21st Feb 2008 07:00
Galliford Try PLC21 February 2008 GALLIFORD TRY PLC - INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2007(UNAUDITED) HIGHLIGHTS 2007 2006 Increase £m £m • Revenue 897.9 606.8 48% • Profit before tax - Pre exceptional * 33.8 20.7 63% - Post exceptional 33.8 21.6 56% • Earnings per share pence pence - Pre exceptional * 6.4 5.3 21% - Post exceptional 6.4 5.6 14% • Dividend per share 0.9 0.8 12.5% • Contracting order book of £2.1 billion, £1.9 billion in Construction and £153 million in affordable housing and regeneration. • Strong growth in affordable housing and regeneration, £9.3 million acquisition of Kendall Cross. • Linden Homes successfully integrated with synergy savings exceeding forecasts. • 1,174 homes completed - 890 in housebuilding, 284 in affordable housing and regeneration. • £480 million of house sales in hand for full year - £393 million in housebuilding, £87 million in affordable housing and regeneration. • Net debt at £45.7 million, representing gearing of 14%. * An exceptional gain of £0.9 million arose in 2006 from a profit on the sale and leaseback of Group property. Commenting on the results, Greg Fitzgerald, Chief Executive, said: "The Group has delivered record first half results and has positioned itselfstrategically across its markets to mitigate the effects of a more difficulteconomic period. Our building and infrastructure divisions have a strong spread of work acrossthe public, regulated and private sectors which is encouraging as the prospectsfor commercial building work ease. We are also making good progress indeveloping our affordable housing and regeneration business. The housebuilding market remains challenging, although the resilience of ourbusiness model and our good cash management have mitigated the effects as themarket has worsened. We remain cautious on the outlook for the division,particularly if current market conditions persist throughout the spring sellingseason. While the Board views the economic outlook with some caution, the Group'sfinancial strength and broad sector exposure will stand it in good stead duringchallenging times." For further enquiries: Greg Fitzgerald, Chief Executive Galliford Try plc01895 855219 Frank Nelson, Finance Director Galliford Try plc 01895 855226 Ann marie Wilkinson / Dan de Belder Bell Pottinger Corporate & Financial 020 7861 3232 CHIEF EXECUTIVES REVIEW Overview I am pleased to report record first half results, substantially ahead of lastyear. Our building and infrastructure divisions are delivering profit growthwith cash generation. We are driving forward our growth in the affordablehousing and regeneration market and have successfully integrated Linden Homes,consolidating our position in housebuilding across the south and east of England. We are therefore in a good position to manage the business through a more difficult economic period. Financial Results The Group's profit before tax of £33.8 million was up 63% on last year's preexceptional profit before tax (£20.7 million) and 56% on last year's postexceptional profit before tax (£21.6 million). Group revenue was up 48% at£897.9 million (2006: £606.8 million). The results include a full six monthscontribution from Linden Homes. Profit from operations, stated before financecosts, exceptional items, amortisation of intangible assets and share of jointventures' interest and tax, was 100% up on the same period last year at £47.2million (2006: £23.6 million). Construction profit from operations was up 43% to £12.7 million (2006: £8.9million) with a combined margin for our building and infrastructure divisions of2.2% (2006: 2.0%). Our PPP Investments business recorded a profit fromoperations of £0.4 million (2006: loss of £1.6 million). The rapidly growingaffordable housing and regeneration division, now reported separately, achieveda profit from operations of £5.7 million (2006: £2.6 million), and a margin of6.0% (2006: 4.7%). Last year's building and housebuilding comparatives have beenrestated accordingly. Housebuilding profit from operations was up 93% to £32.6million (2006: £16.9 million) with the profit margin at 14.2% (2006: 14.5%). The earnings per share of 6.4p represents a 21% increase on last year's preexceptional earnings per share of 5.3p and 14% on last year's post exceptionalearnings per share of 5.6p. Total shareholders equity now stands at £317.1million compared to £306.6 million at 30 June 2007. Our trading results have been underpinned in the period by continued cashgeneration in our construction divisions. In the six months there was a £53.0million reduction in net debt to £45.7 million at 31 December 2007 compared tonet debt of £98.7 million at 30 June 2007 and a net cash balance of £26.6million at 31 December 2006. Dividend The directors have declared an interim dividend of 0.9p per share, a 12.5%increase on last year, which will be paid on 14 April 2008 to shareholders onthe register on 14 March 2008. The directors remain committed to a progressivedividend policy that takes into account earnings growth and the need for ongoinginvestment. Building The building division achieved a profit from operations up 35% at £6.5 millionon revenue including joint ventures of £339.2 million, representing a margin of1.9% (2006: 1.8%). Cash generation has continued to be particularly good duringthe period. The division's current order book has been maintained at £0.9billion, 95% of which has been secured on criteria other than on a pure pricecompetitive basis. Markets for the division's businesses across England and Scotland have beengood. We have secured a spread of projects in the Midlands and Scotland thatwill follow on from our multi school PFI projects in Northamptonshire and theHighlands of Scotland which will largely complete during 2008. The division'skey markets are education, commercial, health, custodial, interiors, leisure andfacilities management. 73% of the current order book is for the public andregulated sectors, thereby limiting the effect of a downturn in the commercialmarket in a more difficult economic environment. Progress is being made in developing our facilities management business. We haverecently secured a contract for Circle Healthcare under which we will initiallyprovide services to two primary care centres with the potential to service up to25 private hospitals and 50 clinics. In the north of England our major project for the new National Museum ofLiverpool is progressing to plan. We continue to secure repeat projects fromlong standing clients, and have recently been selected as one of fourcontractors to work on a new £120 million four year framework agreement with theHome Office. We will also be rebuilding Courts 2 and 3 for the All England LawnTennis Club at Wimbledon to be completed before the London Olympics in 2012. Infrastructure The division achieved a profit from operations up 51% at £6.2 million on revenueincluding joint ventures of £250.1 million, representing a margin for the periodof 2.5% (2006: 2.4%). With 97% of its order book for the public and regulatedsectors where demand is strong, the division is benefiting from its leadingmarket presence in the water, highways, rail, remediation, flood alleviation andrenewable energy sectors. The division's order book has been maintained at £1.0 billion, 92% secured onother than a pure price competitive basis and 90% in framework contracts for keyclients. Our major framework contract for remediation works at Olympic Park is performingwell and likely to generate more work than initially expected, and progress onthe construction of Europe's largest on shore windfarm at Whitelee, south ofGlasgow, is ahead of programme. Whilst the telecommunications market has been difficult we reinforced ourposition in this sector through securing a £40 million framework with BT. From an industry leading position we are delivering a strong performance inwater as we move towards the peak of the water utilities AMP4 framework cycle,and we continue to secure significant new contract awards in addition to ourframework projects. In the renewable energy sector we are continuing to developour track record for positive environmental projects with a number of contractwins for clients including Marks & Spencer, Tesco and McCain. PPP Investments The Group has a strong presence in education, health and defence accommodationPFI projects. A profit from operations of £0.4 million (2006 loss: £1.6 million)was earned on revenue, including joint ventures, of £2.4 million following thefinancial close of the £100 million South East Essex LIFT and the £32 millionSt. Andrews hospital and healthcare PFI during the half year. We were alsoshortlisted as one of three bidders to proceed to the next stage of theBirmingham Building Schools for the Future project. The Group has established a policy to retain 50% of the equity in a project postfinancial close, with the aim of an ultimate disposal of our remaining interestwhen construction is complete and projects are well into the operational phase.The Group's objective is to grow its portfolio and we are encouraged by thecontinuing strength of the secondary market for long term PFI investments. Affordable Housing and Regeneration We have made good progress in the affordable housing and regeneration market. Wecarried out £94.5 million, including joint ventures, of work in the period onwhich a profit from operations of £5.7 million was achieved, representing amargin of 6.0% (2006: 4.7%). The total number of completions was up 170% to 284,with an average selling price of £118,000. Having established a competitive edgein bringing together our construction and housebuilding skills to undertakelarge projects, we are now working on eight major regeneration schemes. Six ofthese are with English Partnerships, with whom we are also in early discussionsover a number of future projects. Following our award of preferred bidder status, we have now exchanged contractswith English Partnerships to develop the first major net zero carbon site atGraylingwell, Chichester where we will be developing up to 800 units over fiveyears in joint venture with Affinity Sutton Housing Association. We have alsoestablished a presence in the north east of England, a region where significantpublic sector housing expenditure is planned, with the £9.3 million acquisitionin November of Kendall Cross Holdings Limited, a long established affordablehousing contractor based in Newcastle upon Tyne. We now have two regenerationprojects in our joint venture with Bank of Scotland and the division's land bankcurrently stands at 4,100 plots compared to 3,500 at 30 June 2007. The division has currently reserved, contracted or completed sales with a valueof £135.1 million (2006: £48.2 million). £87.0 million (2006: £29.5 million) isfor the current financial year to 30 June 2008, representing 83% of projectedsales for the year compared with 95% at the same point last year. In addition,the division's current contracting order book stands at £153 million. Housebuilding The housebuilding division has been trading in an increasingly difficult marketduring the period as the tightening of the credit markets and lower consumerconfidence took hold. We started the financial year with record sales carriedforward and have benefited from our policy of forward selling, our concentrationon individually designed developments and our minimal exposure to consortiumsites. With a full six months' contribution from Linden Homes, acquired in March2007, the division achieved a profit from operations of £32.6 millionrepresenting a margin of 14.2% (2006: 14.5%). Completions were up 82% to 890 andthe average selling price of £231,000 compared with £238,000 a year ago. The market to date in 2008 has continued to be difficult, with the change to areducing interest rate environment having little effect on consumer confidenceso far. With selective discounting and maximising our points of sale, whichcurrently stand at 74, the division has currently reserved, contracted orcompleted sales with a value of £414.9 million (2006: £202.8 million). £392.7million (2006: £196.7 million) is for the current financial year to 30 June2008, representing 75% of projected sales compared with 79% at the same pointlast year. Despite short term market fluctuations the underlying imbalance remains betweenthe supply and demand for homes in our geographical areas across the south andeast of England which will support future growth in our business when conditionsimprove. We are driving reductions in our cost base, directly and through oursupply chain, are taking advantage of the enhanced purchasing power of ourlarger business and are achieving greater synergy savings than forecast from theLinden acquisition. As part of our strategy to optimise our land holdings following the Lindenacquisition we made land sales totalling £23.0 million in the period, and with asoftening land market we have implemented a highly selective programme tocontinue to acquire good quality sites. The division's landbank currently standsat 7,000 plots compared to 7,600 at 30 June 2007. Health Safety and Environment We remain committed to achieving high standards of health and safety as anintegral part of our business performance. We recognise the need for, and settargets for, continuous improvement across the Group. During the 12 months to 31December 2007 our accident incident rate was 6.47 per 1,000 people (2006: 7.21)which is well below the industry average. Following the acquisition of Linden Homes, we have reorganised and strengthenedour health, safety and environmental team to ensure all our operations receive ahigh quality service. We launched a completely revised Health and Safety Policyand associated standards in line with the increased capabilities of the Group.We held our first national H&S Climate Survey, receiving over 4,500 responsesfrom employees and subcontractors giving us comprehensive feedback on the statusof our health and safety culture. We have also embarked upon a behaviouralstrategy programme to underpin a continuous improvement culture. Management Chris Coates, a member of the executive board and managing director of the southeast housebuilding division, who was a director of Linden Homes pre acquisition,has decided to pursue his career outside the corporate sector and will beleaving the Group on 30 June 2008. The board is delighted that the Group willretain his services as a consultant on a part time basis and will appoint asuccessor in due course. Outlook The Group has delivered record first half results and has positioned itselfstrategically across its markets to mitigate the effects of a more difficulteconomic period. Our building and infrastructure divisions have a strong spread of work acrossthe public, regulated and private sectors which is encouraging as the prospectsfor commercial building work ease. We are also making good progress indeveloping our affordable housing and regeneration business. The housebuilding market remains challenging, although the resilience of ourbusiness model and our good cash management are mitigating the effects as themarket has worsened. We remain cautious on the outlook for the division,particularly if current market conditions persist throughout the spring sellingseason. While the Board views the economic outlook with some caution, the Group'sfinancial strength and broad sector exposure will stand it in good stead duringchallenging times. Greg Fitzgerald21 February 2008 Consolidated income statementfor the half year ended 31 December 2007 (unaudited) Note Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m ------ --------- --------- ---------Continuing operationsRevenue 3 897.9 606.8 1,409.7Cost of sales (807.7) (550.2) (1,275.8) ------ --------- --------- ---------Gross profit 90.2 56.6 133.9Administrative expenses (48.3) (32.4) (67.0)Share of post taxprofit/(losses) from jointventures 0.6 (0.2) 1.4 ------ --------- --------- ---------Profit before finance costs 3 42.5 24.0 68.3 ------ --------- --------- ---------Profit before finance costs,amortisation and exceptionalitem 43.5 23.4 62.5Amortisation of intangibles (1.0) (0.3) (1.4)Net exceptional item 4 - 0.9 7.2Profit before finance costs 42.5 24.0 68.3 ------ --------- --------- --------- Finance income 5 3.6 0.5 9.3Finance costs 5 (12.3) (2.9) (17.4) ------ --------- --------- ---------Profit before taxation 33.8 21.6 60.2Income tax expense 6 (9.9) (6.3) (16.6) ------ --------- --------- ---------Profit for the period fromcontinuing operations 23.9 15.3 43.6 ------ --------- --------- --------- Earnings per share 7Post exceptional - basic 6.4p 5.6p 14.3p - diluted 6.3p 5.5p 14.1pPre exceptional - basic 6.4p 5.3p 12.5p - diluted 6.3p 5.2p 12.3p ------ --------- --------- --------- The notes on pages 10 to 19 are an integral part of this condensed consolidatedinterim financial information. Consolidated statement of recognised income and expensefor the half year ended 31 December 2007 (unaudited) Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m --------- --------- ---------Profit for the financial period 23.9 15.3 43.6 Gains on revaluation of availablefor sale investments taken toequity - - 2.0Actuarial gains and losses inpension scheme (7.0) (3.5) 3.9Deferred tax on items charged toequity 3.5 2.3 (1.9)Current tax on items charged toequity - - 0.9 --------- --------- ---------Net (losses)/gains recogniseddirectly in equity (3.5) (1.2) 4.9 --------- --------- ---------Total recognised income for theperiod 20.4 14.1 48.5 --------- --------- --------- The notes on pages 10 to 19 are an integral part of this condensed consolidatedinterim financial information. Consolidated balance sheetat 31 December 2007 (unaudited) Note 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m ----- --------- ---------- ---------Non current assetsIntangible assets 11.2 2.0 12.0Goodwill 114.4 57.2 109.2Property, plant andequipment 7.1 7.3 5.8Investments in jointventures 8.9 5.5 6.4Financial assets - Available for sale investments 3.9 1.2 3.2 - Derivative financial assets - - 1.0Trade and other receivables 3.1 0.2 4.7Deferred tax assets 9.8 18.7 10.0Retirement benefit asset 14 1.3 - - ----- --------- ---------- ---------Total non current assets 159.7 92.1 152.3Current assetsInventories 0.8 1.9 0.6Developments 678.8 325.2 704.9Trade and other receivables 291.2 180.7 278.5Financial assets - Derivative financial assets - - 0.4Cash and cash equivalents 12 86.3 34.0 39.5 ----- --------- ---------- --------- 1,057.1 541.8 1,023.9Non current assetsclassified as held for sale 16 4.5 - - ----- --------- ---------- ---------Total current assets 1,061.6 541.8 1,023.9 ----- --------- ---------- ---------Total assets 1,221.3 633.9 1,176.2 ----- --------- ---------- ---------Current liabilitiesFinancial liabilities -borrowings 12 (17.3) (6.3) (50.0)Trade and other payables (686.5) (391.6) (653.4)Current tax liabilities (8.2) (7.4) (6.2)Provisions for liabilitiesand charges 15 (1.7) (1.0) (2.3) ----- --------- ---------- --------- (713.7) (406.3) (711.9)Liabilities directlyassociated with non currentassets classified as heldfor sale 16 (4.5) - - ----- --------- ---------- ---------Total current liabilities (718.2) (406.3) (711.9) ----- --------- ---------- ---------Net current assets 343.4 135.5 312.0 ----- --------- ---------- ---------Non current liabilitiesFinancial liabilities -borrowings 12 (114.7) (1.1) (88.2)Retirement benefitobligations 14 (28.1) (49.7) (25.0)Deferred tax liabilities (17.5) (13.5) (20.3)Other non currentliabilities (25.4) (34.2) (24.0)Provisions for liabilitiesand charges 15 (0.3) (0.4) (0.2) ----- --------- ---------- ---------Total non currentliabilities (186.0) (98.9) (157.7) ----- --------- ---------- ---------Total liabilities (904.2) (505.2) (869.6) ----- --------- ---------- ---------Net assets 317.1 128.7 306.6 ----- --------- ---------- --------- Shareholders' equityOrdinary shares 9 18.8 13.8 18.8Share premium 9 190.7 49.0 190.6Other reserves 10 6.7 4.7 6.7Retained earnings 10 100.9 61.2 90.5 ----- --------- ---------- ---------Total shareholders' equity 10 317.1 128.7 306.6 ----- --------- ---------- --------- The notes on pages 10 to 19 are an integral part of this condensed consolidatedinterim financial information. Consolidated cash flow statementfor the half year ended 31 December 2007 (unaudited) Note Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m ------ --------- --------- ---------Cash flows from operating activitiesNet cash from operations 11 86.0 25.6 10.4Net interest paid (5.9) (1.1) (8.3)Tax paid (6.7) (2.8) (10.0) ------ --------- --------- ---------Net cash generated from/(usedin) operating activities 73.4 21.7 (7.9) Cash flows from investing activitiesAcquisition of subsidiaries (netof cash acquired) (6.0) (1.9) 40.1Acquisition of investments injoint ventures (1.9) (2.4) (2.7)Acquisition of available forsale investments (0.7) - -Income from investments in jointventures - - 0.2Proceeds from disposal of jointventure - - 0.3Purchases of property, plant andequipment (1.1) (0.9) (2.0)Proceeds from sale of property,plant and equipment - - 19.6 ------ --------- --------- ---------Net cash (used in)/generatedfrom investing activities (9.7) (5.2) 55.5 Cash flows from financing activitiesNet proceeds from issue ofordinary share capital 0.1 0.4 147.0Purchase of own shares (2.5) (1.3) (3.0)Repayment of borrowings (34.7) (0.9) (1.7)Increase in borrowings 28.5 - 99.7Repayment of borrowings acquiredwith subsidiary - - (261.0)Dividends paid to Groupshareholders (8.3) (5.0) (7.1) ------ --------- --------- ---------Net cash used in financingactivities (16.9) (6.8) (26.1) ------ --------- --------- ---------Net increase in cash and cashequivalents 46.8 9.7 21.5 ------ --------- --------- --------- Net cash and cash equivalents atbeginning of period 39.5 18.0 18.0 ------ --------- --------- ---------Net cash and cash equivalents atend of period 11 86.3 27.7 39.5 ------ --------- --------- --------- The notes on pages 10 to 19 are an integral part of this condensed consolidatedinterim financial information. Notes to the Condensed Consolidated Interim Financial Information 1 Basis of preparation The company is a public limited company incorporated and domiciled in the UK.The address of its registered office is Cowley Business Park, Cowley, Uxbridge,Middlesex, UB8 2AL. The company has its primary listing on the London StockExchange. This condensed consolidated interim financial information was approvedfor issue on 21 February 2008. This condensed consolidated interim financial information for the half yearended 31 December 2007 has been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, "Interimfinancial reporting" as adopted by the European Union. The condensedconsolidated interim financial information should be read in conjunction withthe annual financial statements for the year ended 30 June 2007, which have beenprepared in accordance with IFRSs and IFRICs as adopted by the European Unionand the Companies Act 1985 applicable to companies reporting under IFRS. This condensed consolidated interim financial information does not constitutestatutory accounts for the purposes of Section 240 of the Companies Act 1985. Acopy of the statutory accounts for the year ended 30 June 2007 were approved bythe Board of directors on 6 September 2007 and delivered to the Registrar ofCompanies. The report of the auditors on those accounts was unqualified, did notcontain an emphasis of matter paragraph and did not contain any statement underSection 237 of the Companies Act 1985. 2 Accounting policies The accounting policies and critical accounting estimates and judgements appliedare consistent with those described in the Annual Report and FinancialStatements for the year ended 30 June 2007. The same accounting policies and methods of computation are followed in thecondensed consolidated interim financial information as in the Annual Report andFinancial Statements for the year ended 30 June 2007 with the exception thatIFRS 7, "Financial instruments: disclosures", IFRIC 9, "Reassessment of embeddedderivatives", IFRIC10, "Interim financial reporting and impairment" and IFRIC14,"IAS19 - The limit on a defined benefit asset, minimum funding requirements andtheir interaction" have been adopted where applicable to the Group. At the date of signing this condensed consolidated interim financial informationIFRS 8, "Operating segments", IFRIC 11, "IFRS2 - Group treasury sharetransactions" and IFRIC 12, "Service concession agreements", which have not beenapplied, were in issue but not yet effective. The directors anticipate that theadoption of these standards and interpretations in future years will have nomaterial impact on the Group's financial statements. The Group's principal risks and uncertainties are consistent with thosedisclosed in the Annual Report and Financial Statements for the year ended 30June 2007. 3 Business segment reporting Segment reporting is presented in the condensed consolidated interim financialinformation in respect of the Group's business segments which are the primarybasis of segment reporting. The business segment reporting reflects the Group'smanagement and internal reporting structure. Segment results include itemsdirectly attributable to the segment as well as those that can be allocated on areasonable basis. With effect from 1 July 2007, the Group has changed itsmanagement and internal reporting structure to include an affordable housing andregeneration segment. The comparative figures for the period ended 31 December2006 have been restated accordingly. As the Group has no material activitiesoutside the UK, segmental reporting is not required by geographical region.Inter-segment revenue is not material. Building Infrastructure Construction PPP Investments Affordable House-building Group Total Total housing & regeneration £m £m £m £m £m £m £m £m Half year ended 31 December2007Group revenueand share ofjoint venturerevenue 339.2 250.1 589.3 2.4 94.5 230.0 0.2 916.4 Share of jointventures'revenue (2.1) (3.1) (5.2) (1.5) (1.2) (10.6) - (18.5) ------------------------------------------------------------------------------------------------- Segment revenue 337.1 247.0 584.1 0.9 93.3 219.4 0.2 897.9 ------------------------------------------------------------------------------------------------- Segment result:Profit beforejoint ventures 6.4 6.2 12.6 (0.7) 5.7 29.5 (4.2) 42.9 Share of jointventures'profit 0.1 - 0.1 1.1 - 3.1 - 4.3 ------------------------------------------------------------------------------------------------ Profit fromoperations * 6.5 6.2 12.7 0.4 5.7 32.6 (4.2) 47.2 Share of jointventures'interest andtax - - - (1.6) - (2.1) - (3.7) -----------------------------------------------------------------------------------------------Profit beforefinance costs,amortisationandexceptionalitem 6.5 6.2 12.7 (1.2) 5.7 30.5 (4.2) 43.5Amortisationandexceptionalitem (0.1) (0.2) (0.3) - - (0.7) - (1.0) -----------------------------------------------------------------------------------------------Profit beforefinance costs 6.4 6.0 12.4 (1.2) 5.7 29.8 (4.2) 42.5 Net financecosts 2.7 0.6 3.3 (0.3) (2.2) (15.9) 6.4 (8.7) -----------------------------------------------------------------------------------------------Profit beforetaxation 9.1 6.6 15.7 (1.5) 3.5 13.9 2.2 33.8expense (9.9) -----------------------------------------------------------------------------------------------Profit for theperiod fromcontinuingoperations 23.9 ----------------------------------------------------------------------------------------------- Half year ended 31 December 2006 (Restated)Group revenueand share ofjoint venturerevenue 266.7 171.4 438.1 0.2 54.9 116.4 3.3 612.9Share of jointventures'revenue (0.9) (5.2) (6.1) - - - - (6.1) ------------------------------------------------------------------------------------------------- Segment revenue 265.8 166.2 432.0 0.2 54.9 116.4 3.3 606.8 -------------------------------------------------------------------------------------------------Segment result:Profit beforejoint ventures 4.8 4.1 8.9 (1.6) 2.6 16.9 (3.2) 23.6Share of joint ventures' profit - - - - - - - - ------------------------------------------------------------------------------------------------- Profit fromoperations * 4.8 4.1 8.9 (1.6) 2.6 16.9 (3.2) 23.6 Share of jointventures'interest andtax - - - (0.1) - (0.1) - (0.2) -------------------------------------------------------------------------------------------------Profit beforefinance costs,amortisationandexceptionalitem 4.8 4.1 8.9 (1.7) 2.6 16.8 (3.2) 23.4Amortisation andexceptionalitem (0.2) (0.1) (0.3) - - - 0.9 0.6 ------------------------------------------------------------------------------------------------- Profit beforefinance costs 4.6 4.0 8.6 (1.7) 2.6 16.8 (2.3) 24.0Net financecosts 1.2 0.3 1.5 (0.1) (0.8) (6.6) 3.6 (2.4) -------------------------------------------------------------------------------------------------Profit beforetaxation 5.8 4.3 10.1 (1.8) 1.8 10.2 1.3 21.6Income taxexpense (6.3) -------------------------------------------------------------------------------------------------Profit for theperiod fromcontinuingoperations 15.3 ------------------------------------------------------------------------------------------------- * Profit from operations is stated before finance costs, exceptional items,amortisation of intangible assets and share of joint ventures' interest and tax. 4 Net exceptional item There were no exceptional items in the period. The net exceptional credit forthe year ended 30 June 2007 was made up of the following: a)Net profit from property rationalisation of £3.9 million (31 Dec2006: £0.9 million) which includes the profit on sale and leaseback of Groupproperty net of the cost of terminating operating leases relating to Groupproperties that were no longer required. b)Restructuring costs of £1.9 million (31 Dec 2006: £nil) whichrelate to the costs associated with the restructuring of the Group following theacquisition of Linden Homes in March 2007. c)A curtailment credit of £5.2 million (31 Dec 2006: £nil)resulting from the changes in actuarial assumptions which arose on the closureof the Galliford Try Final Salary Pension Scheme on 31 March 2007. These amounts have been treated as exceptional items in accordance with theGroup's accounting policy. The income tax expense associated with the netexceptional item amounted to £1.8 million (31 Dec 2006: £0.2 million). 5 Net finance costs Half Year to Half Year to 31 Dec 2007 31 Dec 2006 £m £m --------- ---------- Interest payable on borrowings (7.2) (0.2)Unwinding of discounted payables (3.1) (2.4)Net finance cost on retirement benefit obligations - (0.3)Other (2.0) - --------- ----------Finance costs (12.3) (2.9)Finance income 3.6 0.5 --------- ----------Net finance costs (8.7) (2.4) --------- ---------- The other finance costs represent the movement in the fair value of interestrate swaps. 6 Income tax expense The income tax expense for the period reflects the estimated effective rate forthe full financial year to 30 June 2008 of 29% (30 June 2007: 29%). 7 Earnings per share Basic earnings per share is calculated using the profit after taxation and theweighted average number of ordinary shares in issue during the period less theweighted average number of shares held by the Galliford Try Employee Share Trustwhich have not unconditionally vested in employees. For diluted earnings pershare the weighted average number of ordinary shares is adjusted to assumeconversion of all potentially dilutive ordinary shares. 31 Dec 2007 31 Dec 2006 Earnings Weighted Per share Earnings Weighted Per share amount amount £m average pence £m average pence number number of shares of shares ------- -------- -------- ------- -------- -------BasicEarningsattributableto ordinaryshareholders 23.9 373,538,911 6.4 15.3 273,865,542 5.6 Effect of dilutive securitiesOptions 4,227,065 4,868,276 ------- -------- -------- ------- -------- ------- Diluted 23.9 377,765,976 6.3 15.3 278,733,818 5.5 ------- -------- -------- ------- -------- ------- Earnings adjusted for post tax exceptional items of £nil (2006:£0.7million)amount to £23.9 million (2006: £14.6 million). The basic earnings per sharecalculated on this adjusted basis is 6.4p (2006: 5.3p) (diluted 6.3p (2006:5.2p)). 8 Dividends The following dividends were paid by the Company: Half Year to 31 Half Year to 31 Year to 30 June Dec 2007 Dec 2006 2007 £m Pence per share £m Pence per share £m Pence per share -------- -------- -------- -------- ------- ---------Previousperiod final 8.3 2.2 5.0 1.8 5.0 1.8Current periodinterim - - - - 2.1 0.8 -------- -------- -------- -------- ------- --------- 8.3 2.2 5.0 1.8 7.1 2.6 -------- -------- -------- -------- ------- --------- The following dividends were declared by the Company in respect of each accounting periodpresented: Half Year to 31 Half Year to 31 Year to 30 June Dec 2007 Dec 2006 2007 £m Pence per share £m Pence per share £m Pence per share -------- -------- -------- -------- ------- ---------Interim 3.4 0.9 2.1 0.8 2.1 0.8Final - - - - 8.3 2.2 -------- -------- -------- -------- ------- --------- 3.4 0.9 2.1 0.8 10.4 3.0 -------- -------- -------- -------- ------- --------- The interim dividend for 2008 of 0.9 pence per share was approved by the Boardon 21 February 2008 and has not been included as a liability as at 31 December2007. This interim dividend will be paid on 14 April 2008 to shareholders on theregister at the close of business on 14 March 2008. 9 Share capital Number of Number of Ordinary shares Share premium Total shares shares issued authorised (thousands) (thousands) £m £m £m --------- --------- ------- ------- ---------At 1 July 2006 360,000 274,798 13.7 48.7 62.4Issue of shares - 1,467 0.1 0.3 0.4 --------- --------- ------- ------- ---------At 31 December2006 360,000 276,265 13.8 49.0 62.8Increase inauthorisedshare capital 145,000 - - - -Issue of shares - 100,248 5.0 141.6 146.6 --------- --------- ------- ------- ---------At 1 July 2007 505,000 376,513 18.8 190.6 209.4Issue of shares - 68 - 0.1 0.1 --------- --------- ------- ------- ---------At 31 December2007 505,000 376,581 18.8 190.7 209.5 --------- --------- ------- ------- --------- 10 Statement of changes in shareholders' equity Share capital Share premium Other reserves Retained Total earnings shareholders' equity £m £m £m £m £m ------- --------- ------- ------- --------- At 1 July 2006 13.7 48.7 4.7 53.0 120.1Profit for theperiod - - - 15.3 15.3Dividends - - - (5.0) (5.0)Proceeds fromshares issued 0.1 0.3 - - 0.4Purchase ofown shares - - - (1.3) (1.3)Share basedpayments - - - 0.4 0.4Actuariallossesrecognised inretirementbenefitobligations - - - (3.5) (3.5)Deferred taxon movementsin equity - - - 2.3 2.3 ------- --------- ------- ------- --------- At 31 December2006 13.8 49.0 4.7 61.2 128.7Profit for theperiod - - - 28.3 28.3Dividends - - - (2.1) (2.1)Proceeds fromshares issued 5.0 141.6 - - 146.6Purchase ofown shares - - - (1.7) (1.7)Share basedpayments - - - 0.7 0.7Actuarialgainsrecognised inretirementbenefitobligations - - - 7.4 7.4Revaluation ofavailable forsaleinvestments - - 2.0 - 2.0Deferred taxon movementsin equity - - - (4.2) (4.2)Current tax onmovement inequity - - - 0.9 0.9 ------- --------- ------- ------- --------- At 30 June 2007 18.8 190.6 6.7 90.5 306.6Profit for theperiod - - - 23.9 23.9Dividends - - - (8.3) (8.3)Proceeds fromshares issued - 0.1 - - 0.1Purchase ofown shares - - - (2.5) (2.5)Share basedpayments - - - 0.8 0.8Actuariallossesrecognised inretirementbenefitobligations - - - (7.0) (7.0)Deferred taxon movementsin equity - - - 3.5 3.5 ------- --------- ------- ------- --------- At 31 December2007 18.8 190.7 6.7 100.9 317.1 ------- --------- ------- ------- --------- 11 Notes to the cash flow statement Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m --------- --------- ---------Cash flows from operating activitiesProfit for the period 23.9 15.3 43.6 Adjustments for:Income tax 9.9 6.3 16.6Depreciation 0.9 1.4 2.3Amortisation of intangible assets 1.0 0.3 1.4Share based payments 0.8 0.4 1.1Profit on sale and leaseback ofproperty, plant and equipment - - (4.8)Profit on disposal of property,plant and equipment - - (0.6)Profit on sale of joint venture - - (0.5)Net finance costs 8.7 2.4 8.1Share of post tax (profits)/lossesfrom joint ventures (0.6) 0.2 (1.4)Movement in retirement benefitobligations (4.0) (0.8) (18.2)(Decrease)/increase in provisionsfor liabilities and charges (0.5) (1.0) 0.1 --------- --------- --------- 40.1 24.5 47.7Changes in working capital:(Increase)/decrease in inventories (0.2) (1.0) 0.3Decrease/(increase) in developments 26.1 (40.0) (98.1)(Increase)/decrease in trade andother receivables (5.1) 3.6 (73.2)Increase in payables 25.1 38.5 133.7 --------- --------- ---------Net cash generated from continuingoperations 86.0 25.6 10.4 --------- --------- --------- Half Year to 31 Half Year to 31 Year to Dec 2007 Dec 2006 30 June 2007 £m £m £m --------- --------- --------- Cash and cashequivalents 86.3 34.0 39.5Bank overdrafts - (6.3) - --------- --------- ---------Net cash andcashequivalents 86.3 27.7 39.5 --------- --------- --------- 12 Net (debt)/cash Net (debt)/cash is made up as follows: Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m ---------- --------- ---------Cash and cash equivalents 86.3 34.0 39.5Financial liabilities:Bank overdrafts - (6.3) -Other current (17.3) - (50.0)Non current (114.7) (1.1) (88.2) ---------- --------- ---------Net (debt)/cash (45.7) 26.6 (98.7) ---------- --------- --------- 13 Borrowings and loans Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m ----------- ----------- ----------Non-current 114.7 1.1 88.2Current 17.3 6.3 50.0 ----------- ----------- ---------- 132.0 7.4 138.2 ----------- ----------- ---------- The movement in borrowings is analysed as follows: £m ---------At 1 July 2006 5.7Increase in overdraft 2.6Repayment of borrowings (0.9) ---------At 31 December 2006 7.4Decrease in overdraft (6.3)Repayment of borrowings (0.8)Increase in borrowings 99.7Increase due to acquisition of subsidiary 38.2 ---------At 30 June 2007 138.2Repayment of borrowings (34.7)Increase in borrowings 28.5 ---------At 31 December 2007 132.0 --------- 14 Defined benefit plans The amounts recognised in the income statement were as follows: Half Year to Half Year to 31 Dec 2007 31 Dec 2006 £m £m --------- ---------Current service costs - (1.7)Interest costs (4.4) (4.0)Expected return on plan assets 4.8 3.7 --------- ---------Credit/(charge) to income statement 0.4 (2.0) --------- --------- An actuarial loss of £7.0 million (2006: £3.5 million) has been taken to theconsolidated statement of recognised income and expense. The amounts recognised in the balance sheet were as follows: Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m --------- --------- ---------Present value of funded obligations (3.9) - -Fair value of plan assets 5.2 - - --------- --------- ---------Asset in the balance sheet 1.3 - - --------- --------- --------- Half Year to Half Year to Year to 31 Dec 2007 31 Dec 2006 30 June 2007 £m £m £m --------- --------- ---------Present value of funded obligations (162.8) (165.8) (156.4)Fair value of plan assets 134.7 116.1 131.4 --------- --------- ---------Liability in the balance sheet (28.1) (49.7) (25.0) --------- --------- --------- The retirement benefit asset arose as a result of the acquisition of KendallCross Holdings Limited (see note 17). 15 Provisions for liabilities and charges Restructuring Onerous leases Total £m £m £m -------------- ------- -------- At 1 July 2006 1.9 0.5 2.4Utilised in period (1.0) - (1.0) -------------- ------- --------At 31 December 2006 0.9 0.5 1.4Charged to income statement 1.9 0.9 2.8Utilised in period (1.3) (0.4) (1.7) -------------- ------- --------At 30 June 2007 1.5 1.0 2.5Utilised in period (0.1) (0.4) (0.5) -------------- ------- --------At 31 December 2007 1.4 0.6 2.0 -------------- ------- -------- 16 Non current assets classified as held for sale At 31 December 2007, the Group held an investment in a PFI project which isclassified as held for sale in line with the Group's policy to sell down equityinvestments in PFI projects to 50% of the project equity post financial close. The investment had the following assets and liabilities: £mTrade receivables 4.2Cash in hand 0.3 --------Non current assets classified as held for sale 4.5 -------- Borrowings 4.1Other payables 0.4 --------Liabilities directly associated with non current assets classified asheld for sale 4.5 -------- 17 Acquisitions On 14 November 2007, the Group acquired 100% of the share capital of KendallCross Holdings Limited, an affordable housing contractor based in the north eastof England. The total consideration payable, including expenses, was £9.3 million in cash,of which £1.9 million is on deferred terms. At completion, Kendall Cross held positive cash balances amounting to £1.4 million, resulting in a net initial cash outlay of £6.0 million. The Group has yet to finalise the fair value of the identifiable assets and liabilities acquired and the goodwill recognised of £5.2 million is provisional. The goodwill relates to the acquired workforce and the expected synergy savings. Details of the assets acquired are set out in the table below. Carrying value Fair value Provisional pre acquisition adjustments fair value £m £m £m -------- -------- --------Intangibles - 0.2 0.2Property, plant and equipment 1.1 - 1.1Retirement benefit asset 1.3 - 1.3Trade and other receivables 5.4 - 5.4Cash and cash equivalents 2.1 - 2.1Bank loans and overdrafts (0.7) - (0.7)Trade and other payables (5.3) - (5.3) -------- -------- -------- Net assets acquired 3.9 0.2 4.1Goodwill 5.2 -------- -------- --------Consideration 9.3 -------- -------- -------- The revenue and net profit for the six week period since acquisition was £2.7million and £0.1 million respectively. If the company had been acquired on 1July 2007 its revenue and net profit would have been £12.6 million and £0.4million respectively. 18 Contingent liabilities Disputes arise in the normal course of business, some of which lead tolitigation or arbitration procedures. The directors make proper provision in thefinancial statements when they believe a liability exists. Whilst the outcome ofdisputes and arbitration is never certain, the directors believe that theresolution of all existing actions will not have a material adverse effect onthe Group's financial position. Galliford Try plc has entered into guarantees and counter indemnities in respectof bank and performance bonds issued on behalf of Group undertakings in thenormal course of business amounting to £174.0 million (2006: £169.8 million). 19 Related party transactions Transactions between the Company and its subsidiaries, which are relatedparties, have been eliminated on consolidation and are not included within thisnote. Transactions between the Group and its joint ventures and jointlycontrolled operations and assets are disclosed as follows: Trading transactions Sales to Purchases from Amounts owed by Amounts owed to related parties related parties related parties related parties 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £mJoint ventures 33.0 5.5 - - 2.9 0.9 2.0 -Jointly controlledoperations and assets 32.5 10.9 0.7 1.2 11.5 1.6 11.1 2.0 ------ ------- ------- ------- ------- ------- ------ ------ Non- trading transactions Loans to Loans from Injection of related parties related parties equity funding 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £mJoint ventures 9.3 - - - 1.9 -Jointly controlled operations and assets - - 4.9 1.2 - - ------ ------- ------- ------- ------- ------- ------ ------ Statement of directors' responsibilities The directors' confirm that this condensed consolidated interim financialinformation has been prepared in accordance with IAS 34 as adopted by theEuropean Union, and that the interim management report herein includes a fairreview of the information required by DTR 4.2.7 and DTR 4.2.8. The directors of Galliford Try plc are listed in the Annual Report for 30 June2007 since when there have been no changes to the board. Signed on behalf of the Board Greg FitzgeraldChief Executive Frank NelsonFinance Director 21 February 2008 Independent review report to Galliford Try plc Introduction We have been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 31December 2007, which comprises the consolidated income statement, consolidatedbalance sheet, consolidated statement of recognised income and expense,consolidated cash flow statement and related notes. We have read the otherinformation contained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. This report, including the conclusion, has been prepared for and onlyfor the company for the purpose of the Disclosure and Transparency Rules of theFinancial Services Authority and for no other purpose. We do not, in producingthis report, accept or assume responsibility for any other purpose or to anyother person to whom this report is shown or into whose hands it may come savewhere expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 31 December 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. PricewaterhouseCoopers LLPChartered AccountantsLondon 21 February 2008 Notes: (a) The maintenance and integrity of the Galliford Try plc website is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the website. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Galliford Try