Galliford Try switches house building operation to a four-day week

Galliford Try has moved its house building arm to a four-day week in a bid to cut costs but maintain its geographical coverage.

But the company revealed that it isn't suffering the debt problems of other more conventional house builders - it had net cash of £1m at the end of December.

The cash balance is a big improvement on the net debt of £47m that was being carried 12 months earlier.

However, the group is to make a £50m write-down to the value of its building land.

Since last reporting to the Stock Exchange, Galliford says that is has “traded in line with our expectations”.

Galliford – along with Kier – is a hybrid and runs two operations: construction and house building.

“Cash generation in our contracting business remains excellent and we are making progress in reducing the capital in house building,” says Galliford.

Having opted to focus in the construction markets for the public and regulated sectors this sector is mitigating the effects of the deteriorating economy.

The contracting order book at 31 December was £1.7bn, of which 91% is for the public and regulated sectors.

As a result, 93% of anticipated revenues for the financial year to 30 June 2009 are already secured. “The market generally is becoming more competitive,” said the group.

However the housing market remains extremely difficult and measures to counter this include the introduction of a four-day working week across the house building operations “to reduce cost while enabling us to preserve our geographical coverage”.

Total housing completions for the period were 960 units compared with 1,200 units the previous year at an average selling price of £171,000 compared with £203,000 a year ago.

There was some evidence of a re-emergence of interest from the investor market during December in appropriately located and priced homes, and total sales reserved, contracted or completed at 31 December stood at £280m compared with £470m a year ago.

Of this total, £210m is for the current financial year to 30 June 2009, representing 75% of projected sales for the year compared with 65% at the same point last year.

Distancing itself further from other gloom-merchants in the house building sector, Galliford says it can still afford the luxury of an interim dividend which could run to as much as 50% of the previous year’s figure.