Trading Statement

RNS Number : 0055P

Galliford Try PLC

08 July 2010

 



8 JULY 2010

GALLIFORD TRY PLC - TRADING UPDATE

Housebuilding expansion plan ahead of target; Construction in line with expectations.

Galliford Try plc, the housebuilding and construction group, today provides the following update on trading for the year ended 30 June 2010.  The group expects to announce its results for the full year on 15 September 2010.

HIGHLIGHTS

·      Full year results expected to be in line with the upper end of market expectations.*

·      Net cash in excess of £75 million at 30 June 2010, significantly ahead of expectations (30 June 2009: £34.1 million).

Housebuilding

·      Total housing completions of 1,705 units; 1,624 net of joint venture partners' share (2009: 1,825 and 1,769).

·      10% increase in average selling price to £190,000 (2009: £172,000)

·      25% increase in housing sales carried forward at £201 million (2009: £161 million).

·      23% increase in total landbank to 9,600 plots (30 June 2009: 7,800 plots).

·      56% of landbank secured at current market values, ahead of new land acquisition target and up from 36% at the half year.

·      Significant opportunities arising from leading position on Homes and Communities Agency's delivery partner panel.

Construction

·      Performing to expectations in challenging markets.

·      Order book maintained at £1.8 billion (2009: £1.7 billion).

·      Excellent cash management across construction businesses.

·      Renewal of 5 year water frameworks completed successfully.

·      77% of projected revenue for new financial year secured (2009: 67%).

Greg Fitzgerald, Chief Executive, commented:

"We are ahead of our target for delivering the transformational housebuilding expansion plan announced with the rights issue in September 2009.  We have also maintained a quality construction order book in increasingly challenging market conditions.  The strength of the group's finances and the spread of its activities mean that, subject to the economic uncertainties affecting our markets, we are well positioned to deliver our planned progress."

For further enquiries please contact:

Galliford Try -                             Greg Fitzgerald, Chief Executive              01895 855001

                                                Frank Nelson, Finance Director

Tulchan Communications -          Mal Patel, Lucy Legh, Peter Hewer          020 7353 4200

* The range of market expectations for the year to 30 June 2010, as reported by Bloomberg, for adjusted profit before tax is £23 million to £25.5 million.

Housebuilding - Expansion plan ahead of target

As the market stabilised during the year, prices firmed and we achieved better than anticipated sales with completions sharply up in the second half of the year to bring the total for the year to 1,705; 1,624 net of the proportionate share of our partners in joint venture developments.  We enter our new financial year with £201 million of housing sales carried forward, 25% up on last year, of which £130 million is for the 2010/11 financial year.  This represents 32% of our planned output for the year (2009: £88 million and 30%).  In addition we have an affordable housing and regeneration contract order book of £176 million (2009: £124 million).

Of the 1,705 units completed in the year, private housebuilding represented 1,160 units and affordable and regeneration 545 units.  Average sales prices were up 10% on last year at £190,000 (2009: £172,000) reflecting both prices achieved and sales mix.  During the second half of the year sales rates averaged 27 per week, although following the political and economic uncertainty leading up to and following the general election in May, there has been the expected slowdown in visitor levels and reservations.  Cancellation rates at 14% remain at historically low levels. 

We launched our three year housebuilding expansion strategy, with the rights issue that raised a net £119 million in September 2009, stating that we would expand our southern based landbank, based on strict criteria for margin, return on capital and achievable selling prices.  Our land bank now stands at 9,600 plots (2009: 7,800 plots).  We are ahead of our new land acquisition target, with 56% of our landbank now having been secured at current market values.  We are also well advanced with our plans for opening new regional offices in Guildford and Oxford, and have added to our management team with the appointment of Greg Locke, a former director of Redrow and Chief Executive of David Wilson Homes, as Managing Director of our midlands and south west division. 

Our access to opportunities in affordable housing and regeneration through our position on all three regions of the HCA's delivery partner panel is growing.  With the new Government's approach to planning potentially causing both further restriction to land supply and delays in obtaining consents, we consider that the ability to secure publicly owned brownfield and regeneration sites will prove a competitive advantage.  

Construction - In line with expectations

As markets became more challenging during the year, the Group's construction business continued to perform to the board's expectations.  Our leading position in long term framework contracting, particularly for the regulated utilities, stands us in good stead and has enabled us to mitigate the effect of continuing competitiveness, particularly in private commercial contracting. 

We enter our new financial year with a total contracting order book of £1.8 billion, up from £1.7 billion a year ago, and have 77% of our planned revenues for the new year secured compared to 67% a year ago.  37% of the order book is for the regulated utility sector, 52% for the public sector and 11% for private commercial work.  78% has been secured other than on a basis of pure price competition.  Our planning over the past year has anticipated reductions in publicly financed projects, which are now likely to follow the Government's autumn spending review.  Our strategy is to continue to be selective in bidding for work where forecast returns are commensurate with risk, and not to pursue contracts with the objective of maintaining past revenue levels.  We have adapted our structure and cost base accordingly. 

We have now completed the renewal of our 5 year framework agreements to 2015 with all of our key water clients, strengthening our position as the leading contractor in a sector where regulatory requirements mean expenditure will continue.  Last month we were also delighted to announce our selection as preferred private sector partner for the development of £300 million of health and community facilities in Scotland for the south east hub programme, demonstrating our ability to secure quality work across our chosen sectors.

Outlook

The Group is ahead of target for delivering the transformational housebuilding expansion plan announced with the rights issue in September 2009.  We have also maintained a quality construction order book in increasingly challenging market conditions.  We have anticipated reductions in public sector work, although some uncertainty remains as we await the effect of the June budget measures and the outcome of the Government's autumn spending review on both our housebuilding and construction activities.  However, the strength of the group's finances and the spread of its activities mean that, subject to economic uncertainties, it is well positioned to deliver its planned progress.

 

END

 

 

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