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Galliford Try expects large growth in construction work

Building group Galliford Try signalled its confidence in the UK housing market today as it announced plans to ramp up construction and more than double annual profits by 2018.

The group has secured a £400 million refinancing deal to help fund expansion as it predicts the property market will continue to improve, backed by the Government's Help to Buy initiative, which offers loans and mortgage guarantees.

Galliford unveiled the strategy as it announced record half-year profits to the end of December, up 18% to £38.1 million, as revenues also climbed 18% to £803.5 million.

Turnover from its Linden Homes house building arm was up 20% to £328.3 million, from completions of 1,300 units, and profit margins from the division also increased.

Average sale prices on private homes increased 15% to £291,000, reflecting strong demand for its well-located southern sites and increased focus on houses, Galliford said.

The group said it planned to add to its record housing landbank of 13,500 plots, adding a further 14,000 to supply its needs for up to four years.

Margins in Galliford's construction arm narrowed amid challenging conditions, but the group said following a year of "sustained and improved levels of opportunity" it intended to grow the businesses by 50%.

Chief executive Greg Fitzgerald said: "We have been very encouraged by the start of the calendar year.

"Group profit for the half year is at a record high and we continue to be encouraged by the levels of future opportunities. Housing market conditions continue to improve."

Shareholders were also rewarded with an interim dividend hike of 25% to 15p per share.

The group said: "The board has reviewed its strategy against a backdrop of an improving economy and, assuming continued economic stability, is targeting disciplined growth across all businesses in the period to 2018.

"The plan assumes no material early tightening of the private housing market, with mortgage availability and flexibility continuing to grow, and no change to the announced scale and duration of the Government's Help to Buy initiative."

Its refinancing arrangement has seen the group enter into a new five-year unsecured credit facility of £400 million, an increase of £75 million on the facility it replaced.

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