Galliford Try strengthens foundations to support growth
By Ian Vallely23 February 2017
UK housebuilder and construction firm Galliford Try achieved a strong first half performance with profit before tax up 19% to £63 million (€74 million).
it said net debt of £113.8 million (€134 million) was in line with expectations.
The company’s balance sheet further strengthened with a £450 million (€531 million) bank facility extended to 2022 on same terms.
This, it said, would help its strategy to 2021 of targeting sustainable growth and strong returns across all three businesses. Targets include 60% growth in profit before tax to the 2021 financial year and a return on net assets in the 2021 financial year of at least 25%.
Linden Homes’ operating margin rose to 18.2% compared with 17% in the first half of 2016. Revenue was up 12% to £407.6 million (€481 million), compared with £362.7 million (€428 million) for the same period a year earlier from 1,491 unit completions, 1,319 units net of joint venture partner share. Total sales reserved, contracted and completed increased by 8% to £857 million (€1.01 billion).
The company’s partnerships and regeneration division had an operating margin of 3.4% (3% in the first half of last year), driven by planned increase in proportion of higher margin mixed tenure revenue.
Total revenue went down from £150.2 million (€177 million) to £144.3 million (€70 million) reflecting expected lower contracting revenue in the first half, partially offset by higher revenue from mixed tenure sales.
There was a 16% increase in total sales currently reserved, contracted and completed at £92 million (€109 million) with contracting order book up 6% at £925 million (€1.09 billion).
At the construction division, revenue was £742 million (€876 million) in the first half of 2017 compared with £738.6 million (€872 million) for the same period a year earlier, with cash balance of £110.8 million (€130 million) – compared with £154.7 million (€182 million) for the first half of 2016 – reflecting delayed cash flows on some legacy projects. At 0.4%, compared to the first half of 2016 when it was 1.2%, operating margin “continues to be constrained by the resolution of legacy contracts; margins on new projects support improving divisional returns in future years”.
However, the order book remained solid at £3.4 billion (€4 billion).
Chief executive Peter Truscott said, “The group delivered another strong performance in the first half. Our reorganised management teams have settled well and are making positive strides towards their respective operating and financial targets.
“We continue to see robust demand and pricing in residential markets, for both Linden Homes and Partnerships and Regeneration, driving good rates of sale, and the land market remains benign in all regions. Linden Homes continues to achieve margin improvement, including much improved overhead efficiency.
“Partnerships achieved a higher proportion of mixed tenure development revenue, resulting also in first-half margin growth. Construction is making steady progress in resolving legacy contracts, and the contribution from newer work is encouraging, demonstrating that the underlying business is strong.”
He added, “While we remain alert to potential uncertainties in the wider economy, we continue to see opportunity in all of our markets. We enter the new calendar year with strovng order books: both Linden Homes and Partnerships are at record levels, and while Construction is lower than the prior year, it remains both at a very comfortable level and, more importantly, of high quality.
"Our improved debt facilities have further strengthened the balance sheet, providing financial flexibility to underpin our strategy for growth.”