18th Feb 2015 10:07
LONDON (Alliance News) - Shares in Galliford Try PLC gained ground on Wednesday morning after the company reported a rise in pretax profit in the first half on the back of strong revenue growth across its construction and housebuilding operations and hiked its dividend by close to half.
The FTSE 250-listed construction and housebuilding company's shares were up 2.2% to 1,400.84 pence, one of the best performers in the FTSE 250, after it said pretax profit for the six months to the end of December was GBP42.5 million, up 12% from the GBP38.1 million posted a year earlier.
Revenue in the first half rose to GBP1.08 billion, up 35% from the GBP803.5 million posted last year, boosted by strong performances in its Linden Homes and Galliford Try Partnerships business within its housebuilding division, along with an in-line performance in its construction business. Revenue including its share of joint ventures rose to GBP1.12 billion, boosted by a GBP169 million contribution from Miller Construction, which it acquired last year.
The group hiked its interim dividend on the back of the rise in profit, raising it to 22 pence per share from 15 pence per share last year.
"We are very pleased with the group's strong performance in the six months to December 31, with our housebuilding and construction businesses both performing well, and are encouraged by the start we have made to the second half of the year," said Galliford Executive Chairman Greg Fitzgerald.
Fitzgerald added the company is progressing with its plans to appoint a new chief executive. The company has been searching for a new CEO since September when Fitzgerald stepped down from the position to take up the chairman role.
The group's construction arm drove the rise in revenue for the first half, with revenue for the division up to GBP604.8 million from GBP398.1 million, boosted by the GBP169 million contribution from Miller Construction.
Galliford Try's construction order book surged in size at the end of December, up to GBP3.25 billion from GBP1.25 billion at the end of December 2013. The order book comprises 61% orders from the public sector, 20% from the regulated sector and 19% from the private sector. Galliford said it has secured 100% of projected revenue for the financial year to the end of June and 75% for its financial year to the end of June 2016.
Its margins remained constrained in the building, as opposed to infrastructure, segment of the construction arm, however, owing to the group working through older contracts. This was offset by the Miller Construction acquisition and by better margins on new work.
In the housebuilding arm, both Linden Homes and Galliford Try Partnerships posted rises in revenue in the first half. Linden revenue rose to GBP346.1 million from GBP328.2 million, with its operating profit rising to GBP52.1 million from GBP44.1 million and its operating profit margin improving to 15.1% from 13.5% a year ago.
In the half, Linden's rate of sale was at 0.51 unit sales per outlet per week, down from 0.52 in the first half of last year. Its average selling price rose 7% in the half to GBP310,000, up from GBP291,000, in line with expectations.
Galliford Try Partnerships, its affordable housing contractor subsidiary, saw revenue rise to GBP157.6 million from GBP100.9 million. The unit won a number of key contracts in the half, including GBP360 million housing scheme in east London's Canning Town on behalf of the Greater London Authority.
Panmure Gordon reiterated its Sell rating on Galliford, saying that though its first-half results were strong, it reckons the company is currently over-valued.
Panmure made no adjustments to its 2015 forecasts for Galliford, but analyst Rachael Applegate said the broker's estimates from 2016 onwards are likely to edge back, reflecting a change to its assumptions for the growth rate of the housebuilding business.
By Sam Unsted; [email protected]; @SamUAtAlliance
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