AGM and IMS

RNS Number : 6819H

Galliford Try PLC

07 November 2008

 



GALLIFORD TRY PLC

AGM AND INTERIM MANAGEMENT STATEMENT 

Galliford Try plc, the construction and housebuilding group, is holding its annual general meeting today and is issuing its interim management statement for the period from 1 July 2008 to 6 November 2008.

Business Performance 

The Group continues to benefit from its spread of operations across the construction and housebuilding markets. The Group's performance remains strong in its construction activities, but in common with the rest of the sector, the prospects for housebuilding have deteriorated further as the already extremely difficult market took a further significant step downwards following the financial sector crisis from mid September.

Galliford Try's construction businesses continue to perform well with a contracting order book that stands at £1.8 billion, of which 90% is for the public and regulated sectors. We are in a strong position with 88% of our anticipated revenues for the financial year to 30 June 2009 already secured. Although the private commercial building market is becoming tighter, the opportunities remain for long term workload in our infrastructure business where we are actively participating in the renewal negotiations for the five year AMP5 framework contracts for our water industry clients.

Our concentration on maximising cash flow from aggressive selling by our housebuilding business delivered an encouraging level of sales through to mid September. However, with the deepening of the crisis in the financial markets, mortgage availability and consumer confidence plunged to new lows. We continued to secure a modest level of sales, albeit prices came under further pressure as the volume housebuilders, in particular, started to price more aggressively. Current sales reserved, contracted or completed stand at £255 million, of which £219 million is for the current financial year to 30 June 2009, representing 70% of projected sales for the year compared to 81% at the same point last year. Overall cancellation rates for the year to date have been 28%. As we anticipated, the affordable housing market has now paused as it comes to terms with the downturn in the wider housing market, although we expect the Government will be keen to promote a recovery in activity levels as soon as practicable.  

Financial Review 

Cash management remains our key focus, with the significant cost reductions in our housing business already made and our actions to minimise expenditure on land taking effect. Although net debt does fluctuate throughout the year, we are currently performing in line with our expectations. We continue to operate well within the Group's banking facility, and in full compliance with the covenants over the facility.  

Outlook

The broad spread of work carried out by our construction businesses, with the significant proportion of our order book in the public and regulated sectors, is encouraging as the general economic outlook has deteriorated. Our strengths in affordable housing will continue to stand us in good stead.  

  Our housebuilding business will clearly continue to experience tough trading until general economic conditions improve. We have a clear strategy, based on tight cash conservation and a reduced cost base, to take us through the period until the market stabilises. The Group welcomes the action taken by the Government with the objective of restoring stability to the financial markets and that it recognises the need for a properly functioning mortgage market. The substantial interest rate reduction announced yesterday is encouraging, although until it is reflected in both a reduction in the cost of mortgages and an improvement in the availability of mortgages, we are not expecting a sustainable recovery in the housing market.  

Following the review of the carrying value of land in the Group's balance sheet for the 30 June 2008 year end financial statements, the board has initiated another review in consequence of the further significant deterioration in the housing market. Based on prudent assumptions, it anticipates that a writedown of the order of £50 million is required, which will be accounted for in the half year results to 31 December 2008. Further details will be provided when announcing the half year results.  

In light of all the factors above, the board is now taking a more cautious view of prospects for the remainder of this financial year, and the next year.  

Chief Executive's Comment

Greg Fitzgerald, Chief Executive, commented:

'Although we are undoubtedly experiencing the most difficult trading conditions for a very long time, the board considers that the spread and depth of our business and operations across the construction and housebuilding sectors gives the Group significant resilience. We are focused on tight cash control and ensuring we are ready to resume our growth plans once conditions stabilise.'

BOARD AND MANAGEMENT 

As previously announced, Chris Bucknall, Deputy Chairman and Senior Independent Director steps down from the board at the end of the annual general meeting. Amanda Burton will take over the role of Senior Independent Director, and will chair the remuneration committee.

The board regrets to announce that Jonathan Dawson, a non executive director since January 2004, has decided to retire from the board for personal reasons with effect from 31 December 2008. He has consistently provided the board with sound advice and chaired the audit committee during a period of considerable change in the Group.  

The board is delighted to announce that Andrew Jenner has been appointed a non executive director and will join the board on 1 January 2009. Andrew is Finance Director of Serco Group plc, the international support services company. He will join the remuneration and nomination committees and will chair the audit committee. There are no details to disclose under paragraph 9.6.13 of the Listing Rules in respect of Mr Jenner.

Ken Gillespie, currently a member of the Group's executive board and Managing Director of the Infrastructure division, will assume responsibility for all of the Group's construction activities from 1 January 2009, reporting directly to the Chief Executive, Greg Fitzgerald.  

Further enquiries to:

Greg Fitzgerald, Chief Executive       Galliford Try                            01895 855219

Frank Nelson, Finance Director         Galliford Try                            01895 855226

Ben Woodford / Dan de Belder          Bell Pottinger Financial        020 7861 3232

 

END

 

 

AGMUUGUWGUPRUQM