Final Results, etc

GALLIFORD PLC 6 September 1999 GALLIFORD plc PRELIMINARY RESULTS Year ended 30 June 1999 Strong performance from Galliford the housing and construction company * Profit before tax up 19% * Turnover up 23% * Return on shareholders' funds 21% * Strong balance sheet * Dividend increased by 9% to 1.2p total 'The prospects for further good growth in profits are the best they have been for the last five years' Richard Miles Chairman FULL STATEMENT ATTACHED Enquiries: Richard Miles, Chairman George Marsh, Chief Executive John Livingston, Finance Director Galliford plc Today: 0171-638 9571 (8.30am - 3.00pm) Thereafter: 01455-222722 www.galliford.co.uk -2- GALLIFORD plc PRELIMINARY RESULTS year ended 30 June 1999 STATEMENT BY THE CHAIRMAN, RICHARD MILES Profits before tax for the year ended 30 June 1999 at £4.5m - an increase of 19% - strongly underline the improving performance of the group. Earnings per share were 2.9p, an increase of 14% compared with last year and of particular note was the increase in pre-tax return on shareholders' funds of 2% to 21%. Net indebtedness at 30 June 1999 was £3.0m compared with £0.7m last year. Dividend The board is recommending an increased final dividend of 0.7p per share making a total for the year of 1.2p, a 9% increase on the previous year (1998: 1.1p). Private Housing I am pleased to report that, although we have not experienced the very buoyant housing demand reported in the South East and certain other areas, better market conditions since January in our regions of the East Midlands and the South West have enabled us to increase our annual completions to 549 units to maintain our profit progression. Including joint venture sales at Midas Homes, the average selling price increased by 20% to £86,400 (1998: £72,000). Planning delays in the East Midlands resulted in insufficient sales outlets being available and hence lower overall sales. This was the principle reason for a decline in margin to 11.4% (1998: 14.4%). The situation has now improved and both Stamford Homes and Midas Homes have the land in place to fulfil their budgeted sales for the current year. By 1 September 1999 we had already secured 30% of our budgeted completions for the current year. Construction Profits from our construction division continue to improve and, although the margin remained relatively modest at 1%, the encouraging inflow to our order book suggests that the margin should improve towards our targeted 2%. Our emphasis on a partnership approach to delivery of our construction service continues to have a positive impact on our returns with over 70% of our current order book secured from customers procuring on value criteria. Our construction order book is currently strong with 80% of workload secured to meet the current year's budget. -3- Substantial progress has been made by Rapid Transport International plc (RTI) over the last year. We have concluded a new agreement with the other shareholders which will enable us to increase our shareholding from the present level of 25% to up to 50%. The Northampton Rapid Transit System continues to progress satisfactorily with the submission of the Transport & Works Act Order progressing well and the selection of the network operator in its final stages. The project should be in a position for construction to commence in 2000. The Future We have a good housing land bank and a strong construction order book ahead of us with continuing opportunities to differentiate our offering in both of these core businesses. The important RTI project is moving steadily towards the construction phase. Against a background of the UK construction and housing market likely to grow in real terms at 1 - 2% over the next year, the prospects for further good growth in profits are the best they have been for the last five years. -4- GALLIFORD plc PRELIMINARY RESULTS year ended 30 June 1999 FINANCIAL REVIEW 1999 1998 Turnover Profit Turnover Profit £'000 £'000 £'000 £'000 Private housing 41,866 4,756 32,290 4,645 Construction 183,910 1,848 151,121 1,243 Group - (1,161) - (1,037) Discontinued operations - - 221 (245) Operating profit 225,776 5,443 183,632 4,606 Net interest (901) (776) 225,776 4,542 183,632 3,830 Note: Group costs which were in prior years allocated to private housing and construction have been shown separately. The prior year has been restated. -5- GALLIFORD plc PRELIMINARY RESULTS year ended 30 June 1999 CONSOLIDATED PROFIT AND LOSS ACCOUNT 1999 1998 £'000 £'000 £'000 £'000 Turnover Continuing operations 225,812 184,913 Discontinued operations - 221 225,812 185,134 Less: share of joint ventures' turnover 36 1,502 Group turnover 225,776 183,632 Operating costs (1998: including exceptional charge of £1,173,000 in respect of bad debt) 220,289 179,007 Group operating profit Continuing operations 5,487 4,870 Discontinued operations - (245) 5,487 4,625 Share of operating losses of joint ventures (44) (19) 5,443 4,606 Interest receivable 67 41 Profit before interest payable 5,510 4,647 Interest payable and similar charges 968 817 Profit on ordinary activities before 4,542 3,830 taxation Tax on profit on ordinary activities 1,417 1,312 Profit on ordinary activities after taxation attributable to members of Galliford plc 3,125 2,518 Dividends 1,320 1,210 Transferred to reserves 1,805 1,308 Earnings per share - basic 2.88p 2.53p - diluted 2.88p 2.53p -6- GALLIFORD plc PRELIMINARY RESULTS STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 30 June 1999 1999 1998 £'000 £'000 Profit/(loss) for the financial year - group 3,166 2,533 - joint ventures (41) (15) Total recognised gains and losses for the year 3,125 2,518 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 for the year ended 30 June 1999 1999 1998 £'000 £'000 Total recognised gains and losses for the year 3,125 2,518 Dividends (1,320) (1,210) 1,805 1,308 New share capital issued - 4,029 Share issue expenses - (384) Goodwill recognised during year (219) (4,353) Net increase in shareholders' funds 1,586 600 Opening shareholders' funds 20,069 19,469 Closing shareholders' funds 21,655 20,069 -7- GALLIFORD plc PRELIMINARY RESULTS CONSOLIDATED BALANCE SHEET 30 June 1999 1999 1998 £'000 £'000 £'000 £'000 Fixed assets Tangible assets 3,966 3,886 Investments Investments in joint ventures Goodwill 293 - Share of gross assets 794 291 Share of gross liabilities (896) (233) Loan to joint venture 850 - 1,041 58 Other investments 303 331 1,344 389 5,310 4,275 Current assets Stocks 28,421 24,850 Development land 23,097 18,375 Debtors 37,202 34,970 Cash at bank and in hand 1,528 7,364 90,248 85,559 Current liabilities Creditors: amounts falling due within one year Bank overdraft 2,934 - Bank loans 383 6,645 Other 63,805 58,154 Net current assets 23,126 20,760 Total assets less current liabilities 28,436 25,035 Creditors: amounts falling due after more than one year 5,097 4,077 Provisions for liabilities and charges 1,684 889 6,781 4,966 21,655 20,069 Capital and reserves Called up share capital 5,498 5,498 Share premium account 477 477 Revaluation reserve 167 171 Other reserves 35 35 Profit and loss account 15,478 13,888 Shareholders' funds - equity interests 21,655 20,069 -8- GALLIFORD plc PRELIMINARY RESULTS CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 1999 1999 1998 Operating activities £'000 £'000 £'000 £'000 Net cash inflow in respect of continuing 1,850 8,210 operating activities Net cash outflow in respect of discontinued - (70) operating activities Net cash inflow from operating activities 1,850 8,140 Dividends from joint ventures 50 - Returns on investments and servicing of finance Interest received 67 41 Interest paid (872) (607) Loan note interest paid (90) (27) Payment of cumulative accrued finance charges under BES arrangements - (906) Interest element of finance lease rental (16) (16) payments Net cash outflow from returns on investments (911) (1,515) and servicing of finance Taxation paid (567) (364) Capital expenditure and financial investment Purchase of tangible fixed assets (998) (1,218) Sale of tangible fixed assets 328 440 Purchase of investment (526) - Purchase of own shares (217) (146) Term deposit - 500 Net cash outflow for capital expenditure and (1,413) (424) financial investment Acquisitions and disposals Purchase of subsidiary - (136) Net overdrafts acquired with subsidiary - (3,234) Net cash outflow from acquisitions and - (3,370) disposals Equity dividends paid (1,210) (1,038) Cash (outflow)/inflow before financing (2,201) 1,429 Financing Repayment of monies advanced under BES - (4,543) arrangements Capital element of finance lease rental (135) (94) payments Repayment of bank loans (6,262) (301) Bank loan received - 5,892 Redemption of loan notes (172) - (6,569) 954 (Decrease)/increase in cash (8,770) 2,383 -9- GALLIFORD plc PRELIMINARY RESULTS for the year ended 30 June 1999 ANALYSIS OF NET DEBT At 1 Cash Other At 30 July flow non- June 1998 cash 1999 changes £'000 £'000 £'000 £'000 Cash at bank and in hand/(net bank 7,364 (8,770) - (1,406) overdraft) Loan notes (1,274) 172 - (1,102) Bank loans (6,645) 6,262 - (383) Finance lease obligations (136) 135 (112) (113) Net debt (691) (2,201) (112) (3,004) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 1999 1998 £'000 £'000 (Decrease)/increase in cash in period (8,770) 2,383 Cash inflow from term deposit - (500) Cash used to repay debt and lease 6,569 4,938 financing Bank loan received - (5,892) Change in net debt resulting from cash (2,201) 929 flows Inception of finance lease contracts (112) - Finance lease obligations acquired with - (208) business Loan notes issued for acquisition - (1,274) Bank loans acquired with business - (929) Movement in net debt in the period (2,313) (1,482) Net (debt)/funds at start of year (691) 791 Net debt at end of year (3,004) (691) -10- GALLIFORD plc PRELIMINARY RESULTS year ended 30 June 1999 NOTES TO THE PRELIMINARY RESULTS 1. It is proposed to pay the final dividend on 1 November 1999 to shareholders on the register at the close of business on 17 September 1999. The shares will go ex-dividend on 13 September 1999. 2. This preliminary statement, which has been agreed with the auditors, was approved by the board on 6 September 1999. It is not the company's statutory accounts. The statutory accounts for the two years ended 30 June 1998 and 1999 received audit reports which were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 30 June 1998 have been delivered to the Registrar of Companies but the 30 June 1999 accounts have not yet been filed. 3. Copies of the Report and Accounts will be distributed to shareholders on 1 October 1999 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 29 October 1999.

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