House builder gears up for investment despite a £26.9 million pre-tax loss
Galliford Try seeks £125m to buy land
Affordable housing specialist Galliford Try has called the bottom of England’s housing crash, unveiling a £125 million issue of new shares to fund a land buying spree.
It launched the rights issue alongside publication of its results for the year ending 30 June 2009, which showed the house builder had been forced to make a £50 million write-down on its existing landbank.
The write-down, alongside £1 million redundancy costs, meant Galliford Try made a pre-tax loss for the year of £26.9 million. But Stephen Teagle, managing director of the group’s affordable housing and regeneration division, said it believed the worst was over.
‘We’ve witnessed a fall in house prices from peak to trough of about 25 per cent,’ he said. ‘And our view is that we are at the bottom, or just slightly above the bottom, and it is the right time to start to invest.’
The group will be recruiting new employees in its affordable housing and land acquisition teams. He added that Galliford Try aimed to be producing 3,800 homes a year by 2012, one third of them affordable housing. In 2008/09 it completed 1,769 homes.
However, Mr Teagle said it would not be until ‘possibly 2014’ that council planning deals with developers would deliver the amount of affordable homes they did 18 months ago. ‘I don’t think, in other words, that we’re going to go back to the house price growth that would allow large volumes of section 106 housing,’ he added.
In 2008/09 Galliford Try’s affordable housing division made an operating profit of £6.3 million on turnover of £184 million. It outperformed the group’s private house building arm, which made profits of £3.5 million on turnover of £235 million. Mr Teagle said he expected the private arm to be more profitable than affordable housing this year.
The group responded to the housing market downturn with a £25 million cost cutting programme. The company’s news came as housebuilder Redrow reported ‘the worst set of trading results in the company’s history’.
Redrow’s turnover for 2008/09 plummeted to £302 million, down from £650 million in 2007/08. It made a pre-tax loss of £141 million, finished the year with net debt of £215 million and made exceptional charges of £97 million. Chairman Steve Morgan said: ‘I am determined to ensure that this will not be repeated.’