12th Sep 2018 08:53
LONDON (Alliance News) - Galliford Try PLC on Wednesday cut its annual dividend by 10% to increase earnings cover, despite reporting a steep jump in profit and revenue for its recently ended financial year.
The stock was trading up 5.1% at 1,049.74 pence each, the best performer in the FTSE 250 index on Wednesday.
The construction firm and housebuilder proposed a final dividend of 49p per share which, added to the interim dividend of 28p, brings shareholders' return to 77.0p per share. A year ago, the total dividend was 86.0p.
"The board is committed to a dividend strategy which fairly and prudently allocates profits between returns to shareholders and further investing in the growth potential of the businesses and maintaining a strong balance sheet, which protects against the risks in cyclical markets. We approach this by setting a target level of dividend cover," Galliford said.
In February 2017, the company had said it intended to increase its dividend cover up to two times. It now expects its dividend to "progress in line with profits after the current year".
For the year ended June 30, the company posted pretax profit of GBP143.7 million, multiplied from GBP58.7 million the year prior, reflecting revenue growth and improved pre-exceptional margins across the group, Galliford explained. Before exceptional costs, pretax profit came in at GBP188.7 million, a 28% increase year-on-year from GBP147.6 million.
The company recorded a total exceptional charge of GBP123 million relating to its Aberdeen Western Peripheral Route project during the year, following the collapse of Carillion - which was a partner in the project alongside Galliford and Balfour Beatty - at the start of 2018.
"The total additional charge to date is GBP123 million, which has not increased beyond previous guidance, of which GBP120 million has been classified as exceptional," Galliford explained.
Meanwhile, revenue, including from joint ventures, increased 11% year-on-year to GBP3.13 billion from GBP2.82 billion. Group revenue, excluding JVs, was up 10% to GBP2.93 billion.
"We have delivered a very strong underlying performance during the year, driven by excellent progress towards our strategic objectives across all three businesses," Chief Executive Officer Peter Truscott said.
Galliford said that Linden Homes made a good start to the new financial year with a "solid" order book, albeit one that is below last year but in line with 2016.
Meanwhile, Partnerships & Regeneration achieved "strong growth in both revenue and margin". The business has a strong order book and continues to see good demand, Galliford said.
In Construction, new projects are delivering "improved margins", with good progress made against completion of the Aberdeen Western Peripheral Route project.
Looking ahead, Galliford said its private and affordable homes units continue to see "good market fundamentals". A total of 6,193 new homes were built by its Linden Homes and Partnerships & Regeneration divisions, up from 5,490 in financial 2017. The sales order books for the two divisions total GBP698 million, it said, up from GBP638 million a year ago.
Galliford added that it is on track to achieve its Group 2021 strategic targets with adjustments to divisional targets.
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