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Galliford's profits rise as social housing booms

FINANCE - Contractor looks at speculative housing in deals with housing associations

GALLIFORD Try's construction operation is branching out into speculative housing in a joint venture with housing associations.

With cash balances exceeding £40 million at the reviving business, managing director Andy Sturgess has set aside money in this year's budget as seed capital for the first deals.

He said: 'If it's straightforward and simplistic, we'll do it and take the cash.' Previously, Galliford's housing business was brought in by the construction arm and used for development cash and to build out any new housing that arose out of work with housing associations.

Social housing work is booming for Galliford with £56 million-worth of work done in the year to June 2005 and £140 m illion-worth of orders booked in.

Turnover for social housing is expected to r ise to £70 m illion by June 2007.

Workload from the telecoms sector rose to about £30 million last year and orders from commercial developers for projects in central London are also rising.

Mr Sturgess added: 'In the West End of London, commercial work is coming back but not in the City just yet.' Galliford has been insulated from a drop in spending between the AMP3 and AMP4 programmes being let by water utilities.

Mr Sturgess said: 'Some of our AMP3 work does not finish until the end of this year and we've also got a Scottish Water framework that was let at a different time to AMP4.' Despite pocketing £1.6 million after selling its stake in the Birmingham schools Private Finance Initiative concession, Galliford still lost £1.2 million on PFI work after chasing more deals.

Galliford closed four PFI-style deals that are expected to generate £120 million of construction work in the financial year.