6th Sep 2007 07:02
Galliford Try PLC06 September 2007 GALLIFORD TRY PLC PRELIMINARY STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 HIGHLIGHTS 2007 2006 Increase £m £m • Revenue 1,410 852 +65% • Profit before tax - Pre exceptional * 53.0 32.5 +63%- Post exceptional 60.2 34.5 +75% • Earnings per share pence pence - Pre exceptional * 12.5 9.7 +29%- Post exceptional 14.3 10.8 +32% • Dividend per share 3.0 2.5 +20% • Results ahead of expectations from Morrison Construction and Chartdale Homes in the first full year following acquisition. • Good performance from Linden Homes since acquisition; integration going well with synergies exceeding forecast. • Year end net debt of £99 million, representing gearing of 32%, significantly better than expectations. • Current construction order book maintained at £2.1 billion. • Record housebuilding completions of 1,526 units and landbank of 11,200 plots. Encouraging sales during summer period with current sales in hand at £323 million. • 90% revenue growth in affordable housing and regeneration activities. * Stated before a net exceptional gain of £7.2 million (2006: £2.0 million) Commenting on the results, Greg Fitzgerald, Chief Executive said: "Galliford Try has had an excellent year. We have delivered significant profitgrowth across all our businesses, with the acquisitions we made in the prioryear and Linden Homes, acquired in March 2007, performing ahead of expectations. With all our divisions delivering strong performances and a rapidly growingaffordable housing and regeneration business, we are confident that our strategywill continue to deliver sustainable growth." 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 / Dan de Belder Bell Pottinger Corporate & Financial 0207861 3232 CHIEF EXECUTIVE'S REVIEW Overview Galliford Try has had an excellent year. On revenue up 65% to £1.4 billion theGroup achieved a pre exceptional profit before tax up 63% to £53.0 million withpost exceptional profits up 75% to £60.2 million. Earnings per share (preexceptional) increased 29% to 12.5 pence with post exceptional up 32% to 14.3pence. The two acquisitions made in our previous financial year have both deliveredprofits ahead of expectations. The Chartdale Homes landbank has continued togrow and Morrison Construction's skills have significantly broadened theresource and expertise available to the Group leading to good growth,particularly in our water, highways and renewable energy businesses. Linden Homes, acquired in March 2007, has exceeded its profit expectations forthe first four months of our ownership. The integration is going well and we arealready seeing the benefits of our greater critical mass across the south ofEngland. The synergy savings projected are ahead of our forecasts at the time ofacquisition, with restructuring costs remaining in line. With our construction and housebuilding divisions performing very well, we areharnessing the skills we have across the Group to grow our presence in theexpanding affordable housing and regeneration market where we have a competitiveadvantage and are rapidly becoming an industry leader on the larger, morecomplex schemes. Financial Review Group revenue for the year to 30 June 2007 was £1,410 million (2006: £852million). Profit from operations (stated before finance costs, exceptionalitems, amortisation and share of joint venture interest and tax) increased from£38.3 million to £62.8 million. Construction profit from operations was up 67% to £22.1 million representing amargin of 2.1% on revenue. Within this the profit from operations of ourbuilding division was £12.3 million, representing a margin of 1.8% and of ourinfrastructure division was £9.8 million, representing a margin of 2.4%. Incomereceived from concession management contributed to a significant reduction inour loss from operations in PPP Investments from £1.6 million to £1.1 million inthe year despite, as planned, there being no sales of investments during theperiod. Our housebuilding division's profit from operations rose 52% to £48.9million representing a margin of 14.1 %. In March 2007 the Group raised £150.3 million by a placing and open offer andacquired Linden Holdings plc, purchasing the shares for £108.5 million andassuming £160.0 million of debt. £63.0 million of the consideration was paid incash during the period with the remainder secured by loan notes, of which £13.0million is deferred and conditional on the securing of planning consents and theabsence of any warranty claims. The results stated above include the fourmonth's trading to 30 June 2007, contributing a profit from operations of £7.8million on revenue of £66.3 million. For the first time we have extracted the revenue and profit from operationsresulting from our affordable housing and regeneration activities from ourconstruction and housebuilding segments. This demonstrates the potential of thiselement of our business which contributed a profit from operations of £6.1million on revenue, including joint ventures, up 90% in the year to £128.4million. The Group has recorded a net exceptional gain of £7.2 million. An exceptionalgain of £3.9 million resulted from property rationalisation, including a profiton the sale and leaseback of Group premises net of the cost of terminatingoperating leases on premises no longer required. The Group's defined benefit pension scheme closed to future service accrualduring the year, resulting in an exceptional curtailment credit of £5.2 million.The Group made a one off payment of £10 million into the scheme following theclosure, making a total of £13.1 million contributed to reducing the schemedeficit in the year and has agreed to make further deficit reduction paymentstotalling £7 million annually. At 30 June the deficit, net of deferred tax, was£18 million. There are no arrangements remaining within the Group under whichemployees are accruing pension on a defined benefit basis. The exceptional gains were partly offset by £1.9 million of costs, in line withour forecasts, arising from the reorganisation of the Group's housebuildingstructure in the south east of England following the acquisition of LindenHomes. The return on average shareholders' funds in the year was 28% and shareholders'funds at 30 June 2007 were £306.6 million. The Group's construction businessescontinued to generate excellent cash flows throughout the year and, despite theassumption of Linden Homes' debt, at the year end the Group's net debt was £99million, well below market forecasts and representing gearing of 32%, comparedto net cash at the previous year end of £16 million. Dividend The directors have taken into account the current performance and theirconfidence in the future prospects for the Group in determining an appropriatelevel of dividend. Accordingly, the directors are recommending a final dividendof 2.2 pence per share, an increase of 22% on 2006, resulting in a totaldividend up 20% to 3.0 pence. The final dividend will be paid on 16 November2007 to shareholders on the register on 19 October 2007. The directors remaincommitted to a progressive dividend policy which takes into account earningsgrowth as well as the need for continued investment in the business. Construction Overview Our construction activities have been organised for the first time this year astwo divisions, building and infrastructure. Overall we carried out £1.08 billionof work on which profit from operations was £22.1 million, representing a marginof 2.1%. The Group's construction order book is £2.1 billion, of which 90% hasbeen secured on a basis other than by pure price competition and 80% is in thepublic and regulated sector. Building Profit from operations of £12.3 million on revenue of £667 million, includingjoint ventures, represented an operating margin of 1.8%, underpinned by thegeneration of substantial cash balances throughout the year. During the year theintegration of the building activities of Morrison Construction, acquired inMarch 2006, was completed with the business in Scotland performing particularlywell and the contracts previously carried out in England absorbed into GallifordTry's existing operations. The division is midway through its two major multi school PFI projects - 41schools for Northamptonshire County Council and 11 schools for the HighlandsCouncil in Scotland. Both projects are performing well, generating anticipatedprofit levels and good cash balances. Having initially secured two contracts forMarks and Spencer as part of their store rebuilding and refurbishment programme,we are in discussions on potential further work. There are also a number of newopportunities we are pursuing under our prisons framework, where Governmentexpenditure continues to be focused. Work at the All England Lawn Tennis Club at Wimbledon is progressing to plan,with the major rebuild of the centre court stadium completed for the 2007championships and the structural work on schedule for the installation of thefixed perimeter roof to be completed for the 2008 championships and theretractable translucent central element for 2009. We have made good progress in growing our business in the north of England.Based on the existing strength of both Galliford Try and Morrison Constructionin the area, we opened a new office in Warrington during the year and recentlysecured the £41 million National Museum of Liverpool, to be built on thequayside in the centre of the city. The current order book stands at £1 billion of which 68% is in the publicsector. Infrastructure Profit from operations of £9.8 million was achieved on revenue of £410.7million, including joint ventures, representing a margin of 2.4%. The divisionalso performed well on cash management with good cash balances held throughoutthe year. Having integrated the infrastructure operations of Galliford Try withthose of Morrison Construction, the division has successfully established itselfas a major provider of infrastructure services in its chosen markets by winningsignificant new work during the year. In water, the division works for seven of the largest water utilities in the UKthrough framework agreements under Asset Management Programme 4 - long termagreements that are currently in mid term, thereby providing visibility to ourfuture workload. Our performance with the water utilities enables us to beconsidered for additional work outside the existing frameworks and during theyear we secured a number of new projects, such as a £50 million water treatmentworks in joint venture with Imtec for Anglian Water. In the highways sector we have over £100 million of road projects currentlyunder construction. We are working on several projects under the earlycontractor involvement scheme of procurement for the Highways Agency in Englandand are under consideration for a number of projects in Scotland, including ajoint venture for the M74 project in Glasgow. We recently secured our first railcontract in Scotland, work on station, bridge and other infrastructure projectsfor the railways through framework contracts for Network Rail and are one ofBritish Waterway's key framework contractors on the canals. In the remediation sector our framework at Olympic Park in east London for theOlympic Development Authority is progressing well. We secured the constructioncontract for Europe's largest on shore wind farm at Whitelee in Scotland in ourrenewable energy business and were appointed as one of the Environment Agency'sfour contractors on a four year framework for its £500 million flood defence,waterways and water resources programme. Despite carrying out a significant value of work in our existing frameworks, wemaintained our overall order book at £1.1 billion by securing new frameworks andother additional contracts. PPP Investments The integration of the Morrison PFI team into Galliford Try Investments wascompleted, and the Company acquired the PFI equity interests in Highland Schoolsand Defence Housing Estates, Portsmouth during the year. Our strategy is tobuild up our PFI portfolio for the future, and despite there being no sales ofinvestments during the year, as planned, income received from concessionmanagement contributed to a reduction in the net loss from operations to £1.1million from £1.6 million in the previous year. The director's valuation of the Group's PFI/PPP portfolio, carried out for thefirst time during the year, has been updated to 30 June 2007 and based on adiscounted cash flow basis, the valuation was £17.9 million which compares tothe carrying value of £6.9 million. Following a review of the overall potentialof the business to the Group, we implemented a policy of taking significantequity stakes in projects at the commencement of the bidding process of up to100%, in light of the superior returns and control of the process that thispractice gives compared to minority equity participation. Decisions on equitysales can then be taken at the most appropriate time to realise best value. Projects in the construction phase in which we have significant investmentinclude Defence Estates (Portsmouth) and Highland Schools. Preferred bidderstatus was awarded and we are working towards financial close on the £25 millionPFI project for community health facilities at St Andrews in Scotland. Weachieved financial close on the South East Essex LIFT following the year endwhich is expected to provide up to £100 million of work over several tranches,and have been shortlisted for Birmingham's "Building Schools for the Future"project where a preferred bidder is expected to be selected during 2008. Housebuilding Profit from operations was up 52% from £32.1 million to £48.9 million on revenueup 54% from £224 million to £346 million, including joint ventures, representinga margin of 14.1%. Completions for the year were up 45% at 1,526 at an averagesales price up 3% to £219,000. In the more challenging markets we now face,sales over the summer period have been encouraging, with our current sales inhand standing at £323 million. The acquisition of Linden Homes in March 2007 significantly increased theGroup's market presence and critical mass in the south and south east ofEngland, enabling the Group to establish a target of completing 3,000 homes perannum. The results include four months trading from Linden Homes whichcontributed a profit from operations of £7.8 million on a revenue of £66.3million, ahead of expectations. The integration is progressing well, with thesynergies anticipated at acquisition already exceeding our forecasts. All theGroup's operations in the south east of England have been rebranded as LindenHomes to maximise the benefits of our market presence in the region. ChartdaleHomes, acquired in the previous financial year, exceeded expectations in itsfirst full financial year since acquisition, is growing strongly and has beenrebranded in line with our plans as Stamford Homes North to provide oneconsistent brand in the eastern counties. Midas Homes, in the south west,maintained excellent progress as a leading developer of homes in the regionacross the mainstream market and, through Gerald Wood Homes, to smalldevelopments of individual properties in attractive rural locations. The Group has historically operated off relatively short landbanks. However, acontinuing competitive market for land, and the increasing time it now takes totake potentially developable land through the planning process, means that it isbecoming more important to plan our operations further ahead and to structureour landbank accordingly. The acquisition of Linden Homes added 4,800 plots toour landbank which currently stands at 11,200 units compared to 4,115 at the endof August last year. We continue to develop opportunities from our long termstrategic land, which currently stands at 1,500 acres. We have an excellent track record in brownfield land development which accountedfor 70% of our 2007 completions. Going forward, over 80% of our landbank isbrownfield. Our individual designs and developments, not relying on standardhouse types or on consortium sites puts us in a good position to continue todevelop homes that differentiate themselves from the competition. We continue toachieve industry leading scores in independent customer research, with over 90%of our purchasers stating that they would recommend us to their best friend.This helps minimise our after sales costs and supports our reputation among homebuyers generally in the market. We received a number of industry awards during the year, including several forsustainable development and design, and the Building "medium size homebuilder ofthe year" for the third year running with Midas Homes securing the 2007 award. Regeneration and Affordable Housing For the first time, the Group is reporting separately the revenue and profitfrom operations generated from the affordable housing and regenerationactivities included within the divisional results for construction andhousebuilding. In the financial year to 30 June 2007, these activities generated£6.1 million of profit from operations on revenue, including joint ventures, up90% to £128.4 million. Affordable housing contracting generated substantially higher revenues andprofit during the year, and we now have 25 long term frameworks for affordablehousing providers. Our acquisition of Linden Homes has increased our project base with EnglishPartnerships and affordable housing providers across the south of England. Weare currently working on seven English Partnership projects and are shortlistedfor a further two. We secured the 430 homes Turner Village scheme in Colchester,the 700 homes Epsom Cluster hospital scheme in Surrey in joint venture, and the123 homes scheme in Millbay, Plymouth. We are carrying out a 440 homeregeneration scheme in Grimsby with Shoreline Housing Partnership having beenappointed preferred development partner in the year and have entered into adevelopment agreement for a 500 homes scheme to regenerate council estates inPlymouth with Westco Properties, part of Devon and Cornwall Housing Association. Our schemes won a number of the major industry awards in the year, includingbest affordable housing development in the British Homes awards, bestsustainable development and best medium sized housebuilder in the Housing Designawards as well as the Housing Corporation Award for our development at Bude inCornwall. There are few businesses with the spread and depth of resources required todeliver the range of services required for these projects and, using the skillsets across its infrastructure, building and housebuilding divisions, GallifordTry aims to take an increasing share of this expanding market. We have thecapability to remediate sites, put in any necessary infrastructure, carry outmajor building works, undertake conversions and develop homes and apartments forsale. Health, Safety & Environment The Group continues to have a major focus on health, safety and the environment.During the year we carried out a complete review of our health and safetymanagement structure to match the growth in the business, changing the way inwhich we provide advisory services to our businesses and implemented newpolicies and standards across all our operations. This has resulted in increasedvisibility and more focus on every incident and dangerous occurrence in theGroup, leading to a slight increase in reportable accidents, with our accidentincident rate rising to 8.6 incidents for each 1000 persons at risk. Thiscompares to 7.11 in the previous year, with the increase largely as the resultof the number of minor incidents. Outlook The market for construction is expected to continue at buoyant levels for theforeseeable future. The spread of our work, much of it directed to theprogrammes essential for the public and regulated sectors to improve thecountry's infrastructure, is well balanced across sectors that are growing andin which we are one of a limited number of qualified providers. In housebuilding, our new critical mass in our areas of operation, combined withour business model of developing individual quality developments, and notrelying on consortium sites, is serving us well. With encouraging sales over thesummer period, we are well positioned to deliver a good performance in the morechallenging markets that we now face. Our increasing focus on affordable housing and regeneration is proving its valueas we continue to win significant schemes, demonstrating the additionalpotential of our successful construction and housebuilding business model. Theopportunities exist to increase our market share significantly. We are confident that our strategy will continue to deliver sustainable growth. Greg Fitzgerald 6 September 2007 CONSOLIDATED INCOME STATEMENTFor the year ended 30 June 2007 ------------------------- ------- --------- --------- Notes 2007 2006 £'000 £'000------------------------- ------- --------- ---------Continuing operationsRevenue 1,409.7 851.5Cost of sales (1,275.8) (763.4)------------------------- ------- --------- ---------Gross profit 133.9 88.1Administrative expenses (67.0) (48.9)Share of post tax profit/(losses) from joint ventures 1.4 0.3 ------- --------- ----------------------------------Profit before finance costs 68.3 39.5------------------------- ------- --------- ---------Profit before finance costs, amortisation andexceptional items: 62.5 38.0Amortisation of intangibles (1.4) (0.5)Net exceptional item: 3 7.2 2.0------------------------- ------- --------- ---------Profit before finance costs 68.3 39.5------------------------- ------- --------- --------- Finance costs:Interest receivable 4 9.3 0.7Interest payable 4 (17.4) (5.7)Income from investments------------------------- ------- --------- ---------Profit on ordinary activities before tax 60.2 34.5Taxation 5 (16.6) (9.1)------------------------- ------- --------- ---------Profit for the financial period 43.6 25.4------------------------- ------- --------- --------- Earnings per ordinary share - basic 6 14.3p 10.8p - diluted 6 14.1p 10.6p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 30 June 2007 ------------------------- --------- --------- 2007 2006 £m £m------------------------- --------- ---------Profit for the financial period 43.6 25.4 Gains on revaluation of available for sale investmenttaken to equity 2.0 -Actuarial gains and losses in pension scheme 3.9 (5.1)Deferred tax on items charged to equity (1.9) 2.2Current tax on items charges to equity 0.9 1.4------------------------- --------- ---------Net gains/(losses) recognised directly in equity 4.9 (1.5)------------------------------ --------- ---------Total recognised income for the period 48.5 23.9------------------------- --------- --------- CONSOLIDATED BALANCE SHEETat 30 June 2007 2007 2006 £m £m------------------------- --------- ---------Non-current assetsIntangible assets 12.0 2.3Goodwill 109.2 57.2Property, plant and equipment 5.8 8.0Investments in joint ventures 6.4 3.3Financial assets - Available for sale investments 3.2 1.2 - Derivative financial assets 1.0 -Trade and other receivables 4.7 0.2Deferred tax assets 10.0 15.7------------------------- --------- ---------Total non-current assets 152.3 87.9Current assetsInventories 0.6 0.9Developments 704.9 283.8Trade and other receivables 278.5 184.1Financial assets - Derivative financial assets 0.4 0.1Cash and cash equivalents 39.5 21.7------------------------- --------- ---------Total current assets 1,023.9 490.6------------------------- --------- ---------Total assets 1,176.2 578.5------------------------- --------- --------- Current liabilitiesFinancial liabilities - borrowings (50.0) (3.8)Trade and other payables (653.4) (344.5)Current tax liabilities (6.2) (3.1)Provisions for liability and charges (2.3) (2.0)------------------------- --------- ---------Total current liabilities (711.9) (353.4)------------------------- --------- ---------Net current assets 312.0 137.2------------------------- --------- ---------Non- current liabilitiesFinancial liabilities - borrowings (88.2) (1.9)Retirement benefit obligations (25.0) (47.1)Deferred tax liabilities (20.3) (13.5)Other liabilities (24.0) (42.1)Provisions for liability and charges (0.2) (0.4)------------------------- --------- ---------Total non-current liabilities (157.7) (105.0)------------------------- --------- ---------Total liabilities (869.6) (458.4)------------------------- --------- --------- Net assets 306.6 120.1------------------------- --------- ---------Shareholders' equityShare capital 18.8 13.7Share premium 190.6 48.7Other reserves 6.7 4.7Retained earnings 90.5 53.0------------------------- --------- ---------Total shareholders' equity 306.6 120.1------------------------- --------- --------- CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 2007 --------------------------- ------ --------- --------- Notes 2007 2006 £'000 £'000--------------------------- ------ --------- ---------Cashflows from operating activities:Net cash from operations 9 10.4 18.2Interest received 8.0 0.7Interest paid (16.3) (5.3)Tax paid (10.0) (10.3)--------------------------- ------ --------- ---------Net cash (used in)/generated from operations (7.9) 3.3 Cash flows from investing activities:Acquisition of subsidiary (net of cash acquired) 40.1 (24.8)Acquisition of investments in joint ventures (2.7) (1.0)Income from investments in joint ventures 0.2 0.1Acquisition of available for sale investments - (0.7)Proceeds from sale of joint ventures 0.3 -Purchase of property, plant and equipment (2.0) (1.6)Proceeds from sale of property, plant and equipment 19.6 11.1--------------------------- ------ --------- ---------Net cash generated from/(used in) investing activities 55.5 (16.9) Cash flows from financing activities:Net proceeds from issue of ordinary share capital 147.0 48.8Purchase of treasury shares (3.0) (1.9)Repayment of borrowings (1.7) (0.1)New bank borrowings 99.7 -Repayment of borrowing acquired with subsidiary (261.0) -Dividends paid to group shareholders (7.1) (4.9)Available for sale financial asset - 3.4--------------------------- ------ --------- ---------Net cash (used in)/generated from financing activities (26.1) 45.3 --------------------------- ------ --------- ---------Net increase in cash and cash equivalents 21.5 31.7--------------------------- ------ --------- --------- Cash and cash equivalents at 1 July 18.0 (13.7)--------------------------- ------ --------- ---------Cash and cash equivalents at 30 June 10 39.5 18.0--------------------------- ------ --------- --------- NOTES TO THE PRELIMINARY STATEMENT 1 Basis of preparation This consolidated financial information has been prepared in accordance with theListing Rules of the Financial Services Authority and uses InternationalFinancial Reporting Standards (IFRS) accounting policies consistent with thosedescribed in the Annual Report and Financial Statements 2006. The financialinformation set out in this document does not constitute statutory accounts forthe years ended 30 June 2006 or 30 June 2007 but is derived from the 2007 AnnualReport and Financial Statements. The Annual Report and Financial Statements for2006 have been delivered to the Registrar of Companies and the Annual Report andFinancial Statements for 2007 will be delivered to the Registrar of Companies indue course. The auditors have reported on those accounts and have given anunqualified report which does not contain a statement under section 237(2) or(3) of the Companies Act 1985. 2 Business segment reporting Segment reporting is presented in the consolidated financial statements inrespect of the Group's business segments which are the primary basis of segmentreporting. The business segment reporting reflects the Group's management andinternal reporting structure. Segment results include items directlyattributable to the segment as well as those that can be allocated on areasonable basis. As explained in the financial statements for 30 June 2006,with effect from 1 July 2006 the Construction activities have operated as twodivisions, Building and Infrastructure, hence the business segments have beenamended accordingly. Due to the complexity of the integration of the MorrisonConstruction and PFI divisions into the Group for part of the previous year, thecomparative figures have not been restated as it is impracticable. As the Grouphas no material activities outside the UK, segmental reporting is not requiredby geographical region. Inter-segment revenue is not material. Construction PPP ------- -------- -------- Building Infrastructure Total Investments Housebuilding Group Total £m £m £m £m £m £m £mYear ended 30 June 2007Group revenueand share ofjoint venturerevenue 667.0 410.7 1,077.7 3.5 345.9 1.1 1,428.2Share of jointventures'revenue (2.1) (9.5) (11.6) (1.1) (5.8) - (18.5)-------------- ------- -------- -------- -------- -------- ------- --------Revenue 664.9 401.2 1,066.1 2.4 340.1 1.1 1,409.7-------------- ------- -------- -------- -------- -------- ------- --------Segment result:Profit/(loss)before jointventures 12.2 9.8 22.0 (1.6) 47.8 (7.1) 61.1Share of jointventures'profit 0.1 - 0.1 0.5 1.1 - 1.7-------------- ------- -------- -------- -------- -------- ------- --------Profit/(loss)fromoperations * 12.3 9.8 22.1 (1.1) 48.9 (7.1) 62.8Share of jointventures'interest andtax - - - 0.4 (0.7) - (0.3)-------------- ------- -------- -------- -------- -------- ------- --------Profit/(loss)before financecosts,amortisationandexceptionalitems 12.3 9.8 22.1 (0.7) 48.2 (7.1) 62.5Amortisationof intangibles (0.4) (0.3) (0.7) - (0.7) - (1.4)Exceptionalitems 1.6 1.4 3.0 - (1.9) 6.1 7.2-------------- ------- -------- -------- -------- -------- ------- --------Profit/(loss)before financecosts 13.5 10.9 24.4 (0.7) 45.6 (1.0) 68.3Financeincome/(costs) 3.4 0.7 4.1 (0.3) (22.5) 10.6 (8.1)-------------- ------- -------- -------- -------- -------- ------- --------Profit beforetax 16.9 11.6 28.5 (1.0) 23.1 9.6 60.2Income taxes (16.6)-------------- ------- -------- -------- -------- -------- ------- --------Profit for theyear fromcontinuingoperations 43.6-------------- ------- -------- -------- -------- -------- ------- -------- Included within the above segments the following amounts relate to regeneration and affordable housingGroup revenue and share of joint venture revenue 128.4Share of joint ventures' revenue (0.9)Revenue 127.5Profit from operations * 6.1 2 Business segment reporting (continued) Construction PPP Investments Housebuilding Group Total £m £m £m £m £mYear ended 30June 2006Group revenueand share ofjoint venturerevenue 628.8 0.9 223.8 0.6 854.1Share of jointventures'revenue (2.5) - (0.1) - (2.6)-------------- -------- -------- -------- ------- -------Revenue 626.3 0.9 223.7 0.6 851.5-------------- -------- -------- -------- ------- -------Segment result:Profit/(loss)before jointventures 13.2 (1.5) 31.4 (5.4) 37.7Share of jointventures'profit/(loss) - (0.1) 0.7 - 0.6-------------- -------- -------- -------- ------- -------Profit/(loss)fromoperations * 13.2 (1.6) 32.1 (5.4) 38.3Share of jointventures'interest andtax (0.1) 0.3 (0.5) - (0.3)-------------- -------- -------- -------- ------- -------Profit/(loss)before financecosts,amortisationandexceptionalitems 13.1 (1.3) 31.6 (5.4) 38.0Amortisationof intangibles (0.5) - - - (0.5)Exceptionalitems 0.4 - 1.4 0.2 2.0-------------- -------- -------- -------- ------- -------Profit/(loss)before financecosts 13.0 (1.3) 33.0 (5.2) 39.5Financeincome/costs 1.3 (0.1) (11.4) 5.2 (5.0)-------------- -------- -------- -------- ------- -------Profit beforetax 14.3 (1.4) 21.6 - 34.5Income taxes (9.1)-------------- -------- -------- -------- ------- -------Profit for theyear fromcontinuingoperations 25.4-------------- -------- -------- -------- ------- ------- Included within the above segments the following amounts relate toregeneration and affordable housingGroup revenue and share of joint venture revenue 67.6Share of joint ventures revenue -Revenue 67.6Profit from operations * 3.8 * Profit from operations is stated before finance costs, exceptional items,amortisation of intangible assets and share of joint ventures' interest and tax. 2 Business segment reporting (continued) Building Infrastructure Construction PPP Investments Housebuilding Group Total Total £m £m £m £m £m £m £mYear ended 30 June 2007AssetsGoodwill 17.9 37.2 55.1 1.9 52.2 - 109.2Intangibles 0.4 1.2 1.6 - 10.4 - 12.0Investment injoint ventures 0.4 - 0.4 4.9 1.1 - 6.4Other assets 162.4 103.2 265.6 3.8 729.1 10.6 1,009.1-------------- ------ ---------- -------- -------- -------- ------- ------- 181.1 141.6 322.7 10.6 792.8 10.6 1,136.7 Cash and cashequivalents 39.5-------------- ------ ---------- -------- -------- -------- ------- -------Consolidatedtotal assets 1,176.2-------------- ------ ---------- -------- -------- -------- ------- -------LiabilitiesOtherliabilities 272.0 126.9 398.9 2.9 274.4 55.2 731.4-------------- ------ ---------- -------- -------- -------- -------Gross debt 138.2-------------- ------ ---------- -------- -------- -------- ------- -------Consolidatedtotalliabilities 869.6-------------- ------ ---------- -------- -------- -------- ------- ------- Netassets/(liabilities)excluding netdebt, goodwillandintangibles (109.2) (23.7) (132.9) 5.8 455.8 (44.6) 284.1Goodwill andintangibles 18.3 38.4 56.7 1.9 62.6 - 121.2-------------- ------ ---------- -------- -------- -------- ------- -------Netassets/(liabilities)excluding netdebt (90.9) 14.7 (76.2) 7.7 518.4 (44.6) 405.3-------------- ------ ---------- -------- -------- -------- -------Net cash/(debt) (98.7)-------------- ------ ---------- -------- -------- -------- ------- -------Net assets 306.6-------------- ------ ---------- -------- -------- -------- ------- ------- Year ended 30 June 2006AssetsGoodwill 55.3 1.9 - - 57.2Intangibles 2.3 - - - 2.3Investments injoint ventures 0.3 1.2 1.8 - 3.3Other assets 179.6 1.5 291.1 21.8 494.0-------------- ------ ---------- -------- -------- -------- ------- ------- 237.5 4.6 292.9 21.8 556.8 Cash and cashequivalents 21.7-------------- ------ ---------- -------- -------- -------- ------- -------Consolidatedtotal assets 578.5-------------- ------ ---------- -------- -------- -------- ------- -------LiabilitiesOtherliabilities 256.8 2.1 149.4 44.4 452.7-------------- ------ ---------- -------- -------- -------- -------Gross debt 5.7-------------- ------ ---------- -------- -------- -------- ------- -------Consolidatedtotalliabilities 458.4-------------- ------ ---------- -------- -------- -------- ------- ------- Netassets/(liabilities)excluding netdebt, goodwillandintangibles (76.9) 0.6 143.5 (22.6) 44.6Goodwill andintangibles 57.6 1.9 - - 59.5-------------- ------ ---------- -------- -------- -------- ------- -------Netassets/(liabilities)excluding netdebt (19.3) 2.5 143.5 (22.6) 104.1-------------- ------ ---------- -------- -------- -------- ------- -------Net cash 16.0-------------- ------ ---------- -------- -------- -------- ------- -------Net assets 120.1-------------- ------ ---------- -------- -------- -------- ------- ------- 3 Net exceptional item The net exceptional credit is made up of the following: (i) Profit from property rationalisation of £3.9million (2006: £3.9million)which includes the profit on sale and leaseback of Group property net of thecost of terminating operating leases relating to Group properties that are nolonger required. (ii) Restructuring costs of £1.9million (2006: £1.9million)which relate to the costs associated with the restructuring of the Groupfollowing the acquisition of Linden Homes in 2007 and of Morrison Constructionand Chartdale in 2006. (iii) During the year the Group closed it's final salary pensionscheme to future service accruals. As a result of the changes in actuarialassumptions which arise on this closure, a curtailment credit arose of£5.2million. These amounts have been treated as exceptional items in accordance with theGroup's accounting policy. The income tax expense associated with the netexceptional item amounts to £1.8million (2006: £0.5million credit). 4 Net finance costs ------------------------ ----------- ----------- --------- 2007 2006 £m £m------------------------ ----------- ----------- ---------Interest payable on borrowings (10.9) (2.6)Unwinding of discounted payables (5.1) (2.4)Net finance cost on retirement benefit obligations (0.7) (0.7)Other (0.7) ------------------------- ----------- ----------- ---------Finance costs (17.4) (5.7) Interest receivable on bank deposits 7.9 -Interest receivable from joint ventures 0.7 0.7Fair value gains on financing activities - interest rateswaps 0.7 ---------------------------------- ----------- --------- Finance income 9.3 0.7------------------------ ----------- ----------- ---------Net finance costs (8.1) (5.0)------------------------ ----------- ----------- --------- 5 Taxation The tax charge for the year is set out below: Analysis of charge in year 2007 2006 £m £m--------------------------------- ---------- ---------Current years' income taxCurrent tax 17.1 9.7Deferred tax (0.4) 0.2Adjustment in respect of prior yearsCurrent tax (0.1) (0.8)--------------------------------- ---------- ---------Income tax expense 16.6 9.1--------------------------------- ---------- --------- Tax on items charged to equity 2007 2006 £m £m--------------------------------- ---------- ---------Current tax credit on share based payments (0.9) (1.4)Deferred tax credit for share based payments (0.9) (0.2)Deferred tax charge/(credit) on retirement benefit 2.2 (1.5)obligationsDeferred tax on revaluations 0.6 (0.5)--------------------------------- ---------- --------- 1.0 (3.6)--------------------------------- ---------- ---------Total taxation 17.6 5.5--------------------------------- ---------- --------- The income statement tax charge for the year of £16.6million is 27.6% of profiton ordinary activities before tax. This is lower than (2006: lower) the standardrate of corporation tax in the UK of 30%. The differences are explained below: ---------- --------- 2007 2006 £m £m--------------------------------- ---------- ---------Profit before taxation 60.2 34.5--------------------------------- ---------- ---------Profit before taxation multiplied by the standardrate in the UK of 30% (2006: 30%) 18.1 10.3--------------------------------- ---------- ---------Effects of:Expenses not deductible for tax purposes 0.6 0.9Change in rate of deferred tax (0.4) -Capital gains tax indexation adjustment (0.6) -Utilisation of capital gains tax losses (0.1) (1.1)Adjustments in respect of previous years (0.1) (0.8)Other (0.9) (0.2)--------------------------------- ---------- ---------Income tax expense 16.6 9.1--------------------------------- ---------- --------- 6 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary sharesoutstanding during the year, excluding those held by the employee share trust,which are treated as cancelled. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all potentially dilutive ordinaryshares. The Group has two classes of potentially dilutive ordinary shares: thoseshare options granted to employees where the exercise price is less than theaverage market price of the Company's ordinary shares during the year and thecontingently issuable shares under the group's long term incentive plan. 2007 2006 ------------------ ---------------- Earnings Weighted Per share Earnings Weighted Per share £m average amount £m average amount number pence number pence of shares of shares---------------- ------- -------- -------- ------- -------- ------- BasicEarningsattributableto ordinaryshareholders 43.6 305,428,612 14.3 25.4 235,209,936 10.8 Effect of dilutive securities:Options 4,194,331 (0.2) 3,076,310 (0.2)---------------- ------- -------- -------- ------- -------- ------- Diluted 43.6 309,622,943 14.1 25.4 238,286,246 10.6---------------- ------- -------- -------- ------- -------- ------- Earnings adjusted for post tax exceptional items of £5.4million (2006:£2.5million) amount to £38.2 million (2006: £22.9million). The basic earningsper share calculated on this adjusted basis is 12.5p (2006: 9.7p) (diluted:12.3p (2006: 9.6p)). 7 Dividends The following dividends were paid by the Company: Year to 30 June 2007 Year to 30 June 2006 £m Pence per £m Pence per share share-------------------------- --------- --------- --------- ---------Previous year final 5.0 1.8 3.3 1.5Current period interim 2.1 0.8 1.6 0.7-------------------------- --------- --------- --------- ---------Dividend recognised inthe year 7.1 2.6 4.9 2.2-------------------------- --------- --------- --------- --------- The following dividends were declared by the Company in respect of each accounting periodpresented: Year to 30 June 2007 Year to 30 June 2006 £m Pence per £m Pence per share share ---------------------------- --------- --------- --------- ---------Interim 2.1 0.8 1.6 0.7Final 8.3 2.2 5.0 1.8---------------------------- --------- --------- --------- ---------Dividend relating to theyear 10.4 3.0 6.6 2.5---------------------------- --------- --------- --------- --------- The directors are proposing a final dividend in respect of the financial yearending 30 June 2007 of 2.2p per share bringing the total dividend in respect of2007 to 3.0p (2006: 2.5p). The final dividend will absorb an estimated£8.3million of shareholders' funds. Subject to shareholder approval at theAnnual General Meeting to be held on 9 November 2007, the final dividend will bepaid on 16 November 2007 to shareholders on the register at the close ofbusiness on 19 October 2007. 8 Acquisitions On 28 July 2006, the Group acquired the entire share capital of Rasen EstatesLimited (Rasen Estates) for £1.4million which was settled in cash. The RasenEstates net assets acquired amounted to £1.4million and there was no differencebetween the book value and the fair value. No goodwill arose on thisacquisition. On 6 March 2007, the Group acquired the entire share capital of Linden Holdingsplc, the holding company of the Linden Group of companies ("Linden Homes"). The consideration payable, including expenses, for these acquisitions was asfollows: £mLinden Homes 110.8Rasen Estates 1.4------------------------- -------------------------- 112.2------------------------- -------------------------- From the date of acquisition to 30 June 2007 the acquisitions contributed £66.3million of turnover and £7.5 million to profit before interest and intangibleamortisation and £3.2 million to profit before tax. All intangible assets were recognised at their respective fair values. Nogoodwill arose on the acquisition of Rasen Estates. Details of the fair valuesrelating to Linden Homes and the associated goodwill arising on the acquisitionare given below: Carrying value Fair value Provisional pre adjustments fair value acquisition* ----------- ----------- ---------- £m £m £mIntangibles - 11.1 11.1Property, plant and equipment 6.4 3.4 9.8Developments 272.6 49.0 321.6Trade and other receivables 23.8 - 23.8Current tax recoverable 2.2 - 2.2Derivative financial assets 0.6 - 0.6Cash and cash equivalents 104.4 - 104.4Bank loans and overdrafts (261.0) - (261.0)Loan notes (3.2) - (3.2)Trade and other payables (105.7) (34.0) (139.7)Deferred taxation (0.9) (10.1) (11.0)----------------------------- ---------- ----------- -----------Net assets acquired 39.2 19.4 58.6Goodwill 52.2----------------------------- ---------- ----------- -----------Consideration 110.8----------------------------- ---------- ----------- -----------* Stated under IFRS The fair value adjustment relates to alignment of accounting policies andrecognition on tangible assets. The intangible assets acquired as part of the acquisition of Linden Homes can beanalysed as follows: £mBrand 10.3Customer contracts 0.8-------------------------------- ----------- 11.1-------------------------------- ----------- The outflow of cash and cash equivalents and borrowings on the acquisition ofLinden Homes is calculated as follows: £mCash consideration 62.9Cash acquired (104.4)Borrowings acquired 261.0-------------------------------------- -----------Net cash outflow 219.5-------------------------------------- ----------- 9 Cashflow from operating activities 2007 2006 £m £m-------------------------------- ----------- -----------Cash generated from operationsContinuing operationsProfit for the year 43.6 25.4Adjustments for:Income tax 16.6 9.1Depreciation 2.3 1.5Amortisation of intangible assets 1.4 0.5Share based payments 1.1 0.5Profit on sale and leaseback of property, plant and (4.8) (3.9)equipment(Profit)/loss on disposal of property, plant and equipment (0.6) 0.3Profit on sale of joint venture (0.5) -Finance income (9.3) (0.7)Finance cost 17.4 5.7Share of results of joint ventures before taxation (1.4) (0.3)Movement in retirement benefit obligations (18.2) (4.2)Increase in provisions for liabilities and charges 0.1 1.9-------------------------------- ----------- ----------- 47.7 35.8Changes in working capital (excluding the effects ofacquisition of subsidiaries)Decrease in inventories 0.3 0.5Increase in developments (98.1) (1.2)Increase in trade and other receivables (73.2) (0.2)Increase/(decrease) in payables 133.7 (16.7)-------------------------------- ----------- -----------Cash generated from continuing operations 10.4 18.2-------------------------------- ----------- ----------- 10 Reconciliation of net cash Net (debt )/cash-------------------------------- ----------- ------------ 2007 2006 £m £m-------------------------------- ----------- ------------Cash and cash equivalents 39.5 18.0 Current borrowingsBank loan (11.5) (0.1)Unsecured loan notes (38.5) -Non - current borrowingsBank loans (88.2) (0.9)Unsecured loan notes - (1.0)-------------------------------- ----------- ------------Net (debt)/cash (98.7) 16.0-------------------------------- ----------- ------------ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Galliford Try