14th Sep 2016 11:17
LONDON (Alliance News) - Galliford Try PLC on Wednesday said it had seen a return to growth in sales rates and prices since the Brexit vote, following a short-term decline, and hiked its dividend by 21% for its recent financial year.
Galliford Try was trading up 6.3% at 1,202.00 pence on Wednesday, the best performers in the FTSE 250.
Shares in the construction and housebuilding group have largely recovered from the 41% fall suffered in the weeks following the Brexit, but are still 9.2% below the level they were at prior to the vote. The stock is down 21% so far in 2016.
In its full-year results Wednesday, the FTSE 250-listed company said it saw a small increase in cancellation rates and a decline in visitor numbers in its housebuilding division Linden Homes following the UK's referendum on EU membership. However, Galliford said this was "broadly in line with normal seasonal patterns".
Galliford said customer interest "remains solid" and said the strength of underlying demand for new homes, the continuing availability of mortgage finance, and the Help-to-Buy scheme provided it with confidence.
The company noted that the market for its construction arm remained positive, although the speed of work coming through the UK public sector continued to be slower than expected.
"Whilst there has undoubtedly been a cooling in demand for new private commercial buildings in the period leading up to and since the EU referendum, our focus on the public and regulated sectors, which represent 90% of our order book, give us a strong and reliable outlook," Galliford added.
Meanwhile its other division - partnerships and regeneration - continued to benefit from affordable housing remaining high on the political agenda. Housing associations remain financially robust, Galliford said, despite the challenges of welfare reform, the recent government rent reforms and Brexit uncertainty.
Galliford said it was looking into further geographical expansion and increasing the mixed-tenure revenue to drive growth in the division's top line and margins. These increased to 3.9% in the division in its recent financial year from 2.9% the year before.
The comments came as Galliford posted pretax profit of GBP135.0 million for its financial year ended June 30, an 18% increase from the GBP114.0 million reported a year earlier, thanks to revenue rising to GBP2.50 billion from GBP2.39 billion.
In light of the rise in profit, Galliford lifted its full-year dividend by 21% to 82.00 pence per share from 68.00p per share the prior year.
Within the Linden Homes divison, there were 3,078 completions over the year, ahead of the 2,769 completions recorded a year earlier. The average selling price of these units rose 2.0% on the prior year to GBP335,000. Revenue from the division came in at GBP841.0 million compared to the GBP779.0 million revenue generated from the division a year earlier.
Linden Homes had a landbank of 11,700 plots at the end of the period, down from 13,500 plots the prior year, but said it had 100% of the land required for its next financial year and had 85% of land secured for the financial year 2018.
Meanwhile, Galliford also recorded a rise in mixed-tenure revenue within its partnerships and regeneration division, but said its contracting revenue came in slightly lower due to procurement delays following rent reforms by the UK government.
Revenue within the company's construction division rose to GBP1.50 billion from GBP1.29 billion the prior year, though the order book at the year end was slightly behind the prior year at GBP3.50 billion down from GBP3.80 billion. However, Galliford noted that 74% of its order book was in frameworks, ahead of the 69% recorded a year earlier, which it said puts it at a "significant advantage".
"They allow us to work collaboratively with clients, gain a deep understanding of their needs and build up expertise through delivering follow-on projects," Galliford said.
Galliford said the UK construction market continued to generate an improving pipeline of projects over the year, with build cost increased moderating and the availability of skilled labour improving across all regions.
"The decision to leave the European Union inevitably creates a backdrop of uncertainty for the new financial year. However, we have been encouraged by visitor levels and sales rates at Linden Homes through the summer. The balance of our businesses and the strength of our order books mean that we are well-placed to manage the impact of this uncertainty," said Chief Executive Peter Truscott.
By Hannah Boland; [email protected]; @Hannaheboland
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