Chief executive acknowledges health service deals have played a big part in increasing profit 15% to £18.7m

Contracts won under the £2.2bn Procure 21 framework initiative in the health service have boosted private contractor HBG’s order book to almost £1bn this year.

HBG has won contracts worth more than £200m under Procure 21, putting it in the top three of the 12 contractors selected to carry out work under the scheme.

Richard Gregory, HBG’s chief executive, said Procure 21 had played an important part in a 15% rise in the firm’s pre-tax profit in the 12-month period to 31 December 2004. It posted a pre-tax profit of £18.7m this week.

Gregory: Banking on Procure 21
Gregory: Banking on Procure 21

In his first interview since taking the helm 18 months ago, Gregory said HBG intended to pay more attention to which clients and projects it took on to ensure that growth was steady. In the year to 31 December turnover increased 28% to £809.5m, representing a 2.3% margin.

HBG’s various Procure 21 contracts include work for Christie NHS Trust in Manchester, where Gregory said that an initial £5m contract had led to contracts worth £30m.

Despite recent criticisms of Procure 21 from companies in the framework that have failed to win contracts, Gregory has unsuprisingly remained a supporter.

He said: “We put a lot of time and effort into prequalifying for that."

"We kept quite close to the government’s Procure 21 team, and we’re probably two or three if you look at the league tables.

“We just desperately hope that the government carries on with this procurement strategy.”

Gregory was less complimentary about PFI, although HBG is involved in several PFI education schemes. It is completing phase one of a schools scheme in Crawley, West Sussex, and reaching financial close on a £57m contract in Bristol and a £53m deal in East Renfrewshire.

“Bid costs are a real issue,” said Gregory. “In Spain and Portugal the process is far less bureaucratic. The process has to get quicker, otherwise the industry will turn around and say, ‘we don’t want to know.’

“The philosophy of PFI is good, but there is quite a lot of variation in the competence of the public sector.”

HBG has been selected as preferred bidder on five schools in Bromsgrove, Birmingham, and is competing with Skanska and Laing to land a £100m Bristol schools project, which is part of the government’s £5.1bn Building Schools for the Future programme.

HBG has also built up a commercial development business. It sold £53m of property last year including Wellington Square shopping centre in Stockton-on-Tees, Durham.