Final Results

RNS Number : 4131M

Galliford Try PLC

18 September 2012

 



07:00 AM TUESDAY 18 SEPTEMBER 2012

GALLIFORD TRY PLC

ANNUAL RESULTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2012

Highlights

Financial	2012	2011	Increase
·      Group revenue¹	£1,504m	£1,284m	17%
·       Profit before tax	£63.1m	£35.1m ²	80%
·      Earnings per share	60.9p	32.2p ²	89%
·       Dividend per share	30.0p	16.0p	88%

Group

·      Exceeded objectives of three year transformational plan, delivered substantial increase in profits and return on capital

·      2012 PBT increased by 80%, EPS by 89%

·      Strong balance sheet with year end net cash of £23 million, providing platform for future growth

·      Disciplined growth strategy supporting progressive and sustainable dividend policy

Housebuilding

·      40% increase in completions (inclusive of joint ventures) to 3,039 (2011: 2,170)

·      11.8% housebuilding margin shows strong progress (2011: 8.1%)

·      Following a resilient summer performance 7% increase in sales currently reserved, contracted or completed at £350 million (2011: £328 million)

·      81% of 10,500 plot landbank now acquired at current market values (2011: 72% of 10,400)

·      100% of land required for 2013 financial year in place, 90% of land secured for 2014

Construction

·      Despite difficult markets 2.0% construction margin remained robust (2011: 2.4%)

·      Year end construction cash balance of £146 million in line with forecast (2011: £217 million)

·      Stable current order book at £1.65 billion (2011: £1.7 billion) with continued focus on contracts with acceptable returns

·      86% of current year's planned revenue secured (2011: 90%)

Greg Fitzgerald, Chief Executive, commented:

"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 housebuilding plan, delivering a substantial increase in profits and return on capital.  In addition, we have maintained a high quality construction order book.  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."

Enquiries:

Galliford Try                                         Greg Fitzgerald, Chief Executive                       01895 855001

                                                               Frank Nelson, Finance Director                      

Tulchan Communications               Christian Cowley                                                  02073 534200

                                                               James Macey White

¹  Group revenue excludes share of joint ventures' revenue of £72 million (2011: £52 million).  Revenue where stated includes share of joint ventures.

²   Stated before a net exceptional credit in 2011 of £6.6 million.

Galliford Try will hold its results presentation at 9:30 am on Tuesday, 18 September 2012 at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS.  A live audio webcast will be available at www.gallifordtry.co.uk/investors.  A recorded interview with Greg Fitzgerald, Chief Executive, regarding the full year results is available on the company website: www.gallifordtry.co.uk.

OVERVIEW

We have exceeded the objectives of our three year transformational housebuilding plan delivering a substantial increase in profits and return on capital.  In addition, and against a background of challenging economic conditions, we have maintained a quality construction order book and benefited from a number of good contract wins. Our current strategy is to enhance the quality of our earnings and improve cash flow, enabling us to pursue our progressive and sustainable dividend distribution policy.

In September 2009, Galliford Try carried out a rights issue to raise £125.6 million setting the ambitious objective of doubling the size of our housebuilding division by 2012 and targeting a significant increase in profits and return on capital. The plan was to create a business that could deliver around 3,000 units a year with a deliberate focus on the south of England where the market is more robust.  This step change in our business required us to make a substantial investment in people and infrastructure to ensure that we could invest the proceeds of the rights issue in attractive sites with attractive returns.

We have achieved everything we set out to do and more. In the financial year, we delivered 3,039 completions and the Group achieved a profit before tax of £63.1 million, ahead of the £60 million we targeted in 2009, accompanied by a significant improvement in return on capital.

STRATEGY

Housebuilding - Disciplined growth strategy with focus on improving margins

As outlined at our half year results in February 2012, the Board intends to pursue a disciplined growth strategy for housebuilding that will deliver further growth, focusing on the more robust southern market, where we currently have around 80% of our business.  This will result in a higher average selling price.  We will fully leverage the Linden Homes brand, which is recognised for high-quality and individually designed developments.  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.  We aim to increase housebuilding margins by maximising the efficiency and effectiveness of our operations.  We are aiming to add an incremental three percentage points to our housebuilding operating margin by the end of 2015. This will be mainly realised on new sites with the margin benefit coming through more strongly in the financial year 2014/15 and beyond.

Construction - Focus on cash and winning work with appropriate returns

In construction, we expected conditions to be difficult in the current economic climate and this has proved to be the case. Our strategy continues to be based on winning work in markets where there are barriers to entry and we are able to add value for our clients, thus earning an appropriate margin. In the context of difficult markets, construction had an encouraging year and met our expectations, with operating margins impacted less than anticipated and delivering a strong cash performance.  We have won a number of important contracts cementing our position as a key infrastructure supplier to the UK utility sectors.  We believe that we are well positioned to resume growth when markets allow.

DIVIDEND

Our disciplined growth strategy for the Group should ensure that the Group becomes more cash generative over time.  To reflect this and the revised capital needs of the Group, the Board announced an enhanced progressive and sustainable dividend policy at the half year results in February 2012.  Subject to approval by shareholders of the final dividend to be paid in November 2012, this represents an increase of 88% and cover of 2x (2011: 2.5x).

OUTLOOK

Both housebuilding and construction are in strong positions with clear strategies going forward and are well placed to benefit from opportunities in their respective markets.  At the year end, housebuilding had secured all the land it will need for 2013 and around 87% of its 2014 requirements.  The business also had a good level of sales in hand, at £273 million.

Construction enjoys good levels of visibility having secured 82% of its projected workload for 2013 whilst maintaining its current order book at £1.65 billion.  2013 will be one of the peak years for work in the water sector under the AMP5 frameworks, which will help offset lower activity in other construction markets.

We welcome the Government's initiatives to stimulate housebuilding and the construction market.

Overall, we are pleased with the Group's position as we enter the next financial year with the Board confident about the opportunity to deliver further growth and create further shareholder value.

FINANCIAL REVIEW

For the year to 30 June 2012, Group revenue was up 17% to £1,504 million (2011: £1,284 million). Revenue including joint ventures rose 18% to £1,576 million (2011: £1,336 million).  Profit from operations, which is stated before finance costs, share of joint ventures' interest and tax, exceptional items and tax, was 77% higher at £77.1 million (2011: £43.6 million).

Overall profit before tax was £63.1 million (2011: pre-exceptional: £35.1 million; post-exceptional: £41.7 million).

Exceptional items:  There were no exceptional items during the year.  Profit before tax in the year to 30 June 2011 included a £6.6 million exceptional credit, after a Competition Appeal Tribunal judgement reduced a fine imposed by the Office of Fair Trading in 2009 for cover pricing between 2001 and 2004.

Taxation:  The effective tax rate was 21.9% (2011: pre-exceptional: 25.4%; post-exceptional: 21.3%). The reduced tax rate is due to utilising tax losses in a former joint venture, of which we acquired full ownership. We believe this rate is sustainable into the medium term.

Earnings and dividend:  Earnings per share were 60.9 pence (2011: pre-exceptional: 32.2 pence; post-exceptional: 40.3 pence). 

The directors are recommending a final dividend of 21 pence per share in line with the enhanced dividend policy announced at the half year results in February 2012 which, subject to approval at the Annual General Meeting, will be paid on 16 November 2012 to shareholders on the register at 5 October 2012. 

With the interim dividend of 9 pence per share paid in April, this will result in a total dividend of 30 pence per share, an increase of 88% over the previous year.

Cash and equity:  Throughout the financial year the Group maintained its focus on cash management, with a net cash balance at the year end of £23 million (2011: £36 million).  Total equity increased by £23 million to £478 million.  Group return on net assets, being profit before tax, finance costs, and amortisation compared to average net assets, increased to 15.5% from 8.6%.  Construction held significant cash balances throughout the year, and had a cash balance of £146 million at 30 June 2012 (2011: £217 million). Housebuilding requires net investment and the year-end investment in housebuilding developments and joint ventures was £795 million (2011: £678 million) with net capital employed of £545 million (2011: £571 million). 

Pension and share scheme costs:  The total cost of pensions charged to the income statement in the financial year was £14.3 million (2011: £10.4 million).  Under IAS19 'Employee Benefits' there is a small deficit in the Group's final salary pension schemes as at the financial year end. This was calculated at 30 June 2012 by an independent qualified actuary. The gross deficit recognised on the balance sheet is £0.2 million (2011: surplus £3.2 million). The change in the year mainly reflects market movements in bond yields used to discount future liabilities.

Amounts charged to the income statement in respect of employee share schemes during the year amounted to £8.5 million. As noted in last year's report, the results for this year include a £5.1 million charge in respect of the March 2012 vesting of awards under the Company's Long Term Incentive Plan.

OPERATIONAL REVIEW

Housebuilding

	2012	2011
Revenue (£m)	636.7	388.5
Profit from operations (£m)	75.1	31.6
Operating profit margin (%)	11.8	8.1
Completions	3,039	2,170

The culmination of our three-year expansion plan led to a significant improvement in housebuilding's financial performance. Revenue, including land sales of £24 million, increased by 64%, while gross and operating profit margins including land sales were both materially higher at 17.6% and 11.8% respectively.  Return on net assets of 15.1% (2011: 6.2%) is upper quartile performance.  We finished the year with sales in hand of £273 million (2011: £247 million).

Market conditions remained mixed during the year. Whilst trading in much of the country was challenging, the housing market in the South East was robust.  79% of our completions were in the South and 75% of our landbank is in the South or 83% as measured by gross development value. Conditions in the South West and the Midlands were generally stable.  In the North of England, where we have limited exposure, we benefited from the decision to reposition our northern business, focusing on areas with greater demand such as York and Leeds.  Access to mortgage finance remains an issue for many buyers nationally and this continued to weigh on the housing market during the year. We have worked with lenders to provide affordable borrowing to customers and welcomed the government's new housing strategy, which makes 95% mortgages available to first-time buyers through high-street lenders.  The problems that first-time buyers have had obtaining mortgages means that housebuilders have been targeting purchasers who already have equity - typically second or third-time buyers who are looking for a three or four bedroom home. Approximately 70% of our sales are to these buyers, compared with the industry average of 60%.

Completions rose by 40% to 3,039 units (2011: 2,170). Excluding the proportionate share of our joint venture partners, completions increased from 1,988 to 2,788. Private housing completions accounted for 2,272 of the total (2011: 1,446), with an average selling price of £250,000, compared with £227,000 in the previous year. Affordable housing completions totalled 767, up from 724, with an average selling price of £104,000 (2011: £106,000).

The number of active selling sites increased from 78 to 87, with sales per site per week of 0.50, compared with 0.40 last year. Cancellation rates remained broadly unchanged at 18%.  The current number of sales outlets is 84 with sales per week per site since 1 July 2012 averaging 0.42 compared with 0.43 last year.

At 30 June 2012, our landbank stood at 10,500 plots. Of this, 81% was land acquired after July 2008, compared with 70% at June 2011.  The gross development value of our landbank increased 11% from £2.19 billion in 2011 to £2.43 billion.  The proportion of 'legacy' land, on which profit margins and return on capital are lower, has therefore continued to decline. Our strategic land holdings stood at 1,285 acres at the financial year end, up from 1,200 acres a year earlier.

An important part of delivering affordable housing is creating balanced communities. Developments increasingly include a mix of housing for sale, intermediate housing and housing on affordable rents.  Affordable housing is a vital sector for Galliford Try, representing around one quarter of the homes we develop. During 2011/12, we cemented our position as a leading player in the market by securing direct funding totalling £17 million under the Government's 2011-2015 Affordable Homes Programme. This was one of the largest awards made to date to a private developer.  We are one of only six organisations on all three regional clusters of the Delivery Partner Panel. This is the route by which the Homes and Communities Agency, Government Departments and many local authorities invite tenders to buy public land. Only organisations on the relevant cluster are allowed to bid. We continued to be very successful with our bids, winning around one in three of those we took to the final stage. Our developments on those sites have a value of more than £225 million and will see us delivering around 1,250 homes.

Over the next few years our objective is to continue to deliver revenue growth and improve margins by maximising the efficiency and effectiveness of our operations.

Construction

Total Construction	2012	2011
Revenue (£m)	924.8	936.9
Profit from operations (£m)	18.9	22.2
Operating profit margin (%)	2.0	2.4
Order book (£bn)	1.65	1.75

Construction's performance held up well in difficult markets. We delivered a robust margin of 2.0% (2011: 2.4%) and achieved cash balances of £146 million, representing 16% of revenue. 

Our strong position in the regulated sector continues to stand us in good stead. Regulated organisations such as water companies have capital expenditure cycles which commit them to levels of work over three to five years. This work - which represents more than 40% of our business - continues to come through as planned.  As expected public sector construction in England has declined. However, while projects have been cut, we have also seen some reassessed and reapproved. In Scotland we are part of the consortium constructing the Forth Replacement Crossing major infrastructure project.  In the private sector we are seeing some activity in leisure and tourism, including a number of hotel projects.

Our long-term strategic aim is to grow the business and we have therefore positioned ourselves to take advantage of an economic and market recovery. In the current conditions, and whilst markets remain difficult, we continue to focus on margins and cash, accepting lower revenues as we turn away work with unrealistic margins or risk profiles.  At the year end, our order book was £1.65 billion, compared with £1.75 billion at 30 June 2011.  Of this, 44% was in the public sector, 42% was in regulated industries and 14% was in the private sector. Importantly, 57% of our order book is in frameworks and 60% has been secured on a basis other than price competition, showing the success of our strategy.

Building

	2012	2011
Revenue (£m)	363.5	436.5
Profit from operations (£m)	8.4	10.4
Operating profit margin (%)	2.3	2.4
Order book (£m)	471	673

Building markets have become significantly more competitive but we have taken advantage of our operations in the South of England and in Scotland, where markets have remained more resilient.  We also secured some notable projects across the Midlands.

In Scotland, we continue to work on significant public sector projects such as the £57 million Orkney Schools framework and the £300 million ten-year framework for the Scottish South East hub. In London, we won two new contracts in the commercial building sector. Green Property (UK) selected us for a £27 million project to create 100,000 sq ft of category A office space. In addition, Royal London Mutual Insurance appointed us to refurbish and extend 6,500 sq m of office space, in a contract worth £8.9 million.

We handed over our Olympic projects, having played a major role in preparing London for a successful Games. Our involvement included: demolition, remediation and associated civil works on the northern area of the Olympic development zone; foundations and groundworks for the Basketball Arena; constructing 14 accommodation blocks, three landscaped podiums and three car parks in the athletes' village; a design and build project at the Lee Valley White Water centre, involving the construction of two canoe courses and a facilities building; and enhancing existing facilities at the Eton Dorney Rowing Centre, to deliver a world-class 2,200m eight lane rowing course. We also have a 39-year relationship with the All England Lawn Tennis and Croquet Club, which provided the venue for the Olympic tennis at Wimbledon.

In the Midlands, Genting UK selected us for a £91 million contract to develop 'Resorts World at the NEC', a major new leisure and entertainment complex in Birmingham.  We were also engaged by Aviva Investors and Citycourt Estates to construct the new £13.5 million Warwickshire Shopping Park, at Binley near Coventry.

Partnerships

	2012	2011
Revenue (£m)	90.4	123.9
Profit from operations (£m)	1.7	1.9
Operating profit margin (%)	1.9	1.5
Order book (£m)	368	156

Galliford Try is well placed in the affordable housing contracting market. We have strong positions in both the South East and North East, and are developing our business in the South West, where we opened an office in 2011. We are also looking at opportunities in the Midlands and North West. Our place on the Homes and Communities Agency's Delivery Partner Panel enables us to take advantage of public land releases.

We reached financial close on a £27 million development in White City for West London LIFT. The development will feature 170 mixed tenure apartments, a new health and social care centre, and community facilities. We also won contracts to build three major developments for housing associations. These were a £8.1 million 60-home mixed-tenure project in the Aylesbury Estate area of South London; the £10.4 million St Edmunds Terrace development in North London for The Guinness Partnership; and the £10.7 million Three Colts Lane scheme in Tower Hamlets.  In addition, we reached financial close on the £347 million Gateshead regeneration programme announced in April 2011. Our consortium with Gateshead Council and housing association Home Group has now formed a local asset-backed vehicle to build 2,400 homes and associated community facilities, for both private sale and affordable housing.

Infrastructure

	2012	2011
Revenue (£m)	470.9	376.5
Profit from operations (£m)	8.8	9.9
Operating profit margin (%)	1.9	2.6
Order book (£m)	811	921

We are a leading contractor in the water sector and our revenues benefited from the second year of the sector's five-year asset management programme.  Work secured included contracts valued at £71 million, in joint venture with Imtech Process, to construct a water treatment works and two advanced anaerobic digestion plants for Anglian Water; a £17 million contract for Scottish Water, in joint venture with Black & Veatch, for a storm water scheme; and two contracts to upgrade the Blackburn Meadows waste water treatment plant in Sheffield, for Yorkshire Water. The larger contract is worth £31 million and the second scheme is worth £18 million.  In addition we were awarded a £15 million joint venture contract with Yorkshire Water to upgrade Woodhouse Mill sewage treatment works in Sheffield.   In joint venture we reached financial close on the £180 million contract with United Utilities, to upgrade and extend Liverpool Waste Water Treatment Works, as announced as preferred bidder in May 2011.

We also won a number of other important infrastructure contracts. These included an £80 million contract to construct the A380 South Devon Link Road for Devon County Council and Torbay Council, with construction to complete by the end of 2015. In addition, Reading Borough Council awarded us an £8 million contract to assist with redeveloping the town's station and the surrounding area.

PPP Investments

	2012	2011
Revenue (£m)	13.8	9.6
Profit from operations (£m)	(1.1)	(1.0)
Directors Valuation (£m)	1.3	4.4

The directors' valuation of our PPP portfolio at 30 June 2012 and on a discounted cash flow basis, was £1.3 million, compared to a valued invested of £0.6 million (2011: valuation £4.4 million; value invested £1.9 million).

During the year, we sold our remaining equity interest in the St Andrews Community Hospital project.  In Scotland, we have a 49% investment in the South East hub, which we won last year, and are now progressing more than £150 million of 'Design and Build' and 'Design and Build Finance Maintain' projects under this framework.  We are also preferred bidder with a consortium bidding for the £500 million South West hub, a framework to provide community facilities across the South West of Scotland.  Our joint venture with Interserve is one of three bidders for a £50 million college in Inverness.  We are also in joint venture with Balfour Beatty and Carillion, as one of four bidders for the £415 million M8/M73/M74 Motorway Improvements project.  In England we continue to bid on the 'Excellent Homes for All' project in Kent, where we are one of two bidders.

HEALTH, SAFETY AND ENVIRONMENT

Health and safety is of paramount importance to Galliford Try and the Group is committed to a policy of effectively managing and improving all aspects of health, safety and welfare.  The total number of reportable accidents improved during the year bringing the Group accident frequency rate down from 0.19 to 0.18. Our behavioural safety programme, Challenging Beliefs, Affecting Behaviour, is a vital part of our health and safety approach.  In March 2012, we launched a dynamic new brand for the programme to ensure behavioural safety has the highest possible profile throughout the business, in addition sharing it with our subcontractors and clients.  More than 4,000 people have attended at least one of the safety leadership workshops.

We provided our fourth annual submission to the Carbon Disclosure Project. The submission, verified by TÜV NORD, showed our emissions intensity measure, per £100,000 revenue, reduced from 3.63 to 3.41 during the year.  We have continued to deliver further performance improvements and made significant progress against our carbon strategy by achieving an 11% reduction from our 2008 baseline per £100,000 turnover.

BOARD

Following the retirement of the current finance director, Frank Nelson on 30 September 2012, Graham Prothero will join the board of directors as finance director later in the financial year.  The Board is delighted with Graham's appointment.  Graham has considerable financial experience in the property and housebuilding sectors and accordingly will be a valuable asset to the Group as we continue to further develop the business.  A further announcement concerning the date of Graham joining the Board will be made in due course.

The Board would also like to express its sincere thanks to Frank Nelson on his significant contribution to the Group over the last 25 years.

CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2012

		2012		2011
				Before exceptional items	Exceptional items	Total
	Notes	£m		£m	£m	£m
Continuing operations
Group revenue	2	1,504.1		1,284.2	-	1,284.2
Cost of sales		(1,320.7)		(1,149.7)	-	(1,149.7)
Gross profit		183.4		134.5	-	134.5
Administrative expenses		(115.8)		(98.2)	6.6	(91.6)
Share of post tax profits from joint ventures		3.7		0.5	-	0.5
Profit before finance costs		71.3		36.8	6.6	43.4
Profit from operations	2	77.1		43.6	6.6	50.2
Share of joint ventures' interest and tax		(4.8)		(5.8)	-	(5.8)
Amortisation of intangibles		(1.0)		(1.0)	-	(1.0)
Profit before finance costs		71.3		36.8	6.6	43.4
Finance income	4	2.6		5.3	-	5.3
Finance costs	4	(10.8)		(7.0)	-	(7.0)
Profit before income tax		63.1		35.1	6.6	41.7
Income tax expense	5	(13.8)		(8.9)	-	(8.9)
Profit for the year		49.3		26.2	6.6	32.8
Earnings per share	7
- Basic		60.9p		32.2p		40.3p
- Diluted		59.7p		31.5p		39.4p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2012
	Notes	2012 £m	2011 £m
Profit for the year		49.3	32.8
Other comprehensive (expense)/income:
Actuarial gains and (losses) recognised on retirement benefit obligations		(10.7)	12.7
Movement in fair value of derivative financial instruments		(1.6)	-
Deferred tax on items recognised in equity	5	3.7	(3.3)
Other comprehensive (expense) / income for the year net of tax		(8.6)	9.4
Total comprehensive income for the year		40.7	42.2

CONSOLIDATED BALANCE SHEET 

at 30 June 2012

	Notes	2012 £m	2011 £m
Assets
Non-current assets
Intangible assets		11.8	9.0
Goodwill	8	115.0	115.0
Property, plant and equipment		10.0	8.4
Investments in joint ventures		5.4	1.9
Financial assets
- Available for sale financial assets		26.5	22.2
Trade and other receivables		35.9	44.8
Retirement benefit asset	10	-	3.2
Deferred income tax assets		7.7	5.5
Total non-current assets		212.3	210.0
Current assets
Inventories		0.4	0.2
Developments		719.8	615.6
Trade and other receivables		281.6	259.9
Cash and cash equivalents	9	95.8	47.8
Total current assets		1,097.6	923.5
Total assets		1,309.9	1,133.5
Liabilities
Current liabilities
Financial liabilities
- Borrowings	9	(73.3)	(11.5)
- Derivative financial liabilities		-	(0.8)
Trade and other payables		(660.6)	(624.5)
Current income tax liabilities		(8.8)	(6.8)
Provisions for other liabilities and charges		(0.7)	(2.5)
Total current liabilities		(743.4)	(646.1)
Net current assets		354.2	277.4
Non-current liabilities
Financial liabilities
- Derivative financial liabilities		(1.6)	-
Deferred income tax liabilities		(0.2)	-
Other non-current liabilities		(83.0)	(29.2)
Retirement benefit obligation	10	(0.2)	-
Provisions for other liabilities and charges		(3.1)	(3.1)
Total non-current liabilities		(88.1)	(32.3)
Total liabilities		(831.5)	(678.4)
Net assets		478.4	455.1
Equity
Ordinary shares		40.9	40.9
Share premium		190.8	190.8
Other reserves		5.3	5.3
Retained earnings		241.4	218.1
Total equity attributable to owners of the Company		478.4	455.1

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2012

	Notes	Ordinary shares £m	Share premium £m	Other reserves £m	Retained earnings £m	Total shareholders' equity £m
At 1 July 2010		40.9	190.8	5.3	186.2	423.2
Profit for the year		-	-	-	32.8	32.8
Other comprehensive income		-	-	-	9.4	9.4
Transactions with owners:
Dividends	6	-	-	-	(11.2)	(11.2)
Share based payments		-	-	-	2.5	2.5
Purchase of own shares		-	-	-	(1.6)	(1.6)
At 1 July 2011		40.9	190.8	5.3	218.1	455.1
Profit for the year		-	-	-	49.3	49.3
Other comprehensive (expense)		-	-	-	(8.6)	(8.6)
Transactions with owners:
Dividends	6	-	-	-	(16.8)	(16.8)
Share based payments		-	-	-	8.5	8.5
Purchase of own shares		-	-	-	(9.1)	(9.1)
Issues of shares		-	-	-	-	-
At 30 June 2012		40.9	190.8	5.3	241.4	478.4

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 30 June 2012

	Notes	2012 £m	2011 £m
Cash flows from operating activities
Continuing operations
Profit before finance costs		71.3	43.4
Adjustments for:
Depreciation and amortisation		3.5	3.3
Profit on sale of property, plant and equipment		(0.1)	-
Profit on sale of investments in joint ventures and non-current assets held for sale		(2.6)	(1.1)
Profit on sale of available for sale financial assets		(0.1)	(0.1)
Share based payments		8.5	2.5
Share of post tax profits from joint ventures		(3.7)	(0.5)
Movement on provisions		(1.8)	(3.6)
Other non-cash movements		(6.4)	(4.9)
Net cash generated from operations before pension deficit payments and changes in working capital		68.6	39.0
Deficit funding payments to pension schemes		(7.3)	(6.9)
Net cash generated from operations before changes in working capital		61.3	32.1
(Increase)/decrease in inventories		(0.2)	0.9
(Increase) in developments		(104.2)	(86.7)
(Increase) in trade and other receivables		(12.8)	(37.3)
Increase in payables		89.1	81.3
Net cash generated from/(used in) operations		33.2	(9.7)
Interest received		1.1	1.1
Interest paid *		(8.0)	(8.6)
Income tax paid		(10.1)	(5.6)
Net cash generated from/(used in) operating activities		16.2	(22.8)
Cash flows from investing activities
Dividends received from joint ventures		0.3	0.3
Acquisition of investments in joint ventures		(0.1)	(0.1)
Acquisition of available for sale financial assets		-	(0.3)
Proceeds from investments in joint ventures and non-current assets held for sale		2.6	2.1
Proceeds from available for sale financial assets		0.9	0.5
Purchase of intangible assets		(3.8)	(3.1)
Acquisition of property, plant and equipment		(4.5)	(3.3)
Proceeds from sale of property, plant and equipment		0.5	0.2
Net cash (used in) investing activities		(4.1)	(3.7)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		-	-
Purchase of own shares		(9.1)	(1.6)
Increase in/ (repayment of) borrowings		72.7	(90.4)
Dividends paid to Company shareholders	6	(16.8)	(11.2)
Net cash generated from/(used in) financing activities		46.8	(103.2)
Net increase/ (decrease) in cash and cash equivalents		58.9	(129.8)
Cash and cash equivalents at 1 July		36.9	166.7
Cash and cash equivalents at 30 June	9	95.8	36.9

For the purpose of the cash flow statement, cash and cash equivalents are reported net of bank overdrafts.  Bank overdrafts are excluded from the definition of cash and cash equivalents in the balance sheet.

            * Interest paid in 2011 included the 2011 bank facility arrangement fee of £4.1 million

NOTES TO THE ANNUAL RESULTS STATEMENT

1   Basis of preparation

This consolidated financial information has been prepared in accordance with the Listing Rules of the Financial Services Authority and uses EU adopted International Accounting Standards (IASs), International Financial Reporting Standards (IFRSs), IFRIC Interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies adopted are consistent with those described in the Annual Report and Financial Statements 2011 which have not changed significantly. The financial information set out in this document does not constitute statutory accounts for the years ended 30 June 2011 or 30 June 2012 but is derived from the Annual Report and Financial Statements for 2012. The Annual Report and Financial Statements for 2011 have been delivered to the Registrar of Companies and the Annual Report and Financial Statements for 2012 will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts and have given an unqualified report which does not contain a statement under Chapter 3 of Part 16 of the Companies Act 2006.

Full financial statements that comply with IFRS are included in the Annual Report and Financial Statements for 2012 which will be circulated to shareholders in October 2012 and will be made available at www.gallifordtry.co.uk.

2   Segment reporting

Segment reporting is presented in the consolidated financial information in respect of the Group's business segments, which are the primary basis of segment reporting. The business segment reporting reflects the Group's management and internal reporting structure. Segment results include items directly attributable to the segment as well as those that can be allocated on a reasonable basis. As the Group has no material activities outside the UK, segment reporting is not required by geographical region.

The chief operating decision-makers ("CODM") have been identified as the chief executive and the Group finance director. The CODM review the Group's internal reporting in order to assess performance and allocate resources.  Management has determined the operating segments based on these reports as housebuilding, building, partnerships, infrastructure and PPP investments.

The CODM assess the performance of the operating segments based on a measure of adjusted earnings before finance costs, amortisation, exceptional items and taxation.  This measurement basis excludes the effects of non-recurring expenditure from the operating segments, such as restructuring costs and impairments when the impairment is the result of an isolated, non-recurring event.  Interest income and expenditure are included in the result for each operating segment that is reviewed by the CODM.  Other information provided to them is measured in a manner consistent with that in the financial statements.

Primary reporting format - business segments

						Construction
				House-building		Building	Partner-ships		Infrastructure	Total	PPP Investments	Central costs	Total
				£m		£m	£m		£m	£m	£m	£m	£m
Year ended 30 June 2012
Group revenue and share of joint ventures' revenue				636.7		363.5	90.4		470.9	924.8	13.8	1.0	1,576.3
Share of joint ventures' revenue				(62.8)		(0.1)	-		(9.3)	(9.4)	-	-	(72.2)
Group revenue				573.9		363.4	90.4		461.6	915.4	13.8	1.0	1,504.1
Segment result:
Profit/(loss) from operations before share of joint ventures' profit				66.8		8.2	1.7		8.8	18.7	(1.1)	(15.8)	68.6
Share of joint ventures' profit				8.3		0.2	-		-	0.2	-	-	8.5
Profit/(loss) from operations *				75.1		8.4	1.7		8.8	18.9	(1.1)	(15.8)	77.1
Share of joint ventures' interest and tax				(4.7)		(0.1)	-		-	(0.1)	-	-	(4.8)
Profit/(loss) before finance costs, amortisation and taxation				70.4		8.3	1.7		8.8	18.8	(1.1)	(15.8)	72.3
Net finance (costs)/income				(37.5)		0.7	0.1		0.5	1.3	(0.1)	28.1	(8.2)
Profit before amortisation and taxation				32.9		9.0	1.8		9.3	20.1	(1.2)	12.3	64.1
Amortisation of intangibles													(1.0)
Profit before taxation													63.1
Income tax expense													(13.8)
Profit for the year													49.3
	Year ended 30 June 2011
	Group revenue and share of joint ventures' revenue				388.5	436.5		123.9	376.5	936.9	9.6	0.8	1,335.8
	Share of joint ventures' revenue				(39.0)	(0.1)		-	(11.2)	(11.3)	(1.3)	-	(51.6)
	Group revenue				349.5	436.4		123.9	365.3	925.6	8.3	0.8	1,284.2
	Segment result:
	Profit/(loss) from operations before share of joint ventures' profit				26.4	10.4		1.9	9.9	22.2	(2.1)	(9.2)	37.3
	Share of joint ventures' profit				5.2	-		-	-	-	1.1	-	6.3
	Profit/(loss) from operations *				31.6	10.4		1.9	9.9	22.2	(1.0)	(9.2)	43.6
	Share of joint ventures' interest and tax				(4.6)	(0.1)		-	-	(0.1)	(1.1)	-	(5.8)
	Profit/(loss) before finance costs, amortisation and exceptional items and taxation				27.0	10.3		1.9	9.9	22.1	(2.1)	(9.2)	37.8
	Net finance (costs)/ income				(12.0)	1.0		(0.2)	(0.5)	0.3	-	10.0	(1.7)
	Profit/(loss) before amortisation, exceptional items and taxation				15.0	11.3		1.7	9.4	22.4	(2.1)	0.8	36.1
	Amortisation of intangibles												(1.0)
	Profit before exceptional items and taxation												35.1
	Exceptional items												6.6
	Income tax expense												(8.9)
	Profit for the year												32.8

 * Profit from operations is stated before finance costs, amortisation, share of joint ventures' interest and tax, exceptional items and taxation.

						Construction
			House-building			Building	Partner- ships	Infrastructure	Total	PPP Investments	Central costs	Total
			£m			£m	£m	£m	£m	£m	£m	£m
Year ended 30 June 2012
Assets
Net cash/(debt)				(469.5)	88.1		15.0	42.4	145.5	0.6	345.9	22.5
Other assets												1,206.4
Borrowings												73.3
Deferred income tax assets												7.7
Total assets												1,309.9
Year ended 30 June 2011
Assets
Net cash/(debt)				(522.6)	138.4		24.9	53.4	216.7	(0.9)	343.1	36.3
Other assets												1,080.2
Borrowings												11.5
Deferred income tax assets												5.5
Total assets												1,133.5

3      Exceptional items

On 24 March 2011 a Competition Appeal Tribunal judgement reduced the quantum of the fine imposed by the Office of Fair Trading in 2009 for cover pricing between 2001 and 2004 from £8.3 million to £1.4 million. The net £6.6 million reduction, after costs, was reflected in the Group's 2011 results as an exceptional item credited to profit before tax. The exceptional credit was non taxable as it reversed the non deductible treatment of the exceptional loss in 2010. 

4   Net finance costs

		2012	2011
		£m	£m
Interest receivable on bank deposits		0.2	0.6
Interest receivable from joint ventures		-	1.7
Unwind of discount on shared equity receivables		1.6	1.3
Fair value profit on financing activities  - interest rate swaps		-	1.3
Other		0.8	0.4
Finance income		2.6	5.3
Interest payable on borrowings		(8.4)	(5.0)
Unwind of discounted payables		(1.9)	(1.3)
Net finance cost on retirement benefit obligations		(0.1)	(0.5)
Other		(0.4)	(0.2)
Finance costs		(10.8)	(7.0)
Net finance costs		(8.2)	(1.7)

5   Income tax expense

	2012				2011
Analysis of expense in year			Before exceptional items	Exceptional items	Total
	£m		£m	£m	£m
Current year's income tax
- Current tax	15.9		8.0	-	8.0
- Deferred tax	(0.8)		1.8	-	1.8
Adjustments in respect of prior years
- Current tax	(3.8)		(1.5)	-	(1.5)
- Deferred tax	2.5		0.6	-	0.6
Income tax expense	13.8		8.9	-	8.9
Tax on items recognised in other comprehensive income
Deferred tax (credit)/expense on retirement benefit obligations	(2.5)		3.3	-	3.3
Deferred tax (credit) for share based payments	(1.2)		-	-	-
Total deferred tax	(3.7)		3.3	-	3.3
Total taxation	10.1		12.2	-	12.2

The total income tax expense for the year of £13.8 million (2011: £8.9 million) is lower (2011: lower) than the year end standard rate of corporation tax in the UK of 24% (2011: 26%). The differences are explained below:

	2012				2011
			Before exceptional items	Exceptional items	Total
	£m		£m	£m	£m
Profit before income tax	63.1		35.1	6.6	41.7
Profit before income tax multiplied by the year end standard rate in the UK of 24% (2011: 26%)	15.1		9.1	1.7	10.8
Effects of:
Expenses not deductable for tax purposes	0.7		0.3	-	0.3
Non taxable income	(1.7)		(0.1)	(1.7)	(1.8)
Change in rate of current income tax	1.0		0.5	-	0.5
Adjustments in respect of prior years	(1.3)		(0.9)	-	(0.9)
Income tax expense	13.8		8.9	-	8.9

The standard rate of corporation tax in the UK changed from 28% to 26% with effect from 1 April 2011. Accordingly, the Group's profits for the accounting period to 30 June 2011 were taxed at an effective rate of 27.5%.  The standard rate of corporation tax in the UK changed from 26% to 24% with effect from 1 April 2012.  Accordingly, the Group's profits for the accounting period to 30 June 2012 are taxed at an effective rate of 25.5% and will be taxed at 24% in the future.

In addition to the changes in rates of corporation tax disclosed above a number of further changes to the UK corporation tax system were announced in the March 2012 UK Budget Statement. Legislation to reduce the main rate of corporation tax from 24% to 23% from 1 April 2013 was included in the Finance Act 2012. A further reduction to the main rate is proposed to reduce the rate by 1% to 22% by 1 April 2014. Neither of these further rate reductions had been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

The effect of the changes enacted in the Finance Act 2012 would be to reduce the deferred tax asset provided at the balance sheet date by £0.3 million. This £0.3 million decrease in the deferred tax asset would decrease profit by £0.3 million with no change to other comprehensive income.  This decrease in the deferred tax asset is due to the reduction in the corporation tax rate from 24% to 23% with effect from 1 April 2013.

The proposed reductions of the main rate of corporation tax by 1% per year to 22% by 1 April 2014 are expected to be enacted separately each year. The overall effect of the further change from 23% to 22%, if applied to the deferred tax balance at the balance sheet date, would be to reduce the deferred tax asset by a further £0.3 million in 2014.

6   Dividends

			2012		2011
			£m	Pence per share	£m	Pence per share
Previous year final			9.4	11.5	7.5	9.2
Current period interim			7.4	9.0	3.7	4.5
Dividend recognised in the year			16.8	20.5	11.2	13.7
The following dividends were declared by the Company in respect of each accounting period presented:
			2012		2011
			£m	Pence per share	£m	Pence per share
Interim			7.4	9.0	3.7	4.5
Final			17.2	21.0	9.4	11.5
Dividend relating to the year			24.6	30.0	13.1	16.0

The directors are proposing a final dividend in respect of the financial year ended 30 June 2012 of 21p per share, bringing the total dividend in respect of 2012 to 30p per share (2011: 16p). The final dividend will absorb approximately £17.2 million of equity. Subject to shareholder approval at the annual general meeting to be held on 9 November 2012, the dividend will be paid on 16 November 2012 to shareholders who are on the register of members on 5 October 2012.

7   Earnings per share

a)        Basic and diluted earning per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding those held by the Employee Share Trust, which are treated as cancelled.

Under normal circumstances, the average number of shares is diluted by reference to the average number of potential ordinary shares held under option in the period. The dilutive effect amounts to the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option price. Only shares that have met their cumulative performance criteria are included in the dilution calculation. The Group has two classes of potentially dilutive ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year and the contingently issuable shares under the Group's long term incentive plan. A loss per share cannot be reduced through dilution, hence this dilution is only applied where the Group has reported a profit.

The earnings and weighted average number of shares used in the calculations are set out below.

		2012				2011
	Earnings £m		Weighted average number  of shares	Per share amount  pence	Earnings £m		Weighted  average  number of shares	Per share amount pence
Basic EPS
Earnings attributable to ordinary shareholders	49.3		80,919,341	60.9	32.8		81,452,318	40.3
Effect of dilutive securities:
Options			1,643,319				1,797,030
Diluted EPS	49.3		82,562,660	59.7	32.8		83,249,348	39.4

(b)       Adjusted earnings per share

Adjusted earnings per share based on the earnings before exceptional income of £nil (2011: £6.6 million) for the year are set out below:

		2012				2011
	Earnings £m		Weighted average number  of shares	Per share amount  pence	Earnings £m		Weighted  average  number of shares	Per share amount pence
Basic EPS
Adjusted earnings attributable to ordinary shareholders	49.3		80,919,341	60.9	26.2		81,452,318	32.2
Effect of dilutive securities:
Options			1,643,319				1,797,030
Diluted EPS	49.3		82,562,660	59.7	26.2		83,249,348	31.5

8   Goodwill

Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to business segment. The goodwill is attributable to the following business segments:

	2012 £m	2011 £m
Housebuilding	52.2	52.2
Building	17.9	17.9
Partnerships	5.8	5.8
Infrastructure	37.2	37.2
PPP Investments	1.9	1.9
	115.0	115.0

Key assumptions

The recoverable amount of a CGU is determined based on value in use calculations. These calculations use pre tax cash flow projections based on future financial budgets approved by the board based on past performance and its expectation of market developments. The key assumptions within these budgets relate to revenue growth and the future profit margin achievable. Future budgeted revenue is based on management's knowledge of actual results from prior years, latest forecasts for the current year along with the existing secured work and management's future expectation of the level of work available within the market sector and expected changes in selling volumes and prices for completed houses. In establishing future profit margins, the margins currently being achieved are considered in conjunction with expected inflation rates in each cost category and to reflect the current market value of land being acquired.

Cash is monitored very closely on a daily, weekly and monthly basis for the purposes of managing both treasury and the business as a whole. Details of the Group's treasury management are included within the finance review of the Annual Report. The assumptions used are reviewed regularly and differences between forecast and actual results are closely monitored with variances being investigated fully. The knowledge gained from this past experience is used to ensure that the future assumptions used are consistent with past actual outcomes and are management's best estimate of the future cash flows of each business unit. 

Cash flows beyond the budgeted three year period are extrapolated using an estimated growth rate of 2% per annum within building, partnerships, infrastructure and housebuilding. The growth rate used is the Group's estimate of the average long term growth rate for the market sectors in which the CGU operates. No long term growth rate has been applied to PPP Investments. A pre tax discount rate of 13.3% (2011: 14.3%) in housebuilding, 10.5% (2011: 10.9%) in building, 10.4% (2011: 11.2%) in partnerships and 12.2% (2011: 13.2%) in infrastructure has been applied to the future cash flows.

Sensitivities

The fair value of the goodwill in all CGU's are substantially in excess of book value. Sensitivity analysis has been undertaken on each goodwill impairment review, by changing the discount rates, profit margins, growth rates and other variables applicable to each CGU. Taking into account current market conditions within the construction and housebuilding markets, none of these sensitivities, either individually or combined, resulted in the carrying value of these businesses being reduced to its recoverable amount.

The impairment review relating to Linden Homes goodwill, which is included within the housebuilding segment, could be impacted by the uncertainty over trading conditions within the housing market. The detailed sensitivity analysis indicates that an increase of more than 21% (2011: 26%) in the pre tax discount rate or a reduction of 16% (2011: 27%) in the forecast operating profits of the CGU would give rise to an impairment.  Similarly, an increase of more than 35% in the pre tax discount rate or a reduction of 45% in the forecast operating profits of the infrastructure CGU could give rise to an impairment.

9    Net cash

		2012 £m	2011 £m
Cash and cash equivalents excluding bank overdrafts		95.8	47.8
Bank overdrafts		-	(10.9)
Cash and cash equivalents for cash flow purposes		95.8	36.9
Current borrowings
Unsecured loan notes		(0.4)	(0.6)
Bank loans		(72.9)	-
Net cash		22.5	36.3

10   Retirement benefit obligations

The amounts recognised in the income statement are as follows:

	2012 £m	2011 £m
Gain on settlement (Enhanced Transfer Value)	-	(1.4)
Finance cost	8.4	8.8
Expected return on scheme assets	(8.3)	(8.3)
Net finance costs	0.1	0.5
Expense/(income) recognised in the income statement	0.1	(0.9)

The principal actuarial assumptions used to calculate the liabilities as at 30 June 2012 are as follows:

		2012	2011
Rate of increase in pensionable salaries		n/a	n/a
Rate of increase in pensions in payment		2.90%	3.55%
Discount rate		4.50%	5.50%
Retail price inflation		2.90%	3.65%
Consumer price inflation		1.90%	2.85%

During 2011 the Company undertook an Enhanced Transfer Value (ETV) exercise in relation to deferred members of the Galliford Try Final Salary Scheme. The impact of the exercise was recognised as a settlement gain of £1.4 million through the income statement with the amount recorded equal to the difference between the actual ETV payments made (£8.7 million) and the IAS 19 reserve discharge (£10.1 million). No special one-off contributions were made to the Scheme in relation to this exercise. As at 30 June 2012, none of the payments due were unpaid (2011: £3.8 million). The 30 June 2012 asset values therefore include a current liability of £nil (2011: £3.8 million) to reflect the payments due.

The amounts recognised in the balance sheet are as follows:

	2012 £m	2011 £m
Fair value of plan assets	173.5	158.4
Present value of defined benefit obligations	(173.7)	(155.2)
(Deficit)/surplus in scheme recognised as non-current (liability)/asset	(0.2)	3.2

11   Share based payments

The Company operates performance related share incentive plans for executives, details of which are set out in the directors' remuneration report. The Company also operates sharesave schemes. The total charge for the year relating to employee share based payment plans was £8.5 million (2011: £2.5 million), all of which related to equity settled share based payment transactions. After deferred tax, the total charge to the income statement was £8.0 million (2011: £2.0 million).

The performance period for the awards made under the Company's long term incentive plan on 10 March 2009 ended on 30 June 2011. This award was subject to a relative total shareholder return condition and two underpins based on cash performance and absolute share price performance. The Company achieved a 105% total shareholder return for the three year period placing it in first place against its peer group. It also significantly bettered its cash underpin targets for the period, however there was a 2% shortfall on the share price underpin target when measured on a three month average price basis, which was the assumed methodology when the IFRS 2 valuation for this award was carried out at the original grant date. Following consultation with major shareholders, the remuneration committee exercised its discretion to alternatively use a 30 day average for the assessment of the share price target as this is consistent with the averaging period used for assessment of the relative total shareholder return condition. The share price underpin target was significantly exceeded on this basis which means that the awards vested to the maximum level in March 2012.

The decision to use an alternative averaging period to that originally envisaged in the grant date valuation gave rise to an additional IFRS 2 fair value accounting charge of £5.1 million in the financial year to 30 June 2012, which has no incremental effect on either cash or the balance sheet.

12   Guarantees and contingent liabilities

Galliford Try plc has entered into financial guarantees and counter indemnities in respect of bank and performance bonds issued on behalf of Group undertakings, including joint arrangements and joint ventures, in the normal course of business amounting to £135.3 million (2011: £125.5 million).

Disputes arise in the normal course of business, some of which lead to litigation or arbitration procedures. The directors make proper provision in the financial statements when they believe a liability exists. Whilst the outcome of disputes and arbitration is never certain, the directors believe that the resolution of all existing actions will not have a material adverse effect on the Group's financial position.

13   Post balance sheet events

No matters have arisen since the year end that require disclosure in the annual financial statements.

 

END

 

 

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