Final Results

RNS Number : 8132Y

Galliford Try PLC

10 September 2009

 



GALLIFORD TRY PLC 

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2009 

HIGHLIGHTS 

 

·      Key results		2009	2008
Group revenue		£1,461m	£1,832m
Profit from operations *		£31.2m	£85.4m
Profit/(loss) before tax	- pre exceptional **	£24.5m	£71.8m
	- post exceptional	(£26.9m)	£60.3m
Earnings/(loss) per share	- pre exceptional **	4.9p	13.6p
	- post exceptional	(4.8p)	11.4p
Dividend per share		1.5p	3.0p
Net cash/(debt) at year end		£34.1m	(£1.7m)

 

·      Total housebuilding completions of 1,769 units compared to 2,524 last year and 1,526 the year before

 

·      Housing market recovery in second half of financial year sustained, with sales made in first two months of new financial year exceeding our forecast

 

·      Landbank currently 7,850 plots (2008: 8,900), of which 1,100 plots are on terms agreed since July 2008

 

·      Record profits and excellent cash generation from Construction

 

·      Public and regulated sectors account for 84% of contracting order book, maintained at £1.7 billion

 

·      Rights issue of £119 million (net) announced to recommence expansion in Housebuilding

* Stated before finance costs, amortisation, share of joint ventures' tax, exceptional items and tax.

** Stated before exceptional items of £51.4 million (2008: £11.5 million) comprising write downs of housing related assets of £50.4 million and redundancy costs of £1 million.

Commenting on the results, Greg Fitzgerald, Chief Executive, said:

'The actions we took to deal with the effects of the financial crisis on our markets during the year, and the financial strength of the Group, mitigated the impact on our business and now enable us to move forward again.

We are encouraged by the continuation of the improvement in the housing market over the summer. We now plan to recommence our growth strategy in housebuilding and take advantage of our strong presence in the public and regulated sectors to maintain our position as one of the UK's leading contractors.'

For further enquiries please contact:

Greg Fitzgerald, Chief Executive                           01895 855219
Frank Nelson, Finance Director                             01895 855226
Louise Mantio, Communications Director               01895 855092

Forward looking statements - certain statements in this preliminary statement are forward looking. Such statements should be treated with caution as they are based on current information and expectations and are subject to a number of risks and uncertainties that could cause actual events or outcomes to differ materially from expectations.

  CHIEF EXECUTIVE'S REVIEW 

The actions we took to deal with the effects of the financial crisis on our markets during the year, and the financial strength of the Group, mitigated the impact on our business and now enable us to move forward again.

Strategy 

Galliford Try's long term strategy is to grow profits by expanding both its housebuilding and construction activities. The severe downturn in the housing market following the financial crisis in the first half of our financial year, and the ongoing effect of the recession on the construction markets, impacted short term objectives and realigns our focus for the medium term.  

Our immediate strategy to mitigate the housebuilding downturn was to maximise cash receipts, minimise expenditure and reduce costs. We achieved this by aggressive sales policies, reducing spend on work in progress on our developments to a minimum and by implementing a £25 million programme of cost cutting measures across the entire Group. We reduced employee levels in our housing businesses, but minimised the numbers involved by implementing a four day week from January to June 2009. Our strategy was executed with the intent that it faced up to the economic realities, while maintaining the operational structure and geographical spread of our housebuilding activities so that, at the appropriate time, we could expand again. During this time we secured substantial grant awards which helped to maintain output levels in our affordable housing business. We also restructured a number of our regeneration schemes with the Homes and Communities Agency, demonstrating the strength of our relationships with them which, as the largest landowner in the UK, should stand us in good stead as they seek to bring new projects forward for development. With activity levels in the housing market recovering from early 2009 and maintained into the first two months of our new financial year, we are able to refocus our strategy and start to expand the business again.

In construction, our strategy has been based on securing a substantial proportion of our workload through the programmes of the public and regulated sectors where winning contracts depends on our performance across a number of key performance indicators, as well as on price. This has stood us in good stead as the economy deteriorated over the past year as, despite funding issues with programmes such as education projects financed through the Learning and Skills Council, commitment to public investment has continued. Following the financial crisis the availability of funding for commercial building and the willingness of private sector clients to proceed with investments has reduced, increasing competitiveness across all construction markets. Our contracting order book has remained resilient at £1.7 billion, we have already renewed two of our water frameworks for the next five years, and since the year end have secured contracts in health, education and commercial sectors totalling £140 million. Our strategy is to maintain our market position built on our strong presence in the public and regulated sectors. 

Dividend

The board has carefully considered the Group's performance and trading prospects in the light of the current economic environment and has decided that, in line with the interim dividend declared on 19 February 2009, the level of total dividend paid for the year should equal half of the amount of the total dividend paid for the previous financial year. Consequently, the directors are recommending a final dividend of 1.05 pence per share (2008: 2.1 pence per share) which, with the interim dividend of 0.45 pence paid in April, will result in a total dividend of 1.5 pence per share (2008: 3.0 pence). The final dividend will be paid on 13 November 2009 to shareholders on the register on 18 September 2009.  

The directors will review the level of future dividends in light of the performance of the business and the prevailing economic outlook at the time, with the intent of returning to paying progressive dividends in the medium term.

  Outlook 

Having positioned ourselves to be able to respond when activity in the housing market resumed, we are encouraged by the continuation of the improvement over the summer and we now plan to recommence our growth strategy in housebuilding. Our leading presence in the affordable housing and regeneration market has enabled us to participate significantly in the initiatives launched by the Government to restart development in this sector, and will give us a competitive edge as markets recover.  

We have today announced a rights issue to raise approximately £119 million, net of expenses, to provide us with the resources and capital structure to recommence the expansion of our housebuilding business.

Our construction business has shown that it can deliver profits and cash generation that is in the upper quartile of the industry. As the recession continues to impact opportunities and increase competitiveness across its markets, we expect that our strong presence in the public and regulated sectors will enable us to maintain our position as one of the UK's leading contractors.

Throughout these challenging times, the diversity of the Group's operations and its financial strengths have stood it in good stead. As we position the Group to meet changing markets, and ready ourselves for the opportunities that will arise as the economy recovers, our overriding focus will be on shareholder value to deliver sustainable growth in the long term.

Greg Fitzgerald 

Chief Executive 

10 September 2009 

FINANCIAL REVIEW 

Group revenue was £1,461 million (2008: £1,832 million). The Group achieved a profit from operations (stated before finance costs, amortisation, share of joint ventures' tax, exceptional items and tax) of £31.2 million (2008: £85.4 million). The pre exceptional profit before tax was £24.5 million (2008: £71.8 million).  

Following a review of the value of its housing assets due to the market downturn the Group has recorded net exceptional costs of £51.4 million (2008: £11.5 million) comprising write downs of housing related assets of £50.4 million (2008: £9.6 million) and redundancy costs of £1.0 million (2008: £1.9 million). The post exceptional loss before tax was therefore £26.9 million (2008 profit: £60.3 million).

Basic pre exceptional earnings per share are 4.9p (2008: 13.6p) with a post exceptional loss per share of 4.8 pence (2008 earnings per share: 11.4 pence). Shareholders funds at 30 June 2009 stood at £294.6 million compared to £325.3 million at the end of the previous year.

Cash management has always been a top priority for our business, and never has this been more important than in the past year. Our construction businesses continue to generate cash balances which exceeded our forecasts throughout the year. This, together with the effect of the controls applied throughout our housebuilding operations, resulted in a net cash position of £34.1 million (2008 net debt: £1.7 million) at the year end. We have continued to improve on our forecasts for the first two months of the new financial year, and as overall debt levels do fluctuate throughout the year there is no let up on our stringent approach to cash. The Group continues to operate within both the headroom and the covenants of our bank facilities, which stood at £426 million at the year end, and are with HSBC, Barclays, Royal Bank of Scotland and Bank of Scotland, and which do not mature until 2012.

HOUSEBUILDING 

In the worst housing market for a generation our housebuilding businesses reacted swiftly to the conditions faced, concentrated on producing quality homes at levels and at prices that the market would support, and reduced costs. These actions were taken while maintaining our geographical coverage and operational infrastructure to take advantage of an eventual upturn. Total completions were 1,769 units, compared to 2,524 last year and 1,526 the year before. Our current landbank of 7,850 plots includes 1,100 plots acquired since July 2008. We entered the new financial year with sales carried forward of £161 million (2008: £150 million) and with the market maintaining the recovery of the last six months, sales in the first two months of our new financial year have exceeded our forecast.

Housebuilding 

Profit from operations was £3.5 million on revenue, including joint ventures, of £235 million, representing a margin of 1.5% (2008: £53.2 million on £486 million, representing 10.9%). Completions for the year were 1,216 at an average sales price of £189,000 (2008: 1,830 at £220,000).

In the first half of the financial year, we took early action to reduce levels of stock and work in progress by setting prices and incentives to maintain sales and generate cash. We aligned our operational structure to the market, including implementing a four day working week from January to June 2009. This minimised the number of redundancies required with the objective of reducing cost whilst enabling us to preserve our geographical coverage, skill sets and operational infrastructure.

During the year we continued with our policy of reducing further our minimal exposure to large apartment developments and to consortium sites, where we are in competition with other housebuilders offering comparable homes, and currently have 60 active selling sites across the country compared to 75 the previous year. Visitor levels to our sites have recovered and are now at similar levels to a year ago, which is encouraging, and our cancellation rates stabilised at around 17%. The number of stock units we hold has reduced from 250 in July 2008 to 91, and we have carefully controlled the capital we have locked up on properties taken in part exchange, currently owning 14 compared to 82 in July 2008.

A number of our larger developments are carried out in joint venture, which both reduces the investment required and shares the project risk. We have significant schemes in Epsom, Chichester and in joint venture with Bank of Scotland in Colchester, St Albans, East London and Hammersmith. These are primarily long term projects with sales spread over several years.

Our landbank of owned and controlled plots currently stands at 4,700 plots, compared to 5,400 a year ago and our strategic land holdings stand at 1,300 acres compared to 1,430 a year ago from which we would ultimately expect to generate over 8,200 units. The land market has shown increasing signs of activity since the start of 2009 with our landbank now including 147 plots on five sites acquired with the acquisition in May of the assets of Wright Homes from its administrative receiver. We have a number of attractive opportunities in the pipeline, giving us confidence that we can resume a growth strategy as economic conditions improve.

Affordable Housing & Regeneration 

Profit from operations of £6.3 million was achieved on revenue of £184 million, including joint ventures, representing a margin of 3.4%. Despite lowering values, as a result of improved grant rates during the year we maintained an average selling price of £129,000. During the year we achieved 553 completions and carried out a total contracting turnover of £113 million.  

Direct funding from Government agencies provides cash benefits, forward visibility of revenues and enhanced operational control. Building on our relationship with its predecessor organisations, we have established a strong relationship with the Homes and Communities Agency ('HCA') since its formation in December 2008. The value of the Group's directly funded programme under the National Affordable Housing Programme rose to £80 million during the year and we have established ourselves as one of the leading private sector providers. This has been supplemented by an initial award of £10 million for a Homebuy Direct programme. We have had fourteen sites shortlisted for £28 million of gap funding under the Government's Kickstart housing delivery programme, which will enable schemes that would otherwise be mothballed to achieve viability and continue production.

We increased our portfolio of regeneration schemes with schemes to deliver 390 homes outside Oxford and up to 350 new homes in Gloucester. This was the first scheme to be announced by the newly formed HCA and is a model for future public sector land releases that enable the HCA to extract value at the point of future sales rather than by an up front land payment.

Our strong presence in the South West and South East was highlighted with the completion of our award winning joint venture schemes with South Hams District Council and Sovereign Housing Association in Totnes and with Harlow District Council at Newhall. During the year we have replanned and rephased our major public sector regeneration schemes to enable development to start earlier on a commercially acceptable basis and assist in delivering the Governments housing objectives. Regeneration schemes at Grimsby and in Plymouth are continuing to deliver sales.

Our affordable housing contracting business, primarily in the South East and North East of England, continued to perform well and recently won a number of contracts, bringing our order book for affordable housing build contracts to £124 million.

We have increased the number of long term frameworks we have with affordable housing providers during the year with the total now standing at 40. Our affordable housing landbank stands at 3,150 plots compared to 3,500 last year.

CONSTRUCTION OVERVIEW 

Our construction business has again delivered record profits and excellent cash generation. Our leading position in the markets for the public and regulated sectors has placed us in a relatively encouraging position as the market for private commercial work reduces, and increased levels of competitiveness for new work have made markets in all sectors more challenging. With the process for renewing the five year frameworks in our water business currently underway, two of which we have already secured, we have maintained our order book at £1.7 billion. We are performing in line with our expectations and are in a resilient position for trading through more difficult markets.  

Total construction profit from operations rose 5% to £26.9 million on revenue, including joint ventures, of £1,063 million which represents a margin of 2.5% (2008: 2.2%). Our total contracting order book (construction plus affordable housing contracts) currently stands at £1.7 billion, compared to £1.9 billion last year. 84% is in the public and regulated sectors and 92% has been secured on a basis other than by pure price competition.

Building 

Profit from operations of £13.0 million on revenue of £546 million, including joint ventures, represented a margin of 2.4%, underpinned by the generation of excellent cash balances throughout the year.

Our strong presence in the education sector has continued throughout the year with £205 million of education contracts awarded since July 2008, including major projects for West Kent College, and the Islington, Wren and Harries academies.

In the health sector we were appointed one of five contractors on the NHS framework in Scotland for building projects and we handed over the St Andrews Community hospital PFI scheme. We continued to both deliver existing projects and secure new work through our five NHS LIFT partnership frameworks with primary care trusts including three new projects in the Liverpool and Sefton LIFT. The total value of health contracts awarded since the start of our new financial year is £49 million. To add to our custodial frameworks, we secured the £47 million Parc Prison in Bridgend.

Work is proceeding well on our £41 million National Museum of Liverpool project and, in the commercial sector, our £103 million redevelopment of St Pancras Chambers in London into a 244 bedroom hotel and 67 apartments. Although there are fewer opportunities available, we continue to secure commercial projects, and were delighted to announce £83 million of hotel projects secured recently in the South of England.

Our project to rebuild the Centre Court stadium at the All England Lawn Tennis Club at Wimbledon culminated this year with the completion of the retractable roof, used successfully at the 2009 championships for the first time, enabling crucial matches to be played during periods of rain and into the night. We have now commenced a two year project to build a new number three court.

Currently, the division's order book is £730 million of which 89% has been secured on a basis other than on pure price competition and 69% is in the public and regulated sectors.

Infrastructure 

Profit from operations of £13.9 million was achieved on revenue of £517 million, including joint ventures, representing a margin of 2.7%, with better than forecast cash generation during the year.

In water, we have maintained our sector leading position in the key performance indicators used by clients. With long term framework contracts with 70% of the largest water utilities in the UK, this is an important factor in our strategy to renew those contracts for the 2010 to 2015 period, and we have already secured our position on the £2 billion capital works framework for Scottish Water as well as the £400 million framework for United Utilities.

In our Highways business we have successfully completed our first early contractor involvement scheme at Parton in Cumbria and are making good progress on our £50 million M40 scheme for the Highways Agency. In Scotland, good progress is being made by our four party consortium constructing the Scottish Executive's largest ever road scheme, the £445 million M74 extension in Glasgow. We have also been appointed as a contractor on Network Rail's £1 billion enhancements multi asset framework, which follows on from our buildings framework agreement.

Our earthworks remediation framework at Olympic Park in East London for the Olympic Delivery Authority, continues to perform well. During the year we secured an additional civil engineering framework for the ODA at Olympic Park, that will take us through 2012 to 2014, as well as a £20 million scheme to construct the white water canoeing centre at Broxbourne and a £5 million contract to carry out civil engineering works at the rowing centre at Eton Dorney Lakes.

We have made good progress in developing our renewable energy services to clients seeking on site generation of electricity, and are working with a number of the major supermarket chains. We have also been appointed by the joint venture developing our 780 home net carbon neutral project at Chichester to deliver the energy requirements.

Our current infrastructure order book is £844 million of which 95% has been secured on a basis other than on pure price competition and 98% is in the public and regulated sectors, with 86% in long term framework agreements.

PPP Investments 

Total revenue, including joint ventures, was £27.4 million (2008: £36.7 million). The profit from operations was £0.5 million (2008: £0.3 million). Having completed the construction phase of our Ministry of Defence housing project in Portsmouth the previous year, we sold our equity interest during the year, and with the Highland Schools project entering its operational phase, we completed the disposal of our remaining investment to HSBC Infrastructure fund after the year end for £16.8 million.

The director's valuation of the Group's PFI/PPP portfolio as at 30 June 2009 was carried out, as in previous years, on a discounted cash flow basis. The valuation took into account known disposal proceeds as well as current levels of liquidity within the banking and funding markets for long term PFI projects and the potential on refinancing. The result showed a valuation of £19.2 million, which compares to the value invested of £10.2 million (2008: valuation of £20.2 million and value invested of £9.1 million)

We secured the preferred bidder position for the £65 million Worcester Library and History Centre during the year. We are directly funding 100% of the equity in the project, and are now working towards financial close. We are currently on a shortlist of three for the major South Tyne and Wear Waste project. Going forward, our efforts will be focussed on securing positions on shortlists with a particular emphasis on the education, health, housing and waste sectors.

Health & Safety

Galliford Try is committed to a policy of effectively managing all aspects of health, safety and welfare. We maintain our fundamental belief that everyone has the right to return home unharmed at the end of each and every working day. In the year to June 2009 the Group's accident incidence rate was 5.7 (per 1,000 people at risk) consistent with last years figure of 5.6 and down on 8.6 the previous year.

Our total number of reportable accidents reduced by 8.5% in the last 12 months to 76, and with 170 visits from the Health and Safety Executive we had no enforcement notices served. We made good progress in implementing our behavioural safety training plan during the year and are now embarking on the leadership element of the programme.  

CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2009

		2009				2008
		Before exceptional items	Exceptional items	Total		Before exceptional items	Exceptional items	Total
	Note	£m	£m	£m		£m	£m	£m
Continuing operations
Revenue	2	1,461.2	-	1,461.2		1,831.9	-	1,831.9
Cost of sales		(1,344.9)	(40.6)	(1,385.5)		(1,660.6)	(9.1)	(1,669.7)
Gross profit/(loss)		116.3	(40.6)	75.7		171.3	(9.1)	162.2
Administrative expenses		(83.4)	(10.8)	(94.2)		(90.7)	(2.4)	(93.1)
Share of post tax (losses)/profits from joint ventures		(1.0)	-	(1.0)		2.0	-	2.0
Profit/(loss) before finance costs	2	31.9	(51.4)	(19.5)		82.6	(11.5)	71.1
Profit from operations		31.2	(51.4)	(20.2)		85.4	(11.5)	73.9
Amortisation of intangibles		(2.0)	-	(2.0)		(2.0)	-	(2.0)
Share of joint ventures' tax		2.7	-	2.7		(0.8)	-	(0.8)
Profit/(loss) before finance costs		31.9	(51.4)	(19.5)		82.6	(11.5)	71.1
Finance income	4	3.8	-	3.8		6.5	-	6.5
Finance costs	4	(11.2)	-	(11.2)		(17.3)	-	(17.3)
Profit/(loss) before income tax		24.5	(51.4)	(26.9)		71.8	(11.5)	60.3
Income tax (expense)/income	5	(6.0)	15.1	9.1		(21.2)	3.4	(17.8)
Profit/(loss) for the year		18.5	(36.3)	(17.8)		50.6	(8.1)	42.5
Earnings/(loss) per share	7
- basic		4.9p		(4.8)p		13.6p		11.4p
- diluted		4.9p		(4.8)p		13.6p		11.4p
Dividend per share - declared				1.5p				3.0p

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for the year ended 30 June 2009
		2009 £m	2008 £m
(Loss)/profit for the year		(17.8)	42.5
Net losses on revaluation of available for sale financial assets taken to equity		-	(0.3)
Realisation of gains on revaluation of available for sale financial assets taken to equity		-	(1.1)
Actuarial losses recognised on retirement benefit obligations		(6.5)	(11.8)
Deferred tax on items recognised in equity		1.8	1.9
Net losses recognised directly in equity		(4.7)	(11.3)
Total recognised (expense)/income for the year		(22.5)	31.2

CONSOLIDATED BALANCE SHEET  

at 30 June 2009

	Note	2009 £m	2008 £m
Assets
Non current assets
Intangible assets		8.2	10.2
Goodwill	8	115.0	115.0
Property, plant and equipment		8.3	8.0
Investments in joint ventures		0.7	12.5
Financial assets
- Available for sale financial assets		9.4	3.6
- Derivative financial assets		-	0.7
Trade and other receivables		40.3	23.0
Deferred income tax assets		12.0	10.7
Total non current assets		193.9	183.7
Current assets
Inventories		0.9	1.7
Developments		447.6	610.3
Trade and other receivables		213.5	308.7
Cash and cash equivalents		159.5	134.4
		821.5	1,055.1
Non current assets classified as held for sale		12.1	-
Total current assets		833.6	1,055.1
Total assets		1,027.5	1,238.8
Liabilities
Current liabilities
Financial liabilities - borrowings		(13.0)	(15.8)
Trade and other payables		(546.2)	(704.9)
Current income tax liabilities		(4.6)	(10.3)
Provisions for other liabilities and charges		(0.6)	(2.5)
Total current liabilities		(564.4)	(733.5)
Net current assets		269.2	321.6
Non  current liabilities
Financial liabilities
- Borrowings		(112.4)	(120.3)
- Derivative financial liabilities		(2.8)	-
Retirement benefit obligations		(27.5)	(27.4)
Deferred income tax liabilities		(14.3)	(17.4)
Other non current liabilities		(11.4)	(14.5)
Provisions for other liabilities and charges		(0.1)	(0.4)
Total non current liabilities		(168.5)	(180.0)
Total liabilities		(732.9)	(913.5)
Net assets		294.6	325.3
Shareholders' equity
Ordinary shares	11	18.9	18.9
Share premium	11	190.8	190.8
Other reserves	11	5.3	5.3
Retained earnings	11	79.6	110.3
Total  shareholders' equity		294.6	325.3

CONSOLIDATED CASH FLOW STATEMENT 

for the year ended 30 June 2009

	Notes	2009 £m	2008 £m
Cash flows from operating activities
Net cash generated from operations	9	47.4	149.6
Interest received		3.0	4.5
Interest paid		(6.3)	(14.6)
Income tax paid		0.8	(16.0)
Net cash generated from operating activities		44.9	123.5
Cash flows from investing activities
Dividends received from joint ventures		2.8	-
Acquisition of subsidiaries (net of cash acquired)		-	(6.1)
Acquisition of investments in joint ventures		(5.1)	(4.5)
Acquisition of available for sale financial assets		-	(2.9)
Proceeds from sale of joint ventures		5.2	-
Proceeds from available for sale financial assets		0.2	3.9
Acquisition of property, plant and equipment		(3.4)	(3.3)
Proceeds from sale of property, plant and equipment		0.8	0.3
Net cash generated from/(used in) investing activities		0.5	(12.6)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		-	0.3
Purchase of own shares		-	(2.5)
Repayment of borrowings		(14.8)	(34.2)
Increase in borrowings		4.1	32.1
Dividends paid to Company shareholders		(9.6)	(11.7)
Net cash used in financing activities		(20.3)	(16.0)
Net increase in cash and cash equivalents		25.1	94.9
Cash and cash equivalents at 1 July		134.4	39.5
Cash and cash equivalents at 30 June	10	159.5	134.4

NOTES TO THE PRELIMINARY STATEMENT

1  Basis of preparation

This consolidated financial information has been prepared in accordance with the Listing Rules of the Financial Services Authority and uses EU adopted International Accounting Standards (IASs), International Financial Reporting Standards (IFRSs), IFRIC Interpretations, those parts of the Companies Act 1985 applicable to companies reporting under IFRS and accounting policies consistent with those described in the Annual Report and Financial Statements 2008 except for the adoption of IFRIC 12 as explained in note 2. The financial information set out in this document does not constitute statutory accounts for the years ended 30 June 2008 or 30 June 2009 but is derived from the 2009 Annual Report and Financial Statements. The Annual Report and Financial Statements for 2008 have been delivered to the Registrar of Companies and the Annual Report and Financial Statements for 2009 will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts and have given an unqualified report which does not contain a statement under section 495 or 496 of the Companies Act 2006.

2.  Business segment reporting

Segment reporting is presented in the consolidated financial statements in respect of the Group's business segments, which are the primary basis of segment reporting. The business segment reporting reflects the Group's management and internal reporting structure. Segment results include items directly attributable to the segment as well as those that can be allocated on a reasonable basis. As the Group has no material activities outside the UK, segmental reporting is not required by geographical region. Inter-segment revenue is not material. 

During the year the Group adopted IFRIC 12, 'Service concession arrangements', which outlines an approach to account for contractual arrangements arising from entities providing public services. The adoption of this interpretation has resulted in the restatement of the accounts of some of the Group's joint venture companies. This has had no impact on the Group's operating profit/(loss) but has resulted in a change in the analysis of the share of joint ventures profits/(losses) after interest and tax. The Group's share of joint ventures' revenue in 2008 increased by £31.7 million, expenses increased by £29.6 million and finance costs increased by £2.1 million. As a result of this restatement, finance costs of joint ventures have now been reclassified to form part of profit/(loss) from operations. Profit/(loss) from operations is now stated before finance costs, amortisation, share of joint ventures' tax, exceptional items and tax. The 2008 comparative segmental analysis has been restated accordingly.  

		Building	Infrastructure	Construction Total	PPP Investments	Affordable  housing & regeneration	House-building	Group	Total
		£m	£m	£m	£m	£m	£m	£m	£m
Year ended 30 June 2009
Group revenue and share of joint venture revenue		546.3	516.6	1,062.9	27.4	184.4	235.1	0.5	1,510.3
Share of joint ventures' revenue		(0.5)	(10.8)	(11.3)	(25.8)	(8.7)	(3.3)	-	(49.1)
Revenue		545.8	505.8	1,051.6	1.6	175.7	231.8	0.5	1,461.2
Segment result:
Profit/(loss) before joint ventures and amortisation		12.9	13.9	26.8	2.3	7.4	4.4	(6.0)	34.9
Share of joint ventures' profit/(loss) and interest		0.1	-	0.1	(1.8)	(1.1)	(0.9)	-	(3.7)
Profit/(loss) from operations *		13.0	13.9	26.9	0.5	6.3	3.5	(6.0)	31.2
Share of joint ventures' tax		-	-	-	0.7	1.0	1.0	-	2.7
Profit/(loss) before finance costs, amortisation and exceptional items		13.0	13.9	26.9	1.2	7.3	4.5	(6.0)	33.9
Amortisation of intangibles		(0.3)	(0.6)	(0.9)	-	(0.3)	(0.8)	-	(2.0)
Exceptional items		-	-	-	-	(12.2)	(39.2)	-	(51.4)
Profit/(loss) before finance costs		12.7	13.3	26.0	1.2	(5.2)	(35.5)	(6.0)	(19.5)
Net finance income/(costs)		3.5	1.0	4.5	(0.4)	(6.4)	(18.3)	13.2	(7.4)
Profit/(loss) before taxation		16.2	14.3	30.5	0.8	(11.6)	(53.8)	7.2	(26.9)
Income tax income									9.1
Loss for the year									(17.8)

  2  Business segment reporting (continued)

			Building			Infrastructure	Construction Total	PPP Investments	Affordable  housing & regeneration	House-building	Group	Total
			£m			£m	£m	£m	£m	£m	£m	£m
Year ended 30 June 2008 (Restated)
Group revenue and share of joint venture revenue				605.4	541.3		1,146.7	36.7	230.4	486.3	0.3	1,900.4
Share of joint ventures' revenue				(1.6)	(9.4)		(11.0)	(35.2)	(7.0)	(15.3)	-	(68.5)
Revenue				603.8	531.9		1,135.7	1.5	223.4	471.0	0.3	1,831.9
Segment result:
Profit/(loss) before joint ventures and amortisation				11.8	13.8		25.6	0.2	12.7	51.0	(6.9)	82.6
Share of joint ventures' profit and interest				0.1	-		0.1	0.1	0.4	2.2	-	2.8
Profit/(loss) from operations *				11.9	13.8		25.7	0.3	13.1	53.2	(6.9)	85.4
Share of joint ventures' tax				-	-		-	-	(0.1)	(0.7)	-	(0.8)
Profit/(loss) before finance costs, amortisation and exceptional items				11.9	13.8		25.7	0.3	13.0	52.5	(6.9)	84.6
Amortisation of intangibles				(0.3)	(0.3)		(0.6)	-	(0.2)	(1.2)	-	(2.0)
Exceptional items				-	-		-	-	-	(11.5)	-	(11.5)
Profit before finance costs				11.6	13.5		25.1	0.3	12.8	39.8	(6.9)	71.1
Net finance income/(costs)				5.5	1.3		6.8	(0.5)	(4.5)	(29.2)	16.6	(10.8)
Profit/(loss) before taxation				17.1	14.8		31.9	(0.2)	8.3	10.6	9.7	60.3
Income tax expense												(17.8)
Profit for the year												42.5

 * Profit from operations is stated before finance costs, amortisation, share of joint ventures' tax, exceptional items and tax.

		Building	Infrastructure	Construction Total	PPP Investments	Affordable  housing & regeneration	House-building	Group	Total
		£m	£m	£m	£m	£m	£m	£m	£m
Year ended 30 June 2009
Assets
Goodwill		18.0	37.2	55.2	1.9	12.5	45.4	-	115.0
Intangible assets		-	0.3	0.3	-	1.2	6.7	-	8.2
Investment in joint ventures		0.4	-	0.4	-	-	0.3	-	0.7
Other assets excluding income taxes and cash		98.3	95.4	193.7	13.2	184.1	335.0	6.1	732.1
Total		116.7	132.9	249.6	15.1	197.8	387.4	6.1	856.0
Liabilities
Other liabilities excluding income taxes and debt		(243.1)	(161.2)	(404.3)	(2.8)	(44.3)	(85.3)	(51.9)	(588.6)
Net assets/(liabilities) excluding income taxes, net debt, goodwill and intangible assets		(144.4)	(65.8)	(210.2)	10.4	139.8	250.0	(45.8)	144.2
Goodwill and intangibles		18.0	37.5	55.5	1.9	13.7	52.1	-	123.2
Net assets/(liabilities) excluding income taxes and net cash/(debt)		(126.4)	(28.3)	(154.7)	12.3	153.5	302.1	(45.8)	267.4
Income taxes									(6.9)
Net debt									34.1
Net assets									294.6

  2  Business segment reporting (continued)

				Building	Infrastructure	Construction Total	PPP Investments	Affordable  housing & regeneration	House-building	Group	Total
				£m	£m	£m	£m	£m	£m	£m	£m
Year ended 30 June 2008
Assets
Goodwill			18.0		37.2	55.2	1.9	12.5	45.4	-	115.0
Intangible assets			0.2		0.9	1.1	-	1.5	7.6	-	10.2
Investment in joint ventures			0.3		-	0.3	9.1	-	3.1	-	12.5
Other assets excluding income taxes and cash			125.7		144.1	269.8	1.5	117.1	551.0	16.6	956.0
Total			144.2		182.2	326.4	12.5	131.1	607.1	16.6	1,093.7
Liabilities
Other liabilities excluding income taxes and debt			275.1		213.0	488.1	3.2	74.3	136.9	47.2	749.7
Net assets/(liabilities) excluding income taxes, net debt, goodwill and intangible assets			(149.1)		(68.9)	(218.0)	7.4	42.8	417.2	(30.6)	218.8
Goodwill and intangibles			18.2		38.1	56.3	1.9	14.0	53.0	-	125.2
Net assets/(liabilities) excluding income taxes and net cash/(debt)			(130.9)		(30.8)	(161.7)	9.3	56.8	470.2	(30.6)	344.0
Income taxes											(17.0)
Net debt											(1.7)
Net assets											325.3

3. Net exceptional item

In light of the significant further deterioration in the housing market during the year, the Group completed a review of the carrying value of its housing assets and operations. Total exceptional costs of £51.4 million (2008: £11.5 million) have been accounted for in the period comprising write-downs of housing related assets of £50.4 million (2008: £9.6 million) and redundancy costs of £1.0 million (2008: £1.9 million).

These amounts have been treated as exceptional items in accordance with the Group's accounting policy. The income tax credit associated with the exceptional items amounted to £15.1 million (2008: £3.4 million).

4. Net finance costs 

		2009	2008
		£m	£m
Interest receivable on bank deposits		1.5	3.2
Interest receivable from joint ventures		2.2	1.3
Net finance income on retirement benefit obligations		-	0.9
Other		0.1	1.1
Finance income		3.8	6.5
Interest payable on borrowings		(5.4)	(11.7)
Unwinding of discounted payables		(1.5)	(4.7)
Fair value losses on financing activities – interest rate swaps		(3.5)	(0.7)
Net finance cost on retirement benefit obligations		(0.8)	-
Other		-	(0.2)
Finance costs		(11.2)	(17.3)
Net finance costs		(7.4)	(10.8)

5. Income tax expense/(income)

	2009				2008
Analysis of charge in year	Before exceptional items	Exceptional items	Total		Before exceptional items	Exceptional items	Total
	£m	£m	£m		£m	£m	£m
Current year's income tax
Current tax	8.3	(15.1)	(6.8)		22.6	(3.4)	19.2
Deferred tax	(2.3)	-	(2.3)		(1.5)	-	(1.5)
Adjustment in respect of prior years
Current tax	0.3	-	0.3		0.9	-	0.9
Deferred tax	(0.3)	-	(0.3)		(0.8)	-	(0.8)
Income tax expense/(income)	6.0	(15.1)	(9.1)		21.2	(3.4)	17.8
Tax on items (credited)/charged to equity
Deferred tax charge for share based payments	-	-	-		1.8	-	1.8
Deferred tax credit on retirement benefit obligations	(1.8)	-	(1.8)		(3.3)	-	(3.3)
Deferred tax credit on movement in fair value of available for sale financial assets	-	-	-		(0.4)	-	(0.4)
	(1.8)	-	(1.8)		(1.9)	-	(1.9)
Total taxation	4.2	(15.1)	(10.9)		19.3	(3.4)	15.9

The total income tax credit for the year of £9.1 million is higher (2008: higher) than the year end standard rate of corporation tax in the UK of 28 per cent (2008: 28 per cent). The differences are explained below:

	2009				2008
	Before exceptional items	Exceptional  items	Total		Before exceptional items	Exceptional items	Total
	£m	£m	£m		£m	£m	£m
Profit/(loss) before income tax	24.5	(51.4)	(26.9)		71.8	(11.5)	60.3
Profit/(loss) before income tax multiplied by the year end standard rate in the UK of 28% (2008: 28%)	6.8	(14.4)	(7.6)		20.1	(3.2)	16.9
Effects of:
Expenses not deductible for tax purposes	0.4	-	0.4		1.4	-	1.4
Non taxable income	(1.2)	-	(1.2)		(1.6)	-	(1.6)
Change in rate of current income tax	-	(0.7)	(0.7)		1.1	(0.2)	0.9
Adjustments in respect of prior years	-	-	-		0.1	-	0.1
Other	-	-	-		0.1	-	0.1
Income tax expense/(income)	6.0	(15.1)	(9.1)		21.2	(3.4)	17.8

6.   Dividends 

The following dividends were paid by the Company:

			Year to 30 June 2009		Year to 30 June 2008
			£m	Pence per share	£m	Pence per share
Previous year final			7.9	2.10	8.3	2.20
Current period interim			1.7	0.45	3.4	0.90
Dividend recognised in the year			9.6	2.55	11.7	3.10
The following dividends were declared by the Company in respect of each accounting period presented:
			Year to 30 June 2009		Year to 30 June 2008
			£m	Pence per share	£m	Pence per share
Interim			1.7	0.45	3.4	0.90
Final			4.0	1.05	7.9	2.10
Dividend relating to the year			5.7	1.50	11.3	3.00

The directors are proposing a final dividend in respect of the financial year ended 30 June 2009 of 1.05p per share bringing the total dividend in respect of 2009 to 1.5p per share (2008: 3.0p). The final dividend will absorb approximately £4.0 million of shareholders' funds. Subject to shareholder approval at the Annual General Meeting to be held on 6 November 2009, the final dividend will be paid on 13 November 2009 to shareholders on the register at the close of business on 18 September 2009.

7. Earnings/(loss) per share

a)    Basic and diluted earning/(loss) per share

Basic earnings/(loss) per share is calculated by dividing the earnings/(loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held by the employee share trust, which are treated as cancelled.

Under normal circumstances, the average number of shares is diluted by reference to the average number of potential ordinary shares held under option in the period. The dilutive effect amounts to the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option price. Only shares that have met their cumulative performance criteria are included in the dilution calculation. The Group has two classes of potentially dilutive ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year and the contingently issuable shares under the Group's long term incentive plan. A loss per share cannot be reduced through dilution, hence this dilution is only applied where the Group has reported a profit.

The earnings/(loss) and weighted average number of shares used in the calculations are set out below.

		2009				2008
	Loss £m		Weighted average number  of shares	Per share amount  pence	Earnings £m		Weighted  average  number of shares	Per share amount pence
Basic
(Loss)/earnings attributable to ordinary shareholders	(17.8)		374,044,584	(4.8)	42.5		372,678,133	11.4
Effect of dilutive securities:
Options			-	-			974,331	-
Diluted	(17.8)		374,044,584	(4.8)	42.5		373,652,464	11.4

7 Earnings/(loss) per share (continued)

(b)    Adjusted earnings per share

Adjusted earnings per share based on the earnings before net exceptional items of £36.3 million (£2008: £8.1 million) for the year are set out below:

		2009				2008
	Earnings £m		Weighted average number  of shares	Per share amount  pence	Earnings £m		Weighted  average  number of shares	Per share amount pence
Basic
Earnings attributable to ordinary shareholders	18.5		374,044,584	4.9	50.6		372,678,133	13.6
Effect of dilutive securities:
Options			-	-			974,331	-
Diluted	18.5		374,044,584	4.9	50.6		373,652,464	13.6

8. Goodwill

Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to business segment.

The goodwill is attributable to the following business segments:

	2009 £m	2008 £m
Building	18.0	18.0
Infrastructure	37.2	37.2
PPP Investments	1.9	1.9
Affordable housing and regeneration	12.5	12.5
Housebuilding	45.4	45.4
Total	115.0	115.0

Key assumptions

The recoverable amount of a CGU is determined based on value in use calculations. These calculations use pre tax cash flow projections based on future financial budgets approved by the Board based on past performance and its expectation of market developments. The key assumptions within these budgets relate to revenue growth and the future gross margin achievable. Future budgeted revenue is based on management's knowledge of actual results from prior years, latest forecasts for the current year along with the existing secured work and management's future expectation of the level of work available within the market sector. In establishing future gross margins, the margins currently being achieved are considered in conjunction with expected inflation rates in each cost category. 

Cash is monitored very closely on a daily, weekly and monthly basis for the purposes of managing both treasury and the business as a whole. The assumptions used are reviewed regularly and differences between forecast and actual results are closely monitored with variances being investigated fully. The knowledge gained from this past experience is used to ensure that the future assumptions used are consistent with past actual outcome and are management's best estimate of the future cash flows of each business unit. Cash flows beyond the three year period are extrapolated using an estimated growth rate of 3% per annum within building and infrastructure and 2.5% per annum within housebuilding and affordable housing and regeneration. The growth rate used is the Group's estimate of the average long term growth rate for the market sectors in which the CGU operates. A pre tax discount rate of 11.3% (2008: 11.5%) has been applied to the future cash flows. 

8. Goodwill (continued)

Sensitivities

Sensitivity analysis has been undertaken on each goodwill impairment review, by increasing the discount rate and other variables applicable to each CGU. The following results were noted:

The fair value of the goodwill in both building and infrastructure are substantially in excess of book value. The Group has undertaken extensive impairment testing, taking into account current market conditions within the construction markets, including adjustments to growth rates and discount rates. None of these sensitivities, either individually or combined, resulted in the carrying value of these businesses being reduced to its recoverable amount.

The impairment review relating to Linden Homes goodwill, which is included within the affordable and regeneration and housebuilding segments, is impacted by the current trading conditions within the housing market. The detailed sensitivity analysis indicates that an increase of more than 27% (2008:10%) in the pre tax discount rate or a reduction of 41% (2008: 17%) in the forecast operating profits of the CGU would give rise to an impairment.

9.  Cash flows from operating activities

	2009	2008
	£m	£m
Cash generated from operations
Continuing operations
Profit for the year	(17.8)	42.5
Adjustments for:
Profit on sale of investments	(4.2)	(2.8)
Income tax	(9.1)	17.8
Depreciation	2.4	2.1
Other gains and losses	0.4	-
Amortisation of intangible assets	2.0	2.0
Share based payments	1.4	1.4
Profit on disposal of property, plant and equipment	(0.1)	(0.1)
Finance income	(3.8)	(6.5)
Finance cost	11.2	17.3
Share of post tax losses/(profits) from joint ventures	1.0	(2.0)
Additions to available for sale financial assets	(6.4)	-
Movement in retirement benefit obligations	(7.2)	(7.3)
(Decrease)/Increase in provisions for liabilities and charges	(2.2)	0.4
	(32.4)	64.8
Changes in working capital (excluding the effects of acquisition of subsidiaries)
Decrease/(increase) in inventories	0.8	(1.1)
Decrease in developments	162.7	94.6
Decrease/(Increase) in trade and other receivables	79.1	(41.5)
Decrease/(Increase) in payables	(162.8)	32.8
Cash generated from continuing operations	47.4	149.6

10.  Reconciliation of net cash/(debt)

Net cash/(debt)	2009 £m	2008 £m
Cash and cash equivalents	159.5	134.4
Current borrowings
Bank loan	(11.5)	(11.5)
Secured loan notes	(1.5)	(4.3)
Non current borrowings
Bank loans	(112.4)	(120.3)
Net cash/(debt)	34.1	(1.7)

11.  Statement of changes in shareholders' equity 

	Share capital £m	Share premium £m	Other reserves £m	Retained earnings £m	Total shareholders equity £m
At 1 July 2007	18.8	190.6	6.7	90.5	306.6
Profit for the year	-	-	-	42.5	42.5
Dividends	-	-	-	(11.7)	(11.7)
Proceeds from shares issued	0.1	0.2	-	-	0.3
Purchase of own shares	-	-	-	(2.5)	(2.5)
Share based payments	-	-	-	1.4	1.4
Actuarial losses recognised in retirement benefit obligations	-	-	-	(11.8)	(11.8)
Movement in fair value available for sale financial assets	-	-	(0.3)	-	(0.3)
Released on disposal of available for sale financial assets	-	-	(1.1)	-	(1.1)
Deferred tax on movements in equity	-	-	-	1.9	1.9
At 30 June 2008	18.9	190.8	5.3	110.3	325.3
Loss for the year	-	-	-	(17.8)	(17.8)
Dividends	-	-	-	(9.6)	(9.6)
Share based payments	-	-	-	1.4	1.4
Actuarial losses recognised in retirement benefit obligations	-	-	-	(6.5)	(6.5)
Deferred tax on movements in equity	-	-	-	1.8	1.8
At 30 June 2009	18.9	190.8	5.3	79.6	294.6

12.  Guarantees and contingent liabilities

Galliford Try plc has entered into financial guarantees and counter indemnities in respect of bank and performance bonds issued on behalf of Group undertakings, including joint arrangements and joint ventures, in the normal course of business amounting to £113.5 million (2008: £117.7 million).

Disputes arise in the normal course of business, some of which lead to litigation or arbitration procedures. The directors make proper provision in the financial statements when they believe a liability exists. Whilst the outcome of disputes and arbitration is never certain, the directors believe that the resolution of all existing actions will not have a material adverse effect on the Group's financial position.

As part of its investigation into alleged anti competitive practice in the construction industry, the Office of Fair Trading (OFT) issued a Statement of Objections to the Company in April 2008 alleging breaches of the 1998 Competition Act.  The Company submitted formal representations on the Statement of Objections and is awaiting the OFT's decision.  If the Group is found to have infringed competition law it may be liable to a fine, although subject to continued co-operation with the investigation, it has been provisionally granted a reduction in any fine that may ultimately be imposed.  No provision has been made for any potential fine in relation to this matter as the result of the investigation is not yet known and any potential fine is not quantifiable.

 

END

 

 

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