Housebuilder Galliford Try this week reported that pre-tax profit had fallen by more than half in the year to June.

The group's profit fell to £4.9m as a result of merger costs and a multimillion-pound contract loss in Northamptonshire. The fall comes despite a rise in turnover of 25% to £568.5m.

The group was hit by costs associated with the merger of Galliford and Try last September, which totalled £3.7m, and a £6.5m exceptional charge to cover potential liability for a defective floor at Daventry International Rail Freight Terminal.

The company acknowledged the results were a disappointment but said the benefits of the merger would not be visible until its results in June 2002.

George Marsh, deputy chief executive at Galliford Try, said: "We have so far achieved £1.2m in corporate cost savings. The merger is well on schedule."

He added that next year's profits should top £18m, on the back of an anticipated annual cost base reduction of £3m.

Galliford Try's construction forward order book is 21% higher than the same time last year, at £419m.

Chief executive David Calverley hinted that he may look for another acquisition, or even a merger, once the company's market capitalisation hits £100m. It currently stands at £64m.

The group has recently moved into the struggling telecoms sector, with the acquisition of Burton Communications, and has contracts with Orange and T-Mobile, owner of the One2One brand.