Galliford Try said it is on track to double its house building arm by next year as it reported a surge in full-year profits this morning.
Posting annual results to 30 June 2011, the house builder and construction firm said pre-exceptional profit before tax was up 34 per cent, to £41.7m, compared with £19.2m the year before, as revenue rose by 5 per cent to £1.28 billion, compared with £1.22bn.
After also taking into account an appeal in March, which reduced an Office of Fair Trading fine in 2009 for cover pricing between 2001 to 2004 from £8.3m to £1.4m, pre tax profit, post exceptional items, soared by 117 per cent, from £19.2m to £41.7m. The company had £36m net cash in June, ahead of expectations.
Galliford Try said it has “made significant progress” towards its 2009 three-year strategy of doubling its house building arm and delivering 3,000 units, with all land secured and with planning permission.
Chief Executive Greg Fitzgerald said: “We exceeded our profit expectations during the year as growth in house building 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 house building in a strong position to deliver on the objectives we set for 2012 and to drive further growth thereafter.”
Growth in housing accelerated in the second half of the year, after the house building businesses were brought together under the Linden Homes brand to “drive improvements in cost effectiveness”. House building revenue rose to £388m, from £316 the year before, while operating profit was up 80 per cent from £17.6m to £31.6m. Completions rose by 27 per cent to 2,170, with margin up from 5.6 per cent to 8.1 per cent and 72 per cent of its 10,400 land bank has been acquired.
Construction held steady, with revenue at £936.9m this year, compared with £936.5m the year before. Operating profit was £22.2m, compared with £22.8m the year before. Construction margin was held at 2.4 per cent, with a cash balance of £217m, an order book of £1.7bn and 90 per cent of this year’s planned revenue secured.
The company said it has seen “signs of limited improvement in the private sector market particularly in the commercial and hospitality sectors” while the government’s comprehensive spending review in the autumn of 2010 “had a significant effect on reducing the pipeline of future public sector work”.
Building margin stayed flat at 2.4 per cent, with revenue dropping to £436.5m, from £445.3m the year before, and operating profit at £10.4m, compared with £10.8m. The order book increased from £638m to £673m.
Infrastructure revenue was down to £376.5m, from £397.4m, with operating profit at £9.9m, compared with £10.7m. Margin was at 2.6 per cent, compared with 2.7 per cent and the order book was at £921m, compared with £922m last year. The firm said it secured the largest proportion of any contractor of the five year AMP5 water programmes in 2010.
Public private partnerships (PPP) saw revenue soar to £9.6m, from £3.5m, but made a loss of £1m, compared with a £2.4m profit last year.
Galliford Try also secured a four year £325m revolving credit facility with HSBC Bank plc in May.