Trading Statement

RNS Number : 3665V

Galliford Try PLC

09 July 2009

 



9 JULY 2009

GALLIFORD TRY PLC 

TRADING UPDATE

Galliford Try plc, the construction and housebuilding Group, today provides the following update to trading for the year ended 30 June 2009.

• Results for the full year expected to be reported in line with the Board's expectations.

• Net cash of circa £35 million at 30 June 2009 compared to net debt of £2 million at 30 June 2008.

• Excellent performances from the Group's construction activities.

• Public and regulated sectors account for 88% of the contracting order book, maintained at £1.7 billion.  

• First AMP5 water framework renewal for 2010 to 2015 secured.

• Encouraging signs in housebuilding, housing sales carried forward up 7% on last year at £161 million.

• Total housing completions 1,769 units, compared to 2,524 last year.

The Group's construction divisions have performed well and are expected to produce record results for the financial year. The Group's long-standing concentration on public and regulated sector work has maintained our competitive edge in replenishing our order book as the future pipeline of private commercial work has fallen, increasing competitiveness across all sectors.  We continue to win significant projects through frameworks, securing over £220 million in this way during the last six months, and, of our total contracting order book of £1.7 billion, 88% is in the public and regulated sectors.  

Our building division's order book of £720 million is well balanced across its market sectors, with major projects continuing to be secured, such as the £54 million West Kent College project announced last month.  Our work for the All England Lawn Tennis Club at Wimbledon culminated this year with the completion of the redevelopment of the Centre Court, including the retractable roof that was brought into use during this year's championships. Having also completed the new Court Two this year, we are now starting work on the redevelopment of Court Three, the latest phase of our thirty five year association with the club.  

Galliford Try is a market leader in delivering the investment programmes of the water utilities, and with the current five year frameworks completing in the first quarter of 2010, our active participation in the renewal process continues. Earlier this week we announced the renewal by our joint venture of the United Utilities framework for the AMP5 period from 2010 to 2015, valued at a total of £400 million, and we anticipate further AMP5 additions to our order book before the end of 2009. Within the last quarter we have also secured a £16 million Highways framework in Wales and £19 million of work in both Wales and the South East of England for our rail business.  Our infrastructure division's order book currently stands at £850 million, of which over 85% is in long term frameworks, and over 95% is for the public and regulated sectors.

In housebuilding the second half of our financial year has been far more encouraging than the first. Following the initial resurgence of activity during January, the momentum has been maintained albeit the overall housing market remains challenging.  Housing completions totalled 1,769 units (housebuilding 1,216, affordable and regeneration 553) compared to last year's 2,524.  Pent up demand is becoming evident from the level of visitors to our sites and by reservations, which have resulted in £161 million of housing sales carried forward of which £88 million is for the 2009/10 financial year, which represents 30% of our planned output for the year.  Our affordable housing and regeneration business has, in addition, a contracting order book of £130 million.

During the financial year we significantly reduced the number of completed stock units held, which currently stand at 80 compared to 280 a year ago. We have also carefully controlled our investment in part exchange stock, which currently stands at £3 million compared to £17 million a year ago.  We have made land purchases during the past year where opportunities have arisen to generate attractive returns in the current market, such as the £7 million acquisition of land and housing assets from the administrative receivers of Wright Homes, announced in May.  The landbank at 30 June 2009 stood at 7,800 plots (housebuilding 4,800, affordable and regeneration 3,000) compared to 9,300 last year. Reflecting market conditions during the year we have not proceeded with a number of sites on which we held conditional agreements and, of the current landbank, 2,100 plots have either been acquired or have had terms renegotiated within the last twelve months.  In light of the increased levels of activity, our housebuilding division has restored a full five day working week for all employees from July, albeit that we are operating with around 40% fewer people than a year ago.

Affordable housing and regeneration continues to play a key role in our housing activities, and we are working closely with the Homes and Communities Agency to re-plan and re-phase projects using grant where available. This enables development to start early on a commercially acceptable basis and assists in delivering the Government's housing objectives.  We continue to receive further direct grant awards, in the past month being awarded £3.75 million of grants to unlock a development of 170 houses in Wiltshire, including 51 affordable homes, that would otherwise not have proceeded.  

Cash management and cost controls remain a high priority throughout the Group and year end net cash stood at circa £35 million. Cash generated from our contracting activities has regularly exceeded planned levels, albeit reduced from the record levels of the previous year.    Since the year end our PPP Investments division has sold its' equity investment in the Highland Schools project, which is now well into its post construction operational phase, for £16.8 million.  As well as continuing with selective land purchases, we are now planning to resume development on a number of previously mothballed housing developments, which will increase our investment during the new financial year. With overall debt levels fluctuating throughout our financial year, we continue to operate significantly within the headroom and within the covenants of our five year bank facility, which does not mature until 2012.  

We are therefore encouraged by the positive signs in housing, albeit the overall market remains challenging. In construction our concentration on the public sector, and in particular infrastructure works for the regulated utilities, provides us with a sound base for mitigating the effects of the recession and putting us in a good position to grow again when economic conditions improve.

The preliminary results for the year ended 30 June 2009 are expected to be announced on 10 September 2009.  

Further enquiries to:

Greg Fitzgerald, Chief Executive                          Galliford Try    01895 855219

Frank Nelson, Finance Director                            Galliford Try    01895 855226

Louise Mantio, Group Communications Director    Galliford Try    01895 855092

 

END

 

 

TSTILFIRDSITIIA