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Galliford Try dividend doubled as profits soar 89pc

Galliford Try shareholders have seen their dividend doubled after profits soared by 89 per cent in the six months to December, it said this morning.

Pre tax profit is up from £17 million in 2010 to £32m, with revenue up 30 per cent to £746.8m in the half year to 31 December 2011. The firm has doubled dividend per share from 4.5 pence to nine pence and will reward shareholders on 11 April.

The results are down to the strong performance in house building - focused on the south - with margin now 11 per cent, up from 6.5 per cent. Operating profit soared from £9.9m to £35m, with revenue up from £152.9m to £277m.

It means the firm remains on track with its 2009 three-year strategy to have doubled its house building business to 3,000 units by the end of this year.

Average selling price on private sales was up 17 per cent at £239,000 (H1 2011: £204,000) reflecting an increased proportion of sales in the south east of England.
Total landbank is 10,700 plots, up from 10,000 a year ago. The company saw a 59 per cent increase in total completions to a record 1,352 units.

There has been a 34 per cent increase in total sales reserved, contracted and completed at £605m, and the firm has secured all plots for 2012 and 2013.

The strategy will now be focused on “further margin growth over volume growth”, it said.

Galliford Try said construction performance is as expected, because it is not prepared to win work “where price levels or contract conditions were unacceptable.”

Construction margin has dipped from 2.5 per cent last year to 2.2 per cent, with the order book also slightly down at £1.6 billion (H1 2011: £1.75bn). Operating profit is flat at £10.9m on increased revenue, up to £499.9m from £442.6m, as workloads peaked within the firm’s five-year water frameworks.

In building, operating profit was £4.6m on revenue of £199.2m, giving a 2.3 per cent margin (down from 2.4 per cent). In infrastructure, profit was £5.2m on revenue of £249.7m, giving a 2.1 per cent margin, which was down from 2.7 per cent.

It said:  “We set a clear strategy to focus on profit margin and cash performance, planning for the absolute level of our construction revenues to fall as we were not prepared to acquire work in highly competitive markets where price levels or contract conditions were unacceptable.

“As we forecast, securing work has become more difficult, consequently we have rigorously maintained this strategy and will continue to do so until markets improve and we can resume growth again.”

Net debt is now £69.8m, up from £30m last time.

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