Half Yearly Report

RNS Number : 6711B

Galliford Try PLC

23 February 2011

 



07:00 A.M. WEDNESDAY 23 FEBRUARY 2011

GALLIFORD TRY PLC

INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

Strong results and housebuilding expansion on track

	2010 £m	2009 £m
Group revenue ¹	575.9	570.0
Profit before tax              - pre exceptional	17.0	13.2
- post exceptional	17.0	6.4²
Net (debt) cash	(30.7)	100.2
Earnings per share         - pre exceptional	14.8p	14.0p
- post exceptional	14.8p	3.0p²
Dividend per share	4.5p	3.3p

Financial Highlights

·          29% growth in pre-exceptional profit before tax

·          £174 million construction cash balance contribution to better than forecast £30.7 million net debt

·          36% growth in interim dividend

Operational Highlights

·          On track to deliver housebuilding expansion plan objectives in 2012

·          100% of plots for planned production in 2012 now secured, with 65% of 10,000 plot landbank acquired at current market values

·          19% increase in sales currently reserved, contracted or completed at £442 million (last year: £370 million), with encouraging increase in sales rate since start of 2011.

·          2.5% construction margin demonstrates resilient performance (2009: 2.4%)

·          £1.75 billion construction order book (2009: £1.8 billion), underpinned by our success in securing large water schemes to add to our long term frameworks

¹   Group revenue excludes joint ventures.  'Revenue' where used in the statement includes share of joint ventures.

²   In 2009 the Group incurred a net exceptional charge of £6.8 million

Greg Fitzgerald, Chief Executive, commented:

"We are currently on track to deliver the objectives of our three year housebuilding expansion plan during the next financial year.  The spring selling season remains crucial, and although it is too early to judge whether it will be sustained, the improvement in our sales rate during the first few weeks of 2011 is encouraging.  Our strategy for managing our construction business in challenging times is working well and the underlying results give us confidence that we will be able to grow the business again when markets improve.

Although the economic outlook is still uncertain, the board is encouraged by the group's performance and progress in the first half of the financial year, and is confident in its strategy for delivering the objectives of its expansion plan."

For further enquiries:

Galliford Try -                          Greg Fitzgerald, Chief Executive                01895 855001

                                              Frank Nelson, Finance Director

Tulchan Communications -       Mal Patel, Christian Cowley,                     020 7353 4200

 Matthieu Roussellier                  

STATEMENT

STRATEGIC UPDATE

Galliford Try set out a strategy in September 2009 to transform its housebuilding business through an expansion plan that had the objectives of a significant increase in profits and return on capital employed during the third year.  We are now half way through the second year and all the building blocks of our strategy are in place.  We have the land we require for the next financial year's production, the structure of our southern biased business has been strengthened with new offices, the people we need are in place, and we are building up our production with the number of our sales outlets expected to increase by 30% to 85 during the second half of this financial year.  We are therefore on track to deliver our objectives during our next financial year, to June 2012.

In challenging construction markets, our strategy has been to maintain revenue at a level that continues to deliver acceptable profits and industry leading cash generation with a controlled risk profile.  Our performance to date demonstrates we are meeting these objectives and successfully maintaining our quality order book, underpinned by our achievements in adding to our long term frameworks for the water industry with individual large scheme projects.  We continue to be in a position where we will be able to take advantage of the opportunities that will ultimately arise when markets improve. 

FINANCIAL RESULTS

Group revenue for the half year to 31 December 2010 was marginally higher at £575.9 million (2009: £570.0 million).  The group achieved a profit from operations (stated before finance costs, share of joint ventures interest and tax, exceptional items and tax) of £17.9 million (2009: £17.1 million).  Profit before tax was £17.0 million (2009 pre exceptional: £13.2 million: post exceptional £6.4 million).  Including the group's share of joint ventures, revenue was £597.3 million.  In line with our strategy, housebuilding revenue was up 29% to £152.9 million with construction revenue lower by 5% at £442.6 million. 

The earnings per share for the period were 14.8p (2009 pre exceptional: 14.0p; post exceptional 3.0p).  The taxation expense of £4.9 million reflects an estimated effective rate of 28.8% (2009: 30.3%) for the full financial year to 30 June 2011 as detailed in note 5 to this interim report.

The group maintained its strong focus on cash management throughout the period.  The construction cash balance at 31 December 2010 was £174.0 million having reduced less than anticipated in the current competitive market conditions.  The working capital invested in land and work in progress increased to £517.2 million as we continued to build up our housebuilding business.  The group's net debt position at the half year end of £30.7 million was therefore better than expected at this stage of our expansion plan.  Although they do not expire until February 2012, the group is close to finalising agreement with its bankers for the renewal of its bank facilities for a four year term.

DIVIDEND

Having taken account of the group's performance during the half year to 31 December 2010, and the progress it has made towards delivering the strategic objectives outlined at the time of the rights issue in September 2009, the directors have declared an interim dividend of 4.5 pence per share (2009: 3.3 pence) which will be paid on 12 April 2011 to shareholders on the register at close of business on 18 March 2011. 

The directors' intention is that, going forward, the interim dividend should represent approximately one third of the total dividend for the year and that, subject to the performance and prospects of the business, the group should, over time, increase the amount of the total dividend so that it represents around one third of distributable profits.

HOUSEBUILDING

Growth in line with forecasts

Halfway through the second year of our three year expansion plan, housebuilding revenue and profits are increasing in line with our forecasts.  Revenue (including our share of joint ventures) for the half year was £152.9 million, up 29% from £118.8 million last year. Profit from operations at £9.9 million is 39% up on a year ago (2009: £7.1 million).  This represents a margin of 6.5%, which is being held back in the short term as we have now invested in the resources needed to deliver the substantially higher revenue levels anticipated in our next financial year. 

Prices achieved at or above expectations

Total housing completions were up 28% to 851 units; 779 net of joint venture partners share (2009: 663 and 638 respectively).  Prices achieved were at or slightly above our expectations and our average selling price on private sales was up 4% at £204,000 (2009: £197,000).  Due to a higher proportion of lower priced affordable homes completed in the period, the average selling price for affordable sales was £110,000 (2009: £131,000) leading to a combined average selling price of £178,000 (2009: £181,000).

Increase in active selling sites to support expansion plan

Total sales currently reserved, contracted or completed of £442 million are up by 19% compared to a year ago.  £286 million is for the current financial year to 30 June 2011, representing 74% of projected sales for the year, compared to 84% at the same point last year.  Sales in the first half of the year have been achieved from a similar number of outlets to last year.  The second half is expected to benefit from a significant increase in the number of active selling sites from 65 at 30 December 2010 to over 85 by June 2011, giving us the outlets projected in our three year expansion plan. 

Continued progress in land acquisition

We have continued to be successful in acquiring land that meets our strict financial criteria although the land market has become more competitive, particularly in the south east.  The planning system remains challenging, and we continue to have concerns over the confusion and delay that is being caused with the implementation of the Government's localism agenda.  

We now have all of the plots that we require, either owned or under our control, to deliver our planned output for the financial year to June 2012.  The landbank currently stands at 10,000 plots, up from 9,300 a year ago.  6,500 plots, or 65% of our total landbank, has now been acquired at current market values compared to 43% a year ago.  We also have 2,700 plots with terms agreed in the pipeline.  Our strategic land totals 1,200 acres, from which we expect to generate around 7,100 plots.

Affordable outlook improving

We continue to benefit from our presence on all three regions of the Homes and Communities Agency's delivery partner panels, with projects secured in every region and new opportunities under review.  We have also secured further funding awards as the Agency's three year programme concludes.  Affordable housing providers are now replanning their development programmes in response to the reforms in the new four year Affordable Homes framework.  The Government's designation of up to 80% of open market rent as affordable housing is expected to support development across the south of England in particular, where we have a comprehensive market presence and good visibility of deliverable schemes.

Encouraging start to second half

Following the encouraging sales volumes achieved during the first quarter of our financial year, the market did not benefit from the historic autumn seasonal upturn and remained subdued for the rest of the period.  However, there has been a significant improvement in the sales rate since the start of 2011 and, with prices remaining stable we have made an encouraging start to the second half.  Despite a backdrop of negative economic commentary, with mortgage availability remaining the most serious constraint to sales volumes, this gives us an early indication that the market could show its usual improvement over the spring selling season.  Our visitor levels for the first 7 weeks of 2011 are 17% above the equivalent period last year and cancellation levels are at 15%, marginally below the long term average.   

CONSTRUCTION

Total construction profit from operations was £10.9 million on revenue of £442.6 million, including joint ventures, representing a margin of 2.5% (2009: £11.1 million on £465.8 million, representing 2.4%).  A positive cash balance of £174.0 million at 31 December 2010 (2009: £203.5 million) demonstrates the effectiveness of our cash management during the period.  In markets that continue to be challenging, these results underpin our strategy of closely managing construction risk to deliver revenues at a level that will provide acceptable profits and cash balances. 

Building 

Profit from operations of £5.1 million on revenue of £216.6 million represents a margin of 2.4% (2009: £4.8 million on revenues of £222.0 million representing 2.2%). 

The results demonstrate a good performance across all our businesses. We have a particularly strong presence in Scotland where we continue to secure significant public sector work in both health and education, building on our track record nationwide.  In England, we have five NHS LIFT (local improvement finance trust) frameworks for primary healthcare providers, which generate a regular flow of new contracts.  Education projects secured in the period include the £57 million Orkney Schools framework and a £50 million Building Schools for the Future project at Halton in the north of England.  We have established a new region based in Bristol, to expand our coverage of the south west.

We are continuing to work on additional facilities for the All England Lawn Tennis Club at Wimbledon, as well as being close to completing our contract for the redevelopment of St Pancras Chambers in London.  In Scotland, we have commenced work on the first projects under the £300 million south east hub framework for the Scottish NHS. 

The building division's order book currently stands at £631 million, compared to £706 million a year ago.

Infrastructure

Profit from operations of £4.7 million on revenue of £174.4 million represents a margin of 2.7% (2009: £5.5 million on £197.9 million, representing 2.8%). 

During the period, the major projects being undertaken at Olympic Park for the Olympic Development Authority were completed and we are nearing completion of our M74 Interlink highway project in Glasgow.  In water, the AMP5 five year framework programmes that we secured last year are now building up revenue levels well as projects start to come on stream.  We are also benefitting from our ability to secure individual large scheme projects such as the £60 million Beckton Waste Water treatment works for Thames Water which added to the £280 million already secured in framework by our construction joint venture.

We are developing the expertise that we have in waste water treatment to deliver anaerobic digester plants that produce energy from waste, and have secured our first contracts in the commercial waste sector.  We have a longstanding expertise in providing infrastructure services to the mobile telecommunications market.  With a number of new projects coming on stream both in mobile phone installations and in constructing security measures to protect remote infrastructure sites, we anticipate work in these sectors to grow.

The current order book for the infrastructure division stands at £919 million, compared to £959 million last year.

Partnerships

A profit from operations of £1.1 million on revenue of £51.6 million represented a margin of 2.1% (2009: £0.8 million on £45.9 million, representing 1.7%).

The opportunities for our affordable housing contracting business are improving as the affordable housing providers resolve their ability to proceed with developments following the Governments comprehensive spending review.  We have a long established business in London where we work in frameworks for over 30 affordable housing providers.  In the north east of England our Newcastle based business has a well established client list and we are currently expanding the business to the other regions of the UK where the group has a contracting presence.  During the period we established a new office in Cornwall to cover the south west of England, taking advantage of opportunities arising from clients replacing failed contractors on their approved lists.

The current order book for the division stands at £194 million, compared to £144 million last year.

Well placed to grow when markets improve

We are encouraged by the strength and resilience of our total construction order book which has been maintained at £1.75 billion (2009: £1.8 billion).  61% of our order book is in long term frameworks, giving visibility to a significant proportion of our future revenues.  All of this financial year's planned revenues have been secured with 61% for our next financial year, compared to 60% at the same point last year.  47% of the order book is in the public sector, 39% in the regulated sector and 14% in the private sector.

With revenues increasing as we enter the second year of the five year AMP5 framework agreements for our water clients, and some evidence of an increase in commercial work opportunities in the private sector, particularly in the south east of England, our strategy has put us in a good position to be able to grow again when markets improve. 

PPP INVESTMENTS

Revenue was £1.3 million (2009: £2.5 million) on which a profit from operations of £0.4 million (2009: £2.2 million) was generated. 

During the period we sold our interest in the Worcester Library and History Centre following financial close.  The effect of the Government's comprehensive spending review during the period has been to reduce significantly the number of opportunities available in the immediate future.  However, we have a strong track record in Scotland, where the regional Government has a clear intention to use capital investment to strengthen recovery and support growth in both infrastructure and key public services.

We are also investing in renewable energy to create a portfolio of wind turbine projects that will create both construction opportunities and a portfolio of investments.  In the period we secured our first community and district energy scheme which will provide a foundation for securing future projects and now have option agreements covering over 30 megawatts of power generation.

HEALTH, SAFETY & ENVIRONMENT 

The health and safety of everyone affected by its operations is the group's highest priority.  We are committed to achieving industry leading health, safety and environmental standards and during the period completed the second phase of our behavioural safety programme 'Challenging Beliefs, Affecting Behaviour' with over 800 operational staff.  Following on from our initial leadership programme that covered 400 staff, we are now moving on to the third phase of the programme, focussing on site management supervision, our supply chain and the implementation of various behavioural tools.

During the period to 31 December 2010 the group's rolling 12 month accident frequency rate improved to 0.19 accidents per 100,000 hours worked compared to 0.27 a year ago.  During the period the incident rate per 1,000 people at risk also improved to 1.6 compared to 2.94 a year ago.

BOARD

Ian Coull joined the board as a non executive director on 8 November 2010 and will succeed David Calverley as Chairman when he retires from the board on 30 June 2011.  Ian, 60, is currently Chief Executive of Segro plc, Europe's largest real estate investment trust, and was previously a director of J Sainsbury plc.

OUTLOOK

We are currently on track to deliver the objectives of our three year housebuilding expansion plan during the next financial year.  The spring selling season remains crucial, and although it is too early to judge whether it will be sustained, the improvement in our sales rate during the first few weeks of 2011 is encouraging.  Our strategy for managing our construction business in challenging times is working well and the underlying results give us confidence that we will be able to grow the business again when markets improve.

Although the economic outlook is still uncertain, the board is encouraged by the group's performance and progress in the first half of the financial year, and is confident in its strategy for delivering the objectives of its expansion plan.

Consolidated balance sheet 

at 31 December 2010 (unaudited)

	Note	31 Dec 2010 £m	31 Dec 2009 £m	30 June 2010 £m
Non current assets
Intangible assets		6.4	7.5	6.9
Goodwill	8	115.0	115.3	115.0
Property, plant and equipment		9.0	7.5	7.6
Investments in joint ventures		1.7	0.8	2.1
Financial assets
- Available for sale financial assets		21.0	12.7	15.7
Trade and other receivables		46.2	39.1	38.2
Deferred income tax assets		8.0	12.8	11.2
Total non current assets		207.3	195.7	196.7
Current assets
Inventories		0.6	1.2	1.1
Developments		585.2	488.4	528.9
Trade and other receivables		223.9	203.6	227.7
Cash and cash equivalents (excluding bank overdrafts)	9	60.5	190.8	166.7
		870.2	884.0	924.4
Non current assets classified as held for sale		-	-	0.5
Total current assets		870.2	884.0	924.9
Total assets		1,077.5	1,079.7	1,121.6
Current liabilities
Financial liabilities - borrowings		(1.8)	(1.7)	(1.0)
Trade and other payables		(521.6)	(510.3)	(563.0)
Current income tax liabilities		(7.5)	(4.1)	(5.9)
Provisions for other liabilities and charges		(8.7)	(8.6)	(8.6)
Total current liabilities		(539.6)	(524.7)	(578.5)
Net current assets		330.6	359.3	346.4
Non current liabilities
Financial liabilities
- Borrowings		(89.4)	(88.9)	(89.2)
- Derivative financial liabilities		(1.4)	(2.5)	(2.1)
Retirement benefit obligations	10	(5.0)	(30.5)	(17.3)
Deferred income tax liabilities		-	(15.0)	-
Other non current liabilities		(6.5)	(9.6)	(10.7)
Provisions for other liabilities and charges		(0.5)	(0.1)	(0.6)
Total non current liabilities		(102.8)	(146.6)	(119.9)
Total liabilities		(642.4)	(671.3)	(698.4)
Net assets		435.1	408.4	423.2
Shareholders' equity
Ordinary shares		40.9	40.9	40.9
Share premium		190.8	190.8	190.8
Other reserves		5.3	5.3	5.3
Retained earnings		198.1	171.4	186.2
Total shareholders' equity		435.1	408.4	423.2

Notes 1 to 12 are an integral part of this condensed consolidated interim financial information.

Consolidated income statement

for the half year ended 31 December 2010 (unaudited)

		Half year to 31 Dec 2010	Half year to 31 Dec 2009			Year ended 30 June 2010
			Before excep-tional items	Excep- tional  items	Total	Before excep-tional items	Excep- tional  items	Total
	Note	£m	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	3	575.9	570.0	-	570.0	1,221.9	-	1,221.9
Cost of sales		(517.1)	(515.1)	1.5	(513.6)	(1,104.6)	1.4	(1,103.2)
Gross profit/(loss)		58.8	54.9	1.5	56.4	117.3	1.4	118.7
Administrative expenses		(41.8)	(39.3)	(8.3)	(47.6)	(87.1)	(8.3)	(95.4)
Share of post tax profits/(losses) from joint ventures		0.1	(1.1)	-	(1.1)	(0.8)	-	(0.8)
Profit/(loss) before finance costs		17.1	14.5	(6.8)	7.7	29.4	(6.9)	22.5
Profit from operations	3	17.9	17.1	(6.8)	10.3	35.2	(6.9)	28.3
Share of joint ventures interest and tax		(0.3)	(1.9)	-	(1.9)	(4.5)	-	(4.5)
Amortisation of intangibles		(0.5)	(0.7)	-	(0.7)	(1.3)	-	(1.3)
Profit/(loss) before finance costs		17.1	14.5	(6.8)	7.7	29.4	(6.9)	22.5
Finance income	4	2.8	2.4	-	2.4	4.4	-	4.4
Finance costs	4	(2.9)	(3.7)	-	(3.7)	(7.7)	-	(7.7)
Profit/(loss) before taxation		17.0	13.2	(6.8)	6.4	26.1	(6.9)	19.2
Income tax expense	5	(4.9)	(4.0)	(0.4)	(4.4)	(8.0)	(0.4)	(8.4)
Profit/(loss) for the period from continuing operations		12.1	9.2	(7.2)	2.0	18.1	(7.3)	10.8
Earnings/(loss) per share	6
- basic		14.8p	14.0p		3.0p	24.6p		14.7p
- diluted		14.8p	14.0p		3.0p	24.6p		14.7p
Dividend per share	7	4.5p			3.3p			12.5p

Notes 1 to 12 are an integral part of this condensed consolidated interim financial information.

Consolidated statement of comprehensive income

for the half year ended 31 December 2010 (unaudited)

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m	Year to 30 June 2010 £m
Profit for the period	12.1	2.0	10.8
Actuarial gains and losses on retirement benefit obligations	9.0	(5.6)	4.8
Deferred tax on items taken to equity	(2.6)	1.6	(1.3)
Net gains/(losses) recognised directly in equity	6.4	(4.0)	3.5
Total comprehensive income / (expense) for the period	18.5	(2.0)	14.3

Consolidated statement of changes in shareholders' equity

for the half year ended 31 December 2010 (unaudited)

	Share  capital £m	Share  premium  £m	Other reserves  £m	Retained earnings £m	Total shareholders' equity £m
Half year ended 31 December 2010:
Balance at 1 July 2010	40.9	190.8	5.3	186.2	423.2
Profit for the period	-	-	-	12.1	12.1
Other comprehensive income	-	-	-	6.4	6.4
Transactions with owners:
Dividends	-	-	-	(7.5)	(7.5)
Share based payments	-	-	-	0.9	0.9
Balance at 31 December 2010	40.9	190.8	5.3	198.1	435.1
Half year ended 31 December 2009:
Balance at 1 July 2009	18.9	190.8	5.3	79.6	294.6
Profit for the period	-	-	-	2.0	2.0
Other comprehensive expense	-	-	-	(4.0)	(4.0)
Transactions with owners:
Dividends	-	-	-	(4.0)	(4.0)
Share based payments	-	-	-	0.5	0.5
Issue of shares	22.0			97.3	119.3
Balance at 31 December 2009	40.9	190.8	5.3	171.4	408.4
Year ended 30 June 2010:
Balance at 1 July 2009	18.9	190.8	5.3	79.6	294.6
Profit for the period	-	-	-	10.8	10.8
Other comprehensive income	-	-	-	3.5	3.5
Transactions with owners:
Dividends	-	-	-	(6.7)	(6.7)
Share based payments	-	-	-	1.8	1.8
Purchase of own shares	-	-	-	(0.1)	(0.1)
Issue of shares	22.0	-	-	97.3	119.3
Balance at 30 June 2010	40.9	190.8	5.3	186.2	423.2

Notes 1 to 12 are an integral part of this condensed consolidated interim financial information.

Consolidated cash flow statement

for the half year ended 31 December 2010 (unaudited)

	Notes	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m	Year to 30 June 2010 £m
Cash flows from operating activities
Continuing operations
Profit before finance costs		17.1	7.7	22.5
Adjustments for:
Depreciation and amortisation		1.5	1.7	3.3
Profit on sale of property, plant and equipment		-	(0.1)	(0.1)
Profit on sale of investments and available for sale financial assets		(1.5)	(4.4)	(4.4)
Share based payments		0.9	0.5	1.8
Share of post tax (profits)/lossesd from joint ventures		(0.1)	1.1	0.8
Movement on provisions		-	8.0	8.5
Other non cash movements		(4.5)	(2.6)	(5.5)
Operating profit before pension deficit payments and changes in working capital		13.4	11.9	26.9
Deficit funding payments to pension schemes		(3.7)	(3.6)	(7.3)
Operating profit before changes in working capital		9.7	8.3	19.6
Decrease/(increase) in inventories		0.5	(0.3)	(0.2)
Increase in developments		(56.3)	(22.1)	(25.1)
(Increase)/decrease in trade and other receivables		(9.9)	9.9	(20.9)
(Decrease)/increase in payables		(40.2)	(44.5)	9.0
Net cash used in operations		(96.2)	(48.7)	(17.6)
Interest received		1.4	1.9	3.6
Interest paid		(2.0)	(2.4)	(4.6)
Income tax paid		(2.5)	(3.0)	(7.5)
Net cash used in operations		(99.3)	(52.2)	(26.1)
Cash flows from investing activities
Dividends received from joint ventures		-	-	0.1
Acquisition of subsidiaries (net of cash and borrowings acquired)		-	(11.1)	(55.7)
Acquisition of investments in joint ventures		-	(1.1)	(2.4)
Proceeds from investments in joint ventures		1.2	-	-
Acquisition of available for sale financial assets		(0.3)	(0.7)	(1.0)
Proceeds from available for sale financial assets		0.1	-	0.2
Acquisition of non-current assets held for sale		-	-	(0.5)
Proceeds from non-current assets held for sale		1.2	16.5	16.5
Acquisition of property, plant and equipment		(2.4)	(0.2)	(1.6)
Proceeds from sale of property, plant and equipment		-	0.1	0.4
Net cash (used in)/generated from investing activities		(0.2)	3.5	(44.0)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		-	119.3	119.3
Purchase of own shares		-	-	(0.1)
Repayment of borrowings		(0.1)	(35.3)	(35.2)
Dividends paid to Company shareholders	7	(7.5)	(4.0)	(6.7)
Net cash (used in)/generated from financing activities		(7.6)	80.0	77.3
Net (decrease)/increase in cash and cash equivalents		(107.1)	31.3	7.2
Cash and cash equivalents at 1 July		166.7	159.5	159.5
Cash and cash equivalents at 31 Dec	9	59.6	190.8	166.7

Notes 1 to 12 are an integral part of this condensed consolidated interim financial information.

Notes to the condensed consolidated interim financial information

1    Basis of preparation

The company is a public limited company incorporated and domiciled in the UK. The address of its registered office is Cowley Business Park, Cowley, Uxbridge, Middlesex, UB8 2AL. The company has its primary listing on the London Stock Exchange. This condensed consolidated interim financial information was approved for issue on 23 February 2010.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006.  Statutory accounts for the year ended 30 June 2010 were approved by the Board of directors on 15 September 2010 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

This condensed consolidated interim financial information has been reviewed, not audited.

This condensed consolidated interim financial information for the half year ended 31 December 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, "Interim financial reporting" as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

The Group's activities, together with the factors likely to affect the future development, performance and position of the business are set out in this Interim Report. The annual financial statements for the year ended 30 June 2010 included the Group's objectives, policies and processes for managing capital, its financial risk management objectives, details of its financial instruments and hedging activities and its exposure to credit risk and liquidity risk.

The Group meets its day to day working capital requirements through its bank facilities. The Group's forecasts, taking into account the board's future expectations of the Group's performance, indicate that there is substantial headroom within the bank facilities and the Group will continue to operate within the covenants of those facilities. Although they do not expire until February 2012, the group is close to finalising agreement with its bankers for the facilities to be renewed for a four year term.

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial information.

2    Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2010, as described in those financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected annual earnings.

The only new amendments to standards that became mandatory for the first time for the financial year beginning 1 July 2010 was IFRIC 19 - Extinguishing liabilities with equity instruments. This amendment has no impact on the Group's results.

3    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.

The chief operating decision-maker ("CODM") has been identified as the Chief Executive and the Group Finance Director. The CODM review the group's internal reporting in order to assess performance and allocate resources.  Management has determined the operating segments based on these reports.

The CODM assess the performance of the operating segments based on a measure of adjusted earnings before net finance costs, tax and amortisation. This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as restructuring costs and impairments when the impairment is the result of an isolated, non-recurring event.  Interest income and expenditure are included in the result for each operating segment that is reviewed by the CODM.  Other information provided to them is measured in a manner consistent with that in the financial statements.

Following the adoption of IFRS8, the segmental reporting below includes profit from operations, which is stated before finance costs, amortisation of intangible assets, share of joint ventures' interest and tax, exceptional items and tax. This reflects the internal reporting measure used by the CODM. As at 30 June 2010 the operating segments reported were changed compared to those previously reported and hence the comparative information provided for the period ended 31 December 2009 has been restated accordingly.

			Construction
		House- building	Building	Partner- ships	Infrastructure	Total	PPP Investments	Central costs	Total
		£m	£m	£m	£m	£m	£m	£m	£m
Half year ended 31 December 2010
Group revenue and share of joint venture revenue		152.9	216.6	51.6	174.4	442.6	1.3	0.5	597.3
Share of joint ventures' revenue		(15.0)	(0.1)	-	(5.6)	(5.7)	(0.7)	-	(21.4)
Revenue		137.9	216.5	51.6	168.8	436.9	0.6	0.5	575.9
Segment result:
Profit/(loss) before joint ventures and amortisation		9.6	5.0	1.1	4.7	10.8	0.4	(3.3)	17.5
Share of joint ventures' profit		0.3	0.1	-	-	0.1	-	-	0.4
Profit/(loss) from operations *		9.9	5.1	1.1	4.7	10.9	0.4	(3.3)	17.9
Share of joint ventures' interest and tax		(0.2)	(0.1)	-	-	(0.1)	-	-	(0.3)
Profit/(loss) before finance costs, amortisation and taxation		9.7	5.0	1.1	4.7	10.8	0.4	(3.3)	17.6
Net finance (costs)/income		(5.3)	0.5	(0.4)	(0.2)	(0.1)	-	5.3	(0.1)
Profit before amortisation and taxation		4.4	5.5	0.7	4.5	10.7	0.4	2.0	17.5
Amortisation of intangibles									(0.5)
Profit before taxation									17.0
Income tax expense									(4.9)
Profit for the period									12.1

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

			Construction
		House- building	Building	Partner- ships		Infrastructure	Total	PPP Investments	Central costs	Total
		£m	£m	£m		£m	£m	£m	£m	£m
Half year ended 31 December 2009 (restated)
Group revenue and share of joint venture revenue		118.8	222.0		45.9	197.9	465.8	2.5	0.3	587.4
Share of joint ventures' revenue		(6.5)	(0.1)		-	(9.0)	(9.1)	(1.8)	-	(17.4)
Revenue		112.3	221.9		45.9	188.9	456.7	0.7	0.3	570.0
Segment result:
Profit/(loss) before joint ventures and amortisation		6.9	4.8		0.8	5.5	11.1	1.6	(3.3)	16.3
Share of joint ventures' profit		0.2	-		-	-	-	0.6	-	0.8
Profit/(loss) from operations *		7.1	4.8		0.8	5.5	11.1	2.2	(3.3)	17.1
Share of joint ventures' interest and tax		(0.1)	-		-	-	-	(1.8)	-	(1.9)
Profit/(loss) before finance costs, amortisation and net exceptional items and taxation		7.0	4.8		0.8	5.5	11.1	0.4	(3.3)	15.2
Net finance (costs)/income		(5.4)	0.4		0.1	(0.3)	0.2	-	3.9	(1.3)
Profit before amortisation, net exceptional items and taxation		1.6	5.2		0.9	5.2	11.3	0.4	0.6	13.9
Amortisation of intangibles										(0.7)
Profit before net exceptional items and taxation										13.2
Net exceptional items										(6.8)
Income tax expense										(4.4)
Profit for the period										2.0

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

The net exceptional item in 2009 of £6.8 million comprised a fine imposed by the Office of Fair Trading of £8.3 million and a net credit on reassessment due to market movements of the carrying value of housing related assets of £1.5 million where the original estimates were taken as an exceptional charge.  Other movements on developments are taken to normal trading.

Reportable segments' assets are reconciled to total assets as follows:

						Construction
			House-building			Building	Partner- ships	Infrastructure	Total	PPP Investments	Central costs	Total
			£m			£m	£m	£m	£m	£m	£m	£m
Half year ended 31 December 2010
Assets
Net (debt)/cash				(517.2)	128.6		20.0	25.4	174.0	(0.8)	313.3	(30.7)
Other assets												1,009.0
Borrowings												91.2
Deferred income tax assets												8.0
Total assets												1,077.5
Half year ended 31 December 2009 (restated)
Assets
Net (debt)/cash				(409.2)	139.0		22.8	41.7	203.5	2.7	303.2	100.2
Other assets												891.1
Borrowings												90.6
Deferred income tax liabilities												(2.2)
Total assets												1,079.7

During the period the Group acquired £2.4 million (31 December 2009: £0.2 million) of property, plant and equipment and disposed of property plant and equipment with a net book value of £nil (31 December 2009: £0.1 million).

4    Net finance costs

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m
Interest receivable from banks	0.6	1.1
Interest receivable from joint ventures	0.9	1.1
Unwind of discount on shared equity receivables	0.6	-
Fair value gains on financing activities - interest rate swaps	0.7	0.2
Finance Income	2.8	2.4
Interest payable on borrowings	(2.0)	(2.3)
Unwind of discounted payables	(0.6)	(0.4)
Net finance cost on retirement benefit obligations	(0.3)	(1.0)
Finance costs	(2.9)	(3.7)
Net finance costs	(0.1)	(1.3)

5       Income tax expense

The taxation expense on profit for the period of 28.8% (31 December 2009: pre-exceptional 30.3%) reflects the estimated effective rate for the full financial year to 30 June 2011.

6       Earnings per share

a)  Basic and diluted earnings per share

Basic earnings per share is calculated by dividing the earnings 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, if applicable, is only applied where the Group has reported a profit.

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

	Half year to 31 Dec 2010				Half year to 31 Dec 2009
	Earnings £m	Weighted average number  of shares	Per share amount pence	Earnings  £m		Weighted  average  number of shares	Per share amount pence
Basic EPS
Earnings attributable to ordinary shareholders	12.1	81,539,277	14.8	2.0		65,771,777	3.0
Effect of dilutive securities
Options		85,684				-
Diluted	12.1	81,624,961	14.8	2.0		65,771,777	3.0

b)            Adjusted earnings per share

Adjusted earnings per share based on the earnings before net exceptional items are set out below:

	Half year to 31 Dec 2010				Half year to 31 Dec 2009
	Earnings £m	Weighted average number  of shares	Per share  amount  pence	Earnings  £m		Weighted  average  number of shares	Per share amount pence
Basic EPS
Earnings attributable to ordinary shareholders	12.1	81,539,277	14.8	9.2		65,771,777	14.0
Effect of dilutive securities
Options		85,684				-
Diluted	12.1	81,624,961	14.8	9.2		65,771,777	14.0

7    Dividends

The dividend per ordinary share amounts is shown in the table below.

		Half year to 31 Dec 2010			Half year to 31 Dec 2009			Year to 30 June 2010
	£m		Pence  per share	£m		Pence  per share	£m		Pence  per share
Declared dividends for the period
Interim	3.7		4.5	2.7		3.3	2.7		3.3
Final	-		-	-		-	7.5		9.2
	3.7		4.5	2.7		3.3	10.2		12.5
Recognised dividends for the period
Previous period final	7.5		9.2	4.0		7.6	4.0		7.6
Current period interim	-		-	-		-	2.7		3.3
	7.5		9.2	4.0		7.6	6.7		10.9

The interim dividend for 2011 of 4.5 pence per share was approved by the board on 23 February 2011 and has not been included as a liability as at 31 December 2010.  This interim dividend will be paid on 12 April 2011 to shareholders on the register at the close of business on 18 March 2011.

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:

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m	Year to 30 June 2010 £m
Housebuilding	52.2	52.2	52.2
Partnerships	5.8	5.9	5.8
Building	17.9	18.1	17.9
Infrastructure	37.2	37.2	37.2
PPP Investments	1.9	1.9	1.9
Total	115.0	115.3	115.0

As stated in the annual financial statements for the year ended 30 June 2010, detailed impairment reviews were carried out for all business segments. Consideration has been given as to whether any events have occurred since the year ended 30 June 2010 which would give rise to an impairment and none have been identified.

9    Net (debt)/cash

Net (debt)/cash is made up as follows:

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m	Year to 30 June 2010 £m
Cash at bank and in hand	48.5	46.1	22.2
Short term bank deposits	12.0	144.7	144.5
Cash and cash equivalents (excluding bank overdrafts)	60.5	190.8	166.7
Borrowings and loans
Current
Bank overdrafts	(0.9)	-	-
Unsecured loan notes	(0.9)	(1.7)	(1.0)
Non current
Bank loans	(89.4)	(88.9)	(89.2)
Net (debt)/cash	(30.7)	100.2	76.5

Cash and cash equivalents include the following for the purposes of the statement of cash flows:           

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m	Year to 30 June 2010 £m
Cash and cash equivalent	60.5	190.8	166.7
Bank overdrafts	(0.9)	-	-
	59.6	190.8	166.7

10   Defined benefit plans

The amounts recognised in the income statement are as follows:

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m
Interest costs	(4.4)	(4.7)
Expected return on plan assets	4.1	3.7
Charge to income statement	(0.3)	(1.0)

The principal actuarial assumptions used to calculate the liabilities as at 31 December 2010 have been set in a consistent manner to those adopted at 30 June 2010. These assumptions will change as market conditions change over time.

An actuarial gain of £9.0 million (31 December 2009: loss £5.6 million) has been taken to the consolidated statement of comprehensive income. Under the rules of the Group's final salary pension schemes pensions in payment generally increase by the retail prices index and are therefore unaffected by the Government's change to measuring statutory inflation by reference to the consumer prices index.  However, the rate by which pensions in deferment increase between the date of leaving the scheme and retirement date are linked to the statutory basis.  Actuarial advice received by the Company is that the effect of adopting CPI assumptions for this element reduces the anticipated inflation rate by 0.5% per annum.  This change has a one off effect of £6.3 million, which has been accounted for in the financial statements as part of this actuarial gain. 

The amounts recognised in the balance sheet are as follows:

	Half year to 31 Dec 2010 £m	Half year to 31 Dec 2009 £m	Year to 30 June 2010 £m
Present value of funded obligations	(165.3)	(171.9)	(163.8)
Fair value of plan assets	160.3	141.4	146.5
Liability	(5.0)	(30.5)	(17.3)

11   Contingent liabilities

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.

Galliford Try plc has entered into guarantees and counter indemnities in respect of bank and performance bonds issued on behalf of Group undertakings in the normal course of business amounting to £117.9 million (31 December 2009: £113.2 million).

12   Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not included within this note. Transactions between the Group and its joint ventures and jointly controlled operations and assets are disclosed as follows:

	Sales to related parties		Purchases from  related parties		Amounts owed by related parties		Amounts owed to related parties
Trading transactions	31 Dec 2010 £m	31 Dec 2009 £m	31 Dec 2010 £m	31 Dec 2009 £m	31 Dec 2010 £m	31 Dec 2009 £m	31 Dec  2010 £m	31 Dec 2009 £m
Joint ventures	5.0	9.4	0.2	0.1	5.3	4.5	1.0	-
Jointly controlled operations and assets	11.2	18.6	-	0.1	3.1	3.6	-	-
	Interest income  from loans to related parties		Loans to related parties		Injection of equity funding
Non- trading transactions	31 Dec 2010 £m	31 Dec 2009 £m	31 Dec 2010 £m	31 Dec 2009 £m	31 Dec 2010 £m	31 Dec 2009 £m
Joint ventures	0.9	1.1	47.5	38.6	-	1.1

Independent review report to Galliford Try plc

Introduction

We have been engaged by the company to review the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 31 December 2010, which comprises the Consolidated balance sheet, the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated statement of changes in shareholders' equity, the Consolidated cash flow and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP
Chartered Accountants
23 February 2011

Uxbridge

Notes:

(a)  The maintenance and integrity of the Galliford Try plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

(b)   Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Principal Risks and Uncertainties

The directors consider that the principal risks and uncertainties which may have a material impact on the group's performance in the second half of the financial year remain the same as those outlined on pages 33 and 34 of the group's annual report and financial statements for the year ended 30 June 2010.  These can be summarised as health, safety and environmental; changes to the UK housing market and the economic cycle; the availability of financing and availability of mortgage finance; developable land and the land acquisition process; the level of public sector spending, confidence and the availability of project finance, contract acquisition; project delivery and the availability of quality people.

Forward Looking Statements

Certain statements in this interim report 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 of outcomes to differ materially from expectations.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

The directors' confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely:

·          an indication of important events that have occurred during the six months and the impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·          material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

The directors of Galliford Try plc are:

David Calverley                    Non executive Chairman

Greg Fitzgerald                    Chief Executive

Frank Nelson                       Finance Director

Amanda Burton                    Senior Independent director

Peter Rogers                       Non executive director

Andrew Jenner                     Non executive director

Ian Coull                              Non executive director (appointed on 8 November 2010)

Signed on behalf of the board

Greg Fitzgerald

Chief Executive

Frank Nelson

Finance Director

23 February 2011

 

END

 

 

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