Trading Statement

RNS Number : 2161Y

Galliford Try PLC

03 July 2008

 



GALLIFORD TRY PLC

('Galliford Try' or 'the Group')

Trading Update

Galliford Try plc, the construction and housebuilding Group, today provides the following update to trading for the year ended 30 June 2008.

·              Full year profit before tax expected to be in line with previous forecast of no less than £60 million.

 

·              Net debt at 30 June 2008 substantially better than previously forecast at less than £5 million, representing gearing of under 2%.

 

·              Excellent performances from the Group’s building, infrastructure and affordable housing divisions.

 

·              Public and regulated sectors account for 87% of the contracting order book of £1.9 billion.

 

·              Total housing completions 2,524 units (housebuilding 1,830, affordable housing and regeneration 694) compared to pro forma 2,433 last year.

 

·              Landbank at 9,300 plots (housebuilding 5,700, affordable housing and regeneration 3,600) compared to 11,100 last year.

The Group's construction divisions have delivered an excellent performance and are expected to produce record results for the financial year. Looking forward, our building division's order book of £0.8 billion is well balanced across its market sectors, with 75% for public and regulated clients, and a number of good opportunities currently in negotiation. In our infrastructure division, over 80% of the £0.9 billion order book is in long term frameworks, and over 95% is for the public and regulated sector. Record workloads were carried out for our water utility clients in what will be the peak year of the five year AMP4 framework cycle. Significant contract wins in our transport business have further strengthened the order book.

The housebuilding market has shown no signs of improvement since our interim management statement was issued in May, with the restrictions on mortgage availability and low consumer confidence keeping the market weak. Having benefited from strong sales in the early part of the financial year, total housing completions for the full year were 2,524 (housebuilding 1,830, affordable housing and regeneration 694) compared with pro forma completions of 2,433 last year (inclusive of Linden Homes) at an average sales price of £193,000, down 12% on a year ago.  

We ended the financial year with £150 million of sales carried forward compared to £185 million last year. Our landbank at 30 June 2008 was 9,300 plots (housebuilding 5,700, affordable housing and regeneration 3,600) compared to 11,100 units on 30 June 2007. Our affordable housing and regeneration division also ended the year with a contracting order book of £180 million. The division has delivered its planned growth during the year and has secured additional direct grant funding from the Housing Corporation bringing the total to £21 million awarded in the year for affordable schemes in the period to 2011, the highest amount secured by any private sector developer.

As we enter the new financial year the lower overall volumes of private housebuilding sales and the increased cost of incentives going forward will continue to impact on margins. We have implemented a comprehensive programme of overhead savings in our housebuilding division, amounting to £12 million on an annualised basis which, together with work in progress reductions will ensure our cost base matches the forecast level of business for the next financial year.  

We operate rigorous cash management controls throughout the Group and have performed ahead of our forecasts, with year end net debt of less than £5 million, representing gearing of under 2%. This results from our aggressive policy on selling, together with the action we have taken to reduce housebuilding work in progress, overheads and expenditure on land, with deferred payments and land creditors below previous forecasts, as well as excellent cash generation from our construction divisions. Overall debt levels do fluctuate throughout the year, and we continue to operate significantly within the headroom and covenants of our five year bank facility, which does not mature until 2012.

When announcing the results for the year in September, the board will recommend an amount for the final dividend in the light of the economic environment and the Group's trading prospects at that time. Based on the current outlook, the board are unlikely to recommend an increase in the level of total dividend over the prior year.

The preliminary results for the year ended 30 June 2008 are expected to be announced on 11 September 2008.  

A conference call for sector analysts will be held today at 09:30 a.m.  The dial in details are:

Dial in:                                     [phone]

Confirmation code:                    1445863

Call title:                                  Galliford Try Trading Update    

Further enquiries to:

Greg Fitzgerald, Chief Executive        Galliford Try            

01895 855219

Frank Nelson, Finance Director          Galliford Try            

01895 855226

Ben Woodford / Dan de Belder           Bell Pottinger Corporate & Financial        

020 7861 3232

 

END

 

 

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