Half Yearly Report

RNS Number : 1884Y

Galliford Try PLC

20 February 2013

 



GALLIFORD TRY PLC - HALF YEAR REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

CONTINUING STRONG PROGRESS

Greg Fitzgerald, Chief Executive, commented:

"In a stable market we are seeing continued momentum in housebuilding particularly in the geographic regions where we operate.  Underlying growth is strong given that last year's results included a contribution of £6.9 million from one significant land sale.  In line with our stated strategy and progress to date we will continue our disciplined focus on margin enhancement in housebuilding.

Our construction business continues to deliver a robust performance against the backdrop of a difficult market.  We have maintained our core skills and our focus on margin protection, thus delivering profits whilst managing our planned reduction in turnover.

We are also encouraged by our performance since the start of the calendar year and are confident of meeting the Board's expectations for the full year.  Reflecting our strong first half performance and future confidence we have increased the interim dividend by 33%."

Financial	H1 2013	H1 2012
·        Group revenue¹	£678.3m	£746.8m
·        Profit before tax	£32.3m	£32.2m
·        Net debt	£58.2m	£69.8m
·        Earnings per share	31.3p	31.1p
·        Dividend per share	12.0p	9.0p

  Group

  ·          Strong half year results, on track for full year.

  ·          Net debt of £58.2 million (H1 2012: £69.8 million).

  ·          Disciplined growth strategy with a focus on margin improvement.

  ·          Dividend up 33%, continuation of progressive dividend policy.

  Housebuilding

  ·          Record number of total completions at 1,364 units; 1,229 units net of joint venture partner share (H1 2012: 1,352 and
 1,216 respectively). 

  ·          12.1% housebuilding margin showing good progress (H1 2012: 12.6% reducing to 11.0% after excluding a significant
  land sale profit of £6.9 million).

  ·          5% increase in total sales currently reserved, contracted and completed at £638 million (H1 2012: £605 million).

  ·          100% of plots for planned production in 2013 and 2014 secured with 65% secured for 2015, 84% of our 10,700 plot
  landbank acquired at current market values (H1 2012: 76% of 10,700).

  Construction

  ·          Construction margin of 1.9% in line with expectations in a continuing difficult market (H1 2012: 2.2%).

  ·          Maintained focus on contracts with acceptable returns. Stable order book at £1.6 billion (H1 2012: £1.6 billion),
 underpinned by strength in long term frameworks.  100% of 2013 projected revenues have been secured, with 65%
 secured for 2014 (H1 2012: 100% and 67% respectively).

  ·         Construction cash balance of £137 million in line with forecast (H1 2012: £149 million).

For further enquiries:

Galliford Try                                       Greg Fitzgerald, Chief Executive, Graham Prothero, Finance Director            01895 855001

Tulchan Communications                 Christian Cowley, James Macey White                                                              020 7353 4200

Galliford Try will hold its half year results presentation for analysts and institutional investors at 11:00 am on Wednesday 20 February 2013 at RBS 3rd Floor Conference Centre, 250 Bishopsgate, London, EC2M 4AA.  A recorded interview with Greg Fitzgerald on the results as well as a recording of the results presentation will be available at www.gallifordtry.co.uk.

¹  'Group revenue' excludes share of joint ventures of £47.0 million (H1 2012: £38.1 million).  'Revenue' where stated throughout this half year report includes share of joint ventures.

STRATEGY

Housebuilding - Disciplined growth strategy with focus on improving margins

Following the successful doubling in size of our housebuilding business in the three year period to June 2012, our disciplined growth strategy with a clear focus on improving margins is now fully embedded in the business.

We will retain our focus on the more robust southern market, where we currently have around 75% of our landbank and where we continue to see good opportunities to acquire new land at attractive prices.

As previously announced we intend to increase our housebuilding operating margin by an incremental three percentage points by maximising the efficiency and effectiveness of our operations.  This will be mainly realised on new developments with the margin benefit coming through more strongly in the financial year 2014/15 and beyond.

Construction - Focus on cash and winning work with appropriate returns

In construction, our strategy continues to be based on winning work in markets and sectors where there are barriers to entry and where we are able to add value for our clients, thus earning an appropriate margin. 

In the context of a difficult market, our construction business had an encouraging first half year in line with our expectations and winning work that fits our strict criteria.  The business will continue its focus on cash management. 

We believe that we are well positioned to resume growth when markets allow.

DIVIDEND

In line with the strategy outlined above and reflecting the Group's strong performance during the half year to 31 December 2012 the Directors have declared an interim dividend of 12.0 pence per share (H1 2012: 9.0 pence) which will be paid on 10 April 2013 to shareholders on the register at close of business on 22 March 2013.

FINANCIAL REVIEW

Group revenue for the half year to 31 December 2012 was down 9% at £678.3 million (H1 2012: £746.8 million) in line with our expected reduction in construction activity.  Correspondingly, revenue (including share of joint ventures) fell 8% to £725.3 million (H1 2012: £784.9 million).

The Group achieved a profit from operations (stated before finance costs, tax and share of joint ventures' interest and tax) of £37.4 million.  Excluding the benefit of a significant land sale and additional £3.6 million charge under the Group's long term incentive scheme in H1 2012, profit from operations has increased by 6% against the same period last year.  This improvement has been driven by increased profits in housebuilding.  Profit before tax was up £0.1 million at £32.3 million (H1 2012: £32.2 million), and the earnings per share for the period was up to 31.3p (H1 2012: 31.1p). 

The taxation expense of £7.0 million reflects an estimated effective rate of 21.7% (H1 2012: 22.0%) for the full financial year to 30 June 2013 as detailed in note five to this half year report.  We anticipate a similar effective tax rate will be maintained for the foreseeable future. 

The Group maintained its strong focus on cash management throughout the period.  Net debt at 31 December 2012 was £58.2 million (H1 2012: £69.8 million).  Average debt over the six months to 31 December 2012 was £116.0 million compared to £104.0 million last year.  The net working capital employed in housebuilding was in line with our forecasts at £551.5 million (H1 2012: £579.3 million).  The construction cash balance of £137.2 million (H1 2012: £149.4 million) remains significant, albeit reducing as anticipated during the period due to the more difficult market conditions. 

The Group's £325 million banking facility is in place until 2015 and the Group continues to operate well within its headroom and covenants.

HOUSEBUILDING
	H1 2013	H1 2012
Revenue £m	277.5	277.0
Profit from operations £m	33.5	35.0
Operating profit margin %	12.1%	12.6% ²

The housing market, particularly in our key geographic locations in the south of England, continues to be stable with revenue during the six months to 31 December 2012 increasing marginally to £277.5 million (H1 2012: £277.0 million).  With respect to profit from operations underlying growth was stronger given that last year's result included a contribution of £6.9 million from one significant land sale. 

During the six months to 31 December 2012 we achieved a rate of sale of 0.46 unit sales per outlet per week, resulting in a 2% increase in actual sales reservations made compared to the same period last year.  Since 31 December 2012 the rate of sale has increased to 0.67 unit sales per outlet per week.

Sales, during the first half of the year, are slightly ahead of our expectations, with completions up to a record 1,364 units, 1,229 net of joint venture partners' share (H1 2012: 1,352 and 1,216 respectively).  The total includes 1,046 private and 318 affordable sales.

Our average selling price on private sales, which increased by 3.8%, was ahead of expectations at £248,000 (H1 2012: £239,000).  The average selling price for affordable sales was £115,000 (H1 2012: £102,000) leading to a combined average selling price up 6.4% at £216,000 (H1 2012: £203,000).  Cancellation levels have remained around the long term average at 19% (H1 2012: 18%).

Mortgage availability continues to be an issue across the sector but with a range of new products and initiatives the position is improving.  Despite the economic uncertainty, our performance demonstrates the relative strength of chosen geographical areas where we operate and the ability of purchasers of our homes to secure mortgage finance, which continues to improve.  We welcome the Government's intention to support and encourage housebuilding and we continue to work with lenders to facilitate more affordable products.  Our use of shared equity as a proportion of sales is declining. 

Our total landbank is currently 10,700 plots, equating to a gross development value of £2.49 billion; of which 9,022 plots, or 84% of our total landbank, has been acquired under current market conditions compared to 76% last year.  In addition we have 100% of land secured for the financial year to 30 June 2014 and 65% secured for 2015 supporting our strategy of delivering incremental operating margin growth.  Our strategic land totals 1,523 acres, from which we expect to generate around 7,000 plots.  Overall we continue to see good opportunities to acquire land at attractive prices.

We are achieving good revenues under the Government's Affordable Housing Programme reflecting our market position, strength of client relationships in the sector and active management of our £17 million direct funding award.  We have also been appointed as preferred bidder on further public land releases with the Homes and Communities Agency's Delivery Partner Panel totalling 718 units.

Since the end of the half year, and as we approach the spring selling season, we are encouraged by indications in the housing market.  Prices achieved are slightly above our expectations and with sales reserved, contracted or completed currently up 5% to £638 million, of which £499 million is for the current financial year representing 72% of projected sales for the year (H1 2012: £480 million, 78%), we are on track to meet our objectives for the financial year.

CONSTRUCTION
	H1 2013	H1 2012
Revenue £m	439.8	499.9
Profit from operations £m	8.3	10.9
Operating profit margin %	1.9%	2.2%

Revenue, although down on last year, is in line with our expectations. As previously stated the construction market continues to be challenging and we have maintained our vigilance focusing on margins and cash.  Our cash balance held at 31 December 2012 was £137.2 million (H1 2012: £149.4 million).

Against a background of a difficult market we continue to target work with acceptable returns and risk.  Our total order book is stable at £1.6 billion (H1 2012: £1.6 billion).  Our order book comprises 40% in the regulated sector, 42% in public and 18% in the private sector.  At the start of 2013 we had secured 100% of our projected revenue for the current financial year and 65% for our next financial year (H1 2012: 100% and 67% respectively). 

We are encouraged by project wins in the period; a selection of these is included below.

² Including a significant land sale in 2011/12.  Margin reduces to 11.0% excluding the significant land sale.

Building

Profit from operations of £3.8 million was achieved on revenue of £185.3 million, representing a margin of 2.1% (H1 2012: £4.6 million, £199.2 million and 2.3% respectively). 

Our Building division serves a range of clients across the whole of the UK.  Our most successful markets continue to be south of England and in Scotland where we have a significant presence and strong track record.

In the period we secured a number of key projects including the £89 million major leisure and retail complex in Birmingham for Genting and a £23 million mixed commercial and residential development in central London for Grainger plc. 

Since the start of 2013 the division has been appointed to construct the £16.7 million China Centre for St Hugh's College, University of Oxford and a new five star Gainsborough Hotel in Bath for £16.3 million.  We have also been appointed by Gloucestershire County Cricket Club where we are carrying out major improvements to the international cricket ground, including a new media centre and conferencing and banqueting facilities, in Bristol.

The division's order book is currently £599 million (H1 2012: £534 million).

Infrastructure

Profit from operations was £3.6 million on revenue of £215.4 million, representing a margin of 1.7% (H1 2012: £5.2 million on £249.7 million, representing a margin of 2.1%). 

Our Infrastructure division carries out civil engineering projects, primarily in the water, highways, flood alleviation, remediation and renewable energy markets operating across the UK. 

We have a number of major UK projects underway.  Our four party consortium constructing the new Forth Road Crossing is progressing well with the bridge pier foundation work and the north and south approaches underway.  We have commenced work on the £80 million A380 South Devon link road for Devon County Council and Torbay Council with the contract due to be completed in 2015. 

We are preparing and progressing our interest in the water sector's next five year asset management programme.  We welcome and are further encouraged by the Government's initiatives and planned investment in infrastructure projects.

The division's order book currently stands at £626 million (H1 2012: £877 million).

Partnerships

A profit from operations of £0.9 million was achieved on revenue of £39.1 million, representing a margin of 2.3% (H1 2012: £1.1 million on £51.0 million representing a margin of 2.2%).

The Partnerships division is our specialist affordable housing contractor which has a strong presence in the south east and north east of England and a growing business across the rest of the country.

During the period the division secured contracts including the £23 million Gallions Quarter development in east London where we are constructing 170 homes in the second phase of the 700 home development and the £52 million redevelopment of the old St Clements Hospital site in east London, which includes the construction of 223 new homes.  Since the start of 2013, as part of the consortium S4B, the division also announced its appointment as preferred bidder for the £100 million Brunswick regeneration scheme designed to transform the Brunswick area of east Manchester.  The scheme includes the provision of 522 new homes, associated community facilities and extensive infrastructure works. 

The division's order book is currently £393 million (H1 2012: £165 million).

PPP INVESTMENTS

Revenue was £7.7 million on which the loss from operations was £1.3 million (H1 2012: £7.7 million and £1.1 million profit respectively).  The sale of our remaining interest in the Ealing care homes project was achieved in the period.  The profit in H1 2012 benefited significantly from the sale of our remaining equity interest in the St Andrew's health project.

PPP Investments specialises in delivering major building and infrastructure projects through public private partnerships.  The business leads bid consortia and arranges finance, taking direct equity investment and managing construction through to operations.

We are particularly active in Scotland where there are a number of PPP projects in the pipeline.  In the period we reached financial close, as part of the Alliance Community Partnerships consortium, on the South West Scotland hub initiative to deliver £600 million of public sector infrastructure projects over the next 10 years.  We are also part of the £300 million South East Scotland hub.

We continue to monitor PPP opportunities in England following the Government's review and are well placed to participate in future projects.  We are one of two bidders on the Kent 'Excellent Homes for All' project.

HEALTH, SAFETY AND ENVIRONMENT

Health and safety remains of paramount importance, and the Group is committed to achieving industry leading health, safety and environmental standards.  Our systems are fully accredited to both BS 18001 and ISO 14001 and are subject to regular third party independent audits.  We review and set improving targets for each financial year and during the period to 31 December 2012 the Group's rolling 12 month incident rate per 1,000 people at risk improved to 2.65 compared to 4.70 a year ago.  The accident frequency rate per 100,000 hours worked was 0.12 compared to 0.20 a year ago.  These figures are based on our internal criteria for measuring incident performance which are stricter than current legislation.  Our bespoke behavioural safety programme 'Challenging Beliefs, Affecting Behaviour' has now reached over 4,000 employees.

SUSTAINABILITY

Our vision is to be leaders in the construction of a sustainable future and we follow a strategy which requires us to consider, prioritise and manage sustainability issues.  During the first half of the financial year we have been reviewing and refreshing the Key Performance Indicators across our six fundamentals of health & safety, environment & climate change, our people, community, customers and suppliers.  Our dedicated Carbon Task Force is driving our carbon reduction strategy throughout the business.

BOARD

As previously announced, Graham Prothero joined the Board on 1 February 2013 as Group Finance Director. 

Ken Gillespie, currently Managing Director, Construction and a member of our executive board, has been appointed to the position of Construction Division Chief Executive and as an executive director of Galliford Try plc with effect from 1 March 2013.  There is no information required to be disclosed in accordance with LR 9.6.13 in connection with the appointment.

OUTLOOK

In a stable market we are seeing continued momentum in housebuilding particularly in the geographic regions where we operate.  Underlying growth is strong given that last year's results included a contribution of £6.9 million from one significant land sale.  In line with our stated strategy and progress to date we will continue our disciplined focus on margin enhancement in housebuilding.

Our construction business continues to deliver a robust performance against the backdrop of a difficult market.  We have maintained our core skills and our focus on margin protection, thus delivering profits whilst managing our planned reduction in turnover.

We are also encouraged by our performance since the start of the calendar year and are confident of meeting the Board's expectations for the full year.  Reflecting our strong first half performance and future confidence we have increased the interim dividend by 33%.

Condensed consolidated income statement

for the half year ended 31 December 2012 (unaudited)

		Half year to 31 December 2012	Half year to 31 December 2011	Year to 30 June 2012 (audited)
	Notes	£m	£m	£m
Group revenue	3	678.3	746.8	1,504.1
Cost of sales		(600.9)	(659.1)	(1,320.7)
Gross profit		77.4	87.7	183.4
Administrative expenses		(46.6)	(53.1)	(115.8)
Share of post tax profits from joint ventures		4.2	1.0	3.7
Profit before finance costs		35.0	35.6	71.3
Profit from operations	3	37.4	38.6	77.1
Share of joint ventures' interest and tax		(1.9)	(2.5)	(4.8)
Amortisation of intangibles		(0.5)	(0.5)	(1.0)
Profit before finance costs		35.0	35.6	71.3
Finance income	4	2.4	1.6	2.6
Finance costs	4	(5.1)	(5.0)	(10.8)
Profit before taxation		32.3	32.2	63.1
Income tax expense	5	(7.0)	(7.1)	(13.8)
Profit for the period from continuing operations		25.3	25.1	49.3
Earnings per share
basic	6	31.3p	31.1p	60.9p
diluted	6	30.3p	30.4p	59.7p
Dividend per share	7	12.0p	9.0p	30.0p

Condensed consolidated statement of comprehensive income

for the half year ended 31 December 2012 (unaudited)

	Notes	Half year to 31 December 2012 £m	Half year to 31 December 2011 £m	Year to 30 June 2012 (audited) £m
Profit for the period		25.3	25.1	49.3
Actuarial (losses) on retirement benefit obligations	9	(9.7)	(5.3)	(10.7)
Movement in fair value of derivative financial instruments		(0.7)	-	(1.6)
Deferred tax on items recognised in equity		0.9	0.5	3.7
Other comprehensive (expense) for the period net of tax		(9.5)	(4.8)	(8.6)
Total comprehensive income for the period		15.8	20.3	40.7

The notes are an integral part of the condensed consolidated half year financial statements.

Condensed consolidated balance sheet 

at 31 December 2012 (unaudited)

	Notes	31 December 2012 £m	31 December 2011 £m	30 June 2012 (audited) £m
Assets Non-current assets
Intangible assets		12.7	11.1	11.8
Goodwill	8	115.0	115.0	115.0
Property, plant and equipment		10.0	8.2	10.0
Investments in joint ventures		9.1	2.6	5.4
Financial assets
Available for sale financial assets		26.7	24.6	26.5
Trade and other receivables		47.0	40.1	35.9
Retirement benefit asset	9	-	1.3	-
Deferred income tax assets		8.1	5.9	7.7
Total non-current assets		228.6	208.8	212.3
Current assets
Inventories		0.5	0.1	0.4
Developments		702.4	687.3	719.8
Trade and other receivables		255.7	295.8	281.6
Cash and cash equivalents	10	74.6	60.5	95.8
Total current assets		1,033.2	1,043.7	1,097.6
Total assets		1,261.8	1,252.5	1,309.9
Liabilities Current liabilities
Financial liabilities
Borrowings	10	(132.8)	(130.3)	(73.3)
Derivative financial liabilities		-	(0.2)	-
Trade and other payables		(582.5)	(599.9)	(660.6)
Current income tax liabilities		(13.3)	(12.0)	(8.8)
Provisions for other liabilities and charges		(0.6)	(0.7)	(0.7)
Total current liabilities		(729.2)	(743.1)	(743.4)
Net current assets		304.0	300.6	354.2
Non-current liabilities
Financial liabilities
Derivative financial liabilities		(2.3)	-	(1.6)
Deferred income tax liabilities		-	(0.4)	(0.2)
Other non-current liabilities		(46.8)	(37.6)	(83.0)
Retirement benefit obligation	9	(6.3)	-	(0.2)
Provisions for other liabilities and charges		(2.8)	(2.8)	(3.1)
Total non-current liabilities		(58.2)	(40.8)	(88.1)
Total liabilities		(787.4)	(783.9)	(831.5)
Net assets		474.4	468.6	478.4
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		237.4	231.6	241.4
Total equity attributable to owners of the Company		474.4	468.6	478.4

The notes are an integral part of the condensed consolidated half year financial statements.

Condensed consolidated statement of changes in shareholders' equity

for the half year ended 31 December 2012 (unaudited)

	Notes	Share  capital £m	Share  premium  £m	Other reserves  £m	Retained earnings £m	Total  equity £m
Half year ended 31 December 2012
Balance at 1 July 2012		40.9	190.8	5.3	241.4	478.4
Profit for the period		-	-	-	25.3	25.3
Other comprehensive expense		-	-	-	(9.5)	(9.5)
Transactions with owners:
Dividends	7	-	-	-	(17.2)	(17.2)
Purchase of own shares		-	-	-	(3.9)	(3.9)
Share based payments		-	-	-	1.3	1.3
Balance at 31 December 2012		40.9	190.8	5.3	237.4	474.4
Half year ended 31 December 2011
Balance at 1 July 2011		40.9	190.8	5.3	218.1	455.1
Profit for the period		-	-	-	25.1	25.1
Other comprehensive expense		-	-	-	(4.8)	(4.8)
Transactions with owners:
Dividends	7	-	-	-	(9.4)	(9.4)
Purchase of own shares					(2.2)	(2.2)
Share based payments		-	-	-	4.8	4.8
Balance at 31 December 2011		40.9	190.8	5.3	231.6	468.6
Year ended 30 June 2012 (audited)
Balance at 1 July 2011		40.9	190.8	5.3	218.1	455.1
Profit for the year		-	-	-	49.3	49.3
Other comprehensive expense		-	-	-	(8.6)	(8.6)
Transactions with owners:
Dividends	7	-	-	-	(16.8)	(16.8)
Purchase of own shares		-	-	-	(9.1)	(9.1)
Share based payments		-	-	-	8.5	8.5
Balance at 30 June 2012		40.9	190.8	5.3	241.4	478.4

The notes are an integral part of the condensed consolidated half year financial statements.

Condensed consolidated cash flow statement

for the half year ended 31 December 2012 (unaudited)

	Notes	Half year to 31 December 2012 £m	Half year to 31 December 2011 £m	Year to 30 June 2012 (audited) £m
Cash flows from operating activities
Continuing operations
Profit before finance costs		35.0	35.6	71.3
Adjustments for:
Depreciation and amortisation		1.9	1.6	3.5
Profit on sale of property, plant and equipment		-	-	(0.1)
Profit on sale of investments and available for sale financial assets		(0.5)	(2.6)	(2.6)
Profit on sale of available for sale financial assets		(0.2)	-	(0.1)
Share based payments		1.3	4.8	8.5
Share of post tax profits from joint ventures		(4.2)	(1.0)	(3.7)
Movement on provisions		(0.4)	-	(1.8)
Other non-cash movements		(1.0)	(3.9)	(6.4)
Net cash generated from operations before pension deficit payments and changes in working capital		31.9	34.5	68.6
Deficit funding payments to pension schemes		(3.7)	(3.4)	(7.3)
Net cash generated from operations before changes in working capital		28.2	31.1	61.3
(Increase)/decrease in inventories		(0.1)	0.1	(0.2)
Decrease/(increase) in developments		18.2	(71.7)	(104.2)
Decrease/(increase) in trade and other receivables		14.8	(31.2)	(12.8)
(Decrease)/increase in payables		(114.0)	(17.5)	89.1
Net cash (used in)/generated from operations		(52.9)	(89.2)	33.2
Interest received		0.5	0.5	1.1
Interest paid		(4.4)	(4.0)	(8.0)
Income tax paid		(2.1)	(1.4)	(10.1)
Net cash (used in)/generated from operating activities		(58.9)	(94.1)	16.2
Cash flows from investing activities
Dividends received from joint ventures		0.5	0.3	0.3
Acquisition of investments in joint ventures		-	-	(0.1)
Proceeds from investments in joint ventures and non-current assets held for sale		1.2	2.6	2.6
Proceeds from available for sale financial assets		0.8	0.2	0.9
Purchase of intangible assets		(1.4)	(2.6)	(3.8)
Acquisition of property, plant and equipment	3	(1.9)	(1.1)	(4.5)
Proceeds from sale of property, plant and equipment	3	0.1	0.2	0.5
Net cash used in investing activities		(0.7)	(0.4)	(4.1)
Cash flows from financing activities
Purchase of own shares		(3.9)	(2.2)	(9.1)
Increase in borrowings		59.5	129.7	72.7
Dividends paid to Company shareholders	7	(17.2)	(9.4)	(16.8)
Net cash generated from financing activities		38.4	118.1	46.8
Net (decrease)/increase in cash and cash equivalents		(21.2)	23.6	58.9
Cash and cash equivalents at beginning of period		95.8	36.9	36.9
Cash and cash equivalents at end of period	10	74.6	60.5	95.8

For the purpose of the cash flow statements, cash and cash equivalents are reported net of bank overdrafts. Bank overdrafts are excluded from the definition of cash and cash equivalents in the balance sheet.

The notes are an integral part of the condensed consolidated half year financial statements.

Notes to the condensed consolidated half year financial statements

for the half year ended 31 December 2012 (unaudited)

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 half year financial information was approved for issue on 20 February 2013.

This condensed consolidated half year financial information does not comprise statutory financial statements within the meaning of Section 434 of the Companies Act 2006.  Statutory financial statements for the year ended 30 June 2012 were approved by the board of directors on 18 September 2012 and delivered to the Registrar of Companies. The report of the auditors on those financial statements 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 half year financial information has been reviewed, not audited. The auditors' review opinion is included in this report.

This condensed consolidated half year financial information for the half year ended 31 December 2012 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 half year financial information should be read in conjunction with the annual financial statements for the year ended 30 June 2012, 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 half year report. The annual financial statements for the year ended 30 June 2012 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.

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 half year 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 2012, as described in those financial statements.

The Group has adopted the amendment to IAS 1 'Presentation of financial statements'.  The adoption of this new amendment has had no significant impact on the Group's results.

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

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.

The chief operating decision-makers ("CODM") have been identified as the Group's chief executive and 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 as housebuilding, building, partnerships, infrastructure and PPP investments.

The CODM assess the performance of the operating segments based on a measure of adjusted earnings before finance costs, amortisation, exceptional items and taxation. 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.

			Construction
		House- building	Building	Partner- ships	Infra- structure	Total	PPP Investments	Central costs	Total
		£m	£m	£m	£m	£m	£m	£m	£m
Half year ended 31 December 2012
Group revenue and share of joint ventures' revenue		277.5	185.3	39.1	215.4	439.8	7.7	0.3	725.3
Share of joint ventures' revenue		(41.6)	(0.1)	-	(5.3)	(5.4)	-	-	(47.0)
Group revenue		235.9	185.2	39.1	210.1	434.4	7.7	0.3	678.3
Segment result:
Profit/(loss) from operations before share of joint ventures' profit		27.5	3.7	0.9	3.6	8.2	(1.3)	(3.1)	31.3
Share of joint ventures' profit		6.0	0.1	-	-	0.1	-	-	6.1
Profit/(loss) from operations *		33.5	3.8	0.9	3.6	8.3	(1.3)	(3.1)	37.4
Share of joint ventures' interest and tax		(1.8)	(0.1)	-	-	(0.1)	-	-	(1.9)
Profit/(loss) before finance costs, amortisation and taxation		31.7	3.7	0.9	3.6	8.2	(1.3)	(3.1)	35.5
Net finance (costs)/income		(15.7)	0.4	(0.1)	0.4	0.7	-	12.3	(2.7)
Profit/(loss) before amortisation and taxation		16.0	4.1	0.8	4.0	8.9	(1.3)	9.2	32.8
Amortisation of intangibles									(0.5)
Profit before taxation									32.3
Income tax expense									(7.0)
Profit for the period									25.3

			Construction
		House- building	Building	Partner- ships	Infra- structure	Total	PPP Investments	Central costs	Total
		£m	£m	£m	£m	£m	£m	£m	£m
Half year ended 31 December 2011
Group revenue and share of joint ventures' revenue		277.0	199.2	51.0	249.7	499.9	7.7	0.3	784.9
Share of joint ventures' revenue		(33.2)	-	-	(4.9)	(4.9)	-	-	(38.1)
Group revenue		243.8	199.2	51.0	244.8	495.0	7.7	0.3	746.8
Segment result:
Profit/(loss) from operations before share of joint ventures' profit		31.5	4.6	1.1	5.2	10.9	1.1	(8.4)	35.1
Share of joint ventures' profit		3.5	-	-	-	-	-	-	3.5
Profit/(loss) from operations *		35.0	4.6	1.1	5.2	10.9	1.1	(8.4)	38.6
Share of joint ventures' interest and tax		(2.5)	-	-	-	-	-	-	(2.5)
Profit/(loss) before finance costs, amortisation and taxation		32.5	4.6	1.1	5.2	10.9	1.1	(8.4)	36.1
Net finance (costs)/income		(18.2)	0.4	0.1	0.1	0.6	(0.1)	14.3	(3.4)
Profit before amortisation and taxation		14.3	5.0	1.2	5.3	11.5	1.0	5.9	32.7
Amortisation of intangibles									(0.5)
Profit before taxation									32.2
Income tax expense									(7.1)
Profit for the period									25.1

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

			Construction
		House- Building	Building	Partner- ships	Infra- structure	Total	PPP Investments	Central costs	Total
		£m	£m	£m	£m	£m	£m	£m	£m
Year ended 30 June 2012 (audited)
Group revenue and share of joint ventures' revenue		636.7	363.5	90.4	470.9	924.8	13.8	1.0	1,576.3
Share of joint ventures' revenue		(62.8)	(0.1)	-	(9.3)	(9.4)	-	-	(72.2)
Group revenue		573.9	363.4	90.4	461.6	915.4	13.8	1.0	1,504.1
Segment result:
Profit/(loss) from operations before share of joint ventures' profit		66.8	8.2	1.7	8.8	18.7	(1.1)	(15.8)	68.6
Share of joint ventures' profit		8.3	0.2	-	-	0.2	-	-	8.5
Profit/(loss) from operations *		75.1	8.4	1.7	8.8	18.9	(1.1)	(15.8)	77.1
Share of joint ventures' interest and tax		(4.7)	(0.1)	-	-	(0.1)	-	-	(4.8)
Profit/(loss) before finance costs, amortisation and taxation		70.4	8.3	1.7	8.8	18.8	(1.1)	(15.8)	72.3
Net finance (costs)/income		(37.5)	0.7	0.1	0.5	1.3	(0.1)	28.1	(8.2)
Profit/(loss) before amortisation and taxation		32.9	9.0	1.8	9.3	20.1	(1.2)	12.3	64.1
Amortisation of intangibles									(1.0)
Profit before taxation									63.1
Income tax expense									(13.8)
Profit for the year									49.3

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

Inter-segment revenue eliminated from Group revenue above amounted to £21.9 million (31 December 2011: £30.0 million, 30 June 2012: £51.5 million) of which £Nil (31 December 2011: £1.0 million, 30 June 2012: £1.0 million) was in housebuilding, £9.7 million (31 December 2011: £11.8 million, 30 June 2012: £22.0 million) was in building, £11.4 million (31 December 2011: £15.4 million, 30 June 2012: £27.3 million) was in infrastructure, £0.2 million (31 December 2011: £1.2 million, 30 June 2012: £nil) was in PPP investments, and £0.6 million (31 December 2011: £0.6 million, 30 June 2012: £1.2 million) was in central costs.

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

						Construction
			House-building			Building	Partner- ships	Infra- structure	Total	PPP Investments	Central costs	Total
			£m			£m	£m	£m	£m	£m	£m	£m
Half year ended 31 December 2012
Assets
Net (debt)/cash				(551.5)	83.4		14.2	39.6	137.2	0.3	355.8	(58.2)
Other assets												1,179.1
Borrowings												132.8
Deferred income tax assets												8.1
Total assets												1,261.8
Half year ended 31 December 2011
Assets
Net (debt)/cash				(579.3)	111.0		18.5	19.9	149.4	0.3	359.8	(69.8)
Other assets												1,186.1
Borrowings												130.3
Deferred income tax assets												5.9
Total assets												1,252.5
Year ended 30 June 2012 (audited)
Assets
Net (debt)/cash				(469.5)	88.1		15.0	42.4	145.5	0.6	345.9	22.5
Other assets												1,206.4
Borrowings												73.3
Deferred income tax assets												7.7
Total assets												1,309.9

During the period the Group acquired £1.9 million (31 December 2011: £1.1 million, 30 June 2012: £4.5 million) of property, plant and equipment and disposed of property, plant and equipment with a net book value of £0.1 million (31 December 2011: £0.2 million, 30 June 2012: £0.4 million).

4      Net finance costs

	Half year to 31 December 2012 £m	Half year to 31 December 2011 £m	Year to 30 June 2012 (audited) £m
Interest receivable on bank deposits	0.3	-	0.2
Interest receivable from joint ventures	1.0	0.5	-
Unwind of discount on shared equity receivables	0.9	0.8	1.6
Fair value profit on financing activities - interest rate swaps	-	0.3	-
Other	0.2	-	0.8
Finance Income	2.4	1.6	2.6
Interest payable on borrowings	(4.8)	(3.9)	(8.4)
Unwind of discounted payables	(0.2)	(1.0)	(1.9)
Net finance cost on retirement benefit obligations	-	-	(0.1)
Other	(0.1)	(0.1)	(0.4)
Finance costs	(5.1)	(5.0)	(10.8)
Net finance costs	(2.7)	(3.4)	(8.2)

5       Income tax expense

The taxation expense on profit for the period of 21.7% (31 December 2011: 22.0%) reflects the estimated effective tax rate for the full financial year to 30 June 2013.

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 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 December 2012			Half year to 31 December 2011			Year to 30 June 2012 (audited)
	Earnings £m	Weighted average number  of shares	Per share amount pence	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	25.3	81,082,861	31.3	25.1	80,925,903	31.1	49.3	80,919,341	60.9
Effect of dilutive securities
Options		2,446,243			1,879,043			1,643,319
Diluted EPS	25.3	83,529,104	30.3	25.1	82,804,946	30.4	49.3	82,562,660	59.7

7      Dividends

	Half year to 31 December 2012 £m		Half year to 31 December 2011 £m		Year to 30 June 2012 (audited) £m
	£m	Pence per share	£m	Pence per share	£m	Pence per share
Previous period final	17.2	21.0	9.4	11.5	9.4	11.5
Current period interim	-	-	-	-	7.4	9.0
Dividend recognised in the period	17.2	21.0	9.4	11.5	16.8	20.5
The following dividends were declared by the Company in respect of each accounting period presented:
	Half year to 31 December 2012 £m		Half year to 31 December 2011 £m		Year to 30 June 2012 (audited) £m
	£m	Pence per share	£m	Pence per share	£m	Pence per share
Interim	9.7	12.0	7.4	9.0	7.4	9.0
Final	-	-	-	-	17.2	21.0
Dividend relating to the period	9.7	12.0	7.4	9.0	24.6	30.0

The interim dividend for 2013 of 12.0 pence per share was approved by the board on 20 February 2013 and has not been included as a liability as at 31 December 2012.  This interim dividend will be paid on 10 April 2013 to shareholders who are on the register at the close of business on 22 March 2013.

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 December  2012 £m	Half year to 31 December  2011 £m	Year to 30 June 2012 (audited) £m
Housebuilding	52.2	52.2	52.2
Partnerships	5.8	5.8	5.8
Building	17.9	17.9	17.9
Infrastructure	37.2	37.2	37.2
PPP Investments	1.9	1.9	1.9
Total	115.0	115.0	115.0

As stated in the annual financial statements for the year ended 30 June 2012, 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 2012 which would give rise to an impairment and none have been identified.

9      Retirement benefit obligations

The amounts recognised in the income statement are as follows:

	Half year to 31 December  2012 £m	Half year to 31 December  2011 £m	Year to 30 June 2012 (audited) £m
Finance cost	3.8	4.2	8.4
Expected return on scheme assets	(3.8)	(4.2)	(8.3)
Net finance costs recognised in the income statement	-	-	0.1

The principal actuarial assumptions used to calculate the liabilities as at 31 December 2012 have been set in a consistent manner to those adopted at 30 June 2012. These assumptions will change as market conditions change over time.

An actuarial loss of £9.7 million (31 December 2011: £5.3 million, 30 June 2012: £10.7 million) has been taken to the condensed consolidated statement of comprehensive income.

The amounts recognised in the balance sheet are as follows:

	Half year to 31 December  2012 £m	Half year to 31 December  2011 £m	Year to 30 June 2012 (audited) £m
Fair value of plan assets	183.2	169.7	173.5
Present value of defined benefit obligations	(189.5)	(168.4)	(173.7)
(Deficit)/surplus in scheme recognised as non-current (liability)/asset	(6.3)	1.3	(0.2)

10   Cash and cash equivalents

	Half year to 31 December  2012 £m	Half year to 31 December  2011 £m	Year to 30 June 2012 (audited) £m
Cash at bank and in hand	69.0	42.9	95.8
Short term bank deposits	5.6	17.6	-
Cash and cash equivalents	74.6	60.5	95.8

Net	Half year to 31 December  2012 £m	Half year to 31 December  2011 £m	Year to 30 June 2012 (audited) £m
Cash and cash equivalents	74.6	60.5	95.8
Current borrowings:
Bank overdrafts	-	-	-
Bank loans	(132.5)	(129.8)	(72.9)
Unsecured loan notes	(0.3)	(0.5)	(0.4)
Net(debt)/cash	(58.2)	(69.8)	22.5

Cash at bank includes £Nil (31 December 2011: £Nil; 30 June 2012: £0.3 million) of restricted cash.  

11   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 £145.9 million (31 December 2011: £131.3 million, 30 June 2012: £135.3 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.

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 are disclosed as follows:

	Sales to related parties			Purchases from  related parties
Trading transactions	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2012 (audited) £m	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2012 (audited) £m
Joint ventures	7.1	11.1	27.2	-	-	0.2
Jointly controlled operations	13.8	12.1	32.7	-	-	0.1
	Amounts owed by related parties			Amounts owed to related parties
Trading transactions	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2011 (audited) £m	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2011 (audited) £m
Joint ventures	23.2	16.7	16.7	0.7	0.5	5.3
Jointly controlled operations	2.8	7.0	-	-	-	-

	Interest and dividend income from related parties			Loans to related parties			Loans from related parties
Non-trading transactions	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2012 (audited) £m	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2012 (audited) £m	31 Dec 2012 £m	31 Dec 2011 £m	30 Jun 2012 (audited) £m
Joint ventures	1.5	0.5	-	46.3	39.5	58.2	-	0.1	-
Jointly controlled operations	-	-	-	-	-	-	-	-	-

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 34 and 35 of the Group's annual report and financial statements for the year ended 30 June 2012.  These can be summarised as Group: health, safety and environmental, people, sustainability, other Group factors, and availability of financing; housebuilding: availability of mortgage finance, changes to the UK housing market and the economic cycle, availability of developable land, and land acquisition; and construction: securing contracts, project delivery, the level of public sector spending, and confidence and the availability of project finance.

Forward looking statements

Certain statements in this half year 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:

Ian Coull                                        Non executive Chairman

Greg Fitzgerald                             Chief Executive

Graham Prothero                         Finance Director

Amanda Burton                            Senior Independent director

Peter Rogers                                Non executive director

Andrew Jenner                             Non executive director

Signed on behalf of the board

Greg Fitzgerald

Chief Executive

Graham Prothero

Finance Director

20 February 2013

Independent review report to Galliford Try plc

Introduction

We have been engaged by the Company to review the condensed consolidated half year financial information in the half-yearly financial report for the six months ended 31 December 2012, which comprises the Condensed consolidated income statement, Condensed consolidated statement of comprehensive income, Condensed consolidated balance sheet, Condensed consolidated statement of changes in shareholders' equity, Condensed consolidated cash flow statement and the 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 2012 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
20 February 2013

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.

 

END

 

 

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