Trading Statement

RNS Number : 3685F

Galliford Try PLC

12 January 2010

 



12 January 2010 

GALLIFORD TRY PLC - TRADING UPDATE 

Galliford Try plc, the housebuilding and construction Group, is providing the following period end trading update in advance of the announcement of its results for the half year ended 31 December 2009, expected to be released on 24 February 2010.  

Housebuilding 

The housing market has continued to demonstrate the stability that returned during the course of 2009 and we have been very encouraged by the sales volumes and income levels achieved up to the end of December.  At 31 December 2009, total sales reserved, contracted or completed stood at £324 million compared to £281 million a year ago. £235 million is for the current financial year to 30 June 2010, representing 75% of projected sales for the year, compared to 70% at the same point last year. 638 units were completed in the period at an average selling price of £181,000. This compares to 964 units last year, at an average selling price of £171,000. Lower unit completions in the first half were a result of minimal stock levels as we entered the current financial year, due to the measures we took during the last financial year to reduce the capital employed in housebuilding.  As the sales in hand indicate, we expect completions to show a marked increase during the second half.

We have continued to make good progress in bringing land acquisition opportunities to fruition, following the raising of a net £119 million in the rights issue that was completed during October. This includes 156 plots with the acquisition of Rosemullion Homes, announced on 2 December 2009.  Our total landbank at 31 December 2009 is 8,800 plots, compared to 7,750 a year ago, of which 3,200 plots have been acquired under current market conditions, since the start of our last financial year in July 2008.  Terms have been agreed to acquire a further 1,600 plots and we expect that by the end of our financial year in June 2010, 40% of our landbank will have been acquired at prices prevailing during this period.  

We announced yesterday that Galliford Try is one of only six organisations to be selected as a delivery partner on all three of the Homes and Communities Agency's development partner panels to develop new affordable and private housing on public sector sites across the whole of England. This gives our leading affordable housing and regeneration business a significant advantage in securing new development opportunities going forward.  We have also now been allocated a total of £31 million of Kickstart funding from the HCA's housing stimulus package, including £14.2 million recently awarded under the second round.

Construction 

Our construction business continues to perform well in challenging markets. The spread of our activities across a number of market sectors, and the strong position we have in the public and regulated sectors, is proving its worth. The contracting order book is resilient and at 31 December 2009 stood at £1.75 billion, 3% higher than at the same point last year.  87% is for the public and regulated sectors, with 92% of anticipated revenues for the financial year to 30 June 2010 secured.  

Our focus is on maintaining the quality and sector spread of our order book, with recent contracts secured including a three year framework for National Grid to carry out improvements at a number of its gas and electricity sites throughout the UK, and the final tier 1 athletes village building contract at Olympic Park in Stratford.  We are also the preferred bidder for the £24 million redevelopment of the international cricket stadium at Edgbaston, and for 40% of the first phase construction work on the Equitex consortium's Building Schools for the Future programme for Cambridgeshire County Council. This has the potential for additional work in future phases of the programme that could reach £600 million over the next 15 years.

We have also successfully renewed three of our existing long-term water frameworks for a further 5 years with Scottish Water, United Utilities and Yorkshire Water with the AMP5 renewal process for our remaining key water clients still ongoing.

Cash and OFT

Cash generation in our contracting business remains excellent, underlining the strength of the business.  Notwithstanding the expenditure now underway on land acquisition, the Group held net cash of around £100 million at 31 December 2009 compared to £34.1 million at 30 June 2009 and £1 million a year ago.  

As announced on 24 November 2009, the Company has submitted an appeal to the competition appeal tribunal in respect of the £8.33 million fine imposed by the Office of Fair Trading in respect of three incidences of cover pricing that took place in the early 2000's, for which an exceptional provision will be made in the financial statements for the half year.

Outlook 

The board remains cautiously optimistic on the outlook for the housing market and is encouraged by the progress being made on transforming the landbank to enable the Group's strategic expansion plan for housebuilding to be delivered. The spread and depth of our construction business across its market sectors will continue to be a key strength as overall market conditions are expected to remain challenging for the foreseeable future. Overall the board considers Galliford Try is well positioned to take advantage of opportunities as they arise.  

For further enquiries:

Greg Fitzgerald, Chief Executive                      01895 855219

Frank Nelson, Finance Director                        01895 855226

Kerry Chadwick, PR Manager                          01895 855153

 

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