Final Results

Galliford PLC 22 August 2000 Galliford plc Preliminary Results for the year ended 30 June 2000 * Pre-tax profits increased by 33% * 34% increase in earnings per share to 3.86 pence * 8% increase in the year's total dividend to 1.3 pence Housing * Operating profit up by 9% to £5.2m * Average selling price up by 19% to £102,750 Construction * 89% increase in construction division profits of £3.5m * Major contract wins with Grosvenor Estates, Hyder, BT and British Waterways * Strong order book with 80% of budgeted turnover secured for the current year 'We have a strong construction order book, a good supply of housing land and a management team committed to delivering above average returns to our shareholders. We look forward to achieving further growth against a background of stability in both construction and housing sectors.' TONY PALMER Chairman Enquiries: George Marsh, Chief Executive Galliford plc Today: 020 7282 8000 Thereafter: 01455 222722 www.galliford.co.uk Galliford plc Preliminary Results for the year ended 30 June 2000 STATEMENT BY THE CHAIRMAN, TONY PALMER I am delighted to report that the increased profits for the year to 30 June 2000 continue the excellent progress that I reported in my statement accompanying the interim report. Profits before tax increased by 33% to £6.0m. Earnings per share increased by 34% to 3.86 pence and the pre-tax return on the closing shareholders' funds increased to 25%. Our financial position remains solid. Shareholders' funds increased to £24.4m and at 30 June 2000 the group had net cash of £4.0m compared to net indebtedness of £3.0m last year. Dividend The board is recommending an increased final dividend of 0.8 pence per share, making a total for the year of 1.3 pence, an 8% increase on the previous year (1999: 1.2 pence). Private housing Our housing operations, comprising Stamford Homes and Midas Homes, achieved a 9% increase in operating profit to £5.2m. We achieved 635 completions compared with 549 last year and have increased our average selling price by 19% to £102,750. We have been selective in land purchase and our land bank at the year-end was 1,651 plots representing 2.6 years at current rate of consumption. Our average plot cost of £16,000 equates to16% of average sales value. Greater emphasis has been placed on developing our strategic land bank and we now have approximately 280 acres secured under option with the potential for an estimated 1,750 plots. Customers' increasing expectations are recognised by both companies and strategies are now in place to deliver a level of service throughout our business which we believe will 'brand' us as a leader in this field. Construction Profits from our construction division increased by 89% to £3.5m and operating margin from 1% to 1.6%. The results for the six months to 30 June 2000 show an operating margin of 1.9% which is close to our declared aim of obtaining maintainable margins in excess of 2%. Our medium-term target is now to move beyond this level. Our current order book is strong with 80% of workload secured to meet our budget for the current year. Our partnership approach remains fundamental to our construction offering, with the following recent awards giving a flavour of the type of contracts with partnering an essential element: * An award of a contract for a major distribution centre for Grosvenor Estates at Rugby valued at £34.5m. This was awarded following a year of partnering negotiation with Grosvenor Estates. * An appointment by Hyder as a preferred contractor under their asset management plan for the next five years, which potentially will involve some £90m capital construction in the water sector. The appointment follows a period of 4 years working in partnership with Hyder. * A framework agreement with BT to construct radio base station sites throughout England, Wales and Scotland as part of a project to provide Britain's police force with a wireless communications service for voice and data communications. The contract was awarded following a rigorous five-month tender process that highlighted Galliford's keen partnering approach. We have been working with BT on BT Cellnet sites for almost five years. Our communications division is now a leading contractor in cell site construction. * A three-year agreement with British Waterways to carry out annual works on its canals in the Northeast region. The contract, which started in July, is worth up to an estimated £5m per year. As a result of our sector focus, we have achieved strong performances from our telecoms, water and social housing activities. We have continued to actively embrace best practice in many areas of our operations including benchmarking, information technology and supply chain management. People I was privileged to succeed Richard Miles as Chairman last October. Richard served on the board for eleven years and, during his six years as Chairman, guided the company through an important period of consolidation and then growth. I thank Richard for his contribution and wish him a happy retirement. I would also like to express my appreciation to our stakeholders who have supported and contributed to our success over the last year - our shareholders, our customers, our suppliers, our sub-contractors and our professional advisors. In particular, I thank all of the Galliford team for their efforts and enthusiasm in delivering a successful year for the group. The future We have a strong construction order book, a good supply of housing land and a management team committed to delivering above average returns to our shareholders. We look forward to achieving further growth against a background of stability in both the construction and housing sectors. GALLIFORD plc PRELIMINARY RESULTS year ended 30 June 2000 FINANCIAL REVIEW 2000 1999 Turnover Profit Turnover Profit £'000 £'000 £'000 £'000 Private housing 60,030 5,162 41,866 4,756 Construction 218,660 3,499 183,910 1,848 Group - (1,707) - (1,161) ____________________________________________ Operating profit 278,690 6,954 225,776 5,443 Net interest - (929) - (901) _____________________________________________ 278,690 6,025 225,776 4,542 _____________________________________________ GALLIFORD plc PRELIMINARY RESULTS for the year ended 30 June 2000 CONSOLIDATED PROFIT AND LOSS ACCOUNT 2000 1999 £'000 £'000 £'000 £'000 Turnover - continuing operations 280,001 225,812 Less: share of joint ventures' turnover 1,311 36 Group turnover 278,690 225,776 Operating costs 271,902 220,289 Group operating profit - continuing operations 6,788 5,487 Share of operating profits/(losses) of joint ventures 166 (44) 6,954 5,443 Interest receivable 269 67 Profit before interest payable 7,223 5,510 Interest payable - group 1,132 968 - joint ventures 66 - 1,198 968 Profit on ordinary activities before taxation 6,025 4,542 Tax on profit on ordinary activities 1,856 1,417 ______ ______ Profit on ordinary activities after taxation attributable to members of Galliford plc 4,169 3,125 Dividends 1,434 1,320 ______ ______ Transferred to reserves 2,735 1,805 Earnings per share Basic 3.86p 2.88p Diluted 3.83p 2.88p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 2000 1999 £'000 £'000 Profit/(loss) for the financial year - group 4,136 3,166 - joint ventures 33 (41) ______ ______ Total recognised gains and losses for the year 4,169 3,125 The reported profit for the year is not materially different from the profit on an unmodified historical cost basis. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2000 1999 £'000 £'000 Total recognised gains and losses for the year 4,169 3,125 Dividends (1,434) (1,320) 2,735 1,805 Shares issued under share option schemes 57 - Goodwill recognised during year - (219) Net increase in shareholders' funds 2,792 1,586 Opening shareholders' funds 21,655 20,069 ______ _______ Closing shareholders' funds 24,447 21,655 GALLIFORD plc PRELIMINARY RESULTS year ended 30 June 2000 CONSOLIDATED BALANCE SHEET 2000 1999 £'000 £'000 £'000 £'000 Fixed assets Tangible assets 4,384 3,966 Investments Investments in joint ventures Goodwill 278 293 Share of gross assets 2,016 794 Share of gross liabilities (2,089) (896) Loan to joint venture 1,900 850 2,105 1,041 Other investments 461 303 2,566 1,344 6,950 5,310 Current assets Stocks 27,916 28,421 Development land 23,886 23,097 Debtors 46,402 37,202 Cash at bank and in hand 5,527 1,528 103,731 90,248 Current liabilities Creditors: amounts falling due within one year Bank overdraft - 2,934 Bank loans 337 383 Other 78,528 63,805 Net current assets 24,866 23,126 Total assets less current liabilities 31,816 28,436 Creditors: amounts falling due after more than one year 5,153 5,097 Provisions for liabilities and charges 2,216 1,684 7,369 6,781 ______ ______ 24,447 21,655 Capital and reserves Called up share capital 5,513 5,498 Share premium account 519 477 Revaluation reserve 163 167 Other reserves 35 35 Profit and loss account 18,217 15,478 ______ ______ Shareholders' funds - equity interests 24,447 21,655 GALLIFORD plc PRELIMINARY RESULTS for the year ended 30 June 2000 CONSOLIDATED CASH FLOW STATEMENT 2000 1999 £'000 £'000 £'000 £'000 Net cash inflow from continuing operating activities 12,730 1,850 Dividends from joint ventures 4 50 Returns on investments and servicing of finance Interest received 137 67 Interest paid (1,062) (872) Loan note interest paid (64) (90) Interest element of finance lease rental payments (6) (16) Net cash outflow from returns on investments and servicing of finance (995) (911) Taxation paid (926) (567) Capital expenditure and financial investment Purchase of tangible fixed assets (1,235) (998) Sale of tangible fixed assets 26 328 Increase in investment in joint venture (1,050) (526) Purchase of own shares (239) (217) Net cash outflow for capital expenditure and financial investment (2,498) (1,413) Equity dividends paid (1,320) (1,210) ______ ______ Cash inflow/(outflow) before financing 6,995 (2,201) Financing Issue of ordinary share capital 57 - Capital element of finance lease rental payments (23) (135) Repayment of bank loans (46) (6,262) Redemption of loan notes (50) (172) (62) (6,569) ______ ______ Increase/(decrease) in cash 6,933 (8,770) GALLIFORD plc PRELIMINARY RESULTS for the year ended 30 June 2000 ANALYSIS OF NET DEBT At 1 July At 30 June 1999 Cash flow 2000 £'000 £'000 £'000 (Net bank overdraft)/ cash at bank and in hand (1,406) 6,933 5,527 Loan notes (1,102) 50 (1,052) Bank loans (383) 46 (337) (2,891) 7,029 4,138 Finance lease obligations (113) 23 (90) Net (debt)/funds (3,004) 7,052 4,048 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2000 1999 £'000 £'000 Increase/(decrease) in cash in period 6,933 (8,770) Cash used to repay debt and lease financing 119 6,569 Change in net debt resulting from cash flows 7,052 (2,201) Inception of finance lease contracts - (112) Movement in net debt in the period 7,052 (2,313) Net debt at start of year (3,004) (691) ______ ______ Net funds/(debt) at end of year 4,048 (3,004) GALLIFORD plc PRELIMINARY RESULTS Year ended 30 June 2000 NOTES TO THE ACCOUNTS 1. It is proposed to pay the final dividend on 1 November 2000 to shareholders on the register at the close of business on 4 September 2000. The shares will go ex-dividend on 29 August 2000. 2. This preliminary statement, which has been agreed with the auditors, was approved by the board on 21 August 2000. It is not the company's statutory accounts. The statutory accounts for the two years ended 30 June 1999 and 2000 received audit reports which were unqualified and did not contain statements under s 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 30 June 1999 have been delivered to the Registrar of Companies but the 30 June 2000 accounts have not yet been filed. 3. Copies of the Report and Accounts will be distributed to shareholders on 29 September 2000 and further copies will be available after that date from The Secretary, Galliford plc, Wolvey, Hinckley, Leicestershire LE10 3JH. 4. The Annual General Meeting will be held on 27 October 2000.

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