Galliford profits lifted by Miller Construction

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BUILDING group Galliford Try has raised its sales targets on the back of improving market conditions and last year’s acquisition of the construction arm of Edinburgh-based Miller.

The company – which today posted a record first-half profit and order book – is aiming to build revenues at its ­construction arm to £1.5 billion by 2018, up from its previous goal of £1.25bn.

Galliford Try's construction boss Ken Gillespie. Picture: Ian Rutherford

Galliford Try's construction boss Ken Gillespie. Picture: Ian Rutherford

Revenues at the division, headed by former Morrison Construction boss Ken Gillespie, surged 52 per cent to £604.8 million in the six months to the end of December, boosted by a £169m contribution from the Miller business that it acquired for £16.6m in July.

Gillespie told The Scotsman: “We’ve made an encouraging start to the financial year.

“From a construction perspective, the order book has been transformed from the £1.25bn we’d traditionally run at to a record book of £3.25bn – that’s from a combination of the Miller acquisition and the improving market conditions.”

He added: “The pace with which the market has returned has been faster than I expected, but that’s perhaps a reflection of how bad things got in the depths of the recession.”

Gillespie said the recovery was being felt across both the public and private sectors, and praised the Scottish Government’s commitment to infrastructure spending.

Galliford’s Morrison division, along with fellow construction groups Balfour Beatty and Carillion, is involved in the £550m Aberdeen bypass, which is set for completion in winter 2017. It is also working on the Queensferry Crossing over the Firth of Forth and the redevelopment of the Royal Edinburgh Hospital.

The group racked up £3.4m of exceptional costs relating to the Miller deal, which Gillespie said had triggered “less than 100” redundancies. Integrating the business also involved a sizeable amount of IT work, he added.

Galliford expects to squeeze out cost savings of £8m a year following the takeover, higher than its initial forecasts.

Overall pre-tax profits for the enlarged group – which has 1,500 staff in Scotland out of a total workforce of about 5,200 – rose 12 per cent to £42.5m in the first half, on revenues 35 per cent higher at almost £1.1bn.

Executive chairman Greg Fitz­gerald, who is due to retire by the end of this year after more than three decades in the industry, said the search for the firm’s new chief executive was “making good progress” as he unveiled the record results.

Gillespie, who joined Galliford in 2006 after its purchase of Morrison Construction, is seen as a candidate for the top job.

Galliford hiked its interim dividend – to be paid on 8 April – by 47 per cent to 22p a share and said it would be enhancing its “progressive” payout policy.

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