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Galliford Try revenue shrinks 16%

15 Sep 10 Galliford Try's revenue for the year to 30 June 2010 has shrunk 16% to £1.22bn.

Galliford Try's revenue for the year to 30 June 2010 has shrunk 16% to £1.22bn (2009: £1.46bn).

However, the construction and house-building group was comfortably back in the black with a pre-tax profit of £19.2m, after exceptional costs resulted in a £26.9m loss a year ago.

Its profit would have been higher but for a £6.9m provision set aside to cover the fine imposed by the Office of Fair Trading for bid-rigging. The group has appealed against the size of the £8.3m penalty, but said an outcome is not expected until later in the year.

Operations

In construction, Galliford Try's total revenue was £936.5m, compared to £1,175.7m the previous year. Its cash balance stood at £206.8m at 30 June (2009: £237.1m). Operating profit was £22.8m, a margin of 2.4% (2009: £27.9m representing 2.4%).

In its building division, profit from operations was £10.8m on revenue of £445.3m, a margin of 2.4% (2009: £11.9m on £528.7m, 2.3%). Infrastructure delivered profit from operations of £10.7m on turnover of £397.4m, a margin of 2.7% (2009: £13.9m on £516.6m, 2.7%). Its social housing business reported an operating profit of £1.3m on revenue of £93.8m, a margin of 1.4% (2009: £2.1m on £130.4m, 1.6%).

Galliford Try's construction strategy has been to maintain its order book in key markets, leading to a reduction in overall revenue “in the short term”.

This has resulted in the order book increasing by 6% to £1.8bn, of which 40% is in the regulated sector, 51% in the public, and 9% in the private sector. It has 88% of projected revenue for the new financial year secured.

In house-building, Galliford Try took the decision to double its business over a three-year period through a £119m rights issue a year ago.

It said this has resulted in its landbank increasing from 7,850 a year ago to a current total of 9,700 plots.

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Profit from operations was up 56% to £17.6m on revenue of £316m, a margin of 5.6% (2009: £11.3m on £306.7m, 3.7%).

Completions for the year totalled 1,705, and average sales prices were up 10% on last year at £190,000 (2009: £172,000), reflecting both prices achieved and a change in sales mix.

Private housing completions, including those on regeneration projects, accounted for 1,287 of the total, generating a profit from operations of £14.3m. Affordable housing completions were 337, resulting in an operating profit of £3.3m on turnover of £42.2m. The average selling price was £124,000 (2009: £115,000).

Outlook

Looking ahead, chief executive Greg Fitzgerald said: “We are on track to deliver the housebuilding expansion plan we set out at the time of the rights issue in September 2009. Our results have been achieved against a backdrop of an improving market in the early months of 2010 and we have been encouraged by the level of sales and prices achieved since the start of our new financial year.

“We have maintained a quality construction order book in increasingly challenging market conditions and anticipated reductions in public sector work, although uncertainty over the extent and focus remains as we await the outcome of the Government's autumn spending review.

“Construction continues to generate profits and cash balances, albeit we have anticipated absolute levels will reduce due to the effect of a more competitive market.

“The strength of the group's finances and the spread of its activities leaves us, subject to economic uncertainties, well positioned to deliver our planned progress.”

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