HBG records profit rise of 73% to 42.0 million pound and a margin of 4.8%

2 May 2007 11:22 - BAM Construct UK Ltd

London, 27 April 2007 - HBG UK Ltd (HBG), the construction, property development, design and facilities management arm of Royal BAM Group in the UK, has announced a record profit before tax for the year ending 31 December 2006 of £42.0 million (2005: £24.3 million), representing a rise over the previous year of 73%. Turnover for HBG also rose significantly to £882.3 million (2005: £776.4 million), as did its secured order book which, at 31 December 2006, stood at £1.6 billion (2005: £1.4 billion).

The overall profit before tax (PBT) margin achieved by HBG was a very satisfactory 4.8%. Although this margin benefited from excellent sales in the year in the property development business, the core construction operations, with a turnover of £810.0 million (2005: £750.8 million), also recorded a strong profit before tax of £21.0 million (2005: £20.2 million).

Significantly, all seven of HBG’s construction regions achieved a sound profit and each exceeded a PBT of 2.0%. Once again, the education sector has been the strongest market for HBG, both with PFI school clusters delivered for sister company BAM PPP, and with tendered work for schools, academies, colleges and universities throughout the country. Healthcare work, though still modest in volume terms through the NHS ProCure21 scheme, has seen rapid growth with the award of several hospital projects in South Wales following HBG’s selection as a Supply Chain Partner for the Welsh Health Framework.

Retail remains a strong sector for HBG throughout the UK with continuous work from ASDA, Sainsbury’s, Marks & Spencer, Morrison and Tesco, including some major city centre mixed development schemes in Edinburgh, Milton Keynes, Hull, Maidenhead, Corby and Folkestone. Commercial office business has provided a bullish market for HBG in the year with several high value developments, particularly in London. High-profile projects were also begun on prominent visitor attractions, including the Natural History Museum in London, the Ashmolean Museum in Oxford and the Royal Halls in Harrogate.

The property development arm of HBG had an exceptional year with profit before tax of £21.8 million (2005: £5.4 million) on a turnover of £84.7 million (2005: £52.4 million) (includes associates).

This largely reflects the successful sales of commercial developments in Leeds, Bristol, Birmingham, and Coventry and, at the end of the year, the sale of HBG’s Wellgate Shopping Centre in Dundee. Significant new investments were also made in Glasgow, Leeds, Chiswick, High Wycombe and Salford Quays, representing a potential 102,100 sq. m. of commercial office space when all are completed.

The facilities management business of HBG continued to grow rapidly as more PFI schools came on line in Bristol, East Renfrewshire and Bromsgrove. Now employing over 450 staff with a further 120 awaiting transfer, the FM business’ turnover grew to £13.8 million (2005: £9.3 million) and will grow even more rapidly in the next few years as further PFI and BSF schools are delivered by HBG’s construction business for BAM PPP, including Solihull Schools which is currently approaching financial close.

HBG’s design practice and services engineering division are both providing essential services both within the other business sectors in HBG and to third party clients. HBG employs 60 architects, structural and services engineers to deliver these activities. The fee income for design came to £4.3 million in the year, with services provided for Tesco, Argent and Sainsbury amongst others.

Commenting on HBG UK’s performance in 2006, chief executive Richard Gregory said: ‘The exceptional results achieved by HBG in 2006, including the successful property sales, follow our overall business plan objectives to achieve controlled growth of turnover and a consistent improvement in profitability. This performance also reflects our commitment to customers and the delivery of quality and value throughout the business.’ He added: ‘At the same time, we have devoted a great deal of time and resources on developing and consolidating our supply chain in order to build long term and sustainable partnerships in every business unit. Finally, the most important factor in this on-going success remains our people – it is their hard work, loyalty and skills that help us deliver quality products and services to all our customers.’

Notes to Editors:

HBG UK Ltd is one of the UK’s leading construction services organisations, with a turnover exceeding £880 million. It operates throughout the UK from regional centres in Bristol, Cardiff, Coventry, Edinburgh, Glasgow, Leeds, London, Manchester and Newcastle. HBG UK Ltd is part of the €8.6 billion turnover European construction company Royal BAM Group.

For further information contact:

HBG Public Relations Department, Lucie Culkin, telephone 020 8338 2710, email lculkin@hbgc.co.uk