7th Sep 2006 07:03
Galliford Try PLC07 September 2006 GALLIFORD TRY PLC PRELIMINARY STATEMENT FOR THE YEAR ENDED 30 JUNE 2006 HIGHLIGHTS 2006 2005 Increase £m £mRevenue 851 718 + 19% Profit before tax- Pre exceptional* 32.5 27.4 + 19%- Post exceptional 34.5 27.4 + 26% Earnings per share pence pence- Pre exceptional* 9.7 8.6 + 13%- Post exceptional 10.8 8.6 + 26% Dividend per share 2.5 2.1 + 19% • Construction - Profit from operations* at a record £13.2 million, representing margin of 2.1% - Forward order book £2.3bn, over 90% on non price competitive basis - Strong cash flow • Housebuilding - Profit from operations* at record £32.0 million, representing margin of 14.3% - Current sales in hand up 22% on a year ago at £122m - Landbank up 58% at record 4,115 units • Net cash at the year end of £16m • Profit from operations* (excluding acquisitions) up 14% to £35.6m • Acquisitions of Morrison Construction and Chartdale Homes performing well. \* The net exceptional gain of £2 million (2005: nil) arises from the profit onthe sale and leaseback of Group premises net of restructuring costs. Profit fromoperations is stated before finance costs, exceptional items, amortisation andshare of joint venture interest and tax. Commenting today, Greg Fitzgerald, Chief Executive, said: "We have had an excellent year with record financial results and transformed thebusiness with two key acquisitions. Our finances are very strong. Acquiring Morrison and Chartdale has demonstratedour ability to supplement organic growth with carefully positioned acquisitionsthat fit our strategy. We have proved the success of our business model indelivering profitable growth and we look forward to reporting further progressin the coming year." For further enquiries please contact: Greg Fitzgerald, Chief Executive Galliford Try plc 01895 855219 Frank Nelson, Finance Director Galliford Try plc 01895 855226 Ann marie Wilkinson / Geoff Callow Bell Pottinger Corporate & Financial 020 7861 3232 CHIEF EXECUTIVE'S COMMENTARY We have had an excellent year with record financial results and transformed thebusiness with two key acquisitions. FINANCIAL REVIEW Profit before tax increased 26% to £34.5 million (2005: £27.4 million). Revenueincreased 19% to £851 million. The results include four and a half month'strading from Chartdale Homes, acquired on deferred payment terms for £67 millionin February, and three month's results from the Morrison Constructionbusinesses, acquired on a debt and cash free basis for £42 million at the end ofMarch. Profit from operations excluding acquisitions rose 14% to £35.6 million,with £2.6 million from acquired businesses resulting in a total of £38.2million. The acquisitions delivered their projected profits to the year end,their integration into Galliford Try is on track and their prospects for thefuture are encouraging. Total Group revenue is therefore anticipated tosignificantly exceed £1 billion in the first full financial year following theacquisitions. Construction profit from operations rose 45% to £13.2 million on revenue,including joint ventures, up 16% to £629 million, representing a margin of 2.1%.Housebuilding has performed well in a market that returned to satisfactorylevels in the second half of the year and profit from operations increased by15% to a record £32.0 million on revenue, including joint ventures, of £224million. The costs of our PPP Investments business exceeded income in the yearas we continue to build up our portfolio resulting in a net loss from operationsof £1.6 million. Group profit before tax is stated after a net exceptional gainof £2.0 million which includes £3.9 million profit on the sale and leaseback oftwo of the Group's office premises net of £1.9 million restructuring costsfollowing the Morrison acquisition. Our rigorous approach to cash management continues. Construction generatedstrong positive cash flows throughout the period and we have closely managed thecapital employed in housebuilding. Net interest reported of £5.0 millionincludes £1.9 million of net bank interest (2005: £1.6 million) and at 30 June2006 we had net cash of £16 million compared to net debt of £12.4 million lastyear. Notable cash movements in the year were the payment of the first £25million of the Chartdale Homes purchase price, £40 million on the acquisition ofMorrison Construction, sale and leaseback receipts of £11.2 million and receiptof the proceeds of the placing and open offer in March amounting to a net £48.6million. The tax charge for the year was 26%, reflecting the availability ofcapital losses to offset the sale and leaseback profit. The results for 2006 are being reported for the first time on an IFRS basis. Thereturn on average shareholders funds in the year of £71.6 million was 48%.Shareholders funds at 30 June 2006 were £120.1 million (2005: £53.7 million). At30 June 2006 the final salary pension scheme deficit was £33 million net ofdeferred tax. In light of the continuing uncertainties of running final salarypension schemes, the Company has commenced the process of consulting withmembers to close the scheme to future service accrual and provide definedcontribution arrangements. The Company also increased its regular cashcontribution towards the deficit from £3.2 million per annum to £6.2 million inthe year, and is in discussions with the Trustees over funding the remainder ofthe deficit. DIVIDEND The directors have taken into account current performance and their confidencein the future prospects for the Group in determining an appropriate level ofdividend. Accordingly, the directors are recommending a final dividend of 1.8pper share, an increase of 20% on 2005, resulting in a total dividend up 19% to2.5p. The directors remain committed to a progressive dividend policy whichtakes into account earnings growth as well as the need for continued investmentin the business. OPERATING REVIEW Construction Construction profit from operations reached a record level of £13.2 million onrevenue, including joint ventures, of £629 million during the year. The resultsinclude three months trading from Morrison Construction, which delivered itsplanned profits for the period and exceeded our targets for securing new work. The integration of Morrison is proceeding well. We have rationalised thestructure and office network across the country and are confident of exceedingthe anticipated savings to our cost base. Since the start of our new financialyear our construction activities have been operating as two divisions, Buildingand Infrastructure, targeting clearly defined market sectors with the objectiveof building on our significant presence in each of them. Our overallconstruction order book totals £2.3 billion of which 90% is in the public andregulated sector and over 90% has been secured on criteria other than on apurely price competitive basis. Building - Our building division has a good spread of work across its markets inboth private and public sectors. The acquisition of Morrison has given us asignificant presence in the Scottish market, particularly north of the centralbelt. The integration of Morrison's English and Welsh operations into the wellestablished Galliford Try business enables us to offer clients a comprehensiveservice across the country in our selected sectors. Education is a key market for the business. The securing of the 41 school £192million Northamptonshire Schools PFI project and the 11 school £134 millionHighland Schools PFI project during the year provides work over a three yearperiod to add to our existing portfolio for universities, schools and colleges.Since the year end we have also been awarded £51 million of work for two newacademies in London. Other major public sector markets are in healthcare and prisons. We alreadyparticipate in four LIFT frameworks for primary care health authorities and arenow securing projects in subsequent tranches to the initial workload. We arealso at preferred bidder stage for a further LIFT for the South East EssexPrimary Care Trust. We carry out a range of projects for the Home Office underframework agreements for its prison programme, an area where expenditure islikely to increase. We are putting additional investment into our affordable housing business togenerate more development led opportunities with our well established housingassociation partners. The commercial market is more buoyant and we have a number of encouragingopportunities, particularly in London, where we have recently commenced a £28million urban regeneration project for the Igloo regeneration fund, atBermondsey. We continue to carry out a significant amount of work for theMinistry of Defence in upgrading living accommodation across the country and arecarrying out a substantial redevelopment for Defence Housing Estates inPortsmouth. At the end of August the building division's forward order book stood at £1.14billion of which 90% has been secured on criteria other than on pure pricecompetition and over 80% is in the public and regulated sectors. Infrastructure - The infrastructure division focuses on water, highways, rail,remediation and ground engineering, renewable energy and telecommunications.Over 90% of its workload is in frameworks and it has long establishedrelationships with clients such as the Highways Agency, Scottish Power andNational Grid. Following the Morrison acquisition, Galliford Try is one of the leadingcontractors to the water industry, operating through framework agreements whichprovide visibility to future workload, resulting in more predictable profits andcontrolled construction risk. We work for most of the UK's water companies;Southern, Thames, Anglian, United Utilities, Welsh and Yorkshire as well asScottish, for whom we have been awarded additional framework projects that willtake our revenue in water to £180 million per annum over the next three years. Our highways business carries out road projects for the Scottish Executive andHighways Agency as well as maintenance services, primarily provided to localauthorities. We are shortly to start a £20 million project on the A595 under the"early contractor involvement" form of contract that suits our collaborativeapproach to major construction projects and have a further £100 million of ECIwork in our order book including a £45 million project for remodelling theintersection at junction 15 of the M40. Galliford Try is also a leading provider of civil engineering and buildingservices for the rail sector. We carry out the reconstruction of railinfrastructure, including bridgeworks, tunnels and viaducts as well as therefurbishment and new build of stations and rail depots let under a mixture offramework and individual projects. We have a well established track record on ground remediation with over 180sites completed including a series of projects under a long term framework forthe National Grid. The award of the major land remediation contract for thenorthern section of Olympic Park in east London, let in a framework agreementunder which we expect to provide work until 2010, demonstrates our success indeveloping our presence in a growth market. We are an established service provider to the renewable energy sector and ourportfolio of windfarm developments for clients such as Scottish Power and FredOlsen Renewables is enabling us to take advantage of the good opportunities wehave in this expanding market. Our telecommunications infrastructure businessexpanded the range of its activities during the year by acquiring Pentland tooffer a fully integrated service that includes site acquisition. The forward order book for the infrastructure division currently stands at £1.15billion of which 90% has been secured on criteria other than on pure pricecompetition and over 90% is in the public and regulated sectors. PPP Investments PPP Investments role is to develop and take equity participation in public /private partnership arrangements for public sector work, with the objective ofproviding negotiated work for our construction activities. During the year financial close was achieved on two of the largest education PFIprojects in the UK for Northamptonshire County Council and for the HighlandCouncil, securing £326 million of construction work. We have recently beenappointed preferred bidder on a further LIFT for the South East Essex PrimaryCare Trust which has an initial value of £11 million with the potential for atotal of £100 million of work over a number of future tranches. The integration of the Morrison PFI team into Galliford Try Investments has beencompleted, and the Company has now acquired the PFI equity interests from AWGGroup in Highland Schools and Defence Housing Estates Portsmouth followingreceipt of the necessary consents. Our strategy is to build up our PFI portfoliofor the future and there were no sales of equity during the year. The divisionincurred a net loss from operations of £1.6 million compared to a £1.2 millionloss from operations last year. Housebuilding Galliford Try's regional housebuilding businesses in the south west, easterncounties and the south east of England had a record year for units sold, revenueand profit. During the year we completed 1,054 homes compared to 853 in 2005. Our averageselling price rose slightly from £208,000 to £212,000, maintaining our presencein the mainstream market. Our record profit from operations of £32 million,representing a margin of 14.3% on revenue, including joint ventures, of £224million, was achieved in a market that was challenging during the first half ofour financial year, picking up to an acceptable level during the second half.Our progress was helped by the differentiation that our business model gives us,with its focus on individually designed developments with a particular strengthin conversions and brownfield developments. We continue to avoid high riseapartment developments and do not depend on major consortium sites, giving us acompetitive advantage in the market place. Our business in the eastern counties was significantly boosted during Februarywith the acquisition of Chartdale Homes. Acquired for a total consideration of£67 million spread over a two year period, the acquisition added 1,350 plots toour landbank and extended our geographical coverage throughout the whole ofLincolnshire. Sales since acquisition have met our expectations, we have securedthe planning consents that were outstanding at the time of acquisition and areencouraged by the new opportunities that our critical mass in the easterncounties is now bringing us. Our track record in brownfield land development, and our relationships withhousing associations and regeneration bodies is increasing the number and sizeof schemes we can undertake. 75% of homes sold were on brownfield developmentswith all in the south east on brownfield land. We have started selling on the108 home conversion of the former Queen Elizabeth II hospital at Banstead andare making progress in securing the necessary planning consents to develop the 8acre brownfield site in Osterley, west London that we acquired last year. In thesouth west, we are following our redevelopment of Truro hospital into 190 unitswith our joint development with English Partnerships of a 17 acre site inCamborne, Cornwall, expected to provide a total of 390 homes, both affordableand for sale, on which we exchanged contracts since the year end. We continue to achieve one of the highest scores in independent customer careresearch, with over 90% of our purchasers stating they would recommend us totheir best friend. This helps minimise our after sales costs and supports ourreputation among homebuyers generally in the market. We received a number ofsustainable development and design awards during the year, two gold and twosilver awards at the annual Daily Telegraph / What House awards and a CABE(Commission for Architecture and the Built Environment) gold award for our mixeddevelopment at Gun Wharf, Plymouth. Our landbank, currently standing at 4,115 units after the Chartdale acquisition,compares to 2,605 last year. We have limited our exposure to apartments, whichrepresent 22% of our landbank. In the last year we have secured consents for 81plots from our strategic land, which currently stands at 625 acres. Since the start of the new financial year sales, supported by the limited use ofincentives, have exceeded targets and at the end of August the value of totalsales in hand stood at £122 million, up 22% on a year ago. Health, Safety and Environment We treat health, safety and environment issues as a priority in our business,focussing on continuous improvement in our standards as an integral part of ourmanagement process. Our accident incident rate of 7.11 per 1,000 people for theyear showed a reduction for the third successive year. We are also committed to a policy of effectively managing our environmentalperformance in order to minimise the impact of our business processes on thenatural environment. During the year seven of our business units achievedISO14001 accreditation. OUTLOOK We enter our new financial year in a strong position. Our building andinfrastructure divisions have a well balanced workload across their specificsectors of expertise, and the structure is in place to deliver continued growth. The expansion of our housebuilding division is progressing well. We areencouraged by the way the business has performed in the markets we have facedand by the opportunities we have to grow both our traditional development andurban regeneration activities. Our objective is to continue our expansion. Our finances are very strong. Acquiring Morrison and Chartdale has demonstratedour ability to supplement organic growth with carefully positioned acquisitionsthat fit our strategy. We have proved the success of our business model indelivering profitable growth and we look forward to reporting further progressin the coming year. Greg FitzgeraldChief Executive7 September 2006 CONSOLIDATED INCOME STATEMENTFor the year ended 30 June 2006 2006 2005 Notes £'000 £'000-----------------------------------------------------------------------Continuing operationsRevenue 2 851,499 718,494Cost of sales (763,456) (651,675)-----------------------------------------------------------------------Gross profit 88,043 66,819Administrative expenses (48,861) (35,596)Share of post tax profit/(losses) from joint ventures 315 (219)-----------------------------------------------------------------------Profit before finance costs 2 39,497 31,004 ------------------------------------------------------------------------Profit before finance costs, amortisation and exceptional items: 37,971 31,004Amortisation of intangibles (447) -Exceptional items:- Profit on sale and leaseback of property 3,908 -- Restructuring costs (1,935) ------------------------------------------------------------------------Profit before finance costs 39,497 31,004======================================================================= Finance costs:Interest receivable 3 657 664Interest payable 3 (5,695) (4,411)Income from investments - 100-----------------------------------------------------------------------Profit on ordinary activities before tax 34,459 27,357Taxation 4 (9,085) (8,312)-----------------------------------------------------------------------Profit for the financial period 25,374 19,045=======================================================================Profit for the year attributable to:- equity shareholders 25,352 19,045- minority interest 22 ------------------------------------------------------------------------ 25,374 19,045======================================================================= Earnings per ordinary share- basic 5 10.8p 8.6p- diluted 5 10.6p 8.5p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 30 June 2006 2006 2005 £'000 £'000------------------------------------------------------------------------Profit for the financial period 25,374 19,045 Actuarial losses in pension scheme (5,135) (15,175)Deferred tax on items taken directly to equity 2,278 4,552Current tax on items taken directly to equity 1,390 -Net losses not recognised in the income statement (1,467) (10,623)Total recognised income for the period 23,907 8,422 CONSOLIDATED BALANCE SHEETat 30 June 2006 2006 2005 £'000 £'000-----------------------------------------------------------------------Non-current assetsIntangible assets 2,305 -Goodwill 57,242 -Property, plant and equipment 7,968 11,630Investments in joint ventures and associates 3,314 2,111 Financial assets - Available for sale investments 1,167 468Trade and other receivables 251 245Deferred tax assets 15,676 15,187-----------------------------------------------------------------------Total non-current assets 87,923 29,641Current assetsInventories 886 613Developments 283,825 206,171Trade and other receivables 184,065 100,204Financial assets- Available for sale financial assets - 3,412- Derivative financial assets 49 139Cash and cash equivalents 21,738 2,007-----------------------------------------------------------------------Total current assets 490,563 312,546 -----------------------------------------------------------------------Total assets 578,486 342,187----------------------------------------------------------------------- Current liabilitiesFinancial liabilities - borrowings (3,864) (16,769)Trade and other payables (344,429) (215,108)Current tax liabilities (3,101) (3,549)Provisions (1,939) (99)-----------------------------------------------------------------------Total current liabilities (353,333) (235,525)-----------------------------------------------------------------------Net current assets 137,230 77,021-----------------------------------------------------------------------Non- current liabilitiesFinancial liabilities - borrowings (1,919) (1,013)Retirement benefit obligations (47,088) (46,168)Deferred tax liabilities (13,489) (2,837)Other liabilities (42,100) (2,598)Provisions (428) (342)-----------------------------------------------------------------------Total non-current liabilities (105,024) (52,958) -----------------------------------------------------------------------Total liabilities (458,357) (288,483)-----------------------------------------------------------------------Net assets 120,129 53,704=======================================================================Shareholders' equityShare capital 13,740 11,340Share premium 48,698 2,295Merger reserves 4,687 4,687Retained earnings 52,982 35,382-----------------------------------------------------------------------Total shareholders' equity 120,107 53,704Minority interest in equity 22 ------------------------------------------------------------------------Total equity 120,129 53,704======================================================================= CONSOLIDATED CASH FLOW STATEMENTfor the year ended 30 June 2006 2006 2005 Notes £'000 £'000----------------------------------------------------------------------- Cashflows from operating activities:Net cash from operations 8 18,234 15,608Net interest paid (4,623) (3,299)Tax paid (10,291) (8,472) -----------------------------------------------------------------------Net cash from operating activities 3,320 3,837 Cash flows from investing activities:Acquisition of subsidiary (net of cash acquired) (24,863) -Acquisition of investments in joint ventures and associates (1,003) (75)Income from investments in joint ventures and associates 115 35Acquisition of available for sale investments (699) (69)Proceeds from sale of available for sale investment - 1,771Purchase of property, plant and equipment (1,609) (1,598)Proceeds from sale of property, plant and equipment 11,123 29-----------------------------------------------------------------------Net cash (used in)/from investing activities (16,936) 93 Cash flows from financing activities:Net proceeds from issue of ordinary share capital 48,803 200Purchase of treasury shares (1,866) (450)Repayment of borrowings (82) (144)Borrowing acquired with subsidiary (48) -Dividends paid to group shareholders (4,902) (3,875)Available for sale financial asset 3,412 (3,412)-----------------------------------------------------------------------Net cash used in financing activities 45,317 (7,681) -----------------------------------------------------------------------Increase/(decrease) in net cash and cash equivalents 31,701 (3,751)----------------------------------------------------------------------- Net cash and cash equivalents at beginning of period (13,733) (9,982)-----------------------------------------------------------------------Net cash and cash equivalents at end of period 9 17,968 (13,733)======================================================================= NOTES TO THE PRELIMINARY STATEMENT 1 Basis of preparation This preliminary statement has been agreed with the Company's auditors, and doesnot constitute statutory accounts for the Company. It has been extracted fromthe annual accounts of Galliford Try plc, which have not yet been filed with theRegistrar of Companies. Galliford Try plc ("the Group") has adoptedInternational Financial Reporting Standards ("IFRS") with effect from 1 July2005, in accordance with the European Union Regulations. The financialinformation for the year ended 30 June 2005 has been restated accordingly. 2 Business segment reporting During the year ended 30 June 2006, for management purposes the Group wasorganised into three operating divisions, Construction, PPP Investments andHousebuilding. The divisions are the basis on which the Group reports itsprimary segmental information. With effect from 1 July 2006, Constructionactivities have been operating as two divisions Building and Infrastructure. Asthe Group has no material activities outside the UK, segmental reporting is notrequired by geographical area. Year ended 30 June 2006£'000 Construction PPP Housebuilding Group Total Investments £'000 £'000 £'000 £'000 £'000Group revenue and share of joint venture revenue 628,847 914 223,787 557 854,105Share of joint ventures' revenue (2,481) - (125) - (2,606)--------------------------------------------------------------------------------------Revenue 626,366 914 223,662 557 851,499--------------------------------------------------------------------------------------Segment result:Profit before joint ventures 13,211 (1,523) 31,369 (5,401) 37,656Share of joint ventures' profit (4) (58) 650 - 588--------------------------------------------------------------------------------------Profit from operations* 13,207 (1,581) 32,019 (5,401) 38,244Share of joint ventures' interest and tax (64) 289 (498) - (273)--------------------------------------------------------------------------------------Profit before finance costs, amortisation andexceptional items 13,143 (1,292) 31,521 (5,401) 37,971Amortisation and exceptional items (113) - 1,388 251 1,526--------------------------------------------------------------------------------------Profit before finance costs 13,030 (1,292) 32,909 (5,150) 39,497Net finance costs (5,038)--------------------------------------------------------------------------------------Profit before tax 34,459Taxation (9,085)--------------------------------------------------------------------------------------Profit for the year from continuing operations 25,374====================================================================================== Year ended 30 June 2005 Construction PPP Housebuilding Group Total Investments £'000 £'000 £'000 £'000 £'000Group revenue and share of joint venture revenue 537,733 - 187,991 514 726,238Share of joint ventures' revenue (1,714) - (6,030) - (7,744)---------------------------------------------------------------------------------------Revenue 536,019 - 181,961 514 718,494========================================================================================Segment result:Profit before joint ventures 8,901 (1,240) 28,002 (4,440) 31,223Share of joint ventures' profit 188 (28) (134) - 26---------------------------------------------------------------------------------------Profit from operations* 9,089 (1,268) 27,868 (4,440) 31,249Share of joint ventures' interest and tax (54) - (191) - (245)---------------------------------------------------------------------------------------Profit before finance costs, amortisation andexceptional items 9,035 (1,268) 27,677 (4,440) 31,004Amortisation and exceptional items - - - - ----------------------------------------------------------------------------------------Profit before finance costs 9,035 (1,268) 27,677 (4,440) 31,004Net finance costs (3,747)Income from investments 100---------------------------------------------------------------------------------------Profit before tax 27,357Taxation (8,312)---------------------------------------------------------------------------------------Profit for the year from continuing operations 19,045=======================================================================================* Profit from operations is stated before finance costs, exceptional items,amortisation and share of joint venture interest and tax. Construction PPP Housebuilding Group Total Investments £'000 £'000 £'000 £'000 £'000Year ended 30 June 2006AssetsGoodwill 55,284 1,958 - - 57,242Intangibles 2,305 - - - 2,305Investment in joint ventures and associates 285 1,204 1,825 - 3,314Segment assets 179,600 1,511 291,078 21,698 493,887------------------------------------------------------------------------------------ 237,474 4,673 292,903 21,698 556,748Cash and cash equivalents 21,738------------------------------------------------------------------------------------Consolidated total assets 578,486====================================================================================LiabilitiesSegment liabilities 256,767 2,047 149,411 44,349 452,574-------------------------------------------------------------------------- Gross debt 5,783------------------------------------------------------------------------------------Consolidated total liabilities 458,357==================================================================================== Net assets/(liabilities) excluding net debt,goodwill and intangibles (76,882) 668 143,492 (22,651) 44,627Goodwill and intangibles 57,589 1,958 - - 59,547------------------------------------------------------------------------------------Net assets/(liabilities) excluding net debt (19,293) 2,626 143,492 (22,651) 104,174--------------------------------------------------------------------------Net cash/(debt) 15,955------------------------------------------------------------------------------------Net assets 120,129------------------------------------------------------------------------------------ Year ended 30 June 2005AssetsGoodwill - - - - -Intangibles - - - - -Investments in joint ventures and associates 447 (28) 1,692 - 2,111Other assets 91,990 1,484 212,812 28,371 334,657------------------------------------------------------------------------------------ 92,437 1,456 214,504 28,371 336,768--------------------------------------------------------------------------Current asset investment 3,412Cash and cash equivalents 2,007------------------------------------------------------------------------------------Consolidated total assets 342,187===================================================================================-LiabilitiesSegment liabilities 139,919 1,113 76,371 53,298 270,701--------------------------------------------------------------------------Gross debt 17,782------------------------------------------------------------------------------------Consolidated total liabilities 288,483==================================================================================== Net assets/(liabilities) excluding net debt,goodwill and intangibles (47,482) 343 138,133 (24,927) 66,067Goodwill and intangibles - - - - -------------------------------------------------------------------------------------Net assets/(liabilities) excluding net debt (47,482) 343 138,133 (24,927) 66,067------------------------------------------------------------------------------------Net cash/(debt) (12,363)------------------------------------------------------------------------------------Net assets 53,704==================================================================================== 3 Interest payable 2006 2005 £'000 £'000------------------------------------------------------------------------------Bank interest 2,304 2,175Interest on unwinding of discounted creditors 2,402 1,320Net finance cost on retirement benefit obligations 746 823Other 243 93------------------------------------------------------------------------------Interest payable 5,695 4,411Interest receivable (657) (664)------------------------------------------------------------------------------Interest payable - net 5,038 3,747============================================================================== 4 Taxation The tax charge for the year is set out below: Analysis of charge in year 2006 2005 £000 £000-------------------------------------------------------------------------------Current tax- continuing operations 9,658 8,003Deferred tax- continuing operations 255 214Total previous years' tax (828) 95-------------------------------------------------------------------------------Taxation 9,085 8,312------------------------------------------------------------------------------- Tax on items charged to equity 2006 2005 £000 £000-------------------------------------------------------------------------------Current tax (credit) on stock options (1,390) -Deferred tax (credit) / charge for stock options (247) 36Deferred tax on pensions (1,541) (4,588)Deferred tax on revaluation (490) -------------------------------------------------------------------------------- (3,668) (4,552)-------------------------------------------------------------------------------Total taxation 5,417 3,760=============================================================================== The profit and loss tax charge for the year of £9,085,000 is 26.4% of profit onordinary activities before tax. This is lower than (2005: the same as) thestandard rate of corporation tax in the UK of 30%. The differences areexplained below: 2006 2005 £000 £000-------------------------------------------------------------------------------Profit on ordinary activities before tax 34,459 27,357-------------------------------------------------------------------------------Profit on ordinary activities multiplied by the standard rate in the UK of 30% (2005:30%) 10,338 8,207 Effects of:Expenses not deductible for tax purposes 855 136Utilisation of capital gains tax losses (1,112) -Adjustments in respect of previous years (828) 95Other (168) (126)-------------------------------------------------------------------------------Total taxation (continuing operations) 9,085 8,312------------------------------------------------------------------------------- 5 Earnings per share Basic earnings per share is calculated using the profit on ordinary activitiesafter tax and the weighted average number of ordinary shares in issue during theyear less the weighted average number of shares held by the Galliford TryEmployee Share Trust which have not unconditionally vested in employees. Fordiluted earnings per share the weighted average number of ordinary shares isadjusted to assume conversion of all potentially dilutive ordinary shares. 2006 2005 ----------------------------- --------------------------- Weighted Per Weighted Per average share average share Earnings number amount Earnings number amount £000 of shares pence £000 of shares pence BasicEarnings attributable to ordinary shareholders 25,374 235,209,936 10.8 19,045 221,821,456 8.6 Effect of dilutive securities:Options 3,076,310 2,783,273 -------------------------------------------------------------------------------------- Diluted 25,374 238,286,246 10.6 19,045 224,604,729 8.5====================================================================================== Earnings adjusted for post tax exceptional items of £2,475,000 amount to£22,899,000. The basic earnings per share on this adjusted basis is 9.7p(diluted 9.6p). 6 Dividends 2006 2005 £000 £000--------------------------------------------------------------------------------- Final dividend paid : 2005 1.5p per share (2004: 1.13p per share) 3,342 2,545 Interim dividend paid 2006: 0.7p per share (2005: 0.6p per share) 1,560 1,330--------------------------------------------------------------------------------- 4,902 3,875================================================================================= The directors are proposing a final dividend in respect of the financial yearending 30 June 2006 of 1.8p per share bringing the dividend in respect of 2006to 2.5p (2005: 2.1p). The final dividend will absorb an estimated £4,911,000 ofshareholders' funds. Subject to approval at the Annual General Meeting to beheld on Friday 27 October 2006, the dividend will be paid on 3 November 2006 toshareholders who are on the register of members on 6 October 2006. 7 Acquisitions During the year the Group made three acquisitions. The consideration payable,including expenses, for these acquisitions was as follows: £000Pentland 1,484Chartdale 60,920Morrison Construction 39,655-------------------------------------------------------------------------------- 102,059================================================================================ A reconciliation of the above amounts to the total purchase price for Chartdaleand Morrison Construction is set out below. There was no difference forPentland. Chartdale £000Total purchase price 67,000Expenses 1,675Less: Cash received from vendor (4,148)Less: Discounting of deferred payments (3,607)-------------------------------------------------------------------------------- 60,920================================================================================ Morrison Construction £000Total purchase price 42,000Expenses 1,723Less: Investments to be acquired (3,500)Less: Adjustment to purchase price (568) 39,655 From the date of acquisition to 30 June 2006 the acquisitions contributed£102,738,000 of turnover and £2,567,000 to profit before interest and intangibleamortisation as follows: Profit before finance costs and intangible amortisation Revenue £000 £000Pentland 2,080 108Chartdale 9,826 1,491Morrison Construction 90,832 968--------------------------------------------------------------------------------- 102,738 2,567================================================================================= All intangible assets were recognised at their respective fair values. £642,000of goodwill arose on the acquisition of Pentland. No goodwill on the Chartdaleacquisition. Details of the fair values relating to Morrison Construction andthe associated goodwill arising on the acquisition are given below: Carrying value Provisional pre acquisition fair value--------------------------------------------------------------------------------- £000 £000Intangibles - 2,752Property, plant and equipment 1,212 850Trade and other receivables 83,357 81,825Cash and cash equivalents 30,240 30,240Trade and other payables (130,536) (132,457)Current tax liabilities - -Deferred taxation (155)--------------------------------------------------------------------------------- Net assets acquired (15,727) (16,945)Goodwill 56,600---------------------------------------------------------------------------------Consideration 39,655================================================================================= The intangible assets acquired as part of the acquisition of MorrisonConstruction can be analysed as follows: £000Brand 454Customer contracts 1,865Relationships 433--------------------------------------------------------------------------------- 2,752================================================================================= 8 Cashflow from operating activities 2006 2005 £000 £000------------------------------------------------------------------------------Cash generated from operationsContinuing operationsNet profit 25,374 19,045Adjustments for:Tax 9,085 8,312Depreciation 1,534 1,821Amortisation of intangible 447 -Charge for employee share options 483 274Profit on sale and leaseback of property (3,908) -Loss on disposal of property, plant and equipment 338 54Profit on sale of fixed asset investments - (1,562)Interest income (657) (664)Interest expense 5,695 4,411Share of results of joint ventures before taxation (315) 219Non cash pension credit (4,215) (2,371) Changes in working capital (excluding theeffects of acquisition of subsidiaries)Decrease in inventories 510 182Increase in developments (1,237) (32,102)(Increase)/decrease in trade and other receivables (161) 6,083(Decrease)/increase in payables (16,665) 11,906Increase in provisions 1,926 -------------------------------------------------------------------------------Cash generated from continuing operations 18,234 15,608============================================================================== 9 Reconciliation of net cash Net cash/(debt) 2006 2005 £000 £000---------------------------------------------------------------------------------Current asset investment - 3,412Cash and cash equivalents 21,738 2,007Bank overdrafts (3,770) (15,740)Current borrowingsBank loan - secured (67) (1,017)Other loan (12) (12)Finance lease obligations (15) -Non - currentBank loans (884) -Unsecured loan notes - repayable between 2007 and 2011 (1,026) (1,013)Finance lease obligations (9) ---------------------------------------------------------------------------------- 15,955 (12,363)================================================================================= This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Galliford Try