19th Feb 2014 08:31
LONDON (Alliance News) - Housebuilding and construction group Galliford Try PLC Wednesday reported an 18% jump in both pretax profit and revenue in the first half of its financial year, as the recovery in the UK housing market buoyed its housebuilding unit, and said it is targeting a doubling of profits over the next five years.
Its construction division continued to struggle during the half, with revenues and margins both down in what it described as a still-challenging market. However, it said the strong first half obverall gives it confidence that it will meet its own expectations for the full financial year.
The company, which builds houses through its Linden Homes brand, posted pretax profit of GBP38.1 million for the six months to end-December, from GBP32.3 million a year earlier, as revenues rose to GBP803.5 million, from GBP678.2 million.
It said it wants to more than double the 2013 financial year profits and earnings per share over the next five years in what it described as a "disciplined growth strategy" through to 2018.
The board proposed a 25% increase in the interim dividend to 15.0 pence from 12.0 pence a year ago.
All the UK's housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast where Galliford Try has high exposure. The builders virtually halted new building in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
Galliford's housing division posted profit of GBP44.2 million for the first half, compared with GBP33.9 million a year earlier as Linden Homes' average selling price on private sales increased by 15% to GBP291,000 from GBP252,000, reflecting the strong demand for properties in the southeast and an increased focus on houses.
The average selling price for affordable homes was GBP122,000, compared with GBP115,000 in 2013, leading to a combined average selling price up 16% to GBP255,000, from GBP220,000 a year earlier.
The housing market, particularly in the firm's key geographic locations in the south of England, is improving, which was reflected in housing revenue increasing to GBP328.2 million during the period, from GBP273.5 million a year earlier.
Revenue also rose in the company's partnerships business to GBP100.9 million, from GBP43.1 million a year earlier.
Partnerships is the company's specialist affordable housing contractor which has a strong presence in the south east and north east of England and a growing business across the rest of the country. Galliford has increased the ties between the housebuilding and partnerships units in an effort to capture what it thinks are significant growth opportunities.
During the period, as part of the consortium S4B, the partnerships division achieved financial close on the GBP100 million Brunswick regeneration scheme, which is designed to transform the Brunswick area of east Manchester through the provision of 520 new homes, associated community facilities and enabling infrastructure works.
Galliford said its construction business , however, is still experiencing difficult trading conditions, resulting in revenue for the division dipping to GBP398.1 million, from GBP400.7 million a year earlier.
"Against a background of a difficult market we continue to focus on risk management, margin and targeting work with acceptable returns and risk," the firm said of the division.
On a more positive note, Galliford said the total order book for the construction arm was up 4% to GBP1.25 billion, from GBP1.2 billion. It is comprised 19% in the regulated sector, 50% in the public sector and 31% in the private sector.
Financially, the firm said net debt increased to GBP85.9 million, from GBP58.2 million in the corresponding period, reflecting a planned significant increase in the landbank.
Galliford also refinanced its banking arrangements, entering into a new five year unsecured revolving credit facility of GBP400 million, an increase of GBP75 million on the facility it replaced.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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