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

I'm going to be greedy and ask 3 questions, if I may, rather than the sort of trend of 2. In terms of the phasing water activity across the transition from AMP7 to AMP8, is there any sort of extra detail that you can -- any detail you can provide in terms of how you think about that phasing is going to come through over that 5-year period? And again, remaining with water, it would appear that the -- one of the big issues over the next 5 years is about managing capacity within the segment. That seems to be -- it would appear that there's going to be more demand and then there is going to be ability to deliver. And what are your thoughts on that? And then the third question, in the private sector, you enjoyed some notable wins. And Bill, you mentioned about the pipeline being consistent within that segment. Could you provide us sort of -- a bit more sort of indication of what kind of projects are coming into that pipeline?

Yes, Adrian. Okay, so phasing of water. So the perennial issue with water is the sort of the downturn in growth between the AMPs. And we've been lobbying the water companies, obviously, in Ofwat forever to try to mitigate that. And to be fair, they have listened and it is improving with every AMP I would say. And obviously, I'd expect this particular AMP, AMP7 to AMP8, to probably be the best in history in terms of the backlog, the amount of work that needs doing. And I think the willingness of the water companies and the regulator to get ahead of the game. So the water companies are already procuring the AMP8 supply chain. In quite a few cases, they intend to roll over. So in some of the frameworks, we have -- will roll over into AMP8, which would be good and there will be some to bid, of course, as well. So my view is that there is likely to be a little bit of a blip, that's probably the lowest one in history if I was a betting man. With regard to capacity, you're quite right, there's a huge amount of work to do, I mean, for round figures, the amount of water -- amount of water work between AMP7 and AMP8 will pretty much double, so capacity will be an issue. And our view is very much be very selective. We're going for the frameworks and the clients that we work with best, of course, first. And once we have capacity, then we'll pull the handbrake on. We're not going to bite it more than we can chew, and I think that's really important for any company. And we're being very honest, by the way, with our clients that where their framework doesn't quite fit with where we are or what we want to do, we've told them exactly that and they appreciate, honestly. So I think the key there is don't bite it more than you can chew, Adrian, albeit we intend to grow significantly into AMP8 with that comment. With regard to the pipeline, the private sector pipeline, I'd say, is consistent, is the word I'd use, in the market that we operate in, which is offices, office refurbs, build-to-rent, et cetera, et cetera. And yes, I'd say it's pretty consistent. The public sector pipeline is the same. And as you said before, with election coming up sometime this year in November, I see some favors at the moment. We don't -- our work carries us through November and 18 months and beyond. So we don't have any issue about that pipeline or any issues about period-end and things like that. So as usual, you read a lot about all the doom and gloom. But what we see in the garden isn't the case. We see consistent pipeline coming through. And we still turn away a lot of work that doesn't quite fit the bill.

[Operator Instructions] Our next question comes from Alastair Stewart from Progressive Equity Research.

Bill, Andrew, a couple of questions. First of all, it looks like the build-to-rent strategy is ticking along quite nicely. Can you give a sort of rough idea aside the momentum there where you [indiscernible] Q3 related projects announced in H1, do you see that sort of level of 2 or 3 continuing half by half or could that accelerate? And also, are you looking at any related sectors like purpose for student accommodation and BTR, let's say, housing association rather than institutional association. So that's the first question. Second one is on industry capacity impact, and perhaps quite interesting just to note, in white collar professions, which would you say are hardest to attract and retain within architect, engineered quantity [indiscernible] and so on?

Okay. Alastair. On the PRS front for us, I mean, we do build to end streams for private clients, of course, repeat private clients and we're doing PRS schemes for Galliford Try to own that. On that one, gets questions on the call the previous is on the ground and underway. We're in the early planning process on a job in Nottingham. We are a bit more advanced in the planned price on a job in Melton Keynes, and we preferred bidder on another job in Melton Keynes and one in Lester. Yes. So those are the ones in the hotels. You remember that following the many budgets in whenever it was, this whole sector grown to a halt for this part of the year, I'm guessing. So there's been a bit of a hiatus there, but we see momentum starting to pick up again, which is good. And of course, the fire regulations and the whole issue around second staircases and things like that put a lot of these schemes back to redesign them for, particularly for second staircases and things like that. So we do see momentum there, and this is still a sector that we're very interested in and continue to work hard at and expect to contribute well to the bottom line as time goes by. Student accommodation doesn't enter our sphere, I'm afraid, no. There are quite a few experts in that sort of sphere and they can stick to that. And on affordable housing, as you know, we had -- the covenant that we had following the sale of the house build business to Vistry came off last year, and we're busy looking at that market, and we'll update you on that at the half year. So the affordable house market is a big and attractive market and we'd have to look at it. And by the way, just for absolute clarity, everyone, when we talk about affordable housing, we're talking about mid and low and mid-rise blocks are flat. We're not talking about the houses, per se. I think that's important to remember. With regard to people, white collar people are just as hard to come by as they always have been in this industry, Alastair. I don't see any particular change there. Two things that we do. We take on 150 young people every year, graduates, apprentices and trainees every year. And so we focus a lot on growing our own, so to speak. And Andrew and I always go along and talk to those guys when they join and girls and it's a really good day. I'd say the only pinch point that I see in white collar at the moment is in design engineers. And we see that in our supply chain with the big design assets, and we've got about 250 of our own designers in-house. So that is -- I think, that is the only constraint we see there. But the -- I think the important thing, Alastair, to trade within your means and not, as I said, bite more than you can chew. That's the cardinal sin.

Our next question comes from Joe Brent from Liberum.

It's not a question, but I'm not sure if we'll get another opportunity, but I just wanted to take this opportunity to publicly thank Andrew for his candor and accessibility over the years. And I'm sure that everyone joins me in wishing him every success for the future.

That's very kind, Joe. I appreciate that. I think I'll be doing the 6th of March, let's say, the half years, but I appreciate the comments, Joe. Thank you very much, indeed.

We currently have no further questions. So I'd like to hand back to Bill for closing remarks. Over to you.

Okay. Well, thanks, everyone, for joining. Just to reiterate, we're really pleased with our performance. We're in good shape. And as I said before, we're very confident we'll continue to the full year and well beyond. And on the back of that, we're going to update our targets, and we decided that 2030 is a sensible future date rather than just updating the talks to 2026. And you can expect that strategy to be the evolution of our current one based on firm foundations of risk management and selectivity, good people, and that the core of the business remains the core, the big generators and the smaller higher-margin businesses provide the growth in margin and revenue that would be. So that's where we're headed, and we'll tell you more about that at the half year results in the 6th of March, at which stage we'll give you a date for our Capital Markets Day later in the year. So thank you all very much for joining, and we see you in March. Take care. Bye-bye.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you.