Galliford Try gives itself well-deserved pat on the back

Galliford Try, the house-building and construction firm, has made good on its pledge to dish out more dosh to shareholders, after a sparkling set of full year results.

The group's need for cash is not as marked as it once was, so the board intends to pay out around half of retained earnings in the form of dividends. In the year to June 30th, earnings per share jumped 89% to 60.9p from 32.2p the year before, so that has paved the way for a full-year dividend of 30p, up 88% from the previous year's pay-out of 16p.

Net cash at the end of June was positive at £20m, compared to net debt of £70m at the end of 2011 and net cash of £37m at the end of June 2011.

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Most of the key numbers for the financial year were flagged in the group's recent trading statement, but to recap: group revenue rose 17% to £1,504m from £1,284m in the previous year, and profit before tax surged 80% to £63.1m from £35.1m the year before, and ahead of the £60m target the group set itself three years ago when it tapped the market for £125.6m to fund a growth spurt.

The housebuilding division saw profit from operations leap to £75.1m from £31.6m the year before, as revenue climbed to £636.7m from £388.5m. The operating margin hardened to 11.8% from 8.1% the previous year. Panmure Gordon had predicted a rise to 11.7%.

As previously revealed, the group completed 40% more homes in the financial year just ended, knocking up 3,039 units versus 2,170 the year before. Excluding joint venture operations, completions rose from 1,988 to 2,788, of which 2,272 were private housing completions at an average selling price of £250,000, up from £227,000 in the previous year. Affordable housing completions totalled 767, up from 724 the preceding year, with an average selling price of £104,000 (2011: £106,000).

At the financial year end, the group's housebuilding division 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 £273m.

The construction division has secured 82% of its projected workload for 2013, while the current order book is more or less stable at £1.65bn, versus £1.75bn at the end of 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," the group said.

The construction division's revenue in the financial year just finished declined to £924.8m from £956.9m the year before, while profit from operations also retreated, to £18.9m from £22.2m. The operating profit margin fell to 2.0% from the previous year's 2.4%.

The long-term strategic aim of the group is to grow the construction business and the board believes the company is well positioned to take advantage of an economic and market recovery when it finally happens.

"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," the group revealed.

"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," said Greg Fitzgerald, the firm's Chief Executive.

"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," he added.

Although many of the big numbers were announced in the July 10th trading statement, the market was still pleasantly surprised by the results, and marked the shares up 14p to 686p in the first hour of trading.

JH