Galliford Try Holdings plc (GFRD) Earnings Call Transcript & Summary

Good morning, and welcome to the Galliford Try Trading Update. My name is Charlie, and I'll be coordinating the call today. [Operator Instructions] I'll now hand over to your host, Bill Hocking, Chief Executive, to begin. Bill, please go ahead.

Thanks, Charlie. Good morning, everyone, and thank you for joining us. Bill Hocking here, Chief Exec, and I'm here with Andy Duxbury, Finance Director. I'm sure you've all seen the trading update [indiscernible] going to take you to a few of the highlights. And in a nutshell, the first half has seen us trading in line with our expectations. We managed -- speaking of the drivers, our last -- the second half of last [indiscernible] the year well. There's no material impact on our trading, and that gives us confidence for the full year through the end of June. The balance sheet demand is really strong. Cash has held well in the period. It was GBP 154 million under the average nontender cash, which we're very happy with. And the order book is still looking good at GBP 2.5 billion. It's a good quality order book. We like everything that's in there. It's got a good risk profile, and it supports our margin aspirations. More importantly, we continue to see a good pipeline of opportunities coming through these with no dimension at all, despite what you see in the press so far. And it's holding up well. The share buyback is going along, and Andy can actually talk a bit about the detail, if he wants to later. But overall, the performance in the first half has been good and demonstrates good progress to overall targets for the year. So that's -- those are the highlights, everyone, and I think it's probably best if we just go straight to questions.

[Operator Instructions] Our first question comes from Andrew Nussey of Peel Hunt.

Yes. A couple of questions from me relating to that pipeline, which you obviously described as robust. I wonder if there are any particular areas of relative strength over the next 6 to 12 to 18 months that you could draw out. And secondly, just with that bid pipeline and what you're seeing, your ability to maintain the rigor around the whole sort of risk assessment process and what you look to pursue.

Yes, I can answer that. The pipeline across the business is holding up pretty well actually, Andrew. In fact, we've said in the segments, we have good success with the custodial sector recently with Rye Hill. And the education sector is holding up well. We've got quite a few awards of [indiscernible]. So those 2, after falling short [indiscernible] immediately. But I'd say across the business, I mean, all of our pipeline, they're holding up pretty well. In Roads, there's been -- we've got the two A47 projects, 2 of which have got the DCO, the consent from the government's proceeds that have been held by a legal challenge on the carbon calculations or something. That's fairly common. I think most of the Tier 1s or most of the roads and the international highways are [indiscernible] at the moment. They've really been not backed ones, by the way, and there have been appeal. And I think that -- but I'd say by the half year -- by the half full year that [indiscernible] can be in June. We should have an [ action ], and those will be positive by the full year, a good outcome for us. So in those, you can actually [indiscernible] based on that challenge. But apart from that, the pipeline is pretty robust. And as I said before, as you know, the management team in the type of work coming through, that fits the bill for us. And I think on a risk basis, there's been no change at all in our own [indiscernible] he is going to talk a little bit of view and don't [indiscernible].

[Operator Instructions] Our next question comes from John Fraser-Andrews with HSBC.

A couple for me, please. The first one is could you elaborate on the commercial sector, the private end of your customer base? Bill, what you're seeing, how the pipeline is looking on that front? It's clear that the public, the regulated sectors are strong. And then the second question is on margin. Are you seeing competitors remaining disciplined? And given your own order book and framework [indiscernible] matching, there's no change in strategy here. And hopefully, margins are moving ahead. Is it the key for Galliford that an increasing proportion of your work is on an upwards margin trajectory?

Yes. The commercial sector actually came to look through [indiscernible] and the issue. So we've seen -- one of our clients in London, for example, is going ahead -- full steam ahead because they see that by the time that building is built in 2 years, to be considered a gestation period, that could be through all of this, and the demand will come back. So we tend to see that the commercial [indiscernible] at times, tend to look through these sorts of issues and look through to better times beyond. So we've seen -- I think the commercial side, there's now -- all of them are probably are going ahead, regardless, I suppose. And then on margin, actually, no sign of competitors doing anything daft presently. But I think, more importantly, John, the clients that we work for don't want to contract those who are doing daft things. So I think that's the important thing is that our clients are far more intelligent about how they procure, and they don't want to procure, to tumble down the line. And that means that our strategy in terms of our risk profile and the type of work that we go for and our margin expectations is absolutely in line of our [indiscernible] aspiration.

Understood the pressure. Can I have another one and ask you to just update on where you're seeing the additional revenue targets that you've got in both the sort of more advanced assessment of facilities in water that you've made with the recent acquisitions? Any moves you're making in sort of facilities management and also in PRS, whether that -- those projects are still flowing, regardless of what's happened in the fourth quarter and the disruptions in the cost of money?

Yes. What we've certainly done in water, we're doing well. The sort of going MCS and Ham Baker into the business of the company is doing well, and those people are being integrated. We've got -- we've won our first capital [indiscernible], which we announced a while back in Welsh Water [indiscernible] that's in Wales on the capital maintenance side. So we're starting to see -- well, maybe not a momentum in those first 2, but we add those to the ones we've already got, and we look forward to [indiscernible]. And we can see that with the acquisitions and I suppose the broad coverage we have across the water industry through the MMC acquisition, we see momentum strong [indiscernible]. And so the [indiscernible] clients are already consulting with the market. And we've got a number of meetings as we speak with our water clients looking to help them in their [indiscernible] planning. So that's all positive. On the PRS -- so on the water side, we're happy with the way we're gaining there. It's going well. Because of the [ end ] cycle, it does -- it will accelerate in [indiscernible]. It will take a little bit of time on the capital maintenance side. On the PRS side, we did see a bit of a pause. That's the one commercial sector that we did see last year after the [indiscernible]. But again, we see those clients now looking through that -- in one of our commercial target now is pressing ahead with their plans for PRS. So there was a bit of a pause there and efforts around the cost of money and things like that. But certainly, the one client that we look at, at the moment is seeing through and they're carrying on.

And I imagine on those, Bill, any adjustment in market pricing is the landowner's problem as opposed you won't be compromising on marking on those PRS schemes of what you built for them in the forward funding.