Galliford Try: construction margin of 3.2% but house building in red

Galliford Try’s latest interim results show a remarkably healthy construction operation which made a margin of 3.2% and generated a pre-tax profit of £17m.

But the other half of this construction industry hybrid – namely Galliford’s house building operation – dived heavily into the red logging a pre-tax loss of £47m as a result of write-down to the value of its land and work-in-progress assets.

The latest interim financial period covers the six months to 31 December 2008.

Greg Fitzgerald, chief executive said: “The benefits of working in both construction and house building markets continue to mitigate the worst effects of the economic downturn.

“As the recession starts to impact opportunities in the construction market, we will benefit from our strong presence in the public and regulated sectors.

“Our strategy in house building to reduce our exposure to the market during the current downturn by focusing on cash generation was adopted early. We have reduced our costs to a level that will enable us to work through the current market.”

Turnover in the half-year was £770m (figure in the previous comparable period: £900m).

Exceptional costs ran to £49m – made up of the £48m of asset write-downs and £1m of redundancy costs.

Without that, there would have been a pre-tax profit of £11m.

But after accounting for the exceptional items, the bottom line was a pre-tax loss of £38m.

In the same period last year, Galliford made a pre-tax profit of £34m

Galliford’s construction activities are organised into two divisions: building and infrastructure.

Total construction turnover ran to £540m, including joint ventures. The total contracting order book (construction plus affordable housing build contracts) currently stands at £1.7bn compared with £2.1bn a year ago.

Of this, 90% is in the public and regulated sectors and 91% has been secured on a basis other than on pure price competition.

Construction – building division

Profit of £6.7m on revenue (i.e. turnover) of £280m.

Construction - infrastructure

Profit of £7.8 million on revenue of £270m. Cash management remained a key focus, with higher average balances achieved during the period than in the prior year.