Galliford Try shareholders to reap rewards of 80pc profit hike
Galliford Try posted an 80 per cent hike in pre-tax profits this morning and proposed to increase its dividend to shareholders by 88 per cent.
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The firm hit its three-year target of doubling the size of its house building arm, while maintaining a 2 per cent margin in construction.
The group is planning to boost its dividend by 88 per cent, subject to approval by shareholders, to 30 pence in November.
Group revenue rose 17 per cent from £1.3bn to £1.5bn for the year to 30 June 2012, as pre-tax profit rose from £35.1m (excluding exceptional items) to £63.1m.
Chief executive Greg Fitzgerald said: “Against a background of challenging and uncertain economic conditions I am very pleased to report that we have exceeded the objectives of our three year transformational house building plan, delivering a substantial increase in profitsand return on capital. In addition, we have maintained a high quality construction order book.”
Cash dropped to £146m (2011: £217m), with a £1.65bn order book (2011: £1.7bn) and 86 per cent of next year’s revenue secured.
The firm posted a 2 per cent construction margin (2011: 2.4 per cent), despite ‘difficult market conditions’. Building margin was 2.3 per cent, while infrastructure margin dropped from 2.6 to 1.9 per cent.
It said it will continue to focus on ‘markets where there are barriers to entry’, saying 2013 will be a ‘peak year’ for the AMP5 water framework.
In building the firm said it has focused on the south of England and in Scotland, with some key schemes in the Midlands, and handing over its Olympic projects including working on the Basketball Arena and accommodation.
In house building, Galliford Try said it exceeded the objectives of a three-year transformational plan.
Housebuilding - under the brand of Linden Homes - saw a 40 per cent hike in completions to 3,039 (2011: 2,170) – including 2,272 private and 767 affordable – and an increase in margin from 8.1 per cent to 11.8 per cent. The house building surge has come after a £125.6m rights issue in September 2009.
It said 81 per cent of its 10,500 plot land bank has been acquired at current market values, which return higher profits than land bought before the downturn.
The firm said it will continue a ‘disciplined growth strategy’.
It said: “We intend to boost strategic land development activities, minimise our reliance on consortium or major greenfield sites and reduce execution risk, by focusing on areas with greater demand and higher selling prices.”
Mr Fitzgerald added: “We have a strong balance sheet and a disciplined growth strategy with a clear focus on improving margins that positions us well to deliver further profitable growth in the new financial year and beyond.”
There were no exceptional items during the year.
The firm said Graham Prothero will join the board of directors as finance director later in the financial year after the retirement of Frank Nelson.
Revenue - £924.8m (2011: £936.9m)
Profit from operations - £18.9m (£22.2m)
Margin – 2 per cent (2.4 per cent)
Order book - £1.65bn (£1.7bn)
Building: Revenue dropped from £436.5 to £363.5, as profit from operations fell from £10.4m to £8.4m, delivering a margin of 2.3 per cent (2011: 2.4 per cent). The order book fell from £673m to £471m.
Infrastructure: Revenue increased from £376.5m to £470.9m, as profits dropped from £9.9m to £8.8m and margin fell from 2.6 per cent to 1.9 per cent. The order book dropped from £921m to £811m.
Partnerships (affordable Housing) – revenue fell from £123.9m to £90m, with profits down from £1.9m to £1.7m and margin up from 1.5 to 1.9 per cent.
PPP - The firm’s public private partnership division made a £1.1m loss (2011: £1m loss) as revenue rose from £9.6m to £13.8m.
Revenue – £636.7m (2011: £388.5m)
Profit from operations – £75.1m (£31.6m)
Margin – 11.8 (8.1)
Completions – 3039 (2170)