Galliford Try sees signs of private sector-led recovery

Aaron Morby 11 years ago

Galliford Try has seen the first signs of a private sector recovery in construction work, which helped to offset sharp falls in public sector work this year.

The firm warned pressure on construction margins remained intense, but said growth in commercial and hospitality work had helped its construction business to ride out the worst effects of public spending cuts.

As a result construction managed to hold revenues at £937m and keep margins at 2.3% in the year to June 30.

Across the group Galliford Try reported pre-tax profits more than doubled at £41.7m, driven by strong growth in housing and a one-off £6.6m payment after the OFT slashed its cover pricing fine.

Turnover grew 5% to £1.3bn as house building grew sharply with new sites coming on stream and completions passed the 2,000 mark.

    Trading performance by division

    Revenue £936.9m (£936.5m)
    Profit £22.2m (£22.8m)
    Operating margin 2.4% (2.4%)
    Order book £1.75bn (£1.8bn)

    House building
    Revenue £388.5m (£316.0m)
    Profit £31.6m (£17.6m)
    Operating margin 8.1% (5.6%)
    Completions 2,170 (1,705)

Greg Fitzgerald, chief executive, said that the firm was on course to achieve its ambition of strong volume growth to become a top five house builder, producing 4,000 homes a year.

He said: “We exceeded our profit expectations during the year as growth in housebuilding accelerated in the second half, testimony to our strategic focus on southern England. We also maintained a higher than anticipated margin in construction.

“As a result we enter the final year of our three year transformational expansion plan for housebuilding in a strong position to deliver on the objectives we set for 2012 and to drive further growth thereafter.”

He added that the construction market had held up longer than expected, but warned the effect of public sector spending constraints was impacting the construction’s future pipeline of work and continuing to drive further “intense competitiveness”.

“Our strategy has held up well with a maintained margin of 2.4%, excellent cash balances generated from our construction activities and a year end order book of £1.75 billion.

“We have seen signs of limited improvement in the private sector market particularly in the commercial and hospitality sectors.”

Over the year Examples of work secured are £9 million of work for Moto Hospitality on the M40, a £39 million commercial and apartments scheme in Wandsworth for Fraser Projects and a £16 million hotel in Birmingham for Hotel de la Tour.

“We have established a new base in Bristol which has secured its first contracts including a £7 million project to refit the Bristol Old Vic theatre.

“Going forward we see some further recovery in the London commercial market.”

Galliford Try’s active housing selling sites rose from 59 to 78 over the year.

New regional offices in Guildford and the Thames Valley helped to lift completions 27% to 2,170 homes.

At the year end, 70% of the firm’s landbank of 10,250 plots had been acquired at current market values offering bigger profit margins than on legacy land.

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