection. We recognize for both of these, discipline remains crucial to all of our stakeholder communities. That being said, we are excited by the scale of opportunity in these spaces and how they strengthen the investment case of the group. Turning to my final slide before I hand back to Bill. We look forward to 2027 with some anticipation. We expect similar levels of revenue growth and continued margin progression towards our targets. As the journey develops towards the black bars to 2030, we continue to believe in a simple and compelling story of sustainable and increasing returns generation based on that disciplined delivery of our proven model in our attractive chosen sectors. There is plenty of capital allocation optionality to be had on top.

[Kris Hampson, CFO at Galliford Try]

We have taken another successful stride along our journey. Our ambition remains bright, and there is plenty of exciting road to travel in front of us. Bill will now take you through the operational side of the strategy delivery in more detail. Thank you.

[Bill Hocking, CEO at Galliford Try]

Okay, everyone. A bit like Kris, some of the slides you are going to see now, you have seen before. I am really pleased with this because what it shows our strategy is robust and is unchanged, and our delivery is really consistent. Let us just reprise the strategy in a nutshell. This is a one-page representation of the strategy, and we start on the top left there, growing revenue in our core businesses. That is building highways and the design and build part of water.

[Bill Hocking, CEO at Galliford Try]

This is the big engine room of Galliford Try. This is where the vast majority of the revenues come through, and the ambition there was to grow those businesses in advance of inflation and get them to 3.5% and beyond. That was our original plan back in 2020 formally set out on the strategy. We are making good progress here, as you have seen today.

[Bill Hocking, CEO at Galliford Try]

Next one there is to grow our specialist businesses in the higher-margin adjacent markets. Kris has touched on some of those. These businesses are doing well. These are the water tech businesses, so manufacture of high-tech bits of kit in the water and wastewater industry, and then hard FM, fire security, things like that in the building part of the business. These are all higher margin businesses, and as we grow them, and they are doing well, then the mix starts to change, and that is what helps to drive us from the 3.5% up towards the 4%. We re-enter the affordable homes market. We all know that this part of the market is probably 18 months, perhaps even a bit more behind where we all thought it might be. What we do see here is a bit more impetus now.

[Bill Hocking, CEO at Galliford Try]

We have all seen the GBP 10 billion funding that has been allocated in the last couple of weeks. Prior to that, there were some planning issues, there were some fire safety issues, viability issues, which are improving, I think would be the right thing to say. I do think that the GBP 10 billion now allocated will provide a stimulus to the affordable housing market overall, and I expect to see a bit more action there over the next six to nine months, I suppose. Kris mentioned the further bolt-on acquisitions, the possibility of those, and actually the acquired companies. If you take a company like Nene Valley Fire and you give that business access to our client base, our geographical base, our offices all over the country, that is a really, really good foundation for significant growth.

[Bill Hocking, CEO at Galliford Try]

That is the simple philosophy of how we take higher-margin bolt-on acquisitions, give them access to our client base, our geography, our offices, and really grow them in some style. When we do all of that, we continue to grow our earnings, our capital allocation optionality, our returns to our shareholders. So that is it in a nutshell, everyone, unchanged now for some time. Then we talk in a bit more detail about how we carry on moving up towards the 4% margin. So pleased to say that last time I was standing up, it was 3.2%, and before it was 3%. The left-hand side is improving and starting at 3.5%, which is nice. The target is still 4%. We are making good progress, as you can see. But these stepping stones, we call them, have not changed one iota.

[Bill Hocking, CEO at Galliford Try]

I am going to go through these in a bit more detail in a minute. Before I go through that, another slide you have all seen before, I just wanted to remind you of the philosophy of how we run the business, because I think as we grow, maintaining the discipline of why we have done so well is really, really important. The simple philosophy is we start with a core of brilliant people. We have got 4,300+ very good people in Galliford Try. Around those people, we put a strong discipline of culture, of process, of risk management, and being very selective about what we do and what we do not do, and having the courage to walk away from projects where we do not think they are the right projects for us.

[Bill Hocking, CEO at Galliford Try]

What that means is that everything in our GBP 4.3 billion pipeline is work that we can execute day in, day out with the right people in the right areas, with the right supply chain, with the right clients, and so on and so on, which means that we perform consistently as is reflected through our performance and our numbers, and we continue to strengthen our already strong balance sheet. The wheel turns. That is the simple philosophy of how we run the business, and that will absolutely remain. Going back to people, I just want to put a bit more color around people because we spend an awful lot of time and effort making sure that we can retain those 4,300 good people and attract more good people to Galliford Try to sustain our growth. Here are just some of the things that we do.

[Bill Hocking, CEO at Galliford Try]

I will not go through all of them. 85% employee advocacy score. Every year we do an employee engagement survey, and we are really pleased that 85% of our employees think Galliford Try is a great place to work and would recommend that to their peers and their friends as a great place to work, which is a really strong score and well above the industry average, I hasten to add. 45 career moves is interesting. That is just in the year. Overall, through our Explore program, we have moved 154 people around. This is simplistically, if somebody wants to move geographically into a different business sector within Galliford Try, they can do that. If somebody's partner gets transferred to Scotland and they want to go to move, then they can go and transfer to Scotland with Galliford Try. They do not need to leave.

[Bill Hocking, CEO at Galliford Try]

It is about retaining good people and making sure that and we operate pretty much everywhere through the U.K., so this is a really good program. That helps us to retain our good people. We promoted broadly 10% of our people in the year, which is fantastic. People see career opportunity with Galliford Try, and people do get, in the industry, I would say, not just with Galliford Try, a lot of responsibility pretty young in the construction industry. People do get a lot of job satisfaction, as I said right at the start, through the construction industry, and we really push that in Galliford Try. 10% of our people are in early careers as defined, so in some sort of training. Graduates, apprentices, degree apprentices, trainees, people like that, and that is a very high percentage.

[Bill Hocking, CEO at Galliford Try]

The emphasis there is on growing our own, growing people from within, and it is really good to see. Those people, going to the last one, number one, those people vote, what is it? Unprompted by us, Babita. They vote through TheJobCrowd. They vote us number one in our sector for apprentices and for graduates, which is really nice to see. A lot of emphasis on our people, everyone. Going back to the stepping stones, the first one is about volume and growth and so on. You have seen the slide before. We have not changed the numbers.

[Bill Hocking, CEO at Galliford Try]

This is just to demonstrate there is a mountain of work out there in social and economic infrastructure, both in the public sector, so taxpayer-funded work that you can see up on the screen, but also bill-payer-funded, so in the regulated industries, water and energy and so on, where we pay the bills. There is a mountain of work out there. There is not a lot of optionality in here. A lot of this work just has to be done. In this last summer, we have seen drought and hosepipe bans and train derailments because the lines are warping and so on. In five minutes' time, there will be flooding and all sorts of things.

[Bill Hocking, CEO at Galliford Try]

The bottom line is our infrastructure has to be more resilient, and there is very little optionality about having to do a lot of this stuff, which is, of course, all encompassed in the GBP 725 billion of CapEx funding that was announced last year and ring-fenced. Just a nod to the volume of work out there, everyone. That leads, of course, to our order book, which is in really good shape. 95% of the order book, as you see there, is in the public sector and 5% in the private sector. It waxes and wanes a bit, but it is something like that normally. We always go into a new year with 90%-odd of our work in hand, which is really good from a number of perspectives.

[Bill Hocking, CEO at Galliford Try]

We can obviously get all our ducks in a row in terms of people and supply chain and materials and so on. Also in terms of risk management, when you have got a very full order book, there is no need to go off and do things that you should not do. That nods to both of them. More importantly to me on this chart is full year 2028 and full year 2029, because we already can see these numbers are a few months old now, so they will be a bit different now, a bit higher. We can already see best part of 2/3 of full year 2028's work already in the bag and heading towards half of full year 2029's work already in the bag.

[Bill Hocking, CEO at Galliford Try]

That's really, really good in terms of this long line of sight for the business, keeping this bow wave of work ahead of us at all times. I've said to some of you before, we already have clients in the water industry talking to us about AMP9, AMP10 and AMP11. That's 2030-2045. Looking forward to getting a quality supply chain in place now to sustain the enormous growth that we forecast going into AMP9. We think AMP9 is going to be considerably bigger than AMP8 already. So a very good position with regards to the order book, everyone.

[Bill Hocking, CEO at Galliford Try]

I'm not going to go through all of these, but just to point out that the jobs that we win, and these are changing every single day, but when you run your eye through the list, you see defense, you see education, you see affordable homes, energy, water, specialists. It's across the board is the point I'm making here. Then we go into a better contracting environment. We've spoken about this quite a bit, about clients are procuring in a far more mature manner for long-term value and long-term collaboration and efficiency, I hasten to add. This leads to what you see up here, that 99% of everything we do is negotiated in one form or another. Once we're on the frameworks, and you do need to be on the frameworks first, of course, most of the work is negotiated.

[Bill Hocking, CEO at Galliford Try]

The red is target cost-reimbursable work, mainly in the water and highways business infrastructure. The black is two-stage work where you're appointed in the early stage and you negotiate a final price. You do end up at a lump-sum fixed price through negotiation, and that price includes inflation and risk and all those sorts of things. Then in the light gray where clients just ask us to come and negotiate something and get on and do it. So that's a really good place to be, everyone. Secondly then, we've talked in the past about quality-price split, and typically it's 80/20, 70/30 in favor of quality. What the Government are saying now in terms of Government projects or public sector projects is that the social value element of the quality mechanism will rise to up to 20%. It was 10% previously.

[Bill Hocking, CEO at Galliford Try]

That's fine by us because we put a huge amount of effort into social value. There's a slide here, and again, I'm not going to go through all of these stats, but social and economic value in the locality of where you're working is simply around employing people locally, training people locally, employing local companies to do work, things like that. There's a formula which the Government mandates that we measure. We measure here 39 of our projects with a value of more than GBP 5 million that completed in the year achieved that GBP 527 million worth of social and economic value in the locality. You can see there the sort of things that we measure. I won't go through them all, but jobs, training, access for young people to come and have a look at construction, things like that.

[Bill Hocking, CEO at Galliford Try]

And you know something, it is the right thing to do. People love doing it. Our people love doing this, and it helps us to win work. Operational improvements. I will not go through all of this, but we said in the past that the sort of technology that we use in terms of 3D modeling and 5D modeling, the fact that we can build things in 3D and in virtual reality, you can walk through buildings and hospitals and prisons and whatevers. You can debug them, you can tweak them. You build them half a dozen times in virtual reality, so when you go and build them in reality, you get it right first time. Therefore, our rework costs are lower, we are more predictable in terms of program, et cetera. Lots of small accretive sort of incremental improvements which you can see reflected through our numbers.

[Bill Hocking, CEO at Galliford Try]

The only probably newer one and more germane at the moment is bottom left there is AI. We are starting to use AI in a very considered and circumspect way, I hasten to add. We are using it at the front end to help us sort of condense documents and scan documents and things like that. We are using in things like safety, whereas before you might have to go through a process and understand what you need to do to do a certain task, now you can push the button or talk to it, and it will say, "These are the things you need to do," without having to go and trawl through the processes. So it is still in its infancy with us.

[Bill Hocking, CEO at Galliford Try]

My personal view is it will help us to be a bit more efficient, a bit more productive, but we are pretty circumspect about how we are implementing it, and we are testing it very thoroughly with human beings before we trust it too much. So that is operational improvements. Then we move on to the last one, which is really about higher margin work. So you might wonder why I put the frameworks up there, but the real story I want from this slide is we target frameworks for all the things we have talked about in the past. The long line of sight, long client relationships, ability to innovate and to be more effective for our clients, to drive costs down without driving margins down, I hasten to add. A few years ago, this slide was entirely green.

[Bill Hocking, CEO at Galliford Try]

Now, when you look at our strategy, which is about grow the big businesses, that is the green, grow the specialist businesses, that is the blue, and grow into affordable housing, that is the orange. The scale is different there, obviously, to fit them all in. But what we have done is we have maintained the quantum of the green, and over the last couple of years, we have got a really, really good presence in the specialist business frameworks and in the affordable housing frameworks.

[Bill Hocking, CEO at Galliford Try]

So you cannot just get on a framework. You have to wait for them to mature, you have to wait for them to be renewed, so it is a never-ending process, really. But the real story I wanted to get across on this slide is that the framework presence now reflects absolutely the strategy, and that is the simple message out of this slide. It is much the same in water.

[Bill Hocking, CEO at Galliford Try]

On a more granular basis, you can see there that in 2021, we had eight design and build frameworks in water. And then through all the acquisitions that we've made over the years, we now work for every single of the major water companies in the U.K. for an average of 19 years. But you can see there on the left-hand side how we've improved our presence in water. So not only in the big design and build frameworks, but more importantly, in terms of the higher margin part of the strategy, the gray bits there, capital maintenance and water technologies, where we've gone from nothing to a very good presence in both of those higher margin areas, which really are going to help us drive through AMP8 and more into AMP9. So a good story there in terms of the framework presence underpinning the strategy.

[Bill Hocking, CEO at Galliford Try]

And then this is just a little infographic to show you on the top it is wastewater. Sorry, there's water in the bottom, there's wastewater. That would never happen in reality, by the way. But as an infographic, it's just to show you where we operate in water and wastewater. So the dark gray bits or black, whatever color that is where we currently have full capability in water, and the red is where we interface, and we have some capability in water. But the real message I wanted to get across here is as we continue to develop our water business, as we continue to probably buy a few more bolt-on acquisitions in the sector, we expect to get more and more end-to-end capability, which will be really good for our clients, for us to provide good services and efficient service to our clients.

[Bill Hocking, CEO at Galliford Try]

So finally, everybody, in summary, we've had a really good year. Very proud of another good year. Thanks again to all of our people for all the hard work they put in to get to these numbers. We making really good progress towards our 2030 targets. We've got a great bunch of people, a great order book. The market is really, really supportive, and we've got a strong balance sheet which supports further returns to our shareholders, of course, and capital allocation optionality. So that's it. Thank you very much. We'll go to questions.

[Greg Poulton, Analyst at Singer Capital Markets]

Thanks. Morning. Greg Poulton from Singer Capital Markets. Just a few from me, please. On M&A, obviously the messaging seems to have stepped up a bit there. Could you just talk about if there are any specific sector focus where you're primarily focused on acquiring? I know it's the adjacent sectors, but that's quite a wide net. Where are you sort of seeing the most opportunities coming?

[Kris Hampson, CFO at Galliford Try]

The answer is, as Bill showed on that infographic, it will be the vertical slide. Ham Baker build distributor arms. You can see those going around. We will be picking individual bits of capability across clean water and wastewater. It will be products and manufacturing, I think, will be the particular targets with sector then. Then we will look at capital maintenance businesses as well there. In terms of the building ones, more fire businesses. As I say, these markets are very fragmented, so we are looking to grow organically across the U.K. But if a fire door business came up in Scotland, we might consider that, in Edinburgh or Glasgow, for example.

[Kris Hampson, CFO at Galliford Try]

Active fire, we are trying to build out a full fire service offering. In the same way in water, we are trying to get to full service offering across water. We will try and build out our capability and maybe suppression, maybe active fire as well. Hard FM will be more of the same. Those sort of sectors as you would expect.

[Greg Poulton, Analyst at Singer Capital Markets]

Just on water, obviously there has been a lot of design work coming through this year. Can you talk about the expected ramp-up in construction work as FY 2027 progresses?

[Bill Hocking, CEO at Galliford Try]

Yeah, that is happening. I mean, it is a natural progression, isn't it, Greg, as you go through. We are seeing that now, and we are also seeing an uptick in orders through the water tech businesses, which also go through a little bit of a modulation as you go through the AMP transition process. We are seeing that ramp up as well. It is all panning out as expected, I think, into AMP8. I think more importantly, you look at AMP9, and you see even more work coming through AMP9. The nature of it might be slightly different. We expect the capital maintenance aspect of AMP9 to be significantly bigger than AMP8, and that is natural, I suppose. The assets are getting older. They need more TLC to keep them going until they can be renewed.

[Kris Hampson, CFO at Galliford Try]

I mean, to put some numbers on it, the original eight frameworks you saw on that slide were probably GBP 100 million, GBP 120 million worth of revenue. We bought about another GBP 120 million of revenues through the acquisitions, the full water acquisition. Call that 250, and we've disclosed, we think, through the peak of AMP8, we'll be doing GBP 600 million-ish. That's the scale of growth that we've delivered through those acquisitions.

[Bill Hocking, CEO at Galliford Try]

Yeah.

[Kris Hampson, CFO at Galliford Try]

Andrew?

[Bill Hocking, CEO at Galliford Try]

Andrew?

[Kris Hampson, CFO at Galliford Try]

Can you say your name and where you're from?

[Andrew Nussey, Analyst at Peel Hunt]

Yeah. Good morning, Andrew Nussey from Peel Hunt. Two questions, if I may. First of all, on water, and you're engaging with clients with a view to AMP9, AMP10, and AMP11, as [inaudible] said. They're keen to build their supply chains. How are you able to build your supply chains to ensure that you're in a position to deliver over that longer-term horizon? Secondly, in terms of the margin bridge, how much more of an influence do you think the better contracting environment is going to be in your overall goals?

[Bill Hocking, CEO at Galliford Try]

Okay. With regard to supply chain, what we're doing is firstly, we continue to be an attractive employer. You saw the stats up there. The supply chain like our strong balance sheet. They like our framework presence. They like the fact that Kris pays them in 27 days. We are a good employer, and we are attractive to the supply chain. That's really important that we maintain that. What we're doing is we're setting in place more and more back-to-back agreements, Andrew. We already have a number of back-to-back agreements through plant hire and things like that. What we're doing now, and it's more regional because the type of companies often that we want in a back-to-back arrangement are more regional suppliers.

[Bill Hocking, CEO at Galliford Try]

If you took somewhere a bit further away, let's just say Wessex Water for this example, we will be talking to some of our suppliers in Wessex Water about a back-to-back framework through AMP8 and possibly into AMP9 so that we can secure that supplier and that supplier can invest as well in people, in plant, and whatever it is they need to do. We are trying to get more and more back-to-back agreements into place with that regard.

[Andrew Nussey, Analyst at Peel Hunt]

Just to follow up on that point. Does that change at all if there is more of a shift in AMP9 to capital maintenance activity?

[Bill Hocking, CEO at Galliford Try]

It might, but I think the underlying, the capital maintenance will be in addition to, not instead of, I think, Andrew. It will just be accretive, yeah.

[Andrew Nussey, Analyst at Peel Hunt]

Okay.

[Bill Hocking, CEO at Galliford Try]

I have forgotten your second one because I have not it down—

[Andrew Nussey, Analyst at Peel Hunt]

The better contracting environment as a sort of margin driver over the medium term. It feels like we are already in a good contracting environment.

[Bill Hocking, CEO at Galliford Try]

We are. As I said, we saw the sort of a modulation between the AMPs for the specialist manufacturing businesses. That is picking up nicely now. But the strategy is working out well, and we see significant revenue growth in those specialists over the next few years. Therefore, the mix will start to move. So we think that it is going to evolve pretty much as we forecast.

[Andrew Nussey, Analyst at Peel Hunt]

Okay. Thank you.

[Bill Hocking, CEO at Galliford Try]

Joe?

[Joe Brent, Analyst at Panmure Liberum]

Good morning. Joe Brent from Panmure Liberum. Three questions, if I may. Firstly, Andy Burnham, what are your first thoughts? Have you seen some delays in Government procurement as there has been that inevitable reshuffle of ministers? He seems to have good energy. Are you feeling that in your businesses? Secondly, could you tell us a little bit more about the trajectory in roads, highways? Clearly a very strong FY 2026, and clearly going forward environments can be stronger. But interested just maybe to get some rough numbers around what is happening in highways.

[Joe Brent, Analyst at Panmure Liberum]

Thirdly, on capital allocation, I guess you have got a pretty good sense of your organic investment. If you bundle M&A and buybacks together, both in FY 2026 and over the last three years, you have tended to spend GBP 10 million-GBP 20 million on buybacks and M&A. Is that the sort of number you would expect going forward?

[Joe Brent, Analyst at Panmure Liberum]

We're not going to model that, but we should be thinking about it in terms of accretion over and above the growth you're expecting.

[Bill Hocking, CEO at Galliford Try]

I'll take the first two, and you can take the last one then. Mr. Burnham, well, he seems very quiet, doesn't he? But I think the important thing for us is we've seen action on the affordable homes, as I said a minute ago, which is welcome. Not before time too, I would say, but nevertheless welcome. Let's see what happens on 28th of October, of course. But what we see a little bit, Joe, every time there's some sort of political activity, like a new leader, is we see a little bit of public servants just sitting on their hands a little bit, waiting to see which way the wind's going to blow. We do sometimes see some minor delays creeping in as projects slipping a bit to the right, but nothing of any substance, really, and they all come back later.

[Bill Hocking, CEO at Galliford Try]

That's what we see so far. Overall, I do think things feel a little bit more positive. But I do think we need to get past 20th of October before we know what's going to happen. It's pretty obvious. Roads trajectory, it just shows how in some parts of the business, we are still wed to the weather. The roads, if you remember, the first two months of this year didn't stop raining for two months. Luckily, you don't do much earth moving in those periods anyway in roads. But since then, to the dismay of the water companies, it hasn't rained enough, which means that we've had a cracking year in roads because you can actually make hay. Nothing's holding you up. It's because normally weather holds you up on the roads.

[Bill Hocking, CEO at Galliford Try]

I'm being a little bit blasé, but that's a factor behind the roads as well as, of course, great performance by our people. We have a little bit of a— because those jobs are finished a little bit ahead of time, there's a little bit of a hiatus until the next ones kick off. We've got a really good backlog in roads. And remember that it's probably less than half of our backlog in roads now is national highways, and the rest is in local authority roads. So, we've got a really good order backlog. It's a bit like the AMP transition, really. It's in the design phase, and it will kick off on the ground shortly and get moving. We expect that to recover quite quickly.

[Kris Hampson, CFO at Galliford Try]

Yeah. On capital allocation, I think you are bang on the money. I think the difference in terms of free cash flow, if I use that phrase that we all know between 2026 and 2027 and beyond is the corporation tax point. We have used up those historical deferred tax losses, so we will have to pay that going forward. But we are happy to do that. Let us be clear on that. So yeah, but GBP 20 million, that sort of range. As you see, we are at the top of our tramlines that we talk about as well. So there is room to maneuver in the tramlines if something a little bit more exciting turned up, there is room for that as well.

[Joe Brent, Analyst at Panmure Liberum]

Thank you.

[Kris Hampson, CFO at Galliford Try]

[inaudible].

[Bill Hocking, CEO at Galliford Try]

Max?

[Kris Hampson, CFO at Galliford Try]

Go to Max [inaudible].

[Max Hayes, Analyst at Cavendish]

Hi, guys. Max Hayes from Cavendish. Just two questions, if I may. The first one is just, you went through digital. Just wondering a bit more color on the areas that are now well established and what other areas that you think can drive that further margin accretion towards the 2030 targets. The second one is just on affordable homes. You have made good progress getting onto frameworks. Is it now about just executing on those frameworks, or is there a lot more to go after? Thanks.

[Bill Hocking, CEO at Galliford Try]

Digital, it never ends, Max, does it? If you go back a few years, we would take a 2D drawing of a building, and we would build a 3D model, and it was quite expensive and time-consuming and not all that useful, to be perfectly honest with you. Now, everything is designed in BIM, Building Information Modeling. It is all designed in 3D. It is all automatically you can go and play with it virtually. You can get your supply chain to come in and input into the model. It is a really interactive, really powerful tool. Things that we dreamt about a decade ago are a reality now, and that will just carry on progressing. I think that I have said before that the language of construction over the next few decades will change from construction to assembly and modularization and things, words like that.

[Bill Hocking, CEO at Galliford Try]

I do think that will be more of a trend. You cannot build a road, for example, in a modular way. You might do the bridges or something like that, possibly, but there are some things in construction that will always have to be done the old-fashioned way, if I can use that term. But the technology is moving so fast, it is fantastic. I think that technology will continue to have an input into what we do. Now we fly drones. We used to send people to measure things up and do surveys of sites. Now you just fly the drone over, does a point cloud survey to a millimeter accuracy. It is fantastic, the tech. It is absolutely brilliant. I think that will continue to evolve. How? I do not know. But it will continue to help us to be more productive.

[Bill Hocking, CEO at Galliford Try]

Affordable housing, I just think that the impetus is there. We have got our first one on the ground in Chester. We are talking to some of these registered providers about some more as we speak. I think the flood, I would not say, that is probably too strong a word, the floodgates opening, but there will be more of these things starting to come through now. The interesting thing is that some of that allocation was to councils, which is the first time that has happened, I think, since the Second World War or something. It will be interesting to see what those. It is not a huge amount of the GBP 10 billion, by the way, but it will be quite interesting to see what the councils do, because they are probably not quite used to or prepared for how to go about spending that money intelligently.

[Max Hayes, Analyst at Cavendish]

Great. Thank you.

[Alastair Stewart, Analyst at Progressive Equity Research]

Alastair Stewart, Progressive Equity Research. A couple of questions. One on your progression to 4%. If you look at the order book, look at incoming orders as opposed to the backlog, are you close to or even at 4%, and it is a case of the backlog moving out over the next couple of years? In other words, are you going to get there earlier than 2030 is the blunt question. Secondly, can you give an idea of the quantum of the delayed orders in building and maybe put a bit of color on, I have forgotten the quote there, the macro uncertainty among the public authorities?

[Bill Hocking, CEO at Galliford Try]

If I take the second one first, Alastair, I sort of answered it earlier on. That is just civil servants sitting on their hands a bit while they are waiting to see which way is up. It is in the roundings. There is nothing to worry about. I do not lose any sleep over that at all.

[Kris Hampson, CFO at Galliford Try]

It is more political rather than—

[Bill Hocking, CEO at Galliford Try]

Yeah.

[Kris Hampson, CFO at Galliford Try]

—economic.

[Bill Hocking, CEO at Galliford Try]

Yes, it is. Yeah.

[Kris Hampson, CFO at Galliford Try]

Okay.

[Bill Hocking, CEO at Galliford Try]

Going back to the first one. Look, I think we've established a bit of a reputation for setting targets that we expect to be able to achieve, and if we achieve them early, so much the better. We are making good progress towards the 4%, and maybe this time next year we will be making even closer progress. When we get there, we will tell you what comes next.

[Kris Hampson, CFO at Galliford Try]

Is it beyond the bounds of possibility that for a third year you could make a 50 basis point jump?

[Bill Hocking, CEO at Galliford Try]

Well, we will see. We are in good shape. We are in very good shape. As I said before, we have got a cracking balance sheet. We have got a cracking order book, cracking bunch of people in a big market out there. So, we are in good shape, Alastair. The fact that we can use some of that firepower to invest organically or make further bolt-on acquisitions and you get further EPS accretion through that as well, of course. No, we are in good shape. If we get there early, then that will be great. [Steve] [inaudible].

[Colin Smith, Analyst at Capital Access Group]

Colin Smith from Capital Access Group. I will have three, if I may. You sort of highlighted about GBP 300 billion worth, I think, of infrastructure potential spend over the next 10 years. Could you just talk a little bit about what you think the actual constraints to the growth rates that you are currently delivering are, and whether you could do better than that on a more structural basis? First question. Second one, with the growth of the higher margin add-ons and their continued development within the Galliford Try structure, do you think the risk structure of the bit or the risk profile of the business has changed from where it was in any material way, and if so, how?

[Colin Smith, Analyst at Capital Access Group]

The final question is just to sort of understand what you think the kind of, or how we should think about the kind of maximum amount of cash the business would like to hold, just to try and get a feel for where you think you might be holding excess cash that might come back by way of special dividends as we have just seen in the announcement today. Thank you.

[Bill Hocking, CEO at Galliford Try]

Okay. Thanks, Colin. So constraints, interesting. So it is an enormous number, Colin. To be fair, it has always been an enormous number. In the industry, when we have had big one-offs like the Olympics, for example, or Hinkley Point C or HS2, there is angst about the size of the supply chain and et cetera. Without sounding blasé, supply and demand seems to come into play and work. From our perspective, though, it is about risk. Could we double the size of the business? Possibly. Would we want to double the size of the business? Probably not.

[Bill Hocking, CEO at Galliford Try]

It is all about making sure that, in my view, that you never bite off more than you can chew, that you grow the business in a civilized manner with the right people and the right supply chain and the right foundations to make sure that you can grow and continue to succeed. Because growing a construction business is easy. Growing it profitably is less easy. For us, yes, the market is big, but we will remain very disciplined as we grow into that in accordance with our strategy. Risk profile on the high margin businesses. It is just different, I think, Colin. Some of these businesses are manufacturing businesses where they have got factories that manufacture pretty high tech bits of kit, so they have orders coming in and so on.

[Bill Hocking, CEO at Galliford Try]

What we see, so for us, that is a slightly different mindset, I suppose, from a contractor's mindset, if we can put it like that. We have a different set of people that come from manufacturing backgrounds and business development backgrounds to make sure that we are not putting a contractor's mindset over a manufacturing business, if I can put it like that. So the risk there is about utilization, really, of these bits of kit. I think we are pretty well sized at the moment.

[Bill Hocking, CEO at Galliford Try]

In saying that, we are just about to double the size of Nene Valley's premises. We are just about to double the size of Lintott's premises in Coventry. We have opened two new fabrication facilities, and we are probably eyeing another one down the M4 corridor sometime soon. We are making sure that where we see demand, and it is long-term demand, we can cater for it.

[Bill Hocking, CEO at Galliford Try]

Remember, when we look at our specialist businesses, we buy bits of kit from those specialist businesses, so we can provide them with a foundation that is really solid, and then we sell bits of kit to our competitors, and we sell bits of kit to our clients. So the risk profile is a bit different because it is manufacturing, not construction. But we come at it with the same sort of mindset, a conservative mindset, that we want those businesses to be running at a high degree of productivity all the time. We do not want a big factory that is half empty. We would rather have a smaller one that is always busy, if that answers the question.

[Kris Hampson, CFO at Galliford Try]

Well, I think if I take the—

[Bill Hocking, CEO at Galliford Try]

Then—

[Kris Hampson, CFO at Galliford Try]

—if I take the third question. I think the two questions are very much interlinked. The order books, as Bill says, are shorter in those businesses, but because they're adjacent, we can feed work to them. Perhaps if there was a fallow period, we will. We debate how much of that self-feeding work we should do. Actually, we want to self-feed some of it. We want to sell as we do to our competitors. We want to sell to third parties as well. So where the mix of that sits in the business. But if one of those dips, then maybe we can. So we can self-control how we manage that risk. I think overall, the thing that I really like about what we've done over the last few years is we've grown volumetrically. Our biggest projects are not particularly growing.

[Kris Hampson, CFO at Galliford Try]

Yes, there's some inflation through them, but we've grown volumetrically. So every job becomes a smaller percentage of the whole. That helps the de-risking that we've talked about. Therefore, we also feel we don't need to keep growing cash. So we have the tramlines, as you know. It used to be 8-12. We've been nudging them. We don't formally write these aren't targets, but we're nudging those down towards 7-11. We've been communicating that for the last 12 months. Even at the current cash number, at the year-end, we'll probably top pay on that. But that's why we're leaning a little bit more into M&A and into returns in this presentation today. That's the key point. We can deploy that cash, and we've got enough in the firepower.

[Kris Hampson, CFO at Galliford Try]

As I said, we will make cash return and shareholder returns decisions based on what's in our active pipeline and we expect to come through. So it may not always be obvious to you why we have or haven't made a return, I guess. But that'll be because we're very conscious about the cash that we see we need in the future to really access those incremental EPS opportunities that we see in front of us.

[Bill Hocking, CEO at Galliford Try]

Stephen?

[Kris Hampson, CFO at Galliford Try]

Stephen, the microphone. Stephen?

[Stephen Rawlinson, Analyst at Applied Value]

Hi. Stephen Rawlinson from Applied Value. I am just intrigued with what is going on in the investment business. Can I just ask four questions about that? Firstly, the loss in investments, GBP 1.8 million higher this year than last, GBP 2.2 million. Can you just help us out a little bit as to why that increased so much? Secondly, you have got preferred bidder on five PRS projects. Can you just talk about the capital that might be needed over the next few years from you as your part of the ventures there, and how we should be thinking about that? Thirdly, will you actually build them yourselves? Is that the intention within the preferred bidder? Because obviously this is an area where historically margins have been well above the average for building.

[Stephen Rawlinson, Analyst at Applied Value]

If you are going to get successful on this, then obviously that will help with the margin accretion you have described. The fourth one is probably a little bit blue sky, but are you expecting to add these to the portfolio or are you expecting to sell them? What is the thought process at the moment from the board's point of view?

[Bill Hocking, CEO at Galliford Try]

Okay. Do you want to take the first two and I will take the second two then?

[Kris Hampson, CFO at Galliford Try]

Yes. I think the simple way to say it is actually the market is pretty much slowed down. These things are quite difficult to get away viably at the moment with bond rates being as high as they are. In reality, what you have got is a little less revenue going through because the projects are going through the building planning or fire safety. So there is a little bit of stuff slowing down there and the reality is we are trying to keep that team together because we do see the money coming through for affordable housing. So we are keeping the team together. The reality is, and we are doing some development work on the five projects, so you are still incurring some money. We do not put that on the balance sheet.

[Kris Hampson, CFO at Galliford Try]

We will take it as we have it because if they do not come up, they do not come. It's a prudent view of the number, that's how we would say it. But should those five deals come through, there will be plenty of opportunity in the future. The cash, the capital we put into in our model is actually very limited. It's sweat capital mostly. We might take an option on the land that might be GBP 50,000 or GBP 100,000. It's not big bucks. Maybe GBP 400,000 of sweat capital that you will see in that GBP 2.2 million effectively. That's what we do. They are not significant. Then Bill will talk about for the ongoing thing. But actually, the build is typically funded by the party that will eventually run the building. The capital need is actually very low.

[Bill Hocking, CEO at Galliford Try]

What we do actually, Steve, is we will do the plan permissions and all the stuff, get all the statutory permissions we need. When that's done, we will sell it forward to a number of people who buy these sorts of assets, and then we will build it for them. We get profit on the upfront sale of the development, and then we go and build it, and as you rightly say, make better profits. When you put those two together, we make broadly double our standard construction margins. We built the photo you saw there, The Rise, we built that. That's exactly the model we used there. We bought an option on the land. We designed it. We sold it forward. We built it, and we handed it over on time, and it's been a really successful project. That's the model.

[Bill Hocking, CEO at Galliford Try]

The PRS team are basically the old PFI, PPP team, because the same front-end skills are needed to do these things, and it's the same front-end skills needed for affordable. That's a really, really good team to have in place, and they do a great job. Just going back to the investments, it is quite lumpy. If you sell or do a deal the day before, the day after it's going to. It's in the roundings, yeah.

[Stephen Rawlinson, Analyst at Applied Value]

Thank you.

[Bill Hocking, CEO at Galliford Try]

Good. Any more questions? Anything on [inaudible]?

[Kris Hampson, CFO at Galliford Try]

There was nothing a minute ago. Let me just check one more time. No. No questions on [inaudible].

[Bill Hocking, CEO at Galliford Try]

Excellent. Well, thank you all very much for coming. Nice to see you all in the flesh for the first time in a long time. We will sure speak outside. Thank you very much.

Participants

Executives

• Bill Hocking, CEO
• Kris Hampson, CFO

Analysts

• Greg Poulton, Analyst at Singer Capital Markets
• Andrew Nussey, Analyst at Peel Hunt
• Joe Brent, Analyst at Panmure Liberum
• Max Hayes, Analyst at Cavendish
• Alastair Stewart, Analyst at Progressive Equity Research
• Colin Smith, Analyst at Capital Access Group
• Stephen Rawlinson, Analyst at Applied Value