Hello, everybody, and welcome to Galliford Try's half year results for the period ending December '24. I'm Bill Hocking, Chief Exec, and I'm here with Kris Hampson, CFO. The photo you see here is a large below ground buffer tank, which is an example of the type of infrastructure that the water companies are building to control storm flows as part of their regulatory framework. Here's the agenda for today.
As usual, we've retained the format and substance of many of the slides from previous years, which hopefully aids understanding and demonstrates consistency of message. This is a photo of an educational facility for the energy sector, which we completed recently in Blyth under the Procure Partnerships Framework.
We've had a really good half year with revenue up 13% at just over GBP 900 million. Divisional operating margin is up at 2.7% from 2.5% last time with adjusted PBT up 22% at GBP 20.5 million, which is a great performance and produces earnings per share of 15.7p and a half year dividend of 5.5p. Cash performance was excellent with average month-end cash of GBP 176 million, up 32%. Our strong order book stands at GBP 3.9 billion, up GBP 200 million on the same period last year with 92% repeat clients and 98% work secured for this year.
These figures are a reflection of the expertise and talent of our 4,300 excellent people in Galliford Try, our culture, robust risk management and performance on the ground. The continuing momentum that we see in our chosen sectors gives us confidence in the outlook for the business and allows us to guide the market to revenue and PBT for the full year above the top end of current market expectations.
Before I hand over to Kris, I'd like to briefly remind you of our strategy through to 2030. We're targeting revenues in excess of GBP 2.2 billion and an operating margin of 4% in 2030. Our original target of 3% operating margin in '26 remains a way point on route to that 4% in 2030. We achieved growing shareholder returns in line with our 2030 targets in 4 main ways.
We continue to grow revenue and margin in our big 3 operating businesses of Building, Highways and Environment and the outlook absolutely supports this, all noncyclical long-term markets with great opportunities for disciplined growth. We grow our specialist higher margin businesses in adjacent markets and are making good progress here. Our new water technologies facility in Paisley is up and running supporting Lintott and Ham Baker's operations in Scotland.
We re-entered the affordable homes market and had further success in securing places on the main frameworks in the sector. Please remember that our definition of this market is mid-rise blocks of flats for registered providers and local councils. Finally, we leverage our geographical framework and client footprint across the whole of the U.K. selling more Galliford Try services to existing customers and sectors that value our balance sheet reputation and ability.
And all of this comes together to underpin our trajectory of growing shareholder returns over the long term. There continues to be robust long-term demand across all of our sectors driven by aging social and economic infrastructure, which needs to be repaired, improved and replaced to cater for a growing population, the effects of climate change and to support and enhance the U.K.'s productivity.
We have leading positions in the sectors and frameworks that are responding to these challenges and see a solid pipeline of opportunity well into the future with Galliford Try part of the solution. All of our sectors are aligned to the government's growth priorities. Here are the drivers of margin growth. The left hand boxes are the mainstay of margin growth, sensible procurement methods from mature clients and robust risk management and selectivity from Galliford Try.
Then there are a host of operational and process efficiencies, which work together to further enhance our margins; modern methods of construction, off-site manufacture and digital and tools that allow us to construct a project in virtual reality and identify measures, which then improve the quality, safety and efficiency of the physical build.
On the right hand side, our work mix will change over time with a higher proportion of higher margin work and the continued growth of the business will make the overhead more efficient. Our excellent people and high quality supply chain relationships underpin all of this as I'll talk about later.
I'll now hand over to Kris to take you through the financials.
Thanks, Bill, and good morning, everyone. Before I take you through the financials, I thought I'd say a few words about my first 6 months. I've toured the group meeting our operating businesses and support functions and completed 9 site visits. This is an image of the Melton Mowbray Distributor Road project that I visited in November. It is a large highways project to divert traffic away from the busy center of Melton Mowbray and on completion will support economic growth for the town.
In the image, bridge beams are being installed using innovative technology that you can see halfway at the lift straps called the Vita Load Navigator. This uses fans that sense rotation of the beam and self-activate to correct any rotation during the lift. This enables precision lifting, improving safety and on-time delivery.
My tour of the group has confirmed my very early impressions on the qualities of the group and why I have great confidence in both the outlook and the returns it will generate. The strong macro factors in our target markets and the reputation Galliford Try has for technical expertise and reliability are clear. Moreover, the tour has reiterated the very robust and selective approach we take to risk management in the business.
All I have seen so far underpins why the group is going to be successful in the delivery of its 2030 sustainable growth targets. So let me tell you about the financials for the first half of 2025. As you can see on the slide, we have renamed our adjusted performance measures from pre-exceptional to adjusted as this aligns with best practice. We have also changed the definition of adjusted PBT and adjusted EPS to exclude amortization of acquired intangibles.
This brings into line our adjusted profit measures and aligns with practice in our sector. A comparison of the changes can be seen in Appendix 9 and full details are in Note 17 of the half year statement. All other measures and definitions remain unchanged. On to the numbers. We are pleased to report another strong set of results for the first half.
As demonstrated on Bill's slides earlier, this is our ninth consecutive half year of growth and this serves to add further weight to the predictability of our results. Sticking [ faithly ] to our strategy works. Revenue at circa GBP 923 million is up 12.7% on the prior year driven primarily by strong deliveries in the AMP7 water programs in our Environment business. Adjusted operating profit of GBP 17.7 million is up 25.5% and divisional adjusted operating margins are up 24 basis points to 2.7% reflecting strong revenue growth, improved contract delivery and operational leverage.
We have now grown margins consecutively from a base of 2% in 2021. We are making good progress towards our original margin target of 3% in 2026 and our updated sustainable growth target of 4% for 2030. Adjusted profit before tax is also up strongly at GBP 20.5 million, up 22% as a result of operating profits and interest income on our cash balances. The adjusted effective tax rate for the half is 22.9% and for the full year is expected to be circa 24%, marginally lower than the standard rate reflecting prior year deferred tax adjustments.
Adjusted earnings per share for the half are therefore 15.7p per share, up circa 11% versus the prior year. On the basis of this performance and our increased confidence in the full year, we are announcing an interim dividend of 5.5p per share, up circa 38% and we are also uplifting our full year guidance with revenue and adjusted profit before tax expected to be above the top end of the range of current market expectations.
The improved guidance is reflective of the strong trading performance and momentum. Moving on to segmental performance. Both Building and Infrastructure have contributed to revenue growth demonstrating the continued success of our framework model and quality-based negotiated contracting. Building revenue is up 4.8% driven by strong project delivery across all of our core markets.
Infrastructure also saw strong progress both in AMP7 deliveries and across our Highways business with revenue up circa 25% to GBP 452 million. We are working with our water clients on the transition to AMP8 starting in April. We expect AMP8 activity to ramp up in the 2026 financial year and beyond and expect a relatively flat weighting in revenue and profit for the group between the halves for FY 2025.
The Building division's adjusted operating profit is up circa 18% to GBP 12.5 million with a 29 basis point improvement in margins versus the prior year. Similarly, the Infrastructure division has adjusted operating profit up GBP 3 million or circa 32% to GBP 12.3 million with a 15 basis point improvement in margins versus the prior year. The lower profits and investments reflect the lumpy nature of the business. H1 2024 included the financial close of the Guildford Crescent PRS scheme. Central overheads are up slightly at GBP 7 million reflecting higher share-based payment and incentive charges on higher profits. On the adjusted operating profit bridge, you can see the GBP 2.7 million volume improvement at prior year margins and the GBP 2.2 million impact of the higher operating margins, which are a direct result of the consistent focus on our drivers of margin growth.
The consistency of revenue growth conversion to profit and margin remains positive. Our balance sheet remains robust with GBP 210 million of cash at the half year. And more importantly, average month-end cash rose to circa GBP 176 million, up from GBP 155 million at year-end 2024. Again this primarily reflects the quality of the projects we select and how tightly we manage them.
For the period, we continue to have no debt or pension liabilities and our PPP assets remain cash generative and are highly marketable. We are pleased to announce the establishment of a GBP 25 million Revolving Credit Facility. The facility supported by a pool of 3 major banks is unsecured and on attractive commercial terms reflecting the group's strong balance sheet, positive momentum and long-term outlook.
It is a standard financing tool for PLCs of our size and sector and will provide further agility, optionality around M&A financing and resilience throughout the group's 2030 sustainable growth strategy period. Moving on to the cash bridge. We have turned GBP 20 million of statutory PBT into GBP 19.7 million of cash from operating activities representing 99% cash conversion, another consistent performance.
Typically in the first half of the year, we see a seasonal reduction in our monthly cycle of working capital balances and this year follows the trend with an outflow of circa GBP 33 million. This includes maintaining payments to our suppliers on average in 26 days with 97% of invoices settled within 60 days. As stated in October, we received a circa GBP 10 million corporation tax refund and announced returning this as a share buyback. We have purchased GBP 3.8 million of the shares in the half resulting in a net circa GBP 6.6 million inflow on the chart.
The corporation tax refund provided a tailwind to our first half average balance, which will unwind as the buyback completes before the year-end. We have also paid out nearly GBP 12 million for the 2024 final dividend. Finally, we have received a net GBP 1.8 million for interest and tax and a small GBP 0.2 million of other outflows.
Overall, another strong cash performance. Moving on to capital allocation. While we have reformatted the slide to demonstrate the model more clearly, we have not changed our capital allocation policy. As we've stated before, we will prioritize in using our cash from profits for reinvesting in the business organically and acquisitively. The 4 strategic bolt-on acquisitions over the last 4 years are growing and are margin accretive to our bottom line. We will continue to assess any potential future acquisition opportunities in line with our strategic priorities and financial hurdles.
Secondly, we will continue to support our sustainable ordinary dividend policy of having EPS cover dividend 1.8x, which is leading for the industry. Finally, where we have excess cash, we will return it to shareholders through special dividends and/or share buybacks as we have done 3 times over the last 3 years. On the right hand side, you can see the total of our shareholder distributions since 2001 totaling circa GBP 84 million. We have allocated more than GBP 46 million as ordinary dividends, GBP 25 million via the share buybacks and GBP 12.5 million through the special dividend in October 2023. We continue to believe that the clear explanation and implementation of our capital allocation model is attractive to investors.
The strong balance sheet and average cash are also really important to customers who value our ability to complete schemes, to suppliers who want to know that they will be paid for their work and to our people who value the security of working for a strong group. In conclusion, we are pleased with the continued predictable track record of outputs across all of our key financial metrics demonstrating that our strategy is working.
Total shareholder returns of close to 250% over the last 4.5 years are further evidence. Looking ahead, our aspirations for growth are aligned with the strong macro factors in the industry as described by Bill earlier. This gives us confidence that we can continue to drive further strong TSR growth going forward. Indicatively, by delivering our 2030 targets, this would imply a dividend for 2030 broadly double our 2024 full year dividend. There is plenty of opportunity in front of us.
Bill will now take you through the operating model and how that is demonstrated in the recent successes of the business. Thank you.
Thanks, Kris. Here's a photo of our Guildford Crescent PRS development on the ground and ready to be transported in the right sequence to site. And here we see the project as it was a few weeks ago and actually it's 3 storeys higher as we speak. The photos make it look easy and it's the result of an enormous amount of detailed design, planning, expediting and logistics by us and our supply chain. You'll be familiar with this slide.
This is the philosophy of how we run our business. We start with the core of the company, 4,300 excellent people. We have a culture of discipline and risk awareness supported by good processes and aligned incentive mechanisms. Being very selective about the type of work we take on leads to a high quality order book, which we can deliver reliably and which underpins our margin targets.
Most of our order book is in long-term frameworks with repeat clients and so we get good visibility of the forward order book and can align our people and our supply chain accordingly. This leads to a consistent and predictable operating performance, which further strengthens our already strong balance sheet. We have disciplined risk management processes at the preconstruction stage and once in contract, we have robust commercial and project controls and a regular system of cross-business peer reviews and project health checks. Here's a [ prius wheel ] of our sustainable growth strategy. There are 4 cornerstones of our strategy, people and the drive to be a values-driven progressive business where the safety of everyone on our sites comes first. We focus on retaining and developing our people and attracting new good people to Galliford Try.
We operate in a socially and environmentally responsible manner and deliver social value around our projects through employing local people and by procuring goods and services through the local companies as far as possible. We deliver high quality products for our clients using modern methods of construction, off-site manufacture and digital tools to improve quality and efficiency. A high proportion of work is delivered through our supply chain and so retaining a high quality supply chain is important as is paying them promptly.
Our supply chain has proved resilient and we continue to perform enhanced financial due diligence on the larger subcontracts or program critical activities, which has proved effective to date. And all of this comes together to maintain our strong balance sheet and to provide good returns to our shareholders through our core and adjacent markets.
This is an important message. I've said repeatedly that investors should be encouraged by the fundamental improvement in procurement methods by public, regulated and private clients. The construction playbook has driven a more mature sustainable contracting environment with an emphasis on quality over price as you see on the right hand side of the slide and an equitable allocation of risk. As I said earlier, the combination of this more mature attitude to client procurement allied to strong risk management helps to drive margins in the right direction. You can see that 99% of our order book comes through some form of negotiated route, be it 2-stage target cost reimbursable or directly negotiated work. We have an excellent half year order book at GBP 3.9 billion, up GBP 200 million on the same period last year. In Building; you can see that custodial, defense and education are very robust and Infrastructure reflects the excellent framework success in AMP8.
The split between the public and regulated sectors and the private sector remains steady at 90-10. This order book has all the attributes to underpin our goals in terms of its quantum, its longevity and sensible risk profile through frameworks with a high proportion of repeat clients at 92%. At the end of December, we had 98% of this year's work secured and 81% already in hand for full year '26, which is an excellent position and reinforces our ability to remain very selective.
Here's a little more granularity on some of our recent wins, which you can read at your leisure. In addition, we have handed over 2,500 school places so far this financial year, have 8,800 places under construction as we speak and a further 6,400 secured and waiting to start on site. These are some of the frameworks we have at the moment and you can see the excellent forward visibility of work that we get through our framework positions across all of our sectors.
You can see a solid pipeline of work supporting growth through our 2030 strategy period. We also of course expect a high renewal success ratio as frameworks end and are reprocured, which is represented in the lighter green color. To demonstrate the depth of this framework portfolio, you can see that Environment has just 3 lines to represent the frameworks in England and Scotland. This is the position in more detail.
We have 55 separate AMP7 and AMP8 frameworks with all the major water companies in the U.K., a great foundation in a critical growing sector; 21 frameworks for the design, construction and commissioning of water and wastewater treatment works; 14 frameworks now for capital maintenance, predominantly mechanical and electrical work; and 20 frameworks for the supply and maintenance of equipment that we manufacture; motor control centers, chemical dosing plants, in-net screens and distributor arms.
As well as this, we have 5 capital maintenance frameworks with the environment agency closely aligned to other work in the water sector. As you can see, we've been working with all of these companies for an average of 17 years. In summary then, we're in very good shape with a strong balance sheet, high quality order book, no debt and no pension fund liabilities.
We've had a good first half to the year with a growing dividend and a good operational performance, which allows us to upgrade our guidance for the full year and gives us confidence in the long-term outlook. We have momentum in the business and our robust attitude to risk remains front and center as we grow resilient existing and adjacent markets in a disciplined manner towards our 2030 targets.
That concludes the presentation and I'll hand back to the operator to take any questions. Thank you.
[Operator Instructions] First question comes from the line of Andrew Nussey from Peel Hunt.
A couple of questions from me. First of all, when we walk through the water sector, obviously strong performance towards the end of AMP7. But as we progress into AMP8, do you expect any sort of degree of hiatus? And sort of allied to that, you obviously referenced in the deck 19 frameworks for AMP7 going to sort of 36 for AMP8. What might that mean in terms of volume of activity? And the second question, Trade Press obviously linking you to some custodial work that ISG had been involved in. I don't expect you to comment on press comment, but just more broadly sort of the opportunities that you've sort of seen from the administration of ISG and equally any issues around supply chain.
Okay. So in water, what we've seen is typically at this stage in the cycle, we see AMP7 tails off and AMP8 starts to tail up and of course this only starts at the end of this month is the cutover date. So what we've seen so far is a very strong AMP7 so there's been no tail off as yet and we see the water companies working on their plans for AMP8. So so far what I'd say is that we see a smoother transition than we've had in the past. That's what I'll say. With regard to the number of frameworks, obviously the AMP7 frameworks will tail off over time. But bear in mind that we could be awarded an AMP7 project now, which will take 18 months to complete.
So there will be AMP7 work going on for another considerable period of time whilst AMP8 ramps up. So we expect the volumes to steadily increase over time and hopefully there won't be any hiatus on the back of that. With regard to ISG, yes, we have seen some upside. I don't want to sound too mercenary about this, but we have seen some upside from ISG's demise and we have picked up some custodial work as a result of that, which are actually also in education not just custodial. With regards to supply chain, we've not seen any significant supply chain issue so far. We've seen 1 or 2 minor blips, but nothing material. So so far, so good on that front.
There are no further questions from phone lines. So handing over to [ Tilly ] to take webcast questions.
So we've got a few questions from Alastair Stewart from Progressive Equity Research. He's asking could you discuss any opportunities in defense in the current environment and whether government is stepping up its discussions with you or the industry? Any indication that other government department construction budgets may suffer?
Okay. Well, on the Defence Estate Optimisation program. We just picked up the noise a few weeks back on RFDB, a GBP 63 million scheme. So we do see momentum in defense. I wouldn't say that's significantly more than we've seen in the past because of course all of these projects have a gestation period. So they're all in the pipeline, they're all coming through. But we see a continued momentum in defense. We don't see any diminishment at all in any other government departments. Education, custodial health carries on as usual.
A follow-up as well. Does mid-rise bring you into the remit of the Building Safety Regulator's gateway authorization?
Yes, in the fullness of time, but we don't have any projects in that at the moment. So we're not affected by the current hiatus in the Building Safety Regulator.
Great. That's all the questions we've got from the webcast. So I'll hand back over to you, Bill, for any closing remarks.
Okay. Well, delighted there's so few questions. That must mean the presentation was nice and clear. So thank you very much, everyone, for joining and look forward to seeing you again at the full year. Thank you. Bye-bye.
