Galliford Try (GFRD) became the latest housebuilder to reduce its exposure to the higher end of the housing market in London and the south-east, which accounts for the drop in average selling prices on private homes built by Linden Homes.
Concentrating more on the affordable end of the market, where its average selling price was just £124,000, is producing significant benefits for the partnerships and regeneration division. Margins grew from 4.8 per cent to 5.1 per cent in the six months to December 2018, while a 91 per cent jump in total sales reserved contracted and completed lifted revenue by more than a quarter to £285m.
Group underlying pre-tax profits reached a record high, but headline numbers were dented by exceptional costs of £26m relating to delays in finishing the Aberdeen by-pass and £4.4m in pension costs. Lower revenue on the construction side reflected a more cautious bidding stance for new work, as well as project deferrals by clients because of economic uncertainties. As a result, the division's forward order book fell from £3.5bn to £3.2bn, while margins held steady at a wafer-thin 0.9 per cent.
Land holdings at Linden Homes were maintained at 11,750 plots, while land reserved for partnership and regeneration work was lifted from 2,850 to 4,100 plots.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits of £187m and EPS of 136.9p for the year to June 2019 (from £192.2m and 161.3p in 2018).
| GALLIFORD TRY (GFRD) | ||||
| ORD PRICE: | 762.5p | MARKET VALUE: | £846m | |
| TOUCH: | 762-767p | 12-MONTH HIGH: | 1,117p | LOW: 562p |
| DIVIDEND YIELD: | 9.4% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 687p | NET DEBT: | 5% | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.40 | 56.3 | 50.7 | 28 |
| 2018 | 1.34 | 53.8 | 39.4 | 23 |
| % change | -4 | -4 | -22 | -18 |
| Ex-div: | 14 Mar | |||
| Payment: | 10 Apr | |||
| *Includes intangible assets of £173m, or 156p a share | ||||
