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Ken Gillespie to step down as Galliford Try results reveal record half-year profit

Galliford Try’s chief operating officer Ken Gillespie has announced his retirement as the firm unveiled a record set of half-year financial figures this morning.

Mr Gillespie will retire from his role next February after 20 years at the company. He will step down from the board in July this year.

The announcement was made as Galliford Try revealed a 24 per cent profit before tax hike for the six months to 31 December 2015, posting a record £52.9m.

Revenue at the firm rose by 12 per cent compared with the same period of 2014 to hit £1.24bn for the half-year.

The group’s construction arm posted a 22 per cent rise in revenue, up to £738.6m, while operating margin rose to 1.2 per cent, up from 1 per cent a year earlier. The firm said this was in line with its expectations based on “progress concluding legacy contracts” and improved margins on new work.

The construction division is now on course to hit its revenue target of £1.5bn ahead of it 2018 target date, while the firm also expects margins in the division to rise to 2 per cent within the next two years. The construction order book now stands at £3.7bn, with 99 per cent of projected revenue now secured for the current financial year.

Mr Gillespie told Construction News that the firm was at the end of “the bridge between recession and recovery” and would be tying up many of its legacy contracts by the end of the year.

“Most of our legacy projects are now complete,” he said.

“We are wrapping up final accounts and supply chain accounts and we expect them to be fully complete within the next six to 12 months.”

He also added that roads and rail would be a major focus for the firm in the future.

“While the company had a huge tradition in this area, we haven’t necessarily exploited the volumes that the company is capable of.”

Within construction, margins were higher in the firm’s infrastructure business, which posted a profit of £4.8m on revenue of £220.8m, representing a margin of 2.2 per cent. However, the group’s building arm saw margins of only 0.7 per cent, down from 0.8 per cent a year earlier, while revenues rose by 25.3 per cent to hit £517.8m.

In contrast, the firm’s housebuilding arm Linden Homes saw its operating margin rise to 17 per cent for the half-year, up from 15.1 per cent a year earlier, while revenue grew by 5 per cent to hit £362.7m, up from £346.1m a year earlier. The group now has plans to expand its Linden Homes business into Yorkshire in 2016.

Linden Homes is targeting an operating margin of 18 per cent by 2018.

Following Mr Gillespie’s retirement, the construction business will continue to be led by Bill Hocking, who has been managing director of construction since joining from Skanska last September.

Mr Hocking, who replaced Mr Gillespie in the construction MD role when he joined, will become chief executive of construction and investments from 1 August 2016, while Mr Gillespie’s remaining responsibilities will be transferred over next year.

Commenting on the appointment of Mr Hocking, Mr Gillespie said: “Bill comes with a great pedigree and there was definitely a few eyebrows raised when we managed to persuade him to come and join us after so many years with Skanska.”

Mr Gillespie said that he would be eyeing up non-executive roles when he steps down next year.

On his time in the industry, he said that he had seen ”great progress” in the areas of health and safety and procurement, particularly in the collaborative framework models that had been developed over the past five years.

Nevertheless, he said the industry’s inability to move margins to the level that contractors’ work deserved was his “biggest disappointment”.

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