Galliford Try has completed a restructure of its construction business, it has announced in a trading update today.
The company confirmed in May this year that it was cutting 350 jobs after a strategic review to make savings in order to bring its operating margins up to a target of 2% by 2021.
The cuts fell largely in Scotland where it struggled with rising costs on Morrison Construction’s role on the £1.35bn Queensferry Crossing joint venture with Dragados, Hochtief, and American Bridge International, as well as experiencing problems on the now-completed Aberdeen Western Peripheral Route (AWPR).
In a trading update issued today for the year up to 30 June, the company said it was “trading well” and expected to report profit before tax in line with expectations, which is due to include £40m of exceptional items.
It also reported net debt at 30 June 2019 of £60m, as opposed to net cash of £98m in the same period a year ago. Average net debt currently stands at £187m.
The company’s Linden Homes arm completed 3,229 homes for the year to 30 June at an average selling price of £351,000 (compared to £367,000 in 2018). The sales rate was 0.56 per week from an average of 80 outlets in 2019 (compared to 0.59 and 85 in 2018).
Meanwhile, the group’s partnerships and regeneration arm had a £1bn contracting order book (2018: £1.2bn) and mixed-tenure sales carried forward of £184m (2018: £160m). Its landbank has increased by 61% to 5,300 plots (2018: 3,300 plots).
Construction orders
Galliford Try’s construction order book is £2.9bn (2018: £3.3bn) with 88% of revenue for the new financial year secured (2018: 87%).
Graham Prothero, chief executive, said: "The group has continued to perform well, supported by good housing demand. We expect our full year results and average net debt to be in line with previous guidance.
“We are making strong progress against the operational targets we set out in 2017. We are reviewing our 2021 volume targets to ensure that growth is controlled, and our gearing is managed. Despite the weaker economic outlook, Linden Homes continues to see robust demand, with operating efficiencies driving strong margins and improving customer satisfaction. Partnerships & regeneration is well on track with its aspirations for exciting growth in both revenue and margins, with some key wins in the period and further good opportunities across the market.
"We are pleased that the restructure of the construction business is now complete. The business is now firmly focused on its core strengths of regional building operations, together with profitable operations in highways and water, all of which are now performing effectively. I look forward to the next financial year with the appropriate strategic priorities in place across the group."
