Morrison eyes further expansion on back of strong contract wins

Morrison Construction, the Scottish arm of listed builder Galliford Try, has grown its staff and turnover by 20 per cent since 2009 and is eyeing further expansion after winning prestigious contracts such as the new Forth crossing.

Speaking after Galliford unveiled a surge in profits from its housebuilding operation in southern England, managing director of construction, Ken Gillespie, said turnover at the Scottish division had reached some £200 million, with 750 employees.

“I see volumes and staff numbers increasing in Scotland on the back of our success of the last 12 months,” he added. “Against a very difficult economic backdrop and a very tough time for construction in Scotland, we are feeling pretty good.”

This year Edinburgh-based Morrison has won a £50m contract to build infrastructure around Total’s new gas processing plant on Shetland, a £58m deal to build schools in Orkney, and a £48.5m contract to upgrade flood defences in Elgin.

It is also the only Scottish member of the Forth Crossing Bridge Constructors (FCBC), a consortium which has been chosen as the preferred bidder to build a new Forth road bridge, due for completion by 2016. FCBC’s successful bid for the design and build contract was £790m. Gillespie said the bridge was “the biggest prize” for a civil engineering company in Scotland.

Total revenue at Galliford Try was up 5 per cent in the year to 30 June, hitting £1.28 billion. After exceptionals, profits were up 117 per cent at £41.7m, from £19.2m the year before.

The firm, which raised £119m from shareholders in 2009 to fund plans to double the size of its housebuilding operation in the three years to mid 2012, said it was on track to meet its target, with planning permission secured for 3,000 homes to be built in its current financial year.

The company’s strategy to buy land at knock-down prices following the financial crisis and concentrate its home building operations around London appears to be paying off, with a 27 per cent increase in completions to 2,170 in its last financial year.

At the same time its housebuilding margin hit 9.2 per cent in the six months to the end of June, compared to 5.6 per cent in 2010.

Galliford also reported a 25 per cent increase in sales currently reserved, contracted or completed, to £328m, following a “resilient summer market”.

Chief executive Greg Fitzgerald said: “We enter the final year of our transformational expansion plan for housebuilding in a strong position to deliver on the objectives we set for 2012 and to drive further growth thereafter.”

The firm recommended a final dividend of 11.5p, taking the total dividend to 16p a share, up from 12.5p last year.

The results kept brokers positive on the company. Howard Seymour at Numis wrote: “We argue that the shares look very cheap …, but would also highlight a very attractive yield from a growing and well covered dividend.”