TIDMGFRD
RNS Number : 8007E
Galliford Try PLC
14 February 2018
14 FEBRUARY 2018
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014.
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION IN WHICH
IT WOULD BE UNLAWFUL TO DO SO. PLEASE SEE THE IMPORTANT NOTICE AT
THE OF THIS ANNOUNCEMENT.
Galliford Try plc
Fully Underwritten GBP150 million Capital Raising
Galliford Try plc ("Galliford Try" or "the Group") today
announces that it proposes to raise GBP150m of new equity capital
(the "Capital Raising") from its shareholders in the coming weeks
and is also providing an update on Galliford Try's dividend
policy.
Galliford Try today has separately announced its Half Year
Results for the six months to 31 December 2017.
Update on trading - strong financial performance, in line with
expectations
Galliford Try's Half Year Results show the strong financial and
operational performance across all three businesses with good
progress being made against the Group's growth plan to 2021.
Highlights include:
-- Linden Homes delivered an excellent performance in the first
half: strong volume growth with revenue up 7%, operating margin
(excluding land sales) improved to 18.5% (H1 2017: 16.3%),
reflecting the increased focus on standardisation and operating
efficiencies;
-- Partnerships & Regeneration has seen a significant
revenue increase of 55% over H1 2017, excellent operating margin
progress to 4.8% (H1 2017: 3.4%), and continuing strengthening of
the order book, up 41% to GBP1.3bn. Further revenue growth and
margin gains are expected, driven by continuing strong demand and
geographical expansion; and
-- Construction's underlying business continues to improve
following the changes made to its tendering processes.
Pre-exceptional operating margin increased to 0.9% (H1 2017: 0.4%)
and a high-quality order book has been maintained at GBP3.5bn (H1
2017: GBP3.4bn). There has been an encouraging performance on more
recently secured contracts, which supports Construction's strategic
objectives.
The Government's stated commitment to the housing market,
including Help-to-Buy and the relaxation of stamp duty for first
time buyers, is welcome and, along with good mortgage availability
and low interest rates, benefits both Galliford Try's private and
affordable homes businesses. Galliford Try's Construction business,
operating predominantly in the public and regulated sectors,
continues to benefit from a strong order book, with an encouraging
pipeline of opportunities from the current and planned investment
in the nation's infrastructure.
Financial position
Galliford Try continues to operate well within its financial
covenants.
However, the compulsory liquidation of Carillion plc
("Carillion") has placed additional financial obligations on the
Group arising principally from the joint venture with Carillion and
Balfour Beatty plc on the Aberdeen Western Peripheral Route
contract ("AWPR").
The over-run costs on AWPR, compounded by the compulsory
liquidation of Carillion have increased the Group's total cash
commitments on the project by in excess of GBP150m.
The Group continues to make good progress in resolving both
AWPR, the construction of which is expected to complete during
summer 2018, and other legacy contracts. The Group no longer
undertakes fixed price, all risk major projects of this nature, and
has improved its tendering and project selection processes.
The Group has sufficient financial resources to meet its
obligations, including the estimated impact of Carillion's
liquidation. However, this would involve diverting capital away
from the Linden Homes and Partnerships & Regeneration
businesses, thereby reducing their ability to capitalise on the
material growth opportunities these businesses would otherwise be
well positioned to exploit.
Capital Raising
Galliford Try therefore intends to raise GBP150m of new equity
capital in the coming weeks to strengthen further the Group's
balance sheet and ensure that the Group's businesses can continue
to pursue their respective growth opportunities that were set out
in the "Strategy to 2021" announced in February 2017 (the "2021
Strategy").
The board of Galliford Try (the "Board") considers that a
strengthened financial position for Galliford Try would also bring
the following additional benefits, each of which would support the
2021 Strategy:
-- Ensures the Group has access to the appropriate capital to
maintain its strong growth trajectory; and
-- Demonstrate the Group's continued and enhanced financial
strength and stability to Galliford Try's shareholders, customers,
suppliers and other stakeholders and reaffirm the Group's capacity
to act as a leading partner on significant projects.
The Group has GBP550m of debt facilities, comprised of a GBP450m
revolving credit facility which matures in 2022 of which GBP100m
was drawn as at 31 December 2017 and GBP100m of private placement
notes due 2027.
The Group will continue with its current gearing policy of year
end net debt to net assets of no greater than 30%.
The Group's defined benefit pension obligations are well
provided, with a fair value of plan assets as at 31 December 2017
of GBP248.0m and the present value of obligations at GBP250.7m
giving a balance sheet liability of GBP2.7m.
The Capital Raising has been fully underwritten by HSBC and Peel
Hunt on a standby basis.
Rothschild is acting as financial adviser to Galliford Try on
the Capital Raising.
Dividend policy
The Board understands the importance of optimising value for
shareholders and believes in balancing returns to shareholders with
investment in the business to support future growth. To this end
the Board has decided to bring forward the planned increase in
dividend cover to 2.0x pre-exceptional earnings per share which
will be effective for the current financial year ending 30 June
2018.
Reflecting this, and the Group's strong underlying performance
during the half year to 31 December 2017, the Board has declared an
interim dividend of 28p per share (H1 2017: 32p) which will be paid
on 6 April 2018 to shareholders on the register at close of
business on 16 March 2018.
- End -
This announcement contains inside information for the purposes
of article 7 of EU Regulation 596/2014. The person responsible for
making this announcement on behalf of Galliford Try is Kevin
Corbett, General Counsel and Company Secretary.
Analyst conference call:
Peter Truscott, Chief Executive and Graham Prothero, Finance
Director will host a short conference call for analysts on the
Capital Raising at 7.15 a.m. today. The telephone number for this
conference call is:
United Kingdom Toll-Free: 08003589473 PIN: 78010788#
United Kingdom Toll: +44 3333000804 PIN: 78010788#
http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf
Analysts and Investors presentation:
Galliford Try will hold its half year results presentation for
analysts and institutional investors at 09:30 a.m. today at the
London Stock Exchange, 10 Paternoster Row, London, EC4M 7LS. An
audio webcast will be available at:
http://webcast.openbriefing.com/gallifordtry_hyr_14022018/ with
recording available later.
For further enquiries please contact:
Galliford Try 01895 855 001
Peter Truscott, Chief Executive
Graham Prothero, Finance Director
Rothschild (Financial Adviser to Galliford Try) 020 7280
5000
John Deans
Alex Midgen
Peter Nicklin
Peter Everest
HSBC Bank plc (Joint Corporate Broker and Joint Global Coordinator) 020 7991 8888
Mark Dickenson
Richard Fagan
Simon Cloke
Keith Welch
Peel Hunt LLP (Joint Corporate Broker and Joint Global Coordinator) 020 7418 8900
Charles Batten
Edward Knight
Harry Nicholas
Max Irwin
Tulchan Communications (PR Adviser to Galliford Try) 020 7353
4200
James Macey White
Martin Pengelley
Elizabeth Snow
Notes to editors
Galliford Try is listed on the London Stock Exchange and is a
member of the FTSE 250. Housebuilding - through the Linden Homes
business - develops private and affordable homes in prime
locations. Galliford Try Partnerships - the regeneration business -
delivers mixed-tenure solutions working with housing association,
local authority and private sector partners. Operating as Galliford
Try and Morrison Construction, the Construction business carries
out building and infrastructure projects with clients in the
public, private and regulated sectors. At the end of the last
financial year to 30 June 2017, the Group generated revenue of
GBP2.8bn.
Cautionary statements
The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed for any purpose on the information contained
in this announcement or its accuracy or completeness. The
information in this announcement is subject to change. Nothing in
this announcement should be interpreted as a term or condition of
the Capital Raising.
This announcement contains unaudited information based on
management accounts and forward-looking statements that are based
on current expectations or beliefs, as well as assumptions about
future events. These forward-looking statements can be identified
by the fact that they do not relate only to historical or current
facts. Forward-looking statements often use words such as such as
"target", "believe", "expect", "aim", "intend", "may",
"anticipate", "estimate", "plan", "project", "will", "can have",
"likely", "should", "would", "could" and any other words and terms
of similar meaning or the negative thereof. Undue reliance should
not be placed on any such statements because they speak only as at
the date of this announcement and, by their very nature, they are
subject to known and unknown risks and uncertainties and can be
affected by other factors that could cause actual results, and
Galliford Try's plans and objectives, to differ materially from
those expressed or implied in the forward-looking statements.
There are a number of factors which could cause actual results
to differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause
actual results to differ materially from those described in the
forward-looking statements are: increased competition; the loss of
or damage to one or more key customer relationships; changes in the
economies, political situations and markets in which Galliford Try
operates; currency fluctuations; changes in interest and tax rates;
changes in laws, regulations or regulatory policies; the failure to
retain key management; or the key timing and success of future
opportunities or major investment projects.
Galliford Try undertakes no obligation to revise or update any
forward-looking statement contained within this announcement,
regardless of whether those statements are affected as a result of
new information, future events or otherwise, save as required by
law and regulations.
N M Rothschild & Sons Limited ("Rothschild"), which is
authorised and regulated by the Financial Conduct Authority, in the
United Kingdom; HSBC Bank plc ("HSBC"), which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom; Peel Hunt LLP ("Peel Hunt") which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom;
and each of Rothschild's, HSBC's and Peel Hunt's respective
directors, officers, employees, agents, affiliates, advisors and
agents, are acting for Galliford Try and no one else in connection
with the Capital Raising referred to in this announcement or any
other transaction(s), arrangement(s) or matter(s) referred to in
this announcement and will not regard any other person (whether or
not a recipient of this announcement) as a client and will not be
responsible to anyone other than Galliford Try for providing the
protections afforded to their respective clients or for providing
advice in connection with the Capital Raising referred to in this
announcement or any other transaction(s), arrangement(s) or
matter(s) referred to in this announcement.
This announcement has been issued by Galliford Try and is the
sole responsibility of Galliford Try. No representation or
warranty, express or implied, is or will be made as to, or in
relation to, and no responsibility or liability is or will be
accepted by Rothschild, HSBC or Peel Hunt, or by any of their
affiliates or agents as to, or in relation to, the accuracy or
completeness of this announcement or any other written or oral
information made available to any interested party or its advisers,
and any liability therefore is expressly disclaimed.
Important notice
This announcement and the information contained herein do not
constitute or form part of, and should not be construed as, any
offer, invitation or recommendation to purchase, sell or subscribe
for any securities in any jurisdiction and neither the issue of the
information nor anything contained herein shall form the basis of
or be relied upon in connection with, or act as an inducement to
enter into, any investment activity.
This announcement and the information contained herein do not
constitute an offer of securities in the United States. The
securities referred to in this announcement have not been and will
not be registered under the U.S. Securities Act of 1933 (the
"Securities Act"), and may not be offered or sold in the United
States absent registration under the Securities Act or pursuant to
an exemption from, or in a transaction not subject to, such
registration requirements. There will be no public offering of any
securities in the United States.
The information in this announcement may not be forwarded or
distributed to any other person and may not be reproduced in any
manner whatsoever. Any forwarding, distribution, reproduction, or
disclosure of this information in whole or in part is unauthorised.
Failure to comply with this directive may result in a violation of
the Securities Act or the applicable laws of other
jurisdictions.
- End -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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