16th Sep 2014 07:00
LONDON (Alliance News) - Galliford Try, which bolstered its construction arm earlier this year, Tuesday reported an increase in profit and revenue for the full year, following a strong performance from its housebuilding and partnerships divisions.
The company also announced Tuesday that Chief Executive Greg Fitzgerald, who has been with the company for 33 years, has decided to retire no later than the end of 2015. The company has started the process to appoint his successor.
Galliford Try, which acquired Miller Construction from Miller Group Holdings Ltd for GBP16.6 million in July, posted pretax profit of GBP95.2 million for the year to June 30, up from GBP71.7 million a year earlier, as revenue rose 21% to GBP1.77 billion from GBP1.47 billion.
FTSE 250-listed Galliford said its housing division continues to make strides as the UK housing market recovers.
Linden Homes, the housing arm, saw revenue rise to GBP759.6 million from GBP632.6 million a year earlier, with operating margin up to 15.1% from 13.3%.
The division ramped up housebuilding, with completions up to 2,887 compared with 2,806 a year earlier. The average selling price also rose by 15%, reflecting "the strong demand for homes on our prime southern sites, the high proportion of houses in our sales mix and the increased average size of the houses we are producing".
Galliford said its construction division also did well despite the UK construction market continuing to face challenges. The arm posted revenue of GBP832.9 million up from GBP822.7 million a year earlier, although operating margin fell to 1.0% from 1.6%.
"We had anticipated that margins would be lower in 2014, owing to challenging conditions in the supply chain, notably in building, leading to higher costs than we expected at the time we bid for some contracts," the company said.
Nonetheless, the company has high hopes for the construction arm after it acquired Miller Construction in July. It expects Miller Construction to be earnings enhancing in the year ending June 30, 2015. On the back of this, Galliford predicts margins for the construction arm to rise towards 2.0% by 2018.
Galliford said its partnerships division has now been fully integrated into its housebuilding division alongside Linden Homes.
Partnerships revenue rose to GBP242.8 million from GBP97.0 million. Of this, GBP22.3 million came from mixed-tenure developments, with GBP220.5 million from contracting.
The company said this growth reflects our strong performance in favourable market conditions. In addition, an increase in land-led and mixed-tenure developments also contributed, enabling clients to get projects on to site more quickly and improving margins.
Looking ahead, the company said tight supply chain conditions means that one of the key challenges will be carrying out the work we are planning.
However, Galliford Try said: "We continue to manage our supply chain relationships carefully, to mitigate this risk and with a view to ensuring we achieve our objectives for the coming year."
Following its performance the company increased its final dividend to 38 pence up from 25 pence a year earlier, making a total dividend of 53 pence compared with 37 pence a year earlier.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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