Housebuilders warn against public spending cuts

By Philip Aldrick, Banking Editor Published: 6:45AM GMT twenty-five February 2010

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Kier Group

Galliford Try

Kier and Galliford Try both used their half year formula to advise that commercial operation will be harm as a new Government grapples with the UK"s �178bn deficit. Alistair Darling has pronounced the subsequent open spending review, should Labour keep power, would be the tightest in thirty years. The Conservatives yesterday reiterated that they would proceed slicing rught away .

Public spending accounts for 3 buliding of commercial operation at Kier and half at Galliford Try. John Dodds, Kier"s effusive arch executive, said: "The uncertainties surrounding the stirring ubiquitous choosing together with the open zone necessity give climb to concerns over the destiny levels of open zone spending."

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Galliford Try noted: "The directors cruise the principal risks that might have a element stroke on opening in the second half are the macroeconomic conditions in the UK, Government policies, and open zone spending as they affect the group"s markets in both housebuilding and construction, together with the accessibility of financial for the group"s clients and residence purchasers."

Despite the discreet outlook, both companies enjoyed a volatile initial half. Pre-tax increase at Kier fell from �31.6m to �16.7m but the repairs was finished by a �17.9m excellent for purported bid paraphernalia by the Office of Fair Trading, that it is contesting, and writedowns on land. On an underlying basis, pre-tax increase were 21pc higher at �31.9m and Kier increasing the halt division 2.8pc to 18.5p, on credit on May 4.

Galliford Try posted a �6.4m pre-tax profit, after an �8.3m OFT fine, compared with a �37.5m loss last time, and hold the division at 3.3p, on credit on Mar 31. Both companies had clever money balances, of �131m at Kier and �100m at Galliford Try, following the latter"s �119m rights issue last October.

Kier"s sequence book increasing in the half from �3.7bn to �4.5bn and it had cumulative 73pc of the aim income for 2010 already. Galliford Try disclosed the sequence book is 6pc higher at �1.8bn and pronounced housebuilding was display signs of improvement, as prices not usually stabilised, but climbed in a little areas, underpinned by a miss of new housing.

Galliford Try combined that the Tory"s immature paper on formulation immature might in essence change the formulation system, worsening fears that already-low levels of supply will be choked further.