Interim Management Statement

RNS Number : 0668S

Galliford Try PLC

12 May 2009

 



GALLIFORD TRY PLC 

TUESDAY 12 MAY 2009 

INTERIM MANAGEMENT STATEMENT 

Galliford Try plc, the construction and housebuilding group, today issues its interim management statement for the period 1 January 2009 to 11 May 2009.

Overview 

Galliford Try is continuing to derive financial and operational benefits from trading in both the construction and housebuilding markets, with construction performing well and the limited recovery in the housing market seen since the New Year being sustained.  The Group therefore expects to report results for the full year in line with the board's expectations.

The Group's strong focus on cash management has been maintained throughout the period. Cash generation from our construction businesses remains excellent and in line with our forecasts, and our actions to tightly control expenditure on land and work in progress on our housebuilding sites continue to be effective. We therefore continue to operate well within the Group's banking facility, and in full compliance with the covenants over the facility.

The initiatives described in our half year report to make savings in our cost base are on track to deliver annualised savings of £25 million, and in early summer we will be reviewing the length of time we need to maintain the short time working we are currently operating in our housebuilding division.

Operational Review 

The economic downturn continues to have an impact, with the construction market becoming more challenging.  Despite this the Group has maintained its contracting order book at £1.7 billion, due to our well established strengths in both building and infrastructure markets for the public and regulated sectors, both of which continue to demonstrate resilience, and which currently represent 87% of the order book.  In addition, the current order book does not take account of any AMP5 water framework contract renewals.

The building division has recently secured a number of significant contract awards and there remain good opportunities in the pipeline. In addition to the £103 million refurbishment of St Pancras Chambers in London for the Manhattan Loft Corporation, the Group has announced the award of a £47 million contract to construct Parc Prison in Wales and contracts in the education sector amounting to a total of £38 million.  Our appointment in March as preferred bidder for the Rutland County Council Big Build project, comprising a £23 million school contract and a residential development for around 120 affordable and open market homes, demonstrates how bringing together our contracting and housebuilding skills generates opportunities.  

Our PPP Investments division has been appointed preferred bidder on the £60 million Worcester Library and History centre and is now working towards financial close. 

In infrastructure, over 95% of our forward order book is for the public and regulated sectors with 80% in frameworks. We have a leading position in the water industry, where we remain focused on securing the renewal of our 5 year AMP 5 framework contracts, which will run from 2010 to 2015. Our rail business recently secured two projects totalling £19 million for Network Rail and London Underground, and our regional civil engineering business has secured a £16 million local highways authority framework contract in South Wales.  Our remediation contract at Olympic Park in East London, on which we have been working since 2006, is going well and we are delighted that we have been awarded a further £23 million of work by the Olympic Development Authority to construct the white water canoeing centre in Broxbourne and to carry out improvement works to the rowing centre at Dorney Lake.  

Our affordable housing and regeneration division has been concentrating on maximising the revenue available through the Government's investment schemes, such as HomeBuy Direct and additional direct grant awards, to mitigate the effects of the housing downturn and maintain our momentum. Following on from our appointment as preferred bidder on the 350 home Gloscat regeneration scheme in Gloucester by the HCA, we have restructured the regeneration schemes being undertaken in partnership with them in Oxfordshire, Chichester and Epsom to bring forward the delivery of affordable housing and create a sustainable base on which to deliver private sales.

The improvement in the housing market that we saw during the first few weeks of the New Year has been maintained and we have been making sales to private purchasers at similar levels to a year ago with prices and incentives held at autumn 2008 levels.  Our housebuilding and affordable housing and regeneration divisions have currently reserved, contracted or completed sales with a value of £400 million of which £288 million is for the current financial year to 30 June 2009.  The upturn in visitor numbers has continued, our cancellation rates have returned to more normal levels of 19% and, dependent on the level of financing required, we are seeing some easing in the supply of mortgage finance.  Our part exchange holdings are down to £5 million compared to £17 million at 30 June 2008. 

Sustaining current levels of activity beyond the spring selling season will be required to confirm an underlying improvement in the general market, although we are cautiously optimistic at this point.  We have said before that the current market could generate land buying opportunities at some stage, and we are now seeing a number of development portfolios becoming available. The acquisition of the residential development assets of Hull based Wright Homes for £7 million, announced yesterday, will provide additional points of sale and landbank that will add to our existing business in the Lincolnshire and Humber area and improve our geographic coverage for the future.

Outlook

The sector strength of our construction business, with a significant proportion of our order book in the public and regulated sectors, continues to stand us in good stead as the economy has deteriorated.  We continue to benefit from our strengths in affordable housing.  In housebuilding, trading remains tough, although we are encouraged by the way in which the increased activity in the market since the New Year has been maintained.  The Board therefore remains cautious on the short term outlook, while believing that the underlying demand for the Group's services will deliver sustainable growth over the longer term.

Further enquiries to:

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

 

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