Galliford Try Construction set to gain £150m cash reserve

Home » Galliford Try Construction set to gain £150m cash reserve
12th September 2019

Galliford Try’s Construction business would be fully recapitalised if the break-up of the group goes ahead.

The standalone contractor would enjoy an average daily net cash balance of around £150m if Bovis Homes’ offer to buy Linden Homes and Partnership housing is approved.

Bill Hocking, chief executive of construction and investments, said the remaining business would employ around 3,400 staff generating revenue of around £1.4bn.

This would make it a top 12 contractor just behind Wates, which topped £1.5bn revenue last year.

The £300m cash injection following from the deal would translate to a daily cash balance of around £150m, said Hocking.

“If the deal does go-ahead we will be a well-capitalised construction business.”

“We have restructured to grow in a sensible and disciplined way with controlled risk.”

Around 300 staff were made redundant in the recent restructuring, 50 less than first expected. Galliford Try has exited high-risk major infrastructure projects, like the Queensferry Crossing and Aberdeen Western Peripheral Route.

The slimmed-down construction operation will now focus on building projects and water and highways work on the infrastructure side where it maintains a strong position.

Hocking said: “We have also changed our emphasis around rail and aviation. The aim is to target building works around rail corridors and airports.

“The rail and aviation business units have been closed, with expertise in these sectors now feeding into the regional delivery teams.”

He said: “We have a good construction business and feel we can build on underlying operating margins of 1.1%.

“Prospects for construction are now very good whether the Bovis deal goes ahead or not.”

The business has already secured 89% of planned revenue for the 2020 financial year.

Construction’s order book stands at £2.9bn, slightly down on £3.3bn previously.  Of this, 79% is in the public sector (2018: 75%), 4% is in regulated industries (2018: 9%) and 17% for the private sector (2018: 16%).

Hocking said that the spread of work for both public and private clients would provide a strong foundation for the future as an independent construction group.

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