Last checked at 9 Jan 2013 07:00
9 JANUARY 2013
GALLIFORD TRY PLC - TRADING UPDATE
Galliford Try plc, the housebuilding and construction group, today provides the following update on trading for the half year ended 31 December 2012. The group expects to announce its results for the half year on 20 February 2013.
Group
·; Half year profit anticipated to be above board expectations.
·; Net debt of £60 million, improvement on last year (2011: £69.8 million).
Housebuilding
·; Revenue is expected to be up on last year on a combination of record 1,364 unit completions, 1,229 net of joint venture partners' share (2011: 1,352 and 1,216) and an increase in the average selling price of our properties.
·; 4% increase in total sales reserved, contracted and completed at £544 million (2011: £522 million).
·; Stable unit sales per outlet per week at 0.46 (2011: 0.45).
·; 83% of 10,400 plot landbank now secured at current market values (31 December 2011: 75% of 10,400). 96% of land secured for 2014.
·; Operating margin expected to be up on full year with continued industry leading return on capital.
Construction
·; 99% of projected revenue for current financial year secured with 62% for year to 30 June 2014 (31 December 2011: 100% and 62% respectively).
·; Stable £1.6 billion order book in line with expectations as we continue to manage risk and moderate turnover (2011: £1.6 billion).
·; 40% of order book in regulated sector, 42% in public and 18% in private maintaining a high quality and diverse spread of future revenues (2011: 41%, 45% and 14% respectively).
Greg Fitzgerald, Chief Executive, commented:
"We are encouraged by the performance of both housebuilding and construction in the first half of the financial year with profits ahead of board expectations. Housebuilding continues to deliver good results in a stable market with construction performing well against a backdrop of a difficult market. We continue to manage cash with group net debt improving on last year. Notwithstanding the continuing challenging economic conditions the Group remains on track to meet its expectations for the financial year and is well positioned to deliver growth."
For further enquiries please contact:
Galliford Try - Greg Fitzgerald, Chief Executive 01895 855001
Tulchan Communications - Christian Cowley, James Macey White 020 7353 4200
Housebuilding
The housing market, particularly in our key geographic locations in the south of England, continues to be stable with prices achieved since the start of our financial year slightly ahead of expectations. Despite the economic uncertainty, our performance demonstrates the relative strength of the chosen geographic areas where we operate and the ability of purchasers of our homes to secure mortgage finance, which continues to improve. The use of shared equity also continues to decline.
Following the successful doubling in size of our housebuilding business in the three year period to June 2012 our disciplined growth strategy with a clear focus on improving margins is now embedded in the business. During the first six months of the financial year we achieved a rate of sale of 0.46 unit sales per outlet per week, resulting in a 2% increase in actual sales reservations made compared to the same period last year.
Sales, during the first half of the year, are slightly ahead of our expectations, with completions up to a record 1,364 units, 1,229 net of joint venture partners' share (2011: 1,352 and 1,216 respectively). Sales reserved, contracted and completed were up 4% to £544 million.
Our average selling price was ahead of expectations at £248,000 (2011: £239,000) and ahead of last year, reflecting an increased proportion of sales in the south east of England. The average selling price for affordable sales was £115,000 (2011: £102,000) leading to a combined average selling price of £216,000 (2011: £203,000). Cancellation levels have remained around the long-term average at 19% (2011: 18%).
Mortgage availability continues to be an issue but is improving. We welcome the Government's stated intention to support and encourage housebuilding and we continue to work with lenders and the Homes and Communities Agency to facilitate more affordable products.
Our total landbank at 31 December 2012 was 10,400 plots (2011: 10,400) of which 8,500 plots, or 83% of our total landbank, have been acquired under current market conditions compared to 75% last year. In addition we have 96% of land secured for the financial year to 30 June 2014 which further supports the enhanced operating margin growth.
Following our success in obtaining £17 million funding under the Government's Affordable Housing Programme in 2011/12, reflecting our market presence in the south and strength of client relationships in the sector, we are securing good revenues under the affordable rent regime. We have also been appointed as preferred bidder on further public land releases under the Homes and Communities Agency's Delivery Partner Panel, totalling 610 units.
Construction
At 31 December 2012 we had secured 99% of our projected revenue for the current financial year and 62% for our next financial year (31 December 2011: 100% and 62% respectively). Our robust order book provides a strong platform for 2013 and 2014.
As we have previously stated, the construction market has continued to be challenging during the period. In response we have maintained our strategy of focusing on margins and cash as well as securing work with acceptable returns and risk. Our total order book continues to be stable in line with our expectations at £1.6 billion (2011: £1.6 billion). We have a diverse spread of future revenues with 40% in the regulated sector, 42% in the public sector and 18% in the private sector.
56% of our order book has been secured in frameworks. We have been encouraged by the Government's announcement in the autumn budget recognising the need for infrastructure investment. During the six months we have announced a number of major project wins, including the £89 million Resorts World project for Genting in Birmingham and the £80 million Kingskerswell Bypass contract. We have a pipeline of opportunities that we expect to announce in the second half of the year.
Cash
Net debt at 31 December 2012 is an improvement on last year at £60 million (2011: £69.8 million). The investment in land and work in progress on our housebuilding sites at half year is in line with our forecasts. The cash balance held by our construction business remains significant, albeit reducing during the period as we anticipated, reflecting the more difficult market conditions.
Board Announcements
As previously announced Graham Prothero will join the Board with effect 1 February 2013 as Group Finance Director.
Outlook
We are encouraged by the performance of both housebuilding and construction in the first half of the financial year with profits ahead of board expectations. Housebuilding continues to deliver good results in a stable market with construction performing well against a backdrop of a difficult market. We continue to manage cash with group net debt improving on last year. Notwithstanding the continuing challenging economic conditions the Group remains on track to meet its expectations for the financial year and is well positioned to deliver growth.