24th Feb 2005 07:01
Galliford Try PLC24 February 2005 GALLIFORD TRY PLC INTERIM RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2004 Financial Highlights • Turnover steady at £347 million (2003: £354 million) • Profit before tax up 22% at £11.7 million (2003: £9.6 million) • Earnings per share up 19% at 3.7p (2003: 3.1p) • Interim dividend up 9% at 0.6p per share (2003: 0.55p) • Net debt of £10.3 million represents gearing of 13% (2003: £11.6 million, 18%) Operational Highlights • Construction operating profit up 45% to £3.0m • Housebuilding operating profit up 8% to a record £12.1 million • Shortlisted for United Utilities AMP4 framework • £957 million construction order book with over 90% secured on non price competitive basis • 79% of housebuilding sales secured for full year Commenting today, Tony Palmer, Chairman said: "Our construction prospects are underpinned by improving profit margins and abalanced future workload. Our positioning in the housebuilding market, combinedwith some strengthening in purchaser confidence, means we are well placed toachieve our targets. We look forward to reporting further progress at the full year." Enquiries to: D M Calverley, Chief executive Galliford Try plc 01895 855 219F E Nelson, Finance director Galliford Try plc 01895 855 226A M Wilkinson Bell Pottinger Financial 020 7861 3232G Callow Bell Pottinger Financial 020 7861 3232 CHAIRMAN'S STATEMENT I am delighted to report record results for the first half of our financialyear. Profit margins in construction have again increased and housebuilding hasdelivered higher profits despite slower market conditions. Financial Review Profit before tax for the six months ended 31 December 2004 was £11.7m, anincrease of 22% (2003: £9.6m) and Group turnover was steady at £347m (2003:£354m). Strong cash flow generated from the construction division and period endcompletions in the housebuilding division contributed to net debt at 31 Decemberof £10.3m, representing gearing of 13%, (£11.6m and 18% at 31 December 2003 and£12.3m and 17% at 30 June 2004). Earnings per share for the period were 3.7pcompared to 3.1p for the same period last year. Shareholders funds have risen to£79.4m compared to £65.5m last year and £72.3m at 30 June 2004. Dividend The directors have declared an interim dividend of 0.6p per share, a 9% increaseon last year, which will be paid on 12 April 2005 to shareholders on theregister at 18 March 2005. The directors reiterate their commitment to aprogressive dividend policy that for each financial year takes into accountearnings growth as well as the need for continuing investment in the business. Construction The construction division achieved an operating profit up 45% on last year to£3m on a turnover of £256m. This represents an increase in profit margin to1.2%, in line with our objective to achieve industry upper quartile levels. We have succeeded in positioning construction as a leading provider in a numberof market sectors with good opportunities, and in securing work where the riskand rewards of the project are fairly shared between client and contractor. Further underpinning our position as a leading contractor to the water industry,we have been shortlisted by United Utilities plc for selection as a preferred bidder partner for the delivery of water and waste water infrastructure works for AMP4 in the North West of England. An announcement on the appointment ofpreferred bidders is expected shortly. In joint venture with Costain and Atkins, we will, if successful be one of two construction partners to deliver an estimated £940 million of work over a five year period commencing in April 2005, out of which we expect to carry out around a quarter. This builds on the three year framework for projects carried out for United Utilities under AMP3. In Scotland, our three year framework agreement with Scottish Water is performing well. In the health sector we achieved financial close on NHS LIFTs at Coventry, whichhas an initial contract value of £42 million and at Barnet, Enfield and Haringeywith an initial contract value of £32 million. Including Liverpool and SeftonLIFT, which closed in the last financial year, we have a total of £134m of LIFTprojects underway and are encouraged by the scope for further work in laterphases. We are also selectively targeting the opportunities that will arise fromthe next release of LIFT schemes. In education we achieved financial close on the £45m Caludon Schools PFI atCoventry. Having been appointed preferred bidder, we are working towardsfinancial close on the £150m Northampton Schools PFI project and have beenshortlisted for multi-school projects in Rochdale and Bromsgrove which each havea construction value of over £50 million. Our expertise and recent track recordin this sector puts us in a good position to benefit from the Government's"Building Schools for the Future" initiative. In October we announced that we had won a number of new affordable housingcontracts that boosted our order book, which currently stands at £104 million.We are pursuing several new opportunities in this growth market, primarilythrough the strategic alliances we have with housing associations. We are seeing growth in rail, with increasing demand for the buildings andinfrastructure services we provide for Network Rail and the train operatingcompanies. Our telecommunications business is benefiting from the recentlyincreased pace of the roll out of 3G by the mobile phone operators. In the private commercial sector, there is some evidence of an increase inactivity, particularly for offices in the West End of London, an area in whichwe have a strong presence and where we have recently won three contracts worth£28.4 million. Overall, we have a well balanced order book that now totals £957m, of which 84%is in the public and regulated sectors and over 90% has been secured on a nonprice competitive basis. Housebuilding The housebuilding division achieved an operating profit of £12.1m on a turnoverof £91.1m. Whilst sales growth during the period was held back by the process ofa return to more sustainable market conditions, completions for the half year at387 were 5% up on the previous half year's total of 367. The average sales priceremained unchanged at £228,000, reflecting our concentration on the mainstreammarket. All of our regional brands have benefited from our focus on individuallydesigned developments for the mainstream market, with a particular strength inconversions and brownfield development. We have no large apartment developmentsand do not depend on major consortium sites. In a purchaser driven market it isparticularly clear that offering more interesting homes for sale on smallerdevelopments gives us an advantage. We have a long track record in converting attractive but redundant buildingsinto desirable homes including a number of schools and hospitals. We arecurrently on site with such schemes in Epsom and Shepton Mallet, and arenegotiating good opportunities for the future. In affordable housing we have built strong relationships with social housingproviders to supply mixed developments which meet planning requirements foraffordable homes as well as outright private purchases. A good example of thisis our joint venture with Westco, part of the Devon & Cornwall Housing Group, todevelop over 180 homes on the former city centre hospital site in Truro, whereup to 50% of the new requirement is for affordable housing. We can bring theright architectural skills to these projects, which can often be a mixture ofconversion and new build, undertake the value engineering appraisals required tomeet all parties' objectives, deal with complex planning briefs and providefunding expertise. We have a number of such collaborative projects currentlyunder development and are encouraged by the scope for increasing our activitiesin this area. As part of our overall strategy on cost control we have implemented a series ofinitiatives to reduce our overall cost base and improve efficiencies in designand support services. We are also seeing some easing in sub-contract prices. We have been successful in achieving a moderate increase in our landbank underour tighter investment criteria, and the number of plots currently owned orcontrolled at 2,464 is up 5% on a year ago. We anticipate securing in excess ofa further 2000 plots from our strategic land bank from 2006 onwards. Since the New Year we have been encouraged by a return to a more normal salespattern and we remain on track to achieve our planned expansion of the businessin the medium term. The division has currently reserved, contracted or completedsales with a value of £166 million and has secured 79% of planned sales for theyear to 30 June 2005. Directors We announced earlier today that Greg Fitzgerald, currently Managing director ofthe housebuilding division, will take over from David Calverley as Chiefexecutive on 1 July this year. With a background in both construction andhousebuilding, Greg has the ability and drive to generate increasing shareholdervalue. David Calverley will become Non-executive from that date, and will takeover as Chairman of the Company on my retirement from the board at the annualgeneral meeting scheduled for October this year. Chris Bucknall, currently ourSenior independent non-executive director, will become Deputy chairman at thesame time. Greg Fitzgerald is an outstanding businessman and the Board is also delighted toretain the experience and skills of David Calverley in his new role. I have saidbefore that we have a first class team and these appointments enable us to buildon our proven management strength to take the business into the future. Prospects In construction, we have a strong position in our selected markets, particularlythose in the public and regulated sectors where there are good growthopportunities. Our prospects are underpinned by improving profit margins and abalanced future workload. In housebuilding, we are encouraged by the level of sales since the New Year.Our positioning in the market, combined with some strengthening in purchaserconfidence, means we are well placed to achieve our targets. We look forward to reporting further progress at the full year. Tony PalmerChairman24 February 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT Half year Half year Year ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004Turnover Note £000 £000 £000 Total continuing operations 347,554 356,431 695,400Less share of joint ventures' turnover (388) (2,897) (7,902) --------- --------- ---------Group turnover 1 347,166 353,534 687,498 Cost of sales (314,876) (325,456) (629,197) --------- --------- --------- Gross profit 32,290 28,078 58,301Net operating expenses (19,567) (17,050) (33,850) --------- --------- --------- Group operating profit 12,723 11,028 24,451Share of profits in joint ventures 104 445 1,324Loss on sale of fixed asset investments - (22) (27) --------- --------- --------- Profit on ordinary activities beforeinterest 1 12,827 11,451 25,748Net interest payable - Group (781) (1,392) (2,224)- Joint ventures (310) (425) (820) --------- --------- --------- (1,091) (1,817) (3,044) --------- --------- ---------Profit on ordinary activities beforetax 11,736 9,634 22,704Tax 4 (3,629) (2,987) (7,084) --------- --------- ---------Profit on ordinary activities after tax 8,107 6,647 15,620Dividends 5 (1,330) (1,198) (3,756) --------- --------- ---------Retained profit for the period 6,777 5,449 11,864 ========= ========= =========Earnings per ordinary share 3.7p 3.1p 7.2pDiluted earnings per share 3.5p 2.9p 6.9pDividend per share 0.60p 0.55p 1.70p ========= ========= ========= CONSOLIDATED BALANCE SHEET 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Fixed assetsIntangible assets - goodwill - 84 -Tangible assets 12,011 11,703 11,936Investments in joint ventures:Share of gross assets 10,596 10,749 10,739Share of gross liabilities (8,573) (8,652) (8,480) --------- --------- --------- 2,023 2,097 2,259Investments in associates 31 48 31Other investments 608 607 608 --------- --------- --------- 14,673 14,539 14,834 Current assetsStocks 1,642 415 795Developments 186,597 154,652 177,392Debtors 86,799 115,060 107,932Cash at bank & in hand 10,120 5,572 2,570 --------- --------- --------- 285,158 275,699 288,689Creditors: amounts falling due within oneyearBank loans and overdrafts (19,240) (12,138) (13,648)Other amounts falling due within one year (195,757) (203,843) (211,552) --------- --------- ---------Net current assets 70,161 59,718 63,489 --------- --------- --------- Total assets less current liabilities 84,834 74,257 78,323Creditors: amounts falling due after morethan one year (2,520) (5,438) (3,108)Provisions for liabilities and charges (2,928) (3,340) (2,928) --------- --------- --------- 79,386 65,479 72,287 ========= ========= =========Capital and reservesCalled up share capital 11,259 11,076 11,239Share premium account 2,246 1,824 2,196Merger reserve 4,687 4,687 4,687Revaluation reserve 1,907 1,910 1,909Profit and loss account 59,287 45,982 52,256 --------- --------- ---------Equity shareholders' funds 79,386 65,479 72,287 ========= ========= ========= CONSOLIDATED CASH FLOW STATEMENT Half Half year year Year ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 Note £000 £000 £000 Net cash inflow from operating activities 6 10,529 11,833 17,107Returns on investments and servicing offinance (681) (1,215) (1,967)Taxation (4,546) (2,064) (5,620)Capital expenditure and financialinvestment (888) (259) (1,220)Acquisitions and disposals 35 50 29Equity dividends paid (2,545) (2,212) (3,423) --------- --------- --------- Net cash inflow before use of liquidresources and financing 1,904 6,133 4,906 FinancingIssue of ordinary share capital 70 75 610Increase/(decrease) in bank loans 18,017 (15,000) (24,151)Repayment of loan notes (3,820) - (16) --------- --------- --------- 14,267 (14,925) (23,557) --------- --------- ---------Increase/(decrease) in cash in the period 16,171 (8,792) (18,651) --------- --------- --------- Reconciliation of net cash flow to movementin net debtIncrease/(decrease) in cash in period 16,171 (8,792) (18,651)(Increase)/decrease in debt and leasefinancing (18,017) 15,000 24,167Decrease in loan notes 3,820 - - --------- --------- --------- Change in net debt in the period 1,974 6,208 5,516Net debt at start of period (12,309) (17,825) (17,825) --------- --------- ---------Net debt at end of period 7 (10,335) (11,617) (12,309) ========= ========= ========= NOTES 1 Segmental analysis Turnover half year ended 31 December 2004 2003 Including Including joint Joint joint Joint ventures ventures Group ventures ventures Group £000 £000 £000 £000 £000 £000Construction 256,145 388 255,757 268,663 843 267,820Housebuilding 91,147 - 91,147 87,578 2,054 85,524Group 262 - 262 190 - 190 --------- -------- ------- -------- -------- --------Total 347,554 388 347,166 356,431 2,897 353,534 ========= ======== ======= ======== ======== ======== Profit/(loss) for half year ended 31 December 2004 2003 £000 £000Construction 2,951 2,032Housebuilding 12,097 11,161Group (2,221) (1,742) ---------------- ------------- 12,827 11,451 ---------------- -------------Less: net interest payable (1,091) (1,817) ---------------- ------------- 11,736 9,634 ================ ============= The profit in respect of joint ventures amounted to £104,000 (2003: £72,000) inconstruction and £nil (2003: £373,000) in housebuilding. 2 Basis of preparation The interim financial information has been prepared on the basis of theaccounting policies set out in Galliford Try plc's statutory financialstatements for the year ended 30 June 2004 and in accordance with applicable UKaccounting standards. All the figures are consolidated and for both the sixmonths ended 31 December have been reviewed by the auditors. The figures for the year ended 30 June 2004 have been extracted from thefinancial statements of Galliford Try plc, on which the auditors gave anunqualified audit report and which have been delivered to the Registrar ofCompanies. The foregoing financial information does not constitute statutoryfinancial statements. 3 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 theperiod less the weighted average number of ordinary shares held by the GallifordTry Employee Share Trust. For diluted earnings per share, the weighted averagenumber of ordinary shares is adjusted to assume conversion of all dilutivepotential ordinary shares. 4 Taxation The tax charge for the period reflects the estimated effective rate for the fullyear to 30 June 2005 of 31.0% (30 June 2004: 31.0%). 5 Interim dividend The directors have declared an interim dividend of 0.6p per share (2004: 0.55p)which will be paid on 12 April 2005 to shareholders on the register on 18 March2005. 6 Reconciliation of operating profit to cash flows Half year Half year Year ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Operating profit 12,723 11,028 24,451Depreciation 833 808 1,642Profit on disposal of tangible fixed assets (20) (144) (150)Charge for employee share options 252 224 82Amortisation of goodwill - 83 167(Increase)/decrease in stocks (847) 33 (347)Increase in developments (9,205) (6,100) (28,840)Decrease in debtors 21,123 1,672 8,423(Decrease)/ increase in creditors (14,330) 4,229 11,679 ---------- ---------- ---------Net cash inflow from operating activities 10,529 11,833 17,107 ========== ========== ========= 7 Analysis of changes in net debt At 1 July Cash At 31 Dec 2004 flow 2004 £000 £000 £000 Cash at bank and in hand 2,570 7,550 10,120Overdrafts (9,844) 8,621 (1,223) ----------- ---------- --------- (7,274) 16,171 8,897Loan notes (5,035) 3,820 (1,215)Bank loans - (18,017) (18,017) ----------- ---------- ---------Net debt (12,309) 1,974 (10,335) =========== ========== ========= INDEPENDENT REVIEW REPORT TO GALLIFORD TRY PLC Introduction We have been instructed by the Company to review the financial information whichcomprises the consolidated profit and loss account, consolidated balance sheet,consolidated cash flow statement, and the related notes numbered 1 to 7. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan audit opinion on the financial information. This report, including theconclusion, has been prepared for and only for the Company for the purpose ofthe Listing Rules of the Financial Services Authority and for no other purpose.We do not, in producing this report, accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or into whosehands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2004. PricewaterhouseCoopers LLPChartered AccountantsLondon24 February 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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